NRRI Forest Products promotes ‘lean’ manufacturing processes

BusinessNorth.com 11/23/2005 by Chuck Watson

Between 2003 and 2004, North Carolina lost five percent of its total manufacturing employment - 31,000 jobs in old and new industries. Fifty-three hundred were in furniture manufacturing.

At about the same time, 75 percent of wood and metal furniture sold in the United States in 2002 was imported, according to “Outsourcing in North Carolina’s Furniture Industry,” a 2004 report from the University of North Carolina.

A similar scenario ambushing the cabinetry, window, flooring or doorskin sectors in Minnesota or Wisconsin would be devastating.

The Forest Products Group at the University of Minnesota Duluth Natural Resources Re-search Institute aims to give regional business a competitive edge. ‘’We don’t want to see the loss of manufacturing jobs like we have seen in North Carolina, primarily due to China’s low-cost labor,’ said Brian Brashaw, NRRI’s Forest Products program director. “Since U.S. furniture manufacturers typically had lead times greater than four to eight weeks, China could build and ship products to the U.S. within that same timeframe, for less cost.”

Low interest rates have kept the cabinet industry booming and custom cabinetry has worked to the Upper Midwest’s advantage. But that won’t last forever without intervention.

“We want to help these companies implement strategies to decrease lead time and improve productivity,” said Brashaw.

His project team focuses on wood materials innovation and manufacturing, improvement in this vital industry, employing the lean manufacturing model initiated by Taiichi Ohno (Toyota). The common sense approach concentrates upon eight dynamics to shorten lead time: defects, excess production, delay, wasted employee talent, transportation, inventory, motion and extra processes.

Last spring, Brashaw and 16 other regional representatives toured several of China’s wood products industry and research facilities on a Lake States Lumber Association-sponsored trade mission. They had two objectives: to understand the whole process and establish strategies to sell high grade hardwoods in China, and to better understand competition in wood products manufacturing.

“Their workmanship is excellent,” Brashaw said. “They will have 70 workers on the floor doing things manually, where we rely on automation technologies and less people.” Wood handling issues such as moisture, stain and re-drying is commonly performed at the manufacturing facility.

Chinese companies cover ‘campus’ housing, meals and medical bills of workers. “But they pay about 20 cents per hour, compared to our $14 to $15 an hour,” he said.

“Many plants use total quality management.” said Brashaw. “We would see in every plant that was certified, ISO 9001 and ISO 14,001.”

China has its own timber challenges. Its government banned logging in virgin forests after massive floods on the Yangtze River in 1998. Scientists convinced the government that logging in the headwaters of the river, the third largest in the world, contributed to flash floods and caused billions of dollars in damage.

In response, Chinese companies are renting large forest areas and harvesting rain forest hardwoods from neighboring countries, contributing to a ballooning global black market for timber.

Furniture, cabinetry and door demand is high in China and the giant lumber yards there have huge potential sales. The Lake State Lumber group witnessed an enormous international doorskin, flooring and furniture trade show, like those in North Carolina just 10 years ago. Of its 1.3 billion citizens, China has a middle class of 50 million, small by percentage, but a very large number of consumers with spending power.

For the rest of the world, it adds up to a particularly compelling challenge: to protect natural resources, trade and jobs.

“It’s easier to keep the jobs we have than try to create new ones,” said Brashaw. “There’s always competition in business-whether it’s down the block or across the ocean. I have a lot of respect for the Chinese. They were very gracious hosts.”

Regional success: TrueRide

The NRRI wood materials and engineering program has assisted plants throughout the region make a shift to lean manufacturing. In 1999, TrueRide Inc., Duluth, wanted to refine and develop a new look for its skate ramps, increase sales, improve customer service and create jobs.

“They tested materials for longevity and strength, they also tested the ramp systems sections,” said Greg Benson, TrueRide co-owner. “We set up a bench line with the testing so we knew to reduce or add material. They tested the way we were building.”

NRRI helped improve the plant’s manufacturing efficiency, decreased cycle time and material waste while increasing manufacturing capacity. Performance tests of skate ramps indicated TrueRide can substitute some of its current materials with lower cost, better looking recycled products. The improved look of the products increased sales, Benson said.

A one-week “Kaizen Blitz” (overhaul) restructured the entire facility, he said. “We reduced the amount of floor space necessary by restructuring, retooling and discovering more efficient use of space,’ Benson said. “It changed the way we thought about our business.”

NATURAL RESOURCES RESEARCH INSTITUTE

Natural Resources Research Institute website

at a glance…

Location: Duluth

Founded: 1985

Affiliation: University of Minnesota

President: Michael Lalich, PhD

Director, secondary wood products

program: Patrick Donahue

Director, forestry program: Bill Berguson

2005 activities budget: $16 million

Employees: 150

UMD-NRRI Forest Products Group

Overall, in millions…

State Base … $3.6

Indirect Cost Recovery … $0.4

Other State Funding … $0.9

Permanent Univ. Fund … $1.4

Federal … $5.4

Industry … $4.2

Foundation … $0.2

Match … $1.4

NRRI Project Activity

total budget … $16.0 million

Center for Applied Research and Technology Development

(CARTD) … $7.5 million

Forest Products Group … $1 million

$250,000 … In-kind company or cooperator match

$100,000 … University or state funds

$180,000 … USDA Cooperative State Research, Extension and Education Service

The remainder is funded by competitive grant funding or from private industry hard dollars.

Source: NRRI, Fall 2005

NRRI sends three with Pawlenty trade mission to China

Governor Pawlenty is leading more than 200 business, government, academic and civic leaders to China Nov. 11-19. The trade mission includes events in Beijing, Shanghai and Hong Kong.

As Minnesota's fourth-largest trade partner, China buys more than $650 million worth of Minnesota products every year.

Goals of the Minnesota-China Partnership are to:

• Increase economic activity between Minnesota and China;

• Provide training programs and develop international business activities;

• Open doors for Minnesota companies

to do business in China.

Delegations will focus on the medical, information technology, environmental technology, food and agriculture, steel

and mining and renewable energy industries. In addition, there will be delegations for general business and higher education.

NRRI sent president Michael Lalich and Director Donald Fosnacht to explore opportunities in environment, steel and mining, respectively; and Patrick Donahue, program director, as a general delagates.

Crown adopts lean manufacturing to streamline production

Ferret.com.au

CROWN Equipment has enhanced its position as the competitive leader in the Australian lift truck market by becoming one of the first in its industry to adopt 'lean manufacturing' in Australia.

Crown Equipment’s process have been streamlined by lean manufacturing.

This complete revamp at its Sydney manufacturing plant is an upgrade that streamlines the company's processes across all divisions to deliver a higher quality product with faster turnaround.

Lean manufacturing involves waste identification and neutralization, which can include both materials and time.

Through a methodical procedure proven in leading manufacturing companies across the world, Crown was able to re-design how the process and stock holding required in the manufacture of lift trucks works together to eliminate waste.

Manufacturing manager for Crown, Ned Walsh, said lean manufacturing is more than merely reducing wastage of inventory, effort and time - it is a manufacturing principle by which the company will maintain its high standards yet with less time, less complication and with a better visibility and ease of supervision.

"Lean manufacturing is about tidy, efficient, clean operations - so it focuses us to foresee potential bottlenecks and solve them in a tidy manner well before they become a problem, therefore manufacturing is uninterrupted," said Mr Walsh.

"Production line emergencies become a thing of the past and during busy times any demanding issue is easy to deal with and nobody suffers in silence.

According to Ned Walsh, 'lean' refers not just to the factory; it impacts positively on the entire lift truck manufacture process - from order to delivery.

"From the point when an order comes through our door right through to when it is delivered to the customer, we know how many hands will touch it; meanwhile we reduce the steps it takes to do so while adding value at each of these steps," he said.

During the transition into lean manufacturing, Crown has changed many of its manufacturing facilities and policies including:

* Introducing multi-skilling of all manufacturing personnel

* Reduction of transport around the plant

* U-shaped assembly line

* Reduction of unnecessary inventory

* Removal of bottlenecks.

Marketing Manager for Crown, Craig Kenchington, said the changes have resulted in significant reduction in manufacturing costs.

"This has allowed Crown to reposition many of its products in the Australian market, thus ensuring the future of the 300 workers in the Smithfield plant and the certainty of supply for our many customers," said Mr Kenchington.

