Norfolk Southern and Seaman Managing Times Q1 2009

Q1.09

MANAGING TIMES S h a r i n g

S o l u t i o n s

f o r

Y o u r

L e a n

J o u r n e y

Norfolk Southern: Giving Customers More Value for Their Transportation Costs

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6 Seaman Corporation is on the transformation fast track

LeanSigma : keeping aircraft checkups safe and efficient 速

13 DPloy: A better way to track metrics and execute strategy

PUBLISHER’SNOTE

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he past year has been extraordinarily dramatic politically and economically. On both fronts, the need for change has become transparent to the most casual observer. On the business side of the ledger, the pain of the “Big Three” U.S. auto makers is a powerful lesson about the value of embracing the broad tenets of “lean.” Putting aside for a moment the pressures that unions placed on the auto makers, what crippled their capacity to compete was an unwillingness to properly transform their companies to meet the market’s need for quality, value, innovation, and agility.

In a downturn, companies tend to choose layoffs, shutdowns, and deep cost cutting as survival tools. While some of these may be unavoidable, consider also taking a hard look at your business, concentrating on what you do best, and placing a renewed focus on your customer connectivity, creativity, and search for waste. The goal must be speed and agility as well as doing more with less—and

Look Forward with LeanSigma®

figuring out how to inject these imperatives into every last employee. When dealing with market fluctuations and economic stress, look closely at the characteristics of lean companies that have successfully transformed their enterprises for competitive advantage in any business climate. Lessons like increased responsiveness to changing customer demands can sustain market share and customer loyalty.

• Focus on what you can control. Take waste out of your operation. Remove what d o e s n’t add value to free up cash.

Re-examine your inventory, your lead times, your energy use, and your accounts receivable pro c e s s e s—the most obvious sources of waste. Norfolk Southern Railroad has done just that by improving its locomotive maintenance processes as well as the velocity of trains through rail yards—all to help insure that their customers get their freight on time, every time. (p. 2) A regional airline has also found that focusing on removing waist can shorten maintenance times, keeping planes flying longer. (p. 10) • Tighten connectivity to customers. Listen to your customers. Go to them and find out what they really want through discussions and observations so that you can develop immediate, i n n ovative solutions to their unarticulated needs.

Getting close to your customers is essential to even finding out where waste is. Focus on lead time, quality, and value innovation.

• Create synchronicity between your supply chain and the rest of your enterprise.

Create partnerships up and down your value chain.

• Leverage gains for growth. Every time you eliminate non-value-added steps and reduce waste in your processes, you

can increase capacity, improve productivity, and cut capital spending.

Seaman Corporation has done just that, through rigorous project selection and acceleration of their lean journey to dramatically increase productivity and grow its business. (p. 6) • Create a current, compelling vision for the future. Communicate the “strained times” vision with everyone in the organization and clarify everyone’s roles.

Develop a roadmap to achieve that vision that everyone can follow.

Communication derails speculation and allows everyone to concentrate on working together to improve the business.

DPloy Strategy is a web-based visual management solution that will help align corporate strategy and objectives with day-to-day efforts. (p. 13) The tools are there and have been there a long time—it’s just a matter of creating the sense of uergency in 2009 to use them. We need to become more impatient, more focused, and be willing to go back to fundamentals. Revisit the things that have worked for you in the past and drive into them even deeper. Push lean down into the very roots of your organizational culture. Doing so will ensure that your company is resilient against the unexpected. LeanSigma® will work even during economic slowdowns if you fully embrace its principles. It serves as an ally in good times as well as bad. Indeed, it can be the antidote to the pain that may lie ahead of all of us. Hard times don’t last for ever, resilient people do.

Anand Sharma, President & CEO TBM Consulting Group, Inc. asharma@tbmcg.com

Q 1. 0 9

MANAGING TIMES A publication of TBM Consulting Group 4400 Ben Franklin Boulevard Durham, North Carolina 27704 800.438.5535 www.tbmcg.com Publisher Anand Sharma: a s h a r m a @ t b m c g . c o m Executive Editor William A. Schwartz: bschwartz@tbmcg.com Managing Editor Julie Poudrier: jpoudrier@tbmcg.com Featured Columnists Mike Caldwell Bill Remy Jonathan Wheatley Contributors Samantha Bason Olga Bouche Richard Holland Gary Hoover Gary Hourselt Beth Ann Hunt Gérard Massai

Bob McElroy Angela Scenna Jim Scott Mike Serena Noel Temple Janet Warner

Art Direction and Design IONA design www.ionainteractive.com Printing Carter Printing & Graphics, Inc. www.carterprintingnc.com Published quarterly in Durham, NC 4400 Ben Franklin Boulevard Durham, NC 27704 TBM, the TBM logo, and LeanSigma® are registered trademarks of TBM Consulting Group, Inc. If you would like to receive this journal via email, send your vital information including email address to tbm@tbmcg.com

On the cover: Norfolk Southern Railway, one of the nation’s premier transportation companies, has focused LeanSigma® on its business for one main reason: to provide efficient transportation for its customers so that they get more value for their transportation costs.

LEANCOMMUNITYNEWS

P

ierre Chevrier has been named site director for Siemens in Grenoble, France.

