Firefighting in industrial operations
"At first I thought I signed up for a job as a factory leader, I ended up being the captain of a firefighting station".
If you have ever worked in a manufacturing environment, you probably know this feeling. Complex manufacturing processes involve an ever-wider array of steps, actors and materials that more often than not demand fast and firm decisions that respond to unexpected situations.
With the increasing pressure to reduce product-cycle times, the establishment of high-mix low-volume set-ups, and the possibility of supply-chain disruptions —as seen especially during the last year—managers and teams often find themselves in constant ‘firefighting mode’, having to react quickly and thoroughly to unpredictable events.
Root causes of ‘firefighting’ in manufacturing operations
Handling volatility is part of every manufacturer's job. On the one hand, customers are turning increasingly demanding, not only in terms of speed and efficiency of the delivery but also expecting a more personalized service all through the process. A sudden surge in demand, while always welcome, can also bring additional problems, so if your plan is to quickly expand, you must be ready to put out fires.
But volatility does not only come on the customer’s side. If a firm is not able to match both sides of the supply and demand equation, this may bring unsustainable economic and environmental costs, resulting in a waste of products, energy and revenue. Disruptions in the production process —resource shortages, unplanned machine downtime or necessary replacements, worker absence, supply chain delays, etc.— can have quick snowball effects that not only compromise the smooth functioning of operations, but also bring the company down a spiral of unplanned costs. Nowadays, only focusing on your own production schedule, especially if you operate at a global scale, leaves too much room for error. Yet being able to manage the volatility of the whole supply change presents an entire new challenge.
Additionally, complex manufacturing demands the coordination of multiteam systems (MTSs) —logistics, production, quality and customer support, maintenance, etc.—with very specific functions that often have siloed and scattered information. The amount of data flowing every minute from sensors, machines, and people working in a factory can surpass the capacity for making sound decisions when one link in the (supply) chain fails. And while hi-tech equipment and automation may solve many of these issues, teams working in labour-intensive production environments still need to communicate smoothly and avoid information asymmetries. This puts an immense pressure on the supply chain manager, who needs to quickly identify where the problem(s) originated and at the same time inform and adapt the next steps in the line to minimize its impact.
But while having the ability to work under stress is a skill that every team lead and manager in manufacturing must have, its risks should be taken into account —even if a company is “doing well”, the hidden costs of ‘firefighting mode’ can quickly overrun operations and impact your bottom line more than you might expect.
Firstly, relying excessively on last-minute decisions takes a toll on the overall performance of the company. With so many variables that can go wrong, any inefficiencies in the production line not only results in delays but in an increase in energy and resource consumption.
Furthermore, with every alteration of the production line comes an immediate cost in human resources —additional inspections, inventory update, etc.—, increasing the overall workload and bringing up the managerial costs of production; not to mention the cost in productivity that having a workforce in constant stress can generate.
Lastly, if any of these disruptions result in a decrease in the quality of the products or the speed in which they are delivered, customer satisfaction might drop, a hole which companies have a hard time coming out of: not only do “completely satisfied” customers contribute to revenue (14 times more than “somewhat dissatisfied” customers, to be exact), but it takes 12 positive customer experiences to make up for one bad one. While often we are happy when we see the outcome, however many problems we have had to overcome in the process, a customer just sees the end product. While extra costs in resources or productivity can be roughly estimated, anticipating the effect of customer dissatisfaction is a challenge that every company should try to avoid.
How can you avoid the costs of ‘firefighting mode’?
The key, then, is to avoid reaching the point where ‘firefighting mode’ becomes an everyday job. And while not everything goes as planned, you can be prepared for unexpected events by improving on:
- Planning: you should guarantee that teams are prepared to respond as autonomously as possible to unplanned circumstances with a list of recommended actions for minor emergencies.
- Communication: you can provide teams with a common view of operations to allow them to get more transparency on production blockers and anticipate problems.
- Collaboration: teams should be encouraged to collaboratively simulate alternative scenarios and create communication channels across different systems.
- Efficiency: if information is widely shared among the system, teams can best estimate how to prioritise which solutions to take according to their impact on performance (compliance with planning, compliance with deadlines, sales, etc.), taking more efficient decisions that minimize the impact of the disruptions on the overall performance.