Vermeer Corp. is celebrating the 15th anniversary of its lean journey in 2012, a remarkable milestone given one of the words President and CEO Mary Andringa uses to describe the continuous-improvement methodology.
"Fragile" is the word.
"It really is. It's a fragile process and a lot of companies talk about lean, they talk about continuous improvement, and they really don't do it very well," says Andringa. "It's not on automatic pilot. It is not something that you turn on and then it's just forever."
You might conclude, then, that introducing lean may not be worth the effort it evidently requires -- until you hear another word Andringa uses to describe lean: necessary.
"I am very passionate about the necessity to use the continuous-improvement process in every part of our business," says Andringa, who well over a decade ago as chief operating officer championed the introduction of lean at Vermeer. "The process works."
|Vermeer Corp. President and CEO Mary Andringa|
It's a lesson the former teacher never wearies of sharing. "I'm sort of tireless on it," Andringa acknowledges.
Her own company is a prime illustration of lean's potential. Vermeer, an international, family-owned business started by Andringa's father in 1948, produces agricultural, construction and other industrial equipment and employs a workforce of more than 2,000. This year the manufacturing company will produce revenues about 40% higher than it did in 2000, estimates the CEO, noting that 2000 was a high-water mark for the manufacturer.
The company will deliver those increased revenues with 10% fewer people than it had in 2000 -- and despite two economic downturns.
"That's pretty significant," Andringa says. It's also a turnaround from the company's pre-lean days in the mid-1990s, when Vermeer's answer to needed capacity was simply more people, more floor space, more machining centers. It raised manufacturing costs and steadily ate away at margins.
"It was not going to be a sustainable future," Andringa says. "It was our burning platform."
What Lean Leaders Do
It is not unusual to find Andringa out on a plant floor when she's at the company's Pella, Iowa, corporate headquarters, even given her CEO title and other, non-Vermeer-specific responsibilities, such as chair of the National Association of Manufacturers and member of the President's Export Council. Andringa's shop-floor visibility is illustrative of her belief that top leaders must be actively involved in a lean culture.
The fragile nature of lean is part of the reason why. "It is very easy to slip back into old ways. It's very easy to not ask the right questions or not follow the process, so I believe [lean] needs to be championed by leadership," she says.
For Andringa, active involvement means more than supporting the efforts of others and making sure the right resources are in the right places -- although both are important. Her active involvement includes having participated in some 40 kaizen events, many focused on manufacturing-floor process improvements but also others addressing business processes, dealer events and product preparation. She's even spent time on third shift as a team member engaged in a total productive maintenance effort.
"Second- and third-shift people many times don't see the leadership as much," she notes.
And Andringa is not the only leadership-team member who has participated in kaizen events. Indeed, Andringa says she requested all of the senior leaders to be involved in at least three kaizen events during the first year of Vermeer's lean journey; many were involved in up to six.
The participation, she says, "shows that we are serious, that this is not a fad."
It also educates leaders in ways they may not anticipate. For example, Andringa recollects being a team member on a kaizen event that targeted the company's directional drills. Her participation brought to her attention the complexity of the assembly process, which required workers to handle significant numbers and types of nuts and bolts.
"That was a real eye-opener for me. Some things you just don't see unless you have to get involved in the detail, like how difficult we sometimes make it for our people -- who are doing the value-added work -- to do their jobs," she says.
Fools Rush In -- So Don't
Enthusiasm is great, but racing headlong into a lean implementation can be disastrous. Vermeer took a measured approach. It included visiting companies that were implementing continuous-improvement initiatives, participating in public kaizen events and attending conferences
"We dug into it for a good year and a half before we really started saying we've got to make the commitment to go here -- and we realized it would be a commitment," Andringa says. "We realized this was not just another project add-on. This was going to be culturally transformative, and it has been."
Even the rollout to employees began with conversation, indeed, many conversations, says Andringa. Management shared with the workforce the need not only to grow the company but also to grow it without adding new buildings, equipment and employees at the same rate as it had in the past. In addition, Vermeer, which had been a profit-sharing company almost since the start, threw open its financial books to employees.
"That was another big step for us," Andringa says.
In the past, management had shared with employees the ups and downs of sales, but not profitability, so workers did not learn until very late whether there were any profits in which to share. Open-book management changed that.
"I told [the workforce] early on, 'I'm getting tired of coming in front of you at the end of the year and saying our sales are up but our profits are down, and the profits were down because we kept adding too many costs,'" Andringa says. "I said this [lean] process is not a silver bullet, but it is going to help us hopefully grow the business and keep our costs more in line, but yet make sure we are adding value for the customer."
And the value-adding element was emphasized. "We made that really important. We're not going to cut any corners; in fact, we want to improve the quality of our products. We want to improve the value," Andringa says.
She said the company also made it clear there would be no workforce reductions as a result of continuous-improvement efforts. So, for example, if a kaizen event on an assembly line eliminated the need for a worker, that employee would move to another area that required help. Economic circumstances could -- and did at times -- hurt workforce numbers, Andringa says, but gains made through lean did not.
The 'Aha' Moments
Every journey has its milestones. The Vermeer CEO easily cites several early signs that signaled the impact lean was making on the workforce and the company.
One such moment occurred in 1999 or 2000, according to Andringa. The company had begun to see an improved flow of inventory through its factories, the result of an early goal to reduce work-in-process inventory by 50% and thereby free up some of the dollars tied to that inventory for other uses. To show appreciation for the hard work that delivered the improved flow, and to reinforce Vermeer's lean focus, the company presented everyone with a free "inventory" day to use as they chose. The manufacturer also asked workers to share what they had done on their "inventory" day and through the year posted those stories in the company publication.
"That actually hit home," Andringa says. "Our folks continue to watch our inventory and they will bring it to my attention if we have inventory piling up."
A second "aha" moment showed leaders the power of kaizen events. Andringa relates the story of an employee survey conducted several years into the lean journey. The survey asked workers to share how they felt about supervisors, their work, and other sentiments designed to gauge the health of the organization.
The upshot? Employees who had participated in at least one kaizen event reported more positive feelings about the company than employees who had not, and the results were even better among workers who had engaged in up to six kaizen events.
"To me that said people involved in the process have more engagement in the company," Andringa says.
No Avoiding the Learning Curve
With the wisdom of a 15-year lean veteran, Andringa points to several things Vermeer might have tried to do differently were the company introducing lean today. "Tried" is the operative word; Andringa is not sure the company could have circumvented certain aspects of the lean learning curve.
"One of the things we struggled with at the beginning is the expertise of leaders for events," she says. "We did find that if you didn't have the right leader on an event -- or a person who could help lead the event -- it didn't really go so well."
Shop-floor kaizen events also did not go well if the manager of the area was not engaged in the process -- either leading the event or participating in the event. "But that was part of the learning curve," Andringa says.
What Vermeer and Andringa have not had to learn is that lean requires constant reinforcement. "It's a process, and you've got to keep asking, 'How do you go from here to there,'" she says.
To that end, Vermeer is not simply making note of its 15th anniversary along the lean path, but is also using the milestone to re-energize the entire workforce on the lean process. The firm recently concluded a week-long kaizen blitz that again saw senior managers participating on the shop floor.
"Again, that says we're not just gliding on autopilot with this process. We need to take it to the next level," Andringa says.
During a recent quarterly meeting, the CEO discussed the company's lean journey and handed out t-shirts to celebrate the anniversary. She also reviewed improvements achieved by the workforce "using the principles of lean for continuous improvement."
"We try to point that out and remind people that this process works," Andringa says.