Balancing effectiveness with efficiency

Figure 1: Roger Schulz (right), purchasing manager, Monroe Truck Equipment, Snow and Ice Div., Monroe, Wis., stressed that companies need to focus on effective operating practices instead of just the pursuit of more efficiencies, which could actually hurt an organization. Matt Kalina, director of strategic marketing, LAI International Inc., Scottsdale, Ariz., said creating a culture where employees seek out the elimination of waste can generate real efficiencies and make operations more effective.

Just getting everyone together was an accomplishment unto itself. Such is the case in the metal fabricating world today. The FABRICATOR invited its Editorial Advisory Board to Chicago in mid-November for a roundtable discussion on the subject of “doing more with less.” The conversation took place against the backdrop of the most successful FABTECH® tradeshow ever, which drew 35,457 visitors and 1,300 exhibitors spread over more than 500,000 square feet of space.

So you have a discussion about running lean operations while metal fabricators are celebrating the return of busy times by spending millions on capital equipment? That may sound a little odd, but that’s where metal fabricators are. Companies are busy, but they don’t want to take the unnecessary risk of increasing labor costs without the reassurance of a stable economy. These organizations have learned to operate successfully without extra frills and waste that once defined their businesses, and they are content to continue operating like that until economic forecasts suggest otherwise.

Just how can these metal fabricators continue to make quality products and meet delivery schedules without adding more bodies—either by choice or the inability to find the right talent? The Editorial Advisory Board provided insight on that topic. The following is an edited transcript of their discussion.

The FABRICATOR: What does the phrase “doing more with less” mean to you or your company?

Matt Gehman: My response is probably 180 degrees from where the question is leading. We’re in this efficient, wear-more-hats mentality not because we’re scared of the direction of the country or what’s happening with the economy. We’re having to create these internal efficiencies because we can’t staff open positions or bring people in for those positions.

Matt Kalina: I think there is a competitive market aspect to the question. For us, it’s a matter of applying our lean mentality to do more with less—leaning out the systems and processes. It might be something as simple as getting rid of clutter no matter what the process is.

Jim Poe: A couple of the companies I’ve worked for have taken on this topic in uniquely different ways. For one of them, we really applied automation and took steps to reduce head count, because in a competitive market, it’s material and labor. Whoever can get the material and labor cost lowest and make a profit is the winner. That’s the bottom line. So the real focus was in the factory, material and labor, and then reducing the head count. We took it down about 35 percent over three years and got real competitive.

Another way I did it with a different company was that we asked the question, How can we run this business differently? We started with a business model and then took the whole organization that way, not just manufacturing. It started with looking at the products that were made. Do we really want to continue to make those products, or should we change the product mix? We ended up changing the product mix significantly and then based the organization on the product mix. We really reduced the head count. Sales stayed the same. So we kept the sales at that level with about 50 percent fewer people.

Charles Caristan: We had a similar experience in the company I work for. Everything is rebounding, so we’re looking at growth in 2012 and beyond. How can we accommodate that growth? There is no more room to shrink even further, especially in terms of human resources. Right now we have put an emphasis on recruiting better and retaining people better so that we can grow that way. It’s not much about doing more with less, but doing more and doing better. That’s how we phrase it.

FABRICATOR: Buzz words such as “doing more with less” and “lean manufacturing” can turn some people off. What do you think is the best way to approach a workforce with this type of concept?

Roger Schulz: Part of the problem that American manufacturers face is the word efficiencies. People struggle to establish efficiencies, when in fact they should improve on effectiveness.

If you have cereal in the morning for breakfast and you are interested in being efficient, you make seven bowls of cereal because you’ve got the milk jug in your hand. Then you eat one bowl every day for breakfast. By Saturday, that‘s some pretty damn soggy cereal. But if you want to be effective, you just make the one you’re going to want to eat today.

Figure 2: Matt Gehman (left), senior project manager, Metal Locking Service Inc., Buffalo, N.Y., credits his staff’s smart phones with enabling them to accomplish tasks in a moment’s notice even when they aren’t in front of a computer. This helps everyone make decisions quickly and eliminates headaches often associated with delayed decisions. Jim Poe, project manager, Iowa State University’s Center for Industrial Research and Service, Ames, Iowa, has worked with several metal fabricators over the years and has found in each setting a workforce that has a desire to learn more about their jobs and how they can improve.

Getting people to understand that it’s not being efficient, it’s being effective, is what is important. What’s the effective utilization of a piece of equipment? It doesn’t need to run 24 hours a day; it needs to run when you need it.

Joe Griffin: We’ve had those same conversations. We talk about it quite a bit.