Yves Doin, former managing director of Siemens Grenoble left in October 2008 to join Schneider. … Greg Andersen has been named vice president of global sales and marketing for Harsco Minerals in Pittsbugh, PA. … Ma rk Elinski is the new continuous improvement manager for Harsco Track Technologies (HTT) in West Columbia, SC. Scott Jacoby, vice president and general manager of HTT is an enthusiastic support e r of the lean transformation approach. … Ben Cole at Harsco Air Exchangers in Tulsa, OK, was recently named continuous improvement leader for the site. Ben is a graduate of the University of Nebraska engineering school and comes to Air Exchangers with a vast experience of lean manufacturing. … Glen Armstrong recently joined Special Metals Corporation in Huntington, WV, as continuous improvement leader. … Pactiv in Temple, TX, has expanded its continuous improvement team under the direction of Lorra Tindell, continuous improvement leader, to include La Donna Thigpen and Jeff Williams.

Their positions were created to bring a greater focus on and support of continuous improvement at the Consumer Products Division in Temple. … Congratulations to all the recent Lean Certification graduates: Michelle de Leeuw, Jaco VanZyl, Josh Hamman, Marius de Waal, Sonja Stadler, and Roniel Sollal, BHP Billiton, South Africa; Aditi Gilman, formerly of Appleton Papers, Roaring Spring, PA; Greg Leisgang, and Brian Frost, Appleton Papers, Appleton, WI; Roseann Milliken, Appleton Papers, West Carrollton, OH; Robbie Watters, Compressor Systems, Midland, TX; Todd Kearns, Saint-Gobain in Dolton, IL; Jacob Stucky, and Dan Lindsay, SaintGobain Containers in Port Allegany, PA; John Cotton, formerly of Douglas Dynamics; Greg Masciana, Tektronix in Beaverton, OR; Erik Lagoy, Hardigg Industries, South Deerfield, MA; Finn Oleson, Danfoss, Apodaca, Mexico; Randy Hanson, Hayward Pool Products, Nashville, TN; Dave Johnson, ConMed, Utica, NY; Jessica Looman, Watkins, Inc., Winona, MN; Devon Leavitt, DST Output, South Windsor, CT; Monika Galius-Auburn, formerly of Advanced Bionics, Manhattan Beach, CA; Francisco Pereda, Hydro Aluminum, St. Augustine, FL; Jeff Moates, Carlisle Food Service Products, Oklahoma City, OK; Eric Noble, Owens Corning, Kansas City, KS; and Tina Varga, Owens

Corning, Toledo, OH. Recent Lean Certification graduates from GEX in India include Jagdish Kumar, G. Thirumoorthy, C. Sasikumar, H. Harish, Nagesh Bhonsle, R. Manoj, S. Kamal, K. Arun Shenoy, Ananth Padmanabha, Syed Saleem, and Raghavendra Shedbal. … TBM also certified a number of SixSigma black belts and green belts in 2008. Those receiving their black belt certification included Anderson Trogo, Murilo Ozanan, and Soraya Mendes of Daimler-Chrysler Brazil; Phil Withey, Mike Looney, Kenton Cawley, Jens Hinrichs, Howard Kilgore, and Remco van der Linden of Doncasters; Scott Schram of Hayward Pools; Jonathan Ziepfel of Pella Windows; Alyson Wood of Phifer, Inc.; and Michael Boer of Tektronix.

Those receiving green belt certification included Joe Kavanagh and Thomas Lewis of Canadian Forest Products; Carlos Paiva, Fábio Morelli Vieira, Leandro Gi, Luciano Azevedo, Marco Aurêlio Coutinho, Mario Grez, Suzana Pelikman, and Vinicius Silva of Daimler Chrysler Brazil; and Bill Hintalla and Ebru Selcuki of Sealy. ... In TBM corporate news, Jim Scott has received a Golden Dome Award from the State of Iowa. Jim was a member of the Iowa Department of Natural Resources Conservation and Recreation Division’s “Streamliners” team, which received the “Team of the Year” award for reducing the registration and titling process for snowmobiles and ATVs from 311 days to one day.

Team of the Year awards recognize documented, measureable results supporting completion of a project that improved the effectiveness or efficiency of processes within the Iowa State Government, or reduced costs, improved customer service, or assisted Iowa State government in meeting established goals. Richard Holland is now managing TBM’s India practice.

Richard will remain in charge of the UK operation while he helps us further develop the practice in India.

Gary Hoover has been named manager of the European consulting practice. Gary and his family will move to Germany, where he will be based for the next three years. Eddie Kembery has been named team leader for the UK practice. Maribel Barrientos is the new assistant in the Mexico office.

Managing Times | Q1.09 www.managingtimes.com

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CASESTUDY

Norfolk Southern: Giving Customers More Value for Their Transportation Costs Mike Caldwell, TBM Senior Management Consultant

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ast year’s skyrocketing fuel prices made many of us look at transportation in a new light. As fuel prices rose, so did the prices of seemingly unrelated items, like groceries or building supplies. Often we don’t think about transportation—at least not until any problems that affect the transportation industry start hitting us in our pocketbooks. But in truth efficient transportation is what makes our consumer economy work. Without it, goods couldn’t be moved from where they are produced to where they are consumed. And as both production and consumption go global, the transportation industry plays an ever more crucial role in making sure the goods get where they need to be on time.

Norfolk Southern Corporation (NYSE: NSC) is one of the nation’s premier transportation companies. Its Norfolk Southern Railway subsidiary operates approximately 21,000 route miles in 22 states and the District of Columbia and serves every major container port in the eastern United States, while also providing superior connections to western rail carriers.

