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 The reasons: immense top-down authoritarian infrastructure, invisible management, power silos or islands, and outdated administrative processes that nobody understands and even worse, that nobody owns!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.