July, 2018

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Article Index

Meet Peer Group Facilitator Jason Eccles
Article by: Jason Eccles

Jason Eccles is the Facilitator of the Operations Management Peer Group and has been a member for three years.

Leader Standard Work: The Essential Tool for Driving CI Culture
Article by: Susan LaCasse

Are you getting the ongoing, incremental change you expected from your commitment to a continuous improvement strategy?

Price Cutting Effect on Volume
Article by: Jim Drennen

From the Sales & Marketing side of business, how many times have you heard something along these lines, “Boss-if you just let me cut the price by 5%, I am sure I can make it up in volume!”

Bridging The Sales/Operations Gap: Four Steps to Gain Sales & Customer Buy-In For Implementing Manufacturing Process Improvements
Article by: Julie Christiansen

When manufacturing asks sales to discuss production changes with the customer, the answer usually resembles something like "they will never let us change that" or "we have already asked, and they said no."

MN Economic Outlook
Article by: Dr. Ernest Goss

The June Business Conditions Index for Minnesota decreased to a still solid 58.8 from May’s 64.2.

Meet Peer Group Facilitator Jason Eccles

Jason Eccles is the Facilitator of the Operations Management Peer Group and has been a member for three years.

Jason is also Operations Manager at Branches LLC in Osceola, Wisconsin and has been with the company for 14 years. Branches LLC builds and sells canoe, kayak and stand up board paddles under the brand names Aqua~Bound and Bending Branches. They sell to large national chains such as REI, regional independents such as Scheels All Sports as well as specialty stores, such as Joe’s Sporting Goods and Midwest Mountaineering.

How, when, and why did you get introduced to this Peer Group? What was your main reason for joining?
In 2015, the facilitator of my previous Peer Group retired. That left me with no Peer Group. Several members of my previous Peer Group recommended me to the Manufacturer’s Alliance. As I have gained much knowledge through the Peer Group experience, I knew that finding another option was necessary. After attending as a guest, I joined as a participating member.

When you last hosted a Peer Group meeting, what value did you (and your co-workers) receive from hosting it? Do you have a topic in mind for the next time you host a Peer Group?
I recently hosted in May 2018. Our discussion was on the topic of leadership development. It was very informative and enlightening to learn of other’s challenges and personal experience in regards to developing as leaders. At Branches’ next hosting, I plan to turn it into a working session in which a current issue is selected and the group brainstorms solutions.

Can you tell us about a meeting that exceeded your expectations of the benchmarking tour, or a time when you were able to apply what you learned from a host company or guest speaker?
In March of this year, we had a guest speaker, Erika Garms. Erika is local to the Twin Cities area and is the CEO of WorkingSmarts. The presentation that day was on the topic of ChangeSmarts and why change initiatives fail. I was able to take information from that presentation back to the Branches leadership team which influenced our EOS implementation and our Individual Development Plan format.

Have you used the members of your Peer Group to help to help solve an issue?
Yes. At a Production Manager’s Peer Group meeting in November 2016, the group brainstormed solutions to a workstation flow and product handling challenge we had been trying to solve for ~2 years. The result of that effort created the foundation for the final solution which created a FIFO transfer of product, reduced our WIP from 240 units to 30, reduced the cell’s footprint from 500 ft2 to 210 ft2 and reduced worker reaching and stretching by over 80%.

How would you describe peer-to-peer sharing best practices to your colleagues?
Best practice sharing is a critical avenue to grow and improve. It offers the opportunity to see real applications of what’s written in books. I have found that sharing best practices has given me the confidence to question and challenge differing perspectives. Visiting other companies also allows you to grow your personal network and find potential symbiotic business partners.

Jason Eccles is the Operations Manager at Branches LLC in Osceola, Wisconsin. He can be reached at ecclesj@bendingbranches.com

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Leader Standard Work: The Essential Tool for Driving CI Culture

Are you getting the ongoing, incremental change you expected from your commitment to a continuous improvement strategy?

If not, you may not have to go very far for your answer as to why: YOU.  Everything that happens or doesn’t happen in your organization is a result of leadership. Leadership is cause, all else is effect. If you want change, you and all other leaders in your organization need to change how you lead and manage.

As obvious as it sounds, a lot of organizations miss this step

Don’t just take my word for it. In a July 2017 article, “Continuous Improvement —Make Good Management Every Leader’s Daily Habit” on McKinsey.com (link provided below), the authors state, “even organizations that have spent many years successfully investing in continuous improvement are telling us that they are not achieving the ongoing, incremental impact they want. The reason? Their leaders and managers haven’t fundamentally changed how they lead and manage.” 

