The Lizard Lick Fine Paper Mill - Essay Example

 The Lizard Lick Fine Paper Mill 1 Abstract The Lizard Lick Fine Paper Mill has fallen into disrepute and is going downhill. Its glorious history and the present dysfunctional status have been examined in detail and it has been concluded that it is a fit case for Change. A consultant has been appointed and his diagnosis is preceded by explanation of the theories of Change and their criteria. A further explanation has been made about Interventions that are required for Organizational Development. Finally the consultant has made recommendations for changes that will bring about cost effectiveness, quality control and increased productivity, all of which are sadly missing from the company performance map today. 2 Introduction The Lizard Lick Fine Paper Mill (LLF) is a group company of a large corporate that has many other plants. Till recently this plant was the most productive and most profitable of all units and was considered the flagship of the group. Its prominence can be gauged from the fact that this was the single place where executives wanted to be posted for furthering their career in the group. Similar is the case of George Golden, Plant Manager, who was posted here three years ago, to be groomed for an eminent position in the group headquarters as the career ending spell. He is known for his hard driving force and capability of setting high standards in every division and for his ability to lobby in the highest echelons for the benefit of the company. LLF commenced business on D-Day; the day of Allied invasion of Europe and ever since has been a model of productive competence. It is the sole provider of jobs for seventy five miles around and the area has seen a transformation since its inception. Until a few years ago it had a daily routine production of high quality paper of 700 tonnes. The Return on Assets (ROA) was an astounding 32%. It produces fine paper, as distinguished from Kraft paper by its white colour, smoothness and fibre content that is used for stationery, photocopying and printing. It is packed in large rolls of 1000 pounds each and shipped in Box-cars from the adjacent rail-yard. Unfortunately the production has fallen to 550 tonnes per day and there are complains from 50% of customers on quality. The mill itself consists of various machinery used in the four processes required for producing paper. Starting from Pulping, proceeding to Liquoring and then to the continuous-process machine, the size of ten football fields, to produce huge sheets of paper that are rolled into 1000 pounders at the last stage. This continuous-process machine is the heart of production and runs on a 24x7 basis throughout the year. If and when it has a breakdown or a forced or planned stoppage, production suffers and large batches of paper that are in-process are lost as wastage. This has been happening more often lately and is a cause of the current reduction in ROA which has fallen to 7%. The reasons for this are that despite preventive maintenance planning and scheduling, the information and indeed the required parts are not available during downtime and thus the work is stopped without real meaning or result. In fact the division is so frustrated that it has asked for an additional machine to augment production level and to overcome frequent downtimes. The morale of the current staff is at a very low-ebb. Absenteeism runs at 11% and injuries have increased, adding to both cost and misery. In a work-force strength of 550 people this is very high and in turn affects productivity besides increasing cost on hiring casual labour to fill in vacancies. The management too seems ill-at-ease with the situation. There are no clear-cut goals or objectives except an order to reduce costs. This is a mere directive without accompanying planning. The costs are totally out of control. Increase in prices and availability of wooden chips have added to costs and apparently the supply chain system is either broken down or does not exist at all. In this demand driven market, it sounds as if the suppliers are diverting to more lucrative areas. Being cash-rich, some control on purchase is affected through bulk buying as much as two years of supply in advance. It is estimated that this reduces purchase cost by 12%. Competition, especially from the efficient Japanese, is another factor and can be countered, according to management, by Government subsidies or interventions. There is also an apparent break-down in communication between management, despite increase n number of meetings that take up to 80% of working time. Under these circumstances we have been hired as consultants by George Golden to suggest an Internal Organization Development and Implementation Plan. 3 Change Criteria At the very outset it is clear from the interviews with George and his management team that the problem starts at the very top. He is unable to give any directive other than force his subordinates to cut down costs. But he is unable to spell out his needs except in a broad dictat. The team and the workers need a vision and motivation that has to come from him. A change is required throughout the organization to make it productive and vibrant. But change can be meaningful only if it is planned according to the needs and is based on the following sound principles 3.1 Motivating Change Topmost in handling change is to motivate the people to achieve the purpose of the change. This means highlighting the glorious future and contrasting it with the immediate past or the current dismal situation. However it has to be conveyed positively with rewards accompanying results. Effective communication will be required to generate support and participation at all levels. Teamwork and togetherness is the core issue here. Some amount of pressure is to be built up for this to show the benefits of change. To bring about active involvements in the procedure the employees have to be given a vision of the future. 