July 13, 2004
Editor's Note: This column was prepared by the staff of Winning Workplaces, a not-for-profit organization that helps small and midsized businesses create better work environments.
Like many automotive stampers, Dowding Industries, an Eaton Rapids, Mich., partsmaker for the heavy truck and automotive industries, is dealing with increased global competition, rising raw materials costs, and customer demands for annual price cuts.
To remain competitive, the stamper had to cut its work force by 40 percent, or 100 employees, over the past three years.
For Chris Dowding, president, tough times demanded fresh thinking. "We needed to empower and encourage people." By listening to employees and engaging them in real decision-making, the stamper breathed hope, excitement, and enthusiasm back into the work force.
The stamper was fighting for its survival, so team-building had to be more than a feel-good exercise. Dowding incorporated principles of Six Sigma, a program that emphasizes instituting measurable improvements in business processes. "Six Sigma identifies compelling reasons for change, sets specific bottom-line objectives, and puts tools in place to constantly measure progress," Dowding said.
Last summer, armed with Six Sigma, Dowding identified materials control as a key area for improvement, and the company set up a five-member team — representing production, shipping, scheduling, purchasing, and customer service – to help improve efficiency in this area.
Dowding began by looking for focused employees with an understanding of the company's operations. They had to be willing and able to make a commitment to meeting biweekly after their regularly scheduled shifts. "It is enormously important to pick the right people, make clear what the common goals are, and make sure team members have the authority to remove roadblocks such as a lack of cooperation between departments," Dowding said.
The team began by drafting an opportunity statement that detailed what was at stake on each project. "If the team succeeded, we would hold onto business, stabilize jobs, and eliminate our wage freeze," Dowding said.
By communicating the stakes to everyone upfront, Dowding was able to motivate team members to buy into the process.
She then worked with the team to set clear-cut objectives. These included reducing inventory by 40 percent; streamlining activities to increase flexibility and allow employees to cover other openings as needed; providing stable scheduling; and improving the accuracy of inventory tracking.
At each meeting the team developed short-term improvement plans and targets, assigned responsibilities, and reviewed progress toward their goals.
By studying the company's processes, the team identified areas that needed improvement. For example, the team recommended strategically aligning job functions by grouping employees who work closely together.
The team also eliminated an unnecessary customer interface by placing customers in direct contact with the stamper's production planners. They recommended consolidating scheduling and purchasing, jobs once handled by three different employees, into one function. They also instituted additional weight verification processes to validate the accuracy of reporting, allowing managers to identify and eliminate errors.
According to Dowding, the team meets regularly, and while they still haven't met all of their initial goals, they have made remarkable progress.
Backlogs, which drive up inventories and overall costs, have been reduced by 85 percent. The stamper also reduced safety stock levels, run sizes, and forecasts because of precise schedule managing. More efficient scheduling also allowed the company to cut overtime by 41 percent.
Increased flexibility made it possible for the stamper to shift one employee to an open customer service position and another to purchasing. This move cut inventory by 19 percent, saving $300,000, and sales per employee has jumped more than 56 percent. What's more, the company increased its overall sales by 21 percent since the materials control team's inception.
By trusting employees and giving them the authority to solve problems, Dowding saw how empowerment could transform the workplace. "You cannot believe in empowerment only in a time of crisis," Dowding said. "Teams should be ongoing, with membership changing over time. We've already identified other projects and other teams, which will come together in a few months."
While any stamper can deploy a team, senior management must give it room to learn, grow, and, from time to time, argue. "You cannot micromanage the team or its activities," Dowding said. "The team will find the solutions and implement the changes. We treat our team like a family – one where it's OK to fight, as long as you agree to work through the issues and go forward as one to hit the goals."
Dowding said she saw her role as to instill a sense of accountability in the team and make sure that they remained focused on their goals. "You must follow up all suggestions and monitor all progress," she said. "Each month we check progress against our specific goals, and make sure that each team member keeps their colleagues informed."
Perhaps most important, she said, management must recognize and reward employees for reaching milestones along the way, no matter how small. "I always thank the team members for their commitment, loyalty, and efforts to keep us viable in the new economy."
Dowding Industries Inc., 449 Marlin St., Eaton Rapids, MI 48827, 517-663-5455, fax 517-663-5123, www.dowdingindustries.com