QuadTech Managing Times, Q4 2008 by TBM Consulting Group

Q4.08

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

QuadTech: Using LeanSigma速 Holistically To Lead the Printing Industry

6 Lean leadership: the secret ingredient of a successful transformation

12 Milbank: keeping production at home using LeanSigma速

14 Reduce energy consumption using kaizen

PUBLISHER’SNOTE

Got Cash?

oday’s global financial crisis has tightened credit markets, making it increasingly difficult and expensive to secure lines of credit. As we collectively face this wave of economic uncertainty, I encourage you to focus your lean efforts on quickly reducing working capital to generate cash. Why tie up cash with nonperforming inventory, unprofitable SKUs, or high receivables when you could be using it to fund growth initiatives, invest in tuck-in strategic acquisitions, or cover unexpected but necessary expenses? Many clients are asking us to help them quickly improve their cash position by rapid deployment of lean projects or events specifically focused on the reduction of working capital. We generally begin by gaining an understanding of your demand segments and by conducting a product portfolio review. We can quickly identify and start implementation of product-line rationalization and pull-replenishment activities that reduce inventory and increase gross margins. We also find it very effective to reduce the lead time of the order-to-cash cycle by streamlining accounts receivable processes. With just eight to ten weeks of focused work on finished goods, raw materials, and accounts receivable, you can achieve an overall 10–15 percent reduction in working capital. Many of you are already applying lean to consolidate distribution centers, reduce finished goods inventories, rationalize product lines, and create vision for future product platforms. Embracing an enterprisewide lean philosophy makes you more competitive. Most importantly, it puts you in a position to respond quickly in the uncertain business climate.

As we face this economic downturn— even worse—recession, let’s work together to find ways to remain competitive and emerge even stronger when the turbulence subsides. In this time of economic turmoil, we believe that working capital improvement is paramount for generating free cash and placing you in a proactive position to differentiate, grow, and prosper. In this issue, you’ll read about several companies who are leveraging lean for significant advantage. I think they’ll weather the storm far better than others who have yet to discover lean as a tool for growth and prosperity. Times are tough but there are success stories everywhere. Learn from QuadTech (p.2) and see how they’re leveraging lean to grow in an ailing industry. Read about leaders who apply lean principles (p.6.) to build a culture of continuous improvement. Marvel at Milbank (p. 12) and all they’re doing to reduce inventories, improve lead-times, and gain significant amounts of market share. Become an environmental steward and generate savings through lean energy reduction (p.14). Manage material flow (p. 22) by applying lean techniques to reduce floor space and improve inventory management. The list goes on. You’ll see results in every example throughout this issue. LeanSigma® is the holistic solution to drive positive transformation across all sectors and it’s the tool of choice for making immediate improvements in working capital and generating the most coveted prize of all—cash.

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

Q4 .08

MANAGING TIMES

Publisher Anand Sharma: asharma@tbmcg.com Executive Editor William A. Schwartz: bschwartz@tbmcg.com Managing Editor Julie Poudrier: jpoudrier@tbmcg.com Featured Columnists Herb Brown Mike Caldwell Matt Goesling Delaine Gray Michael Helton Doug Kiss Ken Koenemann Contributors Cheryl Groves Nero Haralalka Beth Ann Hunt Ken Koenemann

Joe Panebianco Gary Rascoe Mike Serena Dara Shoemaker Chris Thompson Lavon Winkler

Fabrizio Moroso Bill Sample Angela Scenna Ken Van Winkle

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: QuadTech, the R&D subsidiary of Quad/Graphics and a pre-eminent designer and manufacturer of automated control systems for printing, has embraced lean as a way of life. Lean is not “just a manufacturing” thing at QuadTech— instead it is used in every department and at every level of the organization. With the entire print industry being in a recession, providing clients with complete solutions at a competitive price has become increasingly important. With the improvements that have been implemented through lean over the past five years and the continued focus on improving all processes, the company is now strategically positioned to run a different race and reinforce its position as a market leader.

enise Koster and John Kolman have been named lean leaders for their facility at Access Business Group in Ada, MI. … Tiffany Mullis-Brittain has taken a lean coordinator position with the Appalachian Regional Health System. Tiffany was formerly with Vanguard Furniture. … Jim Waugh has been appointed to the position of french fry plant manager for McCain Foods’ (Canada) Grand Falls plant. In his new role Jim will lead the development and execution of the plant strategy that supports organizational growth, talent development, employee engagement, and superior customer service attainment against the quality, cost, delivery, safety, morale and environment (QCDSME) operational framework. Tony Locke will join the company as director of Research and Development in Florenceville, New Brunswick. Tony will work with Melanie Budicky and the Research and Development team to set priorities and assign resources and people to new product development and product improvement initiatives, act as a strategic team leader for all technical resources and cross functional departments, and define strategic partners based on capability to drive innovation and productivity. Tony will also be responsible for management of the Research and Development team in Quebec: Marcos Chocron (R&D Manager, Wong Wing) will report to Tony, and Karima Oumarou, R&D technician will report to Marcos. Jean-Francois Delauney, R&D Manager, CTE, will also report to Tony for the CTE business unit. Further to these changes, Al McCausland, quality systems manager, will assume responsibility for Quebec QA and Dianne Wong, quality manager, will assume the quality assurance agenda for both Wong Wing and CTE, reporting directly to Al. Lily Li Wah Chan, quality assurance technician, will continue to report to Dianne for Wong Wing initiatives; Audrey Tremblay will now also report to Dianne Wong as CTE QA technician. … Motor Technology in Dayton, OH, has been acquired by CIRCOR. New to Motor Technology is George Teets, plant manager, who has transferred from the sales organization of Circor Aerospace. Long-term Motor Technology employee and production

manager John Nunner has also assumed the role of KPO manager. … Carlisle-Syntec in Carlisle, PA, has launched a lean program. The plant manager there is Joe Lightfoot, the production manager is J.T. Coptis, and the Carlisle Operating System/KPO is Melinda Barbour. The company is also in the process of launching the business process side of the organization, and the manager for process improvement is Steve Beichler. The vice president of manufacturing is Tom Timmerman. … Bimbo in Escondido, CA, has also launched lean. The plant manager there is Greg Clark and the KPO and production manager is Jodi Hitchcock. John Engert is the director of quality and food safety and is overseeing the lean activities at all U.S. sites. … In TBM news, Russ Williams, who has spent the past two years in Australia supporting McCain Foods’ lean initiative, has returned to the U.S. and is now a member of Nero Haralalka’s team. Carl Deeley, managing director of business development and consulting, will be relocating to Melbourne in January to open an office and continue our lean work there. Bill Remy has left his position at TBM and joined Invensys as corporate CI leader. In early fall, Mike Serena completed the newly developed two-week supervisor training course for GEX at their ECC-1 facility in Bangalore, India. This was the first of six courses that will be conducted to train all supervisors, KPOs, and general managers at GEX. This learn-by-doing workshop included 24 supervisors and a cross-section of several KPOs and general managers. PUBLISHER’S NOTE. LEAN COMMUNITY NEWS

A publication of TBM Consulting Group 800.438.5535 www.tbmcg.com

LEANCOMMUNITYNEWS

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

CASESTUDY

Using LeanSigma® to become the Printing Industry’s Technology Leader By Chris Thompson, Director of Continual Improvement, QuadTech, & Matt Goesling, TBM Senior Management Consultant

CASE STUDY

uadTech is a pre-eminent designer and manufacturer of automated control systems for printing. We leverage the knowledge gained from our printing heritage and our unmatched talent and resources to create inventive solutions to the challenges faced by commercial printers, newspaper publishers, packagers, and publication gravure printers. As the research and development subsidiary of Quad/Graphics, QuadTech was founded in 1979 by Thomas A. Quadracci and has played a major role in helping our parent company reach and retain its position as one of the world’s largest and most renowned printers. We also apply our deep understanding of printing and our problem-solving expertise to serve as strategic partners to printing businesses worldwide. The ideas born as solutions to printing issues are transformed by our team into robust products that greatly enhance print quality, decrease waste, and streamline processes. Our mission is to provide the innovations that position Quad/Graphics as the technology leader and the low-cost

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

producer and to take the appropriate technologies to the marketplace to keep our industry competitive with other forms of media and help fund our ongoing research efforts. Starting the Journey We began isolated efforts in lean on our own in 2001 and 2002, focusing on 5S activities in manufacturing and some minor process mapping. However, our lean journey didn’t officially begin until summer 2003 when we decided to take a holistic approach and partnered with TBM. Our first two events were held in July of that year. QuadTech operates in a customengineering, low-volume, long-takt-time environment. We are mainly an assembly and machining factory, and that creates a unique set of lean challenges that are different from those found with shorttakt-time manufacturers. Because of this, we chose to begin with the two areas of highest impact for QuadTech: order management and new product development. This presented a huge challenge for the entire organization as everyone tried to understand

and accept the big changes that touched almost every department. While we struggled to get these new lean processes implemented, we have made tremendous progress in both of these areas. From these initial events, we have built a dedicated kaizen promotion office (KPO) team. We have an executive-level director of continual improvement who reports directly to the president, one manager, and two additional full-time KPO team members. Additionally, we have started rotating other team leads through the KPO as a way to help increase their knowledge base, further build buy-in for our lean efforts, and develop the future leaders of the company. Over the past five years, we have held 85 kaizen events, with 61 percent of our employees participating (additionally, 97 percent of our corporate-wide management team has participated in at least one event). QuadTech’s manufacturing kaizen events have included more than 20 shop floor events covering six different product areas, with productivity gains of 10 to 30 percent in these areas. We have instituted Hejunka boards in all of our production areas, a supermarket in the Stacker cell, and kitting bins for the rest of the assembly cells. We now use the S&OP process to bring together sales, operations, and engineering every week, with review by the executive team on a monthly basis. Leveraging Lean for Growth While we have had many successes on the shop floor, the majority of our events have been either business process events or Design for LeanSigma (DLS) events. To date, we have held 32 business process events and 23 DLS events, including 11 voice of the customer (VOC) events, two concept feasibility events, eight design for manufacture and assembly (DFMA) events, and two production preparation (2P) events.

