Business Improvement Techniques Training at NMHG

A Business Case

William Kerr HRM

Contents• NMHG – The Company

• The actual, no messing about, very scary, Business Scenario late 2008-early 2009!

• The Plan, why Training?

• The Delivery

• The Outcomes

• Thought for Today

• Some additional slides about HRM, RoI, Benefits of NTA & DMAIC, which you will probably not read but really ought to!

Overview of NACCO

• NACCO Industries, Inc. is an operating holding company with subsidiaries in the following principal industries: lift trucks, small appliances, specialty retail and mining.

• In 2010, total revenues were $2.7 billion and net income was $79.5 million.

NMHG Organisation• NMHG designs, engineers,

manufactures and sells Materials handling equipment under the Hyster® and Yale® brand names.

• Lift trucks and component parts are manufactured in 10 countries worldwide including, the United States, Northern Ireland, Scotland, the Netherlands, China, Italy, Japan, Mexico, the Philippines and Brazil.

Craigavon Market Areas

Europe, Middle East and Africa 95%Americas 3%

Asia Pacific 2%

Craigavon Plant

• Plant opened 1981

• Head count 652

• 2011 output 15,000

• Current Day rate 63

• Days to build truck 4

• Takt Time per truck 9(mins)

• Shift pattern 3

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The Actual

Business Scenario

215,000

239,685

190,000

210,000

230,000

250,000

270,000

290,000

310,000

330,000

350,000

370,000

390,000

410,000

430,000

450,000

470,000

490,000

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Total Market 2005 - 2010

The Plan, Why Training?• Textbook response

– Cut Quickly– Cut deep - especially Labour and T&D

• Our Response– Identify & Engage Stakeholders (Board, Unite,

Employees, DEL,INI)– Reduce costs sensibly– Invest in T&D– Maintain and enhance skills for the Recovery– Focus T&D on Business Objectives e.g.

Flexibility, Continuous Improvement (B-I.T)– RoI Methodology (Phillips)

The Delivery• Business Improvement Techniques

– DEL funded and delivered by SRC – Very high credibility with both Management and

Employees– Compatible with our drive for Quality and Effectivity– Practical project aspect of the programme gave an

immediate (and continuing) Return on Investment– Employees gained skills which compliment our Culture of

Continuous Improvement and Team Work– Settled on a standard, robust DMAIC problem solving

model (define, measure, analyse, improve, control)

• We then ‘rolled out’ the skills acquired to other Employees

The Delivery• We initially trained 45 Employees who gained

a recognised NVQ Level 2• Model is routinely utilised as an analytical

approach ensuring fixes are made permanent– activities not restricted to ‘Shop floor’

• 30 x Improvement projects• e.g.. Yard storage of NxGen frames – 13

minutes for ‘move man’ to locate & transport frame, now down to 4 minutes. £11k annual savings

Poor storage of framesNo FIFO

•12

Good FIFO

•13

Good FIFO

•14

The Delivery.Business Improvement Teams

The Outcomes• >130 Craigavon Employees qualified NVQ, ILM,

etc

• Recruited over 170 people in 2011(this would have been an unmanageable number had we taken the “text book” response)

• Significant Intangible benefits – morale, loyalty, trust, cross functional awareness

• Retain key staff

• Able to respond to unprecedented ramp up in production

The OutcomesWon 3 Regional Training AwardsWhich show the outstanding effects and benefits as a direct result of training. •Large Employer category•Now is the Time category•Individual categoryWon 2 National Training AwardsPresented to entries that are exemplars of excellence. •Large Employer category•Now is the Time category

The Outcomes• January 2010 30 trucks per day• January 2012 90 trucks per day

• > 50% Reduction in NCR’s/100 trucks versus 2009

• Improved Conversion Cost control

• Inventory Absolute Financial Variance back to <1%

• HRM kept his job

Thought for Today

Apologies to Radio Ulster

Conclusion

DEL Aim

• To promote learning and skills

• To prepare people for work

• To support the economy

NMHG delivery

• >30% (and growing) of our Workforce gained an ‘applied’ Qualification

• Achieving an Empowered Culture of Learning and Development – ‘Employability’

• Increased Workforce by 170 this year and ‘day-rate’ levels (Export) up by 200% in 2 years

Additional slides not included in presentation

References.•Phillips’ Return on Investment Model: Jack Phillips ‘How to measure training’

•Ulrich HR Multiple Role Model: Dave Ulrich ‘Human Resource Champions’

•Benefits of National Training Awards

•DMAIC Model available on request

Phillips ‘Return on Investment’Methodology

1. Reaction and Planned Action of the participants to the training

2. Learning gains in skills and knowledge achieved by the participants

3. On-the-job Application applied and practiced

4. Business Impact outcomes of training in terms of Company Goals

5. Return on Investment• Conservative, adjusted Conversion (monetary value)• Isolate (can we trace that to the Training intervention)

The model also recognises that there should be intangibles benefits that will be presented along with the RoI calculation.

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Phillips ‘Return on Investment’Methodology

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Converting data to

monetary value

Tabulating program

Costs

Isolating the effects of training

Calculating the return on investment

Identifying intangible benefits

Evaluation instruments

Evaluation purposes

Evaluation design

Evaluation levels

Collecting Post-program Data

Significant Influences

Policy StatementProcedures & Guidelines

Staff skillsManagement support

Technical supportOrganisational Culture

Phillips ‘Return on Investment’Methodology

i. Develop Objectives of Training

ii. Develop evaluation Plans and Baseline Data

iii. Collect Data during Training

iv. Collect Follow-up Data after Training

v. Isolate the Effects of Training

vi. Convert data to Monetary Value

Isolation of Effects of Training

Participant Annual Improvement Value

Basis for value

Confidence factor

Isolation factor

Adjusted value

A £135k Faster production of product drawings

40% 80% £43k

B £9.24k Reduction in overtime

100% 50% £4.62k

Phillips ‘Return on Investment’Methodology

Ulrich Model

Processes

Future/Strategic Focus

People

Management of Strategic Human

Resources

Management of Transformation

and Change

Management of firm

infrastructure

Management of Employee

ContributionDay-to-Day/Operational Focus

Ulrich Model

Processes

Future/Strategic Focus

People

Strategic Partner – Aligning H R &

Business Strategy

Change agent – Managing

transformation and Change: Ensuring

capacity for Change.

Administrative Expert –

regenerating organisation

processes

Employee Champion – listening and responding;

providing resources to Employees

Day-to-Day/Operational Focus

What are the benefits of being an NTA winner?

NACCO HR Vice president visit to Craigavon on a fact finding mission based on such achievements/awards

Training provider CforC, Case study on our Problem solving training

European Six sigma magazine highlighted our 17% improvement in truck reliability through our award winning training programme

External interest in our company, starting a benchmarking exercises/networking Meetings

Good Promotion for our organisation through DEL, press releases NTA helped towards us gaining a higher level IiP Award NTA is good supporting evidence, towards EFQM assessments

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What are the benefits of being an NTA winner?

Enhanced partnerships with Local colleges European Lectures visit Craigavon (benchmark) Celebrated NTA awards with Employees(Tee shirts, pens with

logo) Enhanced reputation with our Company Union & Employees NTA’s have given our Employees a positive lift and reason to

celebrate after such a difficult year for the company

12 months on, the NTA learning framework continues,

to help guide us for future training programmes36

HR Display NTA Awards