“Our Business Is Growing Steadily, There Really Is No Need For Us To Expand” (Lesson 6)

One way to ensure your company keeps growing steadily is to perform a situation review, looking at perception, performance and any potential threats that may be lurking beneath the seemingly calm waters of your marketplace.

Case Study: Complacency Over Operations

Early in my production engineering career, I worked for a company that had enjoyed a prosperous 10-year period of ever-expanding sales and reasonably high gross margins on a majority of their product range (typically 20 to 40%).

They employed a mature workforce who laboured hard to keep the production lines operating. I was employed to deploy Total Productive Maintenance initiatives and implement upgrade projects into the facility.

Although the improvement initiatives and project works were going well, I started to notice an impact on the company culture across the site. Management seemed very distracted by outside influences—in particular, receiving parent company directives that didn’t seem to benefit the operation of the facility. This created a kind of distraction from a more important focus—one that centred on the urgency of keeping the facility ahead of the competition.

Within the factory, production operators and maintenance staff would often question, “Why are we working so hard to drive improvement initiatives and new projects, as senior management has clearly switched off to operations?”

This approach to managing the factory began to erode employee morale over time, with many good line operators deciding to move on. Others who stayed often joked that they were waiting for the factory to close and hoping for a redundancy.

Throughout this period, sales and profits for the company remained high, but the cost of manufacturing and level of new product development fell off noticeably to all working onsite.

After completing a two-year stint in my job, I decided my contribution could be better utilised elsewhere, so I moved on to fresh opportunities with another company.

About two years later, I caught up with some of the maintenance staff I’d worked with at the previous company and, sure enough, the seven production lines that I’d been hired to upgrade and improve had been shut down and sold off, with that part of the factory converted to additional warehousing capacity.

In retrospect, the company’s management did not pay attention to operations and simply moved ahead based on the good results they had achieved so far.

 

Thinking Ahead

This case study about complacency is not necessarily reflective of all small-to-medium manufacturing facilities. There are many companies where the owners and management team devote most of their waking hours to ensure the business is operating at its optimal peak week after week.

Still, it is critical to stamp out complacency at all levels of a business, and that often starts with pausing to consider your facility’s current position in the marketplace. When was the last time you…

  • studied what your competitors were doing or planning?
  • noticed potential changes to government legislation (at local, state and federal levels) that could adversely impact your products/production?
  • became aware of new technology entering your marketplace?
  • paid attention to suppliers, distribution channels and your own company for signs of accepting business “as is” with no thought to improve or upgrade?
  • tackled common mindsets that may be symptomatic of potential problems, such as:
    • “We’ve always done it that way”
    • “We’ve tried that before and it didn’t work then”
    • “If it ain’t broke, why fix it?”
    • “Don’t set the bar too high”