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What fabricators can do with lean manufacturing when a crisis hits

Identify the impact, develop a plan, communicate often, and empower employees

Illustration of manufacturing

It’s a time of emergency. How should metal fabricators move forward with lean manufacturing practices? It starts with identifying how the COVID-19 crisis impacts organizations. Getty Images

As you march forward on your lean journey, you see that processes are increasingly productive and predictable. Your customers are demanding but satisfied. Your employees feel they are contributing in a meaningful way. Your operating principles provide meaningful direction.

And then the COVID-19 crisis hits. Your world turns upside down. Unexpected pressures bear down on the operation. What seemed clear a short while ago is now unpredictable. What does a fabricator do? Of course, that will depend on the type of crisis, but let’s look at a few ideas that might provide some structure during this difficult ride.

Identify and Gather Around the Driver

Unexpected extreme demand in a national or local emergency may mean ramping up production to levels never seen before. You need to ramp way up and real soon. Or you might need to ramp down very quickly, either to comply with a government mandate or because your customers’ demand evaporated. Your response to ramp up will be markedly different than the response to ramp down.

What if the issue is not a national or local emergency but rather a liquidity crisis within your own company? Maybe some situation has resulted in a violation or near violation of your financial covenants with a key lending institution. You suddenly risk losing control of your business. You are put on a short leash and have to make decisions that satisfy your financial partners rather than your regular customers.

Whichever of these or other crises apply, you must gather around what is important: the driver, which in this context is the high-level action taken to respond to the crisis, such as the need to ramp up production extremely quickly. Identify the crisis and driver clearly and their impact on your operation, then turn the focus toward action. People need to rally quickly but methodically. There is no room for panic.

Communicate and Clarify Frequently

Clarity and repetition are essential when responding to a crisis. The clearer the communication is, the easier it will be to get people onboard and rallied. Even if you need to convey difficult news, the workforce will be more supportive if you share the news openly and honestly. If you don’t communicate, you leave a news vacuum … and the grapevine will fill the vacuum. When is the last time you observed the grapevine getting it right?

Frequent communication helps people understand the message and hence makes that message more effective. If you communicate a message once or twice and assume that everyone understands, you might be woefully wrong. Muddled and infrequent communications create confusion and distract your scarce resources away from the crisis mission.

Brevity and consistency are two of the most important characteristics of effective communication. Put yourself in the shoes of the people receiving your message. Avoid dumping massive amounts of detail, which can lead to confusion. Make sure they can walk away understanding a few key points.

Are there some things you might not be able to share? Of course. There may be confidentiality issues, personnel matters, or sensitive items that need to be sheltered. Sort out what can and cannot be shared and then communicate the message often.

Use Data to Make Good Decisions

During your lean journey you’ve learned to use data and facts rather than anecdotes and opinions to drive decisions. The same should hold true as you navigate the crisis. Although the nature of the crisis and the driver will point you in a direction, the data should help you quickly and smartly formulate actions that will engage your workforce. Admittedly, there may be periods early in the crisis when you lack solid factual data. You will make assumptions based on the best knowledge you have to date, then refine the assumptions as data begins to surface.

Let’s assume you need to aggressively ramp up for a surge in demand. Once you get a handle on how large the surge needs to be, you can start using takt time and cycle time analysis to figure out the feasibility to produce and where bottlenecks will impede the ramp-up, then begin the process configuration and reconfiguration. Have your engineers create models that allow for quick “what if” and scenario planning. As data and circumstances change, you may find yourself replanning and reconfiguring frequently until the crisis situation stabilizes.

Once you understand what and where the constraints are, you can put a laser beam focus on getting those particular operations or processes to perform at higher levels. This might be the opportunity to use an hour-by-hour chart to develop a deep understanding of throughput, disruptions, and what might be done to make it better. Plus, it puts the gathering and ownership of the operational data in the hands of the people doing the work. Given that information, they are able to develop targeted improvement ideas that may be base hits … but lots of base hits add up to big results.

What if the situation revolves around a liquidity crisis and covenant nonperformance? In this case, you are looking to convert nonliquid working capital into liquid working capital. Can you convert raw material and work-in-process into salable product? Can you turn off or slow down your suppliers so that cash outflow is pushed out until later, or at least moved closer to the point you actually use the material, rather than receive it, pay for it, and just let it sit in your warehouse? In this case, look at operational data to determine the financial impact of either slowing incoming material or increasing throughput velocity so that you increase liquidity.

In severe cases, you may make decisions that appear to counter your lean efforts, but they’re right on for addressing liquidity. For example, you might begin to cherry-pick and batch your jobs based on what can be finished and sold (i.e., converted to cash) rather than following a pull schedule where you build frequent smaller quantities. This ideally would be short-term until you weather the crisis.

Empower People to Act

When the crisis hits, expect company leaders to develop the high-level response plan quickly. Perhaps you have only a few people involved early on, since speed is critical. But once direction is set and communicated, you need to involve and empower people to be part of the solution. Execution will be both top-down and bottom-up. The people closest to the work may have fantastic ideas to respond to crisis drivers quickly.

A crisis response has one leader but many foot soldiers, and they all have something to contribute. One of the important principles of lean is respect for people, and one of the eight wastes is nonutilized talent. Your response to the crisis requires speed and input from all corners of your company. If you empower everyone to generate ideas and carry out plans, then you will be respecting people and using their talent.

In short, let people know what to do, then empower them to do what they need to do. To do this effectively, streamline your reporting processes so people have timely and relevant information about recent performance and what needs to be done next. There probably is no time for system changes, so some of the streamlined reporting may be manual or crude. That’s OK as long as it gives people what they need to know to be effective in the crisis.

Not Business as Usual

Regardless of what crisis you face at your fabrication shop, expect that managing and addressing it will be messy, contentious, and sometimes a bit like herding cats. But it can also be extremely rewarding and fulfilling. Just be willing to adjust as needed and send the message that everyone needs to be flexible. This is not business as usual.

Actions will need to happen much faster than during “normal” times. By utilizing everyone’s talents, with everyone pulling in the same direction and with clear goals and expectations, your company might achieve far more than anyone thought possible.

Jeff Sipes is principal of Back2Basics LLC. If you have improvement ideas you’d like to read about, email him at jwsipes@back2basics-lean.com or Senior Editor Tim Heston at timh@thefabricator.com.    

About the Author
Back2Basics  LLC

Jeff Sipes

Principal

9250 Eagle Meadow Dr.

Indianapolis, IN 46234

(317) 439-7960