Lean to the extreme: How much can we cut?

Here’s the plan: We do close to 50 million pounds a year at a cost to produce of $1.00 per unit. We have a designed capacity of doing 150 million pounds a year. So we have 100 million pounds of opportunity, but it is hidden. We might have enough demand to capture about 80 million pounds of this capacity, but instead we are going to spend $250 million in capital to build a new plant. We sell our product for $1.29 on an average SKU. After all other expenses, we make about $0.01/unit produced.

• Read "How to protect yourself from reality"

So (scribbles in math and mumbles aloud):

Take $100 million in opportunity (which could be gained with a little outside help) + waste $250 million in capital for a new plant (that will be designed just like this one, 33% efficient) = cut five headcount (saving $300k) and trim $1 million more from the budget.

Now that makes sense! You see, anorexic manufacturing really works!

2. Fat isn’t cool. Have you paid attention to the newest trends? Being fat just isn’t cool. Who needs discipline, execution, and time when you can just cut headcount and slash budgets? It is much easier and is the road more traveled. Besides, everybody else is doing it.

Who cares that most implementations fail? Blame the consultant. There is always a way out. I can’t wait to have no champions, give no support, and push back against the change needed for success! Employees love another flavor of the month. They love it so much that they anticipate the next greatest thing! The facilities group loves changing the dog-and-pony boards that get put up with every “new” initiative to make it look like something meaningful is being done.

3. New management. As a new manager, to be the hero the company hired me to be, the first thing I do is look at headcounts and budgets. Slash headcount by 30%! Slash budgets by 15%! This should save the bottom line for about three years. By then, I’ll move on to the next job or promotion anyway, so who cares about my legacy or setting up my successors for success—they will get the blame when the company is failing anyway. At least I will look good!

Then down the road I can say: “What happened? When I was there we were raking in the dough!” Why would I study true cost-cutting through reliability and leave a great legacy when I can benefit myself now and make it look good while doing it? Besides, it will only take them about 7–10 years to recover from what I did. They’ve got this!

• Read "The secret to maintaining the status quo: TPM (totally poor management)"

The implementation of these seven steps will allow you to golf more, travel more, and spend more time with your family:

1. Cut headcount
2. Cut budgets
3. Cut production
4. Take shortcuts
5. Overuse salaried employees’ time
6. Underuse people’s skills and talents
7. Wait for stock prices to surge

Follow these steps to create less frustration within yourself and help raise the stock price long enough for you to consider yourself to be a successful manager.