Friday, April 27, 2018

Revenue Going Up, Profits Going… Down?

By: George Singos

Your company is working harder than ever before, with higher sales and faster production leading to the largest increase in revenue you’ve seen so far. Yet somehow profits are less than they were last year. How could this be?

This is a common tale among manufacturers. While revenue experiences a huge boost, net profits remain stagnant or nosedive. The potential issues driving this imbalance are endless, with anything from improper planning, constant schedule bumping or steep overhead costs often holding profits back. Regardless of the reason, net profits are not as high as they could be.

Fortunately, there are many ways to get profits back where they should be. One such method is to focus on increasing gross margin by substantially reducing the Cost of Goods Sold (COGS). If done effectively, this transformation can eliminate major costs within your operations, resulting in higher profits than you previously thought possible.

Which Costs to Cut: The Biggest Offenders
With so many expense areas available to target, this wide opportunity for improvement may leave you wondering, “Which areas should I target first?” or “What should I focus on to get the biggest returns?”

When it comes to cutting your COGS, here are five of the best areas to target to ensure your company sees an increase in profits:
  • Estimated vs. Actual COGS. Are you meeting your estimated COGS? Or are your predicted COGS simply impossible to meet in the first place? This variance in budget could be the source of some major losses in your net profits.
  • Schedule Bumping. Changes in your schedule should be kept to a minimum. Constantly being interrupted in the middle of a project or task with a new task to complete, whether it takes two minutes or two hours, can immensely impact productivity and decrease value added. The associated costs with this consistent starting and stopping of work can be substantial.
  • Changeover. Lengthy changeover times are often contributors to decreased productivity and production. Are your changeovers as effective and fast as they could be? It is worth analyzing your changeover processes to ensure they are not a source of excessive costs.
  • Scrap and Rework. Another large contributor to waste and slower production is scrap and rework. Failure to fully capture scrap and measure rework can result in budget issues. With these aspects under control, some variations in profit can be resolved. 
  • Direct and Non-Direct Labor. Are your operators being set up for success? It should be a priority of non-direct employees to support all direct labor (operators) within your organization. Get them the assistance and help necessary from other workers to ensure they can add as much value to production as possible and maximize productivity – and profits. 
It is possible for any manufacturer to increase both revenue and net profit by targeting areas such as these and improving business operations. Use these tips to help your company reach its full potential and get the profits you should be yielding.

For a first-hand look at how to boost profitability for your company, register for a free Strategic Planning workshop at The Center. See our upcoming line-up of workshops here.


MEET OUR EXPERT
George Singos
Business Leader Advisor

George Singos is the Business Leader Advisor for the Michigan Manufacturing Technology Center. He has accumulated more than 30 years of manufacturing experience in Business Development, Sales & Marketing Management, Project Planning, Quality Management, Costing and Scheduling. Prior to joining The Center, George worked in International Business Development, where his primary focus was growing International Sales in Europe and East Asia while supporting North American, South American and ASEAN operations.





Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services designed to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.the-center.org.

Friday, April 20, 2018

What A Good Boss Does (According to a 4-Year-Old)

By: Charlie Westra

It can be hard to pin down exactly what a good boss does, and even more difficult to become one. For most managers, this is an ongoing process of learning from others and evolving in the hopes of becoming a true leader. But maybe this journey of growing into a great boss isn’t as complicated as you think. Perhaps it’s so simple that even a small child knows what a good boss should be doing.

For those of you who have kids, this scenario will be easy to picture. When my son Carter was four years old, our bedtime routine consisted of reading two books in the hopes that he would finally calm down enough to get to sleep. One night during this routine, while Carter was jumping around his room cleaning up toys and trying to pick out a book (read: delaying sleep), he started the following conversation:

Carter: “Daddy, you have a new boss.”

Me: “Who’s that?”

Carter: “Mommy.”

Me: “That’s interesting… Hey Carter, what does a boss do?”

I laughed a little, anticipating a response having to do with bossing around or yelling.

Carter: “A boss protects you.”

This answer caught me by surprise – and gave me goose bumps because it was so profound. I wanted to hear more.

Me: “What else does a boss do?”

Carter: “A boss helps you.”

What?! Helps me? This was particularly shocking to me, as I have had many bosses (if not all) who never did anything to help me.

Me: “Wow, they help you? What else does a boss do?”

Carter: (Whispering) “Buys you Star Wars toys…"

This answer wasn’t as surprising.

While this is a funny story, it contains a serious lesson about what a good boss – and leader – should be doing to effectively lead their team.

Do you protect your employees? The U.S. Chamber of Commerce identified “Management Loyalty to Workers” as a top 10 desire of employees at every level of an organization. Do you back up your employees? Do you support their decisions and show them how to learn from their mistakes?

