- SPECIAL REPORTS
George W. Bush probably won't be making an appearance at this month's Assembly Technology Expo in Rosemont, IL. But, by attending the event, you can find out something that he already knows: Lean manufacturing really works.
When the president recently visited the Allen-Edmonds shoe factory in Port Washington, WI, he lauded the small company for its ability to compete successfully in today's global economy. At a time when 98 percent of all American footwear is imported, Allen-Edmonds Shoe Corp. churns out world-class products at its 23,000-square-foot plant in Port Washington, a picturesque town 20 miles north of Milwaukee.
During his visit, President Bush got a firsthand look at how lean manufacturing has enabled Allen-Edmonds to continue handcrafting premium men's footwear in the United States. In 2003, the company invested $1.5 million to convert to a lean manufacturing system, purchase new equipment, change the factory layout, implement rigorous quality processes and develop comprehensive training programs. As a result, productivity increased 30 percent, damage rates declined 25 percent and inventory was reduced by nearly 60 percent.
Jim Kass, director of operations and the architect behind Allen-Edmonds' lean system, will be participating in the Lean Barrier Busting session at this year's ATExpo. The 3-hour session on Tuesday, Sept. 26, from 10 a.m. to 1 p.m., is organized by ASSEMBLY magazine. It will offer insight on several lean manufacturing success stories.
Other participants will include Joe Blanck, vice president of operations, strategy and manufacturing excellence at Schneider Electric (Palatine, IL); Tim Corcoran, vice president of ZF Sales & Service North America (Vernon Hills, IL); and Jamie Flinchbaugh, partner in the Lean Learning Center (Novi, MI) and author of ASSEMBLY's monthly "Leading Lean" column. The event will also feature a panel discussion and Q&A session.
Kass integrated lean concepts such as just-in-time production, cellular manufacturing and the Toyota Production System into his company. During the conversion process, plant floor space was consolidated and the supply chain was overhauled. Allen-Edmonds' production paradigm shifted from a traditional make-to-stock philosophy to a make-to order system, which reduced the cost of managing a massive inventory of finished goods.
Each pair of shoes is handcrafted in a process that includes more than 200 production steps. During the lean conversion process, Kass and his colleagues ensured that the company's 8 decades of shoemaking tradition would remain intact.
Allen-Edmonds invested heavily in training and change management programs. Other expenditures included installing a new lighting system and machinery. Some existing production equipment was enhanced and modified by in-house engineers.
Key performance data were collected to track the new lean system's effectiveness. "We made it a top priority to collect the right data," says Kass. "The numbers culminate in a 15 percent decrease in direct labor and overhead costs." Allen-Edmonds had its best year ever in 2005, which the privately held company attributes to lean manufacturing.
"Quality is the cornerstone of our brand," notes Kass. "Lean manufacturing makes quality our No. 1 focus by improving efficiencies, productivity and profitability. By manufacturing shoes in the United States, Allen-Edmonds is able to produce superior quality footwear and provide the outstanding customer service for which the company has been renowned for the past 84 years."
Achieving Cost Reductions
Schneider Electric's North American operating division has used lean manufacturing principles to significantly reduce its manufacturing costs in Canada, Mexico and the United States. Since 2001, the company has saved more than $237 million.
Schneider Electric is a leading manufacturer of equipment used for electrical distribution and industrial automation and control. Its product line includes circuit breakers, relays, safety switches, sensors, terminal blocks and transformers. Schneider Electric is based in France, but has nearly two dozen assembly plants in North America.
The company defines lean as "an initiative aimed at eliminating all waste in the manufacturing process. Its goal is to use less human effort, less inventory and less time to make products in less space." By harnessing lean manufacturing, the company aims to be highly responsive to customer demands, while producing top-quality products in the most efficient and economical manner possible.
Schneider Electric focuses on three main customer-driven variables: cycle time, on-time delivery and product quality. According to Blanck, cycle time refers to the time it takes a product to be ordered by a customer, assembled by the manufacturer, and then shipped to the customer. "When the cycle is shortened, customers find the experience increases their trust in the manufacturer," says Blanck.
Several years ago, Schneider Electric launched a new logistics strategy aimed at shortening cycle times. "This action reduced the time and transportation costs to reach our customers," says Blanck.
On-time delivery guarantees that a customer's deadline will be met each and every time. "When deliveries occur on time, customers are satisfied and trust they will have the same experience on their next order," explains Blanck. "When on-time deliveries are not met, costs are incurred throughout the entire supply chain."
For instance, valuable time is spent calling people on the telephone, sending and receiving e-mail messages, checking records, and checking loading docks and stocking locations. "The bottom line is that none of the activity is adding value," Blanck points out.
Product quality at Schneider Electric comes from customers demanding the highest quality product available. "The better the quality of the product manufactured, the less cost is incurred to everyone," claims Blanck. "Product quality is not just about meeting product specifications. It goes beyond that to anticipating and meeting customers' needs."
