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People Mindset vs. Production Mindset

Douglasville Substation 015

The Early Days

Sixteen years ago, I was moved from our Owner’s CIPP liner manufacturing business over to Southeast Pipe. I was asked to help solve some immediate problems and to manage a new software implementation. Feeling honored and very appreciative for the opportunity, I dug right in.

My first assignment was to create and deliver customized training for the implementation of a project management system to be utilized to capture daily time cards, production quantities and expenses in the field. Because technology had never been used to capture this type of data, my project also included teaching Introduction to Laptops and Microsoft Windows to field supervisors. This put me in a position to learn a great deal from these team members. What they perceived initially to be a stressor (learning the technology) quickly became a game changer for the supervisors. When they learned how easily they could transmit data without paperwork, they were much more receptive to the change.

Spending classroom time…and then tech support time with these subject matter experts, I did a lot of listening. I began to pick up a lot about what motivated them and a good deal about what demotivated them. Across the board they all exhibited pride in the work they were doing. Many expressed that they were demotivated by the words “more production”.

At that point, we were not forecasting or setting goals. Except that weekly a few upper-level managers would meet and create a work schedule for the following week…and try to place as much “production” into it as possible. Actual performance rarely met the expectations outlined in the work schedules.

Opportunity Strikes

Fortunately, I’ve been able to step into several roles at Southeast Pipe, develop departments, and hand them over. When I made it into Operations, I began to be involved in decision making at the highest level.

This is when I was able to team up with other managers and supervisors and develop our first ever forecast. We created an excel spreadsheet for each field crew. At the top of the spreadsheet, we entered what we believed to be the maximum amount of revenue the crew could earn for the entire year (2017). We then began tracking the crews’ actual revenues weekly, along with their estimated gross profits. And at the bottom of each spreadsheet, we applied actual overhead percentages to forecast the year-end net profits as well. The total revenue of all spreadsheets combined became the yearly forecast.

So we have a forecast that’s realistic. What else?

Well…next, we committed to meet or exceed our forecasts. We met every week for status updates. We knew, based on weeks remaining in the year and remaining revenues…exactly how much we’d have to schedule every week in order to hit our mark by Christmas. Revenues were expressed in production units for crew schedules.

Exciting? Yes!

More Production? Yes!

Our Owner had expressed a desire to do planned shutdowns (with pay) during the week of the 4th of July and also the week between Christmas and New Years Day. So…we decided to compress our year down to account for holidays, hurricanes, and shutdowns. In 2017, we allowed 4 weeks, so we produced a full year’s revenue in 48 weeks. And, yes, he gave us those weeks off with pay.

We’ve used this method of forecasting and goal setting since then.

The reason I say this is a People Mindset is that our entire team understood that when we meet our work schedule, we are meeting the financial needs of the company and we’re being rewarded with extra paid time off.

We’re still a relatively small business with 52 employees as of the writing of this article. I realize there are much more advanced systems for forecasting than the method we use. But forecasting revenue has to start with understanding your capacity. Bringing representatives from every department helped us to do that. And more than that, it associated the faces of real human beings with the numbers we were seeing behind the scenes. Until you do this, I don’t believe you can understand what your TRUE capacity is…or what it could be.

Team forecasting doesn’t solve every problem in business, but it takes what can be a tremendous de-motivating force and instead gives team members transparency and involvement. As Dan Fauchier, Lean LCI-CPC-SME, CMF recently said “…and people only really implement what they’re involved in.”. I wholeheartedly agree.

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