This Open Book Process Gets Results
Right now, American manufacturers are looking opportunity square in the face. The economy is strong. The new administration is encouraging companies to make things at home rather than overseas.
Still, nobody should get complacent. Technologies are changing rapidly, and competition continues to be stiff. Manufacturers who do things the same way they always did are likely to be left in the dust. It’s time for every company to up its game.
To see how, it might help to pay a visit to Trinity Products.
Trinity is a steel pipe manufacturer and custom fabricator, located not far from St. Louis. It employs about 160 people and does close to $100 million in annual revenue. The company makes big, infrastructure-size pipes and structures. You can see its handiwork in everything from bridges and power plants to giant signs and scoreboards.
This is a tough business, dependent as it is on the level of infrastructure spending around the nation—something that Trinity’s leaders have no control over.
How a Tough Business Thrives
But Trinity is thriving, because CEO Robert Griggs and his team know something about manufacturing that many executives and company owners seem to have forgotten: no one knows how to do a job better than the person who is doing it. They have turned Trinity into a kind of learning organization, with people on the shop floor making the company more and more competitive every day. (For a fuller description of how Trinity goes about this, see our article in last June’s Manufacturing Leadership Journal.)
Trinity’s journey started with open-book management. Griggs and CFO Jim Nazzoli helped employees learn about—and track—the company’s revenue, costs, and profits. Today, the company circulates a scoreboard every morning that shows billings and backlogs by product or process, along with key monthly statistics such as total orders and total mill tons.
Flagging Obstacles and Bottlenecks
After this first phase, they began working with a firm called the Cycle of Success Institute, known as COSi. (We have no connection to this organization.) COSi coaches helped Trinity create a system in which employees flag obstacles and bottlenecks and figure out how to solve them. “You identify a problem, put it on a list, monetize it, and prioritize it,” explains Nazzoli, who has added the title of chief continuous improvement officer to his CFO job description. High-priority projects are assigned to a team, and every two weeks the team reports back to the COSi steering committee on its progress.
“We’ve accomplished 125 projects at the mill over five years,” says Griggs. “We have all the data. We took coil splices from 25 minutes to 15. Changeovers from one size to the next size went from eight hours to five, and then to three or three-and-a-half. We continuously organize and prioritize the projects. These lists never go away.”
Open Books Help Balance Them
Many U.S. manufacturers have long experimented with continuous improvement systems, of course. But this one is a little different. Because the books are open, employees can see the effects of their efforts on costs and productivity. They can also see when they’re on track for a profit-sharing bonus.
That answers the question that some employees might be tempted to ask, “Why should we worry about all this?” In the last five years, annual bonuses at Trinity have ranged from $1,000 to $6,000 per employee.
Getting employees involved, helping them learn to think like businesspeople, sharing the wealth that they help create—this is how American manufacturers can take full advantage of today’s remarkable opportunities.
Creating More Opportunities for Industrial Manufacturers
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Bill Fotsch is founder and president of Open-Book Coaching. John Case is a journalist who has written widely on open-book management and employee ownership. Find his book, Open-Book Management: The Coming Business Revolution, here.