But if you think about it, it kind of makes sense: I’ve got a machine running 24/7. I reduce that by 25 percent. Now I’ve got downtime. Sales needs to deliver more parts for that machine. It’s a constant cycle, but I guess that’s really what drives your business.

Schulz: The real metric is: How quickly do you make a product at a profit with good quality and deliver on time? Everything else is totally irrelevant.

All you have to do is read The Goal [by Dr. Eliyahu M. Goldratt], and it says efficiency is the absolute worst word in American manufacturing. It’s effectiveness. It’s quality, on-time delivery, and at a profit.

Poe: I would add to that Safety + Quality = Improved Productivity. Then that drives your profitability at the bottom line, because the quicker you can turn the steel into dollars coming in, you’re going to make more money. If you have steel lying on the floor, it’s not making money. But if you can bring the steel in on Monday, have it shipped to the customer on Friday, receive the check from the customer the following Friday, you’re making money. So the quicker you can complete that cycle, the more money you actually make.

As far as lean goes, some companies think of lean as a way to cut heads, and that isn’t what it is. If you start down a lean journey and they start seeing people go out the door, the people on the floor stop playing lean with you and stop working with you. It stops immediately.

Lean is not a head-cutting process. It’s a process to improve your processes. For instance, there is 5S. You can go into the workcells and work with people to improve their areas and get them really well-organized. I don’t call it “lean.” I just say, “Let’s clean the place up. Let’s get it organized so you can do your work effectively.”

It’s lean, but I don’t call it that. How can they do their job well? It really gets people onboard. You do one cell and people get excited about their cell, and somebody else sees that being done and says, “Why can’t I do that here?” It just kind of snowballs.

Gehman: We’re a very small shop, so we don’t talk in terms of lean, but the same basic principles apply. One of the more effective things we’ve done is we have relocated a sister company from two miles away to an adjacent building. That allowed us to combine a lot of the vendors under one roof. For example, both companies were going through multiple vendors for gases. Now we’ve created an internal structure of intercompany trading to where we only have one vendor for gases. One side of the company deals with the gas vendor, and when the related company needs gases, we’ll do an intercompany exchange and cost program. We do it with many facets of the business, from IT to voice systems. Everything is centralized.

Figure 3: Joe Griffin, assistant general manager, Aerofab, Indianapolis, said it is important for metal fabricators to let friends, colleagues, and even family know that working with metal is an exciting job because that’s how one starts to network and perhaps bring new recruits into the industry. For the new blood entering the industry, Charles Caristan, international fellow—advanced fabrication, Air Liquide, Houston, pointed to the digitization of the Society of Manufacturing Engineers’ “Tool and Manufacturing Engineers Handbook” as a tool that can help them make solid first-time decisions.

That would be my interpretation of the lean practice for a small company that doesn’t have an official program.

Kalina: We’ve succeeded in getting some real efficiencies from some lean events that resulted in making things more effective. For example, we did a total footprint kaizen event at a special laser proc-essing area within our largest plant. We took the time to lay it all out on the line and get everyone on the floor involved from the starting point, just thinking about it from the beginning and accepting many ideas. And the concrete thing that we achieved from that is we were able to have operators and technicians operate more than one machine, in an effective, safe, and much more efficient manner. In the past, that person was operating one machine, and it was taking up enough time where the operator had to be dedicated to that machine.

That’s one way we’re doing more. But we also took away some things that made the job more complicated than it needed to be. We took a look at the workstation setup, did spaghetti diagrams, followed up on simple things like creating shadowboxes and conducting time studies of the work process. We took the time to get people excited about the whole process in that kaizen event and to understand lean principles. It got them to open their eyes and feel like they could get into it and improve their particular workstation.

FABRICATOR: Does anyone use rewards to support a more effective manufacturing environment?

Schulz: The most effective reward program I’ve ever seen had the company owner announce a new cost-reduction program, but he also said that one-third of the annual savings would go to the suggester, one-third would go to the company, and one-third would go into a pot to buy more equipment for the next idea. That was a very effective cost-reduction program.

Gehman: The biggest thing for us has been giving our employees smart phones. At any given point, half of our staff is out in the field. To have that ability to change flights or check in with their family is a huge benefit. For the company, the ability to send pictures of working conditions or some challenge they’ve met at the job site is huge. It also was unexpected, but it happens every single time. No matter how well you plan a field job, it never ever goes according to plan; that’s just the rule.

We do casting repairs all over the world. We were in India last week, and next week we’ll be in Australia. A delay anywhere trickles down and might affect when the job starts, and it all requires a lot of communication to get back online and keep things going.

