Education Investment or Equipment Investment?
How to Bring an Immediate and Sustainable Improvement.
|Takaaki Izumi - CEO, SEIBAN Co., Ltd.|
Co-Presenter, Masatomo Sasagawa - Project Director, Goldratt Consulting Japan
Why Was There a Need for Change？
When we don’t have enough productivity because of seasonal cause, it is general to invest in outsourcing some productivity to cover the shortage. However, the cost of annual outsourcing is definitely not small, and it takes time to increase productivity at the outsourcing contractor. On the other hand, we could not decide which is better: adding a new outsourcing contractor even if it costs a lot or investing more inward to improve our productivity. Consequently, we lost chances to make more sales.
What to change
We needed to change the following mentality about cost:
- To improve productivity, we need to outsource
- If we spend more money, the profit decreases
- We can invest only in equipment and outsourcing
What to Change to
To improve productivity, we can invest in educating employees, and it will link to sustainable growth.
How to Cause the Change
As we have decided to invest in educating employees, three samurais (young leaders) took TOC Executive Management course. With the company president’s support, they significantly improved the productivity at the constraint by focusing on creating a flow and taking over some work at the constraint to the unconstrained process, with what they had learned in first three days of the course. Furthermore, they learned that a company can make profit when they have more ΔT even if they have increased ΔI. So, they utilize costly outsource contractor to improve productivity by 18% in just a week and an increased annual throughput by ¥ ,000,000,000. This result comes from the collaboration of the young leaders’ actions and the management’s support.
How Do You Measure, Refocus, Sustain and Grow and Change?
It is important to focus on measuring throughput; however, what’s more important is the people who uses those numbers. As people improve, business performance increases. In addition, the format of having the young leaders’ actions and the management’s support has increased motivation and collaboration in the organization. We are intend to invest in educating employees.
In the conference, we will use our case study to show how the invest in educating employees makes the company strong and brings sustainable effects.
When we don’t have enough productivity, it is general to outsource productivity. However, the cost of outsourcing is definitely not small and it takes time to increase productivity at the outsourcing contractor. Therefore, we decided to invest in educating employees. Three samurais (young leaders) took TOC Executive Management course, and they significantly improved the performance at the constraint in the process by using what they had learned in first three days. Furthermore, they utilized new costly outsourcing contractor to improve productivity by 18% in just a week because they had learned the company can make profit when they have more ΔT even if they have increased ΔI. As a result, the annual throughput has increased by ¥1,000,000,000.
３ learning objectives
- As people improve, business performance increases
- Even if we increase ΔI, we can make profit by increasing ΔT.
- Making good flow is the main purpose of the operation.
Takaaki Izumi CEO, SEIBAN Co., Ltd.
Just three months after entering SEIBAN Co., Ltd., his father, the previous CEO, had passed away, so he needed to succeed to the position.
As a new CEO, when he was looking for the future direction of SEIBAN, he encountered "The Goal” by Eliyahu Goldratt. He intuitively thought "This is it!”. Thereafter He has accomplished reducing inventories and improving sales and performance drastically by becoming Alex and thinking the company’s policy in the holistic way.
Masatomo Sasagawa Project Director, Goldratt Consulting Japan. Ex-Executive Officer, Hikari Plant Head & Sales/Production innovation Head. Nippon Steel & Sumikin Stainless Steel Corporation (NSSC).
Masatomo joined Nippon Steel Corporation in 1982. He had been mainly involved in steelmaking process and operational improvement in major manufacturing plants. As soon as he stumbled across "The Goal”, he applied TOC in the operational improvement as a Plant Manager just like Alex and himself achieved 25% improvement of productivity without major investment by implementing Five Focusing Steps faithfully. All the increase production contributed to throughput increase which brought in a huge profit to just established new company NSSC in 2003. This result and the fact at Chinese company "W” (Also implemented TOC) brought by a corporate officer in charge of sales made TOC and my contribution widely known in NSSC.