Strategies at the Heart of Operational Issues
This article appeared in the April 2020 issue of MiMfg Magazine. Read the full issue and find past issues online.
Consider your company’s most difficult challenge of the last year. It’s likely an operational issue was either at the heart of the problem or an operational improvement was at the center of the solution.
Operational issues can be related to leadership, talent development, finance, technology, human resources, cyber security, regulations or a variety of other distinct areas. Throughout 2020, MMA events, e-learning tools and articles (published at mimfg.org and in MiMfg Magazine) will be dedicated to connecting manufacturers with the people, processes and technologies necessary to combat a growing trend of operational constraints.
“We hear it every day talking with our members — they can’t hire the right people, locate the funding to buy new equipment, or they keep hearing about the threat of cyber attacks but don’t know where to go for help. And their worries aren’t unique to them; these are common fears facing employers of every size and type,” said John J. Walsh, MMA president & CEO. “It’s important that manufacturers learn that they aren’t alone and their peers are in this as well. If we can illustrate what others have faced — the strategies they’ve developed and the resources they’ve found to push past these operational constraints — I think the whole industry can benefit from that.”
MMA reached out to some of the state’s top thought leaders, and your fellow MMA members, to find the operational threats they see on the horizon — threats that, if left ignored, could result in slower growth, greater vulnerabilities, higher costs and a less competitive future for you.
Being Aware & Proactive About Cashflow
You can start a business with the best of intentions but, without adequate financial resources, it’s easy for your dreams to get derailed. As manufacturers continue to deal with the COVID-19 outbreak, many have discovered a lack of working capital has become their primary concern.
As a partner and managing director for EDSI Consulting, Chuck Mouranie and his team specialize in helping companies navigate through troubling times, growth and lending decisions and regularly see operations idle when a lack of revenue tightens an employer’s ability to invest, hire or market to their customers.
“It’s the unexpected times where cashflow really becomes noticeable,” said Mouranie. “It’s easy to say during good times ‘well, that’s a future problem’ only to discover that, when downturns or crises occur, those shortages can have a significant impact on the depth of the economic trough for both companies and individuals.”
As we are just weeks into efforts to combat COVID-19 in the U.S., some employers are already experiencing a full-scale and justifiable panic about what it could mean for their business. This is particularly true for manufacturers and their employees, who can ill-afford to have their facilities closed for weeks, days or even single shifts.
What Needs to Happen
Corporate cash reserves, bank loan stress, 401K collapse, and consumer confidence will all need to stabilize and recover to put manufactures back to work at early 2019 levels.
“Manufacturers need to have regular conversations where they are asking ‘How long will our cash reserves sustain operations without revenue coming in?’ And be asking that especially when you think things are going well — cash is king during good periods and critical during troubling times,” Mouranie said. “We recommend creating a 13-week cash flow detailing every expense you will need to pay while anticipating receipt of customer payments and balancing cash accounts. Using this tool will permit leadership to prioritize payments while projecting potential issues as cash becomes tight.”
Efficient cash management and communication are necessary to navigate through this troubling time. Open communication with your banking partner, customers, vendors and, most importantly, employees is essential to maintain as much balance as possible. As your operational restrictions are lifted, continue to communicate at a similar level — it’s even more important once you are coming out of the dark times.
Appreciating Your Workforce
Even when the world descends into uncertainty and chaos, one of the most critical demands on manufacturing is access to people. Whether they are trained and engaged, or not, it’s the people who often have the greatest impact on a company’s bottom line.
“We recognize the need for manufacturers to invest in integrated technologies and advanced plant floors but we also know that without the right people in place to work with that technology, your business cannot fully capitalize on potential innovation,” explained Denise Ball, regional client executive for Tooling U-SME, a training resource offering both learning services and turnkey training to help clients understand, implement and adopt strong learning and development programs. “It’s so important to have a workforce that is adaptive, flexible and responsive in times of crisis.”
What Needs to Happen
Manufacturers must plan and implement stronger onboarding and structured on-the-job training that will increase their talents’ speed to competency.
As the economy deals with new and unforeseen challenges, now is a key time for manufacturers to demonstrate the value of their workforce and motivate those workers who will become even greater assets.
