A Different Approach to Plant Tours

Hi, my name is Tom Fricke. I’m the CEO of Bar Louie, the nation’s original gastrobar. I’m here to talk to you today about a little bit of a different approach of doing plant tours, in our case, restaurant tours, because certainly we believe plants and restaurant kitchens are synonymous, and a lot of the same operating principles apply. Plant tours are certainly part of our everyday business. I know you’ve all done them. I certainly enjoy them.

Certainly, early in my career, mentors had a very similar agenda. You would come in, you would look at the Manufacturing line, you would talk to the operators, you would see how they were operating, you talk to them about sort of their issues and opportunities. Then, you look at the output, and you ensure that the output of the facility was meeting all of your standards and all of your expectations.

Certainly, early in my career, that was pretty consistently the way tours were met. That changed one day when I had an opportunity to walk a facility to see Brian, a man who, at the time, was writing for ULA, and ultimately became the Chairman and CEO of PepsiCo. I noticed that, in going through the facility, Steve spent a lot of time walking around the facility, through the yard to department facilities, he spent a lot of time in now production facilities like warehouses, before he went into the lines, and ultimately would go to the lines, and we would do the sort of normal inspections in the normal testing and sampling and quality of product. I remember asking Steve why he spent so much time in the non production areas of the facility. I remember him telling me that a dirty or poorly maintained facility is never going to consistently make a quality product. I thought that was incredibly insightful. The more I thought about it, the more sense that made to me.

Early in my career, I had an opportunity to go overseas as a Country Manager. When I arrived in the country, we had an underperforming plant, I’m sure you’ve all had these facilities as well, it was a plant that underperformed in sort of head continual capital requests. It was always something and I remember against just about any measure that plant underperformed, whether it was financial, or any of the performance metrics around productivity, the plant had recently had a relatively significant capital investment into it, new lines were put in, and yet, despite all of that investment, we weren’t seeing any kind of improvements. In fact, mad plant management, when we talked to them typically had more investment requirements are nice that they were asking for it. As a result, it was certainly one a plant that was on a shortlist of facilities that may be closed in the future just because of its continual underperformance and continual need for capital.

The time came for me to do a plant tour, which relatively early in my career. We decided to really look at the way Steve did it. We walked it in a different way. We started by walking the perimeter of the facility, the fence line, all of the yards. We then went to the exterior of that facility and got a good look around the exterior. When we entered the facility, we went into the non production areas. So, we did the finished goods warehouse, raw material warehouse, any of the facilities, the offices. Then, we went to the production line. Finally, we made sure we made the visit on the day that the senior management team of the facility was meeting to go over previous periods, performance metrics. It was a great opportunity for us to sit in the room and watch how they walked through the performance of the previous period and the kinds of discussions they were having.

What did we find? Well, when we walked through the perimeter, all we saw was a lot of abandoned and used equipment that had been removed through the various projects that were undertaken in the past, and but they were sort of on the fence line. Rather than being disposed of the plant manager edit all around the fence line, and that not only did that look cluttered, but what we saw was the maintenance crews that were able to get close to the fence line. So there was a substantial amount of undergrowth. That was an opportunity in our minds for animals in rodent infestations. Obviously, no Manufacturing facility wants to see that, so we were a bit concerned. Also, from our minds, it’s a pretty strong negative signal about lack of pride in that facility. We couldn’t imagine people coming in and seeing that every day and yet still feeling great about the facility and working at that facility.

Similarly, we saw things like that on the building. that building out Landscaping wasn’t really well maintained. There was overgrowth. One of the things I remember distinctly was there was a tank in the parking lot where the overflow valve had been installed backwards. So, as overflow exited develop, instead of running onto the concrete, into the train, it was running over the tank itself. So, the tank was starting to show signs of frost in staining from that constant release of liquid onto the tank. Again, it just struck us as a lack of pride.

Our concern was that, part of the thing impacting the plants performance was this general lack of pride and attention to details. The interior itself, the non production facility, was similar things. It was a little bit dirty, it was a little bit cluttered, there wasn’t a lot of order in the warehouses. Again, it certainly that the production facilities themselves were clean. When you went into on the production floor in the area, or on a plant was well maintained, or operando wise, rather well maintained, but again, the rest of the facility showed things and again, became a lack of pride. Our concern was that those things had to be impacting the overall culture of the facility, and was one of the reasons we felt the consistency issues we’re seeing.

