Avoiding Risk: Using a Tiered Management System to Improve Daily Execution

The majority of attendees (60%) to the first of our three-part series on avoiding risk in manufacturing confessed they are constantly in firefighting mode within their organizations. This means they are reacting to problems as they occur, rather than proactively finding ways to prevent these issues from happening.

This came as no surprise to presenters, David Hicks and Tim Nickerson of TBM, who have decades of combined experience in consulting for lean operations and supply chain management.

Importance of a Tiered Management System

To avoid risks in your organization, there are three key elements to an effective management system. Each of these elements is crucial, and they won’t work without each other.

1. Metrics

Metrics are necessary to enhance output and measure how well you’re doing, contributing to continuous improvement. The question is: Are you getting the right metrics? While collecting data is useful, collecting the wrong data, incorrectly managing data,) or measuring the wrong KPIs is a waste of resources and counterproductive.

Metrics are collected from the bottom up, starting on the plant floor and working up to the executive reports.

2. Framework and Tools

The framework and tools you use are what help you review and act on the metrics you collect. With the right tools and framework, you can better identify trends and make data-driven decisions.

3. Capability

The people across your organization need to have the capability to act on the necessary changes. Problem-solving, abnormality management, and layered audits are a few examples. When you have people capable of solving these problems, they can solve them as they happen, keeping your organization out of firefighting mode.

Strategy Deployment Meets Daily Management

There are two things that successful companies do very well: They execute their strategic plan and they execute their tactical plan.

A strategic plan is a plan that is driven from the top down. It begins with the CEO and their reports working together to develop a three-to-five-year vision for the organization. From there, the information cascades down to the point of impact.

Conversely, the tactical plan starts at the bottom and moves up. 

Tactical plans involve tiered meetings of various lengths, with different purposes, and different people. It starts with an hour-by-hour chart to let production crews know what is expected of them. When they know what’s expected and are not able to reach those targets, they’re able to share the obstacles that prevented them from achieving them.

These meetings are intended to check line pulses and issue course corrections where needed, in real-time. Ultimately, a tier IV review with site leaders who are reviewing metrics overlaps with the strategy deployment.

Strategic planning is working on the business, whereas tactical execution is working in the business. Executed together perfectly, these strategies create a very productive and profitable business.

Tiered Management System Implementation

There are three important parts of implementing your management system and they work together like cogs in a machine.

1. Training

A simple one or two-hour training video or meeting is insufficient for proper training for the management system. The term bootcamp is actually more accurate because for two days, information is loaded on those who are learning the system. Having a two-day training bootcamp allows attendees to do exercises around the tier system, abnormality management, problem-solving, layered audits, and more.

The idea is to get everyone on the same page and provide them with the information they need to develop the capabilities they need to perform their best.

2. Implement

When implementing your management system, you’ll first need to discuss and decide things like where your meeting will be held and where your KPIs and other pertinent metrics will be posted for people to be able to review, discuss, and act on them. Organizing your management system will take time, but the effort put into it will be worth the week or two spent doing it.

3. Audit, Coach, and Mentor

Now that you have the management system framework in place, it’s time for one of the least thought about components of implementation that many organizations don’t understand the importance of.

In fact, many implementations fail because leaders don’t adequately train the people who will be working within the system. That’s because people learn better from being shown what to do and how to do it.

It’s important to spend time on the plant floor with supervisors and team leaders and model how things should be done. Tier meetings, abnormality management, problem-solving, etc, are all things you should model for your leaders and supervisors.

The purpose of modeling and mentoring is to improve the capabilities of your teams and help them develop the skillsets they need to perform. That’s why it’s important to take the right amount of time to truly mentor your workers, no matter how ready you think your organization is. Spend several weeks cementing the system and monitoring and mentoring until everyone is clear about how it works and what their roles are. This is the biggest part of the success of a tiered management system within your organization.

Closer Look: Tier Management System

Tiered systems are a series of meetings at different sites and organizational levels, to review, track, trend, and respond to operational performance in real-time. It is an organized way to respond to issues proactively and is designed to keep awareness and communication both current and focused on the most critical business success drivers.

The system includes the use of visual displays (Tier Boards) to highlight performance metrics, countermeasures, task assignments, and project updates. This transparency further encourages alignment and focus and enhances accountability, while also encouraging engagement in an aligned and focused approach to achieving organizational goals.

Using a tier management system, KPIs are tracked regularly, and if those KPIs don’t reach target, you’re able to shift to a problem-solving phase to determine the root cause. This approach allows you to do daily performance indicator reviews and issues prioritization with the right people. Essentially, instead of fighting fires, you’re solving problems in a structured and effective way.

