Operational Excellence in Manufacturing is Key to Top Line GrowthOperational Excellence in Manufacturing is Key to Top Line Growth

Lean manufacturing techniques have become ubiquitous as manufacturers in every industry have strived to make their factories faster, more efficient and less wasteful.

But that's not enough any more, says Kevin Duggan, founder of the Institute of Operational Excellence. We need a lean 2.0. Duggan was a speaker at the MD&M Chicago conference on Wednesday.

To get top line growth, manufacturers need to focus on operational excellence in manufacturing. 

In 2010, applying the principles of operational excellence, IDEX Corp., an Illinois company that makes engineered products and systems for fluidic handling applications for many industries including medical technology, saw 12% organic growth. The company first began applying operational excellence strategies back in 2005, according to Duggan, who was trained employees and executives at the company.

So, what is operational excellence look like on a factory floor? Duggan defines it this way:

"When each and every employee can see the flow of value to the customer and fix that flow before it breaks down."

In other words, the philosophy rests on providing visual cues that show product flowing smoothly across the factory floor such that it can be delivered to the customer on time and in compliance to customer's needs. And if there is a delay or disruption of that flow, the visual cues can allow operators in every segment of the factory floor to correct the problem. The visual cues sometimes can simply be a matter of color coding - red to denote a problem, yellow to denote a warning and green for all is well.

Having these visual reminders all across the factory floor eliminates the need for facility managers and operational managers to rush to douse the flames whenever the flow of product is disrupted.

Freeing them up allows the company to actually use their technical knowledge in meetings with customer to better serve their needs. It helps in the transition from a widget maker for their customers to actually partner with them to build the next innovative product that can boost top line, Duggan said.

How does that happen?

Operations managers and other technical staff can now attend sales meetings with customers and provide their knowledge when customers discuss the next product need that they have. That is in stark contrast to always remaining factory bound and dependent on sales staff with no real technical knowledge to tell customers what is feasible in terms of fulfilling customer needs.

"Companies have to become a lot more entrenched with their customers than in the past," Duggan said. "They have to really partner with them to innovate instead of simply asking them when they want a product and what they are willing to pay for it."

But in order to innovate, they need to have a robust manufacturing operation that is able to deliver products on time to customers. If that is absent, all talk of partnering and innovation for customers is just that - talk.

"You have to earn the right to innovate for your customer," Duggan said, quoting an IDEX executive. "And that is really really hard. To do that you need to build a worry-free factory."

 [Photo Credit: iStockphoto user daz2d]

-- By Arundhati Parmar, Senior Editor, MD+DI
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