By Bill Remy, David Pate
Read the summary below or view the video above to discover effective approaches for identifying and improving critical areas in manufacturing operations that will have a significant impact on productivity and profitability:
In the second video of the five-strategy series, David shared insights on TBM’s diagnostic approach which allows us to identify issues affecting business outcomes and formulate plans for improvement. David explains that by engaging in our methodical diagnostic process, we can examine a company’s financial and operational data at a high level, and then focus on specific areas of impact, such as shop floors or distribution centers, where we can gain a comprehensive understanding of the challenges at hand. This process is enriched by our engagement with employees directly involved in these areas, leveraging the wealth of data and our extensive operational experience to pinpoint and address the root causes of inefficiencies.
The conversation continues with David emphasizing that while the opportunities for productivity improvements vary by industry—citing the distinct challenges faced by process versus discrete manufacturing—the overarching goal is to increase revenue without proportionally increasing conversion costs. This can be achieved through strategies like optimizing capacity utilization, which directly benefits the bottom line by improving margins and EBITDA. Additionally, given that material costs often surpass labor and other expenses, strategies focusing on yield enhancement and quality improvements in component usage stand out for their potential to significantly impact financial performance.
A critical challenge with manufacturers that Bill and David explored was sustaining improvements. David pointed to the common pitfall of businesses failing to maintain gains from initiatives like lean or Six Sigma. To combat this, he advocated for a three-pronged strategy: establishing a solid management or operating system, defining clear metrics or KPIs that track both outcomes and leading indicators (including behaviors and activities), and prioritizing leadership development at all levels. This approach, he argued, is essential for embedding improvements into the company’s culture and ensuring long-term success.
The conversation concludes with David’s insights underscoring the importance of a holistic approach that combines operational and financial analysis with a focus on people—both in terms of leadership and at the point of impact.
Tune in to our previous discussion in the series where Bill Remy and Shannon Gabriel, Vice President of Leadership Solutions, focus on the people strategy for greater productivity, emphasizing that the path to agility and responsiveness in manufacturing requires attention to both systems and the human elements that drive them.
Check out the other episodes of Bill Remy’s “Five Ways Manufacturers Can Bolster Agility” video series.
Strategy #1: Labor Strategies Reimagined for a More Productive Workforce
Strategy #3: Beware of Technology FOMO: Implementing Technology to Drive Productivity.
Strategy #4: Supply Chain Risk and Mitigation Strategies in Manufacturing
Strategy #5: Find Hidden Opportunities in ESG – Coming soon
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