This can be an especially frustrating truth when you’ve invested time and money in supervisor training and other leader development. The McKinsey article authors suggest two primary reasons for the leadership gap; both start with executive leadership.

First, executive leaders tend to operate on the belief that change is for everyone else.  I’ve seen this in my own practice. They require others to use CI methodologies and tools, but do not apply those same methods to themselves, often using the same objections that you’d hear on the shop floor when structure and measurement is introduced: Why do I need this? I’ve been successful doing it my way up until now, right? What is wrong with how I do things now?  Why change what isn’t broken?   Not to mention, the impact on the bottom line is harder to define. How would you know if it was worth the effort and time? It’s obvious how other people might need all this, but leave you out of it.

Second, executives also often assume that other leaders in the organization should be able to figure out on their own what they need to do to differently to support the change strategy. We forget that those leaders also have had some success that got them to where they are in the organization — and they have the same resistant reaction to structure as anyone else. To make things worse, if it is expected that line-leaders change how they work or adhere to leader standard work, it tends to be an add-on to the rest of their job duties. Nothing ever comes off the plate, just more piled on. It is not a recipe for success.

We like to say that what gets measured gets done, but really it’s what gets emphasized on a day-to-day basis. An extreme example is the company that says safety is its first priority, but what gets the most focus in words and deed are efficiency and speed of delivery. You need only check the metrics (on-time delivery and the safety record) to know which behaviors are rewarded. If you don’t actively stop doing some things, you won’t continue to do the new things and make them habit. Old triggers will win and the new habits will fall by the wayside. 

Those kinds of changes require structure. In fact, structure is essential if you want to make change stick. 

There are all sorts of structures in our workplace that we don’t even notice anymore. Originally these were designed to help foster and sustain change in process, culture, rules — anything that guides behavior. Over time though, they’ve become part of our way of life, so we don’t think about them as anything special.  f you are advanced in your lean journey, you may have lean tools that are already integrated. t’s become just what you do. 

It is far easier to think of structures that are new — the ones that you are being forced to use, the ones that feel awkward, oppressive, irritating or even insulting. But what you measure improves, and when you quit measuring, results slide. Still, there is something about structure that can make us feel small and stupid for needing it, causing us to resist and ultimately abandon it — even if results are proven.

Leader Standard Work provides structure for leaders, just like other lean tools like 5S, process mapping, and production boards provide structure for individual contributors. It provides a framework for promoting habits aligned with strategy and values. Organizations who really see transformation of their culture have Leader Standard Work at all levels of leadership, starting with the CEO.

Probably the best analogy I’ve heard for Leader Standard Work is the in-flight checklist. The plane (the business) is off the ground, but there are certain things that need to happen in-flight to ensure a good flight for all aboard, passengers (the employees) and crew (leader team). Not all crew members have the same duties or needs in-flight, so though their standard work is aligned to complete the mission of the flight, their tasks are not necessarily the same, but the effect is that they work together, one team, one mission. 

The “one management team” approach is the key to successful culture change; Leader Standard Work promotes and ensures that (McKinsey article). It helps leaders at all levels become relentlessly consistent about the things that matter most, putting focus on what is truly most important. If done well, Leader Standard Work, like other standard work in your organization, has continuous improvement built in; that is, there is an expectation to review and improve standard work at least every six months.

Like it or not, as a leader everything you do, everything you don’t do, everything you say, and everything you don’t say, matters. If you want to change something, then YOU need to change something.  If you want the organization to always be learning, you, too, must always be learning — even better, sharing and discussing what you learn with your team. You can even use what you learn to improve your leader standard work. 

It may take years for Leader Standard Work to become a normal part of how things are done; it is possible may never feel like a way of life, even if it does help you get the results you want. But it is essential if you truly want to create a continuous improvement culture.

Link to McKinsey article: https://www.mckinsey.com/business-functions/operations/our-insights/continuous-improvement-make-good-management-every-leaders-daily-habit

Susan LaCasse is a Leadership Coach and Business Consultant in the Twin Cities area. She writes a weekly blog on “making change a way of life.” For more information about Susan, visit www.leaderscapes.com.

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Price Cutting Effect on Volume

From the Sales & Marketing side of business, how many times have you heard something along these lines, “Boss-if you just let me cut the price by 5%, I am sure I can make it up in volume!”

