Business Efficiency Strategy in 1 Great Case!
In this case, the Business Efficiency Strategy certainly was anything but ordinary….
The instance involved a factory running on an average monthly efficiency of 66% after almost eighteen months of operation. The salient points were that
- The Management found out that another plant with nearly identical specifications had an average monthly plant efficiency of 82% – and, the need for a business consultant – in this case, a purely technical consultant, arose
- The factory was operating round the clock and so physical monitoring was slightly tough
We naturally took up the challenge and made a tour of the plant further to which we had discussions with the top and middle-level managers who, as always is the case, were convinced that they were all putting in their best! Another thing that is always noted is how these folks go even out of the way to ensure that there are no positive results generated.
Anyway, we started off by tweaking the Production aspects and then had a good look at the spare parts store since the store had an unusually high inventory. A quick analysis of the store revealed that many items in stock were very slow-moving items while there was a shortage of many fast-moving and critical spares. In the case of this factory, most of the spare parts were specialized parts supplied by machine manufacturers with a considerably long lead time. Sorting this out was then on first priority and slowly there was an improvement with reduced downtime.
However, in spite of all efforts, the efficiency was hovering in the seventies only which simply was not acceptable. It also proved that we were not looking in the right direction. We went into a detailed breakdown analysis and at some point, we hit gold! On plotting a graph, we found out that breakdowns peaked in the time frame between 5 and 10 in the evening! We analysed whether this had anything to do with climatic conditions or shift change over timings but they all had no involvement in the matter.
The Breakthrough Business Efficiency Strategy
Somewhere during meetings, the HR Manager dropped a line saying he was finding the overtime wages of managerial staff continuously on the rise! That rang so many bells in our head – top managers being paid overtime was unheard of and continuously rising overtime costs smelled fishy – we went right back to our drawing board! In fact, it was the HR Manager’s words that solved the issue.
The folks inside the factory had hit on a simple plan to up their revenue wherein, sometime after the day shift managers left the office at 4:30 in the evening, there would be breakdowns in the factory which could not be solved by the shift maintenance fitters and the managers would be called back in to solve the issue.
The Managers would come immediately, work on the problem and the issue would be resolved after two to three hours. In a month, on average, the two maintenance managers were each putting in about 100 hours of overtime with overtime wages being 1.5 times normal wages. This meant that these guys were taking home an additional eighteen days’ pay every month!
We had a long discussion with the top management further to which, the Management came out with a circular stating that in view of the poor performance of the factory, the Managerial staff would henceforth be eligible only for “Compensatory Off” and not overtime – the overtime eligibility would only be for the workers!
Whether you wish to believe me or not, in three months’ time, we were able to clock a monthly efficiency of Ninety Three percent in that plant and they never looked back after that! In short, that technical issue had absolutely nothing technical about it (I mean the major part of it) rather it was all monetary – as they say, a Business Efficiency Strategy can be anything from ordinary to the bizarre; after all!
If you are on the lookout for such out-of-the-box business efficiency strategies, get in touch!