We are continuing to refine our new product development process by using all of the DLS tools. We have used the VOC tool at multiple points during the process, holding both “process study” VOC events, where we take a higher level view of a market, and also “product specific” VOC events, which we use to create market specifications and determine specific features needed based on the customer input. In the past six months alone, we have held three extremely successful VOC events for three very different markets. These events have been a turning point for QuadTech. The level of buy-in for the results throughout Marketing, Engineering, Field Service, and Sales was incredible. We now have cross-functional teams that visit multiple client sites to gather data as standard pre-work for all VOC events. Moreover, we have taken these VOC results to concept feasibility events and recently announced to our international sales team that we are working on a new product offering to be introduced in the newspaper market. Although we realize we might be later to market than some of our competitors in this situation, we are listening to customers and creating the right solution instead of trying to fill the gap with an existing product from a different market. Another focus area for QuadTech has been managing for daily improvement (MDI). After just three formal weeks of MDI training, including one “MDI in the office” session, we now use this process not only throughout all manufacturing areas, including the stockroom, but also in both the Field Service and Customer Service areas of our business. These departments have daily or weekly meetings with all of their support teams, create yellow slips for issues, assign due dates, and troubleshoot root causes to prevent repeat issues from occurring. By using this process, our order Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

CASESTUDY

Schematic showing where QuadTech control products integrate with a customer’s printing process.

entry process now takes three days to complete, down from 19 days when we started our lean journey—an 84 percent improvement. We are now working with our regional offices (a critical piece of QuadTech’s value chain) to reduce the time it takes them to gather order data from our OEMs and clients to continue to reduce the overall lead time for our products. Creating Alignment with Policy Deployment In 2004, we bridged the gap between our lean efforts and our corporate goals by seeking assistance with our senior management leadership (SML) planning sessions. We began using a policy deployment matrix to align our corporate goals with our full kaizen calendar. While we achieved some successes, we soon realized that we were trying to institute too many changes in one 12-month period. Believing that policy deployment was still the right process for 4

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

QuadTech, we stayed the course and have made significant improvements each year. Today we have four corporate goals, and we have adjusted our kaizen schedule to assist these teams in achieving their goals, which ultimately support the corporate goals and contribute to the company’s financial performance. The key change that we have worked to achieve throughout the company is to have visual management in every department. Through the evolution of our corporate goals, policy deployment, and MDI efforts, we now hold a monthly metrics review (MMR) session with the entire management team, including our remote offices. We get together for two hours each month and review all of the company’s key metrics as a cross-functional group and discuss trends and issues and determine appropriate countermeasures where needed. We look at the company financials, corporate goals,

sales targets, service costs and profitability, warranty, kaizen event status, new product development project metrics and tollgate status, supplier quality, and more. This has helped us raise the level of involvement and accountability throughout not only the management team but also the company as a whole. People are now aware of more than just their little corners of the world; they also understand how what they do affects other teams and the entire company. While we still have more work to do, we have made great strides. Putting the Customer First As we have progressed on our journey, we have moved our lean efforts into our value chain. We have held international events with our remote offices where we have focused on customer service, field service installations, and profitability. Through multiple business process kaizens,

we looked at how we manage customer orders and installations. One event focused on project management of an installation, while a separate event focused on the cycle of an actual on-site installation. After we completed this process in North America, we took the KPO team on the road and held an event in our Weesp, The Netherlands, office to take the changes abroad. We again went out to the field and observed a European installation and made drastic improvements in their process. Our newest lean efforts—using value innovation curves (VIC)—began in summer 2007. We spent three intense weeks learning the VIC process and exploring three different market segments. As a result of those strategic efforts, one 2008 corporate goal team is implementing some of the ideas we generated and a second team is working to further refine our VIC efforts and incorporate this process into our everyday

business practices. We just completed another series of VIC efforts resulting in new strategies for three markets. Although we received great results from two of the markets that we have no previous experience in, we are truly surprised by the results we received from the research in our core market. We now realize the value of focusing externally on what our customers value the most. The most important change that QuadTech has made during our journey is to have embraced lean as a way of life. We have incorporated it into our business processes to bring cross-functional groups together to solve problems throughout the company. Because only a small portion of the work we have done is on the shop floor, lean is not “just a manufacturing” thing at QuadTech. Instead it is used in every department and at every level of our organization. With the entire print industry

in a recession, providing our clients with complete solutions at competitive prices has become more important than ever. With the improvements that have been implemented through our lean journey over the past five years and the continued focus on improving all of our processes, we are now strategically positioned to run that different race and reinforce our position as a market leader.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

LEADERSHIP&CULTURE

The Secret Ingredients of a Successful Lean Transformation Herb Brown, Global Practice Leader, TBM Executive Leadership and High-Performance Culture Practice

LEADERSHIP & CULTURE

Herb Brown

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

t the Lean Excellence Conference in September the most popular topic of discussion was about culture and the role of leaders in establishing an effective, sustainable lean enterprise. Strong, inspirational, effective leaders are the common denominator of companies who embed a culture of continuous improvement throughout the organization. What is it that strong leaders do to inspire a can-do spirit, achieve breakthrough growth, and retain passionate, engaged employees? We talk about the role of leadership all the time but somehow it continues to be the elusive ingredient in the formula for success. Mike Greece, a principal at Padilla, Spear, Beardsley, a NY-based public relations agency, reminisced about his first visit some years ago to Pella Corporation in Pella, Iowa. He spoke about his experience one morning in the Pella parking lot: “I was just blown away by what I saw at Pella. I was nearly run over by an army of employees who just couldn’t wait to get to work. I couldn’t wait to get inside to see what was going on in there that made people so happy to be at work.” At a recent plant tour of the Vermeer plant in Pella, Iowa, David Corbin, Vermeer’s vice president of manufacturing, presented impressive results in sales, profits, and productivity. He credited the company’s guiding principles, its values, its lean culture, and its strong, committed leadership with increasing levels of employee involvement and satisfaction. We all have leaders in our organizations— senior leaders, mid-level leaders, and emerging leaders. But what is it that makes the best leaders inspire associates to continually stretch, to deliver extraordinary results, and ultimately emerge as leaders themselves? Both Mel Haught, CEO of Pella, and Mary

Andringa, co-CEO of Vermeer, have created distinctive recipes—something to savor— that include their secret ingredients of success. (And by the way, they’ll both say, “We’re just starting on our journey.”) If you watch Mary Andringa in action, you’ll see it right away. You will be amazed at her passion and impressed by Vermeer’s success but you won’t quite be able to identify the secret ingredient that makes their culture enviable. Not only has Mary participated in more than 30 one-week-long kaizen events over the past ten years, but she has inspired a whole new crop of leaders who follow in her footsteps and lead by example with the same enthusiasm and commitment. I know it’s unrealistic to think you can bottle the secret ingredients of leadership and liberally apply them when needed. However, lean leaders consistently demonstrate some common behaviors that should be observed and replicated. The Power of “Why” When things go wrong, your standard question should be “Why?” not “Who?” A regular Gemba walk, root cause anaylsis, 5Y, fishbone diagrams, or just a simple whiteboard “chalk talk” might be all you need to lead your team to success. David Corbin from Vermeer reflected on his children and their constant pursuit of knowledge. Says Corbin, “My kids ask ‘why’ all the time, and so should we.” He added, “Asking ‘why’ gives people the opportunity to express their ideas, to solve problems independently, and to feel a sense of pride and ownership as they develop solutions and achieve results.” Your role as a leader is to help people learn and grow, to find solutions, to remove barriers, and to encourage an environment of creative problem solving. As a lean leader,

you are always searching for those precious “teachable moments.” If you try to solve all the problems yourself, you’ll never have time for everything else on your plate. Whether you’re a coordinator or a CEO, the power of “why” is an effective tool for engaging others to collaborate and develop more creative solutions. Lead and Learn by Doing Don’t underestimate the power of participation. If you’re in a leadership role, there is no better way to gain the respect of your employees than by walking a mile in their shoes. Lean leaders, from the CEO to the most recent hire, lead by example. Lean leaders demonstrate their support with their calendars—that is, with their time. Larry Culp, CEO of Danaher Corporation, leads a multi-billion dollar organization by aggressively embedding the Danaher Business System in every person, process, plan, and performance metric. Still, he consistently takes time to participate in shop floor and business process events all over the world. Any Danaher employee can

log-on to the Danaher Intranet site any day of the week and find a recent blog by Culp recognizing kaizen team members for their contributions and expressing his amazement and pride with the types of results his associates deliver day in and day out. It’s not unusual to walk into a Danaher kaizen event on Monday morning and find yourself seated next to Larry. He checks his title at the door, rolls up his sleeves, and solves problems just like you and me. You can bet your bottom dollar and your bottom line that any employee who sees his or her CEO actively engaged in cleaning machines, solving set-up reduction challenges, moving equipment, and so on will be likely to offer unconditional support next time he’s asked to stretch and contribute. Allocate Time for Continuous Improvement Standard work isn’t just for machine operators and technicians. It’s for leaders too. Melissa Sawin, formerly the Director of Continuous Improvement at Reviva, took up the task of developing leader standard Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

LEADERSHIP&CULTURE It’s no surprise that Sawin was recently promoted to a more senior role in the organization. And she’s left a behind a stable of processes for the new CI leadership to use while continuing to support the organization’s need for a sustainable lean business system.

work for executives, managers, and supervisors inside her organization. At the 2008 Lean Leaders Exchange in Atlanta, Georgia, Melissa presented the Reviva approach to leader standard work. What’s in your Outlook calendar? Are you allocating an appropriate amount of time to continuous improvement activities? Here’s what they’re implementing at Reviva. Role

Standard % of Time for CI Activity

Executives

10-15%

Value stream manager

25%

Support department managers

50%

Supervisors

50%

Team leaders

80%

Operators (associates)

95%+

“Leader standard work is a powerful tool to help leaders shift behavior to focus on the process to make the approach process-dependent and not people-dependent,” says Sawin. She contends that the entire process raises the bar for the leadership staff and helps to identify those who will and will not make the transition to more senior levels of leadership. With documents that clearly outline expected behaviors and best practices of leadership activity, Reviva has been able to create a baseline for its lean management system.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

