The Manufacturing Executive: Episode 6
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Episode show notes
Something’s not going well, and it’s your job to fix it. Where do you start?
You can’t rely on your charm and good looks to make a change happen. Instead, you have to work through proven processes that alleviate distress at companies.
On this episode of The Manufacturing Executive Show, Rob Tracy, consultant and author of How to Fix a Factory, talked about specific processes that can solve problems at distressed organizations.
Here’s what we discussed with Rob:
- Why Rob wrote How to Fix a Factory and who he wrote it for
- How value-add reporting can give distinct insight into P&L
- The 10 core systems that must be operating with reasonable proficiency for the factory as a whole to have good outcomes
- Rob’s new idea called The Business Forward Framework
Additional Resource Mentioned in the Episode:
Traction: Get a Grip on Your Business by Gino Wickman
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Transcript of Episode
Joe Sullivan:
Welcome to another episode of the Manufacturing Executive Podcast. I’m Joe Sullivan, your host, and a co-founder of the industrial marketing agency Gorilla 76.
Joe Sullivan:
Today, I have a unique guest in the sense that he can be called both a manufacturing executive and an author. Let me take a moment to introduce Rob Tracy. Rob is the president and founder of Rob Tracey Consulting. With more than 30 years of leadership experience in the manufacturing industry, Rob has become an expert in navigating the sector’s distinct challenges.
Joe Sullivan:
After publishing his first book in 2019, How to Fix a Factory, Rob now uses his unique perspective to reveal issues, reset expectations, and restore working order in manufacturing companies across the nation. Rob understands that every company’s situation is different and he doesn’t believe in just mechanically applying the latest tools and hoping for good results. He works to realign companies with their core values, touching each level of the business to truly provide a holistic analysis of what’s going wrong.
Joe Sullivan:
People-focused and practical, Rob sees through the clutter of everyday obstacles to find the root of the problem. His “boots on the ground” approach ensures that issues are not only identified but solved for good. Before founding his consultancy, Rob held leadership roles with prominent companies, such as Anderson Windows, Pentair, Intek Plastics and CliftonLarsonAllen. In addition to being highly experienced with [Lean 00:02:09] and EOS practices, Rob holds a bachelor of science in industrial and operations engineering from the university of Michigan and is a graduate of the Minnesota executive program at the university of Minnesota’s Carlson school of management.
Joe Sullivan:
A lifelong learner and observer, Rob shares his latest insights about business strategy and life on his website blog. So, on that note, Rob, welcome to the show.
Rob Tracy:
Thanks very much, Joe. Looking forward to our conversation.
Joe Sullivan:
Well, Rob, you and I first connected back in January of this year. So, I think you stumbled across my company, Gorilla 76, online one way or another, and realizing we had overlapping audiences, we struck up a conversation from there.
Rob Tracy:
That’s right.
Joe Sullivan:
So, you have been a long time manufacturing guy, as I noted in the introduction. I know that you’re potentially shifting gears in your career or maybe broadening your horizons a little bit, but regardless, I’d love to hear from you about how you got to where you are today, and also where you see yourself headed?
Rob Tracy:
Yeah, I’ll try to keep the bio brief. Like I said, I’m an engineer. I grew up in Michigan. Been around manufacturing all my life. My dad was part of the foundry industry at General Motors. First job out of school was at General Motors and I found it was just way too big. And I started moving to some different places, each time going to progressively smaller organizations.
Rob Tracy:
And I settled as the CEO at Intek Plastics. After going through some of those other companies that you mentioned. And I found that I just had a passion for that 50, 60, $70 million company, a few hundred people, because you can move fast. You can get things done. You can make an imprint and make a dent.
Rob Tracy:
For the last five years, I’ve been doing consulting work and for the last 20 years… Well, [inaudible 00:03:50] operations is my fast ball. I’ve been more at that senior level for the last 20 years. The last five years as a consultant, I’ve really been focused on helping the C-suite people get a handle on their business on a wide range, general management stuff, not just operations.
Joe Sullivan:
Awesome. And I learned from talking to you months back that you had just published your first book, How to Fix a Factory, which was really interesting. And as you know, we talked more and decided you’d be a really great guest for the show. I read the book over the last few weeks and I found it super interesting. And in particular, there’s so many nuggets in there specific to the manufacturing industry, but so many just great business principles that even I can relate to.
