Enterprise Minnesota Magazine - Winter 2016

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Helping Manufacturing Enterprises Grow Profitably WINTER 2017

The

Path toEngaged

Employees No continuous improvement journey will succeed without employee buy-in.

Here’s how you get it.

Enterprise Minnesota 310 4th Avenue S. Suite #7050 Minneapolis, MN 55415

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A whopping 95 percent of manufacturers who have a formal planning process expect increases in gross revenues and profitability in the coming year.

— 2016 State of Manufacturing® Enterprise Minnesota’s expert strategy consultants help manufacturing companies achieve operational excellence and profitable growth.

Call us today at 800-325-3073 or visit www.enterpriseminnesota.org for a free initial consultation on how our formal business strategy process can help your company!

Scan here to learn more about how we can help your business.

310 4th Ave So., Suite 7050 • Minneapolis, MN 55415

WINTER 2017

THE PATH TO ENGAGED EMPLOYEES

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THE OUTSIDE-IN PERSPECTIVE

CEO ROUNDTABLE: PLANNING FOR GROWTH

Summit Machine used the findings from a candid customer performance audit to build strong customer relations through early collaboration.

Six manufacturing experts discuss how best to conceive and implement strategic growth.

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2 A Much-Awaited Meeting Legislators are sometimes astonished when they see the innovative sparks fly at their local manufacturers.

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Rapid Ascent

Giving Back

Two years after she wrapped up an internship at IPS Worldwide, Jackie O’Connell was offered the keys to the company.

Mark Studniski plots a path to strategic growth in large measure so he can give back to his community.

32 Minnesota’s Workforce Challenges Everybody talks about it.

Let’s share what’s being done about it.

Visit the Enterprise Minnesota website for more details on what’s covered in the magazine at www.enterpriseminnesota.org.

Subscribe to The Weekly Report and Enterprise Minnesota® magazine today! Get updates on the people, companies, and trends that drive Minnesota’s manufacturing community. To subscribe, please visit www.enterpriseminnesota.org/subscribe.

WINTER 2017 ENTERPRISE MINNESOTA /

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bob kill

A Much-Awaited Meeting Legislators are sometimes astonished when they see the innovative sparks fly at their local manufacturers.

I

am eager to show the new Minnesota legislators who will take their oaths of office in January the incredible breadth of innovative products and parts made

by Minnesota’s small and medium size manufacturers.

We at Enterprise Minnesota like to orchestrate manufacturing company tours

throughout the state; we’ve facilitated well over two hundred of them over the past few years. These visits typically include some combination of legislators, local officials, local business advocates and, frequently, members of Congress and/or U.S. Senate and their staffs. We all enjoy watching the eye-popping reactions of first-timers as they discover the creative sparks emanating from manufacturing operations as they observe the environment of sophistication and innovation that most manufacturers inhabit. Their fascination extends to unexpected places, such as when they discover the effects of international markets or how manufacturers’ bottom lines are affected by things like exchange rates. All this inside that unassuming building out on the edge of town to which they’ve never given much thought.

We can’t really blame them. When most Minnesotans think about manufacturing, they likely visualize the big Fortune 500 name-brand companies like 3M or 2

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Medtronic. These are great companies, to be sure. But the contributions of Minnesota’s 8,000 manufacturers go much deeper than the activities of the 22 companies that employ more than 1,000 employees. Minnesota’s Department of Employment and Economic Development (DEED) just updated some statistics about manufacturing that demonstrate how. More than half of these manufacturers employ fewer than 20 people; only 44 percent of them are located within the seven counties in the Twin Cities metro area.

Consider some other nuggets from the updated information: • Employment among Minnesota’s manufacturers has risen almost nine percent since 2010.

• Manufacturing represents the single largest private sector component of Minnesota’s GDP totaling $48.6 billion or 16 percent of Minnesota’s total GDP. • Today, 317,200 Minnesotans work in manufacturing, but after you apply the “multiplier effect”—jobs that are indirectly related to manufacturing— that number jumps to 914,000 jobs, or 33 percent of total jobs in Minnesota.

• Each manufacturing job supports 1.9 jobs in other sectors of the economy, like jobs in sales, marketing, shipping, professional services, printing, etc.

• Wages in manufacturing make up 16 percent of all wages paid in Minnesota, our state’s second largest payroll in 2015.

The average annual wage for manufacturing jobs was $63,236, 15 percent higher than the average wage for all industries.

And so we’ll use this package of statistics to wrap our legislative tours with the confident assertion that Minnesota’s manufacturers constitute the job-creating engine that sustains their communities, not to mention the entire state.

Bob Kill is president and CEO of Enterprise Minnesota.

Helping Manufacturing Enterprises Grow Profitably Publisher Lynn K. Shelton

Custom Publishing By

Contributing Writer Greg Langfield Photographers Chris Morse Tammy Scheffer

Contacts To subscribe subscribe@enterpriseminnesota.org To change an address or renew ldapra@enterpriseminnesota.org For back issues ldapra@enterpriseminnesota.org For permission to copy lynn.shelton@enterpriseminnesota.org 612-455-4215 To make event reservations events@enterpriseminnesota.org 612-455-4239 For additional magazines and reprints contact Lynet DaPra at lynet.dapra@enterpriseminnesota.org 612-455-4202 To advertise or sponsor an event chip.tangen@enterpriseminnesota.org, 651-226-6842

Enterprise Minnesota, Inc. 310 Fourth Ave. S., #7050 Minneapolis, MN 55415 612-373-2900 ©2016 Enterprise Minnesota ISSN#1060-8281.

All rights reserved. Reproduction encouraged after obtaining permission from Enterprise Minnesota magazine.

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SUCCESS STORIES

Rapid Ascent

Jackie O’Connell

Two years after she wrapped up an internship at IPS Worldwide, Jackie O’Connell was offered the keys to the company.

I

f a college student ever questions the potential value of a college internship, recommend to them the story of Jackie O’Connell, the president and CEO at IPS Worldwide. In 1996, O’Connell’s father finagled an internship for his daughter at a tiny two-person division of a company in White Bear Lake that distributed replacement parts for rail-based construction cranes. Just two years later, she was on track to run the place.

The company had opened in 1988, consisting of employees from the justclosed local headquarters of American Hoist, a one-time Fortune 500 company

located across the Mississippi River from downtown St. Paul. IPS founder Tom Holly had spent a career in that plant, overseeing a division that tested prototype equipment.

When Amhoist relocated to North Carolina, Holly bought his department and spun it out as a stand-alone business, taking several co-workers with him.

A business major at Augsburg, O’Connell came on board during the summer before her senior year. She quickly dazzled her boss by adapting her computer skills to transform the company’s typewriter-based literature into digitally based marketing materials. Soon thereafter,

she organized the company’s efforts at a trade show at the Ramsey County Fairgrounds. And at the end of the summer she readily accepted their offer to extend her internship, working nights and weekends throughout her senior year.

Two years later—following a year-long Fulbright Scholarship in Japan, and a first job at a local import/export company that satisfied her appetite for extensive foreign travel—O’Connell got a surprising call from Holly.

“I need a successor for the company,” Holly said. “I need somebody to succeed continued on page 4

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me in this business, and you really impressed me. Will you come back?”

Like any mystified former intern who had just been offered the keys to a company (the list can’t be very long), O’Connell needed a minute to digest the offer. But only a minute. She was not completely foreign to the industry. She grew up in Brainerd, where her father, Charlie DeGeest, directed crane-line maintenance for Burlington Northern. “Dad was 100 percent supportive,” O’Connell says. He rebuilt cranes for 30 years, so he was pretty passionate about cranes,” O’Connell admits www.FiscalCheckup.com she was never inclined toward engineering.

“I wasn’t the get-dirty kid,” she says. “I didn’t take things apart.”

But the offer was more than intriguing.

“Sure!” she responded to Holly.

“I was young, you know,” she remembers. “You’re ready to light the world on fire. He asked me to come, and was confident in my skill. So I did.”

Today, as O’Connell enters her 20th year with the company, Holly’s gamble appears to have paid off. Coming on board as just the company’s third full-time employee, O’Connell used strategic acquisitions to transform IPS from a parts-only operation 1 10/6/15 9:41 AM to a full-service repair and manufacturing facility. In 2001, she purchased the OEM for the locomotives side of the business.

IPS Worldwide still maintains its headquarters and parts operation in White Bear Lake, where its 20 employees maintain an 8,000 square-foot warehouse. The company’s repair and manufacturing shop has 25 employees in a Duluth-based facility. IPS is the OEM of American and Ohio Locomotive Cranes, which manufactures new cranes and rebuilds and repairs existing cranes. IPS Worldwide is a complete Sounds like a pretty supplier of quality replacement parts for good match to us.

American crawler cranes and genuine OEM parts for American and Ohio Locomotive cranes. IPS also provides full-scale LET’S TALK SOLUTIONS crane services including load testing and 763.428.KING inspection, boom and component repair, kingsolutionsglobal.com ground-up rebuild, innovative design and engineering upgrades.

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Rail cranes

IPS manufactures, refurbishes and repairs the 2,000 rail-based cranes that are used to maintain the 76,000 bridges that connect 233,000 miles of track in America’s

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domestic rail network. Rail cranes are essential to drive pilings for railroad bridges, in areas not typically accessible by road, especially in wetlands.

“It’s pretty niche,” O’Connell says.

They have one other competitor, which it tried unsuccessfully to acquire in 2001.

“The plan was we would do all the sourcing and they would do all the selling.

Things didn’t quite work out, so about two years later we got divorced, and we went our separate ways, amicably.

“We’re still very close,” she adds. The two companies share “a vault of informa-

IPS manufactures, refurbishes and repairs the 2,000 rail-based cranes that are used to maintain the 76,000 bridges that connect 233,000 miles of track in America’s domestic rail network. tion” and an inventory of parts. “It’s very amicable, but they are in Ohio and we’re here in Minnesota. We compete for the same business.”

O’Connell made a significant move in 2001 when she engineered IPS’s acquisition of the American and Ohio Locomotive Crane Company, which enabled their evolution from a parts distributor into fullblown manufacturing, where they would rebuild and repair locomotives.

“We shook the dice a little bit,” O’Connell admits now. “Tom was thinking at the time that we would just do parts, but once we became that, we couldn’t just do parts, we had to rebuild their equipment.”