Link Incentives to Achievement of Key Performance Metrics Brian Frost, continuous improvement director at Appleton Papers, says that his organization linked lean success to performance metrics for the entire operations team. In their first full year implementing lean, Appleton made lean deployment 20 percent of its operations scorecard. Their metrics were closely liked to lean deployment: • 30 percent of work force participating in an event = 10 percent bonus • 14 kaizen events per month = 10 percent bonus • Score 75 points on the lean assessment • Standardization of lean tool box Set Vision, Align Resources, and Vigorously Monitor Achievement We really need to look at lean as a foundational element of our organization’s core business system. A lean business system is a fundamental set of processes that enable successful achievement of your most critical objectives. A lean business system must be driven by leadership and enabled by a lean culture. Autoliv and Danaher are preeminent examples of this holistic approach. All pillars are equally balanced: people, process, plans, and performance. They’re all linked, and you must maintain balance for the system to pay off. Policy deployment is the process that translates vision into action and defines a clear set of activities required to achieve breakthrough growth. But you have to live

the policy deployment process by ensuring resources are focused on delivering those results and you must actively monitor performance in a rigorous, disciplined approach. Leaders have to insist that their teams measure and counter measure constantly in order to make it work. Kaizen is a way of life, and we should all embrace it as our primary tool for rapidly driving continuous improvement and sustainable change. However, kaizen alone won’t do the trick. Kaizen is the tool— policy deployment and managing for daily improvement are the processes that help us to deliver. Develop Your People Lastly, you’ve got to tie it all together with people. While leadership may come naturally for some, it must be nurtured in others. You’ve invested a tremendous amount in developing leaders with technical expertise, industry knowledge, and strong relationships. Most likely, those managers will be tapped to lead senior-level positions as your organization benefits from the continuous improvement culture. As Brent Shadix, executive vice president of human resources for WIKA Instrument Corporation says, “Anytime you want to grow from where you are to where you want to go, there are definitely certain types of leadership with certain skills that you’ll need to get there. Our goal is to develop people that can manage at a different level. When you’re an organization that has grown as fast as WIKA, you must be able to change your management style. As we get bigger, we need for leaders to coach, develop, and manage others.” Coaching and mentoring aren’t so easy. Prioritize coaching and development for your rising stars. Give your leadership team the opportunity to recognize their behavioral strengths and weaknesses. Help them find

ways to build the core capabilities to lead and drive success. ––––––––––––––––––––––––––––––––––

“Understand the strengths and weakness of your organizational culture.” –––––––––––––––––––––––––––––––––– Know what your employees are thinking and respond by developing leaders who can keep the ball moving further down the field. This may be the softer side of success but it’s a key ingredient. Your special recipe won’t taste quite right unless you develop all the ingredients in the right mixture. Set the plan. Rigorously deploy process. Vigorously monitor results. And develop your people. Do that and you’ve got the secret ingredients of competitive advantage. Now that’s a recipe you’ll want to keep on hand.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

ACCELERATEDLEARNING

Focus on Training during a Recession to Stay Competitive By Joe Panebianco, Director and Team Leader, TBM LeanSigma® Institute

ACCELERATED LEARNING

Joe Panebianco

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

he current economic climate has most executives and managers on edge. With wild stock market fluctuations on an almost daily basis, keeping most companies from panicking is difficult. When half of your value seems to disappear with the drop of the Dow, the knee-jerk reaction is to begin cutting costs within the organization. Slashed training budgets are a common casualty of tough economic times, but organizations that teach and implement lean principles view training as a key function that should not be reduced. During a recession, training is a valuable tool for reinforcing a company’s culture, generating cost savings, and preparing for economic upturns. Recessions, in general—periods of reduced economic activity—automatically set off alarm bells. However, post-World War II, the average length of a recession is only 11 months. In the big picture, this means that recessions are relatively short-lived events. When you look at the long-term strategy and mission of your organization, a recession will only reflect a small piece of your company’s overall history. Companies with foresight and planning use this time of reduced activity to refocus on their initiatives, including training. Rather than seek short-term gains by reducing the organization’s training budget, they recognize that training is what enables them to develop and retain their

employees, hone skills, refine processes, and continually improve. By sharing information and investing in employees through training, companies with continuous improvement philosophies keep their employees focused on the organization’s long-term goals while getting people the tools to make small improvements on individual levels. When employees have less work, they can still be productive if they use their downtime to learn new skills or train fellow employees. Learning organizations are masters at identifying internal experts and facilitating knowledge sharing. By doing this, these organizations reap several benefits: they foster teambuilding, realize cost savings, and build loyalty. A Valuable Tool for Weathering an Economic Downturn One of the key hallmarks of lean is its focus on relationships. Lean methodology examines how an organization’s employees, customers, and suppliers work together as partners. Constantly evaluating these relationships continually improves processes, systems, and products. The result of delivering products in close collaboration with vendors and customers is highly satisfied, loyal customers. Less variation among products and services results in a higher quality product at a lower cost. Another vital characteristic of lean is its

focus on eliminating waste and unnecessary activities. Behaviors, activities, and actions that fail to add value should be removed from the business or manufacturing process. Once a company creates this mindset among its employees, it will realize small improvements in areas it had never considered before. Most of the non-value-added activities that occur within organizations are found in human behaviors—not in automated manufacturing processes. By training employees in the mechanics of lean on the shop floor, you’ll begin to see its influence in other business functions as employees apply its philosophies in other aspects of their jobs. Unlike other types of training, lean training can be applied to any type of business (service and manufacturing, process or discrete) in any business function (manufacturing, marketing, accounting, technology, human resources, etc.) at all organizational levels. Greater efficiency, lower costs, shorter lead times, and improved processes can be realized across all operations. What are some additional benefits of lean training? • Continual improvements in your business functions • Creative and cost-effective problem solving • Improved responsiveness to change, making a company more adaptable to different market situations

And while these benefits are appreciated no matter what the economic climate, they are even more valuable in uncertain ones. As competitors focus on cutting costs, your organization can continue to invest in innovation, growth, and productivity during slow times. If all of this sounds somewhat familiar, it’s because none of these ideas are new. The lessons a company can apply in order to do well during a recession echo the same lessons that Toyota learned in the 1940s. Realizing they did not have the money or resources to compete with larger car manufacturers like General Motors or Ford, Toyota figured out ways to do more with less. Their management embraced W. Edwards Deming’s concepts of teamwork, collaboration, and trust. In the end, they built a learning organization that focuses on developing and empowering employees, working closely with suppliers, and continuously improving their manufacturing processes. Once your company has resolved to stay its course and not cut back on training during an economic crunch, you’ll still want to make sure that your training dollars are spent wisely. One way to do this is to make sure that the training that is offered is targeted so that its impact is greatest. Analyze your business and understand what value streams are strategically important to your business. Where do you have the

opportunity to grow the business, capture market share, differentiate yourself from the competition, and create value for the customer? Focus your training and continuous improvement on techniques and issues that will transform this area of your business. By doing this, you will be able to maximize the return on investment of your training costs and grow in any type of business climate. Another way to train that is costeffective and fast is through an eLearning platform. E-learning enables companies to teach lean concepts quickly and communicate their message to the masses at a relatively low cost. It is an excellent platform for teaching the principles, concepts, and theories that form the basis of a lean journey. Once your employees have mastered the rudiments of lean, they can quickly apply what they’ve learned on the shop floor and across the business functions. The choices a company makes in how it reacts to a recession play a large role in how the organization will emerge from an economic downturn. Focusing on training during a recession can give a company a competitive edge. By developing your people and updating their skills, you can build important employee loyalty. Customer satisfaction, improved quality, and lower costs are side effects of implementing lean training. Continuing these training programs during a recession makes a company stronger in the long run and also makes recessions a lot less fearsome than they may first appear.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

STRATEGICVISIONING

Milbank: Keeping Production at Home through a LeanSigma® Strategy By Lavon Winkler, CEO, Milbank Manufacturing Company

Lavon Winkler

ilbank Manufacturing Company was founded in 1927 to manufacture highvoltage switches and in 1941 changed over to electrical and meter sockets, where it has remained as an industry leader. The company provides wholesale electrical distributors with quality electrical products for the utility, contractor, industrial, and OEM markets, with a union employee base of more than 800 at five manufacturing facilities in the United States. About three years ago, we examined the need to outsource some of our manufacturing. This wasn’t so much because we needed to cut costs, but rather because we recognized that we simply weren’t very good at some of the processes we were performing. We had a mindset that we needed to do everything ourselves, but then realized that it might make more sense to outsource those processes that weren’t our strong suits. –––––––––––––––––––––––––––––––––––

“We’re real proud of the fact that we’ve done this while keeping jobs in the U.S. and we’ve done it with an all-union workforce.”