The company employs 31,000 people and has 13 classification (hump) rail yards, 8 2

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major system locomotive shops, 14 smaller division locomotive shops, and a total of 26 fixed facilities handling the servicing needs of these locomotives between runs. Norfolk Southern operates the most extensive intermodal network in the East and is North America’s largest rail carrier of metals and automotive products. Railroads are also responsible for 75 percent of all automobile transport. The fastest growing segment of the business is in moving containers to terminals, where they are picked up by the customers.

People depend on Norfolk Southern’s ability to get products where they are supposed to be on time, every time. When freight is shipped, the customer already has capital tied up in that freight, and that money can’t be freed up until the customer has the product in hand and can put it on the shelf to sell. Late arrivals aren’t just an inconvenience; they cost money.

Tracking Time and Money In the freight business, time is the key.

The time you’ve promised to deliver the customer’s products to him. The time it takes to manage trains in rail yards. The time needed to service locomotives to keep them running at peak performance. The ultimate goal is to keep the trains running on time, which is very important from a customer point of view.

The greatest kaizen effort at Norfolk Southern has been geared toward locomotive performance and maintenance. This was straight kaizen work performed in the maintenance shops of the Mechanical Department in order to decrease the amount of time a locomotive is out of service. The railroad has about 3,800 locomotives.

The lifespan of a locomotive is between 20 and 40 years. The majority is used for over-the-road freight hauling for their first 15–20 years and then are “cascaded down” to the rail yards to switch cars around the terminals. Similar to the airline model, federal regulations require that each locomotive receive increasing levels of maintenance inspections at regular intervals: daily, 92 days, 184 days, 368 days, 36 months, and 60 months. Understandably, the longer interval inspections require more time in the maintenance shop. Additionally, each locomotive will receive two to three complete overhauls in its lifetime.

Locomotives are also inspected and fueled daily, although they don’t need to go to maintenance shops for daily inspections, nor do they require fuel at every stop. Still daily inspections and fueling do take time, and that time must be accounted for.

Clearly, keeping those engines running must be a top priority for a business that relies on on-time delivery.

According to Gerhard Thelen, vice president of operations planning and support, additional business can be gained by keeping as many locomotives running as possible and is one way for the company to increase profitability. “We want to spend as

little time on maintenance activities as possible, without sacrificing quality,” he says.

“Any time cycle time can be reduced, it helps the customer.” Reducing the amount of time required to maintain the locomotives could also translate into a need for fewer locomotives to do the same amount of hauling that’s being done now. Or the company can use the same number of locomotives and increase business. Either way, keeping the locomotives running means providing their customers with the service they have come to expect from Norfolk Southern.

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the vision: To be the safest, most customerfocused and successful transportation company in the world

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According to Mark Smyre, manager of quality process improvement, the company has seen up to a 20 percent reduction in dwell time as a result of its kaizen activities (dwell time is the amount of time the locomotive spends in the maintenance cycle). Although you might think that this would mean that the Mechanical Department is releasing all of its locomotives back out onto the tracks sooner, in reality, some are going back out sooner, but for others, the company has chosen to dedicate the time savings gained to identify and fix items that can lead to potential failures.

“Unfortunately some locomotives don’t stay out for the full 92-day cycle before needing unscheduled repairs,” Smyre notes.

“If we can take the time we’ve saved in our general maintenance cycle to perform proactive inspections, then we can identify potential defects and address them before they become an unscheduled maintenance problem, which ultimately saves ourselves

and our customers time and money.”

So how did they cut dwell time by 20 percent? They did it largely by focusing on the seven wastes—especially material transportation, wasted motion, waiting on parts, over processing (doing things that weren’t necessary), and defects. Defects are defined as missing the identification of a potential failure and therefore not correcting it before the engine leaves the shop. “We don’t want to compromise the size of our fleet as a result of missed opportunities,” notes Smyre, “because we need the fleet to pull our freight.” So it makes sense to address potential problems while the locomotive is already in the shop, and since time has been gained by applying lean principles to the process, the maintenance crews can afford to spend extra time when necessary to ensure the quality of their inspections.

And that leads to the second part of cutting dwell time: standard work. “We also re-evaluated inspection procedures,” Smyre says. “Standardization of our work processes was critical.”

Rail Yards: They Aren’t the Back Office Being on time isn’t all about keeping the locomotives running though. Another potential time sink is the rail yard. In rail yards, which operate in a hub-and-spoke manner, inbound trains are received; their engines are moved off for inspection or refueling, and the cars are shifted around to different trains with new engines and new destinations. As you can imagine, shifting rail cars and engines around and mixing and matching to create new trains, when everything must be confined to tracks, can be tricky and time consuming. In fact, according to Thelen, the greatest chance for delays to occur is when cars are being moved around yards. So it made sense to apply lean to the yards as well.

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CASESTUDY Norfolk Southern has gained the following results through its kaizen activities:

––––––––––––––––––––––––––––– 20 percent reduction in dwell time (the amount of time trains spend in the maintenance yard)

––––––––––––––––––––––––––––– Ability to use dwell time more effectively by adding value-added preventative maintenance activities

––––––––––––––––––––––––––––– Creation of standardized work

Generally when we think of business process kaizen (BPK) events, we think of events that help create smoother flow in the back office, but at Norfolk Southern, BPK is the method of choice for gaining greater efficiency in the yards.