Then, the monthly leadership meeting. It was also very helpful. They were going through detailed performance metrics, they did a P&L. The big thing we noticed was there was very little curiosity about variances. There were some pretty substantial variances, but we didn’t see anybody digging to why. So, they were looking at the variances, and they would shake their head, but very little effort to get down to the root cause as to what may be driving things.

So, what did we do? Well, we went to the plant manager and said, “Look, parameters got to be cleaned.” When we asked them about the unused equipment, they basically said it had never been used. While we appreciated the fact that they were trying to save money, and thinking ahead, ultimately, it was never done, and it was causing more problems in our minds than it was addressing. We wanted that done, and we wanted to prevent you maintain. So, get rid of the underbrush, make sure we maintain a clean perimeter at all times. Landscaping, we told them to go ahead and spend a little bit of money to get some base level landscaping. There was [inaudible] a facility. That facility looked good, and it allowed us to get rid of the undergrowth that could lead to other animal issues. We had them fix the overflow valve, so that when there was discharge, it was no longer running over the tank, but it was running into the drains in the driveway, and then made sure that it was cleaned up and repainted.

More importantly, we spent a lot of time with going through root causes on the major variances. I remember one of the major variances was oil usage for the month. We really forced them to think through whether it was an inventory area error where they had recorded the wrong amount of incoming oil, whether there were leaks on the line, whether there was leaks in some of the transport systems and and transfer systems.

We didn’t expect them to have answers as we went through it, but we laid out a whole series of questions that we then we’re going to come back in the following month. We wanted to really see how much progress they’ve made to identify the root causes of the variances. Then, we came back once a month. Every time the period happened close, we want to go back how you can meet with a senior team. We do the very same thing as we did the first time we walked the perimeter, we walked the building, we walk the non production facilities, production facilities, and team meeting. It was that was a nice routine.

Honestly, you could just see the pride restored in the facility. Within 12 months, the plant had moved from bottom quartile plant to a top quartile plant. He had not put any investment into the major capex projects that they had been floating as part of the problem. We spend a little bit on operating expense, making sure that we don’t get the fence line clean than it would have maintaining a property with the right level of landscaping services. It was a great story, and it really eliminated, and proved to me Steve’s comment about a good facility, “Not being able to get that dirty facility, rather not being able to produce consistently good product.”

The first time I went into restaurants, different business. Certainly, my belief was a kitchen is just a small Manufacturing facility and a lot of the principles, sinkewitz was applied. In this first company, again, there were food quality issues, consistency issues. The guests were telling us that the food lacked consistency execution. The complaints and the guests concerns were were sort of greater than you would see in the industry. But food safety was being maintained. So the facilities were for the cooktops, and what the back house, people were doing was fine, we didn’t have food safety issues, but clearly, there was an opportunity to drive improvement in the quality and consistency of the output of the kitchen.

Like before, it was capital, capital, capital. When we started our market tours in the company, we did the same sort of approach. We started with the exterior, the restaurants, we know the condition of the exterior of the restaurants, we walked through the dining areas, and check to make sure that maintenance [inaudible] was cleaning up the standards. We walked the nonproduction spaces, obviously, we walked the line as well to make sure that we were comfortable, that all of the procedures and appropriate practices were being employed—they were.

We also spent some time talking about recipe compliance, and what was some of the inconsistency because of the way the recipes were written. Like before, we found, in the plant, there were some direct correlations, the units that had poor exterior and interior maintenance, under performs on the guests. Again, it’s that same idea that people have to have pride in their facility. When you don’t maintain that, those standards, it shows up in the output of the facility. We spent a lot of time really focused on all of the basic cleanliness. What they were doing, our MLA was fine, it was the other areas that were causing the problem. So, we made sure that we were maintaining all of the proper standards across the entire facility, not just in the food prep areas, and in some of the others.

Then, we also found that the recipes, there were some issues where the recipes were confusing, and we’re not necessarily as precise as they needed to be. Some of the variation was actually driven by a recipe for appliance or the recipe design, and there were some work that needed to be done. We worked on fixing that. I think this idea that a poorly maintained restaurant, like a plant, is never going to be able to consistently produce a good meal. You need that holistic review of the entire facility to really get a feel for how the restaurant is performing or the plant is performing.

Certainly, it’s a technique I’ve been employing now for many years is been very successful. It’s worked well for us. It’s something that I think I will always carry with me. Hopefully, next time you have a plant over here, you have a chance to do something similar and get similar results. Thank you.