RADICAL STRATEGIC VISIONING

––––––––––––––––––––––––––––––––––– While considering this change in our manufacturing, we also looked at what our competitors were doing. It turns out that all of them had some manufacturing outside of the U.S. In contrast, all of Milbank’s manufacturing was in the U.S. and in union shops. Prior to this time, Milbank had been doing some lean—creating islands of efficiency within a sea of chaos—but we lacked the “enterprise” philosophy behind lean. So my first step was to introduce the Toyota Production System, starting with a lot of education at the senior and middle management levels. Our outstanding leadership team began to implement lean across the entire enterprise, focusing on both process and culture.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

This was the state of affairs at the time we considered taking some production outside of our own walls. We looked especially at high-volume processes and considered whether it made sense to move those to Mexico, but ultimately didn’t see a huge benefit in doing so. Instead, we decided that we could intensify our lean implementation based upon the Toyota model to become even more competitive and that we would do so with an all-U.S. workforce. Even though we did end up outsourcing some of our small parts and secondary processes, all of that outsourcing was done within the U.S. Once that decision was made, our lean implementation quickly ramped to a very high level. You often hear about union shops and how difficult it can be to implement changes in such situations, but as people became more engaged and the union saw that we were committed to keeping jobs in the U.S., they jumped on board and now we have a fantastic relationship with them. We have union leaders participating in and, in some cases, leading kaizen events. There’s an awful lot of positive energy, and as a result efficiency and quality are at an all-time high and our lead times have come way down. Our owners are telling us that we’re operating at an efficiency level that is the highest in the history of the company. We are getting all the expected benefits from lean. For example, work in process is greatly reduced—by several million dollars— even though we’ve not held any events directed toward reducing work in progress. All we’ve been doing is following the discipline of defining our current state, identifying our desired future state, and then implementing as we go. In three years we’ve been able to implement $12 million in annualized cost reductions. Additionally, Milbank had a history of carrying some debt and usually being well into our operating line of credit, but by implementing lean, we’ve been able to retire all of our short- and long-term debt and we’ve not touched our line of credit for

about a year now. We feel very good that if the recession really intensifies and things get difficult out there we’re in a healthy position of having no debt, and we have cash in the bank. Additionally, although our market share before we started our lean journey was substantial, we’ve increased it by 9.5 percent in just this past 12 months. Much of that is not because we have a lower price—in fact

our products are some of the higher priced in the industry—but because of our improved response capability, which is a direct result of lean implementation. Some of our products are fairly basic and flow in a high volume through our plants. But the lion’s share of our business is very small production runs. For example, we have lines in Kansas City, MO, where it’s not unusual to do 16 or 17 model changes in an eight-hour shift. That’s the kind of variability that we have. In the past, when we got into the high side of our seasonality, which is the construction season of the summer months, the lead times in our factories in Concordia and Kansas City would always go from about six weeks to 10, 12, or 14 weeks, and sometimes more. We were making everything in batches, product wasn’t flowing, and it was a first-rate mess. Now our lead times have come down to two to four weeks and are down to one week or less on some of our product lines. This is allowing us to secure an incremental share of the market because we can respond to customer needs a lot faster. We are now a lot more reliable than many of our competitors because we are able to keep our stock

availability in the upper 90s. That doesn’t sound like much, but when you consider that we have two distribution centers and 22 warehouses that our distributors pull from, a 98 percent stock availability when you’re manufacturing 10,000 finished goods SKUs is amazingly good. People who don’t understand lean would assume that we’ve done this by bulking up our inventory, and the reality is that

our overall inventory dollars have declined more than $5 million in the past 12 months. So we reduced our total inventory by about 30 percent and we’re nowhere near done. We’re three years into this and we’ve just scratched the surface of what we can do. Historically, Milbank also expanded by building factories, but by using lean strategies we’ve managed to free up 100,000 square feet in our plants that is now available to support our diversification strategy. We have also started working with our primary suppliers, introducing them to the concept of lean and encouraging them to come to our factories to see firsthand results. We’ve let them know that we expect our top-tier suppliers to be implementers of lean; we’ve shown them how they will start to interfere with our ability to realize incremental improvements if they don’t implement lean themselves. You can only do so much within the four walls of your factory and sooner or later you’ll have to go both up- and downstream in the value chain. The ultimate goal with lean is to take waste out from Mother Earth to consumer, so we’re educating our suppliers and getting them on board. Some are more energetic

than others, but we’ve got two or three that are absolutely on fire. We have shown our suppliers that we are a resource for them. We invite them to participate in kaizen events and we’ll also send people to participate in or to facilitate their events. We tell them that as their partner, we will do everything we can to help them to get started on the right track on their lean journey. It’s all part of a lean strategy that will continue to Milbank’s enterprise-wide lean philosophy kept manufacturing in the US, energized union leadership, and produced impressive results: • $12 million in annualized cost reductions over three years • Retired all short- and long-term debt • 9.5 percent market share gain this year • Lead times reduced to 2–4 weeks from 10–14 weeks • 30 percent reduction in overall inventory dollars • Freed-up 100,000 ft2, which is now available to support the company’s diversification strategy • Started working with top-tier suppliers to introduce lean concepts

help us thrive while keeping manufacturing at home. This is the Milbank story and although I know we have so much more work to do, when you walk into our factories, it’s just nothing like it was three years ago. We’re real proud of the fact that we’ve done this while keeping jobs in the U.S. and we’ve done it with an all-union workforce. It’s not been easy; we’ve had some real hurdles to get over, but the success we’ve seen so far is something we can easily build on.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

FUTURES

Using Kaizen to Reduce Energy Consumption and Yield Savings By Doug Kiss, TBM Senior Management Consultant

Lean manufacturers use many process-

Doug Kiss

improvement tools to achieve and sustain efficiency, flexibility, and profitability. Such tools have enabled them to swap warehouses of idle inventory for fast-moving information networks; transform capacity constraints into quick-response production; and standardize processes for consistent quality on a global scale. As these same companies manage spiraling energy costs, they are continuing to rely on lean process improvement to reduce waste and protect profits. Certainly, widespread societal demand exists for energy conservation to preserve the environment, but manufacturing leaders know that energyreduction also is crucial to their companies’ long-term survival. By not reducing energy consumption, manufacturers risk losing the gains reaped from years of LeanSigma® and other continuous-improvement efforts. Energy is essential for goods production, but compared with other widely consumed raw materials, energy has become one of the costliest and most volatile. Therefore, stabilizing energy-consuming processes and removing as much waste as possible become the mandate to remain a globally competitive manufacturer. Share of Energy Consumed by Major Sectors of the U.S. Economy ∑ Industry and manufacturing ∑ Transportation

28%

∑ Residential

22%

∑ Commercial

18%

Source: U.S. Energy Information Administration, Annual Energy Review 2005, www.eia.doe.gov.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

32%

All types of businesses are paying more for energy, and indications are that this trend—driven by increased demand and uncertain supply—will continue. The increases hit manufacturers especially hard because they consume vast amounts of energy in their production processes, use energy to transport their goods to customers, and often use energy sources such as natural gas and petroleum as raw materials. According to the U.S. Energy Information Administration, the cost of natural gas, which is the most common source of energy in manufacturing, increased by 9.3 percent from 2007 to 2008 and is expected to increase at least an additional 1.9 percent from 2008 to 2009. Sources of Energy Used for U.S. Industry and Manufacturing ∑ Natural gas

36%

∑ Other sources

33%

∑ Electricity

17%

∑ Coal

∑ Fuel oil

∑ Coke fuel and wind

∑ Propane

Source: U.S. Energy Information Administration, Annual Energy Review 2005. www.eia.doe.gov.

Fortunately, manufacturers have ample opportunities to reduce energy consumption through the use of common lean tools and techniques. Benefits of Energy Reduction through Lean Process Improvement Traditionally, lean activities have not focused on energy usage, but we know that manufacturers that have applied such activities to production practices have gained significant competitive advantage. Typical improvements resulting from continuousimprovement activity include lead times that

are 25 percent to 50 percent of the industry average, annual inventory turns greater than 24, productivity increases of at least 1 percent per month, and growth rates that are three-to-five times the industry average. By applying lean activities to energy use, an average facility can reduce its energy consumption by up to 20 percent, of which 30 percent can be achieved by making procedural and behavioral changes. Manufacturers such as agribusiness, food and beverage, paper and packaging, and other continuousprocess industries can potentially double these reductions because their processes operate 24/7 and tend to be more energyintensive. One continuous-process manufacturer working to cut energy consumption achieved a minimum 10 percent reduction with each process change. Manufacturers that reduce energy usage do more than lower their utility bills. Benefits include: • Improving workplace culture by creating a safer, cleaner internal environment, and instilling a sense of pride in employees for contributing to a safer and cleaner world. • Contributing to a reputation of social responsibility locally and globally, which makes a company’s products more attractive to customers. • Taking the first step toward ISO 14001

certification. • Becoming a more attractive partner to new and existing customers that have environmental-sustainability mandates for suppliers. • Having accurate data about the true energy consumption of processes, which contributes to better decision-making regarding unit costs; production planning; and capital-equipment maintenance, repair, and purchases. • Complying with current or future government regulations or industry guidelines regarding energy consumption and/or carbon emissions. • Reducing the impact of energy’s price volatility. Applying lean thinking to energy requires the same understanding of value creation and waste reduction as traditional lean applications. Lean practices aim to make companies more competitive and profitable by increasing value-adding activities and decreasing non-value-adding activities as much as possible. Most companies have great opportunity to reduce non-value-adding activities (waste) because, typically, 95 percent of any process is wasted time or activity. To the standard list of seven wastes, we can add an eighth waste: wasted energy. Taiichi Ohno, founder of

TPS, famously said, “One thing you can’t recycle is wasted time.” The same is true for energy: Once energy is wasted, not only is the resource gone, but your company still will incur a substantial cost for it. Additionally, we must understand two truths about lean process improvement before using its tools to reduce energy waste. First, lean process improvement is one part of lean management, which requires comprehensive commitment to culture change from a company’s leaders. Lean management is not a set of tools or a means of reducing waste in and of itself. One of the first benefits of committing to lean management frequently is drastic reduction in wastes (such as excess inventory) and a subsequent boost in cash flow. This, however, is just part of lean management’s ultimate goal: to build long-term sustainability through rampant and continuous process improvement, which feeds exponential creation of customer value at the lowest possible cost. Dedicated energy-reduction efforts should not be undertaken with a short-term focus or tied solely to short-term goals. They should be folded into a company’s existing lean-management strategy and become part of everyone’s daily work. Second, lean process improvement is not a complete solution for energy management just as the Internet is not a complete solution for information management. Lean

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

FUTURES

energy management should be part of a larger energy-management infrastructure that includes effective asset management, supplier development (in this case, energy suppliers), strategic site selection, and other relevant factors. Capturing Wasted Energy The key to capturing wasted energy is loss prevention. Plants consume most of their energy (more than 80 percent) while processing raw materials into finished goods. This is a good place to begin identifying energy waste because removing this waste will have a substantial and immediate impact. Here are two ways companies can begin capturing lost energy immediately: Industrial Energy Usage by Activity Process heating

53%

Machine drives

22%

Facility HVAC

Electrochemical process

Process cooling and refrigeration

Facility lighting

Conventional electricity generation

Other processes

Onsite transportation

Source: Prepared by the Leonardo Academy from U.S. Department of Energy data, from Annual Energy View 2003.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

