When you look at a typical Manufacturing Company in India, the usage of IT is very limited. A small percentage of Big companies use IT in an effective manner. While a great majority do not use the Quality, Manufacturing and other Modules in ERPs like SAP even though they would have paid for it and they lie unutilized in their servers.
Resultantly, most of the Important work in Manufacturing happens off line. We don’t try to control the Manufacturing process as it is happening. Most of the controls are off line. We seem to be letting defects / problems happen and then we are reacting.
Can we go more online?
I think we should go much more online than what we are right now. I would recommend using some Apps for specific purposes. I would recommend using IT in two areas to begin with:
a) How Employees Learn
b) How Employees pursue Routine
Let us examine how we can use I.T effectively in these two areas.
How Employees Learn
Objective of this exercise can be to reduce losses on the shop floor and improve efficiency by bringing a focus on to the Skills and Knowledge of every employee in the Shop floor.
Today in most of the Companies there is some focus on the Skills of the Workmen. In most of the Companies this focus is very weak. There is no effort to continuously improve their skills. Focus on the Skills and Knowledge of Staff is much lesser. Only a very small percentage of the Companies the Staff are getting trained in a systematic manner.
We can’t afford this anymore. We need to become very efficient if we want to grow our top and bottom lines. Let us act on this !
I would suggest defining the Competencies that all the employees need. These competencies may cover:
a) Product Knowledge:The employees need to have good knowledge of the Products that they produce.
b) Process Knowledge: The Manufacturing Process and the process in every function can be another focus area.
c) Systems Knowledge: The Systems that the company may be following can be another focus area as this will ensure employees know the way of working in the company. Eg. Manufacturing system, Daily Work Management System , Policy Deployment system etc.
d) Functional Knowledge: This covers the knowledge that each Staff member needs to have respective to her function. Eg. APQP / MSA / Problem solving knowledge for Quality Engineer.
Bring the Training online
You can bring the Training on these topics online by doing the following:
- Define the Training agenda for each employee covering topics from the above 4 fields.
- The topics defined should have close link with the requirement of Knowledge and Skills to achieve the goals for that year / Quarter.
- Divide each of the Competencies in to several Micro Competencies / Skills as applicable. We should go really micro so that the topics become small enough for easy consumption.
- Have Learning hours every week. I would recommend at least 2 hours every week.
- Make the Learning content available on line on the cloud.
- Define Certification Standards for every Micro Competency / Skill in terms of Knowledge, Implementation and Results.
- Certify the employees continuously for the Micro Competencies.
This will ensure that the Employees will have continuous focus on Skills, Knowledge. This will ensure the efficiency on the shop floor improves.
The Training and Development has to be owned by the Functional Leaders. They will be the Sponsors of the Training as they will have to show the ROI.
By bringing focus on Skills and Knowledge, the Functional Leaders can make huge progress on the efficiencies in the shop floor and that will more than pay back their investment on the Training.
How Employees pursue Routine
Routine is something that is not very exciting in a Manufacturing facility. But, without a strong and consistent routine, the heart beat of the facility can not be consistent. Most of the problems that Manufacturing Companies face is usually related to a violation of Routine.
Defects happen as the SOP is not followed, High Break downs of machines happen as the Preventive Maintenance does not happen, New Products do not perform better as the New Product Development process is not followed well. The list can be very long.
Strengthening the Routine in a Manufacturing Company can give very high returns.
If you look at how the routine is being followed now, it is mostly offline.
- Quality System is verified off line.
- Machines Preventive maintenance happens offline.
- The Production Routine of a Supervisor happens offline.
- Safety checks happen online if they happen.
How do we bring the Routine of the Shop floor online? I have some suggestions.
