Organisation for an Operations Department

I just passed the 1000 visitors threshold on this blog; motivation enough to write something I feel very strongly about - the organisational structure for any operations department. Once I have done that I can talk about KPIs. When I say operations I mean mainly production and manufacturing. 


The biggest ever "no go" is something I tend to find in most production departments - production planning is reporting to the production manager. What a blunder! 


Generally, there is not a single positive result when having this structure in place. The main reason for this is that production managers usually think in terms of fix cost degression, which means, the more material runs through a machine the cheaper the product becomes since fix costs tend to zero out with rising volume. 


The problems with this way of thinking are: 

1. Batch sizes are bigger than the market need, which means rising stock levels, full warehouses, old stock which might get out of date, hence cannot be sold anymore. The cost implication of this is: rising working capital (stock value), rising warehouse costs, rework and obsolescence.  
2. The factory is more likely to run under capacity constraints, as bigger batches bind capacity. This is a cost factor, as widening capacity is linked to further costs (overtime, more working hours, etc).
3. Bound capacity can result in lack or loss of customer satisfaction, as promised time lines for delivery might not be hit. 
4. A blown up organisation which is not reflected by real customer demand. 

So, what's the way out? In order to get away from this "batch size dictatorship" by the production department, a separate planning department must be established which does not report to the production manager but is independent. 

The planning department fixes the production plan and forces production to produce what's really needed. 

I have implemented loads and loads of organisations like these and will explain more in further blog entries. Obviously, I will talk about KPIs for both departments (planning and production), too. It is just too much for a single blog entry as I just realised, and, on a more practical note, as author of this blog, I need a few more topics to write about anyway.  ;-) 

When does Behaviour Change finally occur?

I know, I wanted to talk more about KPIs, but yesterday my client asked me this question about behaviour change and I think it is rather important to elaborate a little bit on that. 


When I started my career back in 1997 with Impac there was a rule when doing area development in any department or area - time to installation of a new management system (or tool) is about 10 weeks. Apparently, so we were told, the University of Chicago researched that it normally takes that long till human beings adapt and change their behaviour. I still follow this rule of thumb - 10 weeks to installation. These 10 weeks include 2 steps, analysis and development. 


From my experience though, behaviour change takes much longer. Well, it depends what kind of behaviour change we are talking about. There are 3 phases of learning and learning in my profession means changing behaviour. 


The first phase is called MECHANICAL COMPLIANCE.
Say, during a project we analysed that review meetings are not held, hence daily results can neither be talked about nor any corrective actions taken. So, after talking to managers and supervisors, drawing up an agenda for such a meeting, giving them a bit of training, we have the first review meeting. The manager and his supervisor do this every day, but people only attend because they were being told to do so. The meetings are not very good initially and actions not yet taken. This is mechanical compliance - doing so because of being told to do so. A characteristic of this phase - in case the meeting would be stopped people would not miss it and be happy to get on with life without it. 


Of course, daily review meetings are important, especially for a learning organisation. This is the forum to talk about achievement of the plan and in case the plan was not met, corrective action would have to be taken. Obviously, the meeting in my example would go on. People would attend for a few weeks, and slowly, the first actions would come up. Problems are being solved. Attendants of the meeting realise the benefit of having a structured approach to managing their area and deal with their problems. This phase is called COMPREHENSION. People understand why something (in my example the meeting) has been installed and how they can benefit from it. In case the meeting was cancelled, people would miss it and ask for continuation. The difference to mechanical compliance is that there is a very small risk of falling back into old behaviours. From phase 1 to phase 2 really takes about 2 to 3 months. 


But that's not enough. With comprehension alone there will not be any continuous improvement. Phase 3 is called FURTHER DEVELOPMENT. That's the phase where people take real ownership and develop something further. In my example about the review meeting participants would probably realise that a certain person from the organisation is missing and be invited to attend, the agenda could be changed, the meeting could be held at a different time, certain reports would be needed, etc.... 


Once that stage is reached "real" behaviour change will have taken place. This normally takes a few months. 

Six Sigma - needed or not?

One of the questions when talking to my clients is: Would you recommend a Six Sigma Project for our company? Quite often, my clients don't really have an idea what Six Sigma actually is other than one of those management buzz words one gets to hear every now and then. 

A a Six Sigma Black Belt myself, who studied Pyzdek's Six Sigma Handbook, a book, it seems, bigger than the Bible, I developed a one-sentence summary of what Six Sigma actually is - a detailed project management approach using statistical management tools and analyses for the operation in order to attain a zero error process output. Or, in easier language and yet another buzz word - Total Quality Management!


