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Does your Company Pass the Eyeball Test?

Published in CFO For Rent Newsletter, Summer 2011

In today’s world, lean practices . . .  those that emphasize order, process, removal of waste, efficiency, productivity . . . are the canons in manufacturing and distribution environments everywhere.  Makes sense unless you too had to overcome the impressions of an eighth grade science class lesson.

Students take their seats.  The teacher points to two stacks of paper on the front counter and asks “Which pile is more stable?”  One is so pristinely stacked.  Not a corner out of alignment.  Maybe two feet tall yet only consuming an 8-1/2” x 11” area on the counter.  Just to the left was another stack.  What a mess!  Probably as many sheets of paper as the first stack but strewn over a footprint two to three times wider.

Group consensus points to the neatly stacked pile.  “Are you sure?” the teacher quizzes.  In a split second, with a simple thrust of his index finger, that perfect pile collapses.  So which was the most stable pile?  Scientifically speaking, it was the one already in disarray.  Hard to make more of a mess.

Fast forward some 25 years later.  I’m interviewing to become President of a 70+ year old family run manufacturing company.  Touring the active factory floor I’m impressed.  The floor is spotless.  There’s an order and cleanliness everywhere I walk.  I think back to eighth grade.   I’m reminded of that perfectly stacked pile.  Was this factory too neat and tidy?  Not at all.  Lean practices at work before it was fashionable.

If I’m to believe the scientific definition of stability as proffered by my eight grade teacher, then what I saw should have been of concern.  But I wasn’t phased.  My simple eyeball test told me that this company had its affairs in order.  Real world had trumped science?

Ever since then as I’ve moved from job to job or consulting engagement to consulting engagement, I’ve relied on my non-scientific eye ball examination to be the first litmus test of a company’s commitment to excellence.  It hasn’t failed me yet.  Maybe it is possible to judge a book by its cover.

Within the last few weeks, along with your CFO for Rent Gene Siciliano, I toured a couple of manufacturing facilities.  In both cases, the shop floor was immaculate, raw materials were fastidiously stored, tools and equipment were neatly in place.  Both of these companies are successful and have plowed through the recent recession with their heads above water.

On the flip side, I’ve walked through several plants and distribution centers over the years that failed the eyeball test.  Inventory in disarray.  Papers scattered about.  Tooling that couldn’t be found.  Trash strewn on the floor.  Any surprise to learn that these companies represent that cluster of organizations struggling to meet their financial and operational goals?

So next time you’re walking through the shop floor, the warehouse or the office, conduct your own non-scientific eyeball test.  Would you give a passing grade?  If not and you need help as a champion for change, call the Schwartz Profitability Group at 310-450-2628 or send us an e-mail at moc.orpztrawhcsnull@eel.  Time to pass that eyeball test!


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