3.2 Creating a Vision A company needs a vision that will clearly state its goals and objectives both for the near and long term. This vision should be in consonance with the larger objective of Productivity, Quality and Cost Controls. The vision must also convey to all members of the company that that they are a team and family and the well-being of each holds equal importance for the entire company. The sense of belonging needs to be emphasised to ensure greatest possible participation by each and every employee. They must also understand that nothing is static in this changing world and that they too have to consciously build up on this vision and contribute to it to make it a dynamic function of the company. This calls for a certain measure of flexibility which they should extend in order to achieve the larger objective set out by this vision statement. At the same time the vision needs to be lean and focussed and not too wide. 3.3 Developing Political Support For the change to be effective and for the realization of the company vision it is imperative that all the stakeholders support the various steps all along the way. The attempts have to be genuine and in common interest for benefits all round. The primary requirement is to have the knowledge of all sources of power in the company and to harness them and motivate them to work for a common goal. The ideal is to get them to agree on and obtain a consensus to avoid sudden conflicts of interest midway between any initiatives. The personalities involved are diverse which means that they have to be handled individually according to the status and mental make-up of individuals, but they have to be brought around to common and mutual understanding and respect. It is often possible by straight talk and sincerity is the best method; but often the goals are to be achieved through use of social networks or by adopting certain circumventions. Whatever the methods that may be employed, this aspect needs a constant and effective open communication channel to overcome any roadblock during the transition period. 3.4 Managing Transition In continuation of the change policies the change manager needs to plan activities that will involve the stakeholders to see through the transition period. These activities have to be practical and oriented towards achieving the targets as set out in the vision statements and need to be understood with clarity by the stakeholders performing them. They must know and feel that this is their vital and positive contribution that will result in realizations of larger goals. The activities have to be planned carefully and there should be a commitment by both the planner and the stakeholder to plan and perform respectively. Planning also entails dividing the tasks to teams and individuals towards a common objective to give the exercise a momentum that increases as the change process evolves. 3.5 Sustaining Momentum In order to finally achieve the targets momentum of change efforts need to be sustained and it is the management’s job to provide the financial, human and technological supports to keep it going. These are vital inputs that enable the teams and individual to rise up to the occasion, perform and deliver. Often emotional and psychological supports are also required to maintain or increase the morale and timely appreciations or rewards go a long way to motivate people. On the way people develop new skills and reach higher competency levels and both should be recognised early and suitably compensated. This will bring a radical change in the behaviour of the people and when this happens, finally the change can be considered to have been achieved. 4 Interventions The explanation of the theory of Change and its management for the benefit of the entire organization calls for Interventions. These are a set of actions and events that are designed to bring about the required changes in the working of the organization. The objective of Interventions is to enhance performances and increase output or productivity of all resources, men, machines, money et al. However these activities can be planned or designed after careful diagnosis of the ills or problems specific to a company and this rule will apply in the case of LLF as well. An effective Intervention is based on valid information and this comes from the knowledge of the diagnosis carried out earlier through interviews with all stakeholders and considering their opinions and understanding of the current status. To make it effective a commitment will be required of all stakeholders to participate in and accept these interventions. They must all enjoin the implementation process and programmes. An Intervention will be truly effective only when the outcome is known. It is always difficult to predict this accurately but it is the duty of the change management planner to describe the possible outcome as closely as possible and to be practical about it. This helps the stakeholder to visualize what he can expect at the end of the exercise and this energizes his commitment to the cause. Interventions also involve the knowledge of the extent to which the organization will gain from such actions. These must be planned to the abilities of the organization concerned. It is to be understood clearly that the strengths and weaknesses of the organization must be declared and accepted while designing these activities. In cases where impractical suggestions are wished upon the stakeholders the chance of success is low. After all it is the stakeholder whose efforts will eventually result in success or failure and their present and future capacity to accept change must be assessed carefully. However competencies, where lacking can be developed and skills can be picked up or taught. But this too forms part of the change process and both the change planner and the stakeholder should have a better understanding of ground realities as well as the possibilities. Despite the best of efforts, there are bound to be shortfalls or shortcomings and some amount of contingencies must be planned to either keep up the momentum or to fill a temporary gap so that the ultimate objective is not lost from sight for temporary causes. Usually in an ongoing change there are three kinds of roadblocks created by individual difference that crops up between the members of the group. The normal cause for this is the need for autonomy of work or leadership. Then there are organizational factors like the working or management styles or the technical or technological difficulties that are accosted during an Intervention. Finally the dimension of the change might itself become questionable as in the case of support from top-management and the degree of commitment from them. It is important for change managers to be able to adjust to the situational factors and to factor these contingencies. This is a tough call as this means being able to soothe ruffled feathers and keeping every stakeholder mindful of the larger goal and involving them into accepting the circumventions needed to overcome the roadblock. It is therefore advisable to consider the following rules while designing the activities for change administration. Readiness for Change Change can be brought abut successfully and Interventions can be designed around when there is general restlessness in the organization about the status quo. This means that present status is found to be unsatisfactory by the