From Legacy to Leader

Embrace Change, Boost Profits, and Outpace Competitors

As a manufacturer, you're all too familiar with the difficulties of juggling legacy systems and the ever-changing landscape of technology. It seems like new trends are emerging faster than you can keep up. AI is growing rapidly, and you're still trying to catch up with IoT, let alone RFID or Barcode Scanners.

Although it might feel like you're lagging behind, you're far from being the only one in this situation.

Supply chain disruptions and labor shortages have made it incredibly challenging for most manufacturers to invest resources in upgrading their legacy systems. The skilled labor pool is shrinking, and the relentless pace of technological advancements only adds to the struggles engineers face in staying up-to-date.

Avoiding necessary adaptations can lead to the erosion of profits and a growing difficulty in maintaining a competitive edge in this global market.

Ask yourself: If a new competitor appeared today, would they mimic your current process or would they implement a different approach?

It's crucial to address this question honestly. New competitors emerge all the time, or your customers may even decide to adopt a more vertically integrated model, lessening their reliance on your services. Fortunately, delaying technological advancements might have benefited you. However, taking too long to adapt could result in unfavorable outcomes.

You might be eager to embrace change, but feel constrained by a limited workforce, tight budget, or insufficient expertise to undertake a transformation.

That's precisely where I aim to offer assistance today.

Identifying Your Pain Points

Let's get started! You need to identify and name your challenges. When considering pain points, think big – the kind of issues that would come up in board meetings. Instead of focusing on smaller problems like a machine that keeps breaking down or slow/faulty test equipment, consider the larger consequences.

Examples:

• Missing out on higher caliber contracts.
• Labor costs are rising while customers demand price reductions.

Notice in the two examples above there is no reference to the current process or technology. A frequent error is selecting a solution before evaluating the problem. To grow your company, it's essential to identify the obstacles hindering that growth. Recognizing your Pain Points is crucial for initiating any process improvement. Without knowing what requires fixing, progress becomes impossible.

Comprehending your pain points allows you to pinpoint the fundamental purpose that any project should aim to address.

Where do you start?

Start by downloading our FREE Toolkit and follow along. Navigating the numerous emerging technologies and buzzwords can be overwhelming when trying to determine where to start. The initial steps are straightforward – begin by looking inward and conducting a self-assessment to define your Project Scope.

Consider your pain points to determine what you think you should improve – a production cell, a work area, or the entire plant? Next, expand on that - identify what I call “Goal Categories” that are best aligned to address your Pain Points. Those are:

1. Improve Quality
2. Reduce Costs
3. Increase Capacity
4. Decrease Training Time

Now, imagine allocating 100% of your energy across these four Goal Categories. How would you distribute your focus for this project? You might find that two topics are equally important and decide to allocate 50% to each, leaving the other two categories untouched. These percentages of focus are what I call “Goal Weights”.

I have outlined three scenarios for a rollout: Decent, Good, and Terrible. I've also incorporated a 60% safety factor. In the worst-case scenario, which means failure in the Terrible rollout, there is still a three-year ROI. With a decent rollout, the ROI is achieved in a year and a half, while a good rollout yields a six-month ROI. Keep in mind, these estimates include a 60% safety factor.
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Crafting a Project Success Mode and Effects Analysis

If you're not already familiar with it, Failure Mode and Effects Analysis (FMEA) is a process used by manufacturers to examine as many components, assemblies, and subsystems as possible in order to identify potential failure modes within a system and their causes and effects. If you haven't yet adopted this approach, it's worth considering adding FMEA to your list of research topics.

Using this method, we developed a Project Success Mode and Effects Analysis (PSMEA), tailored to assist you in evaluating different facets of your project, pinpoint potential avenues to success, and identify the elements that contribute to those triumphs. This forward-thinking analysis offers invaluable insights that enable you to refine your project strategy and implementation. If you haven’t already, be sure to download our FREE Toolkit to see the power of this analysis.

Begin with a Quick Draft for Your PSMEA

As you begin working on your PSMEA, I recommend starting with a quick draft. Remember, there are no wrong answers here, so don't let yourself get stuck on any specific topic. Throughout the entire exercise, maintain a mindset focused on the "big picture," as if you were in a board meeting.

• Big Picture Example: Reduce Production Lead time by 10%.
• Small Picture Example: Decrease False Fails of Test Equipment by 50%.

Companies often fixate on small picture problems, but these "solutions" may not align with their Pain Points.

The Effects and Benefits should consistently revolve around the organization's overall impact. Any project you implement must directly influence your customer experience.

Example:

Company Goal: Reduce Production Lead time by 10%

Effect: Improved On-Time Delivery

Benefit of Effect: Avoid Late Penalties & Win Larger Contracts

Refine your PSMEA

You should now have your Project Scope and PSMEA ready. Share this document with others for review and refinement. Feel free to incorporate any additional ideas they might have. I suggest creating a draft first because I've found that committees often get bogged down in discussions, making the process slow and inefficient. With a completed draft, committees can offer more constructive feedback, leading to a more productive process.

Once your PSMEA is finalized, I encourage you to reevaluate your Goal Weights and make necessary adjustments to optimize your focus. For instance, you might be more inclined to reduce your “Improve Quality” weight if you uncover greater opportunities in “Decrease Costs”. Fine-tuning your focus will provide a clear understanding of which problems to tackle first.

A finalized PSMEA can help you determine the appropriate amount of money to allocate for a process improvement project. If you are utilizing the FREE Toolkit it will calculate Conservative and Aggressive figures. These figures represent the potential annual cost savings for your organization. It's a good rule of thumb to use the Conservative numbers for the first year, or even the second, depending on your team's capacity to invest time and effort into the project. The Aggressive numbers, on the other hand, represent the potential cost savings if your team continues to work towards the established goals listed in your PSMEA.

Shop with Precision

A completed PSMEA should assist you in establishing a budget and clear Goals, you are now prepared to explore technologies and vendors that can address your challenges. As you assess your options, consistently refer back to the PSMEA to ensure that the proposed solutions align with your objectives. Keep in mind that sales representatives may emphasize the benefits of their solutions, which might not necessarily align with your vision.

If you come across multiple options and wish to implement more than one solution, it's advisable to begin with the simplest project. Achieving easy wins that yield profitable results for the organization can generate momentum for change. Successful change projects instill confidence in your staff, customers, and shareholders, demonstrating that you are a leader capable of steering your organization towards progress and innovation.

Need further assistance?

If you're interested in this exercise and have made it this far but are feeling overwhelmed and need help, please don't hesitate to reach out. At Scout Systems, we take great pride in providing exceptional customer support to manufacturers, and I'm proud to be part of that team. Even though you may not be a customer, I would love to introduce you to our world-class support. You can check my personal calendar below and find a suitable time for us to chat. I'm looking forward to our conversation.