Why should we participate in and purchase Wage and Benefits surveys? While compensation is not a top motivator for most employees, your pay levels (compared to the market) should not create dissatisfaction that overshadows other efforts to promote a healthy environment where engaged employees feel successful and rewarded.  As we are all aware, engaged employees mean a higher quality product or service, better efficiency and more money to the bottom line.

Strong talent can move from one job to another, both within and between organizations even in the toughest economic times.  Accurate market data ensures that your pay practices help your organization retain the “best and the brightest”.  Good market information is current and specific to position, industry and geographic area.  Market data is best acquired through Salary Surveys conducted by independent organizations who gather actual pay rates and practices from real companies. 

 Components of an effective total rewards program include:

1. Compensation Philosophy: (examples)
   1. We pay at the 50^th percentile of the market or
   2. Our cash compensation is slightly below market, but our benefits package is better than market or
   3. Our base pay rates are below market but our incentive plan brings the total compensation level to above the 50^th percentile of market…
2. Internal Equity:  comparing positions within our organization based on common factors or elements used to determine ranking.
3. External Equity:  comparison of our total rewards practices against those in the marketplace where we recruit our talent.
4. Program design:  Pay tied to performance at the individual and/or corporate level…is the program legally defensible and does it align with the strategic goals of the organization?
5. Performance Measurement:  Individual and corporate performance measurement tools….are we measuring the right things in the best way.
6. Benefits:  Are the benefits we offer what our employees value and how do they compare to others in our industry?
7. Market Conditions/Budget:  Can our total rewards program flex with the market conditions we face as an organization and be managed within a budget?

 Total Rewards programs make it easier to attract and retain quality employees and most components of an effective total rewards program require current, accurate and sufficiently specific information from the marketplace. 

Wage and benefit surveys provide needed market data to determine competitive pay levels and help in the design or evaluation of your total rewards program.  Participating in independently conducted wage and benefit surveys ensures that there will be quality data for all of us…the more companies (of all sizes) that participate in providing information to the independent survey the better the results.

Informal data collection practices such as conversations with colleagues in the same industry or conducting a survey by calling “friends” and “counterparts” in the industry could mean you both are in violation of confidentiality policies and sometimes federal anti-trust laws. 

Independently conducted wage and benefits surveys are essential to a successful total rewards program in any organization and the return on your investment in surveys along with the use of design experts in Total Rewards can be substantial.

The 2013 Manufacturers Alliance Compensation and Benefits Survey is now available to purchase. This survey was designed with input from local manufacturing companies to provide comprehensive total cash compensation data for making important pay decisions in this ever changing economy. Learn More

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Minnesota:  For a fourth straight month, Minnesota’s Business Conditions Index moved above growth neutral. The index from a monthly survey of supply managers in the state rose to 55.2 from 52.0 in February.

Components of the index from the March survey were new orders at 55.7, production or sales at 58.6, delivery lead time at 55.2, inventories at 52.7, and employment at 53.5. “Both durable and nondurable goods manufacturers detailed expanding business activity.  Growth continues to be especially healthy for metal producers and machinery manufacturers such as agriculture implement manufacturers,” said Goss.

Dr. Ernest Goss of Creighton University, used the same methodology as The National Association of Purchasing Management to compile this information. An index number greater than 50 percent indicates an expansionary economy, and an index under 50 percent forecast a sluggish economy, for the next three to six months.

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Problems cannot be solved at the same level of awareness that created them." –Albert Einstein I picked up Mike Rother's most recent book, "Toyota Kata", knowing that the reviews were almost impossibly glowing – "strikingly different", a "must read", and "the essence" of how Toyota manages. In fact, I found the book deeply inspiring as I began to read but oddly disappointing as I finished. Perhaps that is just the unavoidable arc of trying to sustain enthusiasm throughout an entire book, but it feels like the scope of the book is larger than it needs to be and thus the focus starts to wane.

If you're familiar with the Lean Enterprise Institute you're certainly familiar with Rother's work with John Shook on value stream mapping – "Learning to See".  "Toyota Kata" is based on six years of research into Toyota's management routines and earned Rother the Shingo Research Prize in 2011. (Also awarded to 8 other books in 2011, 9 books in 2012, and a whopping 16 in 2013. Apparently writing about "lean" is still a growth industry.)

Two intriguing contentions are at the heart of Rother's argument: we have not really understood the essence of Toyota's success at "improving and adapting", and even Toyota doesn't really know why other companies haven't been able to emulate that success. "Toyota Kata", describes, probably unintentionally, a head-on collision between scientific method and cognitive dissonance.

The first part of Rother's book argues that we have been copying the wrong things while chasing Toyota-style manufacturing, that the critical aspects of Toyota's success are not visible, and that one cannot reverse engineer an adaptive and continuously improving organization. Rother claims most companies involved in Lean have become stuck in an "implementation mode" and have failed to develop a truly adaptive and problem-solving organization.