IPS was first located in a large 65,000foot facility in Proctor, Mn., belonging to Canadian National. “It was a long, thin building,” O’Connell says, but the facility’s doors were too short to accommodate crane business and the track was too short for IPS’s work on building and repairing 90-foot rail cars. When her lease expired in 2008, she set out on a nationwide search to find a facility that would accommodate their almost-unique set of requirements.

Manufacturing Makes Minnesota Thrive IPS Worldwide’s path to Duluth had little to do with in-state loyalty, O’Connell says. The port city triumphed in the company’s nationwide search for a location because it could satisfy the company’s exceptional list of requirements. For one, rail-based cranes are self-propelled machines that required in-house access to live train tracks with access to major railroads. The Duluth-Superior market offered access to Burlington Northern, Santa Fe, and Union Pacific. For another, the building needed sufficient height to allow cranes to drive right in. The new facility had exactly that. “Height of building, height of doors, live track, good central location for all the rails to come into, were some of the key factors, and we landed in Duluth.”

The railroad relies on IPS to update and rebuild its inventory of expensive cranes. O’Connell said IPS can refurbish a crane that costs $2,000,000 new for about half that price, reusing all the major steel components.

The process can take between six and 12 months, depending on how much simultaneous work they accept at any given time. While rebuilding the cranes, they are also updating the technology.

Many of the cranes that arrive for refurbishing use 1970s pre-digital technology, with old diesel engines.

O’Connell said IPS “reuses the bones” of the incoming cranes, but then “we infuse it with innovation and technology. We put a monitor in it, so now you have a computer screen in there that’s keeping track of all your gauges instead of having gauges. It’s doing diagnostics, so we can sit in our office in Duluth, and we can get on a computer and see what a crane in the field is doing.”

They also add built-on stairways that make it easier and safer to climb in and out of the crane cab.

O’Connell says the company is eyeing more of these partnering opportunities with customers.

For us at IPS, it’s very important to build a strong relationship with our customer. We focus very long and very hard on our relationships and we want our customer to look to us first for help.”

Manufacturing is key to Minnesota’s economy.

It employs over 317,000 Minnesotans and generates $20.1 billion in payroll.

To support this sector, we: ● Offer financial incentives. Nearly 80 percent of Job Creation Fund recipients are manufacturers. ● Provide regional analysts with expertise on the state’s regional economies.

They provide training and labor market intelligence. ● Promote “Made in Minnesota,” our manufacturers’ supply chain database.

It enables companies to find — and be found by — in-state suppliers.

Job Creation Fund. Regional analysts. Made in Minnesota database.

Call it a Minnesota manufacturing “thrive-fecta.”

EMPLOYMENT AND ECONOMIC DEVELOPMENT

Web: www.mn.gov/deed/business Phone: 651-259-7114 • 800-657-3858

G ra n i te E q u i ty . co m

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Giving Back Mark Studniski plots a path to strategic growth in large measure so he can give back to his community.

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hough still barely 40 years old, Mark Studniski is already spending some serious time contemplating the community legacy of Northwest Rule Die, his family’s small machine shop in rural Avon, Minnesota, a 1,400-person community about 15 miles west of St. Cloud.

Studniski recently completed a revenue growth assessment by Enterprise Minnesota, a program that assesses how well a company’s internal systems support strategic topline growth. His consultants were intrigued by the company’s small size—three and a half FTEs—as well as Studniski’s altruistic motivation for increasing the size of his company.

Studniski revealed in early interviews with the Enterprise Minnesota team that his ambition to grow his company was motivated not merely to increase the size and financial stability of his small shop but also to funnel that growth into the quality of life in Avon and nearby St. Cloud. “There’s a lot of aspiration in Mark to contribute to his community,” says Steve Haarstad, a business growth consultant at Enterprise Minnesota. “It is amazing.”

Studniski told Haarstad he wants to be able “to provide better wages to his existing employees, to be able to provide more employment opportunities to people in the community, and to be able to directly give back to the community through contributions and sponsorships.

“I’m trying to give back,” Studniski says. “It is good for the community for people to share the wealth,” he says.

Perhaps his most meaningful goal is to endow a scholarship for students at St. Cloud State Technical and Community College in the name of his father, Al, a lifelong machinist. Al founded Northwest Rule Die in the early ‘80s, along with his wife Linda. But he was killed in 2002 in a tragic machine shop accident.

Mark, then 26-years old, still recalls, “It was a real shock. I had a big pair of

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Mark Studniski was forced to take over Northwest Rule Die 14 years ago, after his father was killed in a tragic accident in the company’s shop.

shoes to fill. I had a real big life choice to make at that point, and decided to keep the business going, working for my mom.”

In a way, that decision was a no-brainer, since his life’s ambition had always been to be a machinist at Northwest Rule Die, and to someday take over the business. He started sweeping floors as a 10-year-old, and spent his free time following his dad around the shop, learning the business. “Today they’d probably call it job-shadowing,” he says.

“There’s a lot of aspiration in Mark to contribute to his community,” says Steve Haarstad, a business growth consultant at Enterprise Minnesota.

“It is amazing.”

“Dad maybe had a lesson in mind, but for me it was just, ‘here, watch this,’ no different than the way any parent would teach his son how to do something—no different than how I teach my daughters how to do something.”

Studniski continued to work in the shop during the time he got a degree in machine tool at St. Cloud Technical and Community College. But he nonetheless felt ill-prepared to suddenly take over every aspect of the business. “I had to do a lot of trial and error and learn on the run. I had no shortcuts through setups, or not all of them, at least. I didn’t have anybody to bounce a lot of ideas off of.”

But he learned the business, if the hard way, and has operated profitably ever since. His participation in the revenue growth assessment is an indication of a savvy business operator, Haarstad says.

“For a company that size to take the time to reflect about who they are, how they bring value to the market, and what kind of customers are a best fit for them is incredibly unique.”

Haarstad points to this year’s State of Manufacturing® survey to illustrate that 62 percent of manufacturers in Minnesota admit they have no formalized pur-

pose or strategic vision. “Every business has some kind of plan,” Haarstad says, “otherwise they wouldn’t be in business.

But is it formal? Is it documented? Is it communicated?”

Haarstad predicts such market awareness will enable Studniski to leverage his business against much larger companies.

“By going through this assessment and just even getting some of those initial ideas, Mark has some advantage, as long as they take action on it and do something with it.”

Studniski is currently using the assessment to plot what he wants Northwest Rule Die to look like in the future, and then “connecting the dots backwards to get there,” according to Haarstad. “What revenues do you need to get there? What are the next steps?” Just as important, he adds: are the employees on board?

“Maybe some won’t care, but knowing always has some kind of higher purpose.

It can be very motivational and inspiring to those who are contributing to it.”

Says Studniski: “We want to grow not just with our customer base, but we want to be able to bring in a couple more employees and just continue to grow slowly. It’s not going to be a real fast-burn-type growth. It’s going to be a steady but slow growth.”

“We provided that assessment to these guys knowing that they are a really small business with limited resources,” Haarstad says, adding that he also tried to “help them along on their first steps in terms of putting a plan together or getting some ideas of action that they could take. I wouldn’t say that we necessarily helped them develop a growth strategy or plan, but we told them what things they’re doing well and what some things are that they can build on and where there are some opportunities for them to make improvements.”

At the end of the assessment the Enterprise Minnesota team brainstormed with Studniski’s extended team: his two employees: his mother Linda, who does accounting half-time; and then Mark’s wife, who is not part of the business but maintains a key interest in its success.

“We had an open discussion about what can we do, where can we start, what are some things where we might be able to get some traction? They threw out a lot of ideas.”

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Chemical Reaction

PHOTOGRAPH BY CHRIS MORSE

Plymouth-based Seacole uses its ISO certification to grow at 10 to 12 percent per year in one of the country’s most regulated industries.

Congressman Erik Paulsen recently toured Seacole’s Plymouth-based plant.

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regg Elliott is more than candid about the pragmatic motivation behind his company’s decision to pursue its ISO certification.

“It was, to be honest, a customerdriven process,” he told a room full of manufacturing executives recently, at an event in Maple Grove, organized by Enterprise Minnesota at Great River Energy. Elliott was one of three CEOs

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who described their ISO journeys. Other presenters included Tom Murphy, president of CARDSource, and Sarah Richards, president and CEO of Jones Metal.

Elliott, a veteran chemist, founded Seacole, a Plymouth-based chemical manufacturing distribution company, in 2002. Operating out of an 85,000-squarefoot plant located near the intersection of Interstate Highway 494 and Minnesota

State Highway 55, Seacole recorded firstyear revenue of about $2 million. Today, it’s nearing $20 million.

He had long studied the way ISO could institutionalize processes, reduce mistakes, and better exploit the capabilities of his ERP system. Yet the ultimate tipping point for his decision to take on ISO, he told event attendees, was prompted by a tip in 2013 that executives at Dow Chemical

wanted to sub-contract a considerable chunk of work to Seacole—but only after the company achieved its ISO certification.

Similar subcontracting has long driven part of Seacole’s enviable profitability, because many manufacturers would rather avoid the costs and regulatory hassles of managing in-house chemical packaging operations, especially when those processes are only incidental to their primary business. Chemical manufacturers are among the most closely regulated American industries, with the DEA, the EPA, Homeland Security, Pollution Control Agency, and a host of others continually keeping tabs on their products and processes.

“We’re growing at a clip of between 10 and 12 percent a year right now, and I think largely because of our ISO.” —Gregg Elliott, president and CEO, Seacole “Everybody watches us,” Elliott said.

After canvassing an assortment of consulting organizations, Elliot and his managers chose Enterprise Minnesota to guide their path to ISO certification.

“We looked at a lot of other options, to be honest,” Elliott said. “You can go online and almost get a mail order ISO program.

You send them a bunch of information, they send you back a bunch of information, SOPs, and then you go through your certification. It’s very easy and pretty cost effective, but you really don’t get much out of it. You really don’t improve your company doing it that way.”

After waiting out a year-long delay while Seacole first upgraded its powerful ERP, Enterprise Minnesota’s Kent Myhrman used three-hour bi-monthly sessions for about a year to guide them through several other related projects, including job instruction training.

“It wasn’t the huge time commitment we were expecting,” Elliott said.

Seacole’s hard cost of achieving ISO was about $23,000, according to Elliott, along with $10,000 to account for another 708 hours’ worth of employee time over the year.

The annual time and labor expense of

maintaining ISO is under $50,000, he added.

