| Keys To
Productivity?
by Douglas M. Bryce
I finally got around to reading
some of the Injection Molding Magazines stacked on the corner of my
desk. One article in the December, 2002 issue caught my eye. By the
time I finished reading I was shocked. The author, Woodruff Imberman
is president of an international management consulting firm located
in Evanston, Illinois (Imberman & DeForest, Inc.). The article
details the findings of a survey of 427 molding plant managers in
the Great Lakes area. The article doesn't say when the survey was
taken but I believe it was during 2002. But the findings were
shocking, and I will list some of them below. I'm told you can view
the complete article in the archives section of the IMM web site at
http://www.immnet.com.
A - Most of the companies
reported a higher than average turnover rate among employees. Of
course, this means those companies end up with high training costs
and defect rates as new employees learn the ropes. This results in
poor productivity and higher operating costs.
B - Twenty-five percent (25%) of
the respondents stated scrap and rework rates at over 3%, but most
of these were not concerned as "it goes back into the process as
regrind". The observant manager knows that there are costs involved
with even that approach. There is a true value placed on products,
materials and labor even if you simply grind it up and use it again.
C - For many of the companies
on-time shipping performance was very poor and customer complaints
were high. Much of this was true even after renegotiated shipping
dates. Managers should be aware that unhappy customers won't stay
around very long. Especially if they have trouble getting their
product.
D - High inventory turnover rates
mean a company has more available operating capital, which is a good
thing. A turnover rate of more than 25 times a year is considered
good. But a whopping 83% of respondents stated they had turnover
rates of 11 times or fewer a year. Why are they holding on to the
inventory?
E - The profit margin (return on
sales) is why we are in business in the first place. the higher the
profit margin the better. But, 35% of respondents reported a meager
profit margin of less than 2%. Another 45% recorded profit margins
right at 4%. And 6% of the companies were running at a loss but
could not explain why! These managers would be better off closing
their doors and placing their money in stocks or mutual funds.
Peter Drucker wrote in Managing
For The Future, "Inertia in management is responsible for more loss
of market share, more loss of competitive position, and more loss of
business growth than any other factor". To paraphrase Mr. Drucker,
"A stagnant management system results in mediocre performance and
eventual loss of business." So why are managers so mediocre?
Dr. Imberman states, "Most
executives...settle for the results reached because they do not want
to upset anybody by insisting on better performance. To do better
requires too much trouble."
According to Dr. Imberman a
company requires good leadership to be successful. "Leaders
determine goals and priorities and give the achievement of these
goals a sense of urgency." Isn't that just common sense? Apparently
most of the companies in this survey didn't think so. And I'll bet
they're the first ones to blame their poor economic performance on
China, the U.S. economy, the lack of trained technicians, etc.,
etc., etc.
Maybe we should all take a lesson
from this article and look closely at our own situations. Are we as
productive as we can be? Or are we mediocre and satisfied with that?
I guess I'll take some time this
week to go through the rest of the magazines on my desk and see what
else I can come up with. I'll look at that as being productive.
END
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