A central element of a good factory management system is the set of goals and objectives which each department, each team, and each employee are given. This is what we are going to cover in this article...
When discussing manufacturing best practices, people often mention physical elements (5S, pull systems, automated processes, mistake-proofing, and so on). That’s what visitors can see easily.
What is NOT easily seen? The management system itself. And yet, it is arguably the most important ‘best practice’ since it drives all the other improvements. Without a management system, employees get distracted by urgencies, spend time firefighting, and don’t work on important topics.
One of the most important ways to get communication across is to set clear goals that all employees can understand and follow every day.
Have you visited factories with tens of slogans about excellent quality, but whose production staff are paid purely based on the quantity produced? That’s what conflict between goals and objectives looks like. People end up disregarding those slogans and are confused about the company’s priorities.
Have you seen “quality policies” that are only written for ISO 9001 auditors, and that nobody really remembers or understands? That’s an example of a set of goals that are not communicated correctly and end up being useless.
Both these situations are prevalent in China. Both are detrimental to company performance.
So, setting a few high-level goals (usually around quality, cost, lead times, safety…) is the first step. But it is not enough.
Objectives for department heads
The production manager should care about efficiencies, on-time delivery, and quality, right? Then make sure he is given these types of objectives.
Similarly, the purchasing manager should care about on-time delivery from suppliers, quality of incoming parts, and total cost of ownership, right? Same idea.
If the system is set up properly, quality (for example) will be the responsibility of purchasing, production, engineering, and the quality department of course. People will have to communicate and work together to make improvements happen.
Setting it up for each department head is the first step. If you get this wrong, the management team won’t enforce the right behavior in their respective departments.
What makes a good objective?
Firstly, it has to be specific and measurable. “Rework” is okay, but this is better:
Secondly, it has to be meaningful, even if the activity increases or decreases markedly. “Scrap costs in RMB” are not very good. Instead, this is much better:
Thirdly, the target has to be realistic and achievable. Otherwise, people are demotivated. Notice how the target gets tighter over time in the graph shown above – it encourages continuous improvement!
Finally, nobody should have more than five objectives. How can they be expected to keep all of them in mind while working on all five at the same time? The ideal amount based on academic research is probably three objectives.
Objectives for teams and individuals
In the best companies, objectives are cascaded down to each individual. Yes, everyone can have 1, 2, or 3 ‘numbers’ to focus on.
What about the receptionist, for example? Surely she is too removed from production activity? Well, she could be instructed not to let the phone ring more than 3 times.
Make sure everyone’s objectives are connected to the company’s overall goals. Once employees understand that link, they will all grow in the right direction.
Make your factory management system visual
Your objectives can be put on visual boards in the office and on the production floor and should be kept updated. Depending on the nature of the metrics, a standup meeting can be held daily or weekly.
This type of information pushes people to work together to accomplish company vision. As people start to learn what they need to do simply, they will look to communicate in a way consistent with those goals.
We are not allowed to show examples that we have put in place for some of our clients, but many examples can be found on the internet. Here is one:
Many first-class manufacturers set up “lean corners” where that information is posted. There is typically one such corner in each workshop and each office floor.
As I wrote above, set up a to-do list in a public area. Set up a to-do list (with responsible persons & due dates) next to the boards, to drive action. Use color codes to show what actions are on track vs. late. Some people will feel pressure!
It will be clear from the visual boards if the team is succeeding or not. “Was the quality goal met?” “Did we achieve the production number?” “Did we meet our cost goals?” The manager should focus meetings around the causes of each goal and employees will become self-motivated since they know whether they are meeting targets or not.
Is this management by objectives (MBO)?
In a sense, it is. Employees are given objectives. But the manager should not revert to using a negative approach such as saying “this is not good! Do better, or you are out!” Unfortunately, we've seen this happen in a few organizations.
The role of the leader is to get the discussion to the “why” and “how to improve,” and away from “Whose fault.” In other words, the leader facilitates the discussion and tries to get the team to commit to certain actions.
When objectives are well chosen, it tends to happen naturally. People don’t spend 3 hours in a meeting room giving excuses and describing how other departments caused their issues. Instead, they look at data and discuss ways to get better results.
It does take a bit of training for the local leaders, the supervisors, and the managers. But generally, most of them understand it and have the right attitude.
I have worked with systems like this for years in automotive and other industries. At CMC, we have put these practices in place for some of our clients in China and, four years later, these systems are still in place and driving regular meetings and improvements.
What about your factory? Do you have a factory management system in place, with goals and objectives? What has been the biggest obstacle to driving improvement? Share your comments below, and we will make sure to respond.