Way outside the box
Magazine Article, Source : The Manufacturer US
Zone : World class manufacturing
Published : 12 Oct 2005 17:14
Companies are looking into shaping up by performing an exercise geared to continuous improvement.
It’s kaizen, the Japanese concept that is still changing American business after two decades. Barbara Axelson asks how
Kaizen is a Japanese term that combines kai (change) and zen (good) that translates as continuous improvement. In the 1960s and ’70s, Toyota Motor Company initiated the first kaizen workshop, a high-end event to demonstrate principles of lean manufacturing to company suppliers.
This year the Kaizen Institute (at its North American operations in Austin, TX), founded by Masaaki Imai, celebrates its 20th anniversary. With 200 professional consultants and offices in 29 countries, Kaizen Institute assists companies on a global basis to implement strategies of continuous improvement and facilitate cultural, technical and organizational change processes required to achieve competitive advantage.
According to Jorge Barron, director of North America operations, “lean [manufacturing] is a way of doing business for global corporations. Kaizen is the integration of full improvement; the umbrella term that includes three pillars: JIT (just-in-time), TPM (total preventive maintenance) and TQM (total quality management). The lean concept is now popular in the US. Lean and kaizen mean the same thing.”
The Institute’s core business is consulting. It serves industries such as automotive assembly, electronics, component manufacture, assembly operations, plastic forming and molding, aerospace and consumer products. “We employ a unique comprehensive system that facilitates measuring, tracking, prioritizing and monitoring of the process as it unfolds in one facility or across multiple facilities,” says Barron. “The powerful Kaizen Management System effectively manages implementation, linking strategic goals with action in every phase of the journey.
“In the US, 95 percent of companies still work on a forecast basis, two weeks or more in advance. The customer needs a day-based framework. Today’s challenge is for business to implement build-to-order systems. The ultimate goal is to build-to-order on firm customer orders.”
Kaizen Institute customer Trek Bicycles, based in the small town of Waterloo, WI, manufactures high-end bicycles. The only North American-based bicycle manufacturer, the company, which worked with a traditional forecast system five years ago, has become a built-to-order manufacturer. The objective was necessary for Trek to maintain a competitive edge with its expensive components and labor-intensive production, which includes extensive welding and attention to detail as products go into final assembly. According to Barron, “it’s always a challenge to keep labor-intensive operations in the US. This particular systems integration was a daunting task.”
It was worth it. Today Trek has realized reduced lead times of 80 percent and has seen an 80 percent cut in work-in-progress, as well as being able to give up leased warehouses.
Other Institute clients include companies such as German manufacturers DaimlerChrysler and ThyssenKrupp, French-based global automotive equipment supplier Valeo and fine spirits manufacturer Allied Domecq. Like many companies in the electronics industry, customers Hitachi and Molex are influenced by Asia’s acceptance of kaizen. Barron notes that lean is making especially rapid inroads into business cultures in Brazil and Eastern Europe in Rumania and the Czech states. “Resistance to change is everywhere,” he adds, “but new companies have the benefit of not having to fight old paradigms.
“We care about our long-term relationships with clients and maintain close contact over a five-year period. We’re not driven by numbers; rather we partner with our customers to ensure they accomplish sustainable continuous improvement initiatives that are linked to their strategic business goals.”
The Institute provides Benchmarking Tours, arranged publicly twice a year in Japan and Germany, and privately, to complement the implementation process with on-going consulting clients to give company executives the chance to see world-class companies in action. The October 2005 event included a DaimlerChrysler plant tour to showcase superior workflow, plus tours of companies with strong TPM practices and management models. Participants were invited to the Institute’s German facility to see the unique kaizen office environment.
The Institute cautions that many companies in the lean marketplace are capable of delivering kaizen-like events without the integration to business strategy capability and without creating the leadership structure and systems necessary to assure sustainability of lean. The Kaizen Institute delivers sustainable improvement processes through development of the internal structure for deployment and enables all levels of the workforce to maintain continuous improvement initiatives.
