Idealised re-design in conflict resolution

The success of the Total Productive Maintenance (TPM) strategy at Fonterra Edgecumbe goes against the trend. Turning to systems thinking, to dissolve the conflict between business strategy and pay structures, paved the way for the early success of Lean Manufacturing at the Dairy site.

In July 1996 when the 17 fitters and electricians at the former Bay Milk Products site received two days of training introducing them to TMP their response was universal. “That is the only way a factory should be managed, we are not going to do it!” Implementing TMP under the existing trade staff pay structure would have financially disadvantaged them while improving company performance.  A typical example of the conflict that occurs when modern business strategies that fit, meet pay structures that don’t.

To dissolve the conflict and find a win/win solution to the problem the staff and mangers turned to idealized redesign. A smaller team of trades staff and managers was formed and trained in the use of the technique. They applied themselves enthusiastically to the job of designing the maintenance function that the site would have “if it could have anything”. The result was an organization and pay structure that met the needs of all. Benefits included,

• Increased plant up time, lower product losses and lower maintenance costs added millions in business value.
• A high level of trust developed between staff and management.
• Staff now had incentives to prevent breakdowns and after hours “callouts” were reduced by 59% over a two year period.
• The reduction in after hours “callouts” improved quality of life for tradesmen with no loss of income.
• Staff could be allocated to projects or callouts based on their redesigned roster system.
• An unexpected benefit was the elimination of rework by the pay clerk who found it much easier to pay maintenance staff correctly under the new structure.
• Backed by strong leadership, the Total Productive Maintenance strategy was then rolled out over the whole site and is thriving today, creating millions of dollars in business value.