TPM, Lean or Six Sigma?

The high growth of FMCG sector has increased the pressures on supply chain. Every company wants to extract the maximum possible output from the current resources – in many cases, driven by a higher demand than supply scenario. Manufacturing units have also come under focus to improve their performance on various parameters like output, service levels, cost, productivity, etc. In such a situation, the management encounters the oft repeated dilemma of which improvement program to pick up – TPM, Lean or Six Sigma (or any other)?

FMCG industry typicality

Manufacturing cost as a share of sales in FMCG companies generally varies from 3-5% vis-à-vis other asset intensive manufacturing companies where it almost double at 8-10%.  Selling costs, on the other hand, are much higher in FMCG companies at about 20% of the sales. In a country like India, where the consumer sector and consumer base is in a high growth phase, the companies spend and invest more on selling and supply chain activities. Manufacturing, in FMCG sector, is more like an equal partner in overall supply chain as different to, say, the automobile or engineering industry where manufacturing is the dominant link.

Challenges in FMCG Manufacturing   

Manufacturing in the FMCG sector is generally ‘less complex’ and not as ‘asset intensive’ when compared to an engineering company. Also, the activities are not very manpower skill dependent. The manufacturing processes have  significant automation or semi-automation in different parts. One of the reasons for this, of course, is to have consistent product quality which supports brand integrity.

In spite of the higher levels of automation, it is quite common to see high manpower at the plants. Most of them would appear to be ‘floating’ and not directly doing anything e.g. on the filling and packaging lines, at many points, operators could be seen just observing the operation.

Most plants produce multiple products and in production processes, batch to batch yield and cycle time variations would be quite common. Multiple products and SKUs also increase complexity of planning process. Demand variations and skews only make matters worse and it is not uncommon to see imbalanced raw material and packaging material quantities and stock outs on the one hand while mismatch of available FG and despatched scheduled stocks, on the other.

To top up the above challenges, there are typical targets of increasing output, improving productivity while reducing manufacturing costs, for the plants.

Expectations from improvement program

Considering the typicality of FMCG sector, the management wants the improvement program to be

• easier to implement
• focussed more on delivering early results
• not high on investment both in terms of capital and resources

What should be implemented?

Since the challenges and targets are spread across manufacturing, managements realize that holistic interventions are more relevant.

It remains, therefore, the recurring question for the senior managements across companies as to which improvement program to implement – Lean, Six Sigma or TPM? And since these initiatives are seen as investments, to implement the one with the maximum returns is but the obvious objective.

None of the above, alone, in most cases, delivers the potential benefits.

The manufacturing process flow at an FMCG unit can be shown in a simplified way in fivedistinct blocks (without considering the support functions). The challenges in all these parts of the process are quite different and varied.  As such, a single program of Lean, Six Sigma, TPM, TQM, etc. may not be able to address the challenges all across. Though they have some overlap in objectives and in the approach to achieve the objectives, they work best when the specific objectives of these initiatives are targeted e.g. to reduce process variability, 6s would be most effective though elements of TPM would be necessary to sustain the improvements.

A combination of tools and techniques from these bodies of knowledge, therefore, works best for FMCG manufacturing. Though this holds true for other industries as well, it is highly relevant for FMCG industry due to the objectives of achieving high improvements from low investments.

Tools of Lean would be more effective in RM/PM/FG storage areas to address issues of high inventories, mis-match of available and required inventories, improving space utilization, improving TAT, etc. In Production processes, Six Sigma approach would yield more benefits in improving process consistency (time and quality), reducing batch costs, etc. while some elements of TPM would be important to ensure high reliability of the equipments (to ensure output) as also control production costs. In Primary and Secondary packaging processes, which are generally more automated, TPM initiatives like Daily Asset Care and Planned Maintenance are more effective in reducing stoppages of the equipments to improve utilization and throughput. Equipment management also helps reduce product and packaging material wastages on the lines.

It would be pertinent to create the appropriate improvement program based on the specific challenges being faced at various stages of manufacturing. While many companies have identified this need and created their own ‘excellence’ programs which are globally implemented, many continue to pick up point initiatives.

In conclusion, the FMCG companies need to structure their excellence journeys in manufacturing, by drawing from the different improvement models, to maximize the achievements and ensure alignment to business objectives.