Joe Sullivan:
I’m a marketing guy, so the book’s not written for me, though I had takeaways. But tell me a little bit about who the book was actually… It was truly written for who your audience was and at a high level, really what it’s all about?
Rob Tracy:
I’ll start by saying that writing a book has always been on my bucket list. I wouldn’t have called myself an author, but I guess I am now. It was a challenge, but it was a lot of fun. It was good growth experience.
Rob Tracy:
The book is targeted at senior leaders and small to mid-size manufacturers. That’s the sweet spot. And by senior leaders, CEOs, COOs, VP of ops, CFOs, those kinds of people that can really influence the overall direction of the company. A plant manager would get something out of it. I think other people, all the way to a production supervisor would get some value, but the target was at senior level.
Rob Tracy:
What I was trying to do with the book, first, I believe my goal was to make it practical, short, one plane ride across the country and you got it. Non-jargony, I tried to… I don’t, there’s no lean words in there. None of that stuff, I just want to have common everyday English. But, what I found is after spending time in a lot of companies, I’d always find myself working in some distressed organization. Something wasn’t going well and my job was to go fix it. And for the longest time, I thought that was just my art and charm and good looks that was making that happen. And what I realized is I actually do have a process I go through.
Rob Tracy:
And so writing the book was a way for me to get it out of my head onto a piece of paper. But what is that process? How do I go about that? Because even though the challenges are different, the path that takes us is often very similar. So, that was the goal. That was what I was trying to accomplish and share that insight.
Joe Sullivan:
So, the book is called How to Fix a Factory. What are some examples of situations in a factory or a manufacturing facility that constitute fixing?
Rob Tracy:
Yeah. Well, as you can imagine, it runs a wide gamut, but I’ll give you three examples just to… Because these have been more common lately. One would be a situation where they’re not taking very good care of customers, and not shipping on time, and lead times are extending and they don’t know why. They’ve tried stuff, they’re running over… They’re doing all kinds of things to try and fix it and it’s not getting any better.
Rob Tracy:
And so I’ll go in and I’ll help start peeling back that onion. And I’ve seen situations when one company, the problem was that they weren’t tracking their production throughput very well. And production had dropped by about 5%, which doesn’t sound like much, but over the course of weeks, it starts to add up. And the next thing you know, they’re in a hole and then they got to dig out of it.
Rob Tracy:
Another place, the customer service was placing orders on the factory that were far in excess of the capacity of the factory. They didn’t have any sales and operations plan to keep the two linked together. That’s been happening more… Even as the pandemic has hit, you think we’d have all kinds of capacity. They’re still struggling with that issue. So, that’s one issue.
Rob Tracy:
Another one would be, just misinterpretations of financials. The standard cost systems that have been in place for eons in manufacturing can give very, very misleading information that lead to bad business decisions. And just managing profitability and understanding the role of product costing, but also understanding capacity and throughput and how to really drive financial performance. Standard cost accounting doesn’t help very well with that. So, we use something or I use something called Value Add Reporting, direct P&L’s, so helping them get a little different insight into what the P&L can look like and how to drive it. So, that happens a lot.
Rob Tracy:
And then the third one is talent. We all know talent’s a struggle. Unfortunately, a lot of the clients that I work with haven’t really taken a strategic look at their talent. And I think, talent, the fight for talent is going to get you raised up to almost the same levels as fight for customers. And it needs that strategic view. And so many clients are just going to temp agencies and they’ve got this revolving door of people, which creates all kinds of issues. So, just helping them get re-grounded on it and raise their talent plan to a more strategic level. Something that is a real common issue.
Joe Sullivan:
Yeah. I hear the talent problem so often from the… Because our client base is very similar to yours. It’s mid-sized manufacturing companies and you’d think that, even with… Well, you hear so much about automation and the negative things that the common, the general public, thinks about automation and replacing human beings and taking jobs away. And the reality is a lot of manufacturing organizations can’t find people who want to do the job. They don’t want to do the dirty work. They don’t want to work third shift. They don’t want to do things that put them at safety risks, of course. And that talent recruitment part of it and retention as well as is just so important, but so challenging.
