Leadership teams have dozens, if not hundreds of processes, systems, and practices involved in running their company. In order to provide clarity and focus, it is helpful to put the processes into a framework.
The top layer of the framework addresses the direction that the company is heading. The strategy defines who the customer is and how
The second layer is the people layer. This layer focuses on the practices to ensure that organization is fully staffed with capable people, well organized, and living the culture that the leadership team envisions.
The bottom layer is the execution layer, which focuses on getting things done, performing at a high level, and continually improving.
Elements of the Manufacturing Operating Framework
The Strategy element defines the practices that will be used to create, maintain, and communicate the strategy. It answers the who, what, how, and when questions related to strategy.
The company strategy clarifies critical questions, such as:
Who is the target customer?
What problem do they have that we solve?
What products and services will we offer?
What will be our competitive advantage?
How will we market our products?
How will we price our products?
What are our financial projections?
What are the big risks that we need to manage?
Profitability Management is the set of practices that ensures that the activities of the company will lead to healthy profitability. Processes that are often included in profitability management include:
Product rationalization (SKU reduction)
Cost management/Cost containment
Investment analysis (e.g. ROI)
The Culture element defines the 'personality' of the company. Every company has a culture, but excellent companies are intentional and deliberate about shaping the culture to be a powerful strategic weapon.
Cultures are built and sustained based on the habits of the organization. In a nutshell, the habits that are encouraged and discouraged will define the essence of the culture. In the Culture element, you'll establish the words to describe the desired culture, but equally importantly, you'll define the practices that will be followed to reinforce the culture. This will often include habits related to:
The Organization element defines how people will be organized in the company. It will clarify the report structure as well as the roles and responsibilities of each person.
The talent element focuses on the processes that ensure that the company has the talent it needs, both today and in the future, and those people are performing at high levels. Typical talent systems includ:
Skills needs assessment
Talent pipeline assessment
Career development - including coaching, mentoring, and feedback
The Performance element includes the practices that are used to ensure that people are performing to their best abilities and they are meeting the needs of the company. Traditionally this has been done through performance review systems, but companies are beginning to opt for alternative methods such as coaching, mentoring, team health exercises, and wellness programs.
Manufacturing is a competitive landscape, and companies need to continually improve in order to stay healthy and relevant. This element defines the processes that will be used to:
Prioritize and select continuous improvement projects
Provide the necessary resources for improvement
Monitor sustainment of the changes
Ensure that continuous improvement is having the intended cultural impact
Plan-Do-Check-Adjust (PDCA) is a simple, yet powerful, approach to ensuring outstanding execution. As the name implies, it starts with the creation of a plan, which sets expectations. Then the team goes and does the work. The Check requires pausing to measure if the actual results are going according to the plan, and if they aren't changes are made. PDCA can be applied toward annual objectives, quarterly objective and all the way down to hour-by-hour objectives on the shop floor.
In this element, we'll define the most important PDCA cycles that will enable great results.
There are always more things that could be done than can be done. People and organizations have a limited amount of time and energy, and this is where the habits of focus enter. There is a need for prioritization of activities from the shop floor to the executive suite.
On the shop floor, it might take the form of a daily production meeting so that everyone knows the top priority jobs, and in the C-suite, it might be a meeting every 90 days to establish the highest priorities for the next quarter.
The focus-oriented habits ensure that people are stroking in the same direction towards the objectives of the company.