“The return on investment calculation is certainly in our favor,” Elliott said, emphasizing that some of that expense was baked into existing employee responsibilities.

“We were doing all that stuff to begin with,” he said. “We had a complaint system, and we had a corrective action system, but they weren’t very well formalized and documented. Those people were all in place and already doing those functions, just not doing them very efficiently.”

Seacole became ISO certified in October 2015 and since then has notched close to $2 million in annual revenue from the Dow relationship, with more coming, according to Elliott.

Elliott readily admits that the ISO disciplines have accomplished much more than good sales at Seacole.

The ISO process used interdepartment cooperation to develop greater efficiencies, which also “really empowered our employees,” Elliott said.

“We’re making fewer mistakes, and we’re not repeating them, which is even more important. In an era when employee retention is a top priority, the ISO process gave them a feeling that they were part of the process. It really helps us retain the employees we have.”

ISO also institutionalized Seacole training processes and reduced audit time with outside customers.

Elliott uses its ISO certification to inspire changes throughout Seacole’s culture. A large sign in the lobby proclaims Seacole’s ISO certification, alongside the company’s core values and mission statement.

“Every visitor, customer, and employee who enters the building understands what we’re all about,” Elliott said. “It’s something that we live on a daily basis.”

Elliott said ISO certification also enabled Seacole’s entrance into the National Association of Chemical Distributors, a large national association whose members move about 90 percent of the chemical products in the United States. That membership, he said, opened the door to a new customer relationship with BASF, the world’s largest chemical producer.

“We’re growing at a clip of between 10 and 12 percent a year right now, and I think it’s largely because of our ISO,” he said.

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‘Near-House’ Healthcare Executives bet that Alexandria Industries’ company-owned clinic will produce healthier, happier employees and ultimately help contain the costs of health insurance.

Lynette Kluver, director of organizational development, and CEO Tom Schabel.

A

lexandria Industries this fall opened a company-owned healthcare clinic that executives predict will simultaneously give employees convenient access to healthcare and also help the company shrink the everincreasing costs of providing employee health insurance.

The 2,000-foot clinic, operated by a nurse practitioner, an LPN, and two support staff, provides the company’s 500plus Alexandria-based employees with

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preventive services like physical exams, immunizations, well-baby checkups, and care for minor illnesses and injuries—all for free.

Convenience aside, the clinic’s most potent impact will likely be how it helps reduce the effects of chronic disease on employees and on the associated costs of health insurance.

“The costliest impact to our self-funded health plan is managing chronic disease,” said Lynette Kluver, the company’s

innovative director of organizational development and architect of the idea.

Kluver, like other HR professionals, is fully aware of CDC estimates that 86 percent of all health care spending goes to people with one or more chronic medical conditions such as heart disease, stroke, cancer, type-2 diabetes, obesity, and arthritis—and that some of these conditions are largely preventable through changes in lifestyle.

Alexandria Industries first tackled worksite wellness ten years ago through a biometric program that helped employees understand and reduce health risks related to cholesterol, blood pressure, weight, and glucose.

Then, a couple years ago, Kluver and her team determined that a company-owned clinic could build upon their worksite wellness success.

“We already know what we’re doing to make healthy lifestyle decisions. We know our risks as individuals and as an organization,” Kluver said. “We opened the clinic to help figure out how to get healthy and stay healthy.”

The formation of the clinic was guided

by Achieve Wellness, a regional third-party workplace health and wellness provider based in Wisconsin that had been a decadelong worksite wellness consultant with Alexandria Industries. Achieve employees currently staff the clinic.

Kluver’s confidence that the clinic will save the company money over the long term is predicated on employees using it. Therefore, the company spent time ensuring that the facility cultivated a warm and inviting atmosphere.

“When you walk in, it’s almost like walking into my living room,” Kluver said, adding that CEO Tom Schabel insisted he didn’t want this to look or smell like a clinic.

They succeeded. The open reception area is illuminated with plenty of natural light.

There are two spacious exam rooms, a lab, and a multi-purpose room.

Rather than calling it an “in-house” clinic, Kluver refers to it as a “near-house” clinic, emphasizing that its location is two blocks from Alexandria Industries’ main campus—close enough to be convenient but distant enough to ensure the confidentiality of employee health records.

“That was purposeful,” Kluver said.

“We feel it gives more confidentiality to the employees than an in-house clinic. It’s real close, they could walk over there, yet they have privacy. Nobody sees anybody coming or going.”

The emphasis on confidentiality is reinforced by the fact that the clinic is operated by Achieve Wellness.

“We have no access,” Kluver said. “It’s a separate phone system and a separate computer system. Everything is separate.

We make that very clear distinction: We own it, but we don’t operate it.”

The company sought to make early stakeholders of employees by posting construction updates from “demo to studs,”

Kluver said. “There was a lot of interest.

I think because of our wellness program over the years, we’ve created some savvy health care consumers. I think overall, our employees and their families were ready for something else.”

Kluver stresses as well that the clinic is

Kluver’s confidence that the clinic will save the company money over the long term is predicated on employees using it. not a response to perceived inadequacies in the quality of local health.

“We’re very much pleased with the relationship and the services available in Douglas County and surrounding areas,” Kluver said, allowing that “there are some challenges to health care. When you

hear people talking about, I called for an appointment, and it takes so long for me to get in. I think we can be more responsive with our own clinic, more personalized.”

Alexandria Industries first approached the clinic as a two-company collaboration with cross-town Douglas Machine (which also recently launched its own companyowned clinic) because it gets complicated to merge company cultures. Kluver acknowledges that there is significant potential in multi-company collaborations, but admits difficulty to aligning everybody’s visions, goals, and outcomes.

“There are a lot of advantages of just working with one company and understanding that company’s specific culture, specific goals, and specific atmosphere,” Kluver said.

The new clinic has already attracted attention and visits from other companies that are looking for more cost effective delivery of healthcare and more personalized delivery.

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Enterprise Minnesota Adds Two New Consultants Vara and Hellickson bring deep experience as business growth consultants.

E

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www.ci.stcloud.mn.us

#stcloudgreater

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nterprise Minnesota has added two experienced professionals to its ranks of experienced consulting staff. Lynn Vara and Abbey Hellickson have joined the organization as business growth consultants.

Vara’s expertise is lean enterprise transformation and continuous improvement methodologies; Hellickson will help manufacturers engage their workforce, maximize productivity, and develop leadership teams.

“Manufacturers who want to stay competitive in today’s global economy need to make continuous improvement a priority,” said Bob Kill, Enterprise Minnesota’s president and CEO. They both have a wealth of experience that positions them well to help manufacturers successfully compete and grow.”

Prior to joining Enterprise Minnesota, Vara served as an independent consultant who helped guide clients through lean transformation and business process improvements. She also served as a fulfillment center manager for Amazon in Irving, TX, and as plant manager for ERICO International Corporation in Cleveland, OH. A resident of St. Paul, MN, Vara attended West Point, where she received a BS in mechanical engineering. She received an MBA and a master’s degree in mechanical engineering from MIT. Hellickson has served as the director of business and workforce education at Rochester Community and Technical College and as a corporate training instructor for Fastenal.

“Attracting, retaining, and engaging the best talent at all levels of an organization is crucial for manufacturers seeking to compete in our global economy,” Kill said. “Abbey has an excellent track record of helping manufacturing companies implement the talent and leadership strategies they need to grow profitably. She

Lynn Vara

Abbey Hellickson

is a great addition to our consulting team.”

A resident of Preston, Hellickson earned a bachelor’s degree in business administration from Winona State University and a master’s of education in human resource development from the University of Minnesota. She serves on the board of directors for the Preston Area Community Foundation and the Fillmore Central Community Education.

BestForce WCI and Enterprise Minnesota renew collaboration.

W

est Central Initiative (WCI) and Enterprise Minnesota have teamed up to offer BestForce, a new initiative that provides operational services to help small and medium-sized manufacturers create new jobs, retain existing employees, and fuel ongoing profitability.

The program was based on the previous success of WCI’s Workforce 2020 grant program, says Bill Martinson, a longtime business growth advisor at Enterprise Minnesota.

WCI, based in Fergus Falls, uses its strong network of resources and contacts to improve its local economy through

funding, programs and by providing technical assistance.

To qualify for BestForce, manufacturers (or companies in related industries) must: • be located in Becker, Clay, Douglas, Grant, Otter Tail, Pope, Stevens, Traverse or Wilkin counties, • operate as independent profit centers, • employ 250 or fewer full-time employees, • schedule service delivery within 45 days of application, and • match at least 25 percent of the project’s total cost.

Enterprise Minnesota will provide

experts who will help manufacturers answer important strategic questions.

Strategy - Does your company have a clearly articulated business strategy that leadership regularly reviews and is communicated effectively throughout your business?

Talent - Do your staff members have the skills and development resources to perform their work and meet your business goals?

Continuous Improvement - Are all your staff members empowered and engaged in looking for ways to improve company processes through continuous improvement initiatives?

Quality - Do you have a strong business management system in place, a system that meets the highest certified industry standards?

Companies interested in the program may contact: Bill.Martinson@enterpriseminnesota.org or Rick.Kvasager@enterpriseminnesota.org.

Risk Prevention Employee Benefits Business Insurance

ADDING ACTUAL VALUE TO THE INSURANCE RELATIONSHIP

You should be getting more from your insurance agent than just great pricing on proper coverage. Marsh & McLennan Agency can also help you reduce injuries, stay on top of compliance (OSHA, DOT, EPA, FLSA, ACA, etc.), and find and keep the right people.

Speak with a local manufacturing risk and insurance specialist: Twin Cities 763 746 8000

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WINTER 2017 ENTERPRISE MINNESOTA /

13

DOING GOOD

Redwood Falls Philanthropist Contributes $1 Million to Tech Center Community/school collaboration will educate high school students and be available to local manufacturers as well.

A

$1 million contribution from a local philanthropist will enable Redwood Falls to join the likes of Alexandria, Fergus Falls, and White Bear Lake, whose school districts have embraced the value of technical education for its students alongside close collaborations with its local manufacturers.

Orrin Estebo, a Redwood Falls attorney, recently committed $1 million to establish the Orrin S. Estebo Career Development Center at the local high school.

Rick Ellingworth, Redwood Falls’ school superintendent, said the donation—part of a $2 million overall plan—will help enable the district to remodel the west wing of its current high school to develop a manufacturing tech center for high school students as well as local manufacturers for after-hours training.