The "Toyota Way" is, according to Rother, a particular pattern of thinking and behaving – not a collection of tools and principles. "Kata" is a Japanese word used to describe these patterns and routines, and the book focuses on two types of kata: coaching kata and improvement kata. The issue is one of philosophy, not technique. It is a uniquely top-down perspective that requires senior leadership to first develop their own improvement and mentoring skills and then to teach those skills to those they are responsible to mentor – and everyone has a mentor and eventually mentors someone else.

Rother talks at length about the role of PDCA both in the improvement kata and in the coaching kata – even in the role of developing a kata itself. He claims that we are not yet using it as Toyota does, and asks us to consider PDCA in the following context:

1. Adaptive and evolutionary systems by their nature involve experimentation.
2. Hypotheses can only be tested by experiment, not by intellectual discussion, opinion, or human judgment.
3. In order for an experiment to be scientific it must be possible that the hypothesis will be refuted.
4. When a hypothesis is refuted this is in particular when we can gain new insight and further develop our capability.

None of this, of course, is insight unique to Rother, but when regarded in the context of an entire organization – not just the engineering or manufacturing processes – it's difficult to see whether it challenges traditional management philosophy or unintentionally reinforces it. Scientific experimentation has a further attribute that says experiments can be replicated and will give the same results. When those experiments involve human behavior we're usually trying to alter some relationship, create some sort of behavioral tipping point, not uncover some immutable cause and effect.

"Toyota Kata" is packed with nuanced insight tucked in between familiar descriptions of lean implementations, which is partly why I finished the book wondering which perspective would leave the stronger impression on most readers: the familiar context or the unfamiliar insight. Scientific method is at the heart of the effective use of PDCA but the discomfort of ideas that challenge our existing worldview suggests we'll ignore or reinterpret whatever makes us uncomfortable – cognitive dissonance trumps scientific method.

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The Manufacturers Alliance annual Manufacturer of the Year awards ceremony brings local manufacturers together to celebrate and recognize companies that share information and experiences to strengthen the Minnesota manufacturing community. Our winners this year are Midwest Rubber Service and Supply, Quality Ingredients Corporation and Uponor.

“We’ve always focused on our customers, but our renewed commitment and success serving them is the result of our lean efforts over the past four years,” said Doug Turk, president of Midwest Rubber Service and Supply Company.

In 2008, while going through a strategic planning process, the company took a hard look at where they were headed. “Our conveyor product sales and services are concentrated in the upper midwest, while our products for the floor care industry are global,” said Doug. “We wanted a strategy to grow while ensuring our high level of service would not suffer. This prompted us to start thinking about lean processes as a way to make that happen.

Critical to jump starting our lean program was executive commitment and an example to showcase lean’s potential. There was some initial skepticism from our team about the lean process, because we had gone through so many ‘flavors of the month’ programs in the past. To convince the team, we decided to tackle our worst-case scenario, our maintenance shop.

Using 5S methodology, we dramatically changed the maintenance shop operation, and peoples’ attitudes, by redesigning an area that once was stacked to the ceiling with boxes, tools and supplies into a more efficient and pleasant place for them to work.

Every department took this as a challenge to find what they could do to improve their own areas of operation.

We’ve learned many things using lean activities. For example, we had always thought it was smarter to ‘batch’ product production and stock for eventual shipment, but then everything was tied up in finished goods and we lost flexibility. As a direct result of our lean practices, we eliminated batch processing and suddenly we were meeting customers’ demands faster than ever before.

Our service business runs 24/7 and the process improvements we’ve made allow us to be more nimble, easily serving our OEM and maintenance customers when they have an urgent need for parts or help.

I really believe lean is an ongoing learning approach that will continually improve our business, and the Manufacturers Alliance benchmarking peer groups are an important part of that process. We not only learn from our peers, but use them as sounding boards—they’re all in manufacturing, so they understand what it’s all about.”

QIC manufactures powdered ingredients, used in everything from beverages to snacks to side dishes, from consumer goods bought in grocery stores to finished meals served in food establishments.  The company began life making dry creamers and shortening almost twenty-five (25) years ago.  In 2007, founder Bob Thompson retired and sold the company to the employees through a 100% employee-owned ESOP.  

QIC is now far from those humble beginnings. Today, it operates out of two “24/7” facilities in Burnsville, MN and Marshfield, WI. In 2012, QIC grew to over 100 employees. Both exciting and rewarding, last year marked the beginning of QIC’s Lean journey and a major expansion at their Burnsville facility.

