The Manufacturing Executive
The Manufacturing Executive

Episode 100 · 7 months ago

Focusing on the Constraint to Drive Meaningful Results


Are you making the right decisions to optimize productivity?  

Most organizations don’t. Most get distracted by efficiency and ultimately fail to meet their goals.  

Today’s guest, Pavel Kuviarzin, Business Growth Expert at Future State Engineering, talks about the problem solving steps to make a true impact on productivity, profitability, and the success of your business. 

Join us as we discuss:

  • The difference between “busy” and productive
  • When to utilize the resources you have vs. when to invest 
  • How cause and effect thinking will make a true impact
  • What you can do to avoid supply chain constraints 

Subscribe to The Manufacturing Executive on Apple Podcasts, Spotify, or our website.  

Listening on a desktop & can’t see the links? Just search for The Manufacturing Executive in your favorite podcast player.  

If we simply focus in this process itself and we optimize it, let's say by twenty percent, it means the entire system can shape twenty percent more out of the door. Welcome to the manufacturing executive podcast, where we explore the strategies and experiences that are driving midsize manufacturers forward. Here you'll discover new insights from passionate manufacturing leaders who have compelling stories to share about their successes and struggles, and you'll learn from B tob sales and marketing experts about how to apply actionable business development strategies inside your business. Let's get into the show. Welcome to another episode of the Manufacturing Executive podcast. I'm Joe Sullivan, your host and a CO founder of the Industrial Marketing Agency guerrilla seventy six. This episode is brought to you by Workstep, a software provider that helps companies higher and retain their frontline workforce across the supply chain. Visit Workstepcom to learn more. We all get distracted by shiny objects sometimes, or at least I do. New Technology or something innovative that a competitor is doing that admittedly, makes us a little bit jealous, and sometimes those shiny objects are feelings of jealousy lead us to say I need to be doing that too. But with this mindset we can easily wind up trying to solve problems that don't really exist, or we attack issues that aren't truly the root cause of our problems. My guests today is a pro at identifying where the true constraints lie in the manufacturers operations so they can channel energy into the places that will drive meaningful results. Let me introduce him. Pavel Kouv Oursen is part of the future state engineering team of change management experts. There, paval helps helps companies achieve breakthrough operational improvements by looking at the organization holistically, identifying hidden capabilities within and creating a decisive competitive edge for the organization. Of Bell has over fifteen years of experience working with distributors and manufacturers. He holds a PMP and CPIM certifications, as well as a bachelor of commerce. But I'll welcome to the show and hey joe, thanks for having me. It's good to have you here. The paval. You told me that you will often see manufacturers make large investments in various improvements to their operations, but because they invest in areas where they're not truly experiencing constraints, they fail to achieve any true impact. So can you elaborate on what you mean by this and maybe provide an example or two for context? Oh, yes, absolutely, Joe. Yes, when we work with our clients we see a lot where the first seeing the clients usually do to improves operation is to put investments in to automation or things like that. So So, before I go and explain but a little bit more about it, what do I mean by not really helping them to achieve the significant improvements as they would like? Let me talk a little bit about three fundamental concepts. So the way we see an operation, there is in any manufacturing organization, there is the throughput, there is inventory and there is operational expense. So what's through put? Through put, basically it's the rate the system generates money through sales. So basically through put is money coming in. And then you also have the inventory. What's inventory? Inventory is all the money invested into things the system intends to sell. So basically you notories, money in the system. And then we also have our operational expense. And what's operational expense? Operational expense, it's money spent to turn inventory into cash. So basically money spent to make throughput happen. And now it brings me to the goal.