Rob Tracy:
There’s still a lot of factories that don’t look like a cleaner room. You see the ones that look really pretty and epoxy floors. There’s a lot of them that’s still fairly industrial. And it’s really hard to get people that want to do that work.
Joe Sullivan:
Well, a substantial chunk of your book covers a topic that you describe as the “core 10 systems”. And I’m going to read a little passage from here. You had written, “All factories have a set of core systems that must be operating with reasonable proficiency for the factory as a whole to have good outcomes. When a factory becomes distressed, it’s usually due to weakness in one or more of these core systems.”
Joe Sullivan:
Now, I know from reading the book, we could probably do an hour long podcast on each of these core 10, but I’m wondering if you could give us a bird’s eye look at what these 10 systems are. Maybe a synopsis of each so we’ll understand what’s important from your perspective.
Rob Tracy:
And so let’s… I’ll just give a little bit of context. I would call these core 10 related operations. There’s others, there’s financial systems and HR… There’s other systems, marketing sales, this doesn’t cover those.
Joe Sullivan:
Sure.
Rob Tracy:
These are operation oriented. So, I’ll just buzz through them. The talent system. We talked a little bit about that. That’s raising talent up to a strategic level, talent brand. And really how are you going to attract, recruit, hire, retain, great culture, those kinds of things.
Rob Tracy:
The second one is a core 10, is a clean and safe factory. And we can use the buzzwords of 5S. I didn’t do that. I just say it’s a matter of being respectful to our people, we need to have a factory that’s clean, well organized and safe for them to come to. And if you don’t have the discipline to do that, then you probably don’t have the discipline to do a lot of the other stuff that needs to be done to run the place.
Rob Tracy:
The third one is a management system, and that’s really the management structure. That’s having the right ratio of, from the plan manager to how many superintendents, to how many supervisors, to how many leads. Because one of the biggest issues I see is they’ll have a supervisor recovering 50 people, and then they wonder why they can’t follow through on stuff and do continuous improvement, or aren’t running the place well, it’s because he’s spending all day administering because he doesn’t have the right structure. So, that’s been the next one.
Rob Tracy:
The fourth one is an equipment reliability system. And that’s just making sure that the people on the floor have equipment that works and gets the job done and produces a quality product. So, maintaining it well, keeping it up to date. The buzzwords should be TPM and all those things, but it’s just about, do we have equipment that’s reliable and working? And if it’s not, then we can have a problem.
Rob Tracy:
Fifth one is the quality system. Quality system is just making sure that we’ve got the tools and the processes in place to ensure that we are passing good quality on to our customers. And internally that we’ve got good product going from one operation to the next, and that it’s not eroding our capacity and our throughput and all those things. When that happened, well you don’t have good control of your quality.
Rob Tracy:
The sixth one is supply. And so the supply system is managing, who do you choose to buy from? What quantities? How do you flow it in? How do you make sure you got good quality? And if you don’t have a good quality… A good supply base, that’s healthy and taking care of you, then you’re going to struggle inside your operation?
Rob Tracy:
The next one is in the inventory system. So, inventory is just the lean, we will. I just wanted to talk about one piece flow while I’ve never seen it. Every factory has got inventory. And so the inventory system is making sure that it’s under control. You know where it’s at. You can find it. It’s being rotated properly, so that when it does time come to put it to productive use on the line, or in a workshop, you can go get it and you’re not losing stuff.
Rob Tracy:
Eighth one, is the sales and operations planning. Talked a little bit about that problem earlier. Sales and operations planning is creating that linkage between the sales group and the operations, any… Probably the financials as well. And making sure you’ve got that ongoing two or three months forward look to create alignment, and we don’t have customer service putting out more on the factory then they can produce. At the same time, operations has to understand what they need to do to take care of the customer and where they should be adding capacity and taking capacity off of table.
Rob Tracy:
The next one is data and measurement. That’s just about having the right measures up and down the chain from at the cell level, what’s important to them? What do they need to measure? All the way up to the senior leadership team, what should they now be watching? What I see at times is they’re missing a key measure, and performance has slipped in on it, but because they’re not watching it, you get this erosion that ends up having a big impact over time. That was the example I gave about they weren’t watching their throughput and 5% went away and they ended up suffering.