Another way to reduce manufacturing costs is by addressing plant safety issues and concerns. Last year, Schneider Electric reduced its medical incident rate by 33 percent across all of its North American facilities, which encompass more than 17,000 employees.
Playing by the Rules
ZF North America has standardized best practices throughout its production facilities and improved communication flow on the plant floor. The company is a leading manufacturer of automotive transmission, chassis and driveline components. Its product line includes actuators, clutches, differentials, steering systems and suspensions. ZF is based in Germany, but has more than 20 manufacturing sites in North America.
The company's sales and service organization began searching for a lean initiative in 1999. "One of the things that prompted the search was our inability to keep pace with pockets of improvement year over year," says Corcoran. After 3 years, "there was good acceptance, but nothing sank in," Corcoran points out. In 2002, the organization took a different course of action.
After attending a lean leadership boot camp, Corcoran decided to take a fresh look at his company's lean strategy. "We were missing important pieces, without which we couldn't see the big picture," notes Corcoran. "Lean tools are just the beginning. You also have to know how and why to use them."
During the next 14 months, ZF employees began deploying new lean methods. But, something was still missing. "That something was an integrated approach and the leadership it takes to direct it," says Corcoran. "This is when things really started taking off for us."
Despite the early twists and turns, ZF's lean journey has been paved with real success, thanks to integrated lean thinking and a totally new way of looking at things.
"When it came to evaluating concepts and tasks, we had to shake ourselves free of the past habits and start completely from scratch," says Corcoran. "But, it's paying off on many fronts.
"By structuring our activities; clearly connecting customers and suppliers; understanding and simplifying flows, and improving upon them by experimenting at the lowest possible levels, we cut about 1,000 different processes down to about 300," adds Corcoran. "The self-assessment and optimization process has become very important for increasing customer satisfaction, motivating staff and optimizing our work."
Last year, Corcoran and his team identified 122 areas for improvement in nine major target areas. "Our quality policy used to be 50 pages long and was cryptic at best," notes Corcoran. "Today, it is easy to read, meets all ISO requirements, is fully integrated into our operating system and fits on four pages.
"We've come a long way in a relatively short amount of time," Corcoran points out. "We're an organization with a shared vision, working within a structure of simple, yet optimized activities and processes. For us, lean is the only game in town."
Common Lean Pitfalls
Lean success takes more than just doing things right. "It is also about avoiding pitfalls than can lead to failure," says the Lean Learning Center's Flinchbaugh. "Leaders must always be on the lookout for signs of lean failure, which can occur at any point in the lean transformation process."
According to Flinchbaugh, there are five common lean pitfalls:
- Believing lean is only about manufacturing.
- Allowing the lean department to lead lean initiatives.
- Confusing activity with productivity.
- Focusing on event lean, which prevents a company from becoming genuinely lean.
- Believing "hare lean" will beat "tortoise lean."
Pitfall No. 1 often occurs because companies are not always focused on the right problems. "There seems to be three dominant reasons why people get stuck in the lean-equals-manufacturing mindset," says Flinchbaugh.
"The first is that there is an abundance of media, books and training focused on ‘lean manufacturing,'" explains Flinchbaugh. "This has been perpetuated to such an extent that people wonder whether lean assembly will work in a machine shop. But, the machine shop is precisely where Toyota's Taiichi Ohno conducted his first experiments and refined lean transformation."
A second reason why people equate lean with manufacturing is that manufacturing is the most visible and measurable part of the organization. "It is easy to measure manufacturing," says Flinchbaugh. "While often the wrong things are measured, every manufacturing manager has at least a dozen numbers he or she can recite to explain process performance. A manufacturing plant may make improvements to increase productivity, but that does not necessarily mean its controller has improved the efficiency of closing the company's books."
The third reason for this mindset is because most companies start their lean transformation on the plant floor, so all other functions immediately associate lean with manufacturing. "Other functional leaders see manufacturing's efforts to break lean out of manufacturing as an attempt to encroach on their territory," notes Flinchbaugh. He recalls one large company that changed the wording on training materials it used outside of manufacturing so that it would not appear to be manufacturing-based.
"When manufacturing does start to convince those outside of manufacturing that lean applies to them, it often takes the wrong approach, further complicating matters," warns Flinchbaugh. "The use of ‘lean manufacturing in finance' does not do anything to break down the wall. As lean is trained and communicated, the focus should not be just on manufacturing tools, such as andon cords and kanban cards. Lean rules and principles should be presented as the foundation that will apply to any process."
To learn about the other four common lean pitfalls, and hear more about the success stories outlined above, be sure to attend the Lean Barrier Busting session at ATExpo, the world's largest trade show for assembly tools and technology. It is attended by more than 12,000 manufacturing engineers, design engineers and plant managers from a wide variety of industries, including aerospace, appliance, automotive, consumer goods, electronics, industrial machinery, medical devices and telecommunications. ASSEMBLY is the official sponsor of the annual event.
To register for the Lean Barrier Busting session on Sept. 26, or to find out more information about the Assembly Technology Expo, call 888-267-3796 or click www.atexpo.com.