Do you help your employees? As leaders, we are responsible for helping those in our team. A common mistake made by many bosses is thinking their success alone dictates the team’s success. It is only by removing roadblocks to an employee’s success that the team can be as effective as it should be. An effective team must go out of their way to help each other succeed.

Do you know what your employees’ Star Wars toys are? Yes, this one applies too. Find what motivates your team. It may be expressing a simple thank you, or getting to know someone personally, or including them in shop-related decisions. Find out what motivates each individual team member and, if it’s within your power to provide, do it.

Sometime in our lives, each of us had a person who took the time to get to know us, gave us opportunity and picked us up when we made mistakes. Everyone has somebody – whether it’s a family member, teacher, coach, boy/girl scout leader, military officer or church leader; we can see their faces, we remember their names. There is no reason why, 10 years from now, you cannot be the face someone remembers as their respected leader. All it takes is helping, protecting and, finally, Star Wars toys.

Want more tips for becoming a great leader? Register for my upcoming webinar, The Journey to Great Leadership Starts with You, on May 22 from 12pm-1pm. Read more here.


MEET OUR EXPERT
Charlie Westra
Growth Services Program Manager

As the Growth Services Program Manager at the Michigan Manufacturing Technology Center (The Center), Charlie’s expertise spans many areas. In his role, Charlie is responsible for developing organizational growth strategies, providing management consulting, and building effective teams. Specializing in improving employee engagement with supervisory skills and leadership development, Charlie works collectively and individually with management and sales teams to develop customized workplace tools to fit specific needs and goals. His mission is to assist companies in producing sustainable, positive results.




Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services designed to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.the-center.org.

Friday, April 13, 2018

Struggling to Embrace Lean Culture? Here’s Why.

By: Mike Beels

People don’t like change. Learning new ways of doing things and adopting new technology can be a scary proposition. I often have clients ask, “Why do we need to change, we are already working hard?” or, “We are already profitable, why change?” The unfortunate answer is that you cannot avoid change; everything changes over time. Instead of avoiding change out of fear or stubbornness, you must embrace it if you want to keep improving.

Remember when eight-track players were first created, totally revolutionizing the way we listened to music in our cars? What could be better than listening to your favorite music whenever you wanted, instead of waiting for it to come on the radio. We thought it was the peak of individualized listening. Then came cassettes. Then CDs, then MP3s, and now we have Sirius radio and Spotify. What’s next? Only the future knows.

Neglecting to use Spotify may not be as detrimental as neglecting to incorporate changes in your facility, but the point remains the same: you must be able to embrace change. If not, you could be committing professional suicide. In his program titled “The Business of Paradigms,” Joel Barker, a technology and business futurist and the bestselling author, speaks to the fear of making changes in business. His message reminds viewers that even if they are already the leader in their market, someone else can find a better, newer way to produce X at any moment, quickly taking over their spot at the top. If you want to improve your service and remain competitive, innovation is necessary.

Make It Count: 3 Ways to Ensure Change is Successful
Following this initial, monumental step of deciding to change, leaders must then figure out how to incorporate and implement change within their facilities. All change begins and ends with employee support, making employees an integral role in the success of your transformation. When starting any new initiative, first ask yourself the question, “How can I make my employees see the need for change?” Let’s explore the answer to this question by looking at the example of how to successfully transition to a lean culture.

Although there is no magic dust or silver bullet to instantly transform the culture, there are several key elements that can help make this transition effective.
  1. Leadership is one of the keys to a successful culture transition. Those leading an organization must provide full support to a lean transformation, as they are in charge of commanding the resources. Leaders should be completely committed to this change. If employees can see that it is not a priority for leaders, they will not make it a priority for themselves. Additionally, leaders must commit to this change for the right reasons, not just because “lean” is the latest buzzword or because a customer asked them to do it. 
  2. Communication is another key. Effective communication requires more than an occasional meeting or speech. Nearly every organization tells me, “We don’t communicate!” Between functional silos (engineering, quality, manufacturing, etc.), between departments, between shifts, between hourly and salary employees, there is little to no communication. Lack of sufficient communication among employees and departments will quickly lead to the downfall of a lean culture change. You must communicate why the change is important and, more specifically, how it will affect each worker. If you simply make changes on the shop floor without including all departments in the loop, you will be met with resistance. Employees need to be tuned in to W.I.I.F.M. (What’s In It For Me?) to truly understand and support the need for change. Five-minute stand up meetings and town hall meetings are two commonly used venues for communicating, and each is highly effective. Five-minute stand ups will often include what happened yesterday, what is expected today and what operators need for the future. Town hall meetings are more than just a slideshow on the state of the business. If done correctly, these gatherings not only provide employees with key information, but also provide them the opportunity to bring up issues or questions they have. 
  3. Training is an important aspect that cannot be forgotten. I have witnessed organizations completely fail in their lean transitions because they did not provide lean training for everyone in the organization. Basic training in lean methodologies is necessary for all workers, and should eventually be made part of orientation for new employees. Additionally, as employees begin to participate in kaizen events, more in-depth training will be necessary. For instance, if the kaizen charter called for an event featuring 5S and Visual Management or Single Minute Exchange of Dies (SMED), the participants would need to be trained specifically in those disciplines to be successful.
When considering the move to a leaner environment, you must first ask yourself if your organization is ready to provide the leadership, communication and training necessary. Only then will your organization truly be able to realize success in adapting to change.