01. Online Quality Checks: Develop a Software that will work on hand held devices (may be smart phones) that can do the following:
a. Trigger Quality checks on the basis of the Product that is running on the line.
b. The triggers may go for People across the hierarchy to take care of the ‘Layered audit’ principles making Quality the Collective responsibility of Employees at all levels and not just the responsibility of that Junior Inspector of Quality on the Shop floor.
c. The Data will be accepted in various ways by the Software:
i. Physical data entry by the person to whom the check is triggered.
ii. A Photographic input for Visual Checks.
iii. An electric pulse from an Instrument having capability to give output.
iv. There can be more ways in which we can collect actual data on Quality.
This will ensure that the Quality System becomes online and the checks that are happening and not happening will be clear. Quality can be controlled online.
02. Online Safety system: Similar to the above Software, one can use the concept for Safety checks too. The input can be similarly taken. In addition to the inputs mentioned above, the CC TVs that are available in Shop floors can be used to identify unsafe acts and alert the concerned employees.
03. Online Maintenance Checks: Again, the approach is same as explained in s.no 1. The Supervisor / Operator will check the Maintenance points on line. The machines that have Breakdowns and Machines that already have Zero Break downs can be treated differently in terms of the checks that you do.
04. Online Assembly line: The Assembly Lines can connected to Internet and following actions can be brought online:
a. Start up procedure. Many of the Start up procedures can be automated where the Software will sense the presence / absence of certain parts / resources. The Pressure in the airline can be sensed by a Transducer and recorded.
b. Running Status recording. The Line may stop for various reasons. The losses may be entered by the operators to ensure we capture the losses. The Software can ensure this.
c. Who is working at the Station. This is quite easily captured by the Software for traceability purposes.
d. No Fault forward. The Defects that can happen at each station can be defined, Quality checks to capture these defects can be available at every station and using a RFID / Barcode system we can prevent a defect going to the next stage.
e. Line Work Management. The Line can display the data on Production / Losses and escalate the information in case of Line stoppages and other inefficiencies.
There can be several more ways in which the work on a Shop floor can be brought online. When we do it, we have tons of data coming up from the shop floor.
Analytics: We need to have our Engineers trained to analyze this Data and take learnings from the data. The learnings may include:
- The Quality checks that are getting missed out and address some practical issues that may be there in carrying out these Quality checks.
- The Engineers who may be missing Quality checks at a certain time of the day and this data can help us to understand the way of working of the Production Engineers and help them to arrange their work much better.
- The Safety points that are getting violated frequently and what needs to be done to avoid these violations.
- The Breakdowns that have relation to running a specific product and specific operation.
- Relating the defects to the people / conditions / time will become easier.
There should be a small team who does these Analytics, takes the learning and does something about it.
When you go online, the Team has to become more Disciplined and more knowledgeable about everything around. The training discussed earlier will ensure this. The Online working will also highlight the absence of Knowledge and Skill of People much more.
Indian Companies have to shift to working Online earlier than what we think.
Are you getting ready?
I meet this team from a big Indian Tyre Manufacturing Company every month. I am helping this team to improve their Leadership Qualities. They are making very good progress. One of the members of this team is a Body Builder!! He is devoting a lot of time to exercising, lifting weights, running and so on. He is an absolutely fit guy!! He is real motivation to everyone around him.
But, I should say that this is an exception than rule among Employees of Indian Manufacturing. Even among youngsters, the percentage of people who are actively taking care of their health is very small. In any group of employees, I have not seen more than 20% who exercise regularly. Most of these people who exercise are just walking. May be 1% or 2% probably go to the Gym.
In any company it is the Mid to Senior Level Employees who take important decisions that affect more people in the Company, and these are the Leaders who give a Direction to the whole Company. I have seen that in most of the Companies this Leadership Team is not very healthy physically!! Again, there are always exceptions. There are some Leaders who are avid Marathon runners! Some Leaders who play sports and go to Gym regularly. But, as I said before this category is Very Very small!
Leaders need to be healthy Physically, Mentally, Emotionally and Spiritually. These are the Four types of Energies that are available to all of us. Many of us may not be aware of the four types of Energies.
What are the ill effects of ‘Unhealthy / Not very healthy Leadership / Employee Team’??
