Excessive
Bureaucracy and Old Fashion Infrastructure among other calamities can derail
all that energy and enthusiasm.
Just
recently I had the opportunity to sub-contract a consulting job with a very
important Biotech Corporation. The place has many problems, so initially the
Project Manager and I thought the opportunities to help this company and put
together a large Lean Manufacturing Implementation program were immense. Not
so, just after a four-week period of analysis we discovered that there was
no possibility whatsoever to use Lean Manufacturing as the magic wand it
usually is. The reasons: immense top-down authoritarian infrastructure,
invisible management, power silos or islands, and outdated administrative
processes that nobody understands and even worse, that nobody owns!
This
operation has enormous profit margins and through their more than twenty
years there have been a number of transactions that have created Divisions!
Indeed, “Divisions” that do not get along well with the Lean
Manufacturing culture as we have discussed in many of our articles here. As
a result, the managerial system in place is still very dysfunctional and the
power struggle is so strong that overcomes any positive thinking among the
very educated and good willing people in charge of the different operations.
These divisions have each a top manager or director whose objectives and
mission do not always really align with their counterparts’.
A few
examples of this:
Production
Planning, Supply Chain, Marketing, Warehousing, several Manufacturing areas,
Packaging; they all have activities that interact with each other, but there
is no clear communication although physically their cubicles are in some
cases adjoining. Some feel they are so important that don’t need to cater
to their internal customers, so they simply do not talk enough among them.
One of the managers said their communication is “mediocre at best”.
There is for example a lab that produces some sub-parts and the manager of
that lab has forbidden his employees to provide the information on
concentrations in the label of the containers, which could have saved the
company many thousands of dollars caused by formulation mistakes, or at
least delays for the chemists having to dig through tons of paperwork and
find the crucial information. Still the company can afford to keep running
although they constantly lose sales and even customers to not-on-time
deliveries. Warehousing is also a source of enormous delays. Instead of the
Lean approach of POUS - Point of Use Storage, they have storage facilities
that take time (from hour to days), to react to the production
requirements.
They
have in place a 10+ year old quality control reporting procedure which
people barely understand and it is in the way of everybody causing
significant delays to the point that when the bureaucratic meeting-based
procedure finally gets approved, in many cases the product is out of luck:
either already expired or with such a short shelf-life that customers simply
can’t accept, so it is either not shipped or returned by the customer with
the consequent loss. One of the managers confided that just this particular
issue causes losses in the hundreds of thousands of dollars each year.
Who
cares? Well we all should care because these losses happening in the biotech
or pharmaceutical industries accumulate and are finally paid by us, the
final customers of medicaments.
Sounds
familiar?
I
know, unfortunately first hand, that unless the stronger stakeholders at the
top of an organization understand the need to change drastically their
style, all efforts will have little or no effect. This is what has made many
of the great industrial powers loose their business. The traditional pyramid
structure can no longer survive. Chrysler Corp. just announced
multibillionaire losses in their operation for the past year. Toyota,
Nissan, and Hyundai among others on the other hand, are consistently growing
in their market participation and make money on each single unit they sell.
Our
National economy is being devastated
by dysfunctional and poorly managed businesses.
What
Can and Should Manufacturers do?
Update!
Systems,
Processes, Mindsets!
Realize
that profit margins will steadily keep shrinking
Stop
the Waste of Resources of any kind.
Whatever
your business and comfort level, prepare for the fiercest competition,
because you’d bet… it is coming!
I
will be glad to provide you with an unbiased no-cost pre-assessment of the
current situation of your plant and determine if you are ready for a
successful implementation. Click here and send me an email.
