Best Practices -- Little Things Mean A Lot

In Americus, Ga., not far from the home of former President Jimmy Carter, Simplex Nails Manufacturing faced a familiar dilemma: Just when it was hit with increasing challenges in the marketplace, it had peanuts to spend on training and new technology. And things haven't gotten much easier for the $3-million maker of roofing nails, which sells directly to retailers. Field reps say decreased commercial construction and roofing repairs are affecting sales. In addition, competition from abroad continues. Plant manager Jeff Kurtz says it's a tough atmosphere, but some free consulting on lean manufacturing from the Georgia Institute of Technology has been a savior. "We are alive because of it," Kurtz says of the company's 30 employees. Georgia Tech's Economic Development Institute advised the company on lean manufacturing techniques after Kurtz and the company's president attended a class on the topic two years ago. John Stephens, a senior research engineer with the institute, says the group gives a limited amount of free counseling to Georgia businesses and also charges for services. In Simplex' case, Stephens says, not much counseling was needed. Changing a few practices made a big difference. "They had a lot of work-in-progress inventory," he says. "They would fill orders from scratch, and if they didn't have it in stock, they were quoting four to six weeks to fill orders. I asked them, 'How long does it take to make a nail?' They said, 'Well we can make a nail in a day.' So I said, 'If you can make a nail in a day, why does it take four to six weeks to fill an order?'" Thus began Simplex' introduction to lean. The company has since:

• slashed its work-in-progress inventory;
• trained workers to use visual cues such as empty nail bins for restocking decisions;
• started planning production directly from customer orders instead of forecasting based on previous quarter orders;
• redeployed some production workers on a plant-wide clean-up and organization effort -- including scrapping useless inventory and assets -- which had several advantages, including freeing up floor space and making visual cues more apparent;
• worked to refocus the sales force from selling in-stock items to using the new pull philosophy. ("There was a little resistance because the sales people felt naked selling what wasn't in stock. But I told them, 'Look, your customers don't want to carry this inventory either,'" Stephens says.)

The results have been dramatic. The company reduced inventory by more than 50%, freeing up $500,000 to $600,000; the plant has 20% more floor space; orders are smaller and more consistent; and morale is better. "Our cash flow all around has improved, and our production is more efficient," Kurtz says. "It has helped us to cross train and make employees more flexible. Everyone has jumped on this out of necessity and because they see how [well] it works." Stephens says there are countless small manufacturers like Simplex Nails that could benefit greatly from implementing a few simple lean techniques. Most of the companies he works with, for instance, have fewer than 280 employees. "But the senior management has got to be behind it. Because if a team comes up with a good idea, and management ignores it, you've just killed the [lean] effort." Send submissions for Best Practices to Editorial Research Director David Drickhamer at [email protected].