So what would be the goals or any organization? And so the goal of any organization would be to increase throughput while simultaneously reducing inventory and operational expense. Now from here I can get to the concept of productivity. So what's productivity? Productive productivities, that way I see it, is any initiative by it's our organization. Any initiative by the organization would be productive if that initiative is an initiative if to supports the supports the goal. If if the initiative is not supporting the goal, then it's not productive. So, for example, one large manufacturer from the commercial reprisi refrigeration equipment, they made a large investment in one of the processes upstream. It's a laser in operation. They made a huge investment, a few million dollars. The wise image it's investment because I think, okay, if we if we get the first process up stream efficient and produce more, we probably going to ship more stuff out of the door. But it's not really the case. So what was happening there is a purchase this equipment, they spend a lot of money and obviously all the top management attention is now to make sure this operation is to its very efficient. So the lasering, the lasering was this extremely efficient and what was happening? Sometimes the laser was idle. So the managers was really angry. Wise operation idle. So we coming into the perspective, looking is operation and we looking that the operator that is moving the full skates of metal that was already lasers, that was already cut. So they moving it from this operation, from the lasering, to the shakeout operation. The operator on the forklift couldn't keep up moving full skates of ready material to the next operation. He just couldn't keep up because the lasering was so efficient. And then we ask in the question, so how do you think it will make the system more effective? And they thinking about that. What it help you to ship more stuff hours the door? Maybe not, but when we asking them so, look, there reason mountains, like lots of lots of inditory in front of the shakeout operation. So we asking them all the rest version. So do you think if we put more and makes the mounting bigger, would it really help? So that's really the misconsumption that if we automate, if we invest more money into it, is some kind of innovative are piece system. If we put robotics in place, we definitely going to ship more stuff, we definitely going to make the system or effective. But that's not the true that's not I mean, that's not the case. You think people just get distracted by the shiny object or a new technology and there they see another manufactured hearing something. So we should we should probably be doing that too. Or how does this happen? I think so, because yes, before it was a big crazy from moving from mrp to earp, because then they moved from Amorp to earp and the way using ear the AREP system like it's an MERP system. So it really didn't helps. And robotics came in place. Everybody's getting robot so now we have to get probis to but the thing is you need to what we do, what's imported to do for organizations, is to apply causing effect thinking into every problem, into everything that is happening. It's more of a scientific method. When you come into your system, you see your processes. All the processes are interrelated and interdependent between each other. So you apply the cause and effects thinking and it becomes a little be clearer to understand how different decisions affects every process within the system. And we apply those concepts, it becomes easier to understand where you really should focus your efforts to make the system more effective. Now, you and I were talking recently about busy work and how there's often this feeling inside and organization that we need to keep everyone busy. Why is this the wrong mindset? So, yes, so there is a big misconceptions and as fortunately, manufacturers or Veri is, organizations sometimes don't really see a difference between productivity, productive work, and busy and...

...being busy. So, so many times being busy is not necessarily means being productive. And many times, when you have all your processes busy and efficient, it creates the opposite effect. It's not making you produce more stuff and it's not supporting the goal. Remembers the goal is to increase throw put will simultaneously reducing operational expensive inventory. When you are being busy, you're not really supporting the goal. You will not have more throughputs when you have all the operations busy. You're probably going to have the opposite effect, you're going to have something, probably more working process inventory. So they was a example from the previous example from this manufacturer in a in a commercial refrigeration refrigeration industry. The heads of rock process busy. So they were creating more working process inmentary. But now why is the misconception is coming? Why? I mean there has to be a reason why everybody wants to be to have everybody busy. So it's a misconception. I think personally, is coming from the cost world or the cost reduction mentality. So, for example, we hire an employee, let's say it's an never like average number of hours for the hours a week, the work. So we paint them for forty hours a week. So when we hire an EMPLA, we want the simple to be as productive as possible, or not real productive, as busy as possible. So when they please ID or the processes, I know it means that not producing. So it's bad. Why? Because of the cost mentality. We pay them for for something. So they have two works. They have to do something. So, as example, will be from a manufacture of post four hundred. It plays think they about sixty million. So distant size manufacture and to make every every process busy, as they had an incentive that every department was measured on how much they produce. So he's a produce more. The incentive is better department, the department. So there is the less, there is machining department. There is here treat is forging different departments, let's say, and every department was was measured. How much can they produce? So let's say they start a bunch of five thousand and need five thousand to meet the market, the market demand. Let's say they need a bunch of five thousand pieces. Now they doing because they want to reduce and change a worse and to make sure they are being productive. As far the incentive they doing there starting a bunch of tenzero pieces so that we're going to have show better numbers. We're going to have we want to have more time working, more time being busy. Sometimes those parts can be easy parts. For example, you can do two parts at the same time as you'll do one hard part. So they doubling it again. So now they're doing twentyzero patches to Twentyzero batches and showing really good results. They're being busy, but guess what's the customer wants the customer wants. The customer probably wants the hard parts and they won't reduced Lee time. So when we went to the floor, we looking there is a lots of inventory, working process inventory everywhere. They went to fourteen weeks a product production lead time. Fourteen weeks. When we start working with them, in a short amount of time we were able to reduce that production lead time to nine days. Well, how we did it? Once again, cause and effects thinking. We apply the problem solving approach in the right areas. Obviously we change in scientive program that's for sure. So we put the measurement on shipping. So how much you shape? That's how everybody how watch everybody get and why they employees in place like this because they scored the best us adults ever from three dollars and now our extra dollar in nowur extra...