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9 Critical Roles of Top Management in Improvement Programs

The success of the improvement programs, in most organizations, not only impacts their competitiveness but in many cases also their survival. In many organizations, programs like Operational Excellence, Lean Transformation, Process Re-engineering, Cost Reduction, etc. are launched with lot of fanfare but sadly, they either die an unnatural death after some time or become painfully slow. A lot of care is taken to roll out projects and initiatives across the organization and high expectations set from the working teams. However, what normally do not get focused upon are the critical roles that the top management needs to play to ensure success of such programs. While the intent and objectives of these programs are in place, not being able to support such programs with the appropriate policy and procedural changes is one of the key reasons for failure or subsequent slowdown – across many organizations. It is the top management’s responsibility to effect those changes in policies and procedures while such programs are being run in the organization. Here are 9 such critical roles that the top management needs to be play to ensure success of such transformational programs

1.      Create the right vision

This is not the organizational vision. This has to be crafted by the top management for the improvement journey and entails the overall objectives and timelines clearly. Articulating this vision and communicating it ensures that the employees understand the purpose of the journey as also that the objectives and targets motivate the teams. Conversely, absence of a clear vision could lead to mis-aligned initiatives as also ‘dull moments’ during the journey when next targets are not clearly known.

2.      Set the right improvement team structure

There could be a need for subtle re-structuring of many teams along ‘routine’ and ‘improvement’ oriented tasks/ objectives. 10-15% of the team strength may need to totally focus on improvement with few routine jobs and the rest focuses on routine with few improvement objectives.

Also, in many improvement journeys, cross-functional teams would play a key role in delivering success. It is important, therefore, that the right kinds of teams are formed for driving the initiatives.

These types of structures are not usual and the top management needs to play a key role in guiding the structuring.

3.      Align the KRAs and KPIs

KRAs/ KPI of the individuals and teams need to incorporate the improvement goals. Again, for the identified 10-15%, 90% KRA should be on improvement and 10% on routines and the opposite for other group. In many organizations, the teams and members may not be used to having ‘improvement targets’ as part of the KRAs and the top management support may be required to implement them. After all, what gets measured, gets improved…

4.      Establish the right Review Mechanism

An appropriate review mechanism is a must to ensure proper monitoring of the improvements regularly. This would involve

–           identifying & establishing the right review structure,

–           identifying ‘what needs to be reviewed’, and

–           defining the review frequency

While establishing the review structure, it has to be ensured that the competence of reviewing teams at various levels is appropriate. In many cases, when the reviewing team is not competent  to review the improvement initiatives, it leaves the working teams more frustrated than motivated.

‘What needs to be reviewed’ should only be reviewed. Over detailing in reviews can make the process boring while it should be ensured that the critical performance measures are not missed out. Design of appropriate benefit/ improvement trackers is important.

The reviewing frequency should not only be decided but also adhered to strictly. Missing out on the review schedules or postponing them frequently would raise doubts about the seriousness of senior management for the journey.

5.      Ensure adequate Resourcing

In many cases, while the improvement objectives are handed over, the team members are not able to free themselves from regular jobs and it becomes an additional responsibility. The top management would need to ensure that the teams are adequately resourced. In the absence of this, over-stressing could lead to frustration and slowing down of the initiatives. The top management should also provide some authority to the teams for taking decisions regarding modifications and changes, including expenditures. This would ensure ownership getting developed in the teams.

6.      Remove hurdles – Prompt decisions

Many challenging situations crop up during the improvement journeys which need the senior management involvement and prompt decisions. It is the top management’s imperative to not only identify such situations but also ensure prompt decisions to ensure their resolution. If the alacrity is not displayed by the top management, after some time it may find slow down in many areas with many ‘balls in its court’. There is a catch, however. Too much involvement would be detrimental. Wherever the resolution is possible at working levels, the top management should judiciously send it back to ensure that the teams do not get into the habit of ‘delegating upwards’.

7.      Appropriate Reward & Recognition

The reward policies of the organization may need to be recast to identify and recognize improvements. These could be done in many ways like monetary rewards, share of benefits accrued, career benefits, public recognitions, etc. The organization would need to frame the appropriate policy aligned to its culture.

8.      Invest in Skill Development

Most improvement initiatives would require new skills to be learnt by the employees at various levels. It is important that the top management considers this skill development as a necessary investment for ensuring success. Failure to upgrade skills of employees, where it is necessary, could lead to many dead-end situations in projects.

9.      Periodic Process Walkthroughs

Did someone say this is traditional and passé? Well, some techniques are forever. Nothing motivates the teams more than the senior management visiting their process and them getting to explain their improvements on the site. While doing this too frequently would dilute the impact, in the right frequency, this would create tremendous pride in the teams for their work and initiatives.

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