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Spring 2018 - Four Easy Pieces
Four Easy Pieces
An increasing number of manufacturers understand that success develops from balancing continuous improvement, strategy, leadership and a commitment to quality management
March 2018

Several years ago, Enterprise Minnesota took on a project called “Pathways to Business Growth” in which 13 client companies would attempt to double their earnings over two years by deploying a comprehensive array of consulting services. The project was underwritten by a grant from the Manufacturing Extension Partnership (MEP).

John Connelly, vice president of consulting at Enterprise Minnesota, today confesses that such an aggressive objective strained the comfort zone of his consultant team. “It was an aggressive goal,” he says, admitting that, “I liked that it put us on edge” as the team analyzed the possibilities of integrating its diverse offerings. 

The Pathways project concluded with satisfying results, Connelly says. “Our clients were universally happy with the project. Many of them doubled their earnings and everyone would tell you that they grew at a much faster pace than they would have without leveraging Enterprise Minnesota’s assets.” The project also provided Enterprise Minnesota with battle-tested insights about the synergistic power of simultaneously leveraging continuous improvement, strategy development, quality management, and leadership training, the service bundles that Enterprise Minnesota today calls its Four Puzzle Pieces.  

“It required us to get our heads around how we help clients evolve, and develop, and influence the leadership teams that are driving the rest of their organizations,” Connelly says. Enterprise Minnesota had previously developed an array of programs related to continuous improvement, quality management, strategy and leadership—its puzzle pieces—“but we never saw them as separate pieces that were meant to stand on their own. We recognized that each of these represented an engine for growth.”

Manufacturing organizations are driven by multiple engines, Connelly explains. “All those engines have to operate in balance. You start to notice that if one engine is working really hard, it can be limited by the other engines. That’s why we have four engines that have to operate in balance. We prefer to see them as independent puzzle pieces valuable on their own that provide the clearest, strongest picture when they are assembled together.”

CONTINUOUS IMPROVEMENT

Connelly acknowledges that Enterprise Minnesota’s expertise is rooted in lean and continuous improvement, just as it is in most manufacturing enterprises. “It was our anchoring puzzle piece,” he says, an early response to companies that were looking for process efficiencies to help them simultaneously improve their margins while also satisfying customer expectations.

Continuous improvement is about best practices, Connelly says. Manufacturers have been employing lean manufacturing principles for years, but experts say the challenge is to determine how well the organization is committed to building a culture of continuous improvement. Are employees empowered to identify and eliminate waste at all levels? Those who do, experts say, can expect to reduce lead times and inventory, increase employee skills, develop stronger leaders, lower production costs, decrease rework, limit scrap, and improve workplace safety.

The ‘Lean’ Roadmap

PN’s Peter Nora acknowledges the challenge of continuous improvement (CI) in a small company

Peter Nora, PN Products, Scandia, MN
(Peter Nora, PN Products, Scandia, MN)

Peter Nora admits that bringing a culture of continuous improvement to a smaller company might be more difficult than with manufacturers that have a larger economy of scale, but that doesn’t diminish its importance.

Nora founded Scandia-based PN Products in 1984, a company that specializes in in-line and cut sheet thermoforming, and working with most plastic materials, including trimming, packaging, and assembly for some products. 

Instilling a lean culture into his 20-person company can be a challenge, he admits. 

“Everyone wears many hats,” he says. “Our roles aren’t as well defined. Sometimes we double up on jobs and sometimes we think somebody else is going to do it—and it doesn’t get done.”

Factors like time-consuming setup times inspired Nora for years to try to lean up his operation, “but we always reverted back to our old ways,” he says. Enterprise Minnesota gave him a roadmap that helps quite a bit. 

“We are still working hard at it,” he says, with monthly meetings and spreadsheet analysis. “It seems to be working.

“We’re always on a tight budget. There are always lofty ideas, but we can’t afford to do them right now. We’re still sporadic. We get busy for a while; we’re hoping to even it out so that we’re busy all the time!”

