A Case Study of Applying Performance Management to a Canadian Wood Products Manufacturer to Increase Plant Productivity:

Introduction:

A large Canadian wood product manufacturer was experiencing a plant bottleneck in the summer season at one of its Orientated Strand Board (OSB) Plants. The plant employed approximately three hundred people. During the summer months, the raw product of logs that fed into the plant were relatively thin and caused jamming in the ponds, and machinery, at the front end of the plant production process. Management was experiencing record production in the plant’s ten year history, however, consistently every summer the plant entry bottleneck resurfaced and timely production schedules were difficult to obtain, costing the plant considerable lost production and subsequent measurable profits. The management team seeking to keep capital expenditures in new equipment under control could not solve this on going dilemma. The company’s executive team, valuing continuous improvement and innovative solutions, looked to an external Business Management Consultant to help solve the plant’s production problem, albeit not knowing what to expect as a solution. AnMar Management Inc. was contracted to analyze the plant bottleneck and offer solutions.

Consultant’s Business Analysis:

The front-end of the plant’s process was called the Green-end because the raw product of tree’s or logs received only minor preparation, or were still “green”. The Green-end employed four teams of: four operators per team, one team leader per team, and one controls systems operator per team; for a total of twenty four employees. The Green-end process was simply responsible to take logs in from the ponds, strip the barks off of the logs and “strand” the de-barked logs (turn them into flakes of wood). The operators operated complicated controlled machinery of forwarders, jack ladders, conveyer belts, loaders, and stranding equipment. The consultant, upon interpreting the performance of these operators firstly recognized that the operators after working in this process area for over ten years could not clearly articulate the precise results they were accountable for, nor isolate which result was bottlenecking the plant? After careful interpretation and analysis with the operators, the consultant determined that a critical operator’s “controllable” pinpointed bottlenecked result was “the number of logs processed while the lines where running”. After a careful “pinpointed” analysis by the consultant, he was prepared to start on a solution – a human performance solution.

The Solution:

The systematic approach to problem solving in human performance is always to first gain a precise definition of the performance problem (results, and supporting behaviors). Once that is accomplished we can set up measurement requirements to gauge progress and to determine how to improve on these critical variables of results and behaviors. Then we can build, from the measurement data, information systems which immediately confirm to the performer the effect his behaviors have on his results while he is working. Finally, and most importantly, we can apply positive reinforcement to the behaviors that are producing the increase in results. This causes not only performance change but also performance to accelerate. The solution for the plant operators was to incorporate individual operator feedback graphs which gauged and confirmed (or fed back) the measurable result every half hour to that operator. This meant that the operators where receiving twenty-four performance data points during a typical twelve hour shift. In other words the operators knew every half hour what effect their behaviors had on “the number of logs processed while the lines where running” (the critical bottlenecked pinpointed result). Some of the new behaviors involved the operators collecting the data and charting the data during operation, which took only a matter of seconds. Prior to the consultant’s solution, the operators received “log counts” only once a month and not during their shifts – hardly valuable information to help an individual performer improve while working?

The Results:

The results were fairly immediate. They are presented in the following graphs of actual result data collected in aggregate at the team level daily. The vertical line on the graph indicates when the performance management solution was implemented:

To summarize the results:

• Each team of operators saw an increase from 1.4 to 1.6 times over the baseline level of performance.
• A record one day log count over the ten years of the plant’s operation was accomplished within six data points (six days) after the performance improvement intervention.
• Financial calculations were completed by the plant accountant and showed a 20% increase in pretax net profits of the plant in the first two months following the performance solution. That meant on average about 1.2 Million dollars per month in pretax net profits increase!
• The implementation was “staggered” across teams (each team implemented the solution a short time after the prior team). This is a technique in Performance Management to evaluate and validate the performance changes against the solution used to ensure the effect was not due to “other” system variables. Compare the two graphs to see “when” the effect took place to both teams – only after the performance intervention.