Before starting to restructure productions, we need to determine what we want to achieve. We will not reach our goals if we try only to identify current problems. Focusing on issues rather than aims would imply that we already know what the right set up looks like.
A consultant company informed me that they would like to implement Toyota Production System (TPS) principles into our production in order to bring our production up to the desired level of performance. I am sure that TPS principles will improve our production, but we have to consider carefully how and in which order to apply these principles and to analyze which adjustments need to be made to accommodate the specifics of our production.
The restructuring of production must always begin with the implementation of a proper system that measures key performance indicators (KPI). We need to calculate the cycle times of processes and to compile data on productivity, delivery, and inventory. During restructuring, it is also important that we know where our company’s stands and what effects our restructuring actions will have.
In production especially, there is a clear target matrix. Everything is focused on quality, delivery service, and costs. It is advisable to start with only one of these areas and address the other two areas later. If a product’s quality is so poor that customers are unsatisfied with it, we have to start with quality. Otherwise, it is best to start with reducing costs. For example, costs can be reduced by increasing productivity, decreasing waste, or improving efficiency. An initial focus on reducing costs to the company will encourage the company’s team to focus on reducing cost in the other areas of production: quality and delivery. In other words, the team will not attempt to improve quality without first considering the impact that such improvements will have on cost.
In a restructuring process, speed is a decisive factor for success. This rule applies both to the business and to its employees. I often hear that a fast pace makes employees tired. In my opinion, the important thing is that the employees are aware that changes are underway. If the team knows it has to change the way it operates, it will work on it. Conversely, if employees sense a “business as usual” atmosphere, then they will be reluctant to implement changes. Change must not progress too slowly.
Furthermore, it is important to give sufficient decision-making power to production managers or to whomever is responsible for overseeing production. If the production team works out an efficiency improvement schedule but cannot implement it immediately because it has to wait for the approval of these procedures, the team will lose momentum and become discouraged. Speed is also decisive in this regard.
Thus, it is not necessary for upper management to participate in all decisions. KPIs should be reviewed continuously and develop in the right direction at an acceptable rate. Micromanagement only serves to slow down the restructuring process.
We now have to pose a rather sensitive question: What kind of people does a company need for restructuring? The old saying, “your best people are the people you have,” holds true for both workers and for production specialists. We need them. To initiate a proper restructuring process, it may be helpful to reshuffle some decision makers or to remove some barriers. Employees who show themselves to be resistant to change or unmotivated have to be eliminated from the company’s leadership. Replacing one or two people on the production management team sends a clear and powerful message that a company is serious about enacting changes.
Let us summarize the key success factors for restructuring production:
- Implement a KPI measurement system and measure KPIs in short cycles.
- Adopt a restructuring strategy that is closely tied to the KPIs.
- Start by focusing on one area and progress, step by step, to the other areas.
- Implement the changes quickly enough. Speed motivates people and keeps them focused.
- Eliminate any barriers to change among the company’s leadership.
- Replace at least one manager to give a visible signal that change is imminent and necessary. Consultants can help with the implementation of restructuring but not with demonstrating the seriousness of the restructuring process.