We now have more than 80 GB of pictures on our server. Being a small shop, in the odd time that we do get that repeat job, chances are that the person who did the original job is not the person who will do it this time. So we immediately call those pictures up, and they go in the job traveler along with the drawings so they can see how this job was set up in the past.

FABRICATOR: Is cross training important when it comes to improving shop floor productivity?

Kalina: Our people have become more advanced [with cross training]. We have a training program with units that cover basics of quality, statistical process control, and 5S. Then there are units for CAD programming, so that people can move up and become more advanced in their skill level. There is a pathway for the machine operators to become recognized technicians for the different machines through different training modules.

With many operators and techs running multiple machines, their skill levels increase and they come up with great ideas to improve the whole workflow in the workstation.

Caristan: One thing I noticed this past year is a thirst for training. We are fortunate to have teams of specialists. We don’t call them experts; we call them specialists in their trade.

We have seen almost the doubling of demand for training this past year, whether it’s for traditional welding or cutting or even with safety seminars. Companies are paying for those activities.

Griffin: We try to cross-train as much as possible. The thing that really limits us on the opportunities is we’re like eight different companies within a company. We do laser drilling, waterjet cutting, effusion hole drilling, and hot forming. Even welding is specialized. We have an EDM company, and we have an electron-beam welding company that we’re partnered with. We do conventional welding, spot welding, seam welding, and straight-line welding. So you get limited opportunities to train everybody to do multiple functions.

But when you go looking for somebody, you expect them to have the multiple skill sets you just described, and that’s what really kind of limits you. If I go out looking for a welder, I know that that MIG welder can lay a bead. He does that all day long. But I want him to be able to set up, look for abnormalities in that piece, do a little flushing afterwards, and maybe mill this side over here so it can fit up over here. Now I’m looking for a different skill set. I’m not looking for a welder; I’m looking for a guy that’s a mechanic.

There are people out there. We’ve had a lot of luck with A&P [aircraft and power plant] mechanics. These people seem to have the right training and good, well-rounded mechanical aptitude that readies them to take on different manufacturing processes.

Poe: On a much simpler level, many times we’ll lay factories out with many cells and prepare them so there are no setups. We don’t want people to do setups. It’s a lot quicker to move the people than to set up, so we just move the people.

The people I’ve worked with really enjoy learning. We were bringing in a number of lasers and turrets at one organization I was at, and they were lined up to learn how to run those machines.

When you automate those machines, however, you don’t need the skill sets you needed before. For example, at one place we had maybe a couple laser cutting machines and a turret in a large cell, and one person literally could run that because all he was doing was calling up programs, making sure the towers were full, and pulling the parts off. So that was basically a one-person cell, and you’re getting tremendous efficiency out of that. We didn’t make extra parts. We ran them when we needed them. But the nice part was that the person could say, “This is my organization. I’m running it. I keep it clean. These are my machines.” You’ve got a whole sense of ownership.

Schulz: Depending on the nature of the product, if you can explain to the employees the significance of the job, then they understand why they need to do it. It’s not just because it calls for it on the print; it’s because that’s the only way the thing will work. Or, if you have those things on it, it’s going to scarf up this O-ring. Or if you have burrs on it, it’s going to hang up on a hydraulic cylinder.

FABRICATOR: How do you find those right people to act as trainers in your organization?

Griffin: [To find trainers], we’ve had luck with doing the value stream maps. We have a lean manager. He has good people skills, and he’ll roll his sleeves up and lay things out in AutoCAD®. He has all the skill sets.

When he goes in and does a value stream map, we challenge him to identify the people that have the skill sets to do the training. So he’s been a lead in for us. We’ll get two or three people from a department, and as they participate in these value stream maps, we’ll see the people who want to command and take charge.

It doesn’t always work, but it’s better than just going out and trying a pig-in-a-poke approach.

Kalina: Sometimes it’s surprising [who the best trainers are]. Sometimes it’s those who really take ownership of their area and have a real connection to what they’re doing and are passionate. They get very involved. And sometimes it’s a combination of a couple different people led by someone out on the floor who encourages them.

That’s why we come back to the culture. It takes a long time to build that culture into a situation where the people really understand what the company needs—that we’re looking for ideas and ways to improve things. We want more and more people to become comfortable with doing that.

Poe: I went into an organization a few years ago, and there was no trust in management—absolutely none. There was a lot of adversity there. The people were on the floor doing what they wanted, and they had gotten no help to do anything—not on layouts, not on equipment, nothing. They were just out there to make parts, and management was in the office.

