Written by Nathanial Marshall, Practitioner at LI Europe

The world is full of information – more data has been created in the last 5 years than in the entire previous history of human existence. While this may seem like an excess of information, data is essential for the world economy and for business.

For example, GDP (Gross Domestic Product) is the typical yardstick to measure a country’s economic performance. But did you know that this wasn’t used as standard until after the Wall Street Crash of 1929? It was then decided that a country’s output and value would be a good measurement of economic performance and could help prevent future economic catastrophe.

In business, we must collect data so that we can measure performance. However, it is not enough to simply collect the data, we need to ensure it is clearly presented so that our teams understand when they are performing well.

Visual management is an excellent way of communicating information, and some of the best illustrations of this are in sport.

Take cricket for example – Jofra Archer is running in and bowling to the Aussie Batsmen at 90mph, and the ball hits the player on the leg pad.  Archer appeals to the umpire for leg before wicket. The umpire raises a single finger to give the batsman, the crowd and the viewers at home a clear visual signal that the player is out.

And while hand signals are used in cricket, other sports such as football use red and yellow cards as visual cues.

So how can we apply visual management to business? What simple cues can be used to let teams know whether they are meeting KPIs?

I was recently working with a steel manufacturer that wanted to improve their output following a move to a new factory. They knew at the end of the day how many products they had produced, but how useful is that information to them once the day is finished? How would they know where and when the performance was? Was it consistent on an hourly basis, or was it a day with peaks and troughs of productivity?

One of the first things we did was introduce an hourly performance tracker board (short interval control).  We asked the line crew to complete it every hour to visually demonstrate how many products that line had produced in that hour. They were given red and green pens to clearly show if this was at the pre-defined target or not.

Looking at the performance of the factory the following week, output improved by 20%. Nothing else had been changed apart from the introduction of visual boards.

I asked the operator how the line had improved. “I am showing everyone in the factory how we are performing; I want to make sure we perform well and have green on that board every hour,” she told me.

That simple visual tool had automatically improved the level of engagement as well as ownership for the improvement.

As well as the initial uplift in performance, it allowed us to understand the reasons for poor-performing hours and put plans in place to correct and improve. All with the input and engagement of the team who were providing the information in the first place. 

The initial level of engagement continued and unlocked some potential amongst the shop floor employees who wanted to learn focused improvement techniques.  We supported this with a course of FMCG Lean Sigma Yellow Belts. The factory continues to go from strength to strength on its improvement journey, and we are now supporting the completion of FMCG Green Belts.

What this example shows is that improvement can come through small steps. You don’t have to implement huge major changes across the entire organisation in one swoop. The true definition of engagement is people giving discretionary effort to improve performance.

If you’d like to learn more about how LI can help you improve performance, get in touch with one of our expert consultants. You might be surprised at how quickly you can get results with just a few simple changes.

Check out the different ways LI Europe can work with you to improve factory performance

Written by Jeremy Praud, Head of UK & Europe at LI Europe.

Very rarely do we embark on a long car journey without doing some planning. The first step is usually planning which route will be most efficient. We take into consideration the time of day, the amount of traffic, the terrain and other factors, then select the most appropriate route for our needs and the capabilities of our vehicle.

We decide what time we want to arrive and what time we need to set off. We calculate how much fuel we’ll need, and check our vehicle – tyres, engine, oil, water – to ensure it is fit for purpose. Then, throughout our journey, we check we’re on track by consulting our dashboard.

Our vehicle dashboards provide us with lots of essential information. We can see how fast we are going, how far we have travelled, whether we have enough fuel to complete our journey, whether our vehicle is safe to drive.

Information from our odometer and speedometer allows us to calculate our expected time of arrival. Warning lights give us the opportunity to adapt our plans to ensure we can still complete our journey. If we are running low on fuel, we schedule a fuel stop.

Every instrument on our dashboard provides us with key information to ensure we complete our journey safely and successfully. We are so used to having this information to hand that we take it for granted and barely give a thought to how important it is.

If we think about it, our dashboard can teach us valuable lessons about how we track things in our business to ensure we meet our goals safely.

Planning an improvement strategy is like planning a long car journey. You need to plan how you will arrive at your desired destination and what you will measure along the way to ensure efficiency.

In the same way that a car tracks safety, speed, distance, fuel and RPM, manufacturers need to track safety, quality, delivery, cost and engagement.

