Many companies are too fragmented in their performance improvement approaches. We see that most efforts frequently lack the scope or corporate support to be successful. At best, the result is an island of excellence without an enterprise perspective and connection, and with little or no impact on customer satisfaction or the bottom line.
When performance improvement goals are too limited and budget-based, and targets are negotiated between plant managers and senior leaders without an emphasis on total opportunity, real problem solving is inhibited and executives don't understand why their companies fail to achieve or sustain operational excellence. Why? Because their own performance targets often create a comfortable plateau:
- Acceptable and compliant: As long as current customers are satisfied and products and processes meet regulatory requirements, what else is required? In some cases, executives will actually argue that the investment required to exceed mere compliance isn't worth it.
- Good enough: Good quality, speed, and cost control have become the norm in many organizations since the advent of lean. Many managers and employees worked hard initially to achieve new industry standards, but have since become content to maintain the status quo.
- Budget-driven: Many executives are satisfied to meet budgetary goals that include modest year-to-year improvements. Yet budgets often result from political negotiations between management and departments, not rigorous plant-floor observations and facts. Budget numbers don't identify what's really happening in operations or what's attainable.
Milliken & Company takes a different approach, driving operational excellence via Zero Loss Thinking. Instead of status quo and budget-based goal-setting, Milliken & Company compares current performances vs. a theoretical perfect state (i.e., zero losses) — perfect quality, 100 percent equipment reliability, no workplace injuries. Zero Loss Thinking examines all company processes and identifies and prioritizes them as opportunities to generate the greatest gains and, over time, lead to breakthrough performance improvements. This approach can even relate to safety, telling us that every incident is preventable. Zero is possible.
Zero Loss Thinking offers executives an improved strategic approach to achieving improvement throughout their organizations, from production to front office:
- Directionally correct: Achieving perfection is difficult — if not impossible. But for most performance metrics, especially workplace safety, it's the direction all organizations should choose. Milliken & Company, for example, has worked for 20 years to reduce its own losses — capturing hundreds of millions of dollars in cost savings — yet has eliminated only 60 percent of the losses it originally identified.
- Metric metronome: Zero Loss Thinking triggers continuous-improvement efforts even after substantial progress is made toward zero losses. There's always more to be improved. And while the next improvement level can be difficult to reach (i.e., less low-hanging fruit), with each round of improvements the problem-solving abilities of management and frontline associates is improved.
- Culture/behavioral breakthrough: As leaders, managers, and frontline associates meet new performance goals, their attitude about work changes. They understand that improving the work is part of the work, not a project that will disappear once a target is achieved. Their perceptions of new goals — which once would have seemed outrageous — also changes, and almost anything starts to seem attainable.
Median performance metrics across manufacturing plants — 90 percent on-time delivery, 85 percent machine availability, 90 percent finished-product first-pass quality yield1 — highlight how much better most organizations could perform. Each day these companies are self-limited by solvable problems that contribute to losses, from minor delays in production to major product recalls; the compounded effect of these unsolved problems can be as much as 65 percent of cost of goods sold (COGS) over the course of a year.
Zero Loss Thinking fixes these problems by analyzing hard data related to wasted time, effort, and material. Typically, much of this data is already recorded within companies, but not leveraged for improvement; other data will be captured through new observations and tracking. Once these wastes (losses) are aggregated at a corporate level, they're assigned for detailed assessment and improvement by plant, function, and production line. Zero Loss Thinking gradually becomes the organization's compass for improvement, guiding management and frontline associates toward increasingly higher performance goals.
Does your organization need a new strategic and cultural approach to improvement? Performance Solutions by Milliken and its practitioners — who have been guided by Zero Loss Thinking throughout their careers — can help. Contact Performance Solutions today.
- MPI Manufacturing Study, The MPI Group, March 2018.