stakeholders and they are looking for ways to either express themselves or to change the existing conditions. Existence of such conditions will guarantee success as all will be eager for change. However if there is complacency and people have resigned to the current status or have learned to live with it as their fate, then interventions will fail as there will be no motivation for change. The Interventionist should either look for readiness or should plan for readiness as the situation demands. Capability to Change This brings forth another aspect for planning Interventions. There is an overlap between Change and Interventions. It has to be assessed whether the organization and its stakeholders possess the capacity or capability to change. For instance, if skills are to be learnt, then basic knowledge of the learner has to be considered prior to devising a training programme and method. Again if the situation demands a technological upgrade, the necessary finance should be available for its acquisition. Absence of capability will make both the change and intervention meaningless. Cultural Context Culture of a company can be described as the sum total of behaviours and rituals adopted as general everyday practice of all stakeholders that form a pattern of work, communication and methodology of various outputs. This has a strong bearing on any change or intervention requirement. Due consideration has to be given to this aspect as its ignorance is a sure recipe for disaster. In fact where a culture itself requires change a cultural diversity programme might be initiated, but that is another issue and subject of this report. Another factor to be considered is that within the group of companies like the parent and its subsidiary the culture may be different, which means different interventions and changes need to be planned in context with the prevalent culture of the company or unit concerned. Capabilities of the Change Agent Another vital factor that needs to be considered while planning for interventions is the capability of the change agent himself. Like the case of the capability of the stakeholders, it is equally important to clearly define the knowledge, understanding and limitations of the person initiating and supervising the changes. This will help to form better and well informed interventions. A full disclosure by such an agent is necessary on ethical as well as technical grounds so as to make a successful interventions strategy. 5 Recommendations Having related Intervention requirements as well as the Change Criteria the following recommendations are offered to George Golden as effective solution for Change Management. The consultants can take up this assignment as Process Consultants and will provide a comprehensive Change Management Solution for the company that will cover Interventions designed for three areas. They are; Cost cutting, Quality improvement and increasing Productivity. Commitment At the outset it must be stated clearly that George needs to change his outlook and mindset prior to requiring the same of his organization. Change starts at the top and his total commitment and acceptance and willingness to change is what will be crucial for a successful change event. As a first step he will have to define the company vision to relate to cutting costs, improving skills and achieving high quality standards for ultimate customer satisfaction. Once the vision statement has been drawn up, the next step will be to involve the stakeholders and have them accept the same with a promise that their efforts will be suitably rewarded and the skills they acquire in the process will be duly recognised and compensated for. This incentive will motivate the management and workers and a chain of events is to follow. Cost Cutting Strategies It is suggested that the company undertakes a through study of all its suppliers of wood chips as well as chemicals. It should grade them with competitive prices, delivery schedules and quality parameters. An open communication system informing them of forecasted requirements on a quarterly or monthly basis should be established and the best suppliers that conform to the above criteria should be chosen for supplies. Since the product manufactured is limited to a few grades, inventories of inputs should not exceed from one to three month. This will release the working capital that is now unnecessarily blocked by high inventories and will increase ROA levels. Preventive maintenance must be made more effective by using the data on machine utilization more effectively and finding the life cycle of parts. These parts should be bought early in the maintenance cycle so that they are available when the need arises. The downtime must be a controlled effort and must include as many changes at any one given time to reduce frequency of shutdowns. They should be predictable fairly in advance to reduce and eventually eliminate any work –in-progress that goes waste due to sudden stoppage of work. Quality Improvements Quality standards concerning moisture, ash percentage, calliper, basis weight etc., should be set for all products and the frequency of checking should be spread over all processes beginning with Pulping to ensure that quality is set from the first stage itself and not become a discovery at a stage where corrective measures are impossible. If there are industry benchmarks or institutional benchmarks that are standard practice, then these should be obtained. The quality assessors need to be trained and equipped with suitable testing equipment to supervise these at all stages of manufacture. If required the company must enrol itself and obtain required certification. Increasing Productivity It is a proven fact that quality equals lowering of costs as it eliminates waste and this results automatically in increased productivity. However there are other measures of increasing Productivity and more attention should be paid to data collected in respect of product cost per ton per hour, machine up time, broke analysis, energy consumptions etc. This will help in arriving at optimum pattern to be adopted. This will set standards and these can be evaluated against performances to find out gap areas and the supervisors can work on them for further improvements. It is estimated that just the exercise itself will increase productivity sufficiently to bring back the production to previous level of 700 tons per day. If pursued rigorously it can certainly start to match the Japanese who are relying on these factors to remain competitive in the market. 6 Bibliography Waddell, D.M., Cummings, T.G. & Worley, C.G. (2004). Organisational Development and Change, 2nd edition, Thomson, Victoria   Read More