The Challenge: While the organization had many strengths, it faced challenges as well. Manufacturing costs were too high compared to the best practices of its competitors.

The Solution: A whole system improvement process was launched to reduce costs, strengthen the social elements of the organization, create a team-based culture, and improve the leadership within the organization.

The Results: Employees became more focused on “ownership” of its own work and its roles in the organization. Manufacturing costs decreased 7%.

Background

The Smith’s Snackfood Company is the leading manufacturer and distributor of snack products in Australia. With manufacturing and/or sales offices in Brisbane, Sydney, Melbourne, Adelaide, and Perth, Smith’s commands 60% of the snack food market share in Australia. Boasting a strong and impressive distribution network, Smith’s distributes snack products to 60,000 outlets every 10 days.

Issues

Manufacturing costs were too high, considering the market share and compared to best practices in similar companies. A five-year plan was developed to reduce manufacturing costs from 37% to 30%.

Process/Solution

A “whole-systems improvement” program was launched. It was understood that if too much focus was put on one component of the system, the organization’s balance would be disturbed and the program would fail.

To address the economic and technical components of the program, Smith’s put into place cost-reduction programs that focused on current usage of raw materials, wastage, and packaging. It also added quality improvement programs and new equipment to the plants.

To build and strengthen the social elements, Smith’s partnered with The Ken Blanchard Companies^® Australian affiliate, The PTD Group (PTY LTD), to build a team-based, empowered workforce and culture that would link systems and procedures to employees’ development levels and leadership styles, and promote continuous improvement. A step-by-step, two-phase process was implemented to support the company’s philosophy of “First Choice”—employees know the right choice to make so that The Smith’s Snackfood Company will always be the first choice of the customer and the consumer.

Smith’s and Blanchard realized that the true journey to empowerment started with the shifting of power from management to teams, the most difficult aspect of creating an empowered workforce. To prepare the ground for the shift they looked at the competence and commitment of team members, one of the key concepts of Situational Leadership^® II (SLII^®).

Because Smith’s was already familiar with Blanchard’s SLII® and visioning processes, it decided to incorporate them and focus on the following critical factors:

1. Vision and values that provide direction and alignment
2. Team implementation and empowerment planning
3. Skill building
4. Consistency within all manufacturing plants
5. Measurement of progress

Phase I consisted of vision and values workshops for all manufacturing and human resource managers, plant managers and the human resource team, team leaders and coordinators, and, finally, team members. The goal of Phase I? To develop a vision, purpose, values, and image for the plant that would align personal values to company values and cascade down from management to teams.

Phase II focused on empowerment planning and team implementation. Because a certain amount of autonomy was encouraged and maintained between plants, empowerment plans and priorities for action, as well as skills development and definition of tasks, subtasks, and issues, varied. The only criteria established upfront was that throughout the process the “First Choice” philosophy had to be embraced.

Outcome

After two years, Smith’s has invested $200,000 and has sent employees from all of its manufacturing plants to workshops. It expects a third of the cost saved to come from team empowerment and the 7% decrease in manufacturing costs. And although true empowerment takes careful planning and years to achieve, Smith’s outlook is good.