SOURCE: Kay Sever | February 3, 2020
OPTIMIZATION… When we think about that word, phrases like “achieving the best results”, “eliminating bottlenecks” and “making the most money” come to mind. You are told by vendors and experts that you must buy new equipment and systems (often millions of dollars) to achieve optimization. If the executive team decides to move forward with optimization, three words commonly summarize management’s focus: Machines, Money and Maximization.
What if I told you that there are three more areas of focus that will make or break your efforts to maximize results? What if you knew that ROI would be less than you promised the board of directors AND less than was possible to achieve if these areas of focus were ignored? What if you learned that little or no investment is required to include these areas of focus in your optimization plan?
It’s time to pull the veil back on three additional aspects of optimization that are overlooked, underrated and misunderstood. These aspects are important to know about because they are sources of organizational weaknesses that reduce reported ROI. It’s time to explore the “organizational side of optimization”: Mindset, Measures and Management, the aspects linked to an Optimization System.
This is the final article in this series and expands on Optimization System concepts.
AN OPTIMIZATION SYSTEM – Filling the Management Information Gap
When you decide to invest in optimization, you want to achieve “best possible performance”, but you don’t have any numbers that tell you what best possible performance is! Last month we talked in general about the impact of this gap on performance and culture. This month let’s expand our awareness about what this “data gap” really means to the effectiveness of your management team.
An optimization system is comprised of three elements (Mindset, Measures and Management). Optimization Measures quantify operating potential linked to your optimization goals. Specific strategies link that data to Mindsets and Management Methods. When these links are made, you can access and manage your operating potential like you manage operations! You can ask new questions, solve new problems, and achieve different results… all of which justify your investment in optimization over LOM.
Here are just a few questions that your management team doesn’t ask or can’t answer without optimization performance data:
- How do our targets compare to what is possible to achieve?
- How much better could we do if we could chase/eliminate lost potential in production and cost?
- Did we budget for something we cannot achieve? Have we unknowingly put impossible targets in the incentive plan?
- How much upside do we have across our value stream and what is it worth?
- Did we budget for new equipment or expansion capital that we do not need?
- How many dollars are lost because of our assumptions about the cost of problems or problems that have become part of the culture (i.e., “just the way it is here”)?
- What policies/procedures have we set that increase our operating cost without our knowledge?
- Can our employees see “upside potential” at their level but can’t quantify it so they can’t communicate it credibly?
- Are the actions of some departments causing unmeasured losses that are subtracted from optimization gains?
- Is our corporate culture a barrier to achieving optimization? If we had optimization data, could we use the data to change that?
- What financial, operating and organizational decisions are made because the management team doesn’t have access to optimization performance data?
- Do we make decisions and take actions to achieve budget goals, not recognizing that some of these decisions and actions could be preventing us from achieving optimization?
Remember this: An Optimization System acts as an overarching umbrella that links optimization data needed by leaders to change some management methods to achieve “full” optimization. Selected optimization data can be shared with employees so they know if they are achieving their best performance, an empowering goal that transcends and mends old “corporate culture divides” within the management team and the workforce.
Without an Optimization System as part of your optimization strategy, your organization will be left out of the optimization process. You are likely to pay for capacity you will never use. You will measure your success with budget data and will not know if you are achieving your optimization goals. You will not be able to measure or reduce lost income potential linked to people, procedures, working relationships and corporate culture. You will not be able to link your organization to optimization, which means that your goal of “full” optimization will remain out of reach.
Thought for the month: “Full Optimization” of a site or company requires an Optimization System that links your operating potential to Mindsets, Measures and Management over the long term.
Kay Sever is a leading expert in reducing financial losses caused by corporate cultures, optimization and change barriers. She has developed a management training system called MiningOpportunity which is based on her 20 years of experience working with mines and plants to reduce the losses they never measure… losses linked to corporate culture, hidden excess capacity and change barriers. MiningOpportunity modules teach executives and management teams how to find and quantify their losses and apply strategies and tactics that stop them. Unique insights from Kay’s 3-year study of management’s barriers to change and optimization are included in the content. See MiningOpportunity.com for her contact information and several training options for your team, including the NEW “Spend a Day with Kay” option.
To comment on this story or for additional details click on related button above.