STRATEGY

Discerning manufacturing executives know that efficient growth evolves from strategic planning. They assess and understand the current overall state of their business and work to develop a well-rounded perspective on their management systems, customers, employee skills, marketplace conditions, and competitive advantage. And they engage their management team to plot a realistic strategic future. 

“In its simplest form, strategy is about looking forward to where companies want the organizations to go,” Connelly says, adding that understanding customers is at the center of strategic thinking. Enterprise Minnesota emphasizes seven steps in revenue growth: identifying and understanding customers, establishing objectives, developing a message, connecting with customers, measuring impact, learning from experience, and sustaining progress. 

Another aspect is accounting for resources, he adds, which includes financial analysis, and assessing the value of the business. “We want companies to understand that the biggest measure of a successful organization is its value,” Connelly says.

A Holistic Look

Donnelly’s Kirscht  discusses how a plan points out the  high points, valleys, and “fruited plains” of a company’s competitive landscape

Ron Kirscht, Donnelly Custom Manufacturing, Alexandria, MN
(Ron Kirscht, Donnelly Custom Manufacturing, Alexandria, MN)

Ron Kirscht describes business planning as “an opportunity for companies to assess how they can get the farthest, the fastest, with the least expenditure of time, talent, and treasure.”

Kirscht is widely admired by Minnesota’s small and medium-sized manufacturers as one of their shrewdest authorities in the art and science of strategic planning. 

From his purview as president of Donnelly Custom Manufacturing, he views a strategic plan as a “holistic look” at a company that helps its executives assess the high points, valleys, and “fruited plains” of its competitive landscape. Donnelly is an

Alexandria-based company that focuses on short-run, close-tolerance molding for industrial products. Its 225 employees annually manage 2,800 active molds, over 600 different materials and 15,000 mold changeovers. 

Under Kirscht, Donnelly’s leadership team embraces planning as a company-wide exercise. Its most recent plan, facilitated by Enterprise Minnesota, analyzed 21 business categories through a process that he says cultivated a “healthy tension” throughout the company, as managers evaluated the company’s strengths, weaknesses and needs. 

A major objective of planning, he says, is to identify and eliminate constraints in an organization that impede flow. “Speed is what we need,” he says and (constraints) are the enemy of speed.

His planning philosophy emphasizes how a company differentiates its products and services from its competition, something many companies ignore at their peril. Differentiation, he says, represents an essential step toward producing a viable value proposition. Strategic planning, he adds, should inherently factor in the wants and needs of ownership, employees, customers and suppliers.

And in the end, no plan will succeed if it isn’t implemented. “It has to be understood, it has to be agreed upon, it has to embody specific priorities, and it has to be acted upon,” he says. 

LEADERSHIP

Connelly says the biggest lever in helping a company move forward is its leadership team. “And the single biggest obstacle to moving forward is its leadership team,” he says. 

Savvy manufacturers use leadership programs to respond to the current and future challenges of the skills gap. They proactively attract, engage, and retain their workforces by identifying the employees they need to step up and become their next supervisors or leaders. Their programs empower employees representing multiple generations to solve problems and make decisions. 

Leadership programs teach employees to manage conflict and assess performance. They also deal with communication, accountability and change. 

This is all about changing for the better,” Connelly says, “not just understanding that it’s hard, not just understanding the pieces, but being able to step in and say, “‘I can lead these change elements for the betterment of the organization.’”

Consistency and Buy-In

Aagard’s Dave Lamb: Know who you are and what you need

Dave Lamb, Aagard Group, Alexandria, MN
(Dave Lamb, Aagard Group, Alexandria, MN)

The key to managing the “puzzle piece menu” of operating a small or medium-sized manufacturing company, according to Dave Lamb, is “knowing who you are and knowing what you need.” 

Lamb is the manufacturing manager at Alexandria-based Aagard Group, a company that makes cartoners, sleevers, case packers, retort unloading and loading, tray packers, and palletizers/unitizers. Founded in 1997, the $37 million company today employs more than 180. 

