Building Businesses, Strengthening Communities

This article appeared in the Mar/Apr 2024 issue of MiMfg Magazine. Read the full issue and find past issues online.

Seeing the bigger picture can be essential to the growth of manufacturing businesses. Recognizing trends, empowering teams, identifying indirect costs and creating insightful strategies may all be part of that picture.

But one common denominator is the foundation for it all: People.

Operational leaders from around the state share their insights on factoring the human element into the workplace to engage more skilled workers. Through these intriguing operations processes, manufacturers may find themselves well-suited to enhance their positive internal cultures and resolve the ever-growing challenge for manufacturers.

Putting the People Back into the Process

“We need a generally and broadly accepted human learning theory specifically for manufacturing in order to attract more people and improve work cultures and engagement,” says Ryan Pohl, Founder of Rockford-based Praeco Skills, which builds customized training solutions for middle- to high-skilled manufacturing jobs.

Pohl says a helpful solution would be to combine Lean principles with the Dreyfus Model of Skill Acquisition, a learning theory developed by a philosopher and an engineer in 1980 in response to the beginning of the AI movement.

Although Lean concepts have been outstanding in terms of efficiency and profits, they are designed for products and processes, not people, he says.

“I run into these conflicts where human-learning principles collide with misapplied Lean principles, and a lot of times the misunderstood rules of Lean win because there can be measurements tied to them,” he says. “When Lean becomes over-dominant in this way and used in a way that tries to manage human development, it can stifle learning. The risk is removing the joy and the pride of learning, making things and being innovative.”

Lean concepts often require identifying rules and processes, and writing them down for future reference. The Dreyfus model recognizes that learning the rules is only the beginning of what it takes to become an expert.

The Dreyfus Model outlines five stages of learning: novice, advanced beginner, competent, proficient and expert. Pohl says that, by the third stage, people will start to push boundaries to figure out what they can and can’t do. There will be mistakes but that’s where natural learning, human-based troubleshooting, intuition and innovation are developed.

“It’s a normal part of the process of becoming proficient, and becoming an expert is where the joy of the job is found,” Pohl adds.

Get operational insights from Ryan Pohl.

Process-Based Leadership and Open Book Management

“Many issues come and go in the manufacturing industry, but there’s one constant: the need to obtain and maintain employee engagement in order to solidify the foundation for effective strategies,” says Todd Hall, President of Saginaw-based Glastender, which manufactures bar and restaurant appliance and equipment furnishings.

To do so, it’s essential to get everyone — from the owners all the way through to the newest employees — on the same page and working toward the same goals. In that regard, Glastender has found two concepts very effective: process-based leadership (PBL) and open-book management (OBM).

OBM involves teaching the employees how the company makes money and tying their success directly to company success through a bonus program. PBL is about looking past day-to-day operations and thinking strategically for the future.

PBL is a disciplined process that includes “non- negotiable” governing rules set by the particular company. At Glastender, it involves scorecards and action registers, and employees meet weekly in small groups to review successes and identify goals based on these records.

Hall says that, by establishing clear goals, team members know what they have to do to help the business grow. When everyone is on the same page, the road to success is easier to see, and this type of motivation, enthusiasm and teamwork is a key to strengthening the industry overall.

“The power of PBL is that discipline and focus are used to align the entire company around strategic targets,” according to Hall. “Everyone in the company has to be on a team of some sort so that they are contributing.”

Get operational insights from Todd Hall.

Sustainable Innovation

“When we start treating innovation as an ever-evolving process, that’s where you get something that’s sustainable. We need innovation to keep going on and on and on,” says Amy Seymour, Director of Global Operations at Fenton-based Interactive Training Solutions (ITS), which specializes in developing technical documentation and web applications to support them.

Creative solutions are more likely to come to light when everyone offers input collaboratively, potentially helping businesses save money, save time, enhance internal cultures and further establish themselves as thought leaders in the industry.

“When organizations rely on one person or one group to bring the innovation, it’s not sustainable,” Seymour says. “Once you let go and let it happen, innovation is constant. It’s in every meeting. It’s in every discussion. It’s in every process.”

She adds that it’s important to embrace change and to “choose the challenge” instead of the easy way when possible.

“Choosing the challenge guarantees that you will fail to some capacity and at some point. You will then be forced to harness that resilience, and at the end of the tunnel is innovation,” she says.

Get operational insights from Amy Seymour.

Factoring in All the Costs

Business owners who feel like they are making a profit may find themselves at a loss — literally and metaphorically — when they begin calculating the numbers.

Not having a clear understanding of your total costs may be the issue.

“You can think you are making a profit on every contract and still lose money if you don’t know what your total costs are,” says Jerry Benjamin, CFO Consultant with Saginaw-based business advisory firm Rehmann.

In addition to labor and materials, indirect costs need to be included in pricing decisions. These costs consist primarily of support functions such as materials management, engineering and indirect labor, as well as occupany and equipment-related expenses. Manufacturers who track all of these costs are in a better position to assess their profitability, he says, noting that ERP systems or other technologies can be helpful tools for this purpose.

For manufacturers especially, “cost pressure” continues to be a challenge. Vendors may look to increase pricing to meet their own profitability targets while customers strive to lower costs for products and services — leaving manufacturers caught in the middle. Thus, manufacturers who have a clear understanding of their own requirements may find themselves on stronger ground.

“It’s really about understanding the total cost to produce that enables you to make informed decisions about operations and pricing,” Benjamin says.

Manufacturers who have a clearer picture of their expenses may have a better handle on their quotes for services and products. As a result, they may be more poised to create effective strategies for future growth.

Get operational insights from Jerry Banjamin.

Have a manufacturing story to tell? E-mail communications@mimfg.org.