“Most small and mid-sized manufacturing owners wear many hats, so strategizing a long-range plan is not always at the top of their to do list. But by making the effort to be an employer of choice, you can set yourself up for that long-term success,” said Ball. “By investing in their most valuable asset —people — manufacturers can improve worker retention, boost productivity, strengthen product quality and ensure their global competitiveness.”
Working Remotely & Securely
The COVID-19 crisis has resulted in much of anufacturing’s non-essential workforce being sent home. This surge of remote workers during a time of unprecedented technology has created a cyber security challenge unlike anything we have ever seen.
Employees remoting in from home networks or home computers, the transmission of corporate data and the extended security footprint are a very real and present danger and the team of cyber threat experts at Lansing’s ASK are discovering that plenty of employers are unprepared for the risks associated with a dispersed work force.
“I believe that every executive needs to ask if they have a cyber security policy in place that delineates areas such as approved methods of communication, encryption of data, backup and recovery, protection of corporate assets in the home environment and ongoing patching and maintenance,” said Mike Maddox, ASK president.
What Needs to Happen
Manufacturers should contact a qualified cyber security and IT consultant to review procedures and policies. A measure of proactive work could very well save your business from secondary catastrophe brought on by a new, unsecured network footprint.
MMA’s Cyber Threat Protection Program, powered by ASK, offers manufacturers discounted and customizable support of all critical areas of IT — infrastructure, disaster recovery and high availability, cyber security and business technology consulting. (See mimfg.org to learn more.)
Aligning Your Tech, Talent & Processes
Technology is a tool that can allow companies to improve processes and save time and resources. But, too often, employers think that their brand-new tech will automatically align with existing processes or that their staff will magically adapt to change. Unfortunately, it is not always that simple.
The team at Innovative Solution Partners (ISP) sees patterns among their clients that get what alignment really requires.
“We have found that the most successful companies look at all three parts of the business to ensure that their technology-focused investments reap benefits, they achieve business goals and their staff can focus on what produces the most value for their organization,” explained Mustansir Saifuddin, partner business intelligence solution architect for ISP. “Manufacturers that approach this challenge head-on are better equipped to handle crises that come out of nowhere.”
What Needs to Happen
Take your time. First, share the company’s business goals with all levels of the organization so that there is a clear understanding and necessary buy-in. Second, vet potential technology partners not just for their technical expertise but how well they understand your goals and their ability to work effectively with your team.
Does your organization have the capability to utilize the systems and processes it has in place to figure out how the business is performing? The ability to answer such questions about sales, manufacturing and financial data is a great indicator as to how a manufacturer is thinking about aligning people, processes and technology.
“When technology is aligned with people and processes, a manufacturer can get quick, accurate information when they need it and ultimately resulting in better decision making,” offered Saifuddin.
Initiating & Scaling Your Transformation
Whether manufacturers must drastically change to survive is no longer in question — it is a certainty.
Even during the best of times, most manufactures are paddling furiously just to keep their head above water. Now, as the world economy grapples with the effects of COVID-19, even more manufacturers are worried about staying afloat. However, when that crisis starts to subside, and it will, the companies who have positioned themselves technologically will have the fastest path to recovery.
Jerry Foster is the chief technology officer for Plex Systems and suggests that “the realities of Industry 4.0 present a new set of concerns to address. Where do we start? Which technologies are relevant? Are my competitors farther down their smart manufacturing path? Do I have the backing of upper management to do what needs to be done? These are the questions most manufacturers are faced with, especially those that are small and medium-sized.”
But the most important question is now: How do I swiftly and purposefully plan for the future without jeopardizing my current operations?
What Needs to Happen
Provide yourself with an appropriate budget and the right personnel. Positioning yourself for continued success requires addressing current needs.
“Whether or not your management team provides funding and resources for smart manufacturing initiatives goes a long way toward determining how seriously they want to compete in the next decade,” suggested Foster. “I am often asked, ‘Can we afford to do that?’ My response is simply, ‘can you afford not to?’”
In spite of all the buzz about Smart Manufacturing, the Fourth Industrial Revolution and various Industry 4.0 technologies, you are not in the technology business. You have a business to run, and you need to orient your technology decisions around supporting the business. When you understand what value-drivers are important to your business goals, you are in a much better position to choose the specific technologies that help make those goals come to fruition.