Rail yards face a number of unique issues: • Car inspection—finding, handling, and repairing cars in the yard • Car handling—optimal utilization of crews for the most efficient movement of cars through the yard; extra crews must be justified • Locomotive handling—efficiently moving engines to the maintenance and refueling areas • Defect handling—what to do with damaged cars

processes

––––––––––––––––––––––––––––– A relentless focus on waste elimination

––––––––––––––––––––––––––––– The viral spread of lean throughout the organization

––––––––––––––––––––––––––––– Meeting customer requirements by ensuring shipments are received on-time, as promised, like “clockwork.”

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“We are learning to view processes from the viewpoint of our customers, says Terry Evans, vice president of operations planning and budget. “To a customer, one-piece flow would mean that we would tow each railcar with its own locomotive directly to the customer’s dock. We fully understand that we must run this business economically, but we must keep the customers view in mind.

As we continue to identify process waste, we understand that there is an abundance of opportunities for improvement.”

To date, No rfolk Southern has conducted 10 BPK events. The purpose of a rail yard BPK is to look at the entire flow of the process from cradle (inbound train) to grave (outbound train). They follow the same procedure as for any other BPK, mapping out the entire process using sticky notes on the walls. Doing so allows them to visualize all of the steps, including tasks, decisions, delays, and inventory. “We then identified the value-added steps in each process and tried to reduce or even eliminate some of the non-value-added steps,” says Smyre. “As always, the value-added step is the one the customer is willing to pay for, and in the rail yard, the basic value-added service is getting the customer’s car onto the right train and

then getting that train out of the terminal on time.”

Their objective for a BPK is to increase car velocity through the yards. By using the process map, it was easier to see where the potential bottlenecks were. “In one case,” says Smyre, “we found that a train coming out of one particular yard could be better served by a different yard on the system, so we asked the Service Design Department to re-route that train out of a different terminal to better serve our customers.”

A typical rail yard process might look like this: When a train enters a terminal, it is first parked in a receiving yard and the engine is cut off from the train and goes to the engine house for service. The body of the train is left parked in the receiving yard until its individual cars are “humped” onto “classification tracks.” Once the various cars from the inbound train have been separated off and shifted onto the appropriate classification track, they are joined up with other cars bound for the same destination.

At the opposite end of the classification tracks, the cars are pulled out and put into a “forwarding yard.” From there they are dispersed onto outbound trains.

Rail yard BPKs have also allowed Norfolk Southern to take a close look at staffing alignment to make sure that they have people where they’re really needed. This may seem to be common sense, but sometimes traditional staffing methods just remain in place and new people will be hired when in fact simply making sure that you have the right people in the right places is all that’s really needed.

Another benefit that the company has gained from BPKs is the “viral spread of lean.” “When we put together a team for an event, we include agreement and non-agreement people local to the terminal and also from outside the terminal who can come in and see things that the local employees may overlook due to familiarity,” says Smyre.

“Union leaders have been very supportive of our lean initiatives,” he adds, “and from the

“Customer satisfaction will remain as a driving force for quality at Norfolk Southern. A high level of safety awareness will always precede our efforts for continual improvement.” –Mark Smyre, Manager of Quality Process Improvement

point of view of our agreement employees, it instills ownership in our continuous improvement process.”

“Having these events has not only gained us process improvements,” continues Smyre, “it’s also helped to familiarize our workers with their own terminals, some of which are large, complex places. And the outside workers invariably take the good ideas back and apply them at their own terminals.”

Interconnectedness While it may seem that lean events at Norfolk Southern have been focused on two very different areas, they are in fact connected. Making the Mechanical Department more efficient has a direct impact on the Transportation Department, which is actually an internal customer of the Mechanical Department, because without healthy locomotives the Transportation Department can’t get trains to their destinations on time. And if the Transportation Department can’t operate efficiently, then the company might not be able to leverage the improvements in train maintenance to grow its business.

But ultimately Norfolk Southern has focused lean on its business for one main reason: efficient transportation means that customers get more value for their transportation costs. “Efficiency and on-time performance of the railroad has a direct financial impact on the customer that goes beyond the simple cost of transportation,” notes Thelen. “And that also means profit for Norfolk Southern, because those companies with better service performance can charge more for that service. Again it’s a matter of perceived value. Customers want their products on time and they want delivery times to be consistent; that is, if a product is coming from a particular location, they want it to arrive in the same timeframe every time. Our customers want to know that they will be receiving their shipments like clockwork. Norfolk Southern can guarantee that sort of delivery schedule thanks to its continuous improvement efforts.”

on a portion of our kaizen activities marve l e d at the progress we have achieved in such a short period,” says Smyre. And no one needs fear that the gains in efficiency have caused slippage in other areas: for nineteen consecutives years Norfolk Southern has won the coveted Harriman Safety Award for having the safest employees in the railroad industry.

Lean has given the employees of Norfolk Southern a renewed pride in their work. Says Thelen, “I see the passion in our employees’ eyes as they display their kaizen improvements, and those teams are displaying a sense of urgency. That will not be easily matched by the competition.”

Blue-Ribbon Standard Norfolk Southern has already set the standard in rail transportation, and now it’s doing the same with lean and kaizen.

“During a visit to Norfolk Southern, a Union Pacific mechanical officer who sat in Managing Times | Q1.09 www.managingtimes.com

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CASESTUDY

Seaman Corporation Is on the Transformation Fast Track Jonathan Wheatley, TBM Senior Management Consultant

–––––––––––––– “Lean will continue to allow us to take waste out and keep costs down while optimizing our business.”