Handling Pressures: Today the Business environment is becoming more volatile than ever. The teams need to be contributing actively. The pressures are increasing continuously. The suicide of VG Siddhartha of Coffee Day is a case in point. I do not know about his Physical health at the time of Suicide. But, from what I read in the News Papers it is very clear that he was under tremendous stress mentally. Continuously working on Mental health could have helped him?
Growth Orientation: A Team that is healthy physically and mentally will be much more Growth oriented than a team that is not very healthy. Many Companies have the problem of their Employees not pushing for improvements. The Employees are quite busy in the routine and do not look at improvements at all. Taking care of Physical and Mental Health will help in enhancing the Capacity of the individual to handle more and look for improvement possibilities.
Execution capability: A Team of unhealthy Employees cannot be very good at Execution. They will keep missing the targets frequently and there will be generally frustration around. As the Targets are being missed, the Company will keep revising the targets downwards. This adds to the generally despondent environment around.
Productivity will suffer:The People Productivity will be an obvious victim. The team will not have much of inclination for working on improving Productivity as they will be feeling that they are already stretched a lot.
There can be many more ill effects of ‘Not very healthy’ Employees.
How to promote Wellness in a Company?
There are many ways in promoting the Wellness of Employees. I am capturing some of them below. I have been fortunate to be part of many such initiatives. Hence these are Initiatives that are working in Companies. Not theory.
You can start various initiatives to promote wellness in your Company:
a. Conduct a Yoga course. Repeat it every year. Encourage more and more employees to participate and learn.
b. Yoga weekly practice. Have a Wellness Centre in your company and encourage your employees to get together to practice Yoga and Meditation periodically.
c. Zumba Practiceweekly
d. Promote Sportsthroughout the year. Encourage employees to take leadership for individual Sports like Cricket, Basketball and so on.
e. Encourage your Employees to participate in Marathons. Encourage a Core group.
f. Encourage your employees to Walk at work every dayas part of their work. Let the office / Factory be designed accordingly. Eg. Let there be a walk involved for getting coffee / food etc.
g. Have an App for Health monitoringand motivate employees to Volunteer to get on to it.
h. Organize for ‘Health Talks’ on various Health related topics by Physicians.
i. Organize for ‘Healthy food habits’Consultation.
j. Promote Employees learning Meditationand practice it regularly.
k. Conduct a Course on ‘Mental health’and encourage employees to join it. Many Yoga institutes conduct this type of Courses.
l. Encourage employees to participate in Social Initiatives. This gives them Spiritual Energy.
m. Give help to Employees who need Counsellingfor problems at work or for problems at Home.
There can be many more initiatives.
It is important to encourage employees to take lead in the above Initiatives voluntarily. Wellness cannot be promoted by the Company unilaterally. It gains energy if you can find a group of Volunteers who will run many of these initiatives.
Company can be supportive to these Groups.
Use of Technology
Technology can be used for promoting the Health concept in a very active manner. One way is to have your own App for your Company. You may collaborate with any of the Health Apps that are already there and customize the app for your Company needs.
You can link the Medical tests of employees that you may be doing annually to the Health Apps and encourage the employees to address the Health issues proactively.
Wide variety of Initiatives
Companies should introduce many initiatives in this area. Employees may have their own priorities in the area of Health. Everyone may not be interested in the same initiative. Some may be interested in Yoga. While some others may be interested in Zumba. Similarly their interests in Sports also may vary. A Company should have a Target of engaging 100% of employees thru one Health initiative or the other.
What can be the Metrics for the Health of Employees?
It is very important to measure your efforts towards the Health of employees. There can be two types Metrics.
a) Process Metrics
b) Result Metrics
You need to measure the Process by which you are trying to promote the Health of Employees.
- Number of Participants in each of the Initiative.
- Regularity of Participation.
- Number of Initiatives introduced vs Initiatives Successful
- Number of activities planned vs executed in each of the Initiatives.
- Number of Volunteers in this area.
Results can be measured in a few different ways.
- Number of Employees in Good health.
- Number of Employees who improved their Health.
