Volume 13, Issue 5 - June 2012

feature

What Lean Doesn’t Mean
by Tara Taffera

Lean manufacturing begets misconception. Some think a commitment to lean manufacturing does not provide a competitive edge, nor reduce remakes and scrap. Others are fearful of a resulting reduction in employees.

Jeff De Lonay, executive vice president, Kolbe & Kolbe Millwork Co. Inc., Wausau, Wis., and Amar Randhawa, general manager of Durabuilt Windows and Doors, in Edmonton, Alberta, are both in the business of manufacturing windows. And both say implementation of lean principles has made a dramatic impact on all aspects of their companies. And both say they seek to work with suppliers who share their lean philosophy.

Why is it then that more window companies don’t embrace lean?

“When it comes to our industry it’s not too popular and I am not sure why,” says Randhawa. “We are a custom manufacturing company—if you come look at our shipping department you won’t find a window the same as another. But the mentality is that you can only do it if you make standard products.”

He says that the window industry in general, “doesn’t do lean.” “It is getting to the point that we want to work with lean suppliers and we are having a hard time finding them,” he says. “We are trying to share with them what we do, and this is how we want to receive their materials.”

There are some industry suppliers that do embrace the lean philosophy and even work with window companies to support and enhance their efforts.

“There are a lot of lean descriptions and some of us who have studied it for awhile in its root form have a slightly different interpretation of lean,” says Steve Waltman, vice president of sales and marketing for Stiles Machinery. “It is a serious pursuit of continuous improvement and making sure the process is effective as could be.”

He relates it to changing a tire. A person could do it in ten minutes but in NASCAR, they can do it in ten seconds. “It takes education, practice and striving for perfection,” he says.

Waltman says lean often becomes watered down. “Some people think: ‘Cut five people and you’re lean.’ Straighten out the wood pile and call it lean. People aren’t giving lean its due.”

People First
In a survey of 100 manufacturers of various products that conducted lean manufacturing initiatives, nearly 70 percent said they failed to cut costs by five percent and many survey respondents said any lean savings achieved were temporary, according to an October 20, 2011 article in Canadian Business. DWM asked Stiles’ Waltman, Kolbe’s De Lonay and Durabuilt’s Randhawa why this was and all agreed that those companies must not have had the support of upper management.

When Kolbe started its program, executives met with every employee and held 20 meetings to explain the process, the culture change and other crucial factors.

“We told them we want to create additional capacities to increase sales,” says De Lonay. “You as a leader have to support everything that will go on.”

He adds that it is important to monitor the system constantly.

“If they are not finding results they are not making the system work,” he says. “If you are only getting 5 percent gains your targets may be overly broad and you should refocus on a more exact target or outcome. ”

Waltman says involving all employees is all too obvious to some but not to others.

“If they did not take into consideration the cultural change that’s why they failed,” he says. “There also was likely lack of commitment from the owner and senior manager and lack of communication on the cultural side. If they don’t involve people up front they will fail.”

Randhawa says anytime Durabuilt takes on a lean project he also deems it a “people project.” “When people think about lean they automatically think how much will we save on the bottom line, but you have to focus on the employees,” he says. “If that doesn’t happen, lean goes sideways. Here, we see the benefits of lean every day and we saw changes in three months."

It’s Not Reducing Employees
All three agree that lean does not necessarily mean a reduction in employees.

“When we started lean we were concerned that when the employees heard the word ‘lean’ they would get it confused with head-count reduction,” says De Lonay. “We call it continuous improvement. We only use ‘lean’ when we speak to outside vendors.”

Randhawa says lean processes empowers employees. “I used to have a line outside my office all the time. By implementing lean we empowered our employees to make more decisions themselves. But you have to be careful and make sure you have the right people and the right training in place to do this first. If you have not armed your team with the proper tools and knowledge, you can fail.”

Indeed, once companies are just starting out toward lean, they need to be trained. Kolbe started looking into continuous improvement in 2005 and hired a consultant to aid in its efforts. “We aren’t big on consultants but we knew we needed to be educated,” says De Lonay.

He says, that yes, many companies embark on lean because they want to be more profitable, increase production, lower costs and increase efficiencies. But companies must remember that it requires a corporate culture change. “Once you figure that out all other things will fall into place,” says De Lonay. (See sidebar at right.)

Durabuilt started down the lean road almost four years ago. Things were getting slower, but its plant wasn’t downsizing. In fact, the company was still planning to grow, but needed to do something different.

“We needed to gain some more floor space and if we wanted to grow we needed to expand our plant but it turned out that wasn’t necessary after implementing lean,” says Randhawa. “We gained 20 percent of space back in our plant and increased volume.”

Perhaps before you achieve such great efficiencies you have to look at the low hanging fruit, says De Lonay. “In the beginning your teams are doing a lot of experimentation and through different exercises they see how they can create the process they need.”

Companies can’t look at lean in a single dimension, says Waltman, such as increasing productivity for employees.

“They are missing opportunities to be lean in other parts of business,” he says. “Utilities, material usage, scrap handling, paperwork. All of these can have a lean principle applied to them. It is frustrating that this is not included in the dialogue. We preach constantly that companies must consider all the aspects of profitability.”

It Doesn’t Have to Mean Automation
Often the notion that the number of employees will be reduced comes from the belief that automated machines will take the place of people, which is not the case. In fact, companies say automated machines aren’t even integral to being lean.

“From the continuous improvement theory, I want to move around less, I want to touch things less, so machinery purposes have to be specific to that,” says De Lonay. “We used to buy big pieces of equipment with multi-functions but we didn’t have enough flexibility. We had to look at equipment that was flexible.”

At Kolbe, sometimes that means getting a machine custom-designed. The company has teams of employees design the machines then sends their designs to a supplier to be manufactured.

