Developing Cross-Location Standards

Developing standard operating procedures in a multi-facility organization is like herding cats.

Circle Chart

With the recent acquisitions of Corp Brothers and Dressel Welding Supply, the Tech Air Companies suddenly found ourselves with four cylinder filling plants, ten distribution hubs and fifteen branch locations scattered across six states. Our Lean Continuous Improvement (Lean CI) program requires Standard Operating Procedures (SOPs) as a baseline for future improvements. However, as any company with multi-facility operations can attest, each separate location tends to develop its own unique way of doing things. Attempting to develop SOPs in this environment can be likened to “herding cats.”

In what follows, it is assumed that the company has engaged the services of a competent lean continuous improvement (CI) consultant to act as a coach and facilitator for the various work teams. In addition, it is assumed that executive management is fully committed to the Lean CI effort and willing to back up this commitment with the necessary resources to ensure success.

Foundations of Lean CI

It is a foundational principle of Lean CI that SOPs must be developed and implemented as a baseline for continuous improvement. Without “standard work,” no further improvement is possible. However, it is important to resist the temptation to try and perfect the SOPs in one all-encompassing effort. As General George S. Patton famously said, “A good plan implemented now is better than a perfect plan implemented next week.”

Work teams must be established so that everyone is identified with a team and a role. For example, a production work team might consist of a first-shift production supervisor as Group Leader, a lead filler as Team Leader, and several fillers and loaders as Team Members. The work teams are the level at which SOPs are implemented and the discipline of standard work is constantly reinforced and practiced.

Value Stream Mapping, Project Selection and Development of SOPs

The first step is to charter a cross-functional team to prepare a Value Stream Map (VSM) of the company’s major value-added processes (e.g. order-to-cash, procure-to-pay, etc.) to identify waste and areas that need improvement. The importance of picking the right team cannot be overemphasized because this step will determine the future direction of the Lean CI efforts. The VSM is developed in a week-long team event facilitated by the Lean CI consultant.

The second step is to use the results of the VSM to prioritize high-impact projects that will be the subject of continuous improvement aka “Kaizen” events to eliminate waste and to develop baseline SOPs. Cross-functional teams must be carefully selected to do a detailed analysis of the particular process and to develop the SOPs under the tutelage of the Lean CI consultant.

The Tech Air Companies decided to target the process of ordering hardgoods (both stock and non-stock) for development of standard work. This process was selected because each of our three regional companies had developed different procedures, and there were no agreed-upon SOPs. A cross-functional team consisting of buyers from the three different regions, as well as representatives from IT, sales and branch managers who were impacted by the process was assembled. The team spent a week together learning from each other with the objective being a document containing baseline SOPs for the hardgoods ordering process. The team started with three different “as-is” processes and resolved these down to a single “to-be” process to be implemented uniformly by all three companies. A key issue was the handling of “rush” orders as there were large differences between the companies in how these were handled.

Some comments from the team members are illustrative of the impact of the Kaizen event:

  • How fun/easy it is to standardize/agree when we work together as a team.
  • Different companies, similar issues…would never have known without this event.
  • How little we know/learn when we don’t communicate with others.

Implementation of SOPs

The third step is the most difficult—the implementation of the baseline SOPs. However, the foundation for success has been laid by the fact that consensus on the SOPs was reached by the parties directly involved in the process. This is the exact opposite of a “top-down” approach to developing SOPs. The problem with a “top-down” approach is that “buy-in” of the parties that are directly involved is not achieved and therefore implementation often is unsuccessful. As Peter Schutz, CEO of Porsche AG, has said, “Decide democratically, implement dictatorially. Democratic implementation can be a disaster.”

So while the SOPs are developed through a bottom-up democratic process by a cross-functional team, the implementation must be conducted in a top-down fashion to ensure compliance with the SOPs. This is where the work teams created earlier become critical. Management must communicate to the Group Leaders (i.e. supervisors) who in turn must communicate to their Team Leaders (i.e. rank and file leadership) and Team Members that the new SOPs are being implemented.

It is almost inevitable that when new SOPs are implemented there will be bugs, glitches, disruptions and general dissatisfaction with the results. This invariably leads to a call to return to the “old ways” and/or the implementation of “workarounds” and other quick fixes to relieve the strain. It is exactly at this point that company leadership must insist that the new SOPs be followed and be willing to back up the efforts with appropriate resources to work through and resolve any issues. It is here that the buy-in of the cross-functional team that developed the SOPs in the first place becomes absolutely critical to success.

It is important for all parties to understand that the baseline SOPs are quite simply a starting point from which to further improve upon. They are not a final destination. Once the baseline SOPs are uniformly implemented, then improvements can be identified, agreed upon and incorporated into revised SOPs that become the new and improved work standard. This is an iterative process that is called PDSA (Plan-Do-Study-Act) and is known as the cycle of continuous improvement, or Kaizen.

Standardizing the Ordering of Hardgoods

At Tech Air, we are in the implementation phase of our first SOP as related to the Standardization of Ordering Hardgoods. In order to attain our expectation of positive results, several steps are in process, including a training webinar hosted by our software partners so that the purchasing departments of the three companies have a clear understanding of purchasing procedures. Purchasing teams are updating their methodologies in order to accomplish targeted inventory turns, stocking levels through the replenishment process with the targeted result of improved customer service as well as improved inventory turns.

Over-communication of the SOP is critical to its success. Once the communication has been completed, there is no excuse not to have all hands in the boat so adherence to the standard will follow. The SOP will be subject to further improvements as the standard is realized.

Accomplishing consistent standard work across all three businesses is the goal. The process is working across our three companies. It can also work across one company’s various branch locations. When everyone is working on the same page, the resulting improvements will go directly to your bottom line.

Myles Dempsey

Myles Dempsey is CEO of the Tech Air Companies, headquartered in Danbury, Connecticut, and at www.techair.com.