Staying Compliant & Lean with Regulations
Proper compliance is crucial, especially in today’s regulatory climate. Manufacturers like certainty in the rules they must follow and it can be challenging when regulatory approaches shift. One step that manufacturers can take to better comply is to complete an environmental, health and safety (EH&S) compliance assessment (CA). Since EH&S requirements are typically driven by process, material and/or threshold, an EH&S CA will provide an understanding of applicable EH&S requirements and areas that may require improvement. Once an EH&S CA has been completed and the requirements understood, compliance becomes more of a scheduling and change management process.
“There are a few key areas that can help create a successful compliance program,” offered James Colmer, vice president of environmental A/E services for BB&E Inc. “The first is leadership commitment. No matter the size, your EH&S compliance program will struggle without it. The key is to have clearly defined and communicated roles, responsibilities and authority. The result is accountability. However, this authority must be balanced with trust.”
What Needs to Happen
Don’t lose your leadership’s trust. An EH&S professional should look to offer value-oriented solutions instead of excuses for why something can’t be done.
Many manufacturers look to lean for help on long-term strategies. This can be effective so long as manufacturers don’t view “lean” as a tool to reduce costs of a certain aspect of the operation.
“You really should jump fully into lean if you are going to do it,” Colmer recommended. “Without a total approach to it, it becomes too tempting to just use bits and pieces of the program for quick return on investment. That may work in the short-term but, over time, you’ll like see programs stall and fall back into old routines.”
Being the Leader Your Team Needs
There’s an alternate reality where COVID-19 may never have happened. Manufacturers face the common operational issues and business goes on. But that isn’t where we are. Instead, we are in a scramble to keep your ship upright — and it’s time to be the leader your team needs.
“Your team needs five things from you right now to navigate back to solid ground: clarity, communication, connection, calm and confidence,” said Marisa Smith of Traction Training Center, a Michigan-based team dedicated to a holistic approach for strengthening the entire business. “Remember that, during a raging storm like this one, everyone is affected differently but everyone is affected. A leader needs to be the lighthouse to help everyone else weather that storm.”
And during the storm is not the time to panic or throw out the playbook. If anything, now is a time to rely on process more than ever.
What Needs to Happen
Continue to systematically review what needs to be handled, ensuring everyone is clear about who is doing what, and by when. Stay focused, adapt, and keep relentlessly working the plan.
Remember to keep playing both defense and offense. In addition to the obvious opportunities to cut costs, restructure debt, etc., take time to look for novel opportunities, especially with growth in mind.
“What opportunities do you have to drive cash?,” Smith asked. “Explore what opportunities you are open to pursue now that you couldn’t have while you were at or over capacity? What wish list projects can you pull off the backlog and tackle, even from home if need be? Be relentless in your brainstorming and selective of your priorities.”
Celebrating Small Victories
Not so much an operational concern but, in times of struggle and uncertainty, it’s important that manufacturers acknowledge the progress they’ve made. Without looking at your victories, your defeats and challenges can seem insurmountable.
“Big, audacious goals are important. Most companies put extensive research and strategy into setting annual goals that will guide their workforce throughout the year and serve as the finish line looming on the horizon,” said John Keuning, director of manufacturing excellence for Express Employment Professionals. “But just as important as the big celebration at the end of a hard-fought battle to achieve a major goal is celebrating the small victories along the way. Even the most dedicated employees can burn out when the going gets tough, so reveling in minor milestones that push a project toward completion helps maintain engagement and gives a motivational boost.”
What Needs to Happen
Show progress, build commitment and allow for opportunities to “fine tune” along the way.
Although there is no shortage of ways to celebrate small victories, the most important factor is to ensure the celebration is meaningful. That doesn’t mean you have to roll out the red carpet and strike up the band for every little accomplishment but you do want your employees to feel the hard work they’ve put in so far is worthwhile.
“From giving public recognition for individual accomplishments to letting employees share what they personally consider small victories, the important thing is to foster a team that focuses on always pushing forward and striving to achieve your goals,” said Keuning. “A positive winning mindset in the face of uncertainty can take you surprisingly far.”
Knowing Where to Go for Help
Operational issues will almost always be at the heart of manufacturing, especially in times where nothing else seems to be going your way. In those times you must remember, you are not alone. Every manufacturer faces these struggles and there are plenty of leading professionals, as well as your industry peers, who are there to help you get up when you fall and chart a strategy to get you where you’ve always known you could go.
For more information on common operational issues facing the industry and for help connecting with solution providers across Michigan, contact MMA at 517-487-8533.