Best Practices -- Spreading The Good Word

Kato Engineering's 'lean office transformation' attacks wasteful procedures off the factory floor.

Like so many other manufacturers in the mid-'90s, Kato Engineering, Mankato, Minn., got the lean bug. The Emerson Electric subsidiary, which has produced large electrical generators since 1945, reduced cycle time for several key products using practices and philosophies derived from the Toyota Production System -- not uncommon among the lean crowd.

Also not uncommon, however, was that Kato's lean achievement was contained within the walls of its production floor. Left lurking amid the overflowing in-boxes and disorganized product-specification documents of Kato's back-office operation was ugly, costly waste. Fortunately, the impending replacement of a legacy ERP system in 2001 forced the company to face the truth about its back office -- improvements in production cycle time were being dampened by inefficiencies in sales, change-orders and on-paper process management.

"We knew that automating our current, wasteful processes was not a good investment," says Ron Orcutt, Kato's vice president and general manager at the time and leader of the lean-office project. "Our experience in the factory also convinced us that a sound, rational approach could reduce the office cycle time."

The effort pays off still today. Through September 2003, Kato has reduced its sales-order cycle time by 59% (from 23 hours to nine); engineering change-order cycle time by 91% (from 24 hours to two); and response time to customers' quote requests by 83% (from 66 hours to 11), among other improvements. Employees also reduced errors upwards of 69%. In one example, by reducing the number of times an engineering change order was handed from one person to another and rearranging work locations, the distance employees traveled to distribute these orders dropped from 1,886 feet to 262 feet.

Orcutt has since been promoted to an executive vice president at another Emerson company, but the lean fire he sparked continues today. It was tough to start, though, because cultural barriers were significant. Orcutt turned to lean and change consultants MainStream Management, Cedar Rapids, Iowa. He had worked with the firm on a lean initiative at another Emerson location and knew he needed help with the office personnel, who tended to view lean as a production-only topic and clung to the long-standing, traditional way of doing things.

MainStream's approach was to focus on building acceptance by the office employees and aligning systems and structures to support lean principles. The first step was a survey, which documented employee concerns and showed that the plant's executives most fervently supported lean, followed by factory employees, then office employees.

Next, a lean steering committee was formed (Orcutt and members of engineering, sales and marketing, operations, finance and human resources), and its members addressed employee concerns head-on. MainStream sums up its formula for sustained results from lean this way: Acceptance by the people involved in the organization's structure, policies and culture is of equal or more importance than the exactness of the technical lean solution.

With the steering committee at the helm, a four-phase process then began: planning, leaning, implementing and sustaining. This involved targeting processes for waste reduction, forming teams out of those involved in the process, defining and mapping the processes, a week-long development of a lean plan, implementing the lean plan and sustaining and documenting the results of the plan.

Throughout, emphasizing acceptance and accountability was crucial. Today, Orcutt says, "Employees are not only more accepting of change but are more proactive in looking for opportunities to improve process efficiencies."

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