Case Study – Leadership in Manufacturing

My apologies, I hope you are sitting down for this article as it’s one of the longest I have ever written at 4200+ words.  I hope my message is not lost between the lines and you get a jist of “leadership in manufacturing”.   If you need any clarifications or further explanations, let me know, I am here to help and provide solutions.

This is a story of a leader and a follower, a leader trying to make a difference and change the habits, patterns, structure, systems, processes, procedures, policies, culture, and community well following the founder who was running in circles and didn’t take time to properly plot and plan his future business operations and succession.

I was recruited as a General Manager of a $40 million growing business, I was recruited to manage the China manufacturing operations, transition responsibilities from a Western country to China and build out their China GTM strategy.  Below are a few challenges that I encountered in the first week:

  • The CEO/Founder was the smartest person on this planet.  He liked to boast about his degrees (diploma in hypnosis and Regression therapy as well he is a Master Practitioner of NLP and Spiral Dynamics) and his understanding of humans (strong larrikin nature, and a strength in numerology, he said “North Americans can be so sensitive to sarcasm! Us Australians thrive on it at times culturally so you would need to adapt”)
  • When he was in the room or travelling in the car, he was the only one who could speak.  The many times I travelled with him in the car, the conversation was about him and how great he was in creatively responding to a group of people chatting about football, he would share the conversation what others said and his best responses, he would even show us on his phone.  Following the meetings or the journey in the car he would be yelling as to why no one was listening or recording notes.   Instead of inspiring employees and others he liked to belittle people, to show his strength and power.  He would speak but not one person in the room would take notes or make an action plan.  It was reactive over proactive management.
  • There was not a clear road map, he would send long emails with rants, you would have to extract issues, problems, and seek possible solutions.
  • The China operation was disfigured and used to riding a broken bicycle, so know one wanted to change.
  • Out of the 150 employees,no one was accountable, everyone passed the buck and the responsibility, there was no planning, foresight, or SWOT analysis
  • The production manager was responsible for everything, planning, budgets, operations, outsourcing, and hiring.  He hired 5 family members to act as trusted managers and assistants
  • In the last few years they spent over $5 million dollars on implementing the Microsoft AX 2009 (ERP) system that was not fully functional, was only working on the front end of the business
  • Their local currency had devalued by 30% from years prior
  • They had purchased 30 brand new single head Melco embroidery machines to replace their two Tajima 20 head embroidery machines at a cost of $250k
  • The business increased, their skus increased (3000+), their inventory increased, but their support operations were suffering
  • No structure in place, limited systems, no policies, processes, procedures, manuals or double/Triple checking/authorization systems in place
  • The operating capital diminished and they had to take their largest loan ever from the bank

IMG_3425

Typically founder meeting, atleast 6 people sitting around the table well he speaks, not one person recording notes (most likely less than 50% understanding, as English is not their first language) and no minutes recorded and/or distributed.  He would request “Do not clean the message on this side!”.  Then make a four point actionable plan with no recourse, follow up, responsibility of who is doing what, when, where, and how with any timelines.

IMG_0877
The outside of the Physical Space

Another challenge for the space, is it was located close to a river which was a problem when a Typhoon hit, I experienced two floods and two typhoons in a two month period which shut down the operation, affected product output, staff morale,and safety.

I started by:

  • Analyzing the company, all divisions/departments, and people in the company
  • Meeting with key staff (managers) and employees
  • In all meetings, I started by recording minutes with issues and responsibilities, I handed out the minutes at the end of every meeting
  • I kept all meetings to one hour maximum to respect others times and ensure they could absorb the meeting, requirements, and changes
  • After weeks of meetings I determined the weakest departments and focused on fixing the major (minor) issues
  • Very few had a JD (Job description), so the next task was to create job responsibilities for the weakest links, I attempted to empower HR to help, but quickly discovered they did not have the ability
  • Creating department org charts, flow of responsibilities, and number of people required in each task
  • Reviewing, overseeing, creating, and managing the forms, documents, and reports which were non existent by department
  • Establishing performance measures by department
  • Touring the factory on a daily basis, watching people work, looking at/for processes, efficiencies/inefficiencies, employee behaviours, and the physical space
  • Hand holding departments and people in need, trying to establish independence by leading by example
  • Reviewing the physical space of managers, to ensure they had the equipment to do the job properly, make changes as necessary
  • Being accountable for everything inside the operations, even dealing with factory sewers, their complaints and issues, one by one
  • Writing a business plan (executive summary) for the China operations, as well as an action plan, and a powerpoint presentation. On the power point I wanted it to demonstrate the Larrikin nature that he instilled.
  • Establishing culture and community in the company, I established online social media portals for the corporation to speak to the public and for internal communications
  • Working overtime every week, I worked late into the evening back at home, and worked every weekend

As mentioned there were a few areas that needed immediate attention and they were operations, manufacturing, financial, and human resources.   Below I will review the issues briefly.

Operations

Fixing the broken bicycle, otherwise known as the operations, which were spread out over 7 floors, 10 individual areas and 4100sqm (44,000sqf) of space.  Manufacturing existed in 6 of the 7 floors in two separate buildings with support operations being located in between them.

My first recommendation was to relocate to a more efficient facility.  To meet the needs of the founder I created a scope that he approved which highlighted the requirements of the future space.  One major restriction was his budget for the new space which was unattainable, this was determined by speaking to staff which had been at the company since day one, speaking to leasing agents, and by physically going to areas that he approved to find a new location.

Brilliant jerks

The founder agreed then complained after the first few weeks as I did not find a qualified space within his limitations.

His budget was RMB 8sqm/month (USD $1.27) which is what he was paying for the disfigured space, and I found a qualified space that was 4400sqm over two floors with the ability to grow the business as per his requirement to an additional 4400sqm.  The space was in great new condition and ready to move into immediately.  The challenge was the rental request was RMB 15sqm/month, after weeks of negotiation I got the price to RMB 11sqm/month.  The monthly rental increase was only RMB 13,2000 (USD $2,062) for a space that would save hundreds of thousands a month by reducing redundant positions, production, and operational efficiencies.

I provided analysis of the business to show that the cost reduction would pay for the whole space but then the founder complained that if I had a proposal I should produce drawings of how the space would be put to use.  His advice (yelling) was to cut paper pieces and place them on a piece of paper to represent equipment, departments and areas. As I am familiar with Adobe Illustrator, I decided it would be best to build an actual to size drawing.  So I gathered all the machinery intelligence, floor space, and looked at the number of machines on hand, see below replica drawings highlighting equipment.

Once I gathered the above information of products in the space, I started on the space layouts, this is an initial drawing of one option of the ground floor of a two floor space (2200sqm per floor):

8-24 RD Works 1b

The above drawing is of the first floor, it’s for receiving and storage of physical goods.  The empty White squares on the Left and Right side were for stairs and an elevator.  I consolidated the 4 separate areas (current space) and had doubled our space for fabric, trim storage, created product storage and packing tables that we did not have at our current location.  The common (Yellow and Packing) area was 100sqm in our current space over two buildings, and now we had over 500sqm in one area to allow for shipping and receiving.

As the founder liked to complain, he said the storage for product was too small but at the time there was no physically storage space in the current location, so I advised it is growth in progress, and now we had 64 units (32o shelves, that could fit 1,280 boxes)  for physical product storage, as demands increase we can adapt, change, and grow.

8-24 RD Works 2bThe above drawing is the 2nd floor with cutting, bundling, embroidery, large format printing, sewing, finishing, QA/QC, and factory management offices.

From the above two drawings, I was able to show how we could consolidate our operations, reduce redundant positions, and improve efficiencies (production).  The founder stated that there were no posts, so that evening I added posts and perfected the drawings, see the computer photo below which added the posts/columns (Black triangles).