Local manufacturers, he said, have voiced concern about their Orrin Estebo ability to maintain their workforce in the face of Baby Boomer retirements over the next five years. “Can four-year college graduates. We need we work together somehow so that kids more people who can earn a good living who are graduating from here can be and make a difference right in their local aware they don’t have to move away to communities with their hands.” get a good job?” They can walk across the Estebo, who grew up on a farm, has street and do that, but they have to know “an appreciation for people who are able about it. to do some kind of mechanical things He said the school’s wood shop looks themselves.” There are good local jobs like the shops that I grew up in. What for those who are willing to get training, we’re wanting to do is partner with he said, but “it’s a hard sell because it some businesses in town and create a sounds a lot nicer to have somebody go career development center that would be to St. Olaf and get a degree in philosophy for kids by day and for adults after the than it does to go to Dunwoody school day ends.

Institute.”

“Orrin has been promoting this idea Estebo is a longtime patron to the for years,” Ellingworth said. “He said Redwood Falls school district. He made the world doesn’t necessarily need more his first major contribution in the early

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/ ENTERPRISE MINNESOTA WINTER 2017

‘90s using the proceeds of a life insurance policy he had received following the death of his wife Nancy. As a teacher in Redwood Falls, Nancy had a school-sponsored life insurance policy for $100,000.

I wasn’t expecting this,” Estebo said and promptly directed the money to fund technology, a coordinator and a computer lab for the district, according to Ellingworth, which, he adds, “was pretty revolutionary back then.”

A few years later, Estebo contributed $250,000 to start a Dollars for Scholars chapter for Redwood Falls, a program that awards scholarships to students who are going to be graduating from the local school. He has since given another $1 million to that project.

“He and Nancy didn’t have any kids of their own. He’s done very well in life. He would say he’s lucky, we would say there’s a lot of brightness that goes along with that.”

Ellingworth pitched the idea of a $2 million project to Estebo at lunch, after which Estebo announced that he wanted to kick it off with a million of his own.

“We’ve always had a collaborative spirit around here that said two good entities working together can produce more than two good entities working in isolation,” Ellingworth said. “Orrin has kicked this up with this gift.”

Ellingworth said that he and Estebo will try to find other business players to contribute to the project.

“By the end of this project we’re going to be on the cutting edge of doing things in partnership with the business community, who by the way, already contribute through the tax base. We want to take it to the next level.”

Peer to Peer Enterprise Minnesota’s exclusive all-day event.

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ore than a hundred manufacturing executives attended Enterprise Minnesota’s 2016 Statewide Manufacturing Peer Council event in October at the Minneapolis Marriott Northwest hotel. It marked the fourth annual meeting of the group, composed of members of Enterprise Minnesota’s regional peer councils.

Kevin Stine, Chief of Applied Cybersecurity – National Institute of Standards and Technology (NIST) Information Technology Laboratory, in Washington, D.C., provided the keynote address, Collaborative Approaches for Cybersecurity.

In other presentations, Enterprise Minnesota’s industry experts discussed: • How ISO 9001:2015 Will Minimize Risk and Maximize Profits • Three Failsafe Ways to Improve Your Continuous Improvement • Seven Steps for Revenue Growth.

800-908-BANK (2265) Bremer.com Member FDIC. © 2016 Bremer Financial Corporation.

All rights reserved.

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John Connelly, director of consulting at Enterprise Minnesota moderated a panel entitled, Growing Your Enterprise.

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WINTER 2017 ENTERPRISE MINNESOTA /

15

GAP is Back!

T

he Growth Acceleration Program (GAP) is a direct state investment program to help manufacturers with 250 or fewer full-time employees to access business improvement services.

Since its inception in 2008, GAP has fueled over 245 Minnesota manufacturing companies to invest in their respective organizations. These companies have generated a $30-to-$1 average returnon-investment. As a result, these

To be eligible for GAP funding, a manufacturer must be Minnesota-based, operate as an independent profit center, and employ 250 or fewer FTEs.

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/ ENTERPRISE MINNESOTA WINTER 2017

manufacturers have created and retained 2,100 jobs in Minnesota, boosted company sales by $148 million, and saved these companies $29.9 million in business costs. To be eligible for GAP funding, a manufacturer must be Minnesota-based, operate as an independent profit center, and employ 250 or fewer FTEs. GAP funding is intended to help an eligible business buy down the cost of business services provided through Enterprise Minnesota. Depending on the size of the manufacturing company, they can get up to a 50-percent rebate for services provided to them. The remaining match must be provided by the company in the form of cash.

GAP funds may not be used for financing, overhead costs, construction, renovation, equipment purchase, or computer hardware.

The maximum amount of GAP funding awarded to an eligible company in any calendar year is $50,000. A company may request GAP funding for multiple projects, as long as no one project exceeds $25,000.

Four Questions

INNOVATIONS

Traci Tapani, co-president, Wyoming Machine on her company’s strategic use of GAP

What is the nature of the lean program that you’re implementing now?

We’re still in the midst of the process, but they’ve been working with a cross-functional team of people to visually map out the process, from the start of estimating and order-entry all the way through to production. We’re helping all the people on that team develop a common understanding about how the process actually works. Prior to that, there were people on the

production floor making scheduling decisions for their department who actually did not understand the whole process.

Where does GAP fall into this?

It helps evaluate the straight-up cost of a proposal. You can say, yes, I can totally fund that on my own, but it becomes daunting when you factor in the cost of all the time and effort of the people who are pulled out of day-to-day production and processing. Sometimes you have people working overtime to make up for the fact that they lost some of their production capability. The GAP financing helps bridge that for us, so that we can make another overall project work.

What’s your takeaway of GAP for other companies that might take advantage of it? Evaluators have said that GAP programs bring on average something like 30-to-1 return on investment. Does that jibe with your experience?

I don’t know the exact math, but I don’t find that to be particularly surprising. The return is much greater than what anyone might initially expect. There is an advantage to the fact that our team can function independent of my sister and me, to have the knowledge to figure out how to solve problems, where we don’t have to be involved. She and I can do other things that are probably more critical to the success of this company than spending our time teaching people about scheduling or process.

One thing to think about in small and mid-size companies is that you might have only one person doing something like customer service or estimating. When that company wants to talk about improving what they are doing, they might take it personally and feel offended when they need to be fixed. But when we can bring in someone from outside

PHOTOGRAPH BY TAMMY SCHEFFER, CREEKSIDE PHOTOGRAPHY

Y

ou have a long history with Enterprise Minnesota. How far back does it go? And what are you working on now?

My sister and I are second generation owners of Wyoming Machine. We go back to when it was known as Minnesota Technology. Our company was founded by our father, who was a successful entrepreneur, but we needed to a take step away from an entrepreneurial focus and more into having designed processes and procedures. Our workforce was large enough that we needed more structure around workforce policies.

One of the first things I remember about Enterprise Minnesota was strategic planning. It helped my sister and me understand how the company actually makes money.

That was a big turning point for us, in terms of our leadership and understanding of this company.

We really got into the nitty gritty, and knew how and where we made money.

Most recently, we’ve been struggling with scheduling issues.

The company has been growing fairly consistently. We’ve been adding people, and in the last year or so, we’ve seen more turnover due to retirements. Enterprise Minnesota proposed a project that focused on lean, and we utilized some GAP funding to help us make that feasible for us to proceed.

Sisters Traci and Lori Tapani, copresidents and owners of Wyoming Machine recently received Lifetime Achievement Awards from the National Association of Women Business Owners (NAWBO). Wyoming Machine is a sheet metal fabricator with 55 employees, based in Stacy.

Working frequently with Enterprise Minnesota, the sisters are long-time advocates of in-house training for unskilled and skilled workers. Traci recently discussed how the company has made strategic use of Enterprise Minnesota’s Growth Acceleration Project (GAP).

the company to work with a whole team of people, it can alleviate some of that emotional tie; you can look at it more objectively, like it’s just a process. That’s invaluable.

WINTER 2017 ENTERPRISE MINNESOTA /

17

THE PATH TO ENGAGED

EMPLOYEES Have you ever thought about what a good day looks like for your employees? Is it when the equipment didn’t break down, or there weren’t any quality issues? In short, they were productive. Now let’s connect that to continuous improvement.

Continuous improvement is not satisfied with a ‘good day.’

The focus is on ‘better days.’ What do high performance companies do to have more ‘better days’ than good days?

They have employee engagement.

I

f you tend to dismiss employee engagement as a priority within your continuous improvement journey, think about this: A recent workforce study conducted by Towers Watson found that fewer than one third (31.5 percent) of U.S. workers considered themselves “engaged” in their jobs in 2014.

On top of that, fully 26 percent of them plan to leave their employers within the next two years.

Today, as many manufacturers scramble to bridge the skills gap to recruit qualified employees, just as many struggle to retain them. The solution to this challenge is engagement. Engaged employees stick around, they’re more productive problem solvers; they’re more willing to recruit others to your company, and they’re more connected to achieving the

By Greg Langfield

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/ ENTERPRISE MINNESOTA WINTER 2017

internal goals that will help your company grow and thrive. (And not for nothing, their lives are better: they arrive home from work with more energy to do the things they want to do.)

In short, engagement helps your business, helps your customers, and helps your employees.

Let’s consider two companies, Alpha Tech and Beta Machine, and how they integrate engagement into their lean journeys. Both are hypothetical, but you’ll recognize their behaviors. The management team at Alpha Tech has just begun introducing the tools and cost savings of continuous improvement into their company culture, but with every step they are thinking about how those processes will help motivate and engage their employees.

When asked about how things were going, the CEO takes a pause and says, “Well, let me just say it’s a good time to be employed here.” They’re on their way to getting engagement with their employees.

Beta Machine is a major manufacturer.

They began their continuous improvement journey almost eight years ago, but its executives have watched their early successes begin to diminish. They’re struggling. They ask, “What’s not working?” As they reassess, they discover that their initial focus was more on tools and cost savings. People were always part of the process, but they weren’t a priority.

Keep these companies in mind. Alpha Tech is just on their journey, so their experience can be applicable no matter where your company is. Beta Machine is having to readjust the continuous improvement efforts to find greater success. They share a commitment to the value of leaning up their operations, and they also understand that no number of cutting-edge continuous improvement concepts can succeed if their employees aren’t dedicated to the process.