"We are proud of our 30 years manufacturing in Australia and realised that to commit to another 30 years we needed to modernise our practices and provide our customer base with the best possible solutions."

22 November 2005

Lean journey

Source : The Manufacturer US
Published : 16 Nov 2005 20:45

What a deal!

Anand Sharma on the dubious wisdom of slashing prices to the bone

Over the summer, a number of automobile companies, led by General Motors, cut prices on their vehicles in order to encourage consumers to buy cars. The employee-discount incentives were widely covered in the media, and they actually did encourage people to go out and buy new cars.

But was it smart business? Sure, consumers may have bought vehicles they might otherwise have put off buying simply because the price was right. But did the consumers really get a good deal? And did those price cuts really help the automobile industry?

The answer is a resounding “no!” Who has ever won by cutting prices alone?
The problem with a company using these kinds of incentives is that it’s a very shortsighted strategy—in fact, it’s totally upside-down logic. If you as a manufacturer cut prices far enough, as General Motors did, then you will lose money because you are selling the product for less than it costs to make (or nearly so). And suddenly you have no money with which to provide service to all those customers who bought your product at rock-bottom prices.

The result is that those new customers are likely to become disenchanted and vow never to do business with you again. So the gains made by selling a product cheaply are soon lost when you can’t provide service and support after the sale. In other words, the fix was a temporary one—and really no fix at all.

And while losing money over the short term can be an acceptable business strategy for a healthy business, companies that are struggling can’t afford to lose money at all and doing so could well sound their death knells.

For an automobile maker or any other manufacturer that is looking for ways to increase sales, and its customer base, the sensible thing is to find out exactly what the customer wants, make it and make it well. Nothing is better at enticing customers than a quality product that provides the features or solutions that the customer wants and needs, followed up by superior service and customer care.

Does this mean that you should never cut prices? Of course not. If you are able to lean your operation and make your products more efficiently and at lower cost to your company, then it makes sense to cut prices when doing so won’t affect profits. Porsche has done just that, while maintaining the high quality its products were known for, and in doing so, gaining new satisfied customers.

That’s why lean manufacturing is going mainstream. More and more manufacturers are realizing that going lean means being able to make quality products for a lower cost that their customers want to buy.

Unlike this summer’s price-cutting tactics of some automobile manufacturers—a practice that ultimately leads to feast-or-famine cycles—a lean business strategy enables manufacturers to connect with customers and eliminate waste. It fosters a culture of continuous improvement, making small changes all the time that can improve efficiencies and decrease costs strategically.

Lean doesn’t mean having to tighten one’s belt and endure losses in order to gain customers. It means running your company in a way that allows you to survive, and even thrive, in both good times and bad.

Reinvesting In U.S.-Based Production

IndustryWeek.com

A Wisconsin consortium demonstrates a win-win way to address challenges confronting U.S. manufacturers.

By Patricia Panchak

Dec. 1, 2005 -- It's no secret that suppliers and smaller manufacturers have borne the brunt of globalization's less positive results, while the mighty OEMs have leveraged size, strength and global reach to reap the benefits. Indeed, it's this reality that has exacerbated an already uneasy alliance between OEMs and their suppliers, causing a rift that threatens to undermine U.S. manufacturing pre-eminence. Already calls for damaging protectionist policies are making headway among some public-policy makers, to counter what many see as the only alternative: the expansion of unfettered free -- and in many ways, unfair -- trade that threatens to decimate small- and medium-size U.S. manufacturers.

However there's a way to "save" U.S. manufacturing's base of small- and medium-size companies, as well as to strengthen U.S. OEMs, without resorting to protectionist measures. The solution comes straight from the capitalist's playbook even as it builds a private-public partnership much like the highly successful Sematech program that helped U.S. semiconductor manufacturers counter the formidable Japanese challenge in the 1980s.

Sound too good to be true? Take a look at just such an effort in Wisconsin in the industrial heartland. There, executives of three U.S. OEM icons -- John Deere, Harley-Davidson and Oshkosh Truck -- have formed, in partnership with the state's manufacturing extension partnership program, a consortium dedicated to helping their local suppliers succeed. Dubbed the Original Equipment Manufacturers-Supplier Development (OEM-SD) consortium, the group assists the OEMs' suppliers in implementing lean management strategies -- and thus becoming more globally competitive -- by using the MEP system's extensive lean consulting and education services. In the first year, the executives credit the program with helping 16 Wisconsin-based suppliers to reduce lead times by an average of 53%. Now the OEMs are set to test the model in supply chains spanning multiple states and MEP centers.

The philosophy behind the effort doesn't disdain or attempt to eliminate offshore sourcing. Rather it simply recognizes and seeks to capitalize on its limits. What's more, the consortium's approach addresses head-on the conundrum that plagues U.S. OEMs: They need both offshore and local suppliers to effectively compete. To win the global competition to deliver high-volume products at low prices, OEMs must source from low-cost offshore providers. But placing such orders overseas threatens the viability of domestic suppliers, which an OEM needs to win the competition to fill the increasing demand for low-volume, customized products. Offshore sources, as many manufacturers have discovered to their dismay, are often unable to meet the short lead times required to deliver such products. By helping their local suppliers become more competitive, the OEMs become more competitive, effectively securing the local supply base they need to compete in on-demand production without sacrificing their ability to tap low-cost offshore sources. At the same time, the effort helps make U.S. manufacturing more competitive, maintaining good jobs and generating tax revenue to fuel a strong economy.

The OEM-SD model is a win-win-win way to address the nation's manufacturing challenges. Reasonable people can debate the intensity of the conflict between the small and large manufacturers, and many will debate whether the government should intervene at all. But small- and medium-size manufacturers -- the bedrock upon which U.S. manufacturing strength rests -- are struggling and need help adapting to the fierce global competition. For my money, the OEM-SD approach is a sound strategy and a reasonable public investment. OEM executives and public-policy makers should take note.

Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.

The lean frontier

Source : The Manufacturer
Zone : World class manufacturing
Published : 09 Nov 2005 11:08

As lean develops from being ‘just another new initiative’ to being the philosophy that could save UK manufacturing, many companies are extending the lean frontiers and using it in other business areas. Ruari McCallion reports

Lean has caught hold in UK manufacturing, extending its reach from a toehold to a highway, and it seems to encapsulate the spirit of the times: a determination to succeed in the face of global competition. But that’s not the end of the story. As presentations at The Manufacturer LIVE have shown, lean is invigorating operations far beyond the manufacturing shopfloor.

Commander Mike Starks, lean transformation manager with the Sea King Integrated Logistics Team in the Defence Logistics Organisation, showed how valuable lean was in the military setting, where personnel were traditionally trained to follow orders, rather than to come up with original ideas.

“In certain environments, yes, military staff are used to being told what to do,” Starks explained. “The actuality, when working in a combination of engineering, administration and logistics, which involves civil servants, commercial and military personnel, [is that] we have a team approach.”

As its name suggests, Starks’ team works with the country’s Sea King helicopter fleet, which has ferried personnel and cargo to postings and war zones all over the world for a couple of decades. As the helicopters head towards the end of their life, they would be expected to spend more and more time in repair and less out in the field. Now, the opposite is the case, largely because of the lean transformation wrought over the past few years. Time out of service has been cut by between 25 and 30 per cent and the number of aircraft out of service at any one time has also been slashed, from 18 to 11. At the same time, the Navy has reduced its maintenance sites from four to two and is on the way to just one. The lean project began in September 2003. Within 12 months, Culdrose in Cornwall had stopped doing Sea King work altogether and is now concentrating on the Merlin helicopter fleet.

“We set up lean pulse lines at St Mawgan in Cornwall, and Yeovilton in Somerset, and were able to increase our throughput at those two sites without increasing manpower,” Starks said. One of the lines undertakes routine maintenance, the other carries out 10-yearly deep overhaul. St Mawgan is still undertaking maintenance work, while capacity is transferred to DARA (Defence Aircraft Repair Agency), which didn’t get involved in the lean project until November 2004. Sea King maintenance, whether routine or deep-level, is being concentrated at DARA. At least part of the labour time saved has been switched to upgrade work, further extending the life and increasing the efficiency of the Sea King.