Just how true is this statement? How much volume would it take to offset the decrease in gross profit? Let’s answer that question once and for all. First, start with the gross margin percentage (G.M.%). This must be known to calculate the gross profit generated by the sale.

Next, what is the price cut expressed as a percentage? Are we talking 5% or 10%? Obviously, the bigger the price decrease, the more volume will be required to earn the same total gross profit. One other consideration is to look at the incremental sales volume in dollars AND units. There are conditions when the required volume to offset the price decrease exceeds the capacity to even produce that volume!

A simple workbook in Excel can be developed to run the numbers. Here is a table showing the % increase in unit volume to earn the same gross margin dollars. Hold on to your hat!

Example: at a current 30% G.M. with a 5% price cut requires you to sell 20% additional units. If sales today for this unit stood at 2,500, you would have to increase the unit volume to 3,000 units to earn the same gross profit dollars.

You can “make it up with volume” but it would be nice to know just how much more volume is required. Of course, there are times when a price cut is an acceptable strategy, such as moving old inventory or in preparation for a replacement product. In any case, knowing the incremental sales volume to offset the price decease should be part of any business case.

If you would like a copy of the Excel workbook referenced in this article, send an email to Jim Drennen, CPIM, Marketing Director at the Manufacturers Alliance. Jim’s email address is jimd@mfrall.com.

Jim Drennen, CPIM, is the Marketing Director at the Manufacturers Alliance. He can be reached at jimd@mfrall.com.

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Bridging The Sales/Operations Gap: Four Steps to Gain Sales & Customer Buy-In For Implementing Manufacturing Process Improvements

When manufacturing asks sales to discuss production changes with the customer, the answer usually resembles something like "they will never let us change that" or "we have already asked, and they said no."

The trouble here is not in the request itself, but in the communication process. Sales and the customer are too busy innovating and selling, so they don't want to do the extra work required to gain these approvals. These four simple steps will dramatically improve your success rate.

1) Clearly explain how the outcome will be the same or better as the current process. Offer assurance to the customer that the new process is either at parity with or enhances the current solution. Also, do not assume the customer is receiving a clear and thorough summary from your sales team. See points “2” and “3” below.

2) Use visual aids and ensure they are reviewed by the right person - whenever possible, provide samples, drawings, photos and other tangible or visual examples depicting the impact of the change.  Be sure they are delivered to and discussed with the true decision-maker in a timely manner.

3) Illustrate the ROI in terms of both hard and soft costs - it is easier to drive manufacturing changes when there is a tangible cost benefit or avoidance for the customer. Quantifying soft costs like delivery speed or quality improvement can sometimes be even more compelling to the customer.  Even if you don't know the exact ROI, do your best to make an estimate because DATA SPEAKS!

4) Make it seamless and effort-free for the customer - if the closing statement of your pitch to the customer is "you won't have do anything besides sign off on the approval because we will handle the full implementation of this change,” your odds of gaining buy-in go up dramatically. Time is the only thing we cannot generate more of, so give your customer the gift of working on their own business issues as their top priority.

Improvement truly is everyone's job! When the Operations group sends a nice easy pitch right over the plate, your sales team and customers are much more likely to "play ball" with your requested process changes. I experienced this first hand when working with a contract manufacturer to implement a switch from print & apply labels to direct ink jet printing on their shipping cases.  By following the steps above, the company was able to gain buy-in from all customers AND reduce material and labor costs significantly...with an astonishing ROI of 8 weeks! Success stories like this are not urban myths, and can truly exist when sales and operations collaborate.

Julie Christiansen has unique experience in leading both sales & operations functions for companies in the manufacturing industry. She is an Improvement Catalyst and the Founder of Propel Progress, a consultancy that helps clients improve processes, drive execution and generate fast results. Contact Julie@PropelProgress.com or 612-308-5693.

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MN Economic Outlook

The June Business Conditions Index for Minnesota decreased to a still solid 58.8 from May’s 64.2.

Components of the overall June index from the monthly survey of supply managers were new orders at 61.2, production or sales at 61.4, delivery lead time at 55.9, inventories at 55.2, and employment at 60.1. “Over the past 12 months, the Minnesota economy added 4,600 durable goods manufacturing jobs for a growth of 2.3 percent, and 1,300 nondurable manufacturing jobs for a growth of 1.1 percent. Minnesota ranked seventh among the nine states in the region in terms of the rate of overall manufacturing growth over the past 12 months,” 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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