I attended the Works Management Round table held June 28th in London. It was attended by selected manufacturers from the UK and the afternoon was broken into two topics, labor productivity and a discussion of the labor pool and skills required.
The session was capably led by Max Gosney, editor at Works Management. The discussion was lively as it always is when a group of manufacturers start talking about labor. But I know Max is going to write the day up soon and rather than steal his thunder, I wanted to share another insight I gained from the day.
It turns out my lunch partner, Nitin Patel from Glen Dimplex Home Appliance, also has quite a bit of experience with labor management. Glen Dimplex manufacturers cooking appliances and is one of the last UK manufacturer of “white goods”. Nitin came from the auto industry and saw his share of labor challenges. His previous company solved them by outsourcing production to reduce labor costs (and their labor problems). But that only extended the supply chain and worsened labor relations with remaining employees beginning a vicious circle downwards. At Glen Dimplex, he found a CEO that took a different approach. Denver Hewlett focuses on his employees and adjusts the operations of the company based on what’s good for his customers and employees. With both of these groups happy, Glen Dimplex is able to successfully compete where most others have given up.
Intrigued, I asked for examples of how it executed this strategy. It seemed too good to be true. It turns out, there are some unconventional practices occurring within the walls of Glen Dimplex.
First is an investment in employees. Many did not have the skills to embark upon Lean and Six Sigma projects. Employees now spend 3 hours a week training. They are learning the math, statistics and principles of continuous improvement. Incredulous I asked how they had justified three hours a week of paid training. Nitin acknowledged that they did not start out at 3 hours a week. They started with smaller commitments but as these investments paid off, it became apparent that more training would yield bigger benefits. Applying my own version of the 5 why’s, I asked for more detail. Nitin relayed this story: As a part of their manufacturing process Glen Dimplex applies enamel over steel. This is a process where a powdered glass and oxide mixture is applied to a metal surface and then baked to fuse the glass to the metal. The problem was that 1-2% of the appliances had a defect in the enamel that would cause the component to be scrapped. Taken on as a project by the employees, they went back through the process and slowly eliminated all the possible causes of the defect. As it turns out, variations in air pressure that force the beads through a sprayer would cause occasional build up on an internal component in the sprayer. Occasionally as the build-up of beads became large enough, it would be dislodged and a small clump would be sprayed onto the surface of the appliance. Not easily visible before baking, it became an obvious defect when it was too late to do anything about it.
What Nitin noticed during the project was that the employees were thinking about the problem at night, they were discussing it among themselves at lunch. And even thought they were obviously busy, because it was a priority for them, they found downtime during the day and took advantage of it by working on the problem. While they were not able to reduce the variation of air pressure in the nozzle, they added a simple step of wiping down the nozzle on a regular basis and the problem was eliminated.
Eliminating scrap, the worst of all wastes, is a tremendous victory. It’s solutions like this that allow and encourage Glen Dimplex to continue investing in their employees.
Realistic discussions about pay with employees are a second example. Compared to the pay practices in many industries, Glen Dimplex employees don’t receive different wages for performing different duties. They are expected to be flexible and the incentive is job security versus a stratification of wages based on jobs performed. This simplifies changes in moving the workforce around the plant based on changes in demand. It eliminates the practice of employees looking to maximize their time at higher paid jobs. It also simplifies “fairness” issues when assigning work. While it may be different from what employees are used to, it is improving utilization for the company which is increasing job security for employees.
Nitin also shared a third practice at Glen Dimplex. As a medium volume, high mix manufacturer, much of the equipment in the plant is general purpose. While this situation might be considered a hindrance to higher performance and throughput, Glen Dimplex has turned it into an advantage. One of the most common complaints from employees at any company that are asked to begin a Lean effort is that they are often being asked to eliminate their own jobs. They understand that for many manufacturers the extra capacity can be turned into high volume. But when the market isn’t demanding more capacity, management will reduce the excess capacity sometime resulting in fewer jobs. Employees are caught in a bind; do nothing and hope the business survives or find hidden capacity and hope they continue to stay employed. In either case they are not in control of their destiny, a difficult position for anyone to be in.
Glen Dimplex has resolved this dilemma by taking a vertical integration approach. Moving in the opposite direction of many companies that have jumped on the outsourcing bandwagon, Glen Dimplex is looking to take on more of the supply chain rather than outsource it.
Glen Dimplex recognizes that they can’t do everything suppliers provide. Nitin explains its strategy. “We have to be careful about what we bring in-house, but there are more opportunities than one might think. For example, we use polystyrene for packaging. Previously it was a purchased product from an outside vendor and we were at their mercy for delivery. When we identified extra capacity, we began a study to determine if we could produce the packaging in-house. It was a very different process that we weren’t familiar with. We didn’t have the engineering or operational skills such as foaming to produce it. We did know we used enough polystyrene to produce it economically. We decided to move this product in-house and learn how to make it. Glen Dimplex management and employees have the attitude that if someone else can make it, so can we.”
It’s this commitment from the executives that provide Glen Dimplex employees with the confidence to believe if they work to find extra capacity on an existing process, the effort will be rewarded with more work, not lay-offs. This strategy has also provided an unintended consequence. Now that Glen Dimplex has so many different processes to support, employees are accustomed to changing jobs and learning new skills on a regular basis which makes them better at it. With more knowledge about all the materials and processes in their entire supply chain they can identify opportunities much easier than competitors with extended supply chains.
It was a great lunch and a refreshing discussion with Nitin. I look forward to visiting his plant to see this in action the next time I’m in the area.
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