THE MANUFACTURING EXECUTIVE
Adapting to Change: Manufacturing Leadership Excellence with Dan Burgos.
Dan Burgos is the founder, president and CEO of Alphanova Consulting. Alphanova is a management consulting firm that helps manufacturers achieve and sustain operational cost reductions of 20% plus, improve on time delivery to 99% plus, and reduce defects to improve product quality to 99% plus. These changes help their clients grow company profit margins by up to 25%.
Dan and his team have over 15 years of experience helping manufacturers in various industries, including aerospace, injection molding, construction projects, chemicals, fiberglass furniture, electronics, consumer goods, oil and gas and medical devices, among others. Dan’s approach is to partner with leaders to uncover and eliminate the problems hindering business performance while coaching leaders to create a culture of collaboration. Dan, welcome to the show.
Thanks for having me.
So, Dan, can you kick things off here by telling our listeners just a little bit about your own personal journey and how you got to where you are today?
Sure. Yeah, definitely. So Dan Burgos, so that’s a Spanish name. I’m originally from the Dominican Republic. That’s what that’s where the accent comes. Native language is Spanish. So my journey came from, you know, I wanted to help and add my passion in solving problems and just helping people. My background in education is industrial engineering, and I have other education that’s also relevant.
But basically I went into manufacturing back in 2006 and, you know, started helping and learning. Before in my years, I knew I wanted to be in consulting. I wanted to be service and I wanted to help. My father instilled in me that entrepreneurialism mindset. And it just came out as I became an adult.
And I just always had that vision even before I finished college. So when I when I first started manufacturing, I was exposed to some manufacturing consultants, basically. And I said, okay, I think that’s what I want to do. That’s how I want to help, because I saw the impact that they were able to have. So again, of course, at that time I wasn’t ready to start on that journey, but basically I moved from implementing improvements and I knew that every time I moved or change companies, I wanted to see something completely different because I wanted to be exposed to as many different technologies and people and mindsets so that I could share that and add value to clients so that I felt that that would always be an enriching experience for my career. So I did that, worked for an oil and gas company after that, very large corporation. And if you go to my website, I share some of that. I experienced what corporate culture was like. I learned things like red tape.
I read things like SEAGO management. Somebody would have to Google that. That’s probably not, you know, just something people shared and basically learning through those experiences. I said, wow culture is so important in, you know, leadership behaviors, and that’s what I said, you know, I don’t want to be the person that preaches and teaches. I want to be the person that’s walked in your shoes and I can actually, you know, share experiences. And so after that, I said, I want to actually go lead on operation and just have that experience. And I pursued that. And actually were able to get involved in a medical device company and I led operations in that department started with the line, and they gave me the whole operation and it was a relatively smaller operation but had a lot of challenges and I was able to regain my confidence that I had lost from working in a dysfunctional culture and made a lot of improvements in terms of their operation.
The results, coached people, developed, learned a lot of lessons, leadership lessons along the way, such as caring for your employees and being there, being supportive as opposed to seeing yourself as the authoritative figure. Passed that, I started getting involved in supply chain, so that gave me a completely different aspect, you know, the logistics of the business and contracts for suppliers and really being strategic about your supply base.
And then after that, I started in consulting, that’s when I felt I was ready for that journey. And after a few years of working for another consultancy, I decided to go on my own and really ready for that entrepreneurial journey. And that’s what I’ve been doing ever since. And it’s just a joy to be able to work and collaborate with folks that’s for some reason I always find it raises the hair on my back to see success and see people that really want to make a difference for their business.
And we’re just along there for the journey to help them get there.
Dan, obviously the last few years have posed some serious challenges to manufacturing leaders, most notably the ones I hear about time and time and time and time again are labor and supply chain issues. So I’m curious from your perspective, what do you see manufacturing leaders doing or what can they be doing to put themselves in the best position possible during times like these?
Yes, definitely. And it’s definitely a theme I’ve been seeing out in the marketplace. So to answer your question, some of the things that I would recommend to consider and see if these are things that you can capitalize on are looking at things on the materials, on the supply chain side, looking at your inventory terms. Right. Are returning the inventory as fast as we possibly can because when when you don’t do that, you’ll leave yourself open for damages or obsolescence and other things that can hinder your utilization of the material.
Another thing that I tell manufacturers to look at is look at the quality, the scrap, the rework, the internal defects in your operation. The higher that you can make that yield for your operation. What we call the first price yield. To put it in simple terms, it’s doing it right the first time, right?