They have also learned that their success is based on three processes that support employee engagement.

Daily improvement. How do you coach and motivate frontline employees—either

Greg Langfield is a business growth consultant at Enterprise Minnesota.

His expertise ranges from enterprisewide lean transformations to targeted improvements including various lean workshops and lean certifications. Before joining Enterprise Minnesota in 2012, Greg worked as an engineering manager for Covidien, as a project engineer for Automation Services Inc. and Doboy Packaging Machinery, and also as a design engineering manager for Laser Machining Inc. He earned a degree in mechanical engineering from North Dakota State University.

WINTER 2017 ENTERPRISE MINNESOTA /

19

Change in Thinking

Learn to See

Sugges&on Box

Daily Improvement

LOCKED box

Visual process – posted

Something YOU can do for ME

Something I can do for ME

Can include anything and everything

Focus on small “process” improvements

Feedback is oHen lacking

Formal recogniIon and communicaIon

Value Add

Idea oriented

1

AcIon oriented, “OK to try”

in the office or on the production floor—to think about making improvements throughout their days?

Best method. How do you coordinate supervisors and other leaders to help employees develop? How do you have employees take control of their work, so that it can be improved?

Purposeful leadership. How do you organize and inspire the management team?

www.enterpriseminnesota.org

Non-Value Add = Wastes

PROCESSES

want employees to say, “I’m the process expert.” What’s not working for me today?

Am I walking too far? Do I need a tool here? What is it?” We’ll help you identify that.

The focus of daily improvement is not merely to develop ideas. We want to transform ideas into action.

An engaged culture of continuous improvement is built on four fundamentals.

DAILY IMPROVEMENT

Many managers still look to the suggestion box as manufacturing’s time-honored method of enabling employees to contribute improvements to the company’s operations.

Experience teaches me otherwise, even that the suggestion box is really anti-continuous improvement, full of good but misguided intentions. Think about it. What’s the first characteristic of a suggestion box: It’s locked! What are we afraid of? A great idea will be stolen? (I also wonder, “Who has the key?”)

Also, from the perspective of continuous improvement, how can you tell if there’s a suggestion in there? Usually, you can’t, of course, another source of waste. It should surprise no one that employees consider the suggestion box a black hole where good ideas go to die. Some consider it the process equivalent of a shredder.

We can do better. Smart advocates of continuous improvement look for more visible ways to post ideas, out in the open.

They want employees in other departments to see those ideas and say, “Good idea. Can I apply it over here?”

An engagement culture encourages employees to use their skills to view these processes in new and innovative ways. We 20

/ ENTERPRISE MINNESOTA WINTER 2017

2

www.enterpriseminnesota.org

sees the glass as half full, the pessimist sees it as half empty, and the continuousimprovement thinker sees it as twice as big as it needs to be).

IT’S OK TO BE SMALL

Trained eyes see how processes inter-relate and can better identify waste, no matter how small. When employees start to see waste, little things will add up to big things.

PERMISSION TO TRY

The focus of daily improvement is not really to develop ideas. It is to find ideas that develop into action. The focus is implementing ideas.

LEARN TO SEE

Engaged employees do more than just to show up and push a button; they continuously think in terms of finding daily improvements that add value and reduce waste. They think in terms of D-O-W-NT-I-M-E: Defects, Overproduction, Waiting, Not Utilizing People, Transportation, Inventory, Motion, and Excess Processing. How much walking am I doing? How many times do I move a part before it actually goes out the door? How many times do I move it just to get access to something?

These things make our days busy, but don’t add value to the customer. They just add cost to the bottom line.

(Someone once said that an optimist

Engaged employees in culture of continuous improvement need to know that it’s okay to try out ideas, even if they don’t work. I like the guideline, “Fail fast, fail cheap, and learn a lot.” Any idea that doesn’t compromise quality or safety is worth a try.

TIMELY RECOGNITION

Effective engagement emphasizes formal and timely feedback. Employees have to trust that management appreciates their good ideas, especially when they are transformed into action.

BEST METHOD

Masaaki Imai, the famed organizational theorist, once said, “Where there is no standard, there can be no improvement.”

The idea is that if I have multiple employees doing a process and each one does it a little bit differently, is that acceptable? If it’s a critical process step related to safety, quality, or productivity, I want to have the best method.

Do we need to have a certain way of doing things in all our processes? Probably not. Start by identifying core areas: Where are the bottlenecks, constraints, or safety

issues? Where can you improve quality?

List all the specifics involved: walking, picking up, moving materials, waiting time, doing paperwork. Challenge every detail. How many times do we have to pick up that form just to do it? Measure wait times for approvals. Blow apart those process steps and then put them back together using the five Ws and one H. Why are we doing it and what is its purpose?

The answer should not be, “because we’ve

right skills? Are they over-skilled?

Then we get to how is it being done?

Can I automate it? Can I do something else? Is the employee overburdened?

Are they working hard? Do they need something to aid them their efforts? Do they need a lifting device? It is important to emphasize the “how” last. If we start there, before finding all possible efficiencies, we risk incorporating waste into our process. Don’t get to the how first and automate waste.

By the time you’re done, that puzzle should be smaller and easier to manage.

Try out the new method as quickly as possible. It won’t be perfect, and that’s okay—as long as we learn from it.

We have enough checks in here to see if we’re hitting our goals. Meaningful measurements are important for productivity and also to a culture of engaged employees, who need to know how well they’re doing. They sense it when their machines don’t break down and they produced product. But they need to know how many parts they were expected to produce. How many customer orders were they expected to process? If goals are hidden, they can’t test their own productivity. The idea isn’t to set up punitive consequences for someone who doesn’t hit their score, but for them to analyze their performance in terms of continuous improvement. If they didn’t hit, enable them to ask, why not?

What happened today that inhibited them from hitting all those customer orders you were entering? How do they improve that process?

An engagement culture encourages employees to use their skills to view these processes in new and innovative ways. always done it that way.”

I recently noticed that a team on the manufacturing floor was devoting 10 minutes each morning to fill out a form for quality. They told me the form goes to quality and they store it. We did a little checking and discovered that no one was looking at that form—it wasn’t adding any value at all. That’s pretty typical. We start doing things and we forget why.

Keep asking questions. Where is it being done? When is it done? Who’s the best person to do it? Assess the sequence of work. How can I think about where it is?

Can someone else do it? Do they have the

Learn to See

Pessimist

OpImist

“The Glass is half Empty”

“The Glass is half Full”

ConInuous Improvement Thinker

“The Glass is twice as Big as it needs to be.”

www.enterpriseminnesota.org

WINTER 2017 ENTERPRISE MINNESOTA /

21

Verify Results plan do CHECK adjust

Goal

UNITS TIME

Hour 1

Actual

Reason

XX

Hour 2

XX

Hour 3

XX

Hour 4

XX

WaiIng for outer cartons

www.enterpriseminnesota.org

40

Put Back Together

Eliminate

Simplify

Combine

Move

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36

PURPOSEFUL LEADERSHIP

Engagement in daily improvement and best methods will be unsustainable without purposeful leadership ensuring that the processes are effective.

Purposeful leaders go and see. They get out of their offices and go to the production floor or to the engineering office, or to the customer service office. They just go. They observe processes. How are they working or not? What’s the value added

Engaged employees in cultures of continuous improvement need to know that it’s okay to try out ideas, even if they don’t work.

PLAN do check adjust

That’s where we need the employees and leaders of the company to come together.

Any time we think about productivity, we usually think in terms of having a score. These measurable scores can apply just as easily to the front office as on the production floor.

One outcome of this is a document called Standard Work that lists expectations for work and process. It prescribes process steps and estimates how much time each should take. The goal of this document is to make the process visible, but not for the operators. It is a leadership tool. It is meant to enable leaders to see

consistency in a process without some sort of documentation, whether it includes pictures, videos, work instruction, procedures, or flow charts.

The goal is to beat the standard. We have to keep getting better and better and that’s how companies continually improve their performance, by having these goals and then figuring out ways that they can make them better.

www.enterpriseminnesota.org

how well it is working. That way we can establish whether we have a best method or maybe there’s improvement opportunity there. We’re trying to make the process as visible as we can using different techniques and tools here to make sure that we have a standard in place.

This means it is not really a work instruction or a procedure, in the truest sense. Standard Work applies better for companies that have continuous flow, that have repetitive work. It relates less well to a job shop environment that has high mix and low volume.

At some point you may have to document the process. It’s really hard to have

or non-value added? Leaders need to understand waste as much as employees.

Purposeful leaders also focus on developing employees as problem solvers.

They ask questions and learn. They first ask what? And then why? They ask, what do you see? They ask, “What would you do differently?” not “Why did that happen?” Leaders coach employees to solve their own problems.

Observant leaders will quickly step in when problems become too big for employees to solve on their own. They might involve time, materials, vendors or information that is beyond an employee’s control. Leaders step in and keep track of the process. And when the problem is solved, they share the results with the relevant employees, who deserve to hear about how they contributed to the solution.

Just like any other process, leadership requires a best method that holds them accountable for seeing if a process is effective. Maybe just Mondays and Thursdays there’s an hour dedicated

Observe Observe Observe

“GO & SEE” “GO & SEE” “GO & SEE”

ü ocus Process ü Process Process FFfocus ocus Value add and ü Process Focus ü aand NNon-­‐Value AAdd ü Value Value A Add dd nd non-value on-­‐Value add dd What is actually happening ü Process F ocus

ü Value As dd and Nhhon-­‐Value ü aactually appening ü What What iis ctually appeningA dd ü and Nhon-­‐Value ü Value What iAs dd actually appeningA dd 47 47 ü What is actually happening 47

www.enterpriseminnesota.org www.enterpriseminnesota.org

www.enterpriseminnesota.org

where leadership is out on the floor, going through office areas, spending ten minutes47 at a certain critical area and just seeing how things are going. Twice a week. In this way we can see what the expectation is when the leaders will be going by, but we also have to hold them accountable for continuous improvement. If this isn’t working, we want to improve it. So we need to make the process visible. That’s all we’re trying to accomplish.

CONCLUSION

I like this story: The leadership team came in at 5:30 one morning, hitting the key processes before third shift went home. We came up to this one machine, a critical piece of equipment, just about every product flowed through it. We could see that it generated a high level of scrap over third shift that night. The operator said she noticed the scrap issues, checked the machine and couldn’t identify anything wrong. She called maintenance, who couldn’t find anything wrong with it either, and so they changed out one of the materials. The scrap went down.