Without tracking every area, we can’t tell if success in one area is compromising another. If we only measured the distance our car had travelled, we wouldn’t know if we were driving at a safe speed. In business, if we only tracked sales and not cost, we wouldn’t know if we were making a profit.

It sounds straightforward, and the theory behind it is. The problem is that businesses often become so focused on improvement in one area that they forget to pay attention to another. It’s like watching your speedometer so closely that you forget to check your fuel gauge.

Goal setting is all well and good, but there must be appropriate KPIs to measure along the way. Otherwise, it’s like just getting in your car, setting off and hoping that you’ll reach your destination at some point. You could quite easily end up driving around in circles or running out of fuel in the middle of nowhere.

Rather than simply picking a destination out of thin air and hoping for the best, plan your improvement strategy. Then decide what your business dashboard will look like to keep you on track. Like a car dashboard, employees should become so used to having that information to refer to that they can interpret the data and adapt accordingly without a second thought.

If everyone understands the destination and how to get there, then the journey will be more enjoyable. 

Download our TIP Card to help you plan your Journey.

Written by Jeremy Praud, Head of UK & Europe at LI Europe.

It would be great if your factory could achieve perfection, but do you actually know what that would look like? 

If your capacity bottleneck ran as fast as it could, not missing a beat and making no waste, what would it cost to make your product? What is your perfection cost against direct labour, materials, energy, maintenance, and salaries? What would be achievable if all your resources were available, operational and working to maximum capacity?

If you understand what perfection looks like, you can work out the gap between your current performance and what is realistically achievable.

This doesn’t mean that perfection becomes your new target. Perfection isn’t possible in any business. You cannot expect employees and equipment to run at maximum capacity and for demand to exactly match supply every hour of every day. It just isn’t feasible.

However, if you know what perfection looks like, you can take the right steps towards it. If you continually close the gap between current performance and perfection, you’ll end up somewhere around excellence.

Valuing perfection cost isn’t easy. Capacity bottlenecks are different for different SKU’s, even on the same line. Working out how to allocate overheads fairly at SKU level is a complex task, and if there are no safety margins to hide behind, it becomes scary. 

However, if you can calculate perfection costs as closely as possible, this will give you benchmarks to work to.

Benchmarks against perfection are useful for understanding the achievable opportunity. Internal factors such as management bandwidth, maturity towards improvement, manufacturing complexity, and foundation systems should be deciding factors for how much of the gap it is possible to close in the next twelve months. 

You can now set an improvement plan based on closing the gap according to site capability. This gives you realistic targets to work to rather than just pulling figures out of the air. Clear, realistic targets encourage the right behaviours and the right results.

Unrealistic targets that don’t consider all the relevant data will result in the wrong behaviours and the wrong results. This is often evident where sales targets have been dramatically increased. Large discounts are applied because the focus is on hitting those figures no matter what. Then someone suddenly realises that although the sales targets have been met, the profit margin has significantly decreased and you’re in no better position than you were before.

Set your targets against operational performance by understanding exactly what would be achievable if perfection was possible and deciding what is realistically attainable.

Strive for perfection; achieve excellence.

Download our TIP Card to help you gauge your current performance.

Written by Nathanial Marshall, Practitioner at LI Europe


Last week, when doing my weekly shop, I found my favourite packet of chocolate biscuits on special offer. Naturally, I bought two packets to enjoy over the coming days. Once I arrived home and unpacked all of my shopping, all I wanted to do was sit down in front of the telly with a cup of coffee and a packet of my favourite biscuits.  When I opened the packet, I found not 10 pieces as expected, but 11 instead. I was incredibly excited that I was getting an extra snack for free. However, being a manufacturing professional, my mind quickly turned to the extra cost this would be creating for the manufacturers.

I might just be the one lucky consumer to get his extra biscuit, but it is likely there were hundreds if not thousands of others with an extra portion.  The manufacturers are essentially giving away an extra 10% of product. For every 10 packets produced, there would be an equivalent full packet given away to consumers for free.  This would add a significant cost to the business. Imagine if someone took away 10% of your expected monthly income, how would you feel?

To manufacturers, this is a type of waste called “Giveaway”. Often manufacturers focus on the waste that is “thrown in the bin”, or “Throwaway”. It is visible on the factory floor, in bins around the areas and its impact is seen by all, as well as being felt on the bottom line. Giveaway can be a hidden waste. Average weight checks will no doubt be in place to ensure the product meets the legal requirements for minimum weight pack declaration. Unfortunately, this is often done without a process to control or even reduce the level of giveaway.