–Richard Seaman

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Richard N. Seaman President and CEO, Seaman Corp.

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The textile industry has faced some tough challenges in recent times, including recession, globalization, and rising raw materials and labor costs. Although these sorts of issues can spell trouble, companies that use LeanSigma® proactively to transform themselves into world-class operations can avoid the worst of the problems and flourish. Last year, Seaman Corporation, an industrial fabrics manufacturer, achieved record sales, and maintained gross margins from those sales in light of dramatically increased raw material costs. Had raw materials costs not increased significantly, the company would easily have improved on gross margin, notes Richard Seaman, president and CEO of the company. “This is in large part due to our efforts to increase capability and capacity and reduce costs through LeanSigma,” he adds. “Lean will continue to allow us to take waste out and keep costs down while optimizing our business.”

Seaman is privately owned and was founded in Ohio in 1949. It is currently headquartered in Wooster, Ohio, with factories in Wooster and Bristol, Tennessee.

Seaman is not a typical process manufacturer, which we most often associate with the food, beverage, and pharmaceutical industries, but instead makes industrial coated fabrics such as high-performance roofing systems and architectural structures, geomembrane liners, truck tarps, and sign facing. John Crum, vice president of operations for the company, says, “When we put up a roll [of fabric] on a line, we pretty much have to process through that roll. If we stop the process, we’re going to produce bad product, and that’s why we’re considered a continuous operation or a process industry.”

On starting their lean journey, Crum comments, “I wondered if lean could be applied to our process and where to start

with the process. We really started trying to create value through quality, productivity, and responsiveness to our customers. We needed to create flexibility in our process and we needed to create standard work.”

Gains Everywhere The company first implemented lean on their calendar lines, which at the time had a four-hour changeover time. “Our set ups were very long, which is typical of a process industry,” notes Crum. For their first kaizen event, they brought in calendar line team members from both plants plus several engineers. The team was able to reduce changeover time on the line by 75 percent.

Reducing changeover time increased the company’s flexibility and productivity by allowing them to produce more special items in a day than they had been able to do in the past. Says Crum, “We are running more set ups a day than we did three years ago and this in turn means that we can be more responsive to our customer base. We have transformed from a rigid production schedule to a flexible one.”

Additionally, Crum attributes lean with enabling the company to cut its production lot sizes in half, which in turn allows for more diversity in the production schedule.

“Before lean, we thought we had to have large production runs to gain productivity,” says Crum.

Stopped production lines are generally anathema in process industries, but at Seaman, if a lean event requires suspending production on a line for 8–10 hours, Crum considers it part of doing business. Why? Because any revenue loss incurred by

shutting down a line is more than made up for by the gains achieved by the event. In fact, Crum expects TBM-facilitated events undertaken at either plant to return an annualized average return factor of 3–5 times over the cost of the event. Seaman has maintained these returns on LeanSigma event investment even with the economy in a downturn.

Standard Work Another lean tool, standard work, has helped the company to vastly improve quality. According to Crum, several hundreds of yards of material would be run on a line before the necessary quality was achieved, but with the implementation of standard work they can now achieve that same level of quality while reducing change over start-up scrap by 87 percent. Everything is interconnected when it comes to the gains made through lean, so work in one area may

well provide benefits in another. For example, improved quality helps reduce costs because the company produces less off-grade material (scrap). That in turn affects capacity, because less scrap translates into more good material, which directly translates into increased capacity.

“First-run yields have also benefited from the implementation of lean, with close to a 40 percent overall reduction” adds Seaman. This improvement in off grades has helped in offsetting the increased cost of material. He notes that lean has enabled the company to significantly improve response times and capability as well. “Over the coming months, even if we don’t have a lot of opportunities to reduce costs, we do have opportunities to increase productivity,” he adds, “and this includes productivity of our sales people.” And so the improvements will keep coming.

Capital Avoidance One big savings companies can realize through lean is reduced capital expenditures.

Crum notes, “We would rather optimize our current capital investment through lean than pursue additional capital investment.” He notes that improving productivity of machines by a 15 percent increase represents a higher return on investment than you could expect to get through capital expenditures, especially when you must also factor in depreciation. “You leverage your assets by using lean,” he says. “The ability to use flexibility and increased capacity to grow the top line is a winning equation.”

When a capital expenditure is considered, it must offer greater benefit than could be gained simply by increasing capacity and flexibility. For example, adding a line that could handle wider-width material might make sense because it could not only help improve quality of a product—through

This custom architectural tension structure, part of the Sault Ste. Marie, Ontario, Canada, welcome center, features Shelter-Rite® fabric, coated with Tedlar® PVF film for ease of cleaning and UV protection.

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Seaman’s rigorous projectselection process and intense focus on sustainment has led to some amazing results: ––––––––––––––––––––––––––––– Improved first-pass yields to 96 percent ––––––––––––––––––––––––––––– Reduction in set-up times of up to 75 percent ––––––––––––––––––––––––––––– 21 percent average increase in productivity ––––––––––––––––––––––––––––– An average $100,000 return on every TBM-led lean event ––––––––––––––––––––––––––––– $2 million in capital avoidance for one facility as a result of improved productivity and yield and faster set-up times ––––––––––––––––––––––––––––– Minimum 3–5X return on all consulting engagements

fewer welds or sewing points—but also create access to new customers.