She retained the material and wrote down the lot number. Because the purchasing buyer was part of “go and see,” the buyer took that. As the leadership team all we did was say thank you and we moved on to the next process. Now did that employee and maintenance make it a good day? Absolutely. Did they make sure first shift came on and had a good

process running? Absolutely.

This wasn’t always the case. Four years earlier, employees didn’t know how to troubleshoot that piece of equipment.

They didn’t have any documentation or support, and didn’t know what to look for. Maintenance had the mentality that if the machine was running, yet producing high amounts of scrap, it was OK. And www.enterpriseminnesota.org

Masaaki Imai, the famed organizational theorist, once said, “Where there is no standard, there can be no improvement.” leadership would discover problems only by looking at a report, maybe a week to a month later.

What can one expect of a return? Let’s say you had a daily improvement process and let’s say you gave $10 to every employee who actually implemented an idea, and you get 20 improvements a month. That’s $200 a month. Not very much for most companies.

What if you had a supervisor go into a critical area with a team of operators and took two days to disassemble the process, and put it back together? What’s the cost

of that? Two days of time? What about if leadership dedicated two hours a week to go out and see really how those processes that are important to the business get better. Is that too big of an investment?

Well, the only way we can talk about it is, what’s the return?

Using twos again. What would happen if we saved 20 minutes per day per employee? That would be huge. Think about all your employees, think about all that time. What would you do with that? I’d be really happy with two minutes per day per employee, that’s still fantastic, that’s huge. Two minutes per day per employee, the process improvement is really big.

What if it was only two seconds a day?

Would it be worth the investment? I hope you say yes, because it is worth two seconds a day, it’d be worth two seconds a week, if we could get there by getting engaged employees and going after continuous improvement.

We’re really after these seconds in our day. What can we do to go after them and see ways to improve processes here?

Think about continuous process as a three-legged stool. We need all three legs. If we take away daily improvement, we’d still have have best methods and leadership. We could measure our work for today, but the challenge would be on making the employee work harder. We’d have goals, but employees would have lost their ability to see processes and waste. We wouldn’t be able to sustain it.

If we took away best method, we’d have a good start, but at some point, but we’d say, “How’d that hour go? How’d that work order go? How’d that day go?

And what can we do to improve it?”

Likewise, the process would still tip over without leadership; it’s never going to sustain itself. We need that active role in leadership to really build that culture to build our employees up to get engagement there.

By looking at these three processes together, and as I mentioned in my story, it’s not overnight, it’s not one day, it’s a journey. We know where we’re headed.

Hopefully you’ll see days getting better, less frustration. In my own personal continuous improvement journey, these three processes came together one day, and I didn’t realize it. It’s hard to tell with engagement how well you’re progressing, right? It’s not like you can take a picture before and then after. Go ahead, now take one small step to make today a better day!

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The

Outside-In PERSPECTIVE Summit Machine used the findings from a candid customer performance audit to build strong customer relations through early collaboration

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W

hen Greg Smith last April engaged Summit Machine to build a robot automation assembly for DNA cell testing, he thought the process would follow similar routine engineering projects: He’d write the order, set a tight spec that vendors couldn’t screw up, and, some 22 weeks later, he’d see the product. Oh, and he’d hope it worked.

Smith is a senior program manager at Teamvantage, a Forest Lake-based contract manufacturer and injection molder. From the kickoff meeting onward, he knew this project would be different. After Teamvantage set the specs, the Summit engineering team invited its customer to engage in weekly meetings, either in person or through WebEx, in which attendees could incrementally observe, tweak, and otherwise improve the project as it progressed.

“From our initial meeting, you could tell they wanted us to work together and get as much early input from us as they could,” Smith said.

The collaborative meetings, he said, kept the project moving: “I don’t know if we got it any quicker, but I think we got it right.”

The meetings “added real value to what we ended up with,” said Doug Lien, a manufacturing engineer at Teamvantage.

Team members changed several aspects of the machine along the way.

“We’d find something at each stage; we’d change course slightly, maybe design something a little differently,” Lien said.

At one point even Teamvantage’s OEM customer started attending the meetings to help implement a major mid-course correction in the order.

Joe Cook, a manufacturing engineering manager at Teamvantage said the meetings created a true partnership: “We want to know what’s going on. That’s how you find long-term solutions.”

He was impressed by Summit’s “utter transparency” in the process.

“It’s a calculated risk from Summit’s side, to open up the (project estimating books) and say, here’s everything (labor and materials) that we’re seeing all the way through,” he said.

Todd Bauernfeind, Summit’s president and owner, agrees that the process brings in some inherent risk.

“Any time you open up the financials, so to speak, you can be handing someone a stick to beat you with. We’re exposing all financial aspects of the project, but we just

feel that we charge a fair dollar amount for what we do, and we shouldn’t be that concerned. Actually, if someone wants to use that against us, they’re probably not the kind of company that we want to deal with. We need them to appreciate the value we bring.”

More important than that, he adds, is that early customer collaborations are designed so that they’re more automation-friendly.”

“They need to find trusted partners, and trust is something that is very much lacking in corporate America today. If you find a partner you trust, you’ll work with them.

Collaborate with them early, and your end result is going to be much better,” Bauernfeind said.

The Customer Audit This open-book customer collaboration was the result of a customer research project that inspired Bauernfeind to transform fundamentally the way he thought about his business.

Bauernfeind had been mulling ways to improve production quality and efficiencies at his ten-person company since he

“Any time you open up the financials, so to speak, you can be handing someone a stick to beat you with.” first bought into it in 1999. (He assumed full ownership in 2005). He puzzled about the financial volatility and disappointed customer expectations that seemed to plague the entire sector of companies that specialize in manufacturing automated equipment. Bauernfeind added hard data to his research in late 2015 when he commissioned an open-ended telephone survey that probed his top customers for their perceptions of Summit’s performance as well as their overall thoughts about the process of designing and building automation. Most customers were keen to talk. Many allowed their interviews to blow well past the promised 20-minute limit; one conversation lasted an hour and a half.

The results were a mixed bag for Summit. Respondents overwhelmingly praised Summit’s people and respect for the longterm quality of its work product. But they also indicated that Summit struggled with proactive communications.

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Bauernfeind pondered the commarket differentiator would be to ments and feedback for about six reform its processes. months, alternating between denial “We needed to change the way and reality, concluding, “At the end we were doing business, the way we of the day, that’s their perspective. communicate, and the way customAnd guess what? Perspective is realers work with us,” Bauernfeind said. ity. Customers are always looking “Our project manager really needs to for new vendors, because they’re not be a customer advocate and control getting the results they’re looking all aspects of the project, external for. They are looking for consistent, and internal.” repeatable results.”

On the advice of a customer, he He took cold comfort in one of reviewed and adopted some progresthe research project’s chief takesive processes used by Setpoint Sysaways: Respondents did not single tems, a Salt Lake City manufacturer out Summit for erratic quality; they of automated systems whose foundconsidered it a sector-wide probers wrote Project Management for lem. He used the data to analyze Profit, a book published by Harvard Summit’s processes and discovered Business Review, that emphasizes what he considered bedrock flaws a metrics-based approach to project in traditional practices of the custom management. It places a special emautomation business sector. phasis on using project managers to First and foremost, he concluded, be involved from planning through automated manufacturers should execution. It prescribes systematized stop thinking of themselves as job metrics-based product development shops. While a typical job shop that integrates budgeting, and timeGreg Smith, senior program manager at Teamvantage: Todd contract begins when a customer lines with engineering processes and Bauernfeind, president and owner of Summit Machine. provides a print that describes virtucomprehensive reviews. ally every specification and part The Setpoint Systems prototype, the shop needs to know in order to make a Bauernfeind said, uses “gauges not gut. All a down payment, but at the end of the day part, custom automation begins only with too often in business, we’re always using are they going to be in the same position, a proposed outcome; part of their assignour gut feelings,” he said. “But superior because they didn’t make any money on ment is to engineer the plans and process processes involve internal measures for the project, much less build an automated to result in that outcome. Job shop bidding measuring processes in projects.” device that meets or exceeds the perforis relatively easy, with the main market difBauernfeind also integrated agile design mance that the customer expected, because ferentiators being better machines or slicker techniques from a Chicago-based company of cost-cutting measures used to make processes. Job shops simply build to the called Compass Automation that lays the more vendor profit.” print. But automation companies bid projtraditional process for automated manufacCustomers, too, shoulder some of the ects based on more of an educated guess turing on its ear. blame in Bauernfeind’s opinion, beginning about what it is they are about to produce, The traditional process, Bauernfeind with one-size-fits-all procurement practices with a far less precise definition of the says, dooms itself to failure by delaying that place an inordinate and unreasonable final automation device. They don’t know the final and riskiest step—debugging the priority on price. precisely how many parts they’ll need, how machine—to the end of the process. The “Custom automation is not a commodeasily they might interconnect or whether company first receives the order and engiity and shouldn’t be purchased as such. I the final assembly will actually work the neers produce a computer-based design for believe that’s one of the driving reasons way they think it will. a piece of equipment. for the inconsistent performance,” BauernThis uncertainty can also affect the proj“Believe me,” he said, “it always looks feind said. ect’s profitability, in Bauernfeind’s view. good on screen. You can convince just He still stings about losing a particular The automated machine industry is filled about anybody looking at it on screen that project to a competitor who underbid him with cash-strapped competitors. Companies it’s going to do what it’s supposed to do.” by $200,000 only to discover that it eventuoften pursue a project with the twin goals Going through the traditional process, a ally took more than a year longer than of receiving the short-term enrichment of company receives an engineering signpromised and an additional million dollars a down payment at the expense of a more off, then releases prints to manufacturing, to implement properly. mature long-term consideration of the which buys the parts, wires up the panels, “It’s a soft cost that companies don’t project. and bolts it all together. Only later does the often track to a project,” he said.

“They’re not just cutting their price,” company test how well it works.

Process Reforms Bauernfeind said. “They’re convincing And frequently it doesn’t. The resultant Bauernfeind emerged from customer rethemselves that they can do it for less, stress-filled debugging process that accounts search with an urgent sense that Summit’s and then they feel good because they get for so much customer angst is the actual 26

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process itself, according to Bauernfeind.

“They’re planning on putting this equipment in place, and they think it’s going to start producing for them right on schedule.

