What is the importance of establishing goals? In my career I have witnessed a number of executives diligently and sincerely establish goals and objectives only to have them fall by the wayside like so many New Year’s resolutions. There are many reasons why that can happen such as business downturns or upturns that scramble the whole premise for the initial decisions; price changes in the inputs required for production that negatively impact demand; personnel changes that affect the dynamics of the corporate team; or acquisition by another owner with a different set of business criteria.
All of those examples can be managed and adjusted to if an executable plan is in place in support of the original goals and objectives. Goals and objectives should remain fairly constant regardless of what is happening on the periphery, but the plans to achieve them may undergo some revisions along the way. If you aren’t familiar with developing an executable plan, review the archives for recent articles on the subject.
Goals and markers
Regardless of the distractions and interferences that confront your company in the fluid execution of daily operations, success can only be determined as a measure against established goals. Imagine what a football field would look like without yardage markers, goal lines, and goal posts. There would be nothing to strive for and there would be no way for a team to know when they had achieved the objective and scored a touchdown. The incremental yardage markers give team members an idea of how far they have come and how far they have to go.
The team works together to cross the goal line. Each player has specific responsibilities and processes to follow, and standards to achieve in support of the team. The team doesn’t cross the goal line once and end the game. They continue to cross the goal line as many times as it takes to win the game, which is their ultimate objective. Each new ball handling opportunity may start from a different place on the field thus requiring a different strategy, or plan, to get to the same goal.
Progress at Joe’s shop
The leadership at Joe’s has established some measureable goals for 2014 that last year would have seemed impossible to achieve, but, due to the experience attained during the initial phase of the lean transformation, they are now within reach. In fact, these goals are just the beginning of a journey seeking a target that will continue to move out as the leaders guide the staff toward it.
As everyone gains experience and confidence in applying lean thinking they will appreciate the words of wisdom I share at the beginning of every lean journey – “There isn’t anything that can’t be done; there are only those things that have yet to be done.” The energy and synergy of a team of people working together to achieve a common goal or objective is unshakeable. You may be wondering how Joe’s leaders are going to prioritize the myriad of improvement opportunities that will lead them to achieving the goals. One technique is called going to gemba or performing gemba walks,
Going to gemba
Gemba is a Japanese word that means, “Where the work is done.” Every shop has numerous places where work gets done, from sales, to order entry, to administrative functions, to manufacturing, to shipping, to invoicing, to accounts payable. Every place of activity in the enterprise harbors opportunities for applying lean thinking. At Joe’s the leaders are beginning to get comfortable with going to gemba to discover what they thought they knew, but really didn’t.
Going to gemba requires a discipline that is usually not promoted in traditional task-managed operations. In those shops, leaders will claim that they don’t have time for observing and absorbing the processes in their area of responsibility because they are too busy managing tasks, fighting fires, and responding to every question from, “Where do I get a new roll of toilet paper” to “What job do you want me to do next, boss?” Leaders in non-Lean companies are so immersed in the minutia of daily activity that they truly may not have time to lead their areas to new heights. That model is changing at Joe’s.
For example, during one of his gemba walks, the Finish Value Stream Leader discovered that people doing the sanding and staining processes were using a variety of different methods, none of which met what he perceived the standard should be. Prior to spending time in gemba observing and absorbing what was happening in the processes he was responsible for, he had always been perplexed why the department was notoriously behind and seeming to need more and more people to manage the workload. He had become accustomed to operating based on his perception of how tasks were being done, rather than on how they were actually being done.
When he discovered that proper processes had not been properly communicated to the staff, he documented standardized work for sanding and staining parts, assessed each person’s output against the standardized process, and tailored a training program for each person to bring him or her up to standard. He is continuing to do that for every process in his Value Stream. Now he has a standard procedure established and a means of measuring performance to standard. He also has a baseline to gauge future improvements against to make sure that he is focusing his energy on tasks and processes that will lead to the goal. Every Value Stream Leader is following the same discipline of spending time in gemba observing and absorbing current processes so they can prioritize improvements that will move the Value Stream towards the current goal, and in harmony with each of the other Value Streams.
So far, Joe’s Cabinet Shop has achieved a 15-percent increase in productivity with current resources as measured against the baseline established five months earlier. I am a little disappointed that greater results haven’t been achieved, but I keep reminding myself that they are only five months into their journey. The leadership team is confident that they are on the verge of breakthrough improvements and are actively engaging the entire staff in realizing those improvements. If the leaders continue to make Lean thinking part of the new culture, 2014 could be as much a banner year at Joe’s as 2013 was for Dustin and his staff at Hunter Trim and Cabinets.
Dustin shared some year-end numbers with me and he encouraged me to share them with you as well. Gross sales increased 64 percent over 2012, which is a remarkable accomplishment given the current state of the economy and new home starts. Dustin hired an additional sales person to keep up with the increase in demand, which accounted for a good share of the increase in payroll of 32 percent. As most of you have probably experienced, material costs increased 67 percent, but Dustin passed on only a small percentage of that increase to his customers. He was able to absorb most of the cost increases through the productivity improvements that were achieved that led to a phenomenal increase in net income of 209 percent!
In Dustin’s words, “Overall things were very good! I’m not sure we will ever see that big of a swing again in things from one year to the next. The challenge now is to continue to improve and continue to have positive increases in sales and net income while reducing materials and payroll expense.” I’m confident that Dustin will continue to achieve results that will astound him because he has only begun to apply all of the tools and techniques in the lean toolbox. I will keep you posted on the results of the lean transformations at both Hunter Trim and Cabinet, and Joe’s in the months ahead.
You can achieve the same kind of results by committing to lean thinking in 2014. Don’t pass up the opportunity to take your company to a level that you can only dream about today. Contact me for more information on applying lean thinking at your company. Dustin welcomes your call as well. You will find him on the Internet at http://www.huntertrimandcabinets.com
Have something to say? Share your thoughts with us in the comments below.