Your most precious possession is not your financial assets. Your most precious possession is the people you have working there, and what they carry around in their heads, and their ability to work together. ~Robert Reich
I was in a client meeting the other day talking with the Plant Manager of a large global manufacturing company. He was showing me around their plant and all the new automated equipment they had recently installed.
Pretty impressive in many ways; the plant was clean, loaded with parts coming in, parts being machined, and entire systems being crated and shipped out. He was also very proud of the work they had begun on Lean Six Sigma with visual display boards, 5-S workstations, daily production cell meetings. All in all a well run factory.
As we were leaving the floor he turned and said something that I had to spend the next several hours thinking about.
“Corporate supplies the capital for all the equipment, but what they don’t understand is that we have all the know how here in this one plant. If they move the plant, they lose the real knowledge. It’s in our know how.”
He swelled up with pride at how competent his people were and how much experience they had in their years of long service in all areas, design, engineering, purchasing, and of course the actual manufacturing process.
As I left the plant the next day I couldn’t help but hear an ominous “ticking” sound in my head. That plant is a time bomb and before long it will explode and corporate will have nothing but some great equipment. The time bomb I am talking about is the “know how” that is locked up in the heads and hands of the several hundred skilled and experienced workers in that factory.
Yes they turn out great products and meet their numbers, but with a little digging and asking a few questions, the real size of the time bomb became evident. There are at least three generations of product drawings and specs in the files. In fact, much of the original product design drawings haven’t been digitized, they are still on paper, with scribbled annotations, in drawers spread out all over engineering. Parts that were originally designed for one specification, say military with rigid requirements are being used in other applications where robustness, and therefore cost, is not the major concern.
There are very few Value Chain maps of the important processes that move from customer order to customer delivery. All that information is contained in departments which tend to act as islands, or silos when it comes to information sharing.
The capital equipment is on the balance sheet and being duly depreciated, but what about the “know how” in people’s heads? Where is know how on the balance sheet. Is anyone paying attention to the real value-added activities in this factory?
Until we start seeing beyond the numbers into the real value within an organization, the time bombs will keep ticking, and exploding.
Tight Lines . . .
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