Capital avoidance is always an attractive alternative. Lean can provide the option of not having to make capital investments.

Seaman thought that it would have to invest nearly $2 million in on-site compounding at the Bristol plant. By linking the results of several events, which included transport a t i o n as well as space and time that had been freed up through lean efforts, the company was able to increase the capacity for compounding at the Wooster site, and then use an improved transportation loop to deliver dry blend compound to the Bristol site.

A Critical Eye Toward Project Selection One way that Seaman is able to achieve such a high return on investment from its lean projects is through a very rigorous selection process. “Lean has given us a good process for project selection,” says Crum.

“We select projects that have potential for real bottom-line results. Selection may take two to three days, but the end result of selecting projects with the greatest impact— the highest return on investment—is critical.” One key to success is to stay away from intangibles during project selection.

The company uses the value stream map to identify opportunities and an impact-difficulty matrix to help standardize and codify the process. Impact-difficulty matrices are divided into four quadrants, with increasing impact and difficulty going up and to the right, so that high-impact but difficult projects are listed in the top right quadrant, and high-impact but relatively easier projects are listed in the upper left quadrant. Projects that appear in the lower right and left quadrants represent lower levels of impact and difficulty.

Seaman approaches upper right quadrant projects as those that will require outside help from TBM. Upper-left-quadrant projects are those that can be led in-house.

Projects that appear in the lower left quadrant are considered one-to-two-day “just do it” events.

This is a very methodical and logical way to weed through potential projects and choose only those that will have the greatest impact. It allows the company to connect the dots between what they agree needs to be done during planning and review with projects that fit the lean strategy and the yearly business plan. Seaman sets its LeanSigma strategy during its planning and

BRISTOL IMPACT/DIFFICULTY MATRIX Seaman-Led Events • Warehouse eRaws • Shop Supplies • IP Freight • IP Demand Segmentation / Inventory • Slitter Productivity • Hiring and Training “Just Do It” Supervisor 20-Day Projects • Yarn Milk Run / Kan Ban

TBM-Led Events • FTR Off-grade $$ • REC Off-grade $$

Show the Payback - ROI

–––––––––––––––––––––––––––––– DIFFICULTY –––––––––––––––––––––––––––––––>

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Seaman’s Fiber-Tite® roofing system was chosen to cover the new state-of-the-art high school and community center in Wooster, OH.

review sessions twice a year. Planning and review stems from that established strategy.

Then the company plans projects using the impact-difficulty matrix, making sure that projects are tied back to the corporate business plan for the year. In this way, Seaman aligns its plans and its resources to generate both top- and bottom-line gains— gains that can be achieved even in an economic downturn.

If you compare Seaman’s progress with other companies who have been working on their lean journey for the same amount of time, it becomes clear that Seaman’s discipline and project selection methods have paid off for the company. From a process capability and a Sigma kaizen standpoint, Seaman has managed to shift the entire transformation process up by six months— moving through critical phases much sooner than the average company. By being able to accelerate the process, Seaman is able to reap the benefits of lean much more quickly.

Sustainment: Managing for Monthly Improvement Often organizations that have embarked on a lean journey obtain great early results but then struggle with sustainment. “Many companies have successful events and then down the line find themselves doing those events over because they failed to sustain the improvements,” notes Crum. “We use a

This geomembrane system was used as an alternative to clay-based systems to line an offshore waste-containment bund (embankment or dike) for the government of Singapore.

process we call managing for monthly improvement (MMI), where the operations group takes about five minutes to go over each event and determine whether the gains from that event are being sustained.”

They use a red, yellow, and green tag process, with green tags going to those events whose results are being sustained, yellow tags for events whose results are in danger of slipping, and red tags for those events that have failed to sustain for whatever reason. They then go back and address those areas that are slipping or failing and bring them back up to green status. By reviewing event sustainment monthly and addressing problems immediately, the company has created a benchmark model for sustainment.

As with project selection, Seaman also has a rigorous process for ensuring sustainment. Sustainment ultimately depends on accountability, and by setting up a monthly review process, the company has found a way to hold everyone accountable for sustaining results.

A Key to Success: Focus, Focus, Focus One overriding theme you will notice at Seaman is a very intense focus on their lean efforts. Crum acknowledges, “It’s all about focus—knowing where you want to go, what you’re trying to achieve, and making sure you stay on task. The second you’re too

busy to focus on lean it will fall apart.”

“You must be committed and must have leaders with passion,” he adds. “If you don’t set high standards, you’ll achieve low standards. You have to believe that every event has the potential for breakthrough changes.”

Indeed the focus of which Crum speaks is evident in the way the company selects projects and the way it sustains them. It’s the sort of focus that other companies—both new to the journey and well along it—can take to heart. Learning how to rigorously deselect projects so that you can gain the utmost from your lean efforts and then setting up a strict process by which you hold everyone accountable for the sustainment of gains—like Seaman’s MMI process—is how others can build from Seaman’s story. As Richard Seaman notes, “A quality initiative is a never ending journey. LeanSigma must be institutionalized; it must become a way of life.” In truth it has become a way of life at the company, and if you follow their lead, you will be able to institutionalize lean into your culture for the kind of long-term success that lean promises, no matter what the economic climate.

Managing Times | Q1.09 www.managingtimes.com

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TECHTALK

Using LeanSigma® to Keep Routine Aircraft Checkups Safe and Efficient Bill Remy, Global Director, Continuous Improvement, Invensys

Airlines are required to regularly take aircraft out of service for scheduled heavy maintenance, a requirement that isn’t taken lightly in these safety-conscious times.

