For any business, the only reason to invest time and effort into Lean is to gain real, measurable results. But many companies that try to implement Lean are not successful. The keys to successful Lean Transformation were the topic of the panel discussion, “Bottom-Line Results From Your Lean Investment,” part of the WMEP Manufacturing Matters! Conference 2007, held in April in Milwaukee. Panelists from three Wisconsin manufacturers discussed how they implemented Lean, the challenges they faced and their bottom-line results.
“While Lean can work for any company, many organizations struggle to implement it,” said Jerry Thiltgen, WMEP Manufacturing Specialist who moderated the discussion. Most of the struggles can be traced to one of three areas: failure to clearly define the purpose for going Lean, not clearly specifying processes and not fully engaging employees.
In addition, problems can occur if Lean is too narrowly defined as a method to cut costs or as specific tools. A broader view of Lean encompasses tools, the entire value stream, and even the thinking of the organization. It includes both the technical side and the “soft” side, or culture of the company.
“A Lean system has to meet some business objective,” said Thiltgen. “It should be simple and practical, solve real problems and improve the way work is performed at every level of the company.”
David Skora, Vice President of Finance & Administration for Fristam Pumps, was the first panelist to discuss his company’s Lean experience. Fristam’s Middleton facility employs 89 and makes sanitary stainless steel pumps for the dairy, food, beverage, pharmaceutical and other industries.
Fristam was experiencing growth, but had long lead times, excessive WIP, large batch sizes and ontime deliveries at about 40%. The shop floor was disorganized and had no open space. It was difficult to track work orders and machine changeover was taking too long. Operators were very specialized, which led to inflexibility.
The inefficiency made it difficult for them to meet their customers’ needs. When one customer, a milk processing plant, shut down because of a failed pump, “a 4-8 week lead time wasn’t going to cut it,” said Skora. In addition, although they were profitable, they had cash flow issues because of inventory build-up. And their growth made them a target of competitors, who were copying their products. To get Lean, Fristam used tools like 5S/Visual Workplace, Changeover Reduction and Value Stream Mapping. They appointed a Lean champion to manage the process. On the shop floor, they cleaned up and moved equipment. They empowered employees to try different processing methods and move equipment. They are currently applying Lean Office to their purchasing and shipping departments.
Fristam’s focus on Lean is providing value to the customer. “Whenever we do a project, we always ask, what is the customer willing to pay for?” said Skora.
Their results include a 70% increase in sales, doubled profits (as a percentage of sales), improved on-time deliveries from 40% to 85%, a 66% reduction in lead times, a tripling of inventory turns, 83% reduction in machine changeover time, 63% reduction in WIP, more cross-training of operators and a 60% increase in sales per associate.
A corporate mandate was the beginning of the Lean journey for Weir Minerals, which has a Madison site that employs 287. Weir Minerals manufactures pumps, valves and process equipment for the mining industry.
When they first began the Lean work, the minerals markets were soft and they were missing sales numbers. Their facility was in rough shape as well, with poor flow, no visual controls and unacceptable safety performance. They also had low first-pass yields and inventory turns.
They went to work using 5S/Visual Workplace, Cellular Flow and Total Productive Maintenance. “Lean is not free,” said Bob Elliot, Weir Vice President of Operations. Sufficient resources need to be devoted to the effort to get the job done. They spent the first 18 months getting the plant in order, completely reorganizing and painting it. “One of the benefits of getting our plant cleaned up, organized and well-lit was our safety improvement,” he said. They also invested in three new machines.
They have a four-person staff dedicated to Lean and have invested more than 4,700 hours in Lean training. They created new metrics to track progress, including global Lean scoring, Lean benefit analysis (which tracks sales per dollar spent and spending per hour produced) and monthly 5S scoring.
Their results include a 71% increase in inventory turns, 75% reduction in safety incidents, 15% reduction in spending per produced hour, average 17% increase in sales for the past 3 years and improved first-pass yields.
Elliot recommended that a Lean leader be designated. He noted that resistance is to be expected and suggested investing in Lean Culture projects. “We did have early resistors who said, ‘I don’t know why you’re cleaning up the plant.’ Now, with our Lean Culture in place, our employees respect the plant and keep it clean,” he said.
Weir Minerals is now working on its supply chain to increase capacity. They are also doing 5S in the front office. “We’ve had successes and made mistakes,” Elliot said. “But we’re growing and it’s exciting.”
Managing rapid growth was an issue for Perlick Corp., a Milwaukee manufacturer of refrigerated cabinets, underbar stainless steel products, beer systems and glass washers for commercial and residential markets. Their customers include national restaurant chains and their fixtures are in 75% of all U.S. stadiums. Perlick was dealing with large batches, excessive inventory and high costs. “It’s all about eliminating waste,” said Gary Gilbreath, Perlick Director of Manufacturing. Their Lean work included Value Stream Mapping, Setup Reduction and Lean Office.
Fast growth over the past three years has kept the company on its toes. They did a Kaizen Blitz to quickly make significant changes to their product development process. They also automated orders through their web site. “No more searching for work orders -- it’s all on the computer,” he said. “You just build the thing.” They continued their improvement work by cross training employees and are now doing one improvement project a month.
Their results include on-time delivery of 97-98%, a 40% reduction in lead time, overhead reductions including the sale of their warehouse and 126% increase in revenue per employee. They can also quickly introduce new products to market, usually in 6 to 7 months.
Their Lean operation makes them 2 1/2 times faster than their nearest competitor, Gilbreath said. He estimates that 10-15% of their orders stem from their fast lead times. In fact, they’ve turned their lead times into a profit center by charging 2% per day on the price of the entire order if the customer needs it faster than their standard lead time. “80-85% of expedited orders receive this premium,” he said. “Our customers appreciate it.” Their Lean work gives them the edge against competitors.
“There are real financial results to becoming Lean,” said Thiltgen. “There is a cost to doing it, but regardless of your company’s size, it’s not overwhelming. If you’ve got a dedicated effort t and support from upper management, you can get dramatic results. Just get started and the momentum will really build over time.”