At IndustryWeek's 2012 Best Plants Conference, Andringa discussed how lean is now helping lower health care costs.
When Mary Andringa, CEO of Vermeer Corp. decided it was time for her company to move to a lean manufacturing system, she vowed that she and her executive team would dedicate themselves to attending kaizens. "Being on a kaizen event is more productive than anything else you can do," says Andringa. "It is the best way to learn about people, processes and products."
Andringa advised that focusing on one specific production line is the most efficient method to learn lean. In fact she says that she refers to her model line as a "learning line." The line the company first examined took 52 days from the time the raw steel was delivered until the product was out the door. After applying lean techniques they are down to two days. The hours per unit went from 80 to low teens and the quality, safety and customer service levels all improved.
It was the commitment of both executives and employees that produced results. While executives attend kaizens on a regular basis, 70% of the employees have been on at least one kaizen event. The company sponsors continuous improvement blitz weeks where plants across the globe conduct kaizens resulting in best practices that are then shared across the company. "We can solve problems if we are all on the same journey," Andringa says.
Vermeer took these same techniques and applied them to address the issue of rising health care costs. The company, which has been self-insured since 1983, established an on-site medical clinic. The first actions taken were routine occupational testing, but five years ago the company took the bolder step of adding a pharmacy (which is run by Walgreens). It turned out to be a smart move. The company found that while the pharmacy is used 15% more than the average use compared to other companies, the cost is 30% less.
The clinic side also reported higher usage and lower costs. Perhaps one reason is the efficiency of the process. "Services, which are offered to employees and spouses, are provided with an average wait time of one minute. We did a kaizen to create that process," Andringa said.
Employees come in once a year to get basic measurements and then receive a counseling session with a wellness coach. These efforts have resulted in a dramatic decrease in blood pressure, cholesterol levels and body mass. "We found out that prior to the establishment of the clinic 30% of our employees didnt have a primary care physician. As there were no preventative measures employees could face serious illness and trauma and the company was facing some large costs," Andringa said.
Health care costs are a huge problem for manufacturers to overcome, Andringa says. As the chair of the National Association of Manufacturers (NAM) Andringa is involved on advocating for policies that will lower the cost of manufacturing in the U.S. with health care as one of the components. Other costs include a high corporate tax rate, high tort costs and high regulatory costs ($1.7 trillion) that puts the U.S. at a 20% cost disadvantage as compared to its trading partners, explains Andringa.
Even with the cost disadvantage, Andringa is very optimistic. "I believe right now is manufacturings time. We are in the spotlight in a way that we havent been for many decades. Manufacturing is leading the U.S. out of the recession. It is time for a manufacturing rebirth in the U.S."