Several years ago, Modern Handling Management started collecting information through their Annual Census of Distribution. The results gave key insights into what kinds of traits world-class facilities share. While some of their common threads are simply about company size, many of them are things that smaller companies can implement for prestige and success. As MH&L described in a follow-up article, “Census of Distribution: What is World-Class,” what made an operation world-class was “simply a matter of doing more.”
What does doing more mean exactly? To be more specific, the article stated, “They are more likely to have continuous improvement programs that utilize Six Sigma and lean material management techniques. They are more likely to share financial information with employees and benchmark regularly against other operations for good ideas they can borrow. Such activities reflect a workforce that is always looking for the next challenge.”
Within these categories, there were some fluctuations in how many reported participation in each. When it came to Six Sigma and open-book sharing of financials, about a quarter of the word-class facilities reported using them compared to only 2-11 percent of companies who reported no growth or improvement. The statistics started to climb when it came to lean management and benchmarking – about half of the strongest companies tallied in using them whereas the weakest companies hovered around 20 percent. The most participation from every company category was in a continuous improvement program. However, the world-class facilities dominated the statistics with 80% participation compared to 42% in companies with no improvement and 61% in companies with some progress.
With the increasing implementation of lean and Six Sigma today, it is important to look at the significance of employee-oriented factors in a company’s success. According to MH&L’s, “Census of Distribution: Putting People First Pays Off,” “Of managers surveyed for the MHM Census of Distribution, those with higher performing operations are much more likely to say they have effective hiring programs, training programs, employee work teams and safety and health programs.” For these companies, employee programs did not translate into higher labor costs. This is due in part to a lower turnover rate within these organizations.
Employee training and empowerment make a huge difference when it comes to world-class operations. Top facilities reported to have provided employees with at least 35-40 hours of formal training every year. According to the “Census of Distribution: Putting People First Pays Off” article, these top companies “have more employees who participate in empowered and self-directed work teams.” The survey indicates that more than ¾ of employees in these companies participate in teams where they’re empowered to make decisions without supervisor approval.
One of the most interesting reports from companies who empower their employees is within the realm of health and safety. Many of the aforementioned three quarters of employees participated in groups dealing with job safety. World-class facility employees reported work-related injuries and illnesses at only half the rate of companies that had yet to progress at the time of the studies. This leads to a number of benefits for these companies including:
- Less time away from work:
- Skilled employees continue to work on a regular basis
- Less money is spent on training or overtime to cover for absences
- Operations remain seamless with healthy employees
- Fewer costs:
- Workman’s comp is less and filed less frequently
- Fewer costs to cover for absent employees and also time spent on paperwork
- Safety ratings are higher, therefore insurance premiums are lower
- Overall morale and emphasis on safety:
- Employees feel appreciated and cared for and work harder in return
- Employees hold themselves and each other accountable for safety
- Camaraderie in not interrupted
Despite the trend that the world-class organizations are larger companies, the statistics show that smaller companies have the same chance at excellence. Streamlining operations with lean and Six Sigma is becoming more mainstream. Companies who are already using these modern and popular initiatives but are still looking to improve may find the key in their people skills. Putting the time and effort into developing employees, continually training them, and empowering them can make the difference between a company that is struggling and one that is succeeding. It has been shown time and again that investing in employees yields unexpected great returns in addition to the goals set forth at the time of change.
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