“Creating capacity for further upgrade was one of the reasons for adopting lean,” Starks said. “The outcome has also been to make extra aircraft available for use.” Maintenance is a pretty new area in the lean universe. How was it received?

“Initially, we faced a lot of scepticism within the organisation,” he said. “We’re not making cars, of course. There was the feeling that we had our own service ethos and lean ‘wouldn’t work here’.” The solution was to follow the standard approach. With the help of Simpler Consulting, lean was introduced pretty much by the book. “We went through the lean tools and carried out ‘model events’, rather than going big-bang. Previously, we’d followed a garage mechanic approach – the helicopter sat in the workshop until it was finished. The operators went to the stores to get what they wanted, and so on.”

The implications of that were pretty far-reaching and disruptive. Each Sea King maintenance hangar was filled with helicopters that stayed where they were until work was completed – with one exception. When one aircraft was finished, others had to be moved out of the way so the chopper could be taken back out of the building. Then they were all replaced. Because each workstation was doing everything, they all had to have complete sets of tools. The upshot was that the hangars looked busy, but an awful lot of the work was unproductive. The helicopters now move through the hangar, along the pulse lines, from workstation to workstation. Each workstation performs one set of functions, so only one set of tools is required for each task; that means they can be kept in less space and are more easily accessible. The efficiency level has risen dramatically but fundamental changes like that have to be introduced carefully. People have to see that the ideas work before they’ll embrace them.

“When we introduced Lean, we began with components for the overhead rotors,” Starks said. That cut ‘walking and waiting’ time dramatically. Next came the issue of standardised work. “People thought a pulse line wouldn’t work, because maintenance is somehow different. In fact, activities like strip-down are 80 per cent the same. So long as we leave flexibility in the system, to cater for the unexpected, it works. We were able to reduce flow time by 25 to 30 per cent.” Even though the organisation has been operating lean for only two years, Starks feels that it is embedded. “Some areas would be very difficult to change back. There are pockets of excellence but some areas are still untouched.”

Each helicopter now goes through a rigorous diagnostic process before it undergoes maintenance, so the crews know exactly what they have to do and when as the copter arrives at their station. Previously, they would find that a completed task would have to be undone in order to get to another job that needed doing, which was chaotic and wasteful.

While the Sea King Integrated Logistics Team is using lean to raise its game, American Standard – which owns Ideal Standard in the UK – used it to pull itself back from the abyss. When forecasts of market growth after a leveraged MBO failed to materialise, the company found itself drowning in a sea of debt.

“The only way we could see out was to free up cash from inventory,” said Emmanuel Kampouris, former president and CEO of American Standard. “A consultant came with a proposal for what we could do with lean manufacturing, how it would improve our quality, speed, responsiveness and reliability – oh, and we could cut our inventory by half, as well. So we said ‘prove it’. We launched a pilot scheme, saw that it worked, and deployed the technique across the organisation. Within two years, we had transformed all 119 facilities and essentially saved our company.” He and the board set a target of cutting inventory capital to zero. By 1993, it was reduced from $600 million to $300 million, and then, by extending the same techniques to the office, it was halved again. By 2000, the company’s revenues had grown to $7 billion. It had extended its industrial and geographical reach and was involved in residential and commercial HVAC and safety systems for trucks and SUVs – and it was debt-free.

At that time, most companies would have focused their energies entirely on cost-cutting. The results would have looked good in the short-term, then quality issues would have started to filter through to the financials. But the process Kampouris followed didn’t do that.

“This is not a cost reduction programme,” he said, and with some force. “When we implemented lean, we didn’t say we were getting rid of anyone. It was about getting more effective, eliminating waste and non-value-added activities. We analysed how long it takes to make each product. How much real time was wasted? I was pretty sure 90 per cent. If it takes 10 days, and nine days it was doing nothing, well we can manufacture this in one day. When you eliminate waste, you’re being more productive. You don’t need to invest in inventory and you don’t have obsolescence. You can catch any defect immediately and you can be more flexible in delivering to your customer what they want, when they want it. You also gain quality and responsiveness.” Kampouris is a true lean evangelist.

“I think it’s an important strategy and not enough companies use it,” he said. “I believe it’s very important to recognise what it is and what it can do, particularly in today’s competitive world, where western companies are in jeopardy of being overtaken and losing markets to the Far East. It can help preserve jobs in the west.” Alan Harrison, head of business improvement at Weir Pumps, in Glasgow, agrees that lean isn’t a cost reduction programme – although cost savings flow from it.

“When we began to implement lean, four years ago, our objectives were to improve quality, cost and delivery,” he said. “We measured our delivery and outputs, in terms of availability and outstandings, with the intention of creating better flow. In almost every single area, we halved our cycle time. We greatly improved delivery and reduced the labour element by at least 30 per cent.” Some of the changes were simple: the operators would do things themselves, like routine maintenance, rather than wait for someone to do it for them, for example.

“We use kaizen events but that isn’t continuous improvement,” said Harrison. “Every employee can raise any concern, at any time, and we review them regularly. We are achieving a series of small improvements, all the time.” Weir makes capital products, for process industries, mining, shipping and other industries.

“Everyone has room for improvement,” he said. “We’re constantly looking to spread lean practices beyond manufacturing. We’re looking at our suppliers, our offices and our transactional processes. For example, we’ve introduced design menus in our CAD programs to replace infinite choices, because infinite choices mean infinite problems for suppliers.” Operators who come up with ideas to improve their activities can save thousands of pounds in new equipment. If there is any key to improvement, then he believes it’s all in the mind.

“I have a message I constantly repeat to myself: don’t let your ego close your mind. No improvement can happen if your mind is closed,” he said. That very much reflects the experience of Bahco’s production plant in Portugal. Pedro Azevedo was the lean manager at the site.

“When we went to Sweden for the first presentation by Simpler Consulting, I had no idea what was coming,” he said. “They asked: are your machines slow enough to produce at the takt time? That was a total challenge to me. Ever since I graduated in mechanical engineering, I worked in process and was always looking for better machines as the route to improvement.” The plant had large and sophisticated machinery that could process three different types of files at once, and was running batch production, with the inevitable consequence: too much inventory and lack of control. The plant management simply had no idea how many files – its main product – it made each day. It was facing increasing competition from China and India and needed a rapid and dramatic transformation for survival. The challenge to think differently led to a remarkable turnaround.

“We brought old equipment, which was heading for the scrapyard, back in to replace the sophisticated machinery and aligned our production to what the customer used,” said Azevedo. “Instead of one machine making everything, from four inch to 14 inch files, we now have three – one making four to eight inch products; another making nine to 12 and the third handling the longest.” The stock of finished goods waiting for customers has been eliminated: when a box is sold, it sends a ‘pull’ signal back up the chain. The machines need less set-up time, they’re simpler to operate and they require less maintenance. Previously, the company had a huge degreaser, which handled 2000 files at a time and took half an hour to clean them. The operators came up with a solution that handled products at the right rate. It has a five-litre tank containing degreasing solution and takes 20 seconds to clean a file, which is more in line with the takt time of 28 seconds. Cost: no more than €500. Efficiency gains: huge.

“Our first rapid improvement event immediately reduced inventory by 67 per cent. It cut floorspace by 50 per cent and improved productivity by 25 per cent,” he said. Now, global efficiency is up by 20 per cent and productivity by 30 per cent. It’s now a ‘visible factory’ – they know how many files they’re producing – and, at the beginning of October, installed a new line to make saws.

Rune Thenander, Bahco’s manager of continuous improvement, says that the company constantly looks at all its activities in its search to drive out waste.

“A couple of weeks ago, we looked at a handsaw. The plastic handle is fixed to the saw by three screws, each of which represents a certain cost,” he said. “What the customer wants is the handle to be attached and if we can reduce the fixings to one screw or none, the customer will still be satisfied.” But doesn’t this require redesign of the product? “Yes. What we do is map the possibilities to give the same or better value to the customer, at reduced cost.” These exercises – of which the company has undertaken several over the past 18 months – typically deliver savings of 25 to 30 per cent, which is more than the normal profit margin.

“We try to apply lean thinking to new product development, also,” Thenander said. “We use a method taught to us by Simpler Consulting. We define the team running the project, define who is the supplier, who is the customer and get a clear picture of who’s doing what.” They go away from the office to a location where they won’t be disturbed, and work on it. “Everyone who can contribute is there and everyone participates. By working in a more focused way, we develop very strong ownership and we’ve been able to shorten development time by 60 to 70 per cent.” He made a particularly interesting point, which is that the principles of lean seem to be better accepted the further a factory is from ‘home’.