Rob Tracy:
And the last one is the operating system. The operating system is that hard one to describe because it’s the overall framework for how do you run the business. What is your meeting pulse? Whether that’s your weekly staff meeting or your quality system meeting, is how do you set your priorities every 90 days? And that’s really where I’ve been focusing a lot lately on my things.
Joe Sullivan:
Yeah, that’s great. Good synopsis of each. And I love having a framework like this, because I’m sure as our listeners are hearing you talk about these, there’s probably a lot of heads nodding. These are all issues that any manufacturing leader deals with, but to be able to have a structure to follow and say, put them in buckets and have a process for addressing each. I see the value in that, because it’s the same in my business and the way we approach implementing marketing and sales program for example.
Rob Tracy:
Right. But what I see is, when you go in and you look at a company that’s struggling or a facility that’s struggling, they may be fine on nine of them. And it’s just one of those 10 that’s undermining everything. So you get… I think you said it earlier, you have to be reasonably proficient in all of them because any one can turn into a weak spot.
Joe Sullivan:
Yeah. And it provides a great system too, I imagine, for auditing somebody up front and saying, where are you strong? Where are you weak? Where can we move the needle the most and pour our energy? Because you can’t attack everything at once, right? Your resources get thinned out.
Rob Tracy:
Absolutely. Yeah.
Joe Sullivan:
Well, number 10 on that list, I want to talk a little bit more about, and have you really unpack it? And that’s the operating system, because I know that one of your big initiatives right now, personally, is developing a formalized operating system that a company can hold in their hands and take and deploy inside their business. So, tell us a little bit about what you’re doing on that front, what you’re developing as far as an operating system goes and what also inspired you to develop that system?
Rob Tracy:
Yep. Absolutely. I wish I had used a different term than operating system. Because it sounds like MS-DOS back in the eighties. The operating system is that framework for how you run the business. And so if your listeners are familiar with EOS, the Entrepreneurial Operating System, that’s an operating system. Verne Harnish has got Scaling Up, that’s an operating system. I’m creating my own. I got very familiar with EOS, both as an implementer, where I went to all the training, but also work in a company that was using it for three years. So, I’ve got that “boots on the ground” view.
Rob Tracy:
And there are lots of things I like about it. And the thing I’m creating, which I’m calling the Business Forward Framework, it has elements of that, but we’re going to come at it a little differently, because I don’t think EOS is a good fit for all companies. You’ve got to have a certain personality profile that’s different to be an ideal client for them. So, I’ve got six buckets that I’m going to put mine in. You got to have the right strategy. You’ve got to have right culture. Right people. A 90 day focus, this is critical that every 90 days you’re resetting priorities and determining what you’re going to focus on and work on. Having the right data and metrics. And then something I call habits, and they can be the medium habits, but even though one of my favorites is just a habit of “just say it”.
Rob Tracy:
So we set the tone that says, when we’re together and we’re talking, whether that’s just you and I, one on one, or in a meeting, if it’s in your head, we’re going to say it. We’re not going to block out with things being unsaid and then go talk behind people’s backs. And we say things to each other and not about each other, that’s just a habit.
Rob Tracy:
So, what I want to do to fill a different niche with this framework is come at the implementation different. Instead of having just one size fits all that this is how you go about implementing it, is help come in, figure out where they’re at, where the good starting point is, and then create a custom roadmap for them and then be with them to implement. And I’m only going to work in industries that I’ve got experience in. I’m not going to be an agnostic generalist.
Joe Sullivan:
Yeah. It makes sense. The implementation of a framework like this is just so key. And I know, I’m familiar with EOS, which is, for those of you listening who maybe aren’t familiar, Gino Wickman was the author of Traction, which I’ve read three times and we’ve borrowed elements of it for our business. We’ve never fully embraced the full system, although we’re thinking about it at my company Gorilla right now.
Joe Sullivan:
But he describes the implementation side of things as traction. And as you put this framework in place, at the end of it, now you’ve got to actually hit the ground running and you have to… People have to be bought in and you have to follow through on doing it. So, I don’t know if you want to speak to that because I know you’re obviously in EOS, you’ve been there and been an implementer and know that system really well. So, maybe speak a little bit to that idea of gaining traction, or in your case, the implementation element.
