Uncovering shop floor waste and inefficiency can be the key to substantially lower costs, reduce waste, and boost profits to bolster against market pressures.
Supply chain issues, a still-tight labor market, strong consumer demand, the Fed’s aggressive monetary policy possibly cooling demand–a lot is going on in our country’s economy when you take the 30,000-foot view.
But down in the weeds of the shop floor, in the day-to-day world of making things happen—where manufacturers live—simple truths remain. Demand is still generally strong. Keeping up with that demand creates challenges in the supply chain and the labor market. Procuring the materials needed to satisfy customer orders means diversifying your supply chain, finding new sources, or risk overburdening your existing suppliers.
At the same time, as the older workforce increasingly chooses retirement, the younger workers coming onto the shop floor need significant investment in training and added incentives to choose manufacturing as a career altogether. So, costs are drastically increasing in the areas of raw materials and labor. And we haven’t even touched on transportation and logistics.
What can you do to bolster your operation in these challenging times and make the most with what you have? Let’s start on the shop floor, where value is created.
1. Find Every Way to Lower Costs and Reduce Waste
Belt-tightening across your value chain should already be integral to your operational approach. Uncovering waste and rooting out inefficiency may seem like a luxury of time and resources on top of the often-daily firefighting necessary to satisfy your customers. Still, it’s one of the surest ways to increase profit and hedge against rising costs.
Waste is often categorized into the 7 Deadly Waste Areas associated with the Lean approach and is a great way to begin looking at gaining efficiency and reducing cost and waste.
- Overproduction – Overproduction happens when workers produce something before it is needed. This misstep is one of the worst forms of waste because it can lead to excessive inventory and spoilage and mask other underlying issues.
- Waiting – When employees are left waiting for the next step in production, no value is being added. Examining each step from the beginning to the end to evaluate how much time is being spent adding value and how much time is spent waiting can be very eye-opening.
- Transport – Transport is waste caused by the unnecessary movement of uncompleted or finished products.
- Motion – This step refers to all movement that doesn’t add value to the product and is usually caused by poor work standards.
- Over-processing – happens when more time is spent on processing than is necessary to produce what the customer needs. This type of waste can be the hardest to eliminate but can lead to significant bottom-line savings.
- Inventory – This type of waste occurs when the supply exceeds customer demands. Accurate forecasting is therefore critical to inventory control.
- Defects – Defects are mistakes that will either need to be fixed or the process will have to be started over completely. In manufacturing, this means a part must either be scrapped or completely remade.
Underneath all this potential waste lies probably the most significant one—time. These wasteful areas can create substantial time management issues, resulting in higher labor costs and persistent overtime. They can also make those added hours the least productive as the excessive effort for little or no gain can be a morale killer and lead to high employee turnover.
2. Invest in Training Your People
Training and developing your people should be your ongoing mantra. It certainly is ours. Training not only in activities necessary for production but behaviors that embody your organization’s core values and lead to increased accountability and authority.
Training is much more than mastering the steps required to operate a piece of equipment or perform a specific job function. It must be about empowering your workforce to willingly participate in the success of your operation in its entirety. Training and development boost morale, increase employee commitment and engagement and retain workers. A comprehensive training and development track is also an attractive benefit in a highly competitive job market.
3. Get Maintenance in Gear
Nothing can impact your capacity like unforeseen maintenance issues leading to unplanned downtime. Unplanned downtime occurs unexpectedly or because of a failure (for example, an equipment failure or waiting for appropriate materials to complete a task).
Common categories of unplanned downtime in manufacturing include excessive tool changeover, excessive job changeover, lack of an operator, and unplanned machine maintenance.
According to a recent Forbes article, unplanned downtime costs industrial manufacturers as much as $50 billion annually. In addition, when unplanned downtime occurs, no value is produced, but the cost of overhead operations continues to grow, directly impacting a company’s bottom line.
It’s past time to shore up your approach to maintenance. As we’ve explored previously, maintenance can be the key to “found money” in your operation. Take the time to get the schedule, staffing, resources, and commitment right.
4. Coach Up Your Frontline Leaders
There’s a lot of stress on frontline leadership right now in manufacturing. Keeping up with yield, capacity, and throughput while managing personnel and equipment issues puts a heavy burden on your leaders daily. Take the time to get out on the shop floor and live in their world for a bit. Work with them side by side and coach them through the challenges. But above all, listen to them.
Your frontline leaders are the direct pipeline to the improvements necessary to reduce waste and lower costs. They are in the trenches daily dealing with the inefficiencies that are typically not of their making. Often, they are the best source for correcting those issues but have simply not been heard. Take the time now to listen. The last thing you want is your frontline leadership team to be frustrated, stressed out, and ready to leave because no one will listen to their ideas to improve things.
There is No Magic—This is Hard Work
Although economic growth has been solid for the past several quarters, persistent supply chain and energy challenges stemming from global issues like the Russia-Ukraine conflict and the Chinese COVID response lockdowns, inflationary pressures are high in the United States. As a result, flagging demand is possible even if the economy doesn’t enter a full-blown recession.
We’ve touched on a few ways your organization can pursue a more efficient operation and lower costs. But there is no magic pill you can swallow to cure all the operational ills you may face.
Keeping your organization profitable will take knuckling down and doing the hard work from the top floor to the shop floor. For example, when was the last time you walked the shop floor as an executive leader? I hope the answer is today, yesterday, or just a few days ago.
Although, thanks to technology, access to data and daily key metrics reports is a mouse click away, that’s not where you’ll find the answers to increasing efficiency and lowering cost. You may see the planned, actual, and variance, but not the action plan to improve. That’s going to require involving and empowering your entire workforce.
The POWERS Difference
A healthy and thriving company culture is the key to an empowered workforce willing to dig in and help reduce waste and inefficiency on the shop floor and pursue Shop Floor Excellence. At POWERS, our proven Culture Performance Management™ (CPM) methodology connects the dots between optimized company culture and desired operational performance outcomes. It can help break down silos, and open lines of effective communication, collaboration, and innovation. Most importantly, it can help lower costs.
Our team has helped executive leadership across many industries implement CPM to operationalize their culture for rapid and sustained performance improvement, increased competitive advantage, greater value, and a stronger bottom line.
To put our experienced team and proven track record to work for you, schedule an initial discovery and analysis by calling +1 678-971-4711, or emailing us at firstname.lastname@example.org.