Do you know what drives your manufacturing company’s bottom-line results? Can you name and explain the metrics that are most important to your employer’s financial strategy and goals? Are you aware of how your daily decisions on the job can help or hinder that strategy, and how they can impact the financial fortunes of your company?

If you can confidently answer these questions in the affirmative, you are likely in the minority.

“We have lots of very hard workers in the United States who are excellent at their given tasks. But what I’m hearing from companies all over the place—and it doesn’t really matter what industry—is that our people don’t really understand, holistically, how what they do at their jobs impacts the rest of the food chain,” says Bill Albert, president of Business Methodologies International Ltd., a Warrenville, Ill.-based training and consulting firm. “If we’re going to compete globally, we need to have people understand, literally, the financial ramifications of the decisions they’re making, and what the impacts are.”

In an effort to address this issue, a growing number of manufacturing companies are turning to computer- and board-based business simulations as a way to instill more business savvy throughout the ranks. These simulations are typically provided by third-party vendors and consultants. And their return on investment can be difficult to measure directly. But according to several industry sources interviewed by Automation World, the intangible payoffs from a business simulation can be substantial.

“I can’t believe I’m saying this, because I’m a financial guy, but sometimes you can’t put a price on education,” observes Donald Johnson, an internal corporate auditor at International Paper Co., in Memphis, Tenn. The company recently conducted a business simulation to help its financial personnel better understand the company’s manufacturing business.

“When I look at the total cost of the simulation, I feel like it was far exceeded by the benefits,” says Johnson, “because every one of us who participated in the simulation left the room with a greater sense of understanding on how International Paper does business.”

Experiential Learning

 Unlike traditional, instructor-based training, business simulations provide “experiential learning,” in which participants learn by doing. In a typical manufacturing business simulation, a group of about 24 to 30 employees splits into four- or five-person teams. Each team takes control of a simulated company that competes against the other teams to produce the best business results. Every team starts with the same amount of resources, then creates its own business strategy and attempts to execute that strategy over the time period covered by the simulation, typically several years.
The simulations can be computer-based or playing-board-based, and they can be customized using the financial and industry metrics of the sponsoring company. In a board-based simulation known as Manufacturing Reality, for example, created by Business Methodologies for automaker DaimlerChrysler (now Chrysler), participating Chrysler employees compete to build the most successful car manufacturing company.

Over the course of the two-day Manufacturing Reality simulation—which covers seven or eight simulated years—each of the employee teams makes between 1,500 and 2,000 decisions, says Business Methodologies’ Albert. The teams must manage everything from procurement and supply to overhead, taxes, production costs and inventory.

Decisions must be made on which automotive platforms to build, and how much to invest in sales and marketing, quality, research and development, production line efficiency and manufacturing flexibility. Teams are measured at the end of each simulated year on metrics including return on assets, market share, gross profit margin and operating profit margin. When the simulation concludes, the team that has driven the most shareholder value for their company is the winner.

“One thing that a simulation does is help people see the business from a broader perspective,” says Tim Ahrens, learning and development leader at Johnsonville Sausage, in Sheboygan Falls, Wis., which has also used a version of the Manufacturing Reality simulation. “So an engineer, for example, no longer sees it just from an engineering perspective, but can see things from the production and sales perspective as well.”

That can lead to improved interdepartmental communication when people get back to their day-to-day jobs. The simulation experience “breaks down a lot of walls, because people understand, ‘Wow, it really does start with sales, and if we don’t have sales, there’s nothing to produce. And then once we get into production, if we don’t have quality, our customers are unhappy,’ ” observes Deanna Alaimo, a consultant and principal at Performance Lift Solutions, based in Leawood, Kansas. “So people really, truly see ...