Heavy maintenance, known as C-check, can remove a aircraft from service for anywhere from five days to two weeks. Airlines make money when aircraft are flying, so finding approaches to making the maintenance process more efficient while also increasing the quality of that process means that airlines can improve their revenue without sacrificing safety or quality.

A C-check consists of three phases.

When a aircraft enters a maintenance hangar for a C-check, it is completely gutted— everything from inside the aircraft is removed, including the cockpit, the galley, the lavatories, the seats, the overhead bins, the floorboards, and the headliners. Once the aircraft has been completely “opened” then it must be cleaned inside and out to prepare it for inspection.

The inspection phase requires two or three people, who use checklists to examine each section of the aircraft. What the checklists require depends on the usage of the aircraft prior to that inspection.

Aircraft arrive at the maintenance hangar with a list of known maintenance items that must be completed, for example, items that have reached their maximum use life and must be replaced. The inspection process generates another list of unplanned maintenance items that must also be addressed.

The third phase of the process is “close up,” where all maintenance and repairs have been completed and everything is put back in the aircraft to ready it for use.

The kaizen process was also approached in phases. The initial part of the work focused on the “open up and inspect” process, looking at how long it took to open up the aircraft and get it cleaned and 10

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inspected and ready to move into the repair phase. This was basic kaizen work that involved a lot of 5S, establishing visual controls, and improved parts management to help drive productivity. In this phase, the company’s goals were to review and map the current-state process, reduce “open up” lead time, and develop a performance-management process. The results obtained during this first phase showed the promise of future gains through continued application of lean tools and kaizen.

Physical Fitness Report The first step for addressing C-check efficiency was to map the current state and identify problems and wasteful practices.

Among the issues that caused increased costs and reduced efficiency were the following: • Excess walking during “open up and close” process • Parts storage (including risk of damage to parts and time spent finding parts) • Time spent locating tools • Cannibalization of parts • Time spent cleaning the aircraft— varying definitions of “clean” • Time required to label parts—a necessary non-value-added process • Poorly defined standard work • Missed defects (i.e., defects that were found at close) • Lack of metrics • Mechanic turnover and new mechanic training • Lack of workload balancing The process had just a 77 percent on-time record while at the same time logging an average of 350 hours of overtime every two weeks.

Next, the kaizen team prepared a spaghetti diagram of the current-state open up process. They found that the walking time alone during open and close consumed

5 hours. Searching for parts during close ate up another 7.5 hours. The problem was that while parts were stored on shelves and in bins, which were labeled, they weren’t necessarily stored in any sort of logical order so that when it came time to put them back in the aircraft a lot of time was wasted looking for the proper parts.

A Kaizen Prescription To address this problem, one of the first things the kaizen team did was to create a new set of racks and rolling containers that we re identified and stored by aircraft section.

Containers were also tailored to accommodate certain items, such as overhead bins. As the

interior was torn down, the parts were placed in order in these racks and bins so that when it came time to put them back on the aircraft, all anyone had to do was work in reverse order through the same racks and bins to find the needed parts for the appropriate section of the aircraft. Each cart was labeled and contained a bill of material that stated exactly what was in the cart and where it goes in the aircraft. By tailoring carts for specific parts, the risk of parts damage was also minimized. This example of creating a visual workplace and reducing waste by using 5S made a huge difference in the amount of time that was wasted walking and looking for parts. At the same time, the team

looked at ways to improve the flow of parts to and from the aircraft by reworking the floor plan and storage locations for the carts and bins.

The team also created a “Safety, Quality, Cost, and Delivery” (SQCD) board on which they recorded both planned and unplanned work hours, how many “squawks” (rejects) were found on a particular aircraft, and what the maintenance cycle time was, and they were able to see some significant reductions in turnaround time. These may seem like relatively small changes, but the result was to reduce the time the aircraft spent in the maintenance hangar by a day. In revenue terms, one day is a big step closer to

C-check Kaizen Results Kaizen Focus

Before Kaizen

Target Improvement

After Kaizen

Results Achieved

Percent Improvement

Open/close up walking time

152 minutes x 2

50%

52 minutes x 2

100 minutes x 2, or 200 minutes per C-check

66% reduction

Time spent locating parts

6-8 hours

50-75%

<1 hour

5-7 hours saved per C-check

>80% reduction

Floor space (ft2)

1200 ft2

50%

766 ft2

434 ft2

35% reduction

Lead time (open/close up)

4.5 days

20%

3.5 days

1 day, 70-90 crew hours

22% reduction

Managing Times | Q1.09 www.managingtimes.com

11

orders and the lack of daily turnover for parts ordering. By taking a segmentation approach and assigning different parts ordering to different people or groups, the company was able to start turning purchase orders daily. This was a huge step toward solving the courier challenge because one reason overnight bases were running out of needed parts was a lack of timely ordering of those parts.

Some small but significant changes in the process around parts ordering enabled the airline to realize a tremendous savings in the logistics costs involved with parts couriering.

the goal of reducing maintenance time by five days. Five days is the equivalent of one whole aircraft that was then available to fly and generate revenue.

Here a Part, There a Part Although not truly a part of the Ccheck process, the airline also used kaizen to address some overnight maintenance issues.