If you have things that you have to rework or repair, you’re not capitalizing on the utilization of the material and hence that forces you to buy more material because there’s a portion of that that’s going to waste. And then the third one is having looking at your suppliers and developing supplier partnerships. You know, a lot of suppliers see you know, there’s a lot of manufacturers look at their suppliers and they think about them as vendors, interchangeable at any time.
The smartest ones look at their supplier base as partners. Right. And how do we develop the best partnership so that when times of risk come along, we have people or business partners that are going to support us in those times, and now is definitely one of those times. And then you mentioned the labor side.
Other things that people can do are gain efficiency. Right. The great resignation, as people are calling it these days, it’s putting a lot of burden on manufacturers to go hire that labor. Well, think about this. If you become more efficient, then you might have less of a need for labor. The other part of it is how do we retain that talent?
And that’s where I recommend manufacturers to focus on employee engagement, to invest in developing their leaders, both on the handling of their operation and managing of the business, but also of engaging their workforce. Nowadays, people care more about the culture of the environment the purpose of their business. And then another thing that I’ve been seeing more and more, I’m sure it’s become visible for a lot of others.
It’s people are resorting to automation because if you know, if we can’t get manual labor to do this well, how do we figure out if we can automate this and eliminate the need for labor? Those are some of the things that I’m seeing that I recommend. I’m sure there’s more, but those are some things to consider. Definitely those two cases.
Yeah. All great advice there. Dan, as an advisor to manufacturing leaders, what do you see as some of the most important quantifiable metrics that affect business performance?
Yes, very good question. So I’ll explain it at a systemic level and then I’ll give you some examples. So the way to think about this is it’s going to be in order of priority. First, we want to care about our people. So we look at safety. We want we want people to come in and leave in the same condition that they arrived in the morning or at the beginning of the shift.
Then you have quality, right? You want to deliver a quality product. The next category is D for delivery, which is delivering your orders on time. And then the last one is cost. You want to make it in an efficient fashion so that you have large enough margins to sustain your business, to continue to grow and invest. So going back to the S categories or metrics under that would be safety incidents.
Hours between incidents. Yeah, for safety, if you look at quality, then you can look at things like, as I mentioned earlier, first price yield, doing it right the first time. What percentage of your products are produced without defects? It could also be customer complaints. So those are some of the ones under quality. On their delivery you have on time delivery.
Of course, it’s one of the most common ones you see out there. But the caution I give for manufacturers is there’s a difference between on time delivery to do what you promised the customer they accepted versus what they requested and you were able to fulfill. That’s the big difference on that one. And another one, maybe a little bit more of a leading indicator would be schedule attainment.
You know, are we completing the schedule and production as we are laying it out or are we falling further and further behind, which would be a leading indicator for late orders in the future? And then on their cost, I would say things like efficiency or ways to measure productivity. It’s very common to see, you know, dollars per labor hour, or labor hours per unit produced.
Another one that I see often in process manufacturing things like chemicals or solvents would be overall equipment effectiveness that looks at the quality, looks the availability, meaning the uptime or downtime of the equipment and then the speed.
How about some of the things that may be, you know, not stuff you’d find in a spreadsheet, the less quantifiable things that also affect performance that may sometimes get overlooked.
I’m glad you asked that, because this is so important for success. There’s an equation that we believe in. It’s that, you know, you want ideal processes, but you also want ideal behaviors. And both of those are going to lead you to ideal results. So some of the things that you want to measure or lead back off of that.
I want to give you an analogy that I think has a lot of learning for your audience, and that is, you know, when people want to engage in this journey of fitness or improving their fitness, people go and purchase equipment or they get a gym membership and they get enamored with that. And what we failed to do a lot of times to be effective in those kinds of journeys is that we neglect the other side, the behavior side, the nutrition side, you know, the things that we choose to do that are going to give us our success.
And I think that’s the part that I see that is so critical that it’s not tangible. The leadership behaviors, the things that are going to engage your workforce because it’s not going to be one person or a small group of people. Typically, manufacturers have dozens of employees. And so the more engaged, the more you can tap into those minds, the more success you’ll have. More so than focusing on just the process and the tools.
Anyone can master those. Anyone can learn those. But if the behaviors are not there, the tools have a very small chance of success.
Got it. So what do you think some of those things are? Leadership qualities, engagement with?
Yeah, exactly. The engagement of your employees, turnover. There’s a saying out there that people leave their leaders more than the organization. So if you have a lot of turnover, there’s a good chance that, you know, they’re not happy with a work environment. So you want to have a handle on that. That’s intangible, but very much connected with the performance of the business.