MEET OUR EXPERT
Mike Beels
Lean Program Manager

Mike Beels has served in the role of Lean Program Manager for the Lean Business Solutions Team at The Center for more than 12 years. Mike’s areas of expertise include Change Leadership, Workforce Engagement and Succession Planning, as well as the entire portfolio of Lean strategies and methodologies. He is a professional trainer and has the ability to command an audience and deliver the training message in a way that participants can understand in a clear, non-threatening manner. Mike always leaves trainees excited and ready to complete training transfer to the shop floor or office.




Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services designed to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.the-center.org.

Friday, April 6, 2018

Manufacturing Education Gets a Face-Lift with LIFT

By: Elliot Forsyth

There’s no question that one of the biggest concerns we hear from our clients is finding and keeping good employees. Unfortunately, this situation is likely to only get worse. In the next decade, it is expected that of the nearly 3.5 million open U.S. manufacturing jobs, roughly 2 million are anticipated to go unfilled due to a gap in skills required for holding such jobs. In other words, students and workers today are not prepared for the jobs of tomorrow.

To address this gap, a number of organizations are stepping forward to target the root of the problem: lack of proper education. These groups have begun focusing their efforts on assisting colleges and high schools with how to better align curricula with the needs of the industry workforce. One such organization is Lightweight Innovations for Tomorrow (LIFT), a Detroit-based Manufacturing USA Institute that works to develop and deploy advanced lightweight materials manufacturing technologies, as well as implement training programs to prepare students for the modern industry landscape. The goal in developing this training is to prevent the skills gap from growing larger by building workforce strategies and knowledge around new lightweighting technologies.

As lightweighting continues to grow in the manufacturing world, it is important to teach the next generation about the uses, development and science behind such innovations. This need is what drove LIFT, along with the Association of Public and Land-Grant Universities (APLU) and the National Center for Manufacturing Sciences (NCMS), to establish an Expert Educator Team (EET). The EET is a group of college and university faculty members, all of whom have years of experience and expertise in both materials science and education and workforce preparation. Drawing from this knowledge, the EET works to gather insight and recommend changes or additions to college courses to better target the skills gap and prepare workers for current manufacturing job requirements.

Real Solutions to a Real Problem
What does this look like in reality? The EET is in the process of publishing a series of six reports with comprehensive recommendations for how teachers and professors can modify their curricula to better reflect the knowledge and skills needed for manufacturing jobs dealing with lightweighting technologies, materials and processes. The first and second reports have already been published, which urge educators to focus on developing students’ skills in areas including thin-wall ductile iron castings, powder consolidation processes and agile sheet metal fabrication. These reports include detailed recommendations for what to cover in future training, as well as sources of further learning, including online videos and webinars.

Another source for further learning is the Learning Hub, a joint effort created by LIFT and the Institute for Advanced Composites Manufacturing Innovation (IACMI). This resource provides the first nationally relevant, open source online library of lightweighting and composites-related educational materials to be used by educators and students at all levels.

In addition to supporting current students, LIFT also works to help future veterans find civilian careers through Operation Next. This initiative seeks to provide military personnel with high-level training for the most in-demand jobs in advanced manufacturing to ensure their job search is as smooth and easy as possible. This is accomplished through a combination of self-directed virtual learning and hands-on lab work.

Preparing the future workforce for modern manufacturing will be an ongoing challenge, and organizations and initiatives such as these are important components that can have a beneficial impact and help the industry thrive in a global marketplace.


MEET OUR EXPERT
Elliot Forsyth
Vice President of Business Operations

Elliot is Vice President of Business Operations at The Center, where he is responsible for leading practice areas that include cybersecurity, technology acceleration, marketing, market research and business development. Over the past two years, Elliot has led The Center's effort to develop a state-of-the-art cybersecurity service for companies in the defense, aerospace and automotive industries, supporting Michigan companies in safeguarding their businesses and maintaining regulatory compliance.



Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services designed to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.the-center.org.