On the path toward global competitiveness and industry dominance, today's manufacturers continue to refine and improve the efficiencies of their operations. For many, a hybrid mix of "Lean" initiatives and practices helps reduce inventory, tighten supply cycles, and ultimately, reduce the cost of making goods. The benefits and basic principals of Lean are widely known. However, many organizations struggle to gain a foothold when embarking on the Lean journey. Or, perhaps more commonly, Lean initiatives stall and are sometimes eliminated due to a lack of understanding of what it takes to both make and sustain the Lean transformation. (See also Part 2 http://www.industryweek.com/ReadArticle.aspx?ArticleID=13485)
For purposes of this article, two companies that succeeded in making the Lean transformation, Husqvarna, a manufacturer of commercial turf care equipment, and American Standard, a multi-billion dollar, global, diversified manufacturer, are quite illustrative of "lessons learned" over the years.
Common Threads To Lean Success
Both American Standard and Husqvarna initiated these transformations by linking Lean implementation efforts with compelling business problems. Ongoing reviews of project expectations and key performance metrics ensured that resources deployed were working on the right projects to drive improvements. Cultural change occurred by ensuring that everyone, from laborers to executive management, had the right tools, leadership support, and incentives to fully achieve and sustain Lean capability.
The remarkable success story of the American Standard family of companies is well known on Wall Street, where Lean and Flow transformations drove this company's impressive margin growth, market share leadership, and dramatic valuation increase. The initial impetus for change came from an emergency need to service a substantial leveraged-buyout debt and avoid breaking-up the plumbing products, air conditioning, and vehicle control divisions.
As inventory turnover levels were tripled, the company came to realize the enormous market share benefits through improved customer satisfaction with flexible and predictable, on-time shipments.
In the case of Husqvarna, the company needed to integrate an additional product line into the apparently full facility due to a recent acquisition. To further complicate matters, the consolidation needed to take place during a seasonal peak in demand. The plant also was working to improve order fill and the profitability of its service parts division by shortening build and ship cycle times. In addition, Husqvarna adopted a new system for managing service parts requirements on-line, allowing it to adjust quickly to seasonal needs, customer demand, and changing facility design.
The results of the Husqvarna Lean project exceeded its original goals. A new mixed model production line was established that incorporated the additional products, yet resulted in a floor space savings of 12%. At the same time, cycle time was slashed by 50% and productivity improved by 10%. On-time shipping performance for service parts improved from 50% to 95%.
With that high-level overview of American Standard and Husqvarna, let's now look at some of the common characteristics that contributed to the success of these projects.
Lessons Learned On The Road To Lean Transformation
Do Everything With The Customer In Mind
Often, Lean practices are implemented with the goal of cutting costs and improving internal operations. However, it is essential to broaden this scope of thinking when undergoing a true lean transformation. First and foremost, we should always keep the customer at the forefront of the planning and implementation process. A key to success is in being able to find the customer in every single metric you choose to measure your Lean transformation progress by.
American Standard's plumbing products group worked with Home Depot to create a store opening process during their rapid growth phase, created dedicated product lines and production facilities for their products and implemented a rapid replenishment program with the finished goods balancing technologies. Trane commercial group, a division of American Standard, focused on air conditioning and ventilation systems and. listened to the "voice of the customer." They moved strategically from the hardware production business to the building management business. Trane's systems selling approach enabled entry into the process as early as the architecting phase, supporting the management of energy in the building with climate control systems, energy and light management products, service contracts for maintenance, as well as quick cycle shipping and "rent a chiller" programs for emergency situations. This integrated approach of blending improved manufacturing capabilities with "voice of the customer" programs helped American Standard win significant business and win top supplier awards from customers such as Home Depot, K-Mart, and Ericsson.
Husqvarna recognized that shipping new products on time was only a part
of the customer satisfaction equation. Their commercial turf care
products, such as riding lawn mowers, tend to go through heavy use with
customers and sometimes require the delivery of service parts.
Providing the right spare part, on very short order, has as much impact
on ultimate customer satisfaction and perception of the Husqvarna brand. A spare parts supermarket design enabled dramatic improvements in on-time delivery performance for this critical customer need.
