Leaning towards lean: Turning Performance

I’m not wired for lean. My garage is a disaster, I take too many steps when making coffee in the morning and I have no problem stocking up on paper towels if there’s a sale. Some of this antilean thinking may stem from my early years in a machine shop, where half-day setups and that’s-the-way-we’ve-always-done-it attitudes were the norm.

Back then, most shop owners felt that, once the machine was set up, it was best to make 6 months’ worth of parts and put them on the shelf. The customer would eventually buy them. They took a pass on just-in-time for just- in-case, and the only key productivity indicator was who could make it to the lunch truck fastest. Inventory turns took place every few years, when dusty, leftover material was sold to the scrap man.

Does it Always Make Sense?

With this in mind, I posted a question on social media: Does lean manufacturing always make sense? After all, many machine shops are too busy getting parts out the door to worry about a bunch of process flow diagrams and whiteboard fantasies. Like yesterday’s shop owners, many feel there’s nothing wrong with building products in advance or buying material in bulk, as long as there’s space in the warehouse and sales orders on the books.

A group of University of Michigan students collaborate on the best way to solve a mock problem in a lean seminar.

Boy, did I get an earful.

Consultants galore expostulated on the many reasons why companies should embrace lean. Inventory is the devil. Smaller lot sizes force shops to become more efficient. Messy workplaces impede the elimination of waste. Long setup times cost money and reduce opportunities for productivity improvement. And yes, they said, lean is for everyone, even small shops with only a handful of people—who may see the biggest benefit from lean.

Nonetheless, lean benefits manufacturers of all shapes and sizes. Russ Scaffede, an instructor with the University of Michigan’s Lean Program at the College of Engineering, offered the example of a luxury yacht manufacturer in Holland, Mich., that was struggling to get product out the door.

“The owners felt they could sell 30 percent more yachts but were unable to increase production, at least not without adding to the facility and hiring a bunch of people,” Scaffede said. “They knew there were inefficiencies on the production floor; they just didn’t know where.”

A former production manager at the Framingham, Mass., assembly plant for General Motors, Scaffede turned to lean consulting after working with Toyota in the 1990s, the company largely responsible for bringing lean to the U.S. On his first visit to the yacht maker, on-time delivery was 70 percent on a good day, and quality was a problem.

A well-organized work area, with everything needed for assembly is in its proper place and clearly identified, is a key component of 5S.

He said: “You can imagine a 36 ‘ yacht—they’d drop it in the water for final testing and discover the wiring for the microwave or the TV wasn’t working. Most of the boat was assembled at that point, so the only way to fix it was to go through the fiberglass. It was a real mess.”

Using lean principles, the company merged its four assembly lines into two. Critical subassemblies such as the kitchen and engine compartment were no longer built on the boats, reducing the need to haul material and equipment up and down ladders and allowing for timelier testing. After 2 years of continuous improvement, takt time—the rate at which finished goods are produced—had nearly doubled. Quality problems were virtually eliminated and on-time delivery was 97 percent, all without requiring new equipment or increased headcount.

Lean is about serving the customer through better efficiency and elimination of waste. “Let’s say you build 3 months of inventory for a particular product,” Scaffede said. “The customer has given you a purchase order, so assuming you have the time, what’s wrong with parking those parts in the warehouse? The answer is that, while you might have saved on setup costs, you now have to pay for storage. And what if the customer has a design change? You might force them to take the products or make them pay you to rework them, but now you have an unhappy customer.”

Burgers and Boats

Another disciple of the Toyota Production System is Glenn Uminger. Like Scaffede, Uminger is a semiretired automotive executive who now spreads the good word of lean. After 27 years working at Toyota’s plant in Georgetown, Ky., he teaches what the University of Kentucky’s College of Engineering trademarked as True Lean, a customer-centric approach to waste elimination.

“True Lean is when employees use systematic problem-solving tools to improve their own processes,” Uminger explains. “They’re all part of a team, sharing a business culture of how to best serve the customer and provide the greatest possible value in their particular industry.”

One example is a fast-food company Uminger helped. By analyzing its existing “manufacturing” processes, employees determined they could avoid thawing an entire freezer’s worth of product by utilizing more efficient small-batch processing of frozen food. “They thawed it in stages, so there was always a batch ready to go into the fryer,” Uminger said. “This greatly reduced food inventory, which had broad implications for improved food quality, energy savings and kitchen space. Corporate picked up on the idea and has since used it to grow the number of stores, especially in urban areas where real estate is more expensive.”

So what the heck do hamburgers and luxury yachts have to do with machining parts? Uminger maintains the principles that make production of a hamburger more efficient can be applied equally well to machining operations. “You can go in so many different directions with lean, but the same principles apply. It’s a matter of what can I do for my business to avoid wasting resources, while still getting product to the customer with the shortest possible lead time.”

Empty the Shelves

Short lead times and low inventory are big components of lean, together forming the basis for JIT. Yet critics argue that lowering inventory in the face of unexpected shipping delays and other supply chain hiccups results in cold Happy Meals and cancelled yacht cruises. “People love to criticize just-in-time,” Uminger responded. “Every time there’s a weather event or other natural disaster, they sit back and say, ‘See, JIT doesn’t work.’ Is the alternative, then, to run an inefficient and wasteful business just in case a tsunami hits?”