Assessing a Factory: The FINAL FOUR and More
Within an hour, you can assess the success level of a factory. If you are invited to a manufacturing plant for any reason, for example as a supplier, or a customer or even as a candidate interviewing for an open position, here is what to look for when assessing the plant. I call these the FINAL FOUR. In other words, if you observe red flags in these FOUR assessment areas, the plant may be in its FINAL days of operation.
- Do not be fooled by the front office! The presentation of the office means nothing, in fact if the front office looks beautiful, but the shop floor is dirty and outdated, that is a big red flag. This is a sign that the company invested in the wrong things. They invested in perception and not reality. They want to look good to feel good. Often this is an ego driven goal of a misguided executive. Whenever I see front office furniture that is overly invested-in while the production floor is under invested-in, I see disengaged employees everywhere. The office workers will be hanging-out, drinking coffee and talking about irrelevant things and they carry no sense of urgency. It feels more like a country club than a place of business. Meanwhile, shop floor employees will be discouraged and demoralized. So if there is a big gap between the office and shopfloor “wow-factor”, this is a huge factory performance RED FLAG. However, if the shop floor and office are about equal in their level of up-datedness and remodeling that is a good sign. Or, better yet, the company invested heavily in shopfloor modernization and it left the office behind. If this is the case, it is only a matter of time before the office gets remodeled, because the shopfloor financial performance will be solid and this will eventually fund office upgrades.
- Observe the employees! If the shopfloor employees have a spark in their eye and a bounce in their step, that is a sign of success. It means the employees are happy to be working there and they are engaged in their work. Also, listen to conversations. If they are talking about anything specific to their job, whether it is a problem they are having or a question about a process, that is all good. Again, it tells you that the employees are engaged. However if the employees look tired and bored, that is a bad sign. Say hello to them with a smile on your face and see how they respond. Do they seem lifeless? If so, that’s not good. Listen to their interactions with each other. Do you hear comments like, “TGIF”? Or “Another day, another dollar”? Or sarcastically, “Oh another day in paradise”? – None of these comments are good. These are RED FLAGS telling you that the employees are disengaged in their work and shop performance is poor.
- Look at the walls! What is posted? Metrics and updated company information? Or outdated information and cartoons of dysfunctional workplaces? Take a stroll to the bathroom. Are they clean and graffiti free? You see, the walls are telling you a story. If they are clean and full of relevant information – that is a sign of success. If they are filled with outdated information, sarcastic cartoons and graffiti – then you want to run for the door. If that plant doesn’t quickly change the culture – they will shut down within a few years.
- Explore the level of equipment maintenance! Look for cardboard, duct tape, bale wire, missing machine guards, crushed conduit and excessive oil leaks. If equipment maintenance is poor, it is a sign that production performance is low. The management is short-sighted. They are failing to invest in spare parts, maintenance personal and systems. They are probably struggling financially and so they fail to invest in maintaining equipment. Meanwhile this plant will be running unfavorable variances in operations. Scrap rates will be high and direct labor costs will be worse than budget. This is the kiss-of-death for a plant. A plant can’t sustain operations when the equipment is degrading over time. Poor maintenance equals poor performance.
If a plant is messy, disorganized, and chaotic – it is not necessarily the “kiss of death” for that plant. There are many successful plants that don’t practice lean principles and yet they can still operate successfully in a chaotic environment. Of course, they have large opportunities for improvement, but failure is not inevitable. So, if you visit a messy plant that exhibits no signs of the FINAL FOUR, just understand that that plant is probably secure, but not optimized.
A lean factory is a factory that is continually optimizing. Lean plants rarely get shutdown, but it does happen occasionally. So if you are in a lean factory, you are most likely in a successful and secure factory.
However, if the shopfloor is underinvested in as compared to the office, the employees are disengaged, the wall postings include outdated information, cartoon & graffiti and equipment maintenance is poor, then you have identified a plant suffering from the FINAL FOUR and this plant’s days are numbered.
An experienced manufacturing leader can quickly and successfully assess a plant using these criteria.
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