In the late 90’s I was recruited to St. Louis to help facilitate a turnaround activity for a tier 1 automotive supplier. The plant that I came to was bleeding money and severely in the red.
In situations like this it’s very common to have a lot of chaos and there is tremendous difficulty with focus on day-to-day operations. One of the techniques that we used to focus on improvements in the plant was incredibly simple, yet it proved quite worthy as a specific improvement tool.
We broke down all of the relevant P&L costs for each working group in the plant, and communicated them to each group. Sometimes there would be an overlap of categories but the main focus was to make each respective area aware of costs on items they might be able to impact.
The method of presenting this information was very significant. All of the data was broken down as much as was reasonably possible and all of the costs were broken down to fractions of a cent. Then we asked each employee to help us improve the numbers.
Psychologically this was tremendously empowering for all of the employees as they had a great variety of items to look at and we were looking for improvements as small as a fraction of a cent. The results were astonishing. When everyone tries to save a penny here or there they suddenly become cognizant of all the costs in an operation.
This was just one of many techniques we utilized to facilitate a turnaround at the facility.
So by now you’re probably asking the bottom line question. How much did the plant improve? One year from the start of the process the P&L had improved by more than $1 million dollars per month! Not bad for a small manufacturer. It’s amazing how those pennies can add up!
