Culture consciousness and people management often present challenges that are greater than those related to cost trimming when organisations are in the process of implementing change, according to Methode vice-president for Europe Joe Khoury.
Employees can score very low on knowledge of what they are doing
Lebanese-born Dr Khoury on Tuesday shared experiences with around 40 chief executives and managers at Mdina Partnership’s breakfast event themed Profit Ability at the Hotel Juliani in St Julians.
Dr Khoury was one of three engineers lined up to relate success stories of lean principles’ implementation.
“Never underestimate the importance of culture,” Dr Khoury cautioned. “Culture is 80 per cent of change management’s success. Understanding your people will take you a long way towards reaching your lean goals.”
He explained how he and others from the wider Methode family, including former manager Edward Chetcuti, now a lean adviser and coach, devised the VAVE (value added, value engineering) programme which sought to identify ways “to do things differently” and deliver value more efficiently. The programme was implemented successfully in China, where labour costs are traditionally lower than most regions, and later in the US.
The team also created customised software, dubbed the equaliser, able to provide a snapshot of the movements of major contributors to raw material cost. The software was later patented.
Dr Khoury emphasised that only managers who understand the culture of a region and of a plant can sponsor change. Behavioural change and process improvement meant Methode was prepared for the turmoil which 2009 brought with it.
“Everyone knows the value of the euro today,” he warned participants. “Next year will not be a glorious year for Europe. All the experts are planning for it. How ready are you? Look at your activities and prepare for any mismatch.”
Mr Chetcuti shared his experience of turning an organisation around by implementing lean principles. He outlined how lean initiatives aim to enhance a company’s ability to reach higher profits through its people and put products and services in the hands of satisfied customers.
In his earlier project, he set about examining behaviour and processes, and found that people were working 12- to 13-hour days unnecessarily – they were, after all, only paid for eight.
After classroom training and simulation, Mr Chetcuti and the team took the principles to the shopfloor. People learnt to see waste and took ownership of the mission to reduce it and to get things right first time. Through visual management – literally illustrating where teams were at in reaching their targets on boards hanging on the wall – people were able to take corrective action sooner. Creative flow of value to the customer began soon after the company stabilised. Within eight months, profits looked up significantly.
“It is important to allow the customer to ‘pull’ the value stream,” Mr Chetcuti advised. “It is criminal to carry out work that the customer has not requested. Remember, even the simplest procedures have a direct impact on value to the customer. Change in behaviour leads to a change in attitude. Only then will a culture change begin to emerge.”
Betfair’s global head of process improvement Antoine Bonello, who migrated from manufacturing into services several years ago, explained how lean Six Sigma principles were effective in all types of industries.
A Lean Six Sigma Master Black Belt, Mr Bonello illustrated how over the past four years, a three-man team implemented change which led to £9.5 million in financial benefits to the global gaming operation.
Analysis of statistical data had led to waste elimination in processes and improved customer retention rates, help desk productivity, and e-mail response time, among other savings.
He explained the importance of measurement by outlining how exercises to constantly study customer feedback identify promoters and detractors in service levels. Data is crucial in directing decision-making, particularly as customer wants often become diluted along the organisational chain.
“Information must be cascaded so that everyone within the organisation is aware of the goals,” Mr Bonello explained. “We expect people to learn by themselves, but even in the best companies, employees can score very low on knowledge of what they are doing. Value engineering prevents mistakes from being replicated. Analyse what you already do.”