How Do You Set Improvement Goals for Manufacturing Operations?

QUESTION: Do you have any suggestions about how to establish improvement goals? For example, I want to see a 10% or 20% or 30% reduction in cycle times this year.

ANSWER: My view is that it is especially important in the first few years of the Lean Revolution that the leadership set bold objectives.

My experience is that a modest goal to improve anything by 5% to 10% will cause most people to simply focus enough and work enough hours to make the numbers happen. They won’t have to change how they think, how they work or how they behave. They also won’t work with much urgency. These are four of the most critical things that must happen to get the CI initiative going in earnest to both radically improve performance and start the culture change that we seek.

For example, if reducing changeover times is a major priority, I always expected a 75% reduction right out of the box. Why? Because there is no way a team can reduce cycle times by that much simply by better focus and working more hours.

If you provide the necessary resources and support, your people will respond and rise to your higher expectations. "

They have to think differently about how to approach the challenge by understanding the process in detail. They have to work differently using more precise data that allows a Pareto-ization of the priorities. They have to behave differently as they’ll need a cross-functional team including machine operators to help and to accomplish it with urgency.

The team will have to also develop another important trait, persistence!

Which would you rather have—a 25% improvement goal and accomplishes 28% or a 75% improvement goal that “only” yields 67% improvement but that jump starts the new way we’re going to manage the business?

Bold objectives force outside-the-box thinking, a data-driven approach and a different way of accomplishing important work in a more collaborative way. In fact, in the changeover time reduction example, it’s likely to take multiple kaizen events before finally accomplishing the objective.

Further, bold objectives create far more urgency than a boss that simply tries to create urgency with words of exhortation. In short, bold objectives cause our people to take the “leap of faith” that the new way of working is superior to the traditional paradigm.

Here’s another example that comes to mind. In both companies where I served as the senior manufacturing leader, I set the first bold objective to reduce scrap by 50% because that was the biggest process improvement/cost reduction opportunity in both businesses at the time. It took three years to accomplish this in both companies, but that was OK.

We learned so much more about our processes and uncovered root cause issues that were hidden from us historically because we didn’t have the data necessary to put a spotlight on many of the underlying root causes of process failures. We were trying to execute at too high a level and ended up putting salve on the symptoms but didn’t get to a detailed enough level to really solve the problem.

I’m sure we could have gotten a 5% to 10% a year scrap reduction by thinking, working and behaving the traditional way. But that would have delayed the start of the real revolution by three years.

On the other hand, for functional objectives that do not require the same scarce resources necessary to solve the big problems of the business, I’m fine with the more traditional objective setting of the 5% or 10% improvements. But where there are game-changing opportunities that materially affect the income statement, the balance sheet, the customer service report and the culture change, I encourage all manufacturing leaders to BE BOLD with your objective setting.

If you provide the necessary resources and support, your people will respond and rise to your higher expectations. Don’t become the constraint to improvements in your organization. Be sure that your own expectations are high enough to lead the revolution.

Larry Fast is founder and president ofPathways to Manufacturing Excellenceand a veteran of 35 years in the wire and cable industry. He is the author of "The 12 Principles of Manufacturing Excellence: A Leader's Guide to Achieving and Sustaining Excellence." A second edition is planned for release in 2015. As Belden’s VP of manufacturing Fast led a transformation of Belden plants in the late '80s and early '90s that included cellularizing about 80% of the company’s equipment around common products and routing, and the use of what is now know as lean tools. Fast is retired from General Cable Corp., which he joined in 1997. As General Cable's senior vice president of operations, Fast launched a manufacturing excellence strategy in 1999. Since the launch of the strategy, there have been 34 General Cable IndustryWeek “Best Plants Finalist awards, including 12 IW Best Plants winners. Fast holds a bachelor's degree in management and administration from Indiana University and is a graduate from Earlham College’s Institute for Executive Growth. He also completed the program for management development at the Harvard University School of Business.