• Finding and stopping leaks: Continuous-process manufacturers have reduced energy waste significantly by declaring “death to leaks” of oil, natural gas, compressed air, treated water, steam, and/or electricity. Such leaks might seem too small to be worth detecting and correcting. However, plugging even small leaks can significantly reduce energy consumption. Stopping one leak from a 1/4-inch pipe carrying compressed air at 80 PSI can save a company $12,000 in one year • Managing equipment and process waste: Common behavior in plants can waste energy: leaving lights, machinery, and computers on unnecessarily; using electronic carts or conveyors when push carts will do; creating excessive material or chemical waste that must be processed further; and making defective parts or finished goods that require energy for rework. Applying Kaizen to Energy Reduction Kaizen events can focus on a process or a system. Work teams and team leaders of frontline activities use process kaizen. Senior managers use system kaizen (also called flow kaizen) to address enterprise-wide management issues. An example of process kaizen would be detecting and eliminating leaks on the production line or cell, as discussed previously. An example of system kaizen would

be changing the flow of raw materials so that suppliers deliver directly to production lines in order to eliminate the need for warehouse space, conveyers, and/or forklifts. Expanding system boundaries even further, a kaizen workshop could address energy at the product-development stage (e.g., machining requirements, material choice, packaging needs, storage specifications) or at a product’s end-of-life stage, such as disposal or reuse at a customer site. When system kaizen involves suppliers and customers, the goal becomes to equally share the benefits of improvement. For example, savings derived from collaborative improvements in transportation of raw materials from suppliers or delivery of finished goods to customers should be made transparent to all collaborators and equally distributed. Another target for lean application that is growing in popularity and has the potential to yield significant energy savings is back-office operations. Particularly in the financial functions, reducing transaction waste through simplification and automation yields less reproduction, storage, distribution, and maintenance of paper records—all of which require the daily use of office machinery. One Midwest manufacturer of fabricated steel parts is in the process of switching from paper checks to electronic funds transfers as the result of ongoing process improvements to accounts payable

processes. So far, the company has reduced the number of weekly paper checks it issues by 62 percent, and in doing so, has cut the time it takes to issue payment to vendors from 4.5 hours a week to 1.5 hours a week. The company now pays its suppliers faster and with less material waste and energy consumption. Spreading and sustaining the improvements of energy kaizens requires the same infrastructure of disciplined procedures as other continuous-improvement efforts. Some of these include: • Standard work: Precise procedures established for each operator’s work based on rate of performance, sequence of activities, and maintenance of a standard inventory of assets required to keep the process operating smoothly. For example, following an energy kaizen, a cell team adds daily checks for steam leaks to the standard work of shift start-up. In doing so, the team identifies new leaks immediately and corrects them. (Standard work also can save energy by eliminating variation in activity. After a team determines the most efficient method of production through kaizen, standard work ensures that everyone is following that method.) • 5S: Often, 5S is the first step to removing waste in an area or process. Periodic 5S audits ensure that the practices continue there after. For example, an operator performing complex assembly with her hands in a one-piece flow cell can keep work-inprocess flowing by maintaining order at her work station using 5S. Another operator not using 5S is disorganized in her work and causes a disruption in flow. To catch up, the plant manager must add an additional two hours to the next shift to meet production goals, which increases per-unit costs in several ways, including energy consumption.

• Plan-Do-Check-Act (PDCA): An improvement cycle introduced by W. Edwards Deming that proposes a change in a process (plan), implements the change (do), measures the results (check), and requires adjustment (act) based on the results. For example, a plant’s maintenance crew monitors daily energy consumption and uses the findings to set monthly energy-reduction goals for individual projects. Once a month, team members report on their energy-reduction projects using the PDCA steps. This structure allows the maintenance supervisor to monitor the progress of the projects and offer help if needed while giving individual team members a guide for working independently. • Visual management: Placing all tools, parts, reports, instructions, and performance indicators of a process or system in plain view so that everyone involved can immediately understand the status of the process or system. Energy example: As part of a “death to leaks” kaizen workshop, a production team assigns a unique color to pipes based on what each pipe contains. This makes for quick identification while checking for and correcting leaks. The colors also are used in a new energyconsumption chart that is added to an indicator board that portrays actual performance versus planned performance for each shift. Operators soon learn to monitor energy consumption by source using the colors, as well as using the colors in reports to indicate which pipes have been checked and, if need be, repaired. Over time, they gain knowledge of where leaks are likely to occur and under what circumstances, and become better at predicting when worn parts need to be replaced.

Lean continuous improvement always has emphasized waste reduction. This makes lean tools such as kaizen ideal for rooting out and removing energy waste. Outwardly, benefits of energy waste reduction include a projection of responsibility to employees, customers, communities, regulators, and lawmakers. Internally, manufacturers benefit from immediate and often significant cost savings, more stable processes, and a jump on certification programs such as ISO 14001. While concerns about climate change and resource protection demand attention from high-energy-consuming businesses such as manufacturers, so does the competitive mandate of increasing customer value while controlling costs. Fortunately, common and proven lean process-improvement tools can help companies address both challenges.

This article is an excerpt from a white paper by the same title. For a copy of the full white paper, contact Angela Scenna, ascenna@tbmcg.com.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

TECHTALK

Progressive 5S: Practice What You Preach Dara Shoemake, Senior Event Coordinator/5S Facilitator, TBM Consulting Group, Inc.

Dara Shoemake

––––––––––––––––––––––––––––––––––

5S is a process for creating and maintaining a safe, organized, clean, high-performance workplace. Promoting 5S doesn’t mean just picking up the trash, though that’s certainly a part of it. The emphasis is on being organized, designating a place for necessary items, and on being disciplined, ensuring that all items and equipment are always returned to their proper place. —Mike Serena ––––––––––––––––––––––––––––––––––

mplementing 5S in an office environment is a challenging and sometimes daunting task. Associates tend to take it very personally when anyone trespasses into “their” area and begins to dictate the items within their workspace needed to do their job and how they are supposed organize it. We experienced this feeling when it became evident that we at the TBM office needed to “practice what we preach” and get serious about implementing 5S. First, we conduct many Institute training courses at headquarters, which means we have clients coming into the Durham office at least a couple of times a month. Our workspace is very visible to all who participate in events throughout the week. Another reason for our concern was the fact that many of us travel to support off-site events, which leaves the people remaining in the office to cover many of our daily responsibilities. That can be difficult whenfiles and other items that need to be reviewed are handled differently by individual employees. We often tell our clients that standardization of work areas and work practices make it easier for one person to step in and take over the duties of another as needed, so it only made sense for us to follow that practice as well, and thus began our journey.

TECH TALK

Where to Begin Many people probably assume that the administrative staff at TBM has the same in-depth knowledge about the lean tools and their implementation that our consultants have, but this is not always the case. We are sent out to participate on a team at a public kaizen event as part of our orientation, and for most of the staff, that is the only exposure we have to what TBM consultants really do in the field.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

We had to keep this fact in mind when we set out to implement 5S in our office. This meant we had to start with 5S training for the office staff. We chose to use “Progressive 5S.” ––––––––––––––––––––––––––––––––––

The essence of Progressive 5S is to pair each step of the process with a specific task or activity along with a key discipline or behavior that would need to be performed for that step. By focusing on one level at a time, it becomes significantly easier to both implement and monitor results. In short, we could not only reduce the amount of time to progress up the ladder to full compliance, but also quantify results for performance tracking and aid in ensuring sustainment. —Mike Serena –––––––––––––––––––––––––––––––––– Our 5S journey started with the Business Development, Marketing, and Institute departments, all of which are housed on the second floor of our building. Because of the aforementioned travel and other responsibilities, we decided to implement 5S in stages starting with our individual workstations. The intent was to work toward getting to a level of 2.0 before moving on to the common or shared areas. After we all completed our initial 5S training, we met as a group to ensure a full understanding of program expectations as well as our roles and responsibilities. Our first task was to agree, as level 1 indicates, what items in the areas were necessary and unnecessary as well as the exceptions based on different requirements for different jobs. For example, some individuals have laptops and docking stations while others have desktop units. We used the following system to

Before Decision

Time Frame

After

Disposition

Cannot be used or

Get rid of it

unlikely to be used Can be used, necessary items Used twice yearly

Store in a distant place

Used monthly

Store near process

Used weekly

Store near operation where used

Used daily

Keep in work area

help us make these decisions. Also, we agreed that we needed to reduce the clutter in our areas. Consensus on this issue proved more difficult than expected. We learned that the word “personal” included a wide variety of items and in a wide variety of locations. Gaining consensus on both item and location led to a few spirited discussions. The next step was to modify the level 1 5S score sheet to fit our office. Our level 1 (sort) audit sheet included the following 10 categories: 1. Furniture and equipment: desk, chair, etc. Empty bins/shelves are okay. 2. Plugs, outlets, and safety equipment: extension cord, surge protector, power cords. 3. Documentation: phone list, Institute calendar, standard work, Personalysis chart, bulletin board items, working files.

5. 6.

Floors and workstation surfaces: pencil cup, paperclip holder, stapler, calculator, tape dispenser, trash can, recycle bin(s). No clutter allowed and cords should be tied away from feet. Cleaning equipment: cleaning wipes, tissues, cleansers. Storage bins/storage cabinets: clear of excess material, stacked items, outdated items, and unnecessary equipment. Wall surface materials: nameplate, in box, signs, pictures, coat hanger, and job aids. No outdated material or clutter allowed. Personal items: Personal photos and knick knacks should be limited to 10 items per person (other than what is included in your personal bin or drawer which will not be audited). Do not include President’s Award and Service Awards as personal items. Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

TECHTALK

Before

Filing cabinets, bookshelves, drawers and other shelves: must be clear of excess materials/files, stacked items, outdated items, unnecessary equipment, and excess duplication of items. Empty drawers are okay if part of multiple drawer filing cabinets. Area specific items: Do not review personal drawers. 10. Excess materials: areas must be clear of material in excess of specified limits as well as clear of excess containers, shelves, or office supplies. 9.

