Metal Fabrication Company

Rapid cultural change takes a company in two years

One of the American dreams is to start your own business and be your own boss. But if your expertise is in tool and die and manufacturing rather than in business management, your business can stall regardless of the hours you pour into it. And then the dream can turn into a directionless nightmare.

That was the situation for the owners and founders of a manufacturing company which had reached a plateau. The demise of a competitor gave this company the opportunity to acquire new business, rapidly doubling in size. That’s when the serious problems started: bloated inventories, late deliveries, and the unthinkable. The company was selling more to make less; heading down the road to loss and financial ruin. Eventually, the owners recognized that doing things the same old way would not get them to the next level.

At this point, they heard of Tony Mangione of Delta Stratagem. Initially, he was asked to straighten out order processing, which was a convoluted nightmare. By the time work would be scheduled to the floor, the jobs would already be late; a common problem in traditionally run companies.

Within a week, the office clerks were able to bring a 10-day process down to four hours, and present the findings to the management team. It was an emotional event that involved people’s ingenuity rather than equipment or technical skills. Tony’s messages about running lean companies, not just lean operations, resonated with the owners. They brought Tony in and put him in charge of operations to break the stagnation.

Sparking a management revolution

Tony assessed the situation and saw that the entire business culture needed to be revamped before Lean could gain traction on the shop floor. The company lacked the processes and professional management skills required to make the transition from homegrown business to industry leader. And there was no alignment between business strategy and operational excellence.

Historically, people had been promoted from the factory floor into management positions as the need arose, with scant management background or training. They found ways of doing the things that needed to get done on an ad hoc basis. These managers were very capable and great fire fighters, but had no awareness or appreciation of the processes available outside their immediate day-to-day activities.

Reinforcing existing foundations for continued growth

Tony helped the owners see that trying to grow the business by selling more would only lead to bankruptcy. A business grows when its capabilities (people skills and operational processes) grow, and superior profits come from the selling of the capabilities you have acquired. Otherwise, it’s like adding floors to a building without reinforcing the existing walls, leading to a total collapse.

With the assent of the owners, Tony placed a moratorium on taking on new customers until the company was ready to handle the existing increased workload, and focused on improving responsiveness to the current customer base. He assembled a professional management team with expertise in engineering, purchasing, IT and facilities. Once this new management structure was in place, they laid the foundations for a world-class company.

Transformation leads to transformation

Customers were categorized and prioritized into Strategic, Developing and General. Multifunctional teams were created to support the strategic customers. Customer names were introduced to the paperwork, bringing awareness to the employees of “WHO” they were working for rather than just the “WHAT” they were working on.

Specific people were unleashed to enrich their responsibilities. One machine operator went from being a “button pusher” to managing his own scheduling board, helping with the maintenance of his equipment, and taking on added responsibility for set-ups, quality issues, material ordering, and the general upkeep of his area. He then owned his job.

The shipping supervisor stopped dealing with the line of customer and supplier trucks lined up in the only dock area, and created a visual board with scheduled deliveries and pick ups. This step reduced loading time by over 50 percent and eliminated traffic jams in the plant’s parking lot.

One process took 12 days to complete through five different departments with continuous part shortage work stoppages. A team took on the task of linking and streamlining the process with the result that a finished product could be loaded up in the waiting truck five hours after being started.

Quality practices and updated technologies were implemented and allowed for an easy ISO certification following three failures in prior years. Procurement, storage, and assembly processes were updated, with pull systems introduced to customers.

The management team drove the changes on the shop floor and material flow and guided strategic investments in new equipment. For instance, Tony’s team replaced inefficient batch processing with sequential processing and kitting, which removed obstacles to scaling up capacity, and also allowed job shop processes to operate in a lean mode.

Turning problems into profits through education

Meanwhile, Tony evangelized the “why” and “how” of change to every level of the organization for top-down buy-in and bottom-up implementation. For example, machine operators got a say in the design of work cells. This could happen because Tony built trust with the owners. He guided them through the financials to demonstrate how steps that first looked like risks were actually much less risky than maintaining the status quo.

The effects were striking. The company shrank its lead times. Inventory flew through the plant. Major customers moved the operation went from their Worst Supplier lists to Best Supplier within six months. Operating losses converted to healthy profits. A second plant was added; the new culture was already imbedded and it became a model of Lean Practices.

With a new culture and practices in place, the company survived its rapid growth. After Tony completed his turnaround assignment, the company continued to grow by an additional 50% in about two years time with much improved profitability, proving that sustainable change can be achieved in a robust and solid way when the people want it.