They’ve coordinated everything else around that piece of equipment coming in, and now it’s going to be late,” Bauernfeind said.

Summit’s new process breaks the project into a series of individual testable sub-

Bauernfeind puzzled about the financial volatility and disappointed customer expectations that seemed to plague the entire sector of companies that specialize in manufacturing automated equipment. systems. Working directly with customers through weekly meetings, Bauernfeind’s engineers segregate and attack the most difficult steps in the process right at the outset.

For each sub-system, they make a test prototype to prove that this theory now works.

“It builds confidence. Now when you go back, the value does not come from sitting in front of a computer on a CAD software.

The value comes from the ideas that we

produce in this room, in much earlier collaboration. The CAD really doesn’t take very long at all. Once everyone knows and agrees up front about what it is that you want and you’ve proved it out with some prototyping, it really doesn’t take long to do the CAD work,” he said.

Bauernfeind emphasizes the value of collaborating early with customers—including seeking input from engineers, operators, and maintenance people. No longer do we want to disappear into a vacuum and work as individuals.

“The bulk of the ideas and design happens right here in this room, as early as possible in the process. We collaborate not only externally with our customers, but internally on a daily basis,” he said.

In addition, he said, “There is a lot of nuance in customers’ process. They maybe have been doing it by hand for 30 years, and now we’re going to automate it. They know from experience a lot of things that we’re never going to know about their current process. We need to be able to gather that information from them, and there’s no better way to do that than involve them in the process as early as possible.

“By pulling them into the conference room and collaborating and working as a group, no longer is any one individual responsible for it,” he said. “No more finger pointing. The group makes the decision. It’s just the way to go.”

Early collaboration is key. The Summit/Teamvantage work team convened weekly to review and improve steps in the 22-week process of building the machine. Shown are Lisa Hawkins, mechanical design engineer, Summit; Greg Smith, senior program manager, Teamvantage; Doug Lien, manufacturing engineer, Teamvantage; Todd Bauernfeind, president and owner, Summit; Tom Connors, sales engineer, Summit; Anthony Landaeta, controls engineer, Summit; and Joe Cook, manufacturing engineering manager, Teamvantage.

A side benefit of this process are customers, like Teamvantage, who can help test and tweak the process along the way and help discover flaws before they get baked into the final product. This also benefits our inside engineers.

“There is a lot of pressure when you ask a mechanical engineer to go back to their desk and design a station or a machine for a customer,” Bauernfeind said, “Everybody knows that we get one chance to make this thing right, and we’re dealing with halfmillion- or million-dollar pieces of equipment. It’s a lot of money. And that equates to a lot of pressure on a designer.”

In the end, debugging challenges and risks are significantly minimized, because all processes have been worked out much earlier along the way.

The future In that context, Bauernfeind has high hopes for Summit’s access to growth in medical products.

“They seem to appreciate the collaborative value we bring. They’re not always about lowest initial cost. I don’t think other companies realize that that’s really what they’re driving to, that lowest initial cost. Instead of assessing the long-term cost of ownership, they seem to be narrowly focused on “What am I going to pay for this piece of equipment today?”

Instead of focusing on “What is this piece of equipment going to cost me over time?

What value am I really getting for the money?”

We’re seeing that it is more prevalent in medical automation applications, because they’re focused on higher levels of automation performance and so are not as cost conscious initially. They also recognize that in developing automation, if you write your FDA requirements, and I’ll probably say this wrong, you have to anticipate the way you will be manufacturing when you release that to the FDA. They don’t want to get into situations where they’re saying that they’re doing specific quality checks, as an example, through automation that aren’t feasible, practical or successful. You never want to get into that situation where you develop your processes and then you can’t manufacture to what you designed.

They also need outside help from competent and proactive vendors to recognize that there’s assistance, that they’re going to need to be able to meet those specs.

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CEO Roundtable

Planning

for Growth Six manufacturing experts discuss how best to conceive and implement strategic growth.

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J

ohn Connelly: Let’s start out with planning. Think about the roles and the positions in a company that help determine strategy and those who help execute it.

Sarah Richards: I have two co-owners, a sister and a brother, and we’ve worked hard to revisit the owners’ plan at least annually. Between myself, my co-owners, and the leadership team, we really work together to determine exactly what strategic direction we’re going to go.

Then it’s really important to bring in the second line, or the emerging leaders. They not only have their fingers on our pulse, but they really understand our customers and suppliers because they’re working with them daily. I also enjoy bringing in some of the newest members of our team, who bring fresh eyes to what we’re trying to do. We try to harness that energy and those new ideas when we’re looking at strategic planning. Right now, we’re in the process of refreshing our strategic plan, and it’s including about 25 percent of our total workforce from all different departments. The group gets a little bit smaller as we get further into the process.

Ron, I know you’re thinking about this, too. Would you comment?

“A really strong Ron Kirscht: Early on, our marketing strategy strategic planning group consisted of just three people and has to start with an external resource. Our raknowing yourself as tionale at the time was that we a business.” had to make some very basic decisions about our service of— Steve Palmer, ferings and in terms of scaling North Central the company. They were very Door Company intense, small groups. Then as we evolved, planning included our core management team. This last time around we started looking at our organization. Our company now was 32 years old, fairly mature, and pretty good sized. But we identified that we’re not getting any younger. A lot of people on our core management teams have been with the company for 15, 20, 25, 30 years. So one of the things that’s going to be changing is leadership. We worked with Enterprise Minnesota on a process that looked at 21 business categories, and we also looked at succession planning and ownership issues and things like that.

We’ve got 24 people on our planning team; it’s the largest planning team that we’ve used. We include all the functional managers within the organization, individual contributors or team leaders or supervisors who really put in some time in the business. They have a new and a fresh perspective and a deep and abiding stake in the future of their organization.

I’m excited to hear ideas from that next group of leadership, the folks who’re going to be around 10 or 15 years from now, to see the alignment of their abilities, their experience, and their belief in the organization.

So Steve, another aspect of planning is how far into the future you look. What time frames do you try to keep in mind?

Steve Palmer: We just went past 50 years of being a business;

obviously we want to be around for another 50 years, so we start with that. You always have to circle back to your long-term vision, even when you get into your shorter planning time frames.

You’re looking out three to five years and getting more into the details of the work, the tactics that you’re going to deploy with your strategies and formulate those around short time frames. Then, of course, in manufacturing things can change quickly so you have to be prepared, you have to have contingency plans in place, as well, know what your short term objectives and goals are.

John, J&B is on track to be a billion-dollar business, and so planning goes on in lots of areas. How do you wrap time frames into your planning process?

John Meyer: Time frames vary based on the division or the specific area. We’re a company of 700 people, reaching a billion dollars. We’re almost always in some sort of a planning mode, whether it’s looking at a 20-year strategy, a three-year strategy, or the next day’s operations. The trick is to prioritize appropriately.

You’ve all heard the phrase “culture eats strategy for breakfast.” Culture always comes first at J&B, whether we’re looking at an acquisition, looking at a warehouse expansion, or even our relationships with customers and suppliers. We’re always looking at whether it’s a good fit for us from a cultural standpoint.

Ron mentioned 21 different categories of things to research and consider during planning. I’m curious, Steve, what bubbles to the top of your list as you move into the structured part of trying to plan. What details of the current state mean the most to you?

Steve Palmer: A really strong marketing strategy has to start with knowing yourself as a business. How do you define your company?

How do you distinguish yourself from the competition? How can you take that message to the market? And how can you develop a successful partnership with the customers out there who need what you have to offer? That’s what rises to the top for me right now, particularly now that we’re in a pretty mature market.

This article represents a paraphrased adaption of a panel discussion, entitled Growing Your Enterprise, at Enterprise Minnesota’s 2016 Statewide Manufacturing Peer Council. The discussion was moderated by John Connelly, director of consulting at Enterprise Minnesota. Participants included: Mary Connor, business growth consultant, Enterprise Minnesota Ron Kirscht, president, Donnelly Custom Manufacturing Greg Langfield, business growth consultant, Enterprise Minnesota John Meyer, CI manager, J&B Group Steve Palmer, president and CEO, North Central Door Company Sarah Richards, CEO, Jones Metal, Inc.

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We’ve been talking about planning, I think we’re starting to move into executing planning and trying to involve the people that you’re counting on to carry it out. Thoughts about that?

Sarah Richards: It’s our job to make sure that the vision is there, that the initiatives are in place, and that we have agreed on some focus within those initiatives. Then I need to make sure that we have projects and timelines and to make sure that everybody has the resources and as smooth a road as possible to acSix experts invested their time at Enterprise Minnesota’s 2016 Statewide Manufacturing Peer Council to share complish things. their experiences in a panel entitled Growing Your Enterprise.

One of the hardest things for me to learn was how to delegate. I’m respect. It’s on the back of our businesses cards and has been driven kind of a natural doer. But we really try to understand our role and into everything. Where more traditional organizations use more of as owners as a leadership team. When you’re small, it’s not always a top-down approach, we’ve got an organization that forces a lot of easy to know who could fill our shoes. When I talk to our leaderdiscussion and collaboration. It’s effective, because we have a lot of ship team about that, they usually have a go-to person within their changes going on; once everyone’s on the same path, things can go ranks that kind of fills that emerging leader role. They just actually very quickly. involve them and assign it, and you’d be surprised at how well they do and how much comes back. Maybe even different than you One thing to consider is always how important communication thought, maybe even better. is as the bridge between planning and implementing. Sarah, what efforts need to be there in order to present, to discuss and Steve, I know you think about this a lot too, having an organizato promote plans? tion that you’re trying to engage and delegate and hold accountSarah Richards: Communication is critical. You are in trouble able. Your thoughts? from a culture standpoint if you can’t answer a couple questions for Steve Palmer: When I started with North Central Door, there were the person on the frontline, from their perspective. One is, “What a lot of unclear lines of who was accountable for what—which can are they trying to do?” And the second question is “What’s in it for lead to a lot of disruption and finger pointing between department me? Why should I care?” They are tougher to answer that you think. managers. I was fortunate with a previous employer that the division I think it’s really important to keep the strategic conversation manager was familiar with implementing a formal framework of going. At Jones, we have a partner, PDP Solutions, that helps us accountability. We clearly defined the scope of accountability for each publish an electronic newspaper with metrics that are readily availmember of the leadership team. Then we also worked on a lateral able and understandable to the frontline. We use that newspaper to scale to show how managers should work with others on the same regularly visit strategic initiatives. It may not say strategy update, level of authority in the organization, how they negotiate with each but it might talk about a key industry that we’ve been targeting, or a other to get things done. It really helped with the decision-making and new customer opportunity. Something else that we tend not to do is the communication among department managers. share some of the bad with some of the good, and we also tend not to celebrate enough, for sure. They think I’m nuts, but every time So, John, given the pace of growth at J&B, you have a signifiwe get a new order, we should ring a bell. We tend not to celebrate cant commitment to developing leaders. I’m curious about the small things, but the more you do, that the more you make your thoughts on the connection between the development and relevant everything we’re working on. succession of leaders and strategic initiatives. Does one get in the way of the other?