“The Spanish and Swedish operations have been harder to change,” he said. “There’s a greater sense of urgency in the remoter locations, a recognition that they have to justify their existence. The motivation of the plant management is higher – there’s sometimes a false sense of security at the centre.”

As lean manufacturing becomes more embedded, experience shows that it continues to deliver results beyond those originally envisaged. It also throws into sharp relief the areas that still need attention: the office and transactional processes are right at the head of that queue. The enemy of lean thinking is a bureaucracy. Also, as manufacturing and operations put their houses in order, they strengthen their hand when they approach suppliers and customers, looking for ways to work together to mutual benefit. The frontier is always expanding.

Broken chain

Flight International

Eclipse Aviation’s founder says aerospace companies must behave like Wal-Mart suppliers. But can the industry make the logistics leap?

He is a 57-year-old, running a small company making castings for the aerospace industry and, without a successor, is keeping his business ticking over until he can retire. The last thing he wants to do is blow his nest-egg on the expensive computer-aided tooling he is told he needs to speed up his production and secure his key customers’ business for the long term.

The above example is fictional, but is typical of thousands of small enterprises throughout the global aerospace industry. Suppliers who have invested in costly equipment in previous upturns only to see it sit idle in the next downturn are wary about getting their fingers burnt again.

And yet the people running companies at the other end of the supply chain, such as Vern Raburn of Eclipse Aviation, are telling companies like this that they must become more like Wal-Mart suppliers if they want to survive in tomorrow’s aerospace industry.

That means delivering the right quality and quantity of products exactly when they are needed and having the resources to do so. Successful retailers in the fast-moving consumer goods (FMCG) sector often beat their rivals not because they offer different or better items on their shelves, but because they manage their stock with ruthless efficiency, keeping to a minimum the time goods sit in storerooms. That frees cash to allow the likes of Wal-Mart and Tesco to keep prices down.

Eclipse says its model is no different. The reason it can afford to sell its Eclipse 500 very light jet for less than $1.5 million, says Raburn, is because its production line will be so efficient, with parts arriving the day before they are needed. That’s how Wal-Mart works.

Yet the aerospace industry has been slow to learn from sectors such as FMCG retailing and the automotive business because it has been cosseted by traditional batch procurement methods, with long lead times and loose delivery targets.

But can it change? One of the biggest developments over the past 25 years has been an end to vertical integration. From Boeing down, companies want to focus on what they do best – designing, integrating or “adding value” to products, and outsourcing work that someone else can do more cheaply. In a global industry, that often means going overseas.

That makes perfect sense as long as this lean manufacturing is matched by lean distribution. With the widget passing through half a dozen layers of the supply chain before it ends up on the end-user’s aircraft, it only needs one kink, one missed deadline, to stop the process in its tracks.

It is this lack of discipline that frustrates bosses like Raburn, and as demand cranks up in the industry – from Raburn’s personal jets to the Airbus A380 – the situation is only likely to get worse. Maybe outsourcing has gone as far as it can and integrators at the top of the chain must realise they cannot have their cake – everything but assembly done elsewhere – and eat it by demanding it all just in time.

Point of View/ Kazuyoshi Abe: New frontiers for world's biggest automaker

Special to The Asahi Shimbun

Toyota Motor Corp. expects to sell more than 8.5 million cars on the global market in 2006. Since General Motors Corp.'s projection is 8.4 million vehicles for the same year, Toyota is set to become the world's largest automaker.

Since the Japanese automaker was established in 1937 in Koromo, then a remote district of Aichi Prefecture that was later renamed Toyota, its head office has not moved. The company will become the world's top automaker when it celebrates its 70th anniversary in November 2007.

Toyota was established as a spin-off of Toyoda Automatic Loom Works by Kiichiro Toyoda. Toyoda was the oldest son of Sakichi Toyoda, the inventor of an automatic weaving machine and known as one of Japan's 10 leading inventors of the time. In the nearly seven decades since its foundation, the automaker underwent various dramatic changes before establishing itself as the global industry leader.

Initially, some officials of the loom works opposed the decision to branch out into automobiles, a risky venture that even financial combines run by the Mitsubishi and Mitsui groups dared not embark on. Opponents feared that automobile production would be a money guzzler that might also eat into the profits of the lucrative loom works business and bring it down.

In December 1949, the automaker faced possible bankruptcy because it was unable to cover a debt of 200 million yen. It was Takeo Takanashi, a Bank of Japan branch manager, who saved the company from embarrassment. Takanashi called on 24 banks, including Tokai Bank (now UFJ Bank) and Mitsui Bank (now Sumitomo Mitsui Banking Corp.), and had them jointly extend a cooperative loan to save the company from going broke. In 1950, Toyota implemented restructuring measures, including the axing of 1,600 employees and the splitting of sales and manufacturing divisions into separate entities.

Labor unions staged a strike for two months in opposition to dismissals. To settle the dispute, Kiichiro Toyoda stepped down and was replaced by Taizo Ishida, who headed the loom works, which was the most profitable of the group companies at the time.

Under the slogan of "thrift and economy," the company introduced cost-cutting measures and a suggestion system to advance the concept of kaizen (continuous improvement). Furthermore, it concentrated production sites by creating 12 factories within Aichi Prefecture and was able to get itself back on track.

The "Toyota production system," which aims to eliminate waste, was created by Taiichi Ono. It incorporates the "just-in-time" system of minimizing inventory and making just enough products to meet demand. In order to implement the system, the kanban method was devised. The method uses kanban, or signs, that tell suppliers to deliver parts to the production line as and when they are needed. These production systems have been exported to the United States and Europe, where they are now widely recognized as "lean production systems."

On Nov. 4, Toyota announced operating results for the six months that ended in September. According to the company, on a consolidated basis, it recorded net revenues of 9.9 trillion yen, up 10.3 percent from the same period of the previous year, and after-tax net income of 570 billion yen, down 2.3 percent. In terms of car sales, it sold 3.83 million vehicles, an increase of 7.5 percent compared with the first six months of the previous fiscal year. As a whole, it did very well.

Projections based on these figures for the year that ends in March 2006 show the company producing a net profit of 1.23 trillion yen, recording an increase in profit for four straight years. Toyota is expected to sell 8.03 million vehicles, topping the 8 million mark for the first time. Furthermore, based on these projections, the company's worldwide vehicle sales are expected to reach 8.5 million vehicles in the calendar year that ends in December 2006.

GM is advancing corporate restructuring to tide over financial difficulties, and its production is declining. As a result, it is clear that Toyota will soon emerge as the global industry leader. As a way to raise restructuring funds, GM sold 8.7 percent of the 20 percent stake it holds in Fuji Heavy Industries Ltd. to Toyota in October for 35 billion yen.

Toyota and GM agreed to continue technical cooperation when Toyota president Katsuaki Watanabe and GM chairman Richard Wagoner Jr. met in November. At a time when American automakers, including GM and Ford Motor Co., are on the defensive against their Japanese counterparts, Toyota and Honda Motor Co., Toyota's rise to the No. 1 spot could trigger antipathy in the U.S. auto industry. In order to ease such antagonism, Toyota should positively advance cooperation with GM. To that end, the company will also start production at a newly built plant in Texas.

Shoichiro Toyoda, now honorary chairman of the automaker, expanded into the housing industry. But unlike the auto business, the housing division is not doing so well. This year, as a way to get out of the slump, it tied up with Misawa Homes Co., a leading housemaker, in an attempt to catch up with its competitors such as Sekisui House Ltd. and Daiwa House Industry Ltd.

Shoichiro's oldest son, Akio Toyoda, who became Toyota vice president in June, is expected to assume the company's presidency four years from now. Traditionally, leaders of the Toyoda family have branched out into new businesses, and Akio is expected to advance into aircraft manufacturing or the space business. In particular, the company has already obtained approval for aircraft engine production in the United States, and industry officials are keeping a close eye on how and when its plans will take shape.