Site-Level Tiered Daily Management: Control Structure

Hour-by-hour performance reviews are the heartbeat of activity because they help you determine things like cost and capacity.

Measure performance to targets against safety, quality, delivery, and cost elements hourly - at the point of impact - and then by shifts, daily and weekly, to see where you are off plan and determine what to do about it.

Overview: Tier Meetings

Tier meetings enable leaders at various levels, to align and focus on problem-solving and critical activities which affect the business. They’re held at different frequencies and at different levels of the organization. 

Tier 1 Meetings

Tier 1 meetings are focused on Shift handoff, occurring two to three times per day, and are led by the interfacing shift supervisors. It is focused on shift changeover and immediate issues affecting things like downtime or quality. Every tier 1 meeting starts with a safety briefing.

Tier 1A Meeting

The Tier 1A meetings are held at shift start-up with a focus on manpower, resources, and attendance, as well as production needs or the production schedule. These meetings can also include focusing on any unique quality attributes for production scheduled in the near future.

Tier 2 Meetings

Tier 2 meetings are geared towards daily performance reviews. They are held each morning, led by the Plant Manager. The purpose of tier 2 meetings is to review the previous day's performance and assign and follow up on corrective actions and ensure needed resources are brought to bear. 

Tier 3 Meetings

Tier 3 meetings are held weekly and are focused on problem-solving larger issues that are challenging the operation. This meeting addresses root cause issues and brings other resources to bear, and is used to manage projects underway.

Tier 4 Meetings

Tier 4 meetings are held once monthly but can be held twice. These meetings include site senior leadership steering and are focused on elements like performance, project countermeasures, and project statuses as they steer towards the Annual Operating Plan.

Tier Room Layouts

Tier meetings should take place in specific areas and in specific ways, with specific layouts to be the most effective.

The environment where meetings take place is important because it provides workers with visuals that give them an idea of performance at a glance. This enforces accountability and creates an atmosphere for discussion and communication about how to move forward in a better, more productive way.

Color coding - for example, red for unmet targets and green for those accomplished - makes it even easier for people to see where everything stands. The environment should encourage open and free discussion among your workers, so they can assist in problem-solving and be a part of the bigger picture.

Continuous Improvement is based on tough analysis but soft on the people and your tier room layouts and locations should build trust to encourage discussion.

The tier 1 area can be equally or more effective if you can do it close to production,  perhaps the supervisors walk the shop together as part of the session. Not all shops have an environment where this is a rational approach, in which case it is acceptable to move into the tier room.  As a good practice, the hourly meeting history should reside in the tier room for reference during tier 2 meetings as needed.

Tier Escalation Process

The purpose of a tiered management system is to collaborate and communicate in a way that creates meaningful and actionable determinations. To this end, each tier serves a specific purpose.

Tier 1

Tier 1 is where you identify issues that inhibit production and quick fixes that have not worked to remedy the situations. It’s also where major issues are shared. These are things that cannot be fixed in a day and, thus, advance to tier 2.

Tier 2

For problems that could not be resolved at the tier 1 level, tier 2 seeks to find additional data and information to assist in finding a solution. If the support staff is unable to resolve it, it is then escalated to tier 3.

Tier 3

When issues go unresolved through tiers 1 and 2, tier 3 involves using the A3 problem-solving approach. An A3 owner is assigned along with a team to review the issue(s) and determine the best solution moving forward

Steps To Take Right Now

It’s not something that happens quickly, but there are some things you can begin doing right now, to start.

Talk to Your Employees 

Ask them if their day was good or bad. Do they know if they had a good or bad day? Do they understand their roles and what their targets are? 

Start Tracking by Hour

Hour-by-hour tracking - if you’re not already doing it - helps you track data and processes in a timely way, and analyze what’s working and what isn’t.

Review KPIs

Are your existing KPIs the right ones? Are you getting the kind of data you need to get things done, or is there something missing? Do you have a clear picture of what’s happening in your operation? Are you collecting APIs that are “easy” rather than “necessary”? 

Gauge the Level of Expertise in Your Organization

How good are your people at problem-solving? Do your employees know how to use the tools available to them to problem solve? Do they have the right tools to do it effectively?

Asses Current Communication Effectiveness

Are you having meetings regularly to improve accountability and communications or is it all ad hoc? Where can communications be improved?  

Conclusion

Employees appreciate consistent handoffs, clear expectations, timely reporting of issues, and accountability. 

You may feel developing and implementing a tiered management system will require you to slow down or even shut down for too long, and this can make it tempting to resist it. However, the time and attention put into it will result in a better continuous improvement approach that makes an impact. With the right discipline and focus, you can begin using a tiered management system that enables everyone to improve your organization from top to bottom.