...that they were getting. It fils. Let's say they work behindred hours per video, so I'll get three dollars extra. We were able to reason the nine doors. So it's huge, huge changes in the mindset of how we do things. So that's why easy work is not always productive work. That's a really perfect example. Let's take a quick break for a word from our sponsor. Hiring and retaining frontline supply chain workers continues to be a major struggle in today's market. Work step is a leading software provider that is partnered with manufacturing companies to help them better understand the true reasons behind their workforce turnover and take actions to improve it. WORKSTEP has successfully helped many manufacturing companies reduce their frontline worker turnover by up to thirty six percent. Visit Workstopcom to learn how you could do the same and protect your bottom line. But now I've heard you use the term systematic capacity expansion. What does that mean? Okay, so before I start talking about the system might a capacity expansion, I think it's critical to understand the focusy mechanesims we use when we start the working with our clients and the what kind of thinking we apply, because the systematic capacity expansion is more of a it's more like the force, the force focusing stet. There is a total of focusing steps that we use when we start working with our clients. So the first thing when we look at organization holistically, so we're looking at the organization as a system, a system made up of different processes. Within those processes, you remember it a solid earlier. Are Interrelated and interdependent. So there will be effects when you make changes in different processes in a process, there will be effects, negative or positive effects. So it's very critical to understand the Inter relationship and the interdependence between those processes because sometimes series organizations unfortunately working in silos, but in organization is not the Silo Organization is the one system. So where does it bring me? Imagine all those processes are connected like in the invisible chain. So you have a chain right. It's could call all the process connected in a chain. And what is the strengths? How strong is the chain? The chain is strong as its weakest link. And why it's so important? Why, ever, see why it's so important to understand where the weakest link. We call it also a constraint. So why it's so critical to understand understand where the constraint is? Because if you strengthen the weakest link, use strengths in the chain. So if you notice that, we found out. So the first focusing step is to identify the constraint. So now we identify the constrain and if we and why so critical to understand it is because if we simply fock was in this process itself, and we optimize it, let's say by twenty percent. It means the entire system can shape twenty percent more out of the door. It's is huge. It's phenomenal. And what's also interesting is that when we apply the focusing steps, you haven't heard me saying investing. We don't invest and we use the same resources and if identify the constraint, the second step is we deciding how to exploit the constraint. So we decide how to strengthen the constraint, how to strengthen the weakest link, and here we already start seeing changes once we strengthen the weakest link. The third focusing step is subordination. Basically subordinate all the processes within your system to work with the constraint. Your constraint is the pacemaker of the system. You subordinate all the processes and you still you don't invest any money and you use the same resources you...

...have and you'll see twenty percent easily. We see as much as fifty percent increase in throughput with the same resources and without investment. This way you might in the first question you ask, you ask me about why people get it wrong when the investing way. Or Manufacturers get it wrong sometimes because the starting it from the forced step, the starting to invest, and that's exactly the systematic capacity expansion and the force focusing step is you elevating the constrain, meaning once you are able to achieve just such significant results, you obviously getting market share from your competitors. So you have the stame resources. Still, you didn't invest in anything and you getting market share. So you're shipping more stuff out of the door. You are you you achieved a decisive competitive men competitive edge in your industry, but at some point of time you'll need to elevate, so you need to invest. That's why it's system mighty capacity expansion. You increase your capacity, but strategically. You don't purchase equipment because you think is going to help you, or auto or you automated process. You systematically, strategically position where to improve and when. And what's more, even important than that, went to improve at work time to put those systems in place to elevate your capacity. Well, how's this concept of systematic capacity expansion different during a time like this, when the supply chain is often the constraint of very good question. Yes, apply chain especially thus what was a two years now, since we have the Covid, even more now. Yeah, so obviously it was a huge, huge game changer everywhere. Flighting problems, hugely times, shortages everywhere. Raw materials costs went through the roof like crazy. When we go to the organizations, everybody right away thinking is the supply chain, is the issues of light chain. Everybody had kind of the beliefs that is because of the supply chain the have all these issues. But it's funny is that the when we worked with our clients during the times and with all the clients, we recognized there is so much, so much capacity left under utilized inside the organization. It would resolve the disruptions, all the price increases, all the stuff that was going on. There is still so much potential inside organizations to optimize with the same resources and without in the investment. So, for example, one manufacturer in the hand tool hand tools industry, pretty large company about the secated two or a hundred million. They had huge issues. So we started working with them and in two thousand and twenty one, not only is the head all the issues going on, they also had about those their organization of about four hundred employees. They had about fifteen percent of inplaee because of cool like combat the pandemic. Because of that, they had shortage. I mean, I'm sure we familiar. I'm sure you heard a lot about different organizations complaining about people issues, but just not know men power and especially during those times with all the incentives from the guard moment, loss of companies and problems with people, there is just not enough labor force. So they had fifteen percent less people. But we applied their concepts. Like we identify the constraint, we decided how to exploit it. We subordinate its entire system to the constraint. And Two thousand and twenty one was her best shipping year. Can you believe that? It was our best shipping year in two thousand and twenty one? With the rest, you haven't heard that from too many people. was less people most of the year and they started.