Even for those who do measure it, there is usually an opportunity to improve. One of the other reasons it is a “hidden” waste, is because an “expected” giveaway may be built into their standards. For example, 5% is built into the budget. If the actual giveaway then comes in at 5%, it would show no loss. This can hide the magnitude of the opportunity.  Improvements to giveaway, unlike efficiency improvements, will always deliver a benefit to the bottom line instantly.

Different methodologies can be employed to reduce giveaway, depending on the product, process and technology.  Over the years I have spent time in various factories improving their level of giveaway. From 20% to below 10% on Sushi pieces, from 7% to 3% on biscuits and 2% to 0.5% on sausages, all of which has saved businesses hundreds of thousands of pounds.

If you fancy sharing your experiences and challenges of improving giveaway, as well as any other improvement initiative, why not come along to our Ambassadors Academy.

The Ambassadors Academy is a monthly event for ambitious manufacturing professionals concerned with driving productivity, in all its form.  If this article interests you and you’d like to find out more about the Academy follow this link to the Ambassadors webpage

Written by Jason Gledhill, Engagement Leader at LI Europe.

As a Manufacturing Improvement Professional, I am lucky to have the opportunity to visit many factories, producing huge numbers of different products. Many of these factories have been good, but on occasion, some of these factories have been exceptional. The layout of the production facilities, level of GMP and the standard of visual management within these factories have been outstanding.

It’s from these factories that I have become a thief.  Perhaps thief may be a strong word to use but why not share great ideas around when you have the chance.   I have not been too proud to learn new ideas and have subsequently implemented them in many manufacturing facilities. Even mediocre sites often do some things better than anyone else.

I am fortunate to be able to visit a range of factories on a regular basis, whereas many of you will be on the same site day in and day out and have little, or no opportunity to visit other sites. Imagine if you had the chance to visit numerous production facilities and see different ideas and ways of working?

Members of The Ambassadors Academy (TAA), on occasion, willingly host onsite visits to their fellow Academy members. This enables members to learn and take ideas, in return of course they also get fantastic independent feedback on what they themselves can still improve.

Every month a group of Improvement Specialists from various factories meet to discuss their latest projects and the implementation issues they are facing. Ongoing training in tools and techniques, that TAA members have requested, is delivered by LI Europe.

Click here for more information about The Ambassadors Academy.

Written by Adrian Oliver, Practitioner at LI Europe

 

Regarding productivity levels, the UK currently lags behind other European nations by a significant amount. According to Trading Economics website, the UK has a GDP per Capita of US$ 42,514 and sits 15th in Europe behind countries such as Germany (US$ 46,747), Netherlands (US$ 53,597), Denmark (US$ 61,582) and Norway (US$ 91,218)1.

Considering the challenges we already face, the last thing the UK manufacturing industry needs is more uncertainty in the coming years. This view is common throughout the food and drinks industry, and I hope it is also a view held by politicians trying to negotiate the Brexit deal with the EU.

Watching the news recently, I see that we are discussing extending the transition period from two to three years. No, wait; hang on a minute, Downing Street is now rowing back from that position to say it might be a “few additional months”.  Does anybody truly know how long the process will take?

Since the referendum in 2016, the fear of the unknown has had a major impact on the amount of investment that businesses have been willing to make. Figures from the Office for National Statistics show that investment levels are significantly lower than Bank of England expectations for the two-year period (a 2% increase versus an expected 13% rise). Indeed, investment has fallen over the last 12 months.

If our investment decisions are being delayed, how do we expect to compete with the rest of Europe and wider afield?

Fortunately, there is another way. A lot of the business owners we speak to have well-run, successful businesses. However, the thing that makes the top performers stand out is the balanced approach they have between productivity being driven through investment in equipment and investment in people.

Ask yourself this question; when you sit down at your next business planning meeting to agree on how to deliver a 10% increase in output without increasing wages, does your list contain mostly capital expenditure? If it does, are you missing an opportunity?

The Ambassadors Academy meets monthly for ambitious manufacturing professionals concerned with driving productivity, in all its form.  If this article interested you and you’d like to find out more about the Academy follow this link to the Ambassadors webpage.

Notes:
1. Data is based on 2017 figures and can be found at www.tradingeconomics.com