“Sometimes you have to take the best part of a couple of machines,” says De Lonay. “At times we make them and then we need help in the PLC (programmable logic controller) area, etc. You sometimes pick and choose and sometimes you work with a supplier to put together the piece of equipment to your specification.”

It’s the last piece that is crucial.

“You need to be on the same page as your supplier regarding what lean means and how to incorporate that into the machine,” says De Lonay. “You have to work with a vendor that really understands lean. You will start with some basic questions and ask how they have incorporated lean into the business.”

“Our machines are flexible and designed to a work cell,” he adds. “Sometimes they are moved very often or repurposed. Sometimes it’s not big equipment—a lot of times you can work with smaller types.”

At Kolbe the company is constantly asking important questions: How can I modify to make 35 windows instead of 10? Sometimes you have to rework the process,” says De Lonay.

He advises companies ask their machinery suppliers about flexibility and serviceability. “If things are hidden you will ask yourself why it is so complex,” he says. “One philosophy of lean is simplicity. Look for those things and ask them to show you those machines. They will show you photos and then you look for those principles.”

Waltman explains it as finding the right balance among the many factors at play. “Yield is a combination of labor and putting the piece into production at the right time. Automation can do that for you,” he says.

De Lonay says working with suppliers who know a thing or two about lean is crucial.

“We live in the automation side every day so quite often we have these robust conversations about what it is a company wants to do in their factory,” says Waltman. “The debate comes from how much you want to challenge the status quo and the tribal wisdom of the current process. The factory needs to be ready to accept a different way of working.”

At Durabuilt, Randhawa doesn’t think it comes down to how much or how little automation exists in the plant.

“When it comes to software on the equipment it makes an impact,” he says.

If automation isn’t integral to lean is it integral to reducing scrap?

“Reducing scrap is related more to the software that runs and not the equipment itself,” he says. “We just bought a new line from Sturtz and didn’t make operational changes but we did make changes to the software and reducing scrap rates. We made it so that it can run smaller batches instead of bigger batches. For a cutting line sometimes people think if you run a bigger batch you gain efficiency and that is not true.”

“Scrap is always the elephant in the room,” adds Waltman. He says vinyl manufacturers have an advantage that the material can be reused. In wood manufacturing, companies look at waste in the “chip-to-chip world.” “But if you study it, scrap is only 10 percent of the problem—90 percent of it is preparation.”

He also says companies have to change the way they view waste, scrap—or whatever term you decide to use.

"t’s not just about wasted materials. There is waste if you need four and you make five. There is waste if you need to remake it—that’s the worst kind of waste. If you make it and you can’t find it then there is a waiting waste."
—Steve Waltman, Stiles Machinery

“It’s not just about wasted materials,” says Waltman. “There is waste if you need four and you make five. There is waste if you need to remake it—that’s the worst kind of waste. If you make it and you can’t find it then there is a waiting waste. What if you have to wait a day before shipping it?”

It Does Provide a Competitive Advantage
Saving materials, money and time are benefits any company would love to achieve. In the end, companies want to gain more customers and provide their current ones a distinct competitive advantage and lean fits in nicely with those goals.

“If you want to make a profit you have to sell something,” says De Lonay. “The reason you implement lean is for your customer. You have to paint a picture for them of why you are doing this so they can clearly see it.”

The smarter distributors use it as a selling tool and tell the customer: The smarter distributors use it as a selling tool and tell the customer: “My manufacturer is innovative and you will have less quality issues,” says De Lonay.

Randhawa says Durabuilt’s customers absolutely uses lean to gain an edge on the competition.

“We have implemented lean for three years and have continued to grow and retain key accounts even in our competitive industry—we have only gained customers,” he says. “We involve our customers and ask for their input.”

The numbers speak for themselves and it is important to share your lean stories with customers.

A large part of Kolbe’s business is custom work—75 percent to 80 percent of its windows are customized in some manner.

“For us a quantifying measure of lean savings is the reduction of charges to our customer to produce a custom product. In our case, we have been able to reduce those charges significantly,” says De Lonay.

If you’re not yet convinced of the savings that can be achieved, he encourages companies to take a serious look at lean.

“In a continuous improvement environment, the goal of reducing costs in slow times, in excess of 50 percent, can be achieved easily and those cost savings can be passed to the customer giving you a higher competitive advantage in the market.”

At Durabuilt, the savings in many areas are impressive.

“We saved close to 25 percent of our footprint in our building, our product volume is up 30 percent, our lead times were reduced by two weeks (from five to three), the amount of quality defects are down,” says Randhawa. “We nearly doubled how much we turn inventory. Lean definitely hits your bottom line. If it doesn’t then I can’t afford to spend money on lean initiatives. We want growth and lean helps us achieve that.”

“Some people think that when you are not as busy you shouldn’t keep up your lean efforts,” says De Lonay. “We haven’t scaled back at all and we haven’t because everyone is out to get more market share. How do you do that? Maybe it’s price and maybe it’s innovation and a number of those go back to continuous improvement and new product development. We felt we could not afford to reduce our efforts in these areas.”

In fact Waltman believes there are many more serious conversations taking place than prior to 2008.

When companies make these changes, Waltman says they will find: “I like the new me. I like having people specifically tasked to do things and do them well, etc. I like holding down material and freight costs.”

Waltman adds that the successful companies will see that there is another way to profitability and that means change. If change is not an option consider the alternative.

“If you don’t like change you are going to hate extinction,” he says.

Tara Taffera is the editor/publisher of DWM/Shelter magazine. She can be reached at ttaffera@glass.com. Follow her on Twitter @dwmmag, read her blog at dwmmag.com and like DWM magazine on Facebook.

 


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