So not just see people as labor. There’s a saying I heard some years ago like, you know, engage not only their hands but also their minds. Excuse me. Also having the right leaders in the right seats. You know, a lot of times manufacturers of all don’t take action when they know they have a leader that’s being having a negative impact on the culture and that spreads out.
And the higher the leader, the worst the effect on the culture. So those are things you can’t measure but they have so much impact on the success of the business that you see eventually show up on the financials.
Yeah, you mentioned having the right people in the right seats. That’s what we had gorilla like. Probably a decent amount of people listening here in the manufacturing sector. You know, we run EOS or the entrepreneurial operating system in our business and based on traction, the book by Gina Wickman. And that’s what that’s something that he talks about a lot is sometimes you got the right people, but you’ve got them in a role that’s not right for them.
Sometimes you don’t have the right people that the core values and you’re forcing them into a role that’s just not going to work. So I see that in my world, for sure. And I’m sure a lot of listeners are nodding their heads as you said that as well.
Yeah, I’m very familiar with the EOS system and he lays out a very good a good method for basically looking at, you know, their characters, looking at character and competence and, you know, so what I see a lot is people, you know, latch onto the competence and neglect the character and in reality should be the opposite. Right.
Let’s focus on having good character people that line up with our with our values, and then we can teach them what they need to learn. And then we’ll be successful in that fashion.
And you referenced an industry week study in a previous conversation that you and I had, it said something along the lines of 70% of manufacturers engage in some type of continuous improvement, but only 24% see significant results. Why do you think that happens?
Again, it goes back to what I mentioned a little bit ago. It’s seeing these initiatives as a program. So a lot of these leaders, unfortunately, see it as a program, as a as a temporary activity that’s going to come and go and it’ll, you know, reap the fruits that we’re looking for and then, you know, we’ll table it and that’ll be that.
And unfortunately, it has to go beyond that. You know, leaders have to understand, again, the behaviors and the processes are going to give you the results. If you really understand that this requires commitment and requires you to really put much more effort than it’s just a temporary program, you’ll be much, much more successful and you’ll have a much better chance to have significant impact.
And it takes time, but the results will keep coming further. You know, over time, passed the initial stages of implementation.
And I think it’s always helpful to hear a tangible story to, you know, kind of illustrate some of the things that my guests talk about. Are there any success stories that you can share with the manufacturing leaders listening today where people have applied some of what we’ve talked about in this conversation in a real world situation?
Yeah, definitely. A current client actually comes to mind, so let me give you, I guess, a rundown of the story. We engaged with this client just about a year ago. And they called us because their operation was struggling, the business struggling. So just to give you an idea, their on-time delivery was as low as 15%.
So imagine that you only deliver on time, 15% of your orders. Your clients are not going to be happy. So if you, the owner of that business, you’re thinking, how do we get this under control? So that was one low point, but the average was more right around 39%. They had scrap above 6% of sales, which is significant.
I would say you want to be below 3% at the very least to be able to be competitive and profitable. They had problems such as, you know, equipment downtime, you know, hindering the operation, a lot of interruptions. There were no metrics to measure to know success. And things were not, you know, standardized, coordinated and put into systems.
So we came in, we assessed uncovered all of those opportunities and been engaged with them for a year and just to give you an idea of some of the success we’ve had, but let me just first share some of the things we’ve done, we’ve put metrics at the strategic level, at the business level.
So now ownership has and leadership has a much better understanding of, so picture a dashboard of all the key metrics and the trends and understanding, you know, week to week and year to date results. They know the trends. They can be proactively addressing things. We’ve put metrics up on the production floor so that people are able to address issues again proactively.
If we address these issues in the operation later on, you know, we’ll get the results and the financials when management leads and look. So we’ve engaged in a journey to teach leaders the right behaviors on managing operations, but also on coaching and engaging and making decisions and delegating at the right level, so people stay engaged and they don’t feel like they’re not contributing when they have more potential to do that.
We want to tap into every mind that’s involved as long as they can add value. Just to give you some of the results that we’ve accomplished or we hope this plan accomplished, you know, they’re holding steady at 97% on time delivery. And there’s been several weeks that they’ve hit 100%. Their scrap has been cut in almost half.
So they’re holding right around at 3% of sales. And the goal which you know, some eyebrows have been rising as a result of this. It’s to go below that 1%. We also tackle the equipment problem. You know, we assess where are we vulnerable and where do we have critical equipment that’s vulnerable. And then we put an action plan in place to tackle those things.
And we have strategies around doing those things and really pushing these leaders to put systems in place so that, you know, the problems that surface don’t keep happening over and over and over again, which unfortunately is, is the big, you know, the big impediment for for making progress. Yeah. So it’s been about a year with this client.
