By Andy Peters
Good managers seek visual cues from their employees every day on how things are going. Many are obvious, including looks of disinterest, lack of focus or other largely emotional issues. Those signals are important to notice and act upon, but there are undoubtedly others that are disrupting your operations even more that you don’t see.
What’s more, they’re right in front of you.
Here’s a recent example. I was helping a manufacturing company find ways to improve productivity and profitability. I watched one employee working the line for minimum wage perform the same process on the same equipment seven — yes SEVEN — times. Her job was to “seat” relatively small metal pieces, about one-inch across, at the bottom of a plastic housing on top of a metal fixture. To conduct this task, she used a large, 18-inch screwdriver, far too big for job at hand. The employee pulled the housing from the fixture and looked inside. Her shoulders slumped. She reached for the screw driver. She poked and prodded the inside of the housing until she turned it upside down and shook the metal pieces out.
She then started the process again. I continued to watch…and watch…and watch…and watch before the part was set aside. I believe the employee completed the job, but had a slight concern that she just gave up. The reality was, no one instructed her on a better way to do the work.
When I approached the owner about the issue, he questioned if that was a big enough concern. After all, the employee was only being paid minimum wage. My answer was clear. It’s a VERY big deal. A $12 per hour employee with payroll and benefits costs a company $33,280 per year. Attempting to perform an operation SEVEN TIMES equates to 14 percent labor productivity. If 86 percent of their time is wasted, the total excess cost of goods incurred by the company, in one calendar year, in this one operation, with no overtime, is $28,620. What’s more, when California fully implements the $15 minimum wage law the operation will generate $35,776 of waste.
There are other operational consequences from not seeing these type of cues. In my clients’ case, their less than predictable manufacturing process impacts their ability to fulfill customer demand. To counter, the company must purchase additional raw materials and plans larger than necessary production runs. To accommodate the excess raw, in-process and finished goods inventory, the client then procures additional storage racks, forklifts, material handling personnel and warehouse space. These additional resources are acquired by allocating or borrowing money that could be otherwise employed. So the unnecessary expenses and drain on profits aren’t accountable solely to labor, but also cost of goods sold, G&A and a slew of other lines within a profit and loss statement.
In manufacturing, many companies accommodate problems by creating inefficient work arounds. When supervisors and managers move on to the other urgent matters of the day, euphemistically called fire-fighting, the quick fixes become the entrenched manufacturing “norm.” When asked about the methods they use employees often respond, “It’s the way we have always done it.” Insiders stop seeing the “screw driver” as a symptom of a problem to be solved; but rather, as a necessary and effective means of pushing production. It usually takes an outsider who hasn’t walked by the situation a thousand times to “see” the visual cue. This pervasive reality, that applies in more than just the manufacturing context, costs companies, big and small, millions of dollars annually.
Where are your screw drivers hiding? Usually in plain sight.