Lamb’s 25 years’ experience in manufacturing have taught him that continuous improvement involves “understanding that there are ways to train and empower folks to look for and then take action to cut waste out of the operation.” 

Training Within Industry (TWI) uses a hands-on approach to teach essential skills for supervisors, team leaders, and anyone who directs the work of others. TWI trains leaders using four components: job relations, job instruction, job methods, and job safety. 

“TWI is just a training side of lean,” he says. “People got a lot out of it and were able to implement the practices,” Lamb recalled. “The goal for Aagard is to train our workforce in leadership, and [TWI] is a very practical, common-sense approach.”

The most important element in tying together the various tools of managing a manufacturing plant is philosophy of leadership, he says, “being consistent and getting buy-in throughout your organization.” Part of Aagard’s success, he adds, is its emphasis on servant leadership. “It is something we are very passionate about,” he says. “It goes hand in hand with the empowerment aspect of lean manufacturing.” 

QUALITY MANAGEMENT

A dramatic number of manufacturers that incorporate quality management systems (Enterprise Minnesota uses the ISO system) into their company cultures experience improved business performance. They find that their ISO certification accomplishes more than merely improve their credibility with OEMs worldwide (itself a worthwhile outcome). Their companies achieve greater market reach and market share; their employees are more engaged and ISO enhances company-wide continuous improvement initiatives. 

Most manufacturers realize that ISO 9001:2015 is significantly different than 9001:2008. “ISO 9001:2015 is much more about overall leadership, overall management, overall ownership, and a focus on avoiding, controlling, and reducing risk,” Connelly says. ISO structures a system that helps manufacturers think about the steps to ensure the satisfaction of clients, he adds.

ISO empowers people to integrate strategy, Connelly says. “In ISO language, what are the key processes that we will count on to be able to carry out that strategy? And how well do we manage those processes?”

Taking the Reins

Delmar’s Delk says with ISO his company no longer manages him

Kevin Delk, Delmar Company, Lakeville, MN
(Kevin Delk, Delmar Company, Lakeville, MN)

Kevin Delk says his company’s ISO certification in August 2013 enabled him to truly “take the reins” of his company. 

“We’re managing the company instead of letting the company manage us,” he says. “We used to fly by the seat of our pants. Now there is actually paperwork.”

Delk is the founder and owner of Delmar Company, a Lakeville-based manufacturer that specializes in CNC plastic machining and custom plastic fabrication. The company received its ISO certification in August 2013. 

“Taking baby steps has allowed us to improve our quality, improve our on-time performance, and look at scrap percentages,” he says.

It has also energized what he calls the company’s “people power.” ISO has enabled him to create an organizational chart in which a lot of people are held accountable. “Instead of just me being at the top, there are three people at the top. I can be gone, like going to an Enterprise Minnesota peer group meeting. The company doesn’t have to have me there that day.”

The ISO discipline also gives Delk better focus about how to grow his business. He’s looking to add to his building’s footprint in a way that will enable up to 50 percent growth in the next three to five years. 

Part of it, he admits, depends on people. “It all comes down to whether we are lucky enough to improve our people strength,” he says. “We have salesmen who are farmers and those who are hunters. We need a few more hunters.”

OBSTACLES

Connelly acknowledges that limited resources constrain a company from easily keeping its “engines” operating in harmony. “No company has enough resources to work on all of the puzzle pieces all at the same time,” he says. “They are forced to prioritize.” Which is why a frequent challenge for Enterprise Minnesota’s consultant team is to continually evaluate which of the puzzle pieces is a company’s most limiting at the moment and keep it from cutting back the others, Connelly says.

It’s a constant balancing act, Connelly says. “Circumstances change, and one of the other pieces will become the new limiter, and you switch to that,” he says. “The ongoing challenge for us internally is to continually think about the full, broad picture of a client. We don’t want to nestle into the place we’re most comfortable. We need to stay broad about all they need and be able to point out the piece that will make the biggest difference

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