Aggressive operations improvement is a long journey. It should start with a few experiments on the shop floor but then quickly expand to encompass not only the manufacturing floor and warehouse but all departments that support operations – planning and scheduling, purchasing and materials management, order entry, shipping and receiving, maintenance, quality, etc. Dramatic change takes place in processes, organizational structure, job responsibilities and compensation.
The journey may be challenging but it is also rewarding. The goal is not 2 or 4 percent annual reductions in key metrics. The goal is 25 percent, 50 percent and often greater reductions in metrics such as elapsed time through the plant, inventory days on hand, machine set-up times, physical space requirements and travel distance. These translate into significant reductions in costs, better utilization of assets, improved margins and tangible improvements in customer service.
Bringing in a team of outsiders to direct this process is rarely effective. Teams are expensive and, sooner or later, they leave. You want these techniques to become embedded in the day-to-day activities of your organization. You need a “coach” who can facilitate and organize the improvement process, teach your employees how to achieve these improvements and continue to build upon them, and help you to leverage these improvements strategically in the marketplace.
Fred Newman has been at the forefront of implementing aggressive lean manufacturing techniques since the early 1980s. He guided a corporate transformation at Blount, Inc. that resulted in the acquisition of Omark Industries, one of the leading practitioners of lean manufacturing techniques. This acquisition process included tours of a number of Japanese manufacturing facilities that were leaders in implementing the Toyota Production System and analysis of several hundred acquisition candidates based on their suitability to profit from lean-manufacturing implementation. Fred then spent a number of years working in various Omark factories to expand Blount’s manufacturing-improvement capabilities. This transformation was so successful that Blount subsequently sold off all its non-Omark-related businesses.
The identification of lean manufacturing opportunities and their implementation has remained a major focus of his consulting practice over the last 35 years. Fred also has reviewed and commented on pre-publication manuscripts of Kiyoshi Suzaki, one of the leading international writers and lecturers on lean manufacturing and related topics.
REPRESENTATIVE NEWMAN & COMPANY RELATIONSHIPS
- Energy Infrastructure Equipment.A Texas-based, private-equity firm purchased a manufacturer of air-cooled heat exchangers and fan blades supplied to global energy projects.The portfolio company needed to improve the efficiency of its manufacturing operations and expand capacity to meet the demands of a rapidly growing market.9 fabrication and machining Cells were created in the Header Shop resulting in dramatic reductions in set-up, run and throughput times and a doubling of output.WIP inventory was substantially reduced through cross-training of welders and improved scheduling and managing of inventory queues.The Fan Shop increased production by 35% by eliminating key bottlenecks.The company was sold for more than a 6 times return on investment in less than 2 years.
- Check Valves.A $150 million manufacturer of oilfield equipment (machining of castings, assembly, paint, test) converted its check-valve facility to cellular manufacturing.Setup times were reduced from 8 hours to 1 hour, run times declined by 50% and travel distance was reduced by 80%.Machining cycle times dropped from 26 days to 2 days.The reduction in WIP and finished goods inventories financed over 85 percent of the required investments.An improved plant layout and inventory reductions enabled the company to close an off-site warehouse and consolidate all remaining inventories and shipping into the plant.There was a significant improvement in margins and a substantial return on investment when this private-equity portfolio company was later sold.
- Industrial Tanks.A leading manufacturer of custom liquid and dry storage tanks needed to increase capacity and shorten customer lead times to meet market and competitive demands.A $1.25 million Stave Cell was designed and implemented at a bolted tank facility reducing stave processing time by 35%, lowering total throughput time from 7 days to 1-2 days, and slashing WIP inventory by 85%.At a welded tank facility, Assembly Workstation Cells were created reducing set-up travel distance from over 3,800 feet to virtually zero.
- Sailboats.A manufacturer of large sailboats needed to increase capacity and lower the time required to manufacture and assemble its products.Dedicated assembly workstations fed by kanban deliveries were created.The cycle time for the highest volume line was reduced from 28 days to 11 days, WIP inventory declined by almost 75 percent, and high-volume raw materials were reduced by 60 percent.These techniques then were applied to the introduction of an innovative power-boat product line.Cycle times decreased over 50 percent.Strong profitability was achieved within the first 10 units of the launch.
- Custom Material and Air-Handling Fabrications.Asked to jump start the lean implementation process by the management team of this newly acquired private-equity portfolio company.Created 5 Fabrication and Assembly Cells in the first year with significant reductions in travel distance and 30%+ reductions in labor hours.Identified upstream Sales and Engineering errors as a major cause of rework and scrap; developed review and communication processes that resulted in a 75% reduction in errors within 6 months.
- OEM Medical Devices.An Operating Partner of a private-equity portfolio company stepped in to reverse declining profitability, increasing late shipments, and unacceptable levels of customer service at this OEM device manufacturer.Assisted the Operating Partner in identifying needed improvements to the manufacturing organization.Identified and published key metrics daily throughout the organization.Implemented a kanban system to control the introduction of work to the plant floor.Increased the velocity of work through the shop with a significant reduction in batch sizes.Developed scheduling algorithms for bottlenecked operations.
- Construction Products Distribution.Worked with the management of an old-line masonry distribution company to lower inventory levels to ease a seasonal cash crunch.Reduced seasonal peak inventory by over 20 percent within 9 months, freeing up almost $500,000 of line credit.Developed and helped implement system aids to assist buyers in determining appropriate purchase quantities.Designed a program to categorize and sell off excess and inactive inventories resulting in substantial, additional cash generation.
- Molded Plastic Parts.A $50 million injection molder improved its control over raw-material and finished-goods inventories in its largest molding facility using a days-on-hand methodology.Numerous assumptions, procedures and processes that led to the purchasing and production of unnecessary items were identified.In the first year, inventory was reduced from $2.1 million to $1.5 million and an additional $300,000 was categorized as obsolete. Inventory days on hand dropped from 80 days to 52 days.
- Exterior Construction Product.The dominant manufacturer of custom translucent skylights and enclosures needed to upgrade its aluminum-beam manufacturing to reduce delivery times, improve quality and add capacity.Almost $1 million was invested in a Beam Cell with extraordinary results:set-up time was reduced by 80%, run times by 83%, travel distance by 75%, and the number of process steps declined by 65%.The Cell often runs unattended for several hours after the last shift.The Company achieved several years of exceptional growth after the Cell was implemented.
- Contractor Tools.The leading supplier of drywall contractor rental tools was much less efficient in its East Coast tool-servicing center versus its West Coast operation.Dedicated tool repair cells were created reducing travel distances by over 50 percent.The labor and materials required to service a tool dropped dramatically.Space utilization increased by over 4 times enabling the facility to add significant volume without having to acquire additional space.These improvements resulted in the East Coast facility becoming more efficient than the West Coast operation.Similar improvements then were implemented in the other facility.The private-equity owner sold the Company for a significant return on investment after only 2 years of ownership.
- Environmental Instruments.A manufacturer of environmental instruments (PC board assembly, machining, assembly, test) converted from functional to cellular manufacturing.Lead times on its core product line were reduced from 3 weeks to 1/2 day, travel distance and space requirements dropped by 90% and defects at final inspection declined from 10% to virtually 0%.Most WIP and all finished goods inventories were eliminated.