In order to ease pressure against Toyota, after Toyota chairman Hiroshi Okuda steps down as chairman of Nippon Keidanren (Japan Business Federation), Toyota vice chairman Fujio Cho will stay on with the association as its vice chairman. Furthermore, the company is expected to assume a greater role in the Japan Automobile Manufacturers Association as the top automaker in the world and continue to meet greater challenges in the auto industry and the business world at large.

* * *

The author is a journalist specializing in economic affairs.(IHT/Asahi: November 16,2005)

Lieberman touts plant as model

By SCOTT WHIPPLE, Staff Writer

NEW BRITAIN -- Sen. Joseph Lieberman told Peter Pan Electronic employees the work they are doing "is probably larger than you realize," and that their company is a model for competing in the global marketplace.

"If we pool our resources, our innovation and our willingness to work hard, this country will be full of opportunity for future generations," he said.

The state’s junior senator was in town Monday to tour a manufacturing plant that will benefit from the $500,000 federal grant to Central Connecticut State University’s Institute of Technology and Business Development. The grant was reported last Thursday in The Herald.

Peter Pan Electronics on John Downey Drive manufactures solenoid vales and specialty valves for a variety of applications. It boasts a workforce of 125 and sells to Japan and China.

Company President Paul Mangiafico presented Lieberman with a Peter Pan Electronics T-shirt.

Lieberman told him he would wear it proudly and "bring a little of your Kaizen attitude back to the United States Senate."

Peter Pan used Kaizen and lean manufacturing methods to streamline operations and stay competitive in the global marketplace.

("Kaizen" is a Japanese term that means continuous improvement: "Kai" means continuous; "zen" means improvement. Lean is a customer-driven, waste-reduction manufacturing approach that improves workforce efficiency.)

During his plant tour, Lieberman stopped to talk with Mark Mangiafico.

Peter Pan’s chief engineer told the senator that business was doing so well that it "spawned" a lean approach to get products out the door faster.

CCSU President Jack Miller said he was grateful to Lieberman and other members of the Connecticut delegation for working to support ITBD and its ongoing projects. Miller noted that one of the many Senate committees Lieberman serves on in is Small Business and Entrepreneurship.

"This partnership is an excellent example of the kind of work that can be done when the university, private industry, the state and federal government work together on a project," Miller said. "At Central, 94 percent of our students are from the state of Connecticut; our graduates stay in Connecticut and build the economy of this state."

Calling the $500,000 federal funding "critically important" to manufacturing, Miller cited the loss in sales this industry sector has suffered in the state. Central’s president credited Rick Mullins, ITBD’s managing director and his staff for their hard work. He also thanked Bernard Sweeney, district director of the Small Business Association in Hartford, for SBA’s involvement.

Center helps firms boost efficiency

Nonprofit analyzes business processes, offers solutions

By Tammy Cilione
Poughkeepsie Journal

FISHKILL — When the 59-year-old Kingston business Fala Technologies Inc. wanted to streamline its day-to-day operations, it tried to become more efficient on its own. The effort failed.

"We've tried it in the past and haven't had great success with it," Fala's operations manager, Jaime Chorvas, said of enhancing areas including quality, cost, delivery and eliminating waste and making continuous improvement possible. This process is lean manufacturing.

Since March, Fala has been under the advisement of Hudson Valley Technology Development Center.

The nonprofit is a resource center for manufacturers, technology-based companies, inventors, entrepreneurs and other Hudson Valley businesses.

To help Fala achieve its goals, the center is using value stream mapping, which falls under the umbrella of lean manufacturing. Value stream mapping is a method of illustrating a product's production from its current state to where the business wants it to go.

Robert P. Winrow, field service director for the center, said the purpose of value stream mapping includes eliminating waste time.

"We don't have a product to sell. We visit to identify what a business' needs are and identify potential solutions to implement to solve their unique problems," Winrow said.

The center charges a fixed price for its services and all information is kept strictly confidential, Winrow said. Phyllis Levine of the center said projects are priced according to their size and scope.

Though the center helps larger businesses, its focus is on businesses with 75 workers or fewer, he said.

The center is one of 10 Regional Technology De-velopment Centers in New York funded cooperatively through the New York State Office of Science, Technology and Academic Research and the National Institute of Standards & Technology.

Fala's owner, Frank Falatyn, said it is important for his employees to know how to run Fala Technologies because he is working on other business projects.

"Hudson Valley Technology Development Center was my source for training people and bringing them up through the ranks," Falatyn said, " I've turned my company 100 percent over to my people, and that only happened recently."

Falatyn said in the past he has sent all of his employees to training to acquire these skills.

"You learn it in school, but to apply it is another level," Falatyn said.

Falatyn said it's the center's hands-on approach that makes incorporating lean manufacturing into workers' daily tasks possible.

"This is where you take what you have learned and apply it to a specific task," Falatyn said.

The roadmap to `lean' and beyond

Source: Bangkok Post

This week we continue discussing the basic roadmap for implementing ``Lean'' thinking and processes across the supply chain. Remember that lean is a journey and not a destination, and that the ``leaning'' of the supply chain is a continuous improvement initiative. Vision and lean training. Communicating lean thinking effectively throughout the organisation is vital to its successful implementation. Effective communication has to begin at corporate and senior management level so it is vital to begin the roadmap by gaining top-level vision and support.

In the competitive global economy, management must appreciate and understand the financial opportunity and long-term business benefits of converting from traditional batch operations and structures to a streamlined, lean process in such critical areas as manufacturing, supply chain and administration.

The conversion to lean requires an understanding of all its components and principles for their integration from supplier to customer. For example, the supply chain is activated in a plant by developing products, securing supplies, ensuring a quality manufacturing performance, and making timely shipments to customers. Key stakeholders must know the tools that can introduce lean to the entire supply chain flow.

A learning organisation must be established with embedded knowledge so that the transition to lean can continue even if key people leave. Formal lean training and certification demonstrates an organisation's professionalism of the total overall lean approach and willingness to invest in its people.

Take a structured approach. Without a structured system to make things happen, a conversion to lean is doomed. Two layers of management committees are recommended to drive the conversion throughout the firm, and to set and evaluate relevant performance metrics:

Lean Improvement Management Council: consists of a dedicated Lean Champion/Kaizen Facilitator responsible for identifying and implementing improvement opportunities. This group is also responsible for prioritising the opportunities and maintaining the schedule of continuous improvement in the form of ``Kaizen events''.

Senior Management Council: assures that the resources are made available and provides the organisation's strategic goals while setting and reviewing key performance metrics allowing for progress reviewing of the Lean Improvement Management Council.

Identify the value stream. Lean cannot be solely focused on manufacturing operations. Implementing lean requires a total business strategy review _ from the first-tier supplier through manufacturing to the end customer. By identifying the total supply chain product flow in terms of time and time constraints, the road map of priority actions required to reduce cycle time and eliminate waste can be identified.

Getting quick wins. In any organisation, it is important to demonstrate results quickly. A well-proven mechanism is training followed by action with continuous improvement (Kaizen as the Japanese know it) events. Kaizen produces quick improvements in order entry, demand planning, product development and any administrative areas by applying appropriate lean tools.

Many companies initially implement lean within the production areas. Results and improvements in such areas are easily visible for all to see. Attaining visible improvements helps to convince staff of the merits associated with lean and allows for a smoother roll out within the wider functions of the organisation.

Lean the entire supply chain. To be a lean operation, an organisation will require the support of both its suppliers and customers. To attain lean, an organisation must partner with its major suppliers, and each supplier must adopt a lean implementation strategy where improved quality standards and flow production are achieved and delivered through lean logistics. Achieving a smooth flow of the entire supply chain is the most essential step toward becoming a lean operation.

Maintain the momentum. Management's strategic vision for maintaining the momentum for change must include rewarding people for buying into continuous improvement. That's why celebrations, credentials and rewards are crucial. Recognition and gain-sharing programmes embedded in the organisation's culture will provide a bridge to continuous improvement, even in the face of high management turnover.

Beyond lean _ operational excellence. The leaning of the supply chain targets the easier-to-get ``low-hanging fruit'', while another set of tools, Six Sigma, allows organisations to target the ``high-hanging'', harder-to-get fruit.

Typically Six Sigma combats more technical issues and is mostly used to improve process capability and reduce process variations by means of enhanced design tools and a Six Sigma generic problem-solving tool.

A combination of Lean and Six Sigma ultimately gives organisations the powerful tools that are necessary to enable successful development of world-class products and services.

