In the early years of my business career (mid ’80s), I was introduced to the concepts of Total Quality Management. My company was totally focused — from the top down — on removing inefficiencies from the organization. I was a member of several different teams whose goal was to improve work practices and business processes, reduce waste, and improve the quality of the products being delivered to our customers. Team members consisted of individuals who were directly involved with the work practices or procedures they were analyzing for improvement. These people were intimately involved with the topic and had full control of any changes that were developed and implemented throughout the process — and their decisions were fully supported by management. Through this work, I saw firsthand how these concepts changed our company for the better.
Having taken part in this quality movement some 30 years ago, I assumed this management theory was a basic premise in nearly every business. Sure, the theories had been adjusted a bit and were now going by the name of Six Sigma or Lean Six Sigma, but the basic premise was still the same. However, I’m learning my assumptions might have been wrong. Data acquired through our own research and from a major research firm show a good number of electrical contracting firms still don’t apply these concepts within their organizations or realize the benefits of this management theory. This blows my mind.
FMI’s “2012 Productivity Survey” recently examined lean construction and its implications on the industry. It’s interesting to note that 42% of survey respondents felt that lean construction is more or less good management practices that have been relabeled under a new name. The good news is 26% of respondents say they understand lean very well and see it as a practical way to improve productivity and/or operational performance. The bad news is 29% either don’t know much about lean, have never heard of it, or have no idea how it applies to contractors. A small percentage even think lean is a bunch of “smoke and mirrors.”
What do our Top 50 players have to say about lean construction? In 2011, nearly two-thirds of this elite group said they had used lean concepts on their projects. In 2012, the number rose to a little more than two-thirds. I was also shocked by these results. After working through some of the most difficult years on record, how could roughly one-third of these top-level electrical construction companies still not be using these business practices in today’s competitive markets?
FMI’s study results show that although the perceptions of lean construction vary, the processes and tools that drive out waste, poor quality, and inefficiency yield positive results. They report electrical contractors that achieve a net income as low as 2% to 3% have the ability to double the bottom line if they can realize a 5% to 10% improvement in labor productivity. I’d say that’s a pretty good payoff, wouldn’t you?
Thinking lean simply means to continuously look for ways to drive out waste in your organization. This can take on many different forms. For example, you should strive to complete work to spec the first time out, thus eliminating rework and avoiding defects. You should avoid non-productive time and minimize employee waste. You should manage your materials and equipment with speed and efficiency, and work hard to minimize overages/shortages of products and idle time of equipment. You should embrace prefabrication techniques and use them whenever possible.
The concepts of TQM were born on the factory floor. Maybe that’s why some electrical contractors feel they’re not a good fit for their organization. But trust me, thinking lean can and will fatten your bottom line.