Best Practices -- Pella Drives Lean Throughout The Enterprise

It's not just for the shop floor anymore.

Just a decade ago, Pella Corp., the window and door manufacturer, was struggling: Sales were stagnant, market share was falling, and its lead position in the window market was in jeopardy. Today, the Pella, Iowa-based company is enjoying unqualified success, having doubled its sales growth, increased profits sixfold and watched its market share skyrocket. The turnaround, say company executives, is due to their implementation of lean practices throughout the organization -- not just on the factory floor, where the strategy is traditionally employed. In those 10 years, executives say, Pella infused lean philosophy and strategies into every nook and cranny of its operation -- including areas where naysayers have said it would never work. Now operations and processes in every department, as well as those shared with the company's suppliers and independent sales organization, are regularly placed under the lean microscope to eliminate non-value-added steps. "We do it every day," say Kathy Krafka-Harkema, a Pella corporate public relations specialist. "It blends into the culture of who we are." This broader view of lean -- as a business strategy that shapes the company's culture -- is the next frontier in the strategy's implementation, and Pella is recognized as one of the pioneers. While other companies implement the process improvement strategy with the half-hearted commitment of a serial dieter whose focus is to shed a few pounds, Pella views its implementation of lean as a never-ending journey that will continuously improve the overall health of the company. "The reason that Pella has integrated the lean processes and the kaizen concepts throughout the whole company is to deliver better service for our customers," says Krafka-Harkema. "We have to be totally integrated. We're not just a manufacturing company, or just engineering. All of the components of the company have to work together to deliver that outstanding service for our customers, so that's why we've expanded it beyond manufacturing." And expanded it they have. Using lean methods, the front office reduced purchase order entry times by 50% to 86% across divisions, reduced cost per purchase order by 50%, cut voucher processing by 27%, and eliminated 14 legacy financial systems (with a goal to eliminate 55 more). The IT department slashed its e-mail traffic in half over a five-week period, reduced asset inventory from $21,513 in June of 2002 to $1,172 in February 2003 and implemented ergonomic improvements for heavy PC users such as call center workers. The Human Resources Department reduced the time it takes to hire an employee, has cut time to process benefit enrollment by 156.5 days and standardized the job-bidding process. New-product development now takes six months to 18 months, down from two to three years, and the Finance Department has reduced the month-end close procedure to two days, from six days. In its custom operation, Pella has cut lead time (from the time a product is ordered at one of its window and door stores to the time the product leaves the factory) to nine days from 18 days. Yet with so much success, Pella executives say the more they improve using lean, the more improvements they find still need to be implemented. Says Brian Giddings, Pella's corporate manager of Continuous Improvement, "In the first year we thought we were halfway there, in the second year we were only 25% there, now we find we're only 10% there. As you progress through the improvement processes, you just turn up more processes to improve." Send submissions for Best Practices to Editorial Research Director David Drickhamer at [email protected].

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