Depot North Island captures first-ever DoD CPI Award

dcmilitary.com

November 10, 2005

by Bill Bartkus
NAVAIR Depot North Island

NAS North Island, Calif. - DoD has taken note of the excellent work performed by NAVAIR Depot North Island teammates in support of the warfighter and has awarded the depot the first-ever Continuous Process Improvement Achievement Award for aviation activities. The depot was recognized as DoD's best of breed CPI aviation depot activity. Depot Commanding Officer Capt. Tim Trainer accepted the award Oct. 26, for the depot during the DoD Maintenance Symposium in Birmingham, Ala.

The award cited the depot for being at the forefront of AIRSpeed since the program got off the ground in 2001. As a leader in the aircraft and components products lines for both depot AIRSpeed as well as the broader Naval Aviation Enterprise AIRSpeed efforts, North Island aggressively worked to effect fundamental changes for NAE.

The depot's impressive results include reducing the F/A-18 Phase Maintenance Interval (PMI) average cycle time to 140 days from more than 190 days and reduced average PMI-1 Work In Progress to 16 aircraft from 31 aircraft. Depot teammates were also credited for reducing the CH-53E turnaround time to 318 days from 376 days, reducing the E-2 PMI-1 cycle time to 35 days from 100 days, and reducing the C-2 Service Life Extension Program (SLEP) to 300 days from more than 400 days.

The depot also established an E-2 PMI-1 site at Naval Air Station Point Mugu, Calif., and assisted in establishing an E-2 PMI-2 site in Japan to meet the fleet's needs for E-2 depot maintenance at lower overall out-of-service time. Implementation of PMI-2 in Japan was critical for the Hawkeye community to meet its future flight line aircraft requirements for Carrier Air Wing Five, the forward deployed air wing, in Japan. Implementation of the field site in Point Mugu has resulted in a cost efficiency of more than $300,000 per PMI-1 aircraft and increased Ready For Tasking (RFT) for the fleet.

In the Components Program, reductions in turnaround time and the speed at which repairs are made translate directly to less dollars being spent by NAE to buy new spare parts.

"AIRSpeed has been the vehicle to change the Components Program Business Model. The program's focus has shifted to production from induction and has reduced the amount of components in material delay thereby using repairable assets," said Cmdr. Douglas Lucka, depot AIRSpeed officer. "The depot's focus remains to provide the right product at the right time, at lower cost to the Naval Aviation Enterprise."

Lucka extended his kudos to every member of the depot team. "The award reflects the innovation, pride and dedication to the warfighter that NAVAIR Depot North Island is known for. Our plant's AIRSpeed efforts are yielding results that are visible to the Naval Aviation Enterprise, and each and every person should be proud of their contributions," he said.

"We could not have accomplished these results without the efforts of everyone in the plant. I look forward to continuing the AIRSpeed journey with you."

"Winning the award recognizes and encourages the application of best practices including Lean, Six Sigma and Theory of Constraints to improve production velocity, reduce waste, improve quality and reduce our cost of operation," said North Island commanding officer Capt. Tim Trainer.

"Congratulations to everyone involved in our AIRSpeed deployment. I cannot be more proud of what you have accomplished over the past three years," Trainer said.

Geared towards excellence

domain-B

9 November 2005

Another Rane Group company, Rane TRW, achieves the Deming. S Krishnakumar, president, talks to V Jagannathan about it.

Chennai: Chennai, the Detroit of India, could well be termed as the country's Deming City. This year two Rane group companies — Rane TRW Steering Systems Limited and Rane Engine Valves Limited — figure in the prestigious Deming medal list awarded by the Union of Japanese Scientists and Engineers (Juse). In fact the Deming medal has become the flavour of the season in this part of India.

Juse rates Deming applicant companies on the following criteria:

*
Management policies and the deployment regarding quality management
*
New product development and work process innovation
*
Maintenance and improvement of product and operational qualities
*
Establishment of systems for managing quality, quantity, costs, environment, safety etc.
*
Collection of information on quality and utilisation of IT
*
HR development.

Interestingly, three Indian companies figure in the 2005 Deming medal list out of four in the world and two of them belong to the Chennai-based auto component group Rane.

The Rs11.83-billion turnover group had introduced the Deming process in December 1999. While Rane Brake Linings Limited literally made a dash to the medal, which it won in 2003, (See The Deming dash) for Rane TRW and Rane Engine Valves it was a saga of steady progress.

Says S Krishnakumar, president of the Rs360-crore Rane TRW, "We started our total quality management (TQM) journey under the guidance of Prof.Y Washio of JUSE. He is an individual Deming Prize winner and an acknowledged authority in Japan in 'statistical process control' and 'new product development'. He held the first workshop in December 1999 and subsequently, visits us once in three months to provide guidance."

A University of Madras graduate, Krishnakumar did his post graduate engineering from the Indian Institute of Science, Bangalore and post-graduate diploma in marketing management from the Indian Institute of Management-Ahmedabad. Prior to joining the Rane group, he worked with automobile and auto component manufacturers like Tata Motors Limited and the Anand Group of Industries and moulded luggage manufacturer Blow Plast Limited.



Established in 1987 (equity base: Rs8.7-crore) Rane TRW is a 50:50 joint venture between the Rane group and TRW. The company has three divisions — fully integral gears division, which has the Deming; hydraulic pumps; and power rack and pinion. Fully integral gears are fitted on multi-utility vehicles and commercial vehicles while power rack and pinion is fitted on passenger cars.

Krishnakumar talks about the company's Deming journey. Excerpts.

How did the Deming process start and how did it progress?
It was a workshop for the top management conducted by Prof. Washio in December 1999 that initiated the Deming process inside the company. The process was formally initiated in the company in April 2000. As the group comprises multiple companies with multiple plants, we set up a three-tiered promotion structure.

At the tier 1 group level we had the TQM Apex Council comprising of the group chairman, vice chairman, presidents and the total quality (TQ) coordinators of group companies and group TQM coordinator. Tier 2, which is at the company level, is called TQM Promotion Committee. This consisted of the president, senior management group of the company and plant and head office TQM coordinators.

Tier 3 is at the plant level and is known as TQM Promotion Team. This team consisted of plant and head office functional heads, plant functional heads, head office department heads and TQ coordinators for the plants and the head office.

The company had a TQ Coordinator to monitor implementation and provide necessary alerts to senior management. Each plant of the company had a plant TQ coordinator who was responsible for facilitating TQ practices in the plant. The company and plant TQ coordinators worked closely to ensure practices were spread uniformly across plants. TQ coordinators were also responsible for coordinating the visits of counsellors from JUSE and ensuring homework given by them is carried out to their satisfaction.

What roadblocks did you encounter?
We had to change the mind set of the employees to help them appreciate the TQM philosophy. Training programmes that emotionally charged our employees were organised and enhanced their motivation to embrace TQM. Initially, there was a feeling that TQM was only for the shop floor and not for non-manufacturing functions. Slowly, we realised that standard operating procedures (SOP) and Kaizen were as much applicable to processes in functions like finance, marketing, materials as they were for manufacturing process. We realised the need for writing SOPs for these processes to insulate them from human error.

Did you have to make any additional investments?
We did not make any additional investments save the consultancy charges of Japanese Sensei. We recovered these costs many times over from the suggestion schemes and quality control (QC) circles, which gave us significant cost reduction due to improvements.

What cost reduction or other benefits did the company derive after the TQM practice started?
This data table is self explanatory.

2000 - 2001 (pre TQM)			2004 - 2005 (post TQM)
Actual	Plan	Actual	Plan	Actual
Sales	Rs94.6 crore	Rs97.9 crore	Rs277.3 crore	Rs310.2 crore
New Product Sales	Rs5.5 crore	Rs4.9 crore	Rs69.6 crore	Rs88.6 crore
Customer Line Rejection	Data Not Tracked	Data Not Tracked	100 PPM	404 PPM
Energy Cost / Net Sales (in percentage)	2.71	2.61	2.35	1.86

The intangible benefits include the company having become more customer focused with improvements in business processes, system orientation and cross functional working. The diagram shows the quality, cost and delivery (Q, C and D) expectations of global majors from us vis-à-vis, prior to Deming.



What ratings did the company obtain for the major criteria required for the award of the Deming?
The points awarded by the examiners are confidential and not shared with the companies. The qualifying mark for Deming would be 70 out of 100 on the criteria indicated.