IMG_3417

I also got more specific to the sewing arrangement, equipment size and shape.  I had a group of sewers (16-20) on two sides with a shared table in the middle, and a sewing line manager at the head.   As production runs could be smaller to meet client requirements, I had to keep in mind sewing line optimization.

I calculated the savings in the hundreds of thousands each month, which would cover the cost of the physical space and improve the operations.  But there were more challenges as the cost and time for moving, the setup and changes.  As know one liked changes, the founder was wanting to rent a smaller space to give us more room and move the cutting to another location.  The current management and founder wanted to patch instead of repair or replace, as everyone was used to riding the broken bicycle (operating with inefficiencies).

In addition the space I choose was modern and situated away from rivers and did not feel the effects of a typhoon or severe weather disturbances.

change direction LT

Manufacturing

There was multiple areas for shipping and receiving, manufacturing was separated, woven and knit was spread out over 7 floors in two buildings with various degrees of organization, as woven was established 5 years ago and knit was established in the last year.  Woven was set up over 4 floors at 500sqm per floor, the ground floor was 1000sqm and housed embroidery, fabric (wovens), and trim receiving, but there was an additional fabric storage for wovens on the 4th floor beside cutting.  Knit was in a separate building (formerly known as staff housing) which consisted of 3 floors at 300sqm per floor with fabric storage and cutting being on the 1st and 3rd floors.   The 2nd floor was for sewing and finishing.   In addition half of the 1st floor was used for trimming, pressing, ironing,quality control, and packing.

Knit sewing area - 300sqm
Knit Sewing Area – 300sqm

Restrictions on outsourcing, the founder insisted on no sub-contracting.  But overtime I had to show demands, production availability, and the need for outsourcing, slowly but surely we started to outsource.  I analyzed product sourcing, scheduling, determined our strengths/weaknesses and made a suggestion with a schedule for outsourcing, but the founder wanted nothing to do with it, he had meet with the factory GM, and concluded that they will allocate all units in one style, his style was to throw it against the wall and hope it sticks.

IMG_0445
Knit Storage & Cutting on the 3rd Floor

You would think since one area was established first, there would be a proven method for establishing the knit area.  But that’s the first mistake, the housing area was converted to the knit shop.  The knit shop was thrown together without any pre-planning or thought, besides what was put together with cutouts and pieces of paper.

Fabric Storage - Knit Area
Knit Fabric Storage & Cutting 300sqm on 3rd floor

Everyone noticed the mess, disarray, and it took hours to locate fabrics to cut, if they could find them, sometimes styles and production would be delayed or cancelled as they could not locate the materials.   As allot of the knit fabric storage was on the 3rd floor, it had to be manually pulled up by the wench on the wall.

I was working on workflow efficiency plans and reports, that would have improved the manufacturing by 20 – 30%.  But the founder was not ready to enforce or change the current structure.

QA/QC

Defining QA, QC, and ensuring staff were doing their job, but then again what was their job as they did not have a JD.  In QA/QC, there were 9 staff, including the manager whose job was to ensure the Quality Assurance in the company, as well manage his QC staff, the processes, procedures, the reports, findings, and resolutions.

The manager, had a pieced together JD, but it needed to be completely redone so I created a department org for manufacturing.   I got more specific for QA and QC with their JD, and got them training and supervising factory floor staff on QA needs.   As allot of the responsibility with factory floor staff was redundant, and could have be done during production by staff that were accountable.

Human Resources

The HR manager was inadequate for the position, she was hired as the price was right, but the expertise was lacking.  The mandate was to hire anyone to fill the position.  For starters, there was no JD, so how do you create a JR (Job Request), and make a JP (Job Post). Then when you have a advertisement, where do you post it, since she was not creative, she wanted to the same website every time for all posts, http://www.58.com.   I told her to think outside the box, and place job specific roles in industry papers/magazines/Internet.   As well connect with schools and organizations who may have possible leads.

