Drummond Makes the Case for Continuous Improvement

Industry News,

Originally Published by: ProSales Magazine — August 1, 2022
SBCA appreciates your input; please email us if you have any comments or corrections to this article.

As a change agent for lean manufacturing best practices, it is extremely satisfying when I see a company embrace best practices despite their challenges. Too often, it is stated, "we (I) cannot implement or do the suggested improvement practice because _____" from so many claiming to be continuous improvement groups. The excuses are always the same. Too busy. Not approved by upper management. Will happen sometime later, but later never comes. However, when a company takes the time and makes an effort, no matter the current or unexpected challenges, what a difference it makes!

Employee staffing and skills challenge. The same can be stated no matter what region of the country, “not enough people are willing to work, and those that do are no longer as skilled or have a good work ethic.” Every company that does not have good management and employee relations suffers the same issues.

Case Study 1 – Good Employee Management Practices. An LBM and component manufacturer (CM) of wood truss and wall panels had the very common problems of high employee turnover, staffing shortages, and low net profits. As part of my services, we spent a lot of time discussing best practices for management and employee best practices, because it is the foundation of lean manufacturing. The ideals of best practices for employees have to be more than an empty slogan by upper management. When employee best practices are actually embraced, the results are astounding. Although I must keep this company's name in confidence, I can tell you their results after adopting the employee best practices I recommended. Their nearly 100% turnover rate within manufacturing and new hires each year dropped by about 30% each year over the last three years. Their turnover rate is very manageable now, and they have virtually eliminated any open positions within the company. Now they are known in their region as a place where people want to work, and they do not have problems filling positions within their company. Production efficiencies and quality of work have improved substantially. They were able to meet the challenges of doubling their sales with virtually no equipment or capital investments. They went from barely profitable to record-breaking profits in line with the rest of the industry. They stated that this was all because they got their management and employee best practices in order. If they had not, the exploding sales would have crushed them. Continuous improvement is not just a slogan within their company.

Every CM should have had the best net profits they have ever had over the past two years. Virtually every CM is expanding its manufacturing with more automation. However, now that demand is becoming more balanced with supply, inflated margins earnings will be suppressed by competition and falling commodity pricing. Yet two things that require the least cost and minimal effort to improve existing sales and manufacturing process virtually overnight are, incredibly, refused because of the "this is how we have always done it" mentality.

Case Study 2 – Pricing and Unit Measurement. Many CMs have improved their net profits by a minimum of three points by establishing the margin per man-minute instead of the traditional markup method. One told me because they embraced the gross margin (GM) dollar per man-minute (MM) pricing, they improved their net profits by eight points. (Point gain, not a percentage gain.) Every one of these companies has also stated that their truss manufacturing pricing, scheduling, and understanding of their true workstation’s efficiencies have improved radically when using properly developed man-minutes based on industrial engineering practices. (This practice would be applicable to any type of manufacturing, not just truss manufacturing.) When given the proven time standards MM and after updating their programs, they could compare their old and new methods using side-by-side comparisons with minimal effort. In other words, they did not have to take my word for it but prove it for themselves. For most, all it took was adding a few columns in their reports to compare the different data. Once the data was collected accurately and analyzed, the potential benefits were overwhelming, leading them to embrace better GM/MM and MM unit practices. Every other type of labor unit was proven to be too inconsistent and unreliable, such as piece count, dollars, and especially board foot.

These companies have proven that continuous improvement practices are not simple slogans. Maybe, just maybe, the same excuses for not implementing better practices in your operation are no longer acceptable. Now is a very good time.