To ensure the program’s continuous improvement, an audit team and targets were created. Our initial team included one person from Marketing and Business Development and three people from the Institute. Audits were conducted on a weekly basis with reports going out to everyone on all three teams, our managing director, Mike Serena, team leader, Joe Panebianco, and our Institute consultants. The reporting included the score sheet, a run chart of our progress, and the countermeasures. The documentation communicated our results as well as where we needed to improve before the next audit. Within three weeks we reached a 1.0 in all 14 workstations and the change was highly visible to all.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

After

Level 2 After achieving level 1, we moved on to level 2 (creating and labeling a home for everything). Typical 5S foot printing in a shop floor environment is to clearly mark where everything goes. We agreed in our office that it was not necessary (or attractive) to see the foot printing when the item was in its proper location. Therefore, we chose to use a more discreet method using a foot print just inside the edges of the item. This way when the item is correctly located, the labeling is not visible. For desktop and personal item storage, the area was foot printed and labeled as “personal,” but the individual items in the area were not foot printed. We designated a wall area 2 feet wide by 2 feet high to be used for personal items. Creatively, associates employed the use of white string and “T” pins to foot print personal wall space in cubicles. Further, labels were applied to the center of the foot printed area. For uniformity, we chose to use 1/8-inch black vinyl tape for foot printing, and white label tape with black lettering. Overhead bins were labeled on the outside front. Contents of overhead bins must be neat (bookends used where applicable), and empty overhead bins were labeled “empty.” For the inside of bins, we use several visual labeling methods. For binders, labels should have a large font size and all capital letters.

We use photos in place of foot prints for the inside of overhead bins. The photo can be placed in a sheet protector and hookand-loop fasteners or mounting tape can be used to attach it to the inside of the door. The outside of each file cabinet was labeled with the contents and the inside of file cabinets/pencil drawers were sectioned and labeled. All file folders in file cabinets were labeled for ease of reading. If an associate must have file folders in an organizer on the desk, those folders were labeled using the small-size standard font. Associates were encouraged to keep as many file folders as possible in a cabinet rather than on the desk. Items on the floor were “shadow boarded” and labeled. We did not include chairs, floor mats, file cabinets, or lateral cabinets in this requirement. Our directions for shadow boarding were to simply type the name of the item in a word document, print, laminate it, and use black gaffers tape to secure it to the floor under the item. Level 3 At the implementation of our 5S pro g r a m the feeling among office staff was that we would run into issues when it came to level 3 (sustain). This ended up not being the case. By the mere act of creating a home for everything, we found that we were automatically putting items back when we were through with them. Putting things in their proper place was beginning to be a way of life for us. One idea we came up with to help with sustainment was a “buddy system.” When someone is out of the office, their buddy keeps an eye on their area. If a guest uses the area, the buddy ensures that they leave the area as they found it. Buddies also assist if packages are delivered while people are out, and make sure that they are placed in the right location.

Milestones – Individual workstations First Audit

2/19/08

1.0

3/3/08

2.0

5/5/08

3.0

5/19/08

Moving On Common areas such as meeting rooms, printer areas, and kitchen areas were a bit more of a challenge for us. Getting buy-in from all of the different users was the key. The common areas are used by all associates, as well as by consultants when they are working at the office. As you can see from the chart, it took a bit longer to reach our goals in those areas. Milestones – Common areas First Audit

5/19/08

1.0

6/30/08

2.0

8/29/08

3.0

9/15/08

Looking Forward Reaching level 3 in the areas we’ve tackled has resulted in a great deal of pride and a sense of accomplishment, but we know that we still have a long way to go. We have plenty of room for improvement, and more areas to cover, including extending the program out to all of our storage and shipping areas. But we’ve proven that we can create and sustain an orderly and visual workplace that is conducive to greater productivity and an overall better workplace atmosphere. As we continue up the Progressive 5S ladder, we expect to make even greater changes in our office and the way we want to portray ourselves to the clients who visit us. More importantly, we found that it takes effort and consensus to get everyone to “sing from the same choir book” and certainly “practice what we preach!”

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

THINKSYNC

Lean Distribution: Shaping Up to Ship Out Ken Koenemann, Managing Director, Lean Value Chain Practice, TBM Consulting Group, Inc..

hen the trailer pulls away from the dock doors, it’s over. You’ve done all that you can do to ship your customers the right product in the right quantity and have it delivered on time. It’s also your final opportunity to get it wrong, which is why manufacturing executives need to pay as much attention to creating a lean material flow in their picking, packing, and shipping areas as they do in the factory. A lean distribution operation is an integral part of a pull-based value chain that begins with the customer order. Such operations apply lean tools and techniques to simplify packaging, streamline material flow, reduce errors, eliminate extra handling, reduce floor-space requirements, and improve inventory management. In the ideal state—admittedly a far-off vision for many companies—warehouse workers do not have to rush through a large batch of shipments at the end of the month or quarter.

THINK SYNC

Ripe for the Picking Getting to that point and setting up a lean distribution operation does not start with equipment. It’s not about having new conveyors or the latest material-handling automation to eliminate labor hours. New equipment and technology may be part of the final solution, but lean distribution starts by thinking about how to apply the lean principles of eliminating waste, creating flow, and implementing pull-based processes to create a value chain driven by customer demand. The goal on the floor is to create a linear material flow, based on takt time (the total net daily operating time divided by the total daily customer demand), where

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

product comes from manufacturing and goes directly to the shipping dock with no double handling. Current equipment may or may not support that objective. For example, picking orders from flow racks with products slotted based on sales velocity and ergonomic factors (with fast movers located between the thighs and shoulders) will be far more efficient than picking orders from pallet racks. Flow racks allow incoming product to be loaded on one side and then slide forward to the pick face as it is consumed, supporting first-in, first-out inventory management. In one of our client’s facilities, the travel time for order pickers in the existing pallet rack shrank from upwards of two minutes per item to 40 seconds or less with flow racks. New labels with specific colors for each part family further reduced opportunities for error during put away and order picking. Other efficiency improvements and reductions in travel time not directly related to new equipment came from zone picking waves of orders rather than have each order picker work on a single order at a time. This tactic allows order pickers to simultaneously fill lines on multiple orders, which are later consolidated by order.

Fast Cash

Standard Packing Cells Lean Pick, Pack, and Ship

Before

Results

Volume (lines per day)

900

1,100

Productivity (average lines per hour per person)

5.5

7.5

Defects per million opportunities

1,392

200

Another common warehouse practice that can contribute to errors and extra handling is releasing orders to be picked in the order that they happen to come in or by some other random method that’s not linked to the shipping schedule. What’s picked in the morning should go out in the late morning or early afternoon, not that evening or the following day. Otherwise boxes and pallets just sit around, taking up space on the shipping dock. Packing to Perfection Packing is another area where there’s a lot of opportunity for a lean approach to make dramatic improvements. Packing departments in many companies are haphazard, chaotic areas with randomly placed tables and equipment—scales, taping equipment, label printers and shrink-wrapping machines—surrounded by shelves of corrugated material and shipment staging areas. In contrast, a lean packing operation features ergonomically designed work cells, each outfitted with the same equipment, which support standardized work and make it easy for employees to rotate from one workstation to the next. Each work cell utilizes standard-sized boxes and has the necessary dunnage within easy reach. A

dedicated material support person (a “waterspider” in lean parlance) helps replenish packaging supplies for all of the cells and loads the sealed boxes onto pallets. This allows order packers to stay focused on their work. To further save handling and travel time, a return conveyor automatically transports totes from the packing area back to order picking. A lean setup like this can have a dramatic impact on throughput and the amount of work-in-process inventory in the packing and shipping area. Of course the packing operation goes smoother, with less variation in the workload, when supply-chain managers have worked with customers to optimize pack sizes based on actual demand. On another recent project our client had been specifying a minimum order quantity of 65 units for a particular product. Their customers were large retailers. Each store sold 10.6 units of this particular product per week on average, which meant that the minimum order quantity represented a full month and a half of inventory. By reducing the unit pack quantity to 13, much closer to the weekly sales average, they saved storage and shelf space for the customer and dramatically smoothed out the replenishment process.

Today’s global financial turmoil and the tightened credit markets require an urgent focus to redirect your lean focus to find opportunities to convert balance sheet items like inventory and receivables to cash. Many of our clients are seeking to rapidly improve cash position by conducting a series of lean projects focused to reduce the working capital in the value chain. We start by understanding your demand segments and by conducting a product portfolio review. We can quickly identify and start implementation of product-line rationalization and pull-replenishment activities that reduce inventory and increase gross margins. Measurable results can be obtained within 8–10 weeks for both discrete and continuous process manufacturing companies: • 10% ~ 45% reduction in finished goods inventory • 15% ~ 50% reduction in raw material inventory • 20% ~ 30% reduction in Days Sales Outstanding We can provide you with critical training or consulting to help make immediate, meaningful improvement in your working capital position. Contact Kathy Million at kmillion@tbmcg.com to speak with a member of the TBM Lean Value Chain practice if you’d like to learn more.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

THINKSYNC Shipping Department before Kaizen

Lean Shipping Department

This diagram shows the shipping department with inefficient flow prior to kaizen activity. Waste included excess handling of totes and pallets, no standardization of packing areas, and product stored in a non-friendly, poor-ergonomic fashion. Pallets of product scheduled to ship were moved from packing stations and staged by dock doors.

This diagram shows the redesigned material flow through the shipping depart m e n t . From manufacturing and inventory storage areas, FedEx/UPS shipments (green), consolidated orders (blue), combined shipments (orange), and international shipments (red), flow directly to packaging stations and out the dock doors (top).