- Number of KPIs of employees in which there is improvement
Each company can devise their own way of measurement. But, measurement is important to ensure you know where you are going with the initiative.
Many companies do not have this type of focus on Health. Their reasons would be that they do not have time for this. But, if you are able to encourage a group of employees to take lead, then the Collective effort of the employees can push this focus forward.
Do you have focus on your Employees’ health?
All of us who worked in a few companies in our respective careers and those like me who had the wonderful opportunity to work with many Companies as a Business Coach would have observed that some Companies had a very good Working Culture whereas many Companies did not have such a great working Culture.
We generally say the Culture of the Company is good and may be recollect that this company had the practice of ‘Town hall meeting’ or ‘Annual Sports meet’ and so on.
Let us look at what a Good Work Culture is and how do we develop it in a conscious manner in a company.
I remember a definition of ‘Culture’. ‘Culture is the way we do things around here’.
So, a Work Culture personifies the way you run your Company. To understand this better, let us look at the case of any of the Religions that we practice. Each Religion has its Rituals / Festivals that are celebrated by the Practitioners of the Religion. These Rituals / Festivals survived for Centuries. In the Geographical locations where these Rituals / Festivals are followed rigorously, the Religion flourished. According to the Rituals / Festivals the Culture of that Religion developed. In the Same Religion, there may be different Rituals / Festivals in different Geographical Locations. So, the Culture in the same Religion in different areas may be slightly / vastly different. While the Governing Doctrine is same, the Culture may be different based on the Practices / Rituals / Festivals in that region.
But, the Practices / Rituals / Festivals play a very big role in sustaining a Religion. All the Religions have been sustaining for Centuries!
Now, if you want to develop and maintain a Good working Culture in your Company, you should be able to define your ‘Good Work Culture’. This may depend on the Values that your Company Practices and the way you want to contribute to the Society through your Company’s work.
It is good to start right at the top and be clear about the type of Work Culture that you want to build. But if you are not very clear about this overall objective, then you can look at some universal ‘Good to have’ Objectives.
Some examples are as follows:
01. Performance Focus: Competent Employees / Vendor Partners would definitely be very happy to work in an environment where good Performance is recognized and encouraged.
02. Professional Improvement: Again, the Employees / Vendor Partners would like to have a culture of Company encouraging / giving opportunities to the employees / Good Vendors to Learn continuously.
03. Wellness: Employees would love to work in a Company where their Wellness is given a good importance.
04. Customer Orientation: A Company where good Customer Orientation is there (Both internal and external Customer) would progress well.
05. Contribution to the Society: All Stake holders would be happy if the Company is seen as contributing to the goodness of the Society at large.
06. Process focus: Company may give importance to ‘How’ the Goals are being pursued in the Company and not just the Goals themselves.
This way a Company may have some overall Objectives that are not just monetary objectives but means to achieve the Business Goals of a Company in a consistent manner.
Why should companies pay attention to Culture?
People are the foundation for any Company. All the Stake holders are important. But it is ultimately the Stake holders who are making / breaking the company.
Even if a Company is not building a Working Culture deliberately, a Work Culture gets developed on the basis of how things get done in the company.
A Good / Bad Culture would develop without your active participation. If you want to develop a good culture based on your Company’s values, then it is better for you to participate in that process and try your best to influence it. If you do not control it, it will be left to the Dominant personalities in your Company who would anyway influence the way the work gets done in your Company.
If you are not controlling the Culture in the Company, then the Work Culture can keep changing as the Leaders in the Company change. This is the reason we keep hearing ‘It was an exciting place till 2 years back when ‘xyz’ was in charge’.
How do we build the Working Culture in a Company?
As we discussed earlier, the Company’s Work Culture is sum of its ‘ways of getting things done’.
One needs to introduce some specific Practices in the company that work towards the Objectives that have been set.