Ron, it feels like communication is always on your mind.

John Meyer: We’ve formalized leadership development in the Ron Kirscht: People make a fatal error when they try to control last few years. It is an invitation-only program that takes about 25 results instead of influence thinking. If you influence thinking to associates through more than three years of development. It embeds get people working voluntarily to meet predetermined objectives, mentor relationships so that there’s a lot of organic thought sharing you unleash the power of the organization and the potential of the within the organization, rather than having an official strategy kind people. You have to sell, not tell. It’s a process of selling. of driving itself.

One of the keys, if you’re going to change, you have to create The other side is accountability and respect. J&B was founded on dissatisfaction. People don’t want to change. You know, you think 30

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you do, but you really don’t. If you’re not dissatisfied with the results your present actions are getting, change is not imminent, but if you’re dissatisfied, you know what? That was good enough, but it’s not good enough anymore, and here’s why it’s not good enough, we’ve got to do better and here’s why we have to do better, and this is how we might do better. You create that dissatisfaction so someone else says, “I’d rather go there than be here.”

Another thing is you never want people to see themselves in isolation when they’re going through change. In the absence of communication, nothing else matters because change is not going to occur. Leadership will be frustrated, “Man, we had dreamed the perfect dream. Nobody went there.” That’s a failure of leadership, that’s not a failure of people.

I appreciate Sarah’s reminder that a big part of what you need to communicate about plans is where we’re headed, because people need a reason to get away from the day-to-dayness, as Sarah reminds us. John, say something about communications of plans at J&B. John Meyer: I’d also like to make a quick shout-out to PDP because we utilize them at one of our facilities. They offer a great tool for the frontline associates to see that information cascades down from our strategies. Our organization is, I think, very fortunate. I’ve been at companies that are 700 people big, and a lot of times you don’t see leadership at those organizations. We’re very fortunate that our leadership keeps us focused by putting on a “One of the keys quarterly road show in which the top executives meet with (to change) is that every single team of associyou have to create ates in all our facilities.

dissatisfaction.

Steve, I find that orgaPeople don’t want to nizations have to find an ongoing balance between change.” thinking forward with the — Ron Kirscht, Donnelly need to produce and ship Custom Manufacturing today. How does that balance strike you?

Steve Palmer: It’s prioritizing what’s important in the long term. You can get wrapped up in the day-to-day. I’m good with checklists. I’ll write down what we’re doing today and how those things are going to contribute to a growing, profitable company that’s, finding new customers—just to make sure we don’t get lost in things that might be not as important.

Again, I can find accountability in how we delegate those day-today responsibilities to qualified people, leaving me more time to look on what’s important for the long-term success of the company.

Let’s talk about measures. We use measures to evaluate performance and to frame goals, and one of the challenges with measures is when you use them, you usually get what’s measured.

We have to think about right measures and right behaviors.

Sarah, what are the measures that work best for Jones Metal?

Sarah Richards: We’re working on that right now. We have a new ERP system that we just launched after Labor Day. You all are jealous. We measure many of the same things that you all do, some of the table stakes, content delivery, productivity, profitability. We’re now going to have a better tool to measure things more closely related to productivity: direct vs. indirect, time for different people, sales conversion rate.

Greg, measurement is something you think about between management systems and operational excellence. I’m interested in your perspective on measures and right behaviors.

Greg Langfield: We’ve been talking about alignment of employees and how they think about their job day-to-day and then making decisions that are in line with the vision and the strategy moving forward. It’s a challenge to get that down to a tactical level. Ron was saying influence thinking, and I think that’s a way to try to get the right behaviors in the organization. Some things I think about are, does it tell a story? Do my measures tell a story?

Sometimes we get caught up in measures that tell a partial story and we think we’re doing pretty good, and the end of it is we’re just missing out on the other metric to complete the story. For example, if you just focus on on-time delivery but don’t look at schedule attainment, you could have costs in terms of expedited freight or overtime. In the meantime, on-time delivery could be looking good, so you just want to think about it in a way that tells a complete picture there.

Ron, I want to go back to something you mentioned earlier about the significance of funding operations and funding growth. We’re talking about measures, budgets, maybe, and we’re talking about strategic initiatives. What’s the fit between financial measures and strategic initiatives?

Ron Kirscht: I think there’s more than a casual link between the two from the standpoint that if you’ve got initiatives that are going to cost several million dollars and you’re willing to fund it to $500,000, then you’re wasting people’s time and ruining their belief systems. Eisenhower said that the plan is nothing, but planning is everything. When you are creating a budget, you’re really saying, how are we going to operate the business? Are we going to be strong and on the upswing, or are we going to be trying to maintain, or are we trying to have a controlled descent? You put that forward, and throughout the year you’ve got to be continually updating your forecast to what your original plan was. Are we going to end up in a different place based on the direction we’re going, and is that good or bad, and what do we need to do to respond to it?

In terms of measurements, key performance indicators, you can only really reliably measure four attributes. One is quality, one is quantity, one is efficiency, and the other is timeliness. Everything else is a little iffy in terms of if you’re actually getting a meaningful measurement.

Steve, what are some of the key measures that you’re paying attention to at North Central Door?

We put metrics in place for all members of the leadership team who are part of the accountability process, which includes quality, quantity, cost and time. We make sure that measurements and standards of performance are balanced against one another so that we’re not driving one behavior over another—behavior that might impede one measurement over another. We make sure that we’ve balanced metrics so that we can achieve the overall goal and performance that we want.

We also want to ensure that we promote activities that help improve the effectiveness of our managers and not just create pencilwhipping exercises that have no value to him or his employees.

Finally, we ensure that everything is achievable, not a slam dunk, but a stretch goal. We also try to ensure that our metrics of performance don’t become a tool for reprimanding a person but an opportunity to repair deficiencies.

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Final Word

Minnesota’s Workforce Challenges Everybody talks about it. Let’s share what’s being done about it.

T

he fact that Minnesota’s manufacturers struggle to find (or keep) a new generation of skilled employees to replace the multitudes of retiring Baby Boomers is one of the most exhaustively admired challenges on our state’s growing list of economic development anxieties.

There are a lot of people admiring the problem, yet much more can be done to proactively share what people are doing to solve it.

We typically can’t get 10 minutes into friendly chitchat with a manufacturer before the subject spins inevitably to the fact that they typically are sitting on a long-open position on their manufacturing floor that has gone unfilled because they can’t find anyone with sufficient skills or experience to be a manager, an engineer, or to operate a particular piece of machinery. Manufacturers are looking to fill jobs at all levels.

No one doubts the grim authenticity of the skills gap. It is a real problem, its consequences are getting worse by the day.

Most of us know about the unnerving projection from Deloitte and the Manufacturing Institute that the manufacturing jobscape in 10 years will operate in a setting in which there will be two million more

No one doubts the grim authenticity of the skills gap. It is a real problem, its consequences are getting worse by the day. manufacturing jobs in the U.S. economy than there will be applicants to fill them.

Two million. Their research concludes that by 2025, domestic manufacturers will need to find some 3.4 million new employees: 2.7 million to fill job-openings triggered

by Baby Boomer retirements and another 700,000 to accommodate modest business growth. They then assume the same 60 percent shortfall of applicants that manu32

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Lynn Shelton is director of marketing and legislative relations at Enterprise Minnesota.

facturers are experiencing today.

Bob Kill (Enterprise Minnesota’s president and CEO) and I recently got some shrewdly pragmatic insight into the skills gap from Tim Penny, the former First District Minnesota Congressman. As the current president of the Southern Minnesota Initiative Foundation in Owatonna, Penny understands the urgency of addressing the skills gap in a way that sustains the powerful economic base of manufacturers in his region. He says the solution will consist of three common sense steps: 1) Highlight the challenges of the workforce for all to see, 2) Highlight how people are responding and partnering, and 3) Share the best solutions that are truly working with all who support manufacturing. It’s just common sense.

The solution to the skills gap, at least in my mind, should begin with aggregating and analyzing its diverse manifestations from the perspectives of individual manufacturers statewide. To my knowledge,

no one has ever done this. What jobs are chronically unfilled? Why? Is it due to a lack of equipment-specific training, or is it due to more fundamental inadequacies in the basic math and reading skills among potential employees? Would manufacturers find more applicants if they increased compensation for key jobs? Does the skills gap take on a different look depending on the size of a company or where it is located?

Then talk to tech school educators. Can statewide tech education be better coordinated? Are there greater roles for on-line or in-company programs? Should we coordinate better opportunities into high school curriculum? Middle school? Elementary school? How can we identify, inspire and motivate more manufacturing advocates of the professional staffs on high school campuses? Can manufacturers take a more comprehensive approach to helping recruit students into tech schools? Are there opportunities for non-traditional students of manufacturing, like women, older workers, or by organizing immigrant communities?

And talk directly to students. Why aren’t they more interested? What advice would they give us to help entice them into manufacturing?

There have been admirable regional successes in Alexandria, Bemidji, Brainerd Lakes, Fergus Falls, Northfield, White Bear Lake, and most recently in Redwood Falls.

We know there are many more examples that deserve to be shared statewide. How can we systematize our thinking so that same level of community leadership and success can be enjoyed statewide?

As a part of Enterprise Minnesota’s 2017 State of Manufacturing survey and events, we plan to hold six large events in each of Greater Minnesota’s regions in May. Workforce will be the dominant topic at each event.

In the meantime, I invite you to share the solutions that are working in your community to help solve the workforce challenges.

Send me your thoughts at lynn.shelton@ enterpriseminnesota.org

You looked into energy-saving programs and rebates from Minnesota Energy Resources. That simple move led to high-efficiency equipment upgrades, which saved the company energy and money. High-five for you.

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