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Constant, Never-Ending Improvement Builds Net Worth
Background
Gordon manufactured two
styles of fiberglass boats: one for water-skiing and pleasure, the other
designed specifically for bass fishing. Both boats were manufactured on
the same production line, switching between the two models as orders
and demand shifted.
Problem
Business
was booming. Obviously, that's the goal of any business so long as you
can fill orders promptly. They were selling boats as fast as they could
make them, about two boats per eight-hour shift. So they added a second
shift running from 4:00 pm until midnight. At first, this second shift
was unable to finish two boats per shift but caught up after several
weeks. Nonetheless, production was still not meeting demand.
The
Solution
Eventually, the night shift needed a new
foreman. Gordon hired a rough-hewn character who came with high praise
from his last boss. After getting acquainted with the process, he asked
his night crew to think of ways to do the job easier - not faster. The
men volunteered several ideas for doing the job with less hassle.
About
this time I was retained to assist with the production lag time. Using
The Profit Process, we met with the two shift foremen and explained the
need for a simple means of communicating productivity to the workers.
The next day, the new night foreman spread a large length of butcher
paper across the wall in the factory. When the night shift came on duty
he asked the day foreman how many boats they had made that day. The
answer was "2." Without a word to his night crew, he scrawled a large
'2' on the butcher paper. That night his shift completed two boats and
he marked that '2' opposite the first one. The following day he again
asked the day-shift foreman for their production total and noted another
'2.'
After several days of logging in 2's for each shift, the
night shift workers announced that thought they could complete three
boats that evening. They did just that and a large '3' was marked on the
wall. The day shift then logged another two-boat day, but the night
shift topped it with another three-boat evening. But after a week of
being outdone by the new shift, the day workers began producing
three-boats as well.
The men developed more ideas for improving
both the manufacturing process and the products. Gradually, over just a
couple years, production grew from two boats per shift to six boats -
all duly noted on the wall chart!
The Result
Due
to the continual increase in both product quality and productivity, the
business thrived. Eventually the business built a larger factory and
added another line of boats. Finally, the business was sold to a
national firm to fill in a geographic gap in its coverage and Gordon
retired. In two short years, increasing his productivity had increased
the valuation of his small business beyond his expectations.
Commentary
Having a visible and simple metric for product and process
improvement is a powerful stimulus. Given an opportunity, line workers
and foremen working together know best how to improve the product, the
process and Leadership Development of Small Business.Constant and
never-ending improvement is the key to prosperity in all businesses and
the ultimate key to customer satisfaction and financial rewards.
About
the Author:
Don Morrison of The ProfitProcess consults small
business owners on making a business more profitable, Business Valuation
Resources,Valuation of Small Business, Small business development,Small
business value development, Leadership Development of Small Business,
Working Capital Generation Improvement.