Let us discuss with reference to the Six Objectives of Work Culture that we earlier discussed.
a) Performance Culture: Some of the Practices that may be adapted to establish this culture are:
a. Having Measurable KPIs for every employee.
b. Having Transparent link between KPI score and Ratings. This should be visible to all employees.
c. Having clear rules for Promoting Employees.
d. Having practice of giving Objective Feedback by all Supervisors to their teams.
e. Celebrating Performance at the Micro Level. Leaders in the Company can have practice of giving small mementos to encourage Small but significant progress towards Goals.
f. Celebrating Good Ideas towards Work Objectives.
There can be many more innovative ideas.
b) Professional Improvement: You can promote many practices towards this Objective. Some of them are as follows:
a. Having periodic Technical Paper presentations and inviting IIT / International University Professors who are experts on your Company’s Technology area.
b. Sponsoring the higher studies of Employees.
c. Promoting study of your Technology area.
d. Promoting the learning of Formal Technical Problem-Solving methodologies.
e. Promoting Discussion forums on HR, Finance, Supply Chain related topics along with local companies.
f. Improving the Skills of Employees with focused training.
This is definitely not an exhaustive list.
c) Wellness: Promoting Wellness can be done thru a variety of means. Some of them are as follows:
a. Conducting lectures by Doctors / Yoga Experts to address Physical / Mental / Emotional and Spiritual Health.
b. Conducting Health Camps
c. Weekly Wellness camps where Yoga / Zumba etc are practiced.
d. Health monitoring of Employees
e. Recognizing Role models in the area of Physical fitness
What is critical is to do these activities continuously and not as one time activity. Employees adapt these practices at their own speed.
d) Customer orientation: There are several practices that can help you move towards this objective:
a. Taking periodic feedback / Score from Internal Customers.
b. Internal Customers to have a say in the Performance evaluation of Internal Suppliers.
c. Recognizing Best Internal Suppliers by Internal Customers.
d. Publishing Great Customer service stories in the Company.
e. Inviting Senior Executives from other companies to tell Stories about Customer orientation.
Truly this area has enormous potential for innovation in promoting Customer orientation.
e) Contribution to Society: This is an area that you can use to activate the fourth Energy – Spiritual Energy of every Human (After Physical, Mental and Emotional Energies). Very powerful one. Some of the Practices that you can think of are:
a. Encouraging employees to form a group that contributes money, physical effort for Societal Causes of their choice.
b. Channeling the Company’s CSR efforts thru Employee groups.
c. Encouraging Stake holder Groups to participate in Public relief activities.
d. Helping the people in immediate surroundings of the Company.
Stake holders participating in these activities will have enormous satisfaction and they will be able to realize their higher energy.
f) Process Focus: It is very important to let a Process Culture prevail in your Company. Don’t focus on the Results always. Encourage your Stake holders to follow the process and have faith that the results will come. Some practices that can help you are:
a. Have a defined way of pursuing Goals in your Company that prescribes a good Process.
b. Measure the performance of a Stake Holder with Process Measures along with Results Measures. Having only Result Measures will push the Stake holders to somehow achieve results.
c. Promoting a ‘way of working’ in every sphere of the Company like New Product Development, Quality Process, Problem solving etc.
d. Reward People / Functions excelling in Process.
You can do the above and you can do more. Each company should find its’ own mix of Activities / Practices / Rituals / Celebrations that promote the Culture that you want in your Company.
But you SHOULD participate in the building of the Work Culture in your Company. Leaving the Culture building to a few strong personalities in your company that too accidentally is very Dangerous.
Catalyst: Volunteerism can be a Catalyst for Culture Building in a Company. Encouraging Employees to promote the activities that they can personally relate to can be very productive in furthering the Culture. Human beings can generate a lot of Positive energy when they connect to an activity where their heart lies. A Company should encourage this. The Positive energy they generate can be quite contagious!! Eg. Someone who is passionate about Social work should promote the Societal angle in your Company. You would be surprised to see how many of your Employees are interested in Social causes. I know many Youngsters earning just Rs 10,000 per month. But contributing to a Social cause every month!
Build the Work Culture in your Company Actively !!