When did you start implementing concepts like TQM, total productivity maintenance (TPM), lean manufacturing, etc, in your plants?
The Deming Award is only a milestone in our TQM journey. We were extremely careful not to bring in new initiatives as we believed they would only confuse our employees. TPM was introduced on a need basis selectively under the umbrella of TQM. Similarly, lean manufacturing was taken up in companies only after achieving Deming.

It takes some years for a company even to get the confidence of applying for the award. So when did you get that confidence?
It took us three to four years to understand the various principles and tools of TQM and practice it in an effective manner. The award process is a two-step process - diagnosis in 'year 1' (October to December) and on-site examination in 'year 2' (August). Formal applications for these have to be made three months before the events. In April 2004, we began to feel confident about going through the diagnosis by the year end. Our TQM diagnosis took place in December 2004.

Normally Juse makes suggestions for further improvement while awarding the Deming medal. What did it suggest for your company?
We were advised to use extensively the 'design of experiments' (DOE — a systematic approach to assess a system or process) to improve our problem solving capability and also enhance our capability for reliability analysis so that our validation test results could be better correlated with that of field performance of our products. JUSE also advised us to attempt the task achieving 'QC story methodology'.

We have incorporated initiatives to implement Juse's suggestion in our strategic business plans. We would like to implement these suggestions and showcase the results in a three year period, when we would need to undergo a surveillance audit. It would also stand us in good stead when we plan to challenge the Japan Quality Medal.

How has the TQM / Deming medal helped the company with post sales customer or market information? What was it before Deming and what is it now?
Using TQM learnings, we carried out systematic segment-wise customer surveys to understand customers' perceptions on our products and companies. These were used to put in very focused action plans with clear accountabilities that enabled us to improve our performance in the eyes of the customers. The use of 'quality function deployment' or QFD (a structured mathematical tool used to spot customers' requirements and translating them to key critical parameters) also enjoined us as to get customer voice in developing new products. Here we converted customers' basic perception of our product performance into engineering specifications; besides we benchmarked the performance of our products with those of competitors to develop superior quality.

How did you involve your suppliers in the TQM activity?
We have put in place a structured supplier development programme with extensive supplier training on TQM and quality concepts. Early involvement of suppliers is a key feature in the development of new products.

What does the new tag, 'A Deming Company' mean to your domestic as well as overseas markets?
Deming is essentially a Japanese award and it does not have a great recognition either in the US or Europe. We pursued Deming not for increasing sales but for improving our operational efficiencies, which would stand us in good stead in bagging new and challenging business. In fact, the Deming tag would increases customer expectations from us and we would have to strive to meet these expectations.

A step by step guide to lean manufacturing

Ferret.com.au

By Les Brookes*

THERE is clearly confusion between Lean, Agile, 6 Sigma, TQM, etc. But what falls under the Lean umbrella and how do you get there? And how do we avoid initiative overload?

The term Lean suggests no fat or a minimum level of fat and applying this to business would imply minimum levels of waste. This suggests that to become lean we must remove waste from the business processes to leave just that activity that adds value. Whilst this would appear logical, actually understanding that which is of value versus that which is not, and then applying this to all aspects of a business is difficult. And often the answers do not lie within the grasp of management running the business, but with people who are closest to the process and better placed to see the value and waste.

One of the key lean tools is that of “Value Stream Mapping” which enables us to create a map of both value and waste in a given process. This map can then be used to understand the waste and its causes before moving on to remove it so that value flows without interruption of waste.

Step 1. Lean Business Philosophy - For the senior members of a business to support any type of business improvement methodology there needs to be a vision of what the business would look like afterwards. The senior board must grasp what is meant by Lean, and identify the opportunities, dangers, level of commitment required and benefits.

This first step needs to take senior members and key decision makers through the issues, ideally through action-based learning simulation so they experience this first hand. They can then decide whether Lean can be supported, and develop a vision and implementation strategy.

It is often assumed that the biggest area for improvement is in the manufacturing/processing areas whereas the opposite can be true. Most businesses have focused on manufacturing for some years and may find to improve support parts of the process actually unlock more potential in manufacturing as a result.

Step 2. Culture and Organisational Change Programme - In order to implement the Lean philosophy we have to take great care of our most important asset - people. Lean has as big an impact on management as it does on the workforce, but in completely different ways.

With Lean, the people who can most easily get to grips with value-adding and non-value adding activities are the workforce. For Lean to work we need to adopt a bottom-up approach which is led and supported by a visionary senior group and facilitated by middle management. Waste is far easier to understand and remove as close to where it is created in the process.

It is essential to have a co-ordinated teams programme which runs alongside the lean activity and education to ensure that all members of staff are correctly coached. This avoids conflict and enables the efficient removal of waste.

Step 3. Applying Lean To Your Business - This stage involves educating middle management in the Lean business philosophy, creating understanding of how this can be applied and re-focussing them to move to a facilitation role.

At this stage we begin to deal with the cultural and behavioural issues that can exist between the management and workforce, and also with management releasing some of the ownership of improvement to put belief into the Lean process to drive the business forward. Lean will cut across functional/departmental boundaries which will eventually lead to a restructuring of responsibility for the major business processes.

Step 4. Transformation to Lean - We are now ready to move onto application which involves a series of critical steps that enable us to focus on the higher level issues surrounding this stage, which are People, Education, Support and Approach.

We need at this point to form teams of about 12 people, some of whom will come from the process, to be used for the initial education and training, with the minority (2) coming from outside to act as third party objective team members. The Oliver Wight Approach is to run an action-based learning event to educate the team, who are supported by middle management. The key here is not to take ownership of the plan but to provide conditions in which the team can implement. A nucleus of people trained in the Lean tools and techniques can then, with some external support, help others create lean processes.

Step 5. Sustainability - Sustainability is often one of the problems with any business philosophy adopted. Often this comes about as a result of lack of senior commitment, no goal alignment throughout the organisation, lack of understanding and no alignment to strategy.

This is why step 1 is important to both cover these issues and also to ensure that management understand that Lean is not just another initiative. Lean can only be achieved through behavioural and cultural change to a business where waste is not acceptable.

In conclusion, Lean can deliver huge benefits to any business by following a Proven Path Approach. Success can be achieved providing that the commitment is there at senior level and that companies recognise the need for some external support.

Lean manufacturing in sheetmetal fabrication

Ferret.com.au

IN today's competitive market, manufacturers are looking for fabricating systems that can yield high productivity and flexibility with low operation and maintenance costs.

Strippit/LVD being a leading manufacturer of fabrication machinery, integrates the latest manufacturing principles to its facilities. Strippit/LVD also applies these principles when designing machinery.

The most recent manufacturing principle to be applied is 'Lean Manufacturing'. Lean Manufacturing encompasses the reduction of operator input, raw material stocks, set-up times, manual operations and costs while increasing production.

In Australia several manufactures have applied these principles in selecting machinery but surprisingly the larger the company doesn't always equate to the larger the automation.

Pierlite is a leading manufacturer of domestic and industrial light fittings and currently runs factories in Sydney, Adelaide, and Wellington. In response to increase competition from local and overseas companies Pierlite needed to increase production while decreasing costs.

Like most companies of this size the instant response was to look at investing in a system with a large degree of automation. After looking into several systems Pierlite decided such a specialised machine did not suit its production.

Instead, it was decided to design operations around 'Production Cells'. These production cells meant installing several machines, which could be run simultaneously by one operator. By doing this it gave Pierlite the flexibility to run both small and large production runs with quick changeovers, decrease labour costs, while at the same time increasing production.

For its machinery Pierlite decided to purchase three Global 20 1215 turret punch presses and three PPEB press brakes from Strippit/LVD's Australian distributor GWB Machine Tools.

The Global 20 provides some of the fastest production speeds, with hit rates of up to 510hpm on 25mm centres, while the PPEB press brakes have some of the most advanced features such as quick change tooling, high speed bending and the easy to use but powerful Cadman CNC control.

While the Cell Production concept works for Pierlite, other companies looked to different types of Lean Manufacturing, Strippit/LVD once again provides the solutions.

DVR Metal Industries is a small family run contract fabrication company in Brisbane employing about eight people. Company director Bob Viner’s business motto is 'Delivering Technology'. In keeping with this principle DVR has invested in the latest equipment from Strippit/LVD.