Bill Schwartz, executive vice president of business development at TBM Consulting in Durham, NC, explains: “The kaizen concept has been embedded in Toyota’s production systems and supports the Japanese concept of getting better, whereas many US companies think the status quo is fine.” TBM serves the international marketplace across all industries, of which manufacturing is primary.
Kaizen is indeed a method for implementing change. Part of the journey to lean, the workshop is a five-day event with a cross-functional team of 10 to 12 people across business areas and business levels. Intent is specific, rather than enterprise-wide or departmental. Focus is on a process that may touch multiple business functions. The team has an executive sponsor, who could be the vice president of sales or the CFO, someone who “owns” the process.
The typical team comprises three company groups — perhaps people from the plant floor such as a design engineer, a supervisor and a quality specialist, and then a contingent from the offices including IT and other functions, completed possibly with representatives from sales and cost accounting. The mix varies, but it is representative of those involved in the processes upon which kaizen will focus that week. Objectives, such as more efficient product assembly or a revamped machining line, are set. Maybe production needs to be taken from five to two days, or 150 steps cut to 40 or a group of nine workers reduced to seven. It varies drastically and can affect leadtime, quality, inventory, floor space or production.
“Kaizen is like bricks in a wall,” explains Schwartz. “It’s an implementation tool. The events are usually part of a bigger picture. We advise companies to first initiate executive education, in a two-day workshop called Quest for the Perfect Engine, and then to conduct an assessment and create a work plan and objectives.”
What will it cost? The individual focus is on how much will be saved. Schwartz used an example of a $124-million company that could save $1.2 million the first year after implementing kaizen. Companies usually generate a return of 10 times their initial investment. TBM uses no contracts and offers an unconditional guarantee of five percent.
A kaizen event, known as a breakthrough event, blitz or workshop, has an agenda:
On day one, Monday, six to eight hours are devoted to training on lean manufacturing, kaizen and related tools.
Day two, Tuesday, is known as the Day of Discovery, in which the team goes out and walks through processes with stopwatches, exploring steps, workflow, measurements such as floor space, defects, historical data, how many people touch a process and how it can be mapped out. Results, posted on sheets of paper on the walls of the workroom, are reviewed at lunchtime and mid-afternoon. At this point, Schwartz says, “we tell people to have fun.” There is a high level of enthusiasm and empowerment for these tasks. Team members become grounded in facts. “We’re looking for waste,” adds Schwartz. “We teach teams to eliminate waste, to eliminate extra work. It’s simple, but very powerful. By Tuesday night, we generate ideas and brainstorm. Everyone is cautioned not to spend money—no new computers or equipment. And it must all be implemented by Friday; the idea is: get it done now!”
So what happens? A department might be 500 feet away from another department with which it interacts. That department could be moved on Day Three, Wednesday, which is Action Day when all approved changes are implemented. Or an assembly line might be taken apart. Immediacy is important; there’s often a tradition of inertia in which no one wants to do things fast. Here, the executive sponsor figures in and, usually, according to Schwartz, approves the action. Additionally, the whole company stands by to assist with related challenges.
Day four, Thursday, refines and documents what is referred to as the “standard” work. Documentation is operator-friendly and flowcharts solidify processes. “Companies often say they get more done in one week than they would in six months,” says Schwartz. “Too often, in the US, we look for perfection, but 60 percent kaizen is great!”
Finally, Friday is the day of recognition and celebration when the team makes its presentation to management.
What’s next? Kaizen is not just a one-time event; in many companies, such events are ongoing. Schwartz explains it’s not unusual to see productivity gains of 20 to 30 percent, drops of 50 percent in defects and time-cycle reductions from 15 to 25 percent.
TBM customer Hubbell in Orange, CT, is an international manufacturer of quality electrical and electronic products for commercial, industrial, residential, utility and telecommunications markets. As a result of the company’s lean journey, some significant improvements include a net sales increase of 54 percent between 2001 and 2004, an increase in net income of a whopping 320 percent in the same time frame, as well as a decrease in inventory of 53 percent and a space reduction of 1.5 million square feet.
Hubbell president and CEO Timothy H. Powers sums it up: “The kaizen process is powerful because it concentrates the energies and talents of a group of people on finding a solution to a single business problem—in the span of about five days.”
