Is your Continuous Improvement programme based upon price or value?
Since my article last month, I have spent time at both Interpack in Dusseldorf and the Control Exhibition in Stuttgart. Though brief visits, bearing in mind the size of each, I spent long enough to appreciate that the focus was on quality, automation, and efficiency, more so than ever before. The interest in Big Data and large-scale integration was also much in evidence.
The Control Exhibition was more focussed upon automotive and engineering generally, with little of direct interest to food and drink manufacturers. However, it has often been said that what happens in engineering today, happens a few years later within food and drink manufacturing.
The drive for automation within the food and drink industry, though clearly in evidence in some companies, still has a long way to go to effectively meld consistently high quality with optimal efficiency in many FMCG companies. Most companies we talk to see the value in eliminating paper recording and replacing it with real-time computer generated, instantly actionable, information, but fail in their big picture vision or in obtaining the necessary investment to make it happen.
Consequently, instead of a corporate drive to reduce wastage and improve efficiency initiatives, are often departmentalised and dependent upon who has the budget. One good example of this, which came up a few years ago, was within a large cake manufacturer, part of an even larger group, where the technical manager gained approval to install automated label verification across all his production lines, to meet the demands of one particular supermarket group. At the same time, the C.I. Manager had identified an average loss of more than £50,000 worth of fresh cream per week without the resources to investigate where this huge loss was occurring.
Yet with little more, if any, extra money these two projects could easily have been combined through engaging a more integrated supplier who could have easily delivered on both and more.
Most FMCG companies now have at least one C.I. Manager but where their financial hands are tied as this guy’s were, then they are held to account for improvements without the power or financial muscle to influence outcomes.
During a recent Lean Six Sigma training course, my business improvement team learned that a good C.I Manager should generate savings in excess of 5 times his/her annual salary. How is this supposed to happen we might well ask if the C.I. Manager is given an inadequate or no budget?
Everything costs money. If we want to improve, we need better, often more frequent measurement, analysis, and distribution of information. In short, we need better information management systems, better inter-departmental communications, better and more frequent training and, perhaps, consultancy. This all takes some investment in money and time if improvements are to be made and, even more importantly, sustained.
Initial improvements, especially from a low starting point, may be easy for any C.I Manager and his team, even with an inadequate, or no budget, but as improvements gather apace further sustained improvements become harder and harder to achieve, especially if the C.I Manager’s success is judged against the Lean/Six Sigma 5 times multiplier, year on year.
Good quality information is absolutely crucial to the making of and sustainability of worthwhile improvements.
Potential customers often ask for a cheap OEE system to improve efficiency. “Not interested in quality measurement at this stage,” they say. Yet, as OEE is a calculation based upon Availability X Performance X Quality, how can quality measurement not be included? When I hear such requests, they sound like a return to the ‘good old days’ where the production department played the numbers game (make as much as we can, as fast as we can). Then the quality department slapped a quarantine notice on the consignment, due to poor quality, and the interdepartmental blame culture was ‘alive and well’.
Another weakness of the many cheaper piecemeal options, is that they lack the granularity so necessary for root cause analysis and problem-solving. Consider, for example, a chicken packer who has calculated a processed unit cost of say £1.00 per bird. Following a large production run, the team find that the cost has risen to, say £1.05 per bird. A quick check shows that volume output was roughly as expected and within the assigned timescales, so why has the extra cost occurred? This is when, in the absence of real time, root cause data, speculation begins. Everyone has a theory, but nobody really knows the root cause.
We often find that companies coming off paper-based systems will choose the cheapest computer system to address an immediate need, lacking the vision to see what might be required later. This may not be due to a lack of finance, but a lack of understanding and appreciation of the difference between price and value and, we believe, one of the greatest reasons why more than 70% of computer systems fail to generate their expected benefits.
In summary, there is no quick, easy or cheap fix for Continuous Improvement. Continuous Improvement is not a destination, but an on-going and continuous journey towards the hoped-for performance optimisation. Though this utopia may prove elusive, we can still be pleased with increased excellence along the journey. In our experience, this can only be achieved through the selection of, not only the right system that has the capability to expand as each company’s requirements change, but also a supplier/partner with the right knowledge to support the cultural changes which are manifestly essential aspects of any sustained improvement programme. Get in touch here.
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