Presentation
Abstract : |
Leaders need to think in terms of “people do not leave poor companies, they leave poor leaders”. That today’s team leaders are tomorrow’s team members, and visa versa. Why? Because change (successful change, i.e. mindset for continuous process improvement, etc.) is vital to the following measurements – employee moral, process capability and customer satisfaction – and because leading is hard. There is no one way. However, if employees (union or non union) believe, really believe, that people matter and that hidden agenda’s are matter of expression, not practice – then the job of achieving results that the stakeholders want to see CAN be easier – and even contagious. It was once told to me that my hardest decisions as a business leader were still in front of me. How comforting. Well, the individual was right. Difference? Today, I travel through these decisions with a company verses a conscience. And all I did was:
- Remain open
- Stay ordinary
- Appreciate always
- Empower and
- Satisfy needs
Sounds layman, until you ask the company to change and realize that CULTURE is everything. Here’s two examples to drive the point home:
Example One: Aerco is a Union Workforce (although we do not look at ourselves as Union). In 1999 Aerco experienced a Work Stoppage. Why? We were trying to change too quickly. In 2002, Aerco’s direct labor headcount had been reduced from 62 to 45 employees and shipments had increased by 100%. Why. Lean became the driver of change. In 2003, Aerco’s Productivity Rates measured 161% better than our closest competitor. Why? Because rather than worrying about “how” direct labor is absorbed into product costing, Aerco focused on developing the Flexible Workforce and measuring the Effective Utilization of our People’s Time. In 2004, Aerco needed temporary labor during the summer months to support the growing seasonality of our business. The Union approved 7 non-union temporary employees. Why? Because they understood the nature of our business and had become a part of the strategy/continuous improvement process. In 2005, Aerco announced a Global Sourcing Initiative aimed at removing material and (possible) labor costs. Three weeks later, Aerco asked the Union for an additional 4 temporary employees to support the high customer demand the business was realizing (in quote, unquote the “off season” – realize, this is providing Aerco with 7 of 12 months to hire temporary employment). Result. Aerco’s Union approved the additional 4 temporary non-union employees in less than 15 minutes and understood that “outsourcing” was becoming a part of our daily terminology. Why? Because the Union is one of our many (world-class) change agents.
Example Two: In 2001, Aerco opened a new product development initiative that was supposed to revolutionize the word “lean” in our business. In other words, transform the company as a lean practitioner to a truly lean enterprise. The objective, develop a new product that:
- Reduced selling price by 20%
- Increased # feature and benefits by 2x
- Increased gross margin by 2x
- Reduce Total Product Cycle Time by 50%
- Reduce # parts by 50%
- Achieve 4.5 sigma or better
- Completely DFMA compliant and
- Establish new product as a platform for future designs
You get the idea. So-o-o-o-o, in January of 2005, after 3 ½ years of trail and error, Aerco shut down the project. Why? Our (1) product development initiative had become a technology development project and was outside our process capability to manage the risk. Result? Employee moral dump, loss of stakeholder confidence and loss of market position. Action? Within 24 hours, the COMPANY knew of our decision and had rallied together to open up (4) new product development initiatives with a new set of criteria:
- Speed-to-market and customer satisfaction are the drivers
- NO technology leaps
- Stay within our known (core competency)
- Develop concurrent teams (cross functional) and
- Each team reports out to the Management Team on a weekly basis
Result? After 10 months, Aerco exhibited all (4) new products at our industry’s National Convention (ASHRAE) in Chicago and was the BUZZ of the show. Aerco’s sales forecast for 2006 are projected to increase by 20% and the issues of employee moral, loss of stakeholder confidence and market position are behind us. Oh yeah, the engineer’s that were part of the project that we stopped, they’ve been promoted.
Neither example could have been realized if it hadn’t been for our culture. Never, did we have to stop and sell the company on “why” they should believe what we are saying. Rather, all we had to do was provide vision, direction, and support and then ask them for their involvement/ideas. Agility. |
Speaker
Biography: |
Fred Depuy, President & CEO
Fred W. Depuy, President and CEO, Aerco International, Inc. BS, Applied Technology – Florida Institute of Technology and MBA – New Hampshire College. Employment history with Aerco:
- 1991 to 1994 - National Sales Manager
- 1994 to 1997 - Vice-President North American Sales
- 1997 to 1998 - Vice-President Sales & Marketing
- 1998 to 1999 - Executive Vice-President
- 1999 to present - President and CEO
Accomplishments:
- Implemented Mixed Model Flow System using Demand Flow Technology
- Increased total inventory turns from 3 to 15
- Reduced Net Working Capital from 32 cents/dollar to 9 cents/dollar;
- Improved gross margins from 28% to 45% of sales
- Increased sales from $20,000,000 to $42,000,000 (2006 will equal $50m+)
- Reduced Operating Line from $4.7m to zero (growth is financed on 100% cash flow)
- Hosted (4) AME Champion Club Workshops
- Nominated 2004 Top 25 Industry Week Best Plant
- Developed culture with true mindset for continuous improvement and change
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