Every Manufacturing Company always has Cost Reduction Agenda. While they try to improve their Product Design using Frugal Design principles, they always have Cost reduction agenda in the Product too.
The Business situation is becoming tougher and tougher for companies. The Topline and Bottom line Growth cannot be taken for granted! It has to be earned in the hard manner.
Automotive industry is going thru some tough phase. The Industry may get fragmented due to Electric Vehicles coming in. It is no longer left to a few Big companies. Few more Bigger companies like Apple, Google are entering this space. Some smaller / new Players are also entering the fray.
Manufacturing Companies across the world are trying to become more efficient using Industry 4.0 elements. The struggle to become more efficient is continuous for Manufacturing Companies.
Much like Individuals developing capabilities to do more things, Companies also need to develop Capabilities in their Companies. These Capabilities may be built around a few Practices in the Company.
Every Company needs to develop the Capability of ‘Continuous Cost Reduction’ on active basis.
I have seen many companies who get substantial Cost Reduction when they start it off for the first time. But after one /two years, the effort tapers off. They say it is no longer possible! I don’t think the Cost Reduction possibilities will dry up. The ideas to access new Possibilities may dry up.
I would like to highlight some Best Practices that can ensure Continuous Cost Reduction in a Company. Companies need to pick up a few or all of these elements and formulate their own Process. Following are some important elements in this process.
01. Cost Reduction Target: Every Company needs to have a Challenging Target for Cost reduction every Year. This Target may be there at the Company level in terms of Profitability improvement. This would be naturally broken down in to Targets for reduction of various expenses and will flow down to Various Functions in the Company. Some of the Cost Reduction Projects may be led by Cross Functional Teams. It is important to involve ALL functions in Cost Reduction effort. It should not be left to few Functions only.
02. Price Recovery: Companies need to have great focus on recovering the escalation of Expenses from Market. If there is a Raw Material price increase, if there is Power tariff increase, if you have given increments to your team, it is ideal if you can recover from the Market. The Market may comprise of individual Big Customers as well as After Market where you are addressing a bigger Market. Every Company would have its’ own constraints to recover full amount of Cost Escalation from the Market. The Competition and Customer Power will not simply allow this to happen. But still every Company needs to have a good mechanism to capture the Cost escalation and throw up information to Sales & Marketing to recover the higher Cost from the Market. Many a times a Good Software support is needed for highlighting the escalation of Costs and how much of it is being recovered from Market. This information has to be available. After this the Company will take a call as to how much it can recover from Customers and how much it cannot. I have seen many companies who simply do not know how much the Costs have gone up and how much is recovered. Resultantly they do not have control on their Profitability.
03. Cost Reduction as a KPI: Every Senior person in the Company needs to have Cost Reduction as a KPI and he has to deploy the Measures to achieve the Cost reduction to his teams. This KPI should have a reasonable weightage so that everyone takes it seriously.
04. Cost Reduction Projects: Every HOD should identify Projects to an extent of 150% of the Target that he is given. Companies may have a Guide line that at any point of time each HOD should have Projects for next 6-8 months. The Projects should have detailed Plans. This is essential to ensure the Projects are practical. Companies create some simple formats to have these details and have a sign off from all Stake holders that it is doable.
05. Brainstorming sessions: Every Company needs to have a structure for Brain Storming sessions to identify Cost Reduction Projects. Many of the Subjects may require a Cross Functional Participation. So, each HOD should work out a schedule for Brainstorming Sessions. Each Brain Storming session should have:
a. A Target for Value of Cost Reduction Projects that need to be identified in the session.
b. Advance information to Participants to come prepared.
c. Analysis of data to be sent to the Participants that will help them to understand the Cost Structure of the Product / Part.
d. Involve Supplier Partners as appropriate.