One Size Does Not Fit All
Manufacturing optimization programs often look more like religious conversions than process improvement efforts. In truth, there are a variety of best practices and methods that will drive significant Lean improvements. American Standard had a significant variety of products and manufacturing processes:
- from Trane commercial air handling systems to residential air conditioning and gas furnace products
- to plumbing products chinaware, acrylic whirlpool tubs, steel sinks, and brass faucets
- to WABCO break controls, to compressors, electronics, sway control and stabilization products.
All of this is manufactured within a variety of markets around the globe, 100 factories in 35 countries, and different types of customers through a variety of channel relationships.
At the end of the day, they deployed a combination of Lean and Flow techniques to re-align and optimize production and material replenishment process. Trane incorporated Six Sigma techniques to redesign processes to maximize their capabilities. Specifically, they used Toyota Production System set-up reduction techniques in all divisions and performed rate-based line balancing in our repetitive automotive and high-volume air conditioning production lines. For high variety, mixed-model production lines, they used workflow balancing techniques at or below operational takt time targets. For processes that were paced by a major machine, they used theory of constraints and pacemaker process design.
The lesson learned here is to encourage and embrace a certain level of best practice flexibility. However, it is essential to avoid permitting anarchy and a lack of accountability by providing structure and support for your company's set of best practices. Trane managed this through certification & mastery programs of key leaders to accomplish training, guarantee consistency, and eliminate cosmetic-only implementations.
Drive and support your defined method by "walking the talk" and take advantage of opportunities when the going gets tough -- and it isn't "easy" to stay with the program -- to send a compelling message that compromise is not acceptable.
Show Me The Money!
Lean transformations do not happen overnight; however, with appropriate focus and enabling technologies, progress can be made much faster than you may think. In any event, establishing solid momentum, continuing the pace of improvement overtime, and then ensuring the proper focus to sustain performance requires that the Lean implementation continues to be the number 1, 2, or 3 priority on literally everyone's list of objectives in the organization. As soon as this falls to number 5, 6, or 7 -- we are doomed to wandering and losing our way.
It is my experience that the most important champions of our efforts are the financial leaders of our organization. It is absolutely essential to "connect the dots" of any investment in activity or technology for Lean programs, with corresponding bottom-line financial improvement. To do this effectively, the financial results of our efforts will maintain the momentum and resources needed to be successful.
How Good Is Your Company ENTITLED To Be?
For breakthrough performance to be clearly evident at the level of a large corporation, it really requires the continual deployment of an ongoing series of breakthroughs. One of the best ways to keep the demand for these ongoing series of efforts, is to have a clearly quantified vision of just how good your company entitled to be.
It is extremely important to have solid metrics on current state condition and to quantitatively target the improvement level for each project. However, in order to continue to stretch performance to world-class levels, always quantify the level of performance that will guarantee industry-leadership and near-perfect process capability. This process of entitlement visioning sets the stretch targets for your company's efforts, enables thinking out-of-the-box in implementation designs, and enables consensus on how far improvement efforts should continue to take.
Think BIG With Respect To Process
The sum total of incremental improvement efforts can be very powerful over time. However, huge breakthroughs are usually available by effectively aligning processes at a macro level and eliminating large elements of waste by looking at the overall flow of products, information and material.
Process mapping and synchronization models at both American Standard and Husqvarna were used to concretely map out breakthrough improvements by streamlining overall process times, reducing unnecessary movement, hand-offs and communications. Value Stream Mapping is a powerful addition to the toolkit of "thinking big" with respect to process is available as well.
It is thinking big with respect to process that enabled;
- Trane commercial group to double sales while reducing plant square footage by over 2.5 million square feet.
- WABCO UK and US Plumbing Products groups to operate with negative working capital over a period of years.
- Husqvarna to implement state-of-the-art pull conveyance systems and flexible paint systems in their new "green field" production facility.
The lessons learned here illustrate the enormous benefits that can be achieved through stepping back from the process that one has been very close to for many years and envisioning new process relationships that could drive significant cycle time reduction and dramatic elimination of non-value added work while creating improved flexibility. Using concrete tools and processes such as Value Stream Mapping and product synchronization ensure that the best results will be achieved from these efforts.
Dave Gleditsch has over 25 years of manufacturing and systems development experience. His area of expertise is in business transformation based on Lean and Flow Manufacturing principles. In his current position, he oversees the development and deployment of all Pelion technology, including establishing and implementing best practices for customers. He previously served as corporate vice president of manufacturing technology for American Standard.
To learn more, please visit www.pelionsystems.com or call toll-free at 1-888-LEAN-FWD.