Ship Shape When it comes to shipping, standard pack sizes and carton configurations have some other benefits. It’s much easier to “cube out” a trailer—fill all of the space available and thereby minimize transportation costs—if you have three standard box sizes compared to 20, for example. With standard packaging, managers can figure out how to load the trailer for maximum efficiency before orders have been picked, and even release orders so that shipping personnel can build optimum loads. In many distribution operations today success is defined by the “perfect order.” This is not a theoretical ideal, but a higher level metric that combines the error-free performance at each stage of an order. Factors include order entry accuracy, warehouse pick accuracy, on-time delivery rate, damage-free shipment rate, and invoice accuracy. Lean supports the quest for the

perfect order by improving accuracy and throughput while simultaneously reducing operating costs because there are fewer errors being made and inventory requirements are lowered. A lean distribution operation is an integral part of a lean value chain. Concepts such as working to takt time are just as applicable in the warehouse as they are on the shop floor because they align operations with demand to give customers what they want, when and where they want it, and in the right condition. Getting there doesn’t require tons of new technology and automation. It requires a change in mindset and an organization-wide commitment to making material flow.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

BOOKSTOREAD

The Toyota Culture: The Heart and Soul of the Toyota Way By Mike Serena, Ed.D., Managing Director, TBM LeanSigma Institute ®

bers and leaders to improve themselves and operations, and servant leadership that supports, teaches, and is open to input Part 4 discusses the four organizational processes that need to be in place to enable team-member development and high performance, or more specifically creating an “enabling” versus a rigid bureaucracy: • Planning employment levels to provide stability and security • Establishing a human resources department that ensures fair and consistent policies and practices and also supports team morale and growth • Encouraging deep learning and growth rather than monetary rewards and fasttrack promotion • Encouraging policy deployment to achieve long-term mutual prosperity Part 5 examines how Toyota has adapted many of its principals to a wide variety of their working environments. There is a great deal of material in this 548-page volume and many of these pages rehash The Toyota Way. In the end, the book attempts to leave the reader with several very clear “lessons learned:” • Leaders must lead–they need to be brutally honest regarding the current situation and they must model the desired behavior reflecting companywide values and beliefs. • Change requires a reason and a vision in how “change” will benefit both the company as well as all employees. • People must be taught and supported because people generally resist change, and “learning by doing” is more powerful than “learning by listening.” • Change needs a plan and a process because attitude and behavior change must be supported by structural change, metrics, and an understanding that transformation is a “journey of small steps.” In summary, I found the book a reinforcement of the Toyota Way and I found more pragmatic application in Liker and Meier’s 2007 book, Toyota Talent, which I highly recommend to anyone involved in training. In this book resides some excellent detail as to how Toyota employs its training strategy throughout its entire organization and at all levels and it might be a good prerequisite to reading The Toyota Culture.

Mike Serena

Note: All books that Mike Serena reviews have been recommended by clients and the readers of Managing Times. Please send your recommendations for review to Mike at mserena@tbmcg.com.

BOOKS TO READ AND RECOMMEND

o sooner than Liker comes out with his next book on Toyota and several of our readers have sent me many emails requesting a review, so here goes! This book is a follow up to Liker’s original book, The Toyota Way, which summarized management’s principles in a 4P model—that is, philosophy, process, people, and problem solving. The 4Ps emphasize a long-term philosophy of adding value to both customers and society. However, the main focus of The Toyota Culture (Jeffrey Liker and Michael Hoseus, McGraw-Hill, 2007) is how Toyota establishes its core competency, which is all about respect for people and the importance of continuous improvement. The book is divided into five distinct parts. Part 1 defines and discusses how Toyota views culture in their organization as “the pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal adaptation…and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.” This definition is the foundation of the “Three Levels of Culture” as defined by Edgar Schein: I, Artifacts and Behavior (what we see); II, Norms and Values (what they say); and III, Underlying Assumptions (what they deeply believe and act on). Part 2 examines the people value stream or the process of developing people who are willing and able to continually improve the way work is done. This process is organized in four distinct stages: attract people with the right qualities, develop people to do the jobs as assigned, engage people to contribute to continuous improvement, and inspire people to become committed members of the company, community, and society. Part 3 discusses the four daily processes that need to be in place to support the people value stream to ensure continual growth and development: work groups to support daily learning and team problem solving, clean and safe workplace to ensure the security needed so they can focus on production issues, two-way communication to listen to and give feedback to team mem-

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

CONSIDERTHIS!

Is Lean Certification Right for You?

Most companies realize that they

CONSIDER THIS!

possess neither the internal expertise nor the time to design, train, implement, and sustain a lean program on their own. To ignite an enterprise to embrace a lean culture, an increasing number of manufacturers are turning to a training and mentoring track that provides in-house expertise to help companies not only start but also sustain that transformation: lean certification.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

What Is Lean Certification? Lean certification is a validation process that delivers training in lean principles in both classroom and real-time situations. These latter experiences occur under the guidance of a seasoned mentor who possesses real-world success in lean environments. Rather than just sitting through theoretical lessons, students learn how to apply their training directly to their own companies. As part of the curriculum, participants are required to define their companies’ value streams and identify strategic projects for their own sites and are then held accountable for project sustainment and performance metrics. In addition to strategic planning, successful implementation, and the on-time delivery of projects, the curriculum for certification addresses budget objectives that lead to significant return on investment. Following the completion of each training session, participants are tested before being allowed to proceed to the next level of training and must complete an extensive “lean transformation exercise” based on actual scenarios before they are certified. Lean certification not only trains participants to fully understand key lean concepts but also sensitizes them to the need to understand psychological and sociological change strategies in order to address, and overcome, barriers, resistance to change, and sustainment challenges that will threaten the success of their organization’s lean journey.

A Pulse Check TBM has now graduated several classes of lean-certified practitioners. We talked with these graduates to see if their expectations were met by the program. Across the board, participants found the combination of classroom training and hands-on activities “in the field” to be invaluable. Six Sigma Master Black Belt Greg Masciana of Tektronix in Beaverton, OR, has read a number of books on lean, but said “The three weeks of hands-on kaizen work at three different sites was more useful than I could have imagined.” “The combination of classroom instruction, simulations, and hands-on work created a depth of understanding that truly made lean happen [here],” Masciana says. “It helped build my confidence to the point where I’m comfortable answering other people’s questions.” Aditi Gilman, formerly with Appleton Papers in Roaring Spring, PA, echoed Masciana’s sentiments. Like Masciana, Gilman found the hands-on work shadowing a TBM consultant at client sites to be invaluable. Gilman believes that going through lean certification training is one way for a company to get people more energized in a lean transformation, specifically the cultural change. Greg Leisgang is a 32-year Appleton employee (at the plant in Appleton, WI) who also went through the lean certification process. Going through certification gave him the opportunity to learn new techniques using lean tools. “It’s been an eye-opener,” he says. “I wish I had gotten this training years ago—I would have managed differently. The biggest positive change is that we’re really sustaining things now.”

CONSIDERTHIS

Leisgang points out another benefit he gained from the training program— networking. “I didn’t know some of my colleagues who also took the course,” he remarks. “Now I have access to internal expertise and people to discuss things with.” The advantages of networking also extend to outside companies who also sent people to the course. “I’ve kept up with them—we can discuss issues and difficulties. It gives me sources to bounce ideas off—lean veterans who have ‘been in battle’.” Another lean certification graduate is Todd Kearns of Saint-Gobain Containers, Inc., in Dolton, IL. Kearns is heading up the lean transformation in his plant, so he will be responsible for converting a workforce of approximately 400 to lean principles. Gaining his lean certification helped him feel much less overwhelmed than six months earlier at the start of the company’s transformation. “I’m now much more comfortable in my position,” he says. This feeling of comfort and better control is important when dealing with the inevitable roadblocks. “Being able to participate, talk to the consultants and the other participants, and seeing lean in action really distinguishes this course from those that involve strict classroom training like a college course,” Kearns says. “The fact that the class included people from different industries allowed me to stretch [my knowledge and skills].” Robbie Watters of Compressor Systems, Inc., in Midland, TX, also found the group learning setting to be a big plus. “Many programs are individual or online, but in the group, I could get immediate feedback,” he says. “I still have contact with some of my classmates,” he adds, “and we bounce questions off of each other. That outside help is valuable.” Watters feels that the lean certification course helped him to become more aggressive in tackling the various aspects of Compressor Systems’ lean transformation.

The Sponsors’ Viewpoint Lean certification candidates must have a sponsor within the company to help remove roadblocks and to ensure management support of the lean effort. Anthony Speer of Compressor Systems was Watters’ sponsor. “Over time I could have taught Robbie,” Speer says, “But we needed quick impact—we needed to get there fast…[and] seeing it in action somewhere else helps you to understand the process a whole lot better.” Masciana’s sponsor at Tektronix, Mike Badnin, sees lean certification as a means of gaining credibility with upper management so that the company can make a successful lean transformation without relying indefinitely on outside help. He sees value in a course structure that allows students to learn from others and build a network. With Tektronix’ acquisition by Danaher, the culture went from one of having to justify lean efforts to “lean is our way of life.” Having someone who had gone through the lean certification program gave Badnin’s division a step up when word came down that the entire company was going lean. Brian Frost of Appleton had a similar impetus for sending associates through the certification program: “It jump-started some of our skills and abilities,” he says. “Really learning lean is different from just getting the tools, and lean certification really gets at learning lean.” “Additionally, it allowed us to quickly facilitate our own events and do the day 1 training ourselves, and that saves money,” he adds. Frost also attended lean certification, so he has dual perspectives as student and sponsor. “It helped us to shape how we were going to deploy lean throughout the organization,” he notes. “It exposed us to the ‘bigger picture,’ and visiting the other companies provided us with some benchmarking.”

