Managing a Manufacturing Plant During Crisis
Managing a Manufacturing Plant During Crisis
The Corona virus crisis has brough an unexpected management situation to the majority of production companies. Ho to deal with this new situation? This crisis is very different from all the other we have ever experienced. The proven methods from the past are simply not relevant anymore.
However, there are similarities and lessons learned, that could be used today. 4 experienced interim managers we have discussed and shared their experience and observations with our EIM Community.
Jan Przepióra
Operations Management
Industry:
- Technical
- Print/packaging
- Pharma
Projects:
- Turnaround Management
- Process improvement
- Crisis management
- Greenfield Investment
- Business Process Optimisation
Tomasz Skupień
Operations Management
Industries:
- Technical
- Automotive
- Metal Processing
Projects:
- Restructuring
- Process Improvements
- Transfer of Factories, Greenfields, Brownfields
Cezary Ciecieląg
Operations Management
Industry:
- Automotive
- FMCG
- Windows industry
Projects:
- Turnaround / Crisis
- Process improvements
- Lean Management
- Greenfield, Brownfield
- Factory Relocation
Beata Elert
Supply Chain, Operations
Industry:
- FMCG
- Automotive
- Pharma
Projects:
- Restructuring
- Processes optimisation,
- Transfer od production
- Change management
- Management of Investments
Main issues in a manufacturing plant during COVID-19 Crisis
Coronavirus and preparation for daily operation
- Health and Safety of employees
- New Crisis procedures
- Re-training of employees
- Maintaining social distance between employees
- Remote work
People
- Increased absenteesm
- Change in the production flow
- Lower productivity due to hygienic reasons
- Headcount reduction
Production and Technical area
- Productin planning
- Components, raw materials, packaging supplies
- Finished goods status
- Availability of spare parts and maintenance services
- Order status
Communication
- Planning
- Components, raw materials, packaging supplies
- Finished goods status
- Order status
Case studies
1. Time to be flexible
Source of the crisis:
Unexpected loss of 50% orders – for longer time
New situation in the plant:
-
Big factory with fixed costs
-
Large production team
-
Threat of financial liquidity loss
Solution:
Adjusting plant costs to much smaller sales
-
Consideration of change to reduced time contracts (big risk)
-
Determining minimal number of operators to run all processes
-
Signifficant downsizing in headcount (30 – 40%, direct, indirect)
-
Open communication in plant – redundancy agreement in 2 days
Work organisation changes necessary after redundancy
- New work procedures – less people for the same process steps
- Trainings of workers due to changed positions / work content
-
Some layout changes in workshop, e.g. 1 person runs 2 machines
-
Employee motivation revived – e.g. engaging them in the changes
-
Electricity saving routines, offal reduction, less rented forklifts…
-
Comunication, communication, communication…
2. Prepare for the impossible
Source of the crisis:
Raw material price increase
New situation in the plant:
-
Negative financial result
- Sales prices were fixed for long term
- Immediate threat of insolvency
Specifics :
High dependency on manual labor
Solution :
Hire more employees and work slower
- Factory Interim Manager & Quality Manager performed extreme slow yield tests
- Precision of work was proved to be the key, not speed, as before
- Further tests were run for full line brigades, but slower
- All tests showed the potential to improve yield up to 10 % (it was a lot when ⅔ of plant costs was only material cost)
- Decision after tests: employ more (!) workers for similar volume
- More people working slower – this made the plant profitable
- Additional 5% of yield was gained in set-up precision project on automated processes
3. Use your full potential
Source of the crisis:
Unexpected loss of 50% orders – for longer time
Solution:
Definition of a immediate survival plan
- Detailed day to day forecast with the majority of existing clients
- Rapid acquisition of new clients based on company’s core business, know how and technological capacity
- Introduction of quick decision making and special procedures with all new offers (simplification, decrease in processing time)
4. Take advantage of the existing conditions
Source of the crisis:
Unusual order distribution during the year with idle machine time up to 30%.
Solution :
Full reorganization of the production process and rework of the factory layout
- Downsizing in headcount by 20%
- Increase in productivity of 38%
- Reduction of lead time by 50%
Best practices from the crisis interim managers
Understand and acknowledge that you are in a crisis situation.
Declare “State of emergency” status
Set-up a crisis team with a clear leader
Define an action plan
Structure and document all anti-crisis activities
Develop and consider several scenarios
Set-up and monitor strictly KPI’s
Involve actively your suppliers, customers and employees
Communicate, communicate, communicate
- Open minded leaders are needed to find new perspectives
- The chosen solution migh be suprising (more employees, slower working routines)
- Interim Managers bring out-of-the box, external view, that is crucial
- Interim Managers have experienced many crisis situations and can handle the pressure
- An interim manager leaves the company after his mission is fulfilled, thus does not endanger the permanent managers job security
How do EIM Interim Managers generate value?
EIM Nurtured Community Members discussing the topic of Managing a Manufacturing Plant during crisis
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