What we did not realize how quickly they're gonna start getting more orders because nobody else could do it. There is an issues everywhere. Everybody is in the same game, game playing field. It's not like one organization having these issues. Is global right, so everybody's having issues. But but with this client we were able to go through those issues and still improve their operations. So now they start getting market share, the start getting orders from from other customers, and this way they were able to achieve a decisive competitive agents their industry. And they had so many shipments non stop. There was more and more shippers coming in. It was crazy. And then that's why what I was wanted to say is that I don't think systematic capactic expansion would be different than any times, and actually times of uncertainty, times of crisis, that's that's that's times where you can really an organization can obviously either cease to exist or, if they put the right methods, is a place, right focusy, they can actually get a decisive competitive age and they can be number one in their industry or be really on the top. So That's very dangerous times, but at the same time there is opportunities to also to get and when use is this comminded, like when use situmtic capacity especially, you elevate to the next level. So this concept really wouldn't change even during times like the supplying destructions and all this kind of stuff that is going on provow. Is there anything I did not ask you about today? That you'd like to add to the conversation. So yeah, so one thing I would like to mention is that we also believe in the inherent simplicity. So any problem, any difficult situations that manufacturer might face, there is really an inherenceiplast in simplicity within that's the only thing that you really need to kind of understand is what is the problem, get those the root causes a problem, understand all the effects that you're experiencing because of the problem and apply very simple methodologies because, to tell you honestly, every time we go to clients and we finding out where to we need to improve and how to improve, it's very it's usually really simple. It's almost like a common sense approach. But what we have there is lots of conflicts. Sometimes there is we say, inside organizations and there is a euroneous assumptions about what should we do to get better from different departments, like you know, the usual politics. Sometimes Organization space and there is, if their honest management, euroneous assumptions is coming out. But they if we have a constructive dialog inside the organizing we have a constructive dialog, all the parties will agree that actually is a goal is the same. The goals organization is to make more money, right or, like I said it, increased Sirport, reduce inmatory and operational expense and if you ask anybody organizations delegree that that's a goal. How we get there? That's we were starting to really embrace them. Put our great conversation today, can you tell our audience how they can get in touch with you and where they can learn more about future state engineering? Yeah, thank you, JOD I enjoyed it as well. So it's very simple. We will share my linkedin profile. You can just send me, send me a message, as well as our future state engineering that's called website and will also we are getting really active on Linkedin. We are hosting actually this month we are hosting a Webinar. From time to time we have different sessions coming out and Linkedin some lively events where we can talk,...

...where we talk more about the concepts we apply it, things like that. So yeah, just connect, was me owning, then send me a message and they will go from there. Beautiful. Well, put that once again, thanks for doing this today and as for the rest of you, I hope to catch you on the next episode of the Manufacturing Executive. Before we go, I want to say a quick thank you to our sponsor, work stop. Worksteps software helps companies higher and retain their frontline workforce across the supply chain. Visit Workstepcom to learn more. You've been listening to the manufacturing executive podcast. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. If you'd like to learn more about industrial marketing and sales strategy, you'll find an ever expanding collection of articles, videos, guides and tools specifically for B Tob Manufacturers at Gorilla Seventy sixcom learn thank you so much for listening. Until next time.

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