To establish a comprehensive Lean culture, QIC incorporated a weekly Gemba “where the real work is performed” tour of the plant. QIC uses five critical benchmarks: 1) Safety, 2) Quality, 3) Delivery 4) Cost and 5) Lean. QIC has also applied Lean methods to reducing energy use, packaging costs and its waste stream. 

Well established in the food chain, QIC sees great potential in the nutraceutical and dietary supplement markets (Think protein powders and consumer health supplements). While QIC has its own line of proprietary products, an important segment of the business comes from manufacturing powders to customers’ specifications, and importantly, offering to add value to those formulations. Another critical part of QIC’s success is Service Account Management, where a dedicated service account manager continuously develops the client/vendor relationship. The result is a healthy pro-active partnership.

Like every successful manufacturer, QIC is neither complacent nor smug, but looks to the Manufacturers Alliance to be a partner in its growth and evolution.  Through benchmarking tours at several local manufacturers and opening their own doors to Human Resources, Quality and Operations Management, and Lean Enterprise colleagues, QIC sees the value in Peer-to-Peer sharing. As an employee pointed out, “being able to see first-hand that your peers have solved the problem that is plaguing you is inspiring.  It translates into ‘we can too.’

Our employees return from Manufacturers Alliance workshops motivated to apply new ideas to existing opportunities. They have become problem-solvers in their own right. This knowledge transfer has helped drive our focus on continuous improvement. Through the Manufacturers Alliance, we learned about other companies that have benefitted from the Minnesota Jobs Skill Partnership Grant.  We applied and were awarded the grant in 2012. This grant, along with a Manufacturers Alliance membership, will allow QIC to develop employee owners, and grow manufacturing, in the Midwest.”

Uponor is a relative newcomer to the Manufacturers Alliance Manufacturer of the Year awards. In fact, last year was the first year they were nominated and came in as runner-up. This year they were awarded the 2013 Manufacturer of the Year in the large-company category.

 "It's a great recognition, and I am extremely proud to work with individuals who collectively work each and every day to not only make our customers happy, but to do it in a better way," says Rusty Callier, Director Operations. "I am excited for Uponor and for our employees; this award validates what we have accomplished and will be used as a springboard to sustained success." 

Here are just a few of the successes Uponor experienced in 2012.

• Achieved the best year ever in terms of reducing severity and frequency of accidents
• Overall Equipment Efficiency (OEE) improved 7.8%
• Non-value-added (NVA) decreased by 19%
• Scrap rate decreased by 9%
• Variable Production Cost (VPC) decreased 6.3%
• Lean processes applied to the office spaces. For example: New Catalog lean process reduced production costs by 21%; production time reduced from 207 days to 30 days
• Co-hosted Manufacturers Alliance Tour of Excellence

 "Our 2012 body of work has not only allowed us to make great strides in our business, but also in our belief that we are a learning organization that must invest in learning and benchmarking to stay competitive," says Callier. "Through participating in Manufacturers Alliance training, holding training events and plant tours, hosting peer meetings and participating in numerous site visits set up through peer groups, we continue to learn from other Manufacturers Alliance members."

 Sharing Best Practices 

The following highlights a few areas where Uponor employees demonstrated a commitment to sharing best practices with their peers in 2012.

• Educated and presented to several organizations and events about UNA's successful tier management system: AME Kanban Event, St. Jude, Sitecore Symposium, Manufacturers Alliance Monthly Education programs and meetings
• Actively led and participated in several peer-mentoring/training programs including:
• • Manufacturers Alliance Lean Practitioner Program
  • A3 methodology
  • Set-up reduction for production and distribution teams
  • 5S auditor training and trained 48 5S auditors
  • Manufacturing Execution System (shop floor reporting and incident management)
  • Kaizen training
  • Value stream map training for Distribution, Finance, Human Resources and Marketing
  • Lean, 5S, A3 and value stream mapping for Canadian Distribution
  • Published numerous internal lean case studies with before and after pictures as well as a cover photo in Uponor's global employee magazine
  • Conducted UNA plant tours showcasing our lean initiatives to several of our peers, including: Manufacturers Alliance Tour of Excellence, Xcel Energy, AME Member Tour, and St. Jude
  • Active participants in several manufacturing professional organizations

 "We've come a long way in a relatively short time," Callier adds. "In fact, we just began implementing Lean operations in 2009, and now it's a mindset for every person on the manufacturing and distribution floors."

He adds that the company is beginning to experience Lean success in the front offices as well. "After an A3 initiative, the Marketing team saw a 21% increase in production savings; and reduce the production time from 207 days to 30. It's very exciting and rewarding to take what we've learned and share with others externally and internally."

If you would like your company to be in the running for the 2014 Manufacturer of the Year Award, please see the guidelines and criteria available here. 

The mission of the Manufacturers Alliance is to provide peer-to-peer training, education, and resources which inspire manufacturing companies to continuously grow, improve, and stay competitive.

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