So, back to the question of my clients whether they needed Six Sigma in their companies. I would normally ask 3 questions back:
- In case you produced non-100% quality and that product hit the market, would that mean a high risk for your company? (Imagine you are Rolls Royce and one of the flight engines broke down during a flight, or you are a pharmaceutical company and wrong ingredients ended up in pills, or any other high risk product really which would be life threatening to humans, hence bear a huge risk for the company)
- Are well working management systems in place? A management system contains, among others, KPIs, operations reports, regular effective and efficient communication on all levels with action plans (planning and review meetings), trained supervision and management, etc. 
- Is your management well trained when it comes to using Excel, reading and dealing with graphs and figures?


The more 'no answers' I get, the more I am inclined to say - "Well, let's sort the basics out first and deal with Six Sigma at a later stage. Your company is not yet ready for it." For me, and that's my personal point of view, Six Sigma only makes sense when a company has reached a certain level of "management maturity". If that's not the case implementing Six Sigma would be like killing a fly with a canon ball.

Corporate Coaching - a new Business Concept?

The word coaching is often heard as a way out when managers are faced with managerial problems; or, privately, when people need a catalyst to help them dealing with seemingly insurmountable problems in their lives, the so-called life-coaching. And I am aware that this is only a very rough categorisation of the term. The idea I am pursuing goes beyond that and I am trying to combine both, coaching and consulting; let me call it Corporate Coaching.

As Performance Improvement Consultant, and I have been doing this for more than 16 years, one goes into clients’ companies and improves what there is to improve in order to gain financial and non-financial benefits for those clients – we install KPIs, implement planning tools, we close communication gaps and train management, etc, etc; the list is endless. Every Consulting Company promises a knowledge transfer from consultancy to client so that the latter would not be left alone and helpless after the project. But of course that is sheer marketing on behalf of the consultancy, hence rather fictional. There are a few concepts and methods of how to attain this knowledge transfer, but they are far from being as sustainable as they are promised and supposed to be.

So what should one do in order to ensure that all newly implemented management tools will remain within the company in a sustainable manner? That is where Corporate Coaching comes into the equation. It is a concept similar to “Help them so they can help themselves”. A coach is hired, he undertakes an analysis of the operation, detects where and how immense the problems are, he suggests a project, and in this very project, managers and key staff of the company will function as consultants or project manager. The coach is there to do what the writing on the tin suggests – coach! He will train project managers and consultants, set up the project and its governance, and play a vital role in the background.

Doing it this way, all the gained knowledge will stay in the client's company. Also, all management tools will have been developed by their potential users, hence ownership is guaranteed from the beginning. The role of the coach is to challenge and question all those tools and elements of the management system and give advice and steer; the client will get the desired input from the outside.

Advantages: Such a project would be a lot cheaper than any other consulting project and the results absolutely sustainable and not any less beneficial. Also, all participating managers and key staff would be trained extremely well and intensively and could tick off major items on their personal development plan.

Disadvantages: Unfortunately, such a project could take longer and should only be undertaken within smaller to medium-sized companies or departments within big companies. Due to the length of the project the cost pressure should not be too high and human resources deployed by the clients’ companies would need some spare time to participate.

I have been doing this for a few years, even successfully, but those projects came into life more out of sheer co-incidence. What I’d like to do is to discover the market a little and see if my ideas are any feasible. 

Challenge 2012

Hello Readers,


I am pretty good in regularly updating my travel blog. Unfortunately, this is not so true for my professional one. But thinking about it, I am lacking a concept of what to do with the Naked Consultant blog. Initially, I wanted to use it to write down all my projects I worked on in the past, which I did, more or less well, and when that was over, I thought I could talk about my current projects and assignments. I was quickly faced with a dilemma - confidentiality versus regular communication. So I left it, confidentiality won, and I put the blog to rest for the unforeseen future. 


Things have changed now. My 2 year assignment with my client in Derbyshire is coming rapidly to an end and the question of what to do with my blog is emerging again. 


The last 2 years were good ones - not only because the projects I managed were successful (one day soon I will elaborate further of what we did there), but also because I learned a lot about my strengths and weaknesses and where I should focus on in my career as freelancing management consultant. 


And that's already the crux - do I see myself as "management consultant"? I guess yes, as consulting is what I do and have always done, but the term alone is so widespread and general that in the end it does not help when building a career outside one of the bigger or smaller consulting companies on this planet. 


Based on what I am good at and what I have enjoyed the most over the years I want to see myself as "Corporate Coach". But more on that and the concept in my next blog entry...