Responding quickly to the economic downturn, Sealy Corp. reduced capacity last year by eliminating the second shift at most of its assembly plants. But even in down times, the $1.5-billion company has continued to make major process improvements, which gives employees something to feel positive about and helps keep morale up, according to Mike Hofmann, executive v.p. of operations. Hofmann is in charge of Sealy's supply chain, which includes design engineering, purchasing, logistics, and manufacturing. The company operates 25 factories in North America and sells its mattress brands through more than 7,000 retail outlets.

What impact has the economic recession had on your markets?

Mike Hofmann: The recession's impact on us began in December 2007. That's when we saw things slow down in the United States. In Europe things began to slow down last summer. Unlike the last U.S. recession, we've seen the luxury mattress category take a more significant hit than the low end of the business.

What have you done to make your operations more lean?

Hofmann: We've been engaged in lean manufacturing, following the example of the Toyota Production System, to create a culture of continuous improvement for well over five years. We've seen annual double-digit gains in our factories in terms of labor productivity, both direct and indirect. Because of our lean culture, we continued to improve in 2008 despite the downturn in volume. I just hate to think where we'd be in manufacturing if we were still operating at 2005 performance levels.

Because we operate on a quick-response, 48 to 72-hour delivery model, we cannot afford to shut down facilities without significant delivery or service penalty. To keep our service levels the same we've focused on smaller lot sizes and smaller delivery units to customers so they can minimize their investment in inventory.

How have you achieved such steady productivity gains?

Hofmann: We're conducting Kaizen events, with every plant averaging roughly one per month. However, today our focus has broadened. In the early days we zeroed in on labor; and were heavily focused on unnecessary part movement, elimination of waste, and elimination of excess handling. Now we're really focused on improving scrap and inbound and outbound logistics, which require greater coordination with sales. We're even applying lean to engineering to take waste out of our product designs. We're asking questions such as: Are we over-engineering? Is there another design or manufacturing technique or assembly technique that will allow us to achieve the same performance standards at a lower cost?

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