Rob Tracy:
The element. Let me think about the best way to talk about that. There’s a lot of things in EOS around how to get that traction. Some of my favorite things is, we talked about the 90 day pulse.
Joe Sullivan:
Mm-hmm (affirmative).
Rob Tracy:
That is… And there’s a 90 day pulse and an annual pulse. So, in that strategy, so you know you’re all stroking the same direction is critical, but then breaking things down into 90 days, where you say, what are the top priorities? And we’ll do facilitated sessions where we’ll come up with all the possible ideas that we could do in the next 90 days, list them out. And it might have 100 on the list, and we’ll narrow it down to five and say… And then we’d scope them. I’m a big fan of writing one-page project charters that talk about what’s in scope? What’s out of scope? What are the milestones? And then you integrate those into the weekly meeting where every week you’re checking in saying, are we on target or are we off target? So, you don’t lose sight of them and they don’t go sit on a shelf. So, those are just some of the tools and techniques about how to drive performance forward.
Joe Sullivan:
Yeah, I think there’s even research out there. I remember reading in Traction that, the human mind is built in a way that it can handle about 90 day milestones and not much more than that. So, when you have these big and these massive goals that you’re trying to accomplish for the year or beyond, you shut down and wind up getting nothing done, unless you can break it down into smaller chunks, right? That could be maybe attacked in 90 day segments.
Rob Tracy:
Absolutely. Yeah, even if it’s a huge project, by doing an ERP implementation that might take two years, you can still say, what are we going to do in the next 90 days? And then we might be in the next 90 days, we’re going to do software selection. In the next 90 days, we’re going to get our data cleaned up. In the next 90 days, we’re getting at least… When you have something that’s a year or two out, it can seem like you’ve got an awful long time to implement, and the things on the back burner and you don’t really work on them. 90 days is that timeframe where it’s long enough that you can get something done, but short enough that you’ve got some urgency. You got to get moving because time is burning.
Joe Sullivan:
Yep. And then I think those weekly touch points become so important because it creates accountability, right? If you wait a month, if you only touch base with your team as you are implementing these 90 day milestones, well, then everybody waits until day 29 and says, “Oh man, I got to get all this stuff done.” And you hack your way through it.
Rob Tracy:
Yeah.
Joe Sullivan:
Versus weekly, you create consistency and accountability for each other, right?
Rob Tracy:
Yeah. Yeah. We want to avoid that college students syndrome where you keep pushing it off and then cram at the end. It just doesn’t work very well.
Joe Sullivan:
It makes sense. Well, Rob, anything else you wanted to touch on in terms of your operating system? I think this was… I’m curious where… Is it available out there for people to look at yet? Is it still in the works? I’m curious if people want to look at your operating system or-
Rob Tracy:
I would say I’m about 90% done.
Joe Sullivan:
Yeah.
Rob Tracy:
I don’t have it out and published anywhere. That’s not up on my website yet. So, probably the best thing to do is reach out to me through LinkedIn, be happy to talk anybody through it. Talk and I can help compare and contrast it with the EOS, I’m still an EOS fan.
Joe Sullivan:
Yeah.
Rob Tracy:
I can help show where there would be different so they can make a right decision. But yeah, best thing to reach out to LinkedIn or go to my website. My contact information is on there. It’s just simply robtracy.net so pretty simple to find.
Joe Sullivan:
Beautiful. Well, Rob, thanks a ton for doing this today. This is a super valuable conversation. I learned a ton. I’m sure our listeners are saying the same and really like what you’re doing. So, appreciate you joining.
Rob Tracy:
Yeah, I appreciate that. I love manufacturing. I’m glad I had a little chance to get to talk to you and your audience.
Joe Sullivan:
Great. Well, thanks Rob. And to the rest of you, we hope to see you next time on The Manufacturing Executive.
Speaker 2:
You’ve been listening to The Manufacturing Executive podcast. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. If you’d like to learn more about industrial marketing and sales strategy, you’ll find an ever expanding collection of articles, videos, guides, and tools specifically for B2B manufacturers at gorilla76.com/learn. Thank you so much for listening. Until next time.