IMG_3872

I was always baffled when I walked into her office as she never seemed to be working on the major objectives.  This time she thought it was important for her to cut individual pieces of paper for employee cards, each one had to be cut to perfection.  I was curious as why she didn’t have a junior staff do this task, she advised everyone was busy and she wanted it done right.  I guess this is about hiring competent staff and another reason why the founder asked me to cut pieces of paper to show the area, equipment, and  utilization of floor space for the new prospect space.   Could you imagine the chaos if I followed his direction.

In countless meetings, I had to let her know that she is responsible for all personnel in the company, keeping detailed records on employment start date, issues, successes, community, and culture of the company.  One issue, she was randomly using numbers with employees, I thought she was actually numbering employees, but quickly learned she had not allocated a numbering system for all staff.  When a staff left she wanted to give that number to a new employee, I had to let her know the number is the employee’s number for life.   A number is a unique identifier for each and every employee for life.

As the founder liked to micro manage he created a document that listed all jobs, I ended up adding to the document, with information of who requested the position, was a JD created, was a JR, JP created, when and where was it posted.   How many applicants and interviews with comments.

Hiring process was a disaster, but i had to give her a chance, she would bring in a potential employee for an interview with no pre-thought out questions.   The first interview was a disaster, so I advised she needed structure, when you go into an interview, you should have your three types of questions:

  • Standard questions (what was you pay at your last job, why did you leave your last job, how will you add value to this role, what are your strengths/weaknesses, etc.)
  • Job specific (how long have you worked in this field, what is your greatest success, how would you deal with a particular situation, etc.)
  • Technical questions (specific technical questions about the job) already printed out to write notes.

One of her major challenges, was managing her time, as she had way too much to do.  As she was also responsible for payroll, which of course was a disaster, and the system they used was broken and needed replacement and she had too many junior inexperienced people involved in important roles.    Everyday staff would be in her office to complain about pay, have records altered/changed, to meet their needs.

Finance

Was being pulled in every direction.  The individual responsible for finance did not have the expertise to do the necessary job, but his pay was right.

Professional vs Amatuer 1

The company was bleeding money and was in constant need of support from the head office.  It was like a needy child asking for money every week.  I advised that we needed to be financially independent, which would require changes to our thought patterns, the way we manage the business, our processes, and reporting.

For starters the financial controller, didn’t have the ability to manage himself, the department, or the company.  I looked at his physical space and it was in disarray, so after asking him questions, I finally got him to move off his small desk, to a larger u shaped desk with drawers and locks for private information.   Now we could start again with a clean desk and much more space.

I started looking at his documents and forms used for management of the staff, department, and corporation.  None of it made any sense, nothing synced, it was all a bunch or documents that didn’t fit together.  I started by telling him that everything should be the same format, we didn’t need to create a new document for P&L and CF.  It should be an adaptable document, where you change the heading to meet the scenarios.

I advised we needed to contain and control costs and expenses and make everything transparent.  He would always spend what he had in his bank account, I told him to hold onto funds for his dear life, and do not let go of funds till it was absolutely necessary.  I ended up writing a department manual and highlighted organizational structure which should match the head office in Australia.

One thing you gotta know about China, is the infrastructure for roadways, rail, and rapid transit is the top in the world, but when managing corporations it’s a completely different story based on culture, upbringing, training, and habits.  This will drastically change based on a region with a different language and culture.

China is about managing through chaos, the less people know the better.  It is culturally acceptable to trim the books, have two or three sets of books for different reasons.   So bringing order to the fiasco was not generally accepted.   I started the challenge, was working seamlessly with the CFO in Australia, but then the founder got involved and started demanding everything his way, when he wanted it, so we went back to the same disorganized management style.

