Electronics manufacturer, Regenersis, uses strategy deployment process as foundation for full lean transformation, increases productivity by 14%, boosts gross profit by 17%.
Sooner or later, every business reaches a point when it’s time to reset because of market forces or internal turmoil. For the Regenersis operation in Sömmerda, Germany (between Frankfurt and Leipzig), the time to reboot came.
The company services and refurbishes electronic devices for a global client base. It established the Sömmerda site to provide outsourcing services for Fujitsu Technology Solutions. Over time, by offering after-sales support, repair, and maintenance, its customer base expanded to include Apple, ASUS, Fujitsu, Honeywell, TeleCash, VeriFone, and other well-known electronics brands.
Regenersis Sömmerda experienced growing market pressure from competitors with lower labor costs. Rapid growth and the integration of a major acquisition a few years later, followed by several management changes, contributed to an impenetrable organizational structure.
The Turnaround Begins
Alfons Krauthausen, Managing Director B2B/Infrastructure Sector & Germany, decided it was time to make some dramatic changes. Ensuring the site’s long-term future required a complete organizational realignment to improve efficiency and employee cooperation and open up new market opportunities.
It was then that TBM advisors began working with managers in Sömmerda. We helped identify areas with high immediate potential, then facilitated several kaizen workshops to engage the workforce in uncovering the root cause of the issues and implement streamlined processes. Following these successes, management decided to develop a comprehensive operational improvement program for the site using the strategy deployment process (also known as hoshin kanri).
During the strategy workshop the management team agreed on a number of key breakthrough objectives. Their targets included double-digit percentage increases in productivity and gross profit, and a significant reduction in employee absenteeism. We used the X-matrix tool to align the goals with their improvement plans and associated projects. Management then allocated the cross-functional resources that would be necessary to turn the plans into reality.
Challenge: Rapid growth, acquisitions, increased competition, turnover, and poor morale prompted new leaders to launch a transformation program to improve efficiency, engage employees and open up access to new markets.
Krauthausen, Jungnitz and his management team recognized from the outset that taking everyone along on the journey, and actively involving them to shape the organizational direction, would be key to their success in Sömmerda. This meant proactively communicating the coming changes, and explaining why they were necessary.
The works council was actively involved from the start of the continuous improvement process. Management presented the strategy deployment program to the council before it was launched. Council members were also actively involved in rolling out the new job roles, management approach and work processes.
As part of the organizational realignment, the management team created several service delivery manager positions. The service delivery managers became responsible for managing individual customer accounts, and resolving any issues as soon as they arise.
"The greatest challenge we faced was integrating the entire management team into the culture change,” says Jungnitz. “We consciously focused on junior managers with the courage to shake things up and move forward.”
Solution: Established aggressive breakthrough objectives and goals for double digit productivity and gross profit improvements, and absenteeism reduction. Identified KPIs, developed detailed execution plans and implemented standard management practices.
Embracing change was crucial to implementing another vital aspect of the organizational transformation proposed by TBM: Managing for Daily Improvement, or MDI. This management system, a cornerstone of effective operations, commences with the tracking and reporting of key performance indicators (KPIs) identified during the strategy deployment process. Managers and team leaders convene daily to review these KPIs, ensuring a constant vigilance over objectives and a sustained forward momentum. This approach, when adopted, can significantly enhance an organization's performance.
These daily meetings, a crucial part of the MDI process, are not about managers dictating solutions but about empowering the team to solve problems before they escalate. This approach flips the traditional problem-solving hierarchy, with managers taking a backseat and guiding the team to identify their own solutions. Over time, managers develop the skill of asking questions that engage employees, fostering a culture of creativity and problem-solving within the team.
The MDI initiative necessitates a shift in the daily work approach of management staff, which can be unsettling for those accustomed to a command-based leadership style. The introduction of MDI often requires the support of an external consultant, whose primary role is to establish a consistent performance review board with actionable KPIs. Additionally, the consultant plays a crucial role in helping managers adapt to new roles and expectations, thereby making the transition to MDI smoother and more effective.
Results: In 8 months, productivity was up by 14%, gross profit up by 17%, and absenteeism fell by 33%. Employee morale improved through open communication and training. Performance boards now serve as the focus of daily management reviews.
Today, the management review meetings at Sömmerda take place every day at 10:30 a.m. Within 20 minutes, all of the service delivery managers and their team leaders get a complete overview of the previous day, what’s on the agenda for the current day, and any potential problems or bottlenecks. If an area is off target or falling behind, corrective actions can be taken long before the financial figures for the month or quarter are prepared.
Team managers are currently working on sustaining their progress and implementing standard work, which helps ensure process reliability. Future priorities include implementing 5S measures, the next level of MDI, further layout changes and training employees in A3 problem-solving tools.
“After introducing hoshin kanri, we achieved most of our objectives within eight months,” reports General Manager Dirk Jungnitz. “We have set the bar even higher for the new business year, and know that we can only succeed as a team if we all pull together.”
7 Steps to Success
Rapid growth, multiple acquisitions, and growing competitive pressure have led Regenersis Sömmerda to undertake a top-to-bottom business transformation focused on process improvement and a lean operational approach. The steps included:
- Strategy Deployment
- KPI Development
- Managing for Daily Improvement
- Productivity Improvement
- Employee Engagement
- Standard Leadership Practices
- Proactive Communication