Think lean for the long term
IT can make the journey smoother, but not without corporate commitment
By Malcolm Wheatley, senior contributing editor -- Manufacturing Business Technology, 6/1/2005 6:00:00 AM
When Bridgeton, Mo.-based Hussmann Corp.set out on its journey to lean, things didn't go according to plan. One of lean's central tenets—pull-based scheduling—is typically achieved using kanban cards. But for Hussmann, a manufacturer of refrigerated display cabinets, its paper-based kanban cards were repeatedly getting lost in the 1,000-employee plant, resulting in production delays.
"In the end, there was a perception that a pull-based system would never work for us, because you couldn't transfer the responsibility for carrying out scheduling to hourly-paid staff," recalls Karl Yeager, material flow leader at the plant. And so, for a while, the lean initiative stalled.
It's not an uncommon scenario. While competitive pressures have prompted many American manufacturers to adopt lean manufacturing principles over the last few years, relatively few manufacturers have succeeded within the time frame they anticipated. And even fewer have succeeded at moving lean beyond the factory floor, into the extended supply chain.
What can companies do to make their lean programs more successful? And how can IT support those efforts?
The recently completed Lean Strategies Benchmark Report from Boston-based Aberdeen Group offers some answers.
The report, authored by Chris Jones, Aberdeen's senior VP of research, is based on a survey of more than 275 companies from a cross section of U.S.-based manufacturers. Of the companies surveyed, 14 percent have more than $1 billion in annual revenues; 16 percent, from $250 million to $1 billion a year; and 70 percent, below $250 million.
The collective experience of the companies surveyed led Jones to three conclusions about what it takes to succeed with lean. The first conclusion is that success will not come overnight. Typically, says Jones, it takes two years for any significant benefits of lean to kick in—especially when lean extends beyond the factory floor.
Second, IT can accelerate lean improvements, especially when it comes to automating tasks like line design and load leveling in production processes. The AberdeenGroup survey indicates more than 90 percent of lean practitioners are still using spreadsheets or paper-based solutions for these tasks.
Electronic kanban
The third conclusion is that many companies implement lean more slowly than they have to, simply because they lack the metrics and tools to prove that lean is working. (See sidebar, Typical productivity measures don't apply to lean.)
Hussmann jump-started its lean program by replacing its manual kanban system with an electronic solution from eBots. This system has virtually eliminated the lost card problem by allowing workers to place the cards associated with parts they have just used in a box near their workstations. Twice a day, an hourly worker collects the cards and scans bar codes attached to them, sending new replenishment signals to the eBots system. The system then prints new cards that are placed in the appropriate parts bins in the storeroom. Previously, workers were expected to trigger replenishment by returning cards to the storeroom. This often was overlooked in the course of a busy workday, which led to cards being lost.
Hussmann now has 1,500 electronic kanbans in place, and is adding to them at the rate of 15 to 20 a day, reports Yeager. He also says lean concepts are becoming part of Hussmann's culture, which is creating a happier, more productive workforce. "Once you've got lean principles in place, it's almost natural for employees to take ownership of the process," he says.
Hussmann's story typifies many other manufacturers' experiences with lean. A decade ago, the stumbling block was the cultural transformation called for by managers and the workforce alike. But while companies have gotten better at dealing with lean's softer side, there's still a problem when those softer issues clash with the harsh realities of shop-floor schedules, customer orders, and manufacturing plants configured around yesterday's management paradigms.
According to Jones, many manufacturers exhibit a kind of myopia when it comes to the IT tools that might support their lean programs. "Manufacturers just don't seem to see the relationship between the problems that they experience, and the fact that technology to alleviate them is available," says Jones. "It's a significant disconnect."
Load-leveling works
Take production scheduling, for example. Simple lean logic—the idea that excess inventory is a waste—along with Jones' studies of best-in-class plants forced him to conclude that some form of level-loading, pull-based scheduling is an effective way of using IT to support lean.
The problem, he points out, is that switching to pull-based scheduling typically requires ripping out systems that do push-based scheduling—something few manufacturers are willing to do.
The lack of IT systems available to support lean in its early day prompted many manufacturers to continue on their lean journeys without even thinking of adding systems. Jones says that might change as more manufacturers are exposed to systems that can support lean, such as the RapidResponse solution from Webplan. This system allows manufacturers to predict the effect of changes in demand on operating capacities and workloads—an important capability in lean factories, which are supposed to run without the security of inventory buffers.
As Jones observes, lean plants sometimes need software to act as a pacemaker, releasing orders to manufacturing at a level pace that doesn't swamp production resources. At Westfield, Mass.-based Instrument Technology, that meant a system compatible with the so-called Theory of Constraints, or TOC, a load-leveling concept that calls for identifying the one operation in a plant that will cause bottlenecks if it is not producing enough parts. The idea is to keep that constrained operation constantly running at full capacity, even if other operations have to slow down to match its pace.
Instrument Technology adopted the TOC approach when its lean effort—which was supposed to shorten lead times and improve on-time delivery performance—began to stall. Jeff Carignan, VP of manufacturing, says his study of TOC "was an epiphany."
Carignan saw how lean and TOC complement each other—especially in environments such as Instrument Technology's, where highly variable demand patterns are conjoined with finite machining resources. "Lean manufacturing and TOC have similar messages," concludes Carignan. "Both tell you not to build inventory, but build only what there is actual end-customer demand for."
Lean supply chains
Another way in which IT can support lean, says Jones, is helping manufacturers configure their plants properly. Tools such as process optimization technology, simulation programs, and even CAD systems—from vendors such as Pelion Systems, Brooks Automation, and Kubotek—assist manufacturers with plant layouts, simulating newly improved lines in operation, and constructing lean-compatible, automated production equipment.
While companies are finding that IT can boost lean efforts, experts counsel against viewing IT as a magic wand, primarily because many other factors determine how fast—and how well—a lean program will proceed. Ian Bannister, operations director at automotive accessory manufacturer Thule, Malmö, Sweden, has been implementing lean programs for 15 years.
"Resource availability generally dictates the pace in implementing lean, and lean initiatives are rarely staffed with full-time resources," Bannister says. "If you're going lean in bite-size chunks, it's possible to do an assembly line or cell in three to six months—but to make a real impact, extending those lean 'islands' into the wider business can take two years or longer. And many companies simply never get that far. They say that they have adopted lean—but it's at the cell or assembly-line level, not the whole business."
Extending lean into the supply chain calls for links with other enterprises. And the cost and complexity of interfacing to different systems can make things difficult—an issue that once troubled Robert Jackson, director of worldwide operations at memory card and memory module manufacturer Smart Modular Technologies, Fremont, Calif. "The overall imperative is to be a lean business for our customers," Jackson says. "If it doesn't add value to customers, why do it?"
That reasoning led to Smart Modular's adoption of supply chain portal technology from RiverOne. Jackson describes the solution as an information translation hub.
"We can take our data and make it available in our customers' worlds, and take their data, and make it available in our world—irrespective of the systems they use," says Jackson.
RiverOne likes to think of itself as "the one you go to when the next link in the production process isn't a neighboring work center, but another enterprise," says company VP Peter West. "We're not the lean story," he adds, "but we are part of what going lean calls for."