Transitioning responsibilities from the Western headquarters to China

As costs and wages (Western office) were escalating it was natural to want to move support operations and distribution to China to improve efficiencies and reduce costs.  The process had already begun as the S&OP department was growing and taking over responsibilities from the Western office by managing the inventory, the purchases, the replenishment, and allocation.

The next challenge was to move over pick, pack and direct distribution to international buyers, stocking basic styles, then logoing as required by the client, then shipping to the individual buyers. The savings would be in the double-triple handling of products, physical location, cheaper staff, and reduced customs fees as smaller shipments did not pay duties.  The main cost was frieght which could be favourably negotiated to ensure the costs could be reduced by 20 – 30%.

I proposed that we start trial efforts with specific styles to work out the kinks and prepare ourselves for the physical space and employee requirements.   As I have worked in pick, pack, and direct distribution for many years and understand the demands and requirements.

In the meantime, I was looking for a new physical space that we could grow into over the next few years.  Keeping our physical space costs to a minimum well we transitioned and moved.

The founder insisted that we find a space that had an extra 4000sqm for warehousing and distribution.  He travelled to many 3PL’s around China to look at the what, why, where, when, who and how.  So he already had a plan, instead of sharing his plan, he would make random requests of his needs and wants to various staff in the company, so you would never know who was working on what.

China GTM Strategy  

When I arrived they had one person responsible for the orders, but many people involved, that were claiming ownership to the success of the first two domestic China orders.  The company had been trying to recruit staff for many months but there was no success.

My main objective with everyone was to provide structure, and for them to provide structure for the internal departments, think outside of the box, and record what they are doing.  Think about why they are doing it, when they are doing it, where they are doing it, who is responsible for doing it, and how was it gonna be managed.

I used our social media to attract a qualified sales manager to help with our sales, I started the initial interview processes and started discussing roles and responsibilities.  The candidate was local Chinese with lots of strength in domestic and international sales.

But once I introduced the candidate to everyone in the company, it started to go sideways, as everyone wanted to be in the driver set, setting the direction, the roles, responsibility, priorities, and of course now there was the pay.   In the process we ended up losing the candidate and me.   It was too much of a struggle to get anything done that was a benefit to the people, departments, or corporation.

In Closing

On a positive note that were very good people working in the company, some running departments like pre-production (patterns, sample room, and markers).   S&OP had its struggles but was pretty much setup to run at an efficient pace.  The founder was brilliant, but struggled with empowerment, roles, and responsibilities, as he only wanted it his way and didn’t value the opinions of the professionals he hired.   To control the staff he would give people individual tasks, competing against others, to see who would bring him the best results.  The company was set up to compete against others internally, which took away from the community and family system I was pushing for.

IMG_9178

I wanted to put performance measures in place to record efficiencies, but this was another challenge as many people shared the responsibility, so expertise became a factor.   This goes back to a JD to ensure the individuals involved now their roles and responsibility.

As the finances were in disarray, my pay check was late, my accommodation rental was not paid on time, and it became my responsibility.  I ended up accepting the late pay, paid the rental, and did not make that the objective of the conversations.   As we had much bigger issues on the table to deal with.

My biggest challenge was the founder, who was the smartest person on the planet, as he created and built this company to $40m before I arrived.   It was a battle, he advised “I am not kissing his ass”, I advised “You didn’t hire me to kiss your ass”, look at the people “Kissing your ass, and look what that got you”!!! In one of his long winded emails he said “If you’re a shrinking violet very sensitive to being challenged then we won’t work well together.” which is totally opposite of kissing ass.

I am not a leader who kisses ass, I tell you the way it is, even if it’s hard to swallow.  I want solutions not brownie points for kissing ass.  I want teamwork, not a captain of a sinking ship who expels his frustrations and feelings on others.

At the end of the day, this was not an opportunity for me as the priorities were all wrong, there finances were in disarray (the company did not pay my salary), and no one could get any huge success stories as the founder was the only that was allowed to speak.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s