To help increase a competitive edge DVR has recently invested in a Global 20 1225 Turret punch press with full lights out automation, with the intention to run this system unattended during the night.

This allows the company to increase production without having to put on a second and third shift. The Global 20 will be installed with a fully automatic load/unload system and parts sorting.

The Global 20 is being complemented by a PPEB 80/25 press brake also purchased. These two machines will be installed alongside other equipment from Strippit/LVD a PPEB 135/30 press brake with laser angle measurement, an MVS guillotine and a Helius laser.

Bob Viner also realised that having the latest equipment was important but the latest software was needed to program the machines. That is why DVR is using the Cadman software from Strippit/LVD.

The Cadman software is designed around Strippit/LVD's principle of 'Art to Part' offering full integration from part drawing through to manufacture.

The Cadman software offers 3D part drawing or 3D importation. The software will automatically unfold the part to create an accurate flat pattern for punching and laser cutting.

This high level software means that only one programmer is needed to program four different types of machines simultaneously.

11 November 2005

Toyota culture overpowers rivals

afr.com

Doron Levin Bloomberg

Toyota Motor Corporation makes life miserable for Detroit's car makers in more ways than anyone can count.

Consider Toyota's Camry family sedan, the top-selling model in the United States last year, its seventh sales crown since 1996.

The Camry, once a compact economy car, has evolved into a consumer benchmark for quality and reliability.

Toyota benefits from a manufacturing system that produces Camrys so efficiently and at such low cost that US-based car makers have a tough time keeping up.

The world's most profitable car maker, with more than $US10 billion ($13.3billion) in net income last year, uses its financial clout to invest in further improvements and innovations, such as hybrid technology, helping it gain market share in the US, even as rivals bemoan the cost of developing their own hybrids.

"Toyota just saves and saves in a million little ways and then uses that money as a club against its competitors," says Jim Olson, a former Toyota executive and guest lecturer in business at Winthrop University, South Carolina.

In 1990, The Machine that Changed the World, a book based on a research project, predicted Toyota's production system - called lean manufacturing by the authors - was destined to revolutionise car making.

The authors, James Womack, Daniel Jones and Daniel Roos, asserted Toyota's philosophy of waste reduction was as historic as the invention of the moving assembly line.

The book's prophecy is being borne out by events. Every car maker in the world, and many non-automotive manufacturers, now study Toyota. Executives at General Motors, Ford and Delphi - the former GM parts subsidiary that filed for bankruptcy on
October 8 - are pushing to cut health care and other so-called legacy benefits from non-competitive labour agreements, which they blame for poor financial performance.

Health care, for example, adds $US1500 to the cost of making a GM vehicle. Yet even if health care, pension costs and high union wage scales were somehow to shrink, the manufacturing expenses of US car makers would still be uncompetitive.

By rooting out wasted costs, effort and time - as well as excess capital investment - Toyota has been able to turn factory usage and labour productivity into major advantages.

Last year, Toyota's North American factories built 1.44million vehicles. That number is 107per cent of Toyota's theoretical capacity, as the plants worked two shifts a day without overtime.

In contrast, GM and Ford factories used only 86per cent of rated plant capacity last year.

Harbour Consulting, a Michigan firm that analyses factory efficiency, reported in June the average Toyota vehicle built last year in North America needed about 19.5hours of labour for assembly, while each GM vehicle took about 23hours and each Ford about 24.5hours.

"The big challenge if you're trying to match Toyota is that they've developed a culture over decades," says Jeff Liker, a University of Michigan engineering professor and author of The Toyota Way, published in 2004.

GM "has to change an existing culture into a new one", he says.

Teaching the Big Box New Tricks

Fortune

What Toyota knows about supply chains—and how to apply it to almost anything, even megastores.

Manufacturing gurus James P. Womack and Daniel T. Jones have been studying the finer points of Toyota's business for more than two decades. Their 1990 bestseller on the topic, The Machine That Changed the World, has been translated into 12 languages. In their new book, Lean Solutions, excerpted here, Womack and Jones apply the Toyota system to service industries, including retailing, auto repair, and medical care. A key part of their "lean consumption" message is that customers' time is a central component of their total cost—and that a major opportunity awaits business executives who build on that insight. One of their surprising revelations is that the British supermarket chain Tesco, featured in the excerpt below, has applied Toyota's logistics methods so successfully that, the authors contend, it's leaving Wal-Mart's British subsidiary, ASDA, in the dust.

Most companies approach the marketing of products by breaking customers down into specific demographic attributes. With these data in hand, it ought to be possible to predict where customers will shop and in what format: price-conscious shoppers at Wal-Mart; time-pressed, higher-income customers at the stores near their homes or offices; or consumers on the web. The lean-consumption approach is very different. Rather than focusing on customer attributes, the lean provider looks at customer circumstances. Time is a constraint for most consumers today. This is where lean consumption can fundamentally change the equation—because the customer can actually obtain the same items cost-effectively through the entire range of store formats without being forced to make tradeoffs between time and price.

Tesco in Britain has been a pioneer in lean provision for more than a decade. In the mid-1990s, as he looked at the opportunities for retailers provided by the emergence of lean logistics, Graham Booth, Tesco's supply-chain director (now retired) had a very simple insight: A rapid replenishment system triggered by the customer would work in any retail format. What's more, it would work even better if the same replenishment system, using the same suppliers, cross-dock distribution centers, and vehicles serving many stores, could supply every retail store format.

Indeed, Booth saw that there might be very little difference in real costs in supplying the same item through any store format. This was because the purchase price from the supplier could be negotiated for the whole network, not by format, and the same replenishment system making frequent milk runs to larger stores could also stop at small stores to share logistics costs. The cost disadvantage of smaller outlets, due to weak supplier leverage and expensive logistics, would largely disappear.

Booth approached Dan Jones and his research group at the Cardiff Business School in Wales, asking how Tesco could benefit from Toyota's supplier logistics methods to reduce time and effort. Dan suggested "taking a walk"—examining a typical provision stream, in this case the one for cola. He urged Graham to invite the other functional directors at Tesco—retail, purchasing, distribution, and finance—along with the operations and supply-chain directors of Britvic, the company supplying the cola. On a cold day in January 1997 this group set out, walking back through the provision stream for cola from the checkout counter of the grocery store through Tesco's regional distribution center (RDC), Britvic's RDC, the warehouse at the Britvic bottling plant, the filling lines for cola destined for Tesco, and the warehouse of Britvic's can supplier. Along the way, Dan and his team from Cardiff kept asking simple questions: "Why are products missing from the shelves? Why does a sales associate need to re-sort products from roll cages that have just come off the truck from the RDC? Why is so much stock needed in the back of the grocery store, at the Tesco RDC, and at Britvic's RDC? Why are there huge warehouses of cans waiting to be filled near the bottling plants?" And so on. The walk was an eye-opener. When Tesco and Britvic analyzed the map they drew of the process as they walked, they could see waste at every step, along with huge opportunities for saving costs while increasing the satisfaction of the end customer. As Booth looked at the situation, he realized that practically all of Tesco's practices for getting goods from the supplier to the shelf would need to change.

The first step was to hook the point-of-sale data in the store directly to a shipping decision in Tesco's RDC. This made the end customer at the checkout point the "pacemaker" regulating the provision stream. Tesco then increased the frequency of deliveries to the retail stores. After several years of experimentation, Tesco's trucks now leave the RDCs for each store every few hours around the clock, carrying an amount of cola proportional to what was sold in the last few hours. At the RDC, cola is now received directly from the supplier's bottling plant in wheeled dollies. They are rolled directly from the supplier into the delivery truck to the stores. And once at the stores, the dollies are rolled directly to the point of sale, where they take the place of the usual sales racks. This innovation eliminates several "touches," in which employees moved cola from large pallets to roll cages, to the stores, and then onto dollies to reach the shelves, where they were handled one last time. (In drawing their provision-stream maps of the original process, Tesco discovered that half its cost in operating this provision stream was the labor required to fill the shelves in the store.)

For fast-moving products like cola, the Tesco RDC is now a cross-dock rather than a warehouse, with goods from suppliers spending only a few hours between their receipt and their dispatch to the stores. To guard against sudden spikes in demand, a buffer