hierarchy.

Crystal Ball

Crystal Ball

Today’s economic situation is new to all of us, and the size and complexity of the modern problem may seem to diminish what we have learned and practiced for years. Let’s apply what we know, perform the basics, and at the same time pay attention to current events, trends and indicators. Read your own crystal ball, establish what you believe will occur, and act accordingly.

Spend intelligently, you had thought of that already. Don’t be shy about spending, but get your money’s worth. Spend for the factors that will contribute to the company’s survival. Spend as an investment, in people, assets, product quality, customer service, productivity.

Remember both parts of the formula for productivity, which is output divided by input. To increase productivity, cut input or increase output, or both.

A very wise boss taught me to inspect the source document, and to open every door. There will still be many factors that you can’t verify, but recent history confirms that it is not prudent to accept

everything on faith.

Strategy

Question the big picture and your business’ position in it; your business model; your industry as a whole and your place in it. Read your own crystal ball, establish the things that you believe will occur, and act accordingly.

Consider newly recognized conditions, such as energy cost and the changing worldwide focus toward energy independence and conservation; a warming planet and what investments can do well while doing good to help solve the problems. Many authors remind us to avoid becoming a buggy whip manufacturer at the time of Henry Ford. It may be hard to keep up with all of the paradigm shifts, but you’d better try, and be especially observant of the changes in your own business sector.

Review motivational factors again, for people and companies. Abraham Maslow, in his Hierarchy of Needs theory, explained the five needs as: physiological; safety and security; belongingness and love needs; esteem and reputation needs; the need for self-actualization. A couple years ago most U. S. workers, and companies, would have satisfied the first two levels so their needs were somewhere in the third, fourth and fifth levels. Today it may well be a different story. If a worker or company perceives that basic survival is at stake, that is level one and two. Motivate the people, and manage the business, accordingly.

Within your business, prioritize the problems and the effort to reach solutions. Management must rank priorities, because the person with the wrench or mouse in his hand can work on only one job at a time and if you haven’t named one then he will.

Choose your place of battle. What product lines or services will you live or die on? Address those first, and allocate resources elsewhere only when the higher priorities are satisfied.

Do some serious rethinking about what you do and how you do it. You may learn that your business rivals have an entirely different mind set. For an eye-opener, click on “Toyota Kyushu - The Manufacturing Ballet” written by Kevin Meyer of Superfactory, at http://www.superfactory.com/document-archive/newsletter-articles/171-toyota-kyushu-lean-manufacturing.html.

People

Find a way to retain your qualified people for all the right reasons, for them and for your business. Unless your enterprise completely fails to make it out of these tough times, you must have qualified people at all levels to maintain your product, and to resume successful operation when the turnaround comes.

Know how many employees are required to generate your product, and determine the manning level as sales requirements vary. Keep just enough people at work to generate the output you want, take the others aside, train and cross-train them. Or use their talents to increase asset value; sell or market, paint, repair, maintain, rebuild, volunteer.

Train people in topics that will later pay off. A principle of Toyota’s success is to invest in employees; even if they have no production work Toyota will train in techniques that will later produce results, in productivity in general or the Toyota Production System for instance.

Reward proficiency in the results that add to the company’s bottom line. Practice accountability at all levels, tailor rewards to above average results in the factors that generate more profit.

Understand that micromanagement is not a dirty word. If a subordinate complains about micromanagement, lead them to understand that someone has to manage well, and if not them, then it will be you. The gurus who preach that the only way to success is to hire well and then delegate have had more money in their payroll than I have.

Products and processes

Keep product quality up. Let me rephrase that; keep necessary quality up. Companies can get so wrapped up in the self-evident truth that quality is essential, that they continually tighten specs and reject criteria far past the level that the product and the industry really require. I’m sorry to break this heretical news to you, but if your customers don’t demand and pay for a particular quality level, and your competitors don’t provide it, you may be tossing perfectly good product away. Just because extremely high standards are necessary in pharmaceuticals and space ships doesn’t mean they are necessary for sunglasses and kitchen cabinets. And remember the old adage that quality is built in, not inspected in. The capability of your process drives the quality level, not the other way around.

Keep inventories down; sell finished goods, convert work in process to finished goods and sell them. Cut cycle time for customer service as well as your balance sheet and cash flow. Have you considered moving from Just in Case to Just in Time? That step tends to be easier when inventory levels are lower.

Take the basic and cost effective steps in production and in support: know and manage constraints; simplify product and paperwork and design and flow and layout; fairly set the expected output then communicate and measure, even reward, results.

Get the arithmetic in order. Concentrate on the system reports that you trust and that you must have. Is your mechanism to allocate non-direct costs accurate, so that decisions are correct? Do reports offer a basis for action, or just another unread document?

Good luck, and let me know how you do.

Jack Greene Jackson Productivity Research Inc.

Author:.

Jack Greene is president of Jackson Productivity Research Inc. His consulting practice and articles address practical actions to control and reduce costs through time study; plant and facility layout and design; balance workloads; optimize capacity and utilization; improve productivity; manage constraints; merge and consolidate facilities; cost-justify facility relocation.

Mr. Greene's articles demonstrate how principles of industrial engineering and productivity achieve results wit...

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