So I walked the floor a lot, and we did a lot of little things that were meaningless to me, but to them it was a big deal, such as getting the right tool to do a very simple job. You have to get them on your side, so to speak.

It took constant vigilance to figure out what they needed to do their jobs better and help them to do just that every day. That became my job on a daily basis—to help somebody out.

Finally they came around and started asking for help, but it took a long time for that to happen. It was about two years to really get them to do that.

Kalina: It’s about openness of communication too. We have a system that we developed where we have a daily update with some basic metrics about how we’re doing for the month, quarter, and year. We’ve rolled out flat-screen monitors, just as an example, to show some of those things, some of the events coming up, and things that are specific to even that work area.

And we all tie everything into a quarterly profit-sharing incentive, so that’s where people are going to get the real result of efforts to be more efficient.

Gehman: It’s probably easier to change the culture in small companies rather than large companies just because of the volume. But one of the things that we do is make sure that our project managers are directed to get the input of the people who are going to be completing the work for them. Not because project managers need help with quoting or managing that project, but so that the shop guy, the shop foreman, or the apprentice understands that their input is important. It creates responsibility in that project as well.

That’s one of the things we’ve done. The benefit on the management side is that “dictating to” almost never works in our business. It just creates animosity. As soon as they find out that management understands and values their input, the projects run so much smoother. It translates directly to profitability. It also makes our job easier in the front office because then we can focus on the other things a small business has to focus on—the banking relationships, the myriad insurance issues, and all that stuff.

Griffin: We’ve got a campaign. It’s about developing a sense of urgency.

I love this quote. It’s from Thomas Edison, and I’ve used this with our engineers and staff: “Being busy does not always mean real work. The object of all work is production or accomplishment, and to either of these ends, there must be forethought, system planning, intelligence, honest purpose, as well as perspiration. Seeming to do is not doing.”

We seem to have a lot of engineers that are very busy, but they’re not productive. Where’s the sense of urgency? We can’t wait two weeks to get a quote. It has to be done by Friday. Our customer’s not going to live with that, and we’re going to miss out on the opportunity. Compress your hours and take next Friday off and go play golf. That message is hard to get through to certain people.

That’s what doing more with less means to me—being reactive to the customer no matter what the situation is, creating that sense of urgency, and then being able to take the time off when you have the time available. Sometimes it never happens. Most of the time, if you work your organization right, you can work those kind of details out.

FABRICATOR: Any final thoughts?

Caristan: My personal struggle, whether it’s within my company or with customers that I visit, is to see people reinventing the same thing over and over again. True, you need to customize. Each customer is different. But it always seems people are trying to reinvent every nitty-gritty detail and spending a lot of more time assembling that customized package.

The challenge is not so much to do more with less, but to do more and do better than what is being done today. You can use a lot of tools, and I see the effort being made on the other side with the Society of Manufacturing Engineers. They’re digitizing the “Tool and Manufacturing Engineers Handbook.” They’re trying to improve it with the wiki method, but it’s going to be peer-reviewed.

Gehman: One of the things happening up in our area because of the shortage of skilled labor is that an enormous number of manufacturers are throwing money at charter schools for applied technologies. Those companies are sponsoring programs, trying to grow their crop of future employees. They want to get kids out of the public school system, which is failing miserably up there, and get them into dedicated-focus, results-driven programs that charter schools are much better at doing up there.

Griffin: One of the things I’ve found is that it helps to expose people to opportunities in our industry. For instance, if you have a shop of 35 people, how many people outside of your core business group, and maybe extended family and friends, have any idea what you do? So how can you recruit people to come to your company and look for your opportunities if no one knows what you do?

I taught a class through Purdue University for a while. It was just a basic manufacturing process class. We had castings and welding and things like that. The first week, I gave everybody a shop tour of Aerofab, and it’s amazing. Most of these people had never seen anything like it—the laser or the waterjet. It got their fires going.

I actually hired three people through those classes, and they ended up being very good engineers. But how do you promote that? We’ve talked about that with our owners. How do we recruit the good people?

Poe: Every engineering school wants programs. They all do. “Come and talk to us. Bring some pizzas, bring some sodas, and present to the industrial or the mechanical engineering program,” they would say.

When I was working at a metal fabricating company, we’d go over and do that a couple times a year at Iowa State or the University of Nebraska. I’d take my young guys just out of school. Maybe they’d put in a laser or turret, and I had them do a slide show on that effort. So they’re kind of talking with their peers. They’re not talking to a guy that’s 50 years old.

We had really good success bringing people in even though we were in a metal industry making store fixtures. Nobody wants to make store fixtures. Still, we were able to attract some really nice people doing that—letting the young engineers do all these presentations.