Like the other companies in this article, Appleton used lean certification as a means to get up to speed quickly in order to accelerate the benefit gained from lean manufacturing. “We wanted lean to rapidly become a part of our culture, so we wanted to have the internal resources in place to be able to drive change across the organization,” he says. In effect, Appleton was creating its own internal consulting team. A Common Viewpoint More companies are recognizing the value of a lean certification training program to jump start a lean transformation and drive culture change. Being able to rely on internal expertise to produce positive results quickly is a major driving force behind the effort to gain lean certification for associates. In organizations where management may be a bit skeptical about lean, having lean certified staff members who can answer questions and from experience explain the big picture about how lean will affect long-term goals can be the “tipping point.” Most companies also see lean certification as a means to get the most for their training dollar. There’s a reason that lean organizations are also considered learning organizations, and those companies who take that to heart by seeking training to raise the value of their human assets will find themselves in a better position to drive change and sustain it—and that translates into real competitive advantage.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

FIELDNOTE

WIKA Receives Recognition for Environmental Efforts

IKA Instrument Corporation in Lawrenceville, GA, recently announced that it successfully reduced water consumption at its Lawrenceville pressure and temperature gauge manufacturing facility by almost 70 percent from its April/May 2007 peak usage of 60,300 gallons per workday to its June 2008 usage of only 18,500 gallons per workday. Last fall, a three-person project team of managers identified and implemented water-reduction methods that would conserve

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– WIKA Does Their Part to Combat the Water Crisis After realizing the extent of Georgia’s water crisis last year, the management at WIKA Instrument Corporation decided they wanted to do their part in being a good corporate citizen by initiating a water-reduction project. To carry out the project a team was formed consisting of Erich Berninger, director of manufacturing; Cathy Bochenek, environmental health and safety manager; and Peter Braun, facility manager. Bochenek commented that the company implemented the water reduction project to be proactive and to see what they could do to alleviate the water crisis. “To create a starting point for the project, our team looked at WIKA’s big water usages and ways we could reduce or eliminate water usages,” said Bochenek. The team looked at everything from extending vacation time, collecting rain water to underground tanks, and well drilling. According to Bochenek, they eventually settled on adding chillers to some of their machinery. “We ultimately went with the least expensive option that would have the fastest outcome,” said Bochenek. “Through research, we discovered that adding chillers at different operations would have a return on investment in less than a year.” WIKA’s Facility Manager, Peter Braun, explained that their company does a lot of soldering, which requires a lot of water. Installing chillers in the soldering process enables them to circulate and reuse water, and because it is a closed system, water evaporation is eliminated as well. The installation of chillers has paid off immensely in dollars and in water reduction. “We decided to benchmark our project this past June. We looked at our June water billing statement and compared it to last year. The results were tremendous,” said Bochenek. “Last year at this time we peaked at 60,300 gallons of water per workday. June’s statement showed that we used less than 18,500 gallons per workday, which is almost a 70 percent reduction!” Along with increased production, the water reduction project has also helped to increase awareness with WIKA employees. “This project has shown our employees, and hopefully the community too, that we all have to do our part in helping to reduce water usages,” said Braun. “By seeing the efforts the company is making to reduce water usages, our employees see that WIKA cares about them and the environment.” Braun concluded by encouraging other companies in the community to look at ways they can reduce their water usage. “We realized that we all needed to do our part and we could not have been happier with the results of our water reduction project. The payback has been great and it has allowed our company to be a good corporate citizen.” –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– —Michael Helton, WIKA Instrument Corporation

FIELD NOTE

water and save the company money. The return on investment on implementations to date will be realized in less than one year’s time. The amount of water saved is estimated to be 10.5 million gallons annually— enough to fill more than 16 Olympic-sized swimming pools. Following is an article written by Delaine S. Gray, communications manager of the Gwinnett (GA) Chamber of Commerce for its August 2008 FOCUS newsletter.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

CONMED Wins 2008 Perfect Engine Site Award

LEANCHAMPIONS

Sharma presented the award to David Johnson, vice president of Global Operations and Supply Chain at CONMED. CONMED began its LeanSigma journey in 2006 and continues to use the business improvement technique to innovate, develop, and launch new products and stay competitive in its market. “We are honored to receive the Perfect Engine Site award,” said Johnson. “Our lean journey has generated significant results for CONMED, many of which include facilitating agility and delivering superior quality and service levels to our customers.” In the span of just one year, the site has executed more than 33 kaizen events with enhanced results: • Backorders reduced from $3 million in January 2007 to $1.3 million by June 2008 • Inventory turns increased from 3.01 percent to 3.54 percent in two years • Reduced lead times • Productivity measured by sales per employee increased 19.1 percent “We presented the award to CONMED’s French Road facility because of their adaptability to the lean discipline and proven track record,” said Sharma. “CONMED was able to quickly implement and leverage the lean culture that has helped them achieve continuous business growth and results.”

LEAN CHAMPIONS

ONMED, a Utica, New York-based medical technology company, was presented with the fifth annual “Perfect Engine Site” award at the inaugural Lean Excellence Conference in DesMoines, Iowa, in September. The award was in recognition of their French Road location’s commitment to the continuous improvement philosophy and dedication to lean culture. CONMED is a medical technology company that produces surgical devices and equipment for minimally invasive procedures and patient monitoring. The company’s products serve the clinical areas of sports medicine-arthroscopy, powered surgical instruments, electrosurgery, cardiac monitoring disposables, endosurgery, and endoscopic technologies. Surgeons and physicians in a variety of specialties, including orthopedics, general surgery, gynecology, neurosurgery, and gastroenterology use these devices. CONMED employs 3,200 people and distributes its products worldwide from several manufacturing locations. “The Perfect Engine” refers to the precision interworking of human resources and physical assets to achieve outstanding productivity results that create business agility, growth, and profitability. It is also the title of a book authored by TBM Consulting Group’s CEO Anand Sharma, who has consulted with hundreds of companies worldwide in implementing the Toyota Production System. “The Perfect Engine Site” award recognizes individual plants or offices that have successfully implemented LeanSigma® and have demonstrated innovation and outstanding teamwork in creating visuallymanaged environments that feature onepiece flow.

Managing Times | Q4.08 www.tbmcg.com/news/newsletter.php

TIMES

TBM LeanSigma® Institute 2009 Event and Workshop Schedule Corporate Headquarters 4400 Ben Franklin Boulevard Durham, North Carolina 27704 USA 1.800.438.5535 Australia 403A 86 Bay Street Port Melbourne, Victoria 3207 Australia 03.9681.7385 Brazil Avenida Moema 170, cj 45 Sao Paulo -- SP Brasil 04077-020 55.11.5051.7490 China Room 3, 3/F, POS PLAZA 1600 Century Avenue Pudong Shanghai, 200122 P.R. China 86.21.6888.6671 India “Technopolis” Sector-54 DLF Golf Course Road Gurgaon, India 122 002 91.124.437.5995 Mexico Calzada San Pedro #250 Nte. Edificio HQ Col. Miravalle CP 64660 Monterrey, NL 52.81.50.00.91.36 Switzerland 29, route de Pré-Bois 1215 Geneva 15 Switzerland 41.22.710.77.70 United Kingdom 3 Gleneagles House Vernon Gate DERBY DE1 1UP United Kingdom 44.1332.367378

Business Process Kaizen Instructor Training (BPKIT) Mar 17-20 Durham, NC CEO Boot Camp (CEO) June 2-4 Hosts TBD Dec 1-3 Hosts TBD Kaizen Breakthrough Experience June 15-19 United Kingdom, TBD Kaizen Promotion Office Workshop (KPOW) Apr 21-24 Durham, NC Oct 20-23 Sao Paulo, Brazil Oct 20-23 Durham, NC Lean Excellence Conference Sept 8-10 United Kingdom, TBD Sept 15-17 North America, TBD LeanSigma for the Extended Enterprise Nov 25-26 Sao Paulo, Brazil| LeanSigma Vision Tour (LSVT) Mar 17 Host TBD Discrete July 21 Host TBD Nov 10 Host TBD Mar 18 Host TBD Process July 22 Host TBD Host TBD Nov 11 Shop Floor Kaizen Breakthrough Instructor Training (SKBIT) Discrete Feb 24-27 Durham, NC May 19-22 Durham, NC May 19-22 Sao Paulo, Brazil Aug 25-28 Durham, NC Sept 22-25 Derby, UK Process Mar 10-13 Durham, NC June 2-5 Durham, NC Aug 31 – Sept. 3 Durham, NC Sigma Kaizen Black Belt Training (SKBB) Track 1 Week 1: Feb 23-27 Durham, NC Week 2: Mar 23-27 TBD Week 3: May 4-8 Durham, NC Week 4: June 8-12 Durham, NC Week 5: July 13-17 TBD Sigma Kaizen Green Belt Training (SKGB) Track 1 Week 1: Feb 23-27 Durham, NC Week 2: Mar 23-27 TBD Week 3: May 4-8 Durham, NC TBM Lean Certification (LC) Durham, NC Discrete Week 1: Jan 27-30 Track 1 Week 2: Feb 17-20 Durham, NC Week 3: Mar 24-27 Durham, NC Week 4: Apr 27-May 1 TBD Week 1: May 12-15 Durham, NC Track 2 Week 2: June 9-12 Durham, NC Week 3: July 14-17 Durham, NC Week 4: Aug 17-21 TBD Track 3 Week 1: Sept 15-18 Durham, NC Week 2: Oct 6-9 Durham, NC Week 3: Nov 3-6 Durham, NC TBD Week 4: Dec 7-11 Process Week 1: Feb 3-6 Durham, NC Week 2: Mar 3-6 Durham, NC Track 1 Week 3: Mar 31-Apr 3 Durham, NC Week 4: Apr 27-May 1 TBD Week 1: May 19-22 Durham, NC Track 2 Durham, NC Week 2: June 16-19 Week 3: July 21-24 Durham, NC Week 4: Aug 17-21 TBD Track 3 Week 1: Sept 29-Oct 2 Durham, NC Durham, NC Week 2: Oct 27-30 Week 3: Nov 17-20 Durham, NC Week 4: Dec 7-11 TBD Quest for the Perfect Engine (QPE) Hong Kong, China July 29-30 Jan 13-14 Shanghai, China Mumbai, India Aug 6-7 Feb 11-12 Monterrey, Mexico Mar 19-20 Beijing, China Aug 19-20 São Paulo, Brazil Mar 25-26 São Paulo, Brazil Sept 16-17 Monterrey, Mexico Frankfurt, Germany Sept 29-30 Paris, France Apr 2-3 Düsseldorf, Germany Oct 28-29 Ahmedabad, India May 7-8 June 17-18 Barcelona, Spain Nov 5-6 Gurgaon, India July 8-9 Monterrey, Mexico Nov 12-13 Shanghai, China

TBM Consulting Group, Inc. 4400 Ben Franklin Blvd. Durham, NC 27704 www.tbmcg.com

MANAGING

PRESORTED FIRST CLASS MAIL US POSTAGE PAID RALEIGH, NC PERMIT #2483

Q4.08