There’s much more to accomplish and they’re ambitious and they want to go to places. And this is just the beginning. I see way more improvements. So those are drastic changes and improvements and results. But the potential is unfortunately that a lot of manufacturers don’t realize that just because it takes longer, but you can see so much benefit from engaging in this and really building it into your business that I think that’s part of why only 24% as the study showed, really see the benefits.
And for any manufacturing leaders that are listening, where do you get started trying to make some of these changes that you’ve been talking about today? And how long does it take to start seeing results?
Yeah, so let me tackle the first part of your question. You know, here’s what I tell leaders and when we’re having the conversation about possibly engaging us is be committed. And that starts with getting educated. It’s make sure you see this not as a, you know, a process, an initiative that you’re building. It has to be you’re building a system.
You reference the EOS. That’s a system, that’s a business management system. And so any type that you pick, whether it’s Lean or EOS, or any other, make sure you’re committed fully and that it is a system, understand what you’re getting into and understand that by being committed, you may have a laundry list of obstacles which may include internal people, people that you might respect, and people that you may have to make a decision, you know, do they still belong on the future state of our organization?
You know, some people there’s two ways to look at this. You know, sometimes companies outgrow the current talent in their leadership right. It’s not the same to be a small business, to be a mid-sized manufacturer, to be a multi-billion organization. It requires different skills and different talent. And sometimes people are set in their ways to some degree.
And so people are unwilling to learn new things. These things are very teachable. The biggest obstacle, it’s not so much how do we move equipment around so that it makes sense? How do we solve the quality problems? It’s typically the people. And so the ownership, the leadership has got to have a high level of commitment to either convince this people with their persistence, with their coaching, with their teaching, with their collaboration, and at some point make the decision, maybe you’re in the wrong role or maybe we need to find a different company for you because the direction we’re leading is not aligned with, you know, with your values and the value you can add to this business. That’s my main, I guess, suggestion for your audience is that that high level of commitment, that’s where the 24% comes in, is from the commitment, from leadership, from for ownership, not so much on learning the tools or things of that nature.
Dan, is there anything I did not ask you about that you’d like to touch on?
Oh, let me think about that for a second. No, I think.
You know that’s a fine answer. Or do I always just like to ask that in case there’s something you’ve got? You want to get out there?
Yeah. Oh, one thing that I didn’t answer. You said how long it takes to get results. I think that’s a very important question. You know, you know, in this client, it turned out that within three months, they started seeing results and profitability sort of to go up. But in some cases, it depends on the circumstances.
And, you know, there’s so many variables, like if you’re a capital intensive manufacturer, it’s going to take time to really see the changes have the effect. So it could be six months, it could be close to a year sometimes to start seeing results. But it it’s more a function of the receptiveness and the speed of adoption of your people to the new behaviors than anything else.
Again, everything is driven by the behaviors, by the culture, by people’s willingness to effect change. We don’t we strive on not doing the work for the client necessarily, but more as a catalyst for change, teaching them these new values, these new behaviors and these new systems so they can take them and run with them. So that way, when we’re finished with our engagement, it just embedded as a system into your into your business.
And that’s how you become successful by adopting it as a system, as opposed to saying this is a project that has a beginning, it has an end, and once the consultants are gone, you know, we’re finished and there’s nothing else we need to do. This is part of a continuous improvement effort that you’re constantly looking for. Where are we failing and where do we get better and how do we get creative and make changes so that we’re successful the next time around?
Well, then this was a great conversation. I appreciate you doing this today, and we’d love for you to tell our audience where they can get in touch with you and where they can learn more about Alphanova Consulting.
Yeah, absolutely. So, you know, people wanting to learn more about what we do, they can go to our website, which is www.alphanovaconsulting.com check out. We have a lot of free resources. We have a lot of blogs that answer and educate people on how do you get started and what to expect, how do you implement it.
And a slew of things related to behavior and some of the things I shared here. Of course, we have our contact information if you’d like to get in touch. And I did want to mention one resource that I think would be valuable for your audience that I’ve included and shared. It’s we have a self-assessment tool that basically takes 5 minutes and, you know, anyone from your audience can go in and just answer ten questions on certain performance indicators and the levels, and it will give them feedback as to how do they compare and maybe some suggestions as to, you know, how do you how should you approach this in terms of how do you bridge the gaps from world class performance and where you are today?
Great. Well, Dan, once again, thanks for doing this today.
Absolutely my pleasure, my pleasure, and thanks for having me.
You bet. As for the rest of you, I hope to catch you on the next episode of the manufacturing executive.