In the normal course of events, aircraft will arrive at a final destination at the end of the day—the overnight base. Standard maintenance is performed on aircraft during the brief overnight “rest” period, but due to faulty business processes often the airline found that the needed parts weren’t in the right locations. This meant having to courier parts from one overnight base to another in order to have the aircraft ready to fly on schedule. Obviously the cost of couriering p a rts around the country can quickly add up.

In this case, the airline used a business process kaizen (BPK) to address parts movement and replenishment at overnight bases. One very successful BPK event centered on the large backlog of purchase

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Onward and Upward The next big efficiency push planned for the C-check process is managing planned and unplanned repairs. This is not straightforward and will require concentration on routing standardization and creating flow in the actual repair process. Given the age of this particular fleet of aircraft, total required repair hours are divided about evenly between planned and unplanned repairs.

This means that if a aircraft requires 1,000 hours of total work, only half of that is known about when the aircraft arrives in the maintenance hangar. An additional 500 hours worth of work will be generated from the inspections. This creates an additional level of complexity because fully half the work cannot be anticipated before the aircraft arrives, so the challenge will be to create better flow in spite of that huge unknown factor.

One strategy being considered is to look at the types of unplanned repairs that are being repeated from aircraft to aircraft. If certain unplanned repairs are required in a majority of the aircraft, then it makes sense to automatically plan for those repairs, even if they aren’t part of the standard checklist.

This will involve revisiting some of the

assumptions and parameters on which the planning system is based and then working out a process for sequencing those repairs.

This is the next big piece to be worked on.

Another area that will be tackled in future events is managing for daily improvement (MDI). The challenge in the aircraftrepair process is that cycle or takt times for aircraft repairs must be measured in hours or days. For example, removal and replacement of an engine requires something like 25 hours. Thus we have to take a different approach to MDI so that line leaders and supervisors understand how to know whether at the end of the shift, or midway through the shift, they are on schedule. The concept of an hour-by-hour chart changes to something more like a shift-by-shift chart in this type of business, so the company will need to take a more creative approach to some of these problems. But kaizen and continuous improvement embrace creativity, so it’s entirely possible for even organizations with unique situations to make the power of kaizen work for them.

Taking Off Clearly this airline is just in the earliest stages of its lean journey, but already it has found ways to improve quality and safety, save time, and reduce costs. Savings in walking time, parts location, and lead time mean that maintenance crews need to put in less overtime, while also getting aircraft through the repair process more quickly and efficiently. This means that more aircraft can be serviced in one location and that the aircraft are in the air longer, which means greater revenue for the airline. If this one company can gain this much from those first small steps on a lean journey, imagine how high it can fly once lean becomes a way of life.

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Managing Times | Q1.09 www.managingtimes.com

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Q1.09

MANAGING TIMES TBM LeanSigma® Institute 2009 Schedule Highlights Corporate Headquarters Durham, North Carolina 1.800.438.5535

LeanSigma Vision Tour – April 22, 2009 WIKA Instrument Corporation, Atlanta, GA Tour Focus: Lean Supply and Distribution

Australia Port Melbourne, Victoria 03.9521.8654

WIKA will dive deep into the work they have done on their value chain to make the following improvements: • Increased shipping capacity for new products in less space with no additional manpower • Synchronized sales and operations planning • Model replenishment system for kanban and pick-to-order components • Mixed-model production line running a 50/50 mix of make-to-order and make-to-stock

Brazil São Paulo 55.11.5051.7490 China Pudong, Shanghai 86.21.6888.6671 France Lyon 33.472.91.32.88 Germany Heidelberg 49 (0) 6221.825.835 India Gurgaon 91.124.437.5995 Mexico Monterrey 52.81.50.00.91.36 Switzerland Geneva 41.22.710.77.70 United Kingdom Derby 44.1332.367378

Go to: www.tbmcg.com/lsvt for more information.

LeanSigma Vision Tour – April 30, 2009 CONMED Corporation, Utica, NY Tour Focus: Enterprise-wide Lean Transformation CONMED will dive deep into the work they have done to accelerate their lean transformation: • 100 percent management participation in the first year • 30 percent employee participation in the first year • 85 percent reduction in line-side inventory • 66 percent reduction in floor space • Seasoned employees freed up to support new growth initiatives Go to: www.tbmcg.com/lsvt for more information.

Food & Beverage Industry LeanSigma Fundamentals March 31 – April 1, 2009 Melbourne, Australia A two-day introductory workshop about the LeanSigma approach for rapid business improvement in the food and beverage industry.

See how lean and Six Sigma, together in a coordinated initiative, can help you achieve substantial new efficiencies and sustained revenue and profit growth.

Go to: www.tbmcg.com/lsfood for more information.

Kaizen Breakthrough Experience – May 18-22, 2009 CONMED Corporation, Utica, NY Experience the dramatic bottom-line improvement and efficiency you can quickly achieve and sustain as your kaizen team implements lean tools in an actual business operation.

Go to www.tbmcg.com/kbe for more information.

LeanSigma Global Summit – September 16-18, 2009 Las Vegas, NV With tracks for both discrete and continuous process manufacturers, the LeanSigma Global Summit provides senior leaders, operations management and continuous improvement teams with insights for creating operational agility in today’s tumultuous business environment.

Go to www.tbmcg.com/golean for more information.

Lean Certification – All Year TBM Lean Certification Programs are comprehensive programs for companies that wish to develop in-house expertise to guide their organization through a lean transformation.

Go to www.tbmcg.com/leancert for more information.