By Denny Dotson, Chairman | http://www.dotson.com
About 8 years ago, our management team at Dotson Iron Castings, a foundry located in Mankato, Minnesota, decided that short lead-times and on time delivery were going to be the differentiators for Dotson. Industry norms are 8 to 12 week lead-times and dismal on time delivery rates. We decided this transformation was very important to the success of the company and we began communicating about it with all employees.
The starting performance numbers were typical of the industry at the time.
- On-time delivery was 85%
- Work-in-progress inventory was 30 days
- Finished goods inventory was another 30 days
- 2% of our product was returned by the customer as defective
- Lead time was 8 weeks
Take on-time delivery as the example. At first, everyone on staff thought, if they thought about it at all, that on time delivery was the shipping department’s issue. It was a metric most of our 140 employees felt very disconnected from and figured they had no control over. Dotson management, however,started tracking all the reasons shipments were late. We found few had to do with shipping. There were order entry errors, engineering problems, scrap issues, and problems with outside suppliers.
By sharing the metrics with everyone and publishing them using PDP digital tools, we started to hold people accountable for ALL the reasons shipments could be late. In addition, we began discussing on time and its impacts with employees.
It took time but eventually people started to ask about the details on late shipments, first from their own department and then from other areas that were having problems. Employees started to care, ask questions, and come up with solutions. They felt connected to this important Key Performance Indicator.
By communicating results in real time and being transparent about the problems and solutions in all areas, all the metrics improved and today the numbers are impressive.
- On-time delivery at 99%
- Work-in-progress is 18 hours
- Finished goods are at 3 days
- Returns are now less than 2%
- Lead time is at 2 weeks
It was important to align and engage our workforce in the process. The People Driven Performance communication system was an integral part of our success.