06. Involving SMEs: Every Company needs to have a hierarchy of Cost Reduction methods. While the Buyers would be pushing for Volume discounts, there should be some effort in challenging bigger things in the Company. May be Design of the Product may be redone to cut the costs by 1/3rdor the Dealer Model may be challenged in some areas to sell directly to the Customers. Every Company should have their own share of these Big Bang ideas and they may decide to involve some Subject Matter Experts (SMEs) from outside. These Brain storming sessions may be conducted with some notice and may carry on for a few sessions. Involving outside agencies like IITs / Technical Universities across the world in this effort is a good idea. These efforts will ensure that the Cost reduction effort will continuously happen in a company and it will not dry up after couple of years.
07. Involving Supplier Partners: The Cost Reduction has to be driven along with the Supplier Partners. Companies that want to take the ‘full benefit of a Supplier’s effort’ will not get much cooperation from the Suppliers. The Company needs to behave in a mature manner and look at the Medium-term benefit. Supplier Partners should be supported by the Company by training them, exposing them to new practices in technology and process. Companies who invest in to this will reap the Benefits from this type of philosophy.
08. Training of the Teams: If a company wants to do some serious Cost reduction, then it should identify the Competencies that its’ staff need to have and Train them to develop these competencies. Some examples of Competencies that are required are:
a. Ability to understand the Cost Sheets.
b. Product knowledge
c. Manufacturing Process Knowledge
d. Lean Principles
e. VA / VE
f. Frugal Engineering
It would be good to develop E-Learning material on these topics and keep training the Team members continuously. Training and Re-Training is needed in this area.
09. Involvement of All Employees: There should be processes in the Company to involve all employees in the effort of identifying ideas for Cost reduction. It would be good to develop a Mobil app for this and encourage all employees to keep contributing on a continuous basis. This type of Ideas Database can help a Company to maintain a Continuous flow of ideas and Cost Reduction.
10. Motivational means: Companies need to be liberal in rewarding the Employees for implementing great Projects. The practice that Facebook / WhatsApp etc. follow in this regard is a good example. Facebook rewards anyone who finds a bug in a handsome manner. Due to this incentive, there are always lots of committed hackers who are searching for a bug in Facebook. This is a win /win situation.
11. Spend time every day: All important Functions that are involved in Cost reduction should set up a War room for Cost reduction and ask the Teams to meet EVERY DAY for 45 minutes to push the Cost reduction Projects. Teams have to meet every day to ensure focus on the Cost reduction. This is a very important practice, if you want Cost Reduction to gain focus in your Company. The War room should have all the Parts, facilities to strip down the parts / products.
12. Bench marking: It would be good to encourage a practice of Bench marking the Products / Parts / Processes across the world. Every company can learn from others if the companies are open to let others in. It can’t happen with competitors. But, you can learn from Customers and Suppliers. Many companies get the Parts / Products and conduct a Strip Down Analysis to gain more insights.
13. Continuous activity: Cost reduction has to be looked at as a perennial activity in a Company. It has to go beyond the Annual Target. There should be Quarterly Target and the activity has to go beyond a Financial year as the Company may want to have Projects ready and identified for next 6 months.
14. Metrics: The Cost Reduction should have Lag and Lead indicators. While Department wise and Companywide target may be the Lag indicators, Practices like Brain Storming sessions, Daily War room meetings, Benchmarking, Strip down analysis etc. can be the Lead Indicators. It is very important to monitor the health of the Process of the Cost reduction.
15. Cost Council: It is good to formulate a Cost Council in the Company with senior people in it. This Council should set Bench marks with the Competition and Market for Price, Costs. This Council should formulate ideas for achieving Cost Competitiveness on a continuous basis. This Cost Council should be there at all levels in the Organization with its members conducting reviews at all levels. The CEO or Finance Head can become the leader for this Council.
There can be more ideas.
Individually the above ideas may be in practice in many companies. But what is needed is to put them together and formulate them in to a Competency for the Company. It will become a Competency for the Company if the individual elements are practiced regularly and a good result is coming regularly. Cost Competitiveness is very important for every Company. By putting together your own way of managing the Cost Reduction in your Company and practicing it continuously, you develop it in to a Competency for the Company.
Is Cost Reduction a strong Competency of your Organization?