The lean frontier
Source : The Manufacturer
Zone : World class manufacturing
Published : 09 Nov 2005 11:08
As lean develops from being ‘just another new initiative’ to being the philosophy that could save UK manufacturing, many companies are extending the lean frontiers and using it in other business areas. Ruari McCallion reports
Lean has caught hold in UK manufacturing, extending its reach from a toehold to a highway, and it seems to encapsulate the spirit of the times: a determination to succeed in the face of global competition. But that’s not the end of the story. As presentations at The Manufacturer LIVE have shown, lean is invigorating operations far beyond the manufacturing shopfloor.
Commander Mike Starks, lean transformation manager with the Sea King Integrated Logistics Team in the Defence Logistics Organisation, showed how valuable lean was in the military setting, where personnel were traditionally trained to follow orders, rather than to come up with original ideas.
“In certain environments, yes, military staff are used to being told what to do,” Starks explained. “The actuality, when working in a combination of engineering, administration and logistics, which involves civil servants, commercial and military personnel, [is that] we have a team approach.”
As its name suggests, Starks’ team works with the country’s Sea King helicopter fleet, which has ferried personnel and cargo to postings and war zones all over the world for a couple of decades. As the helicopters head towards the end of their life, they would be expected to spend more and more time in repair and less out in the field. Now, the opposite is the case, largely because of the lean transformation wrought over the past few years. Time out of service has been cut by between 25 and 30 per cent and the number of aircraft out of service at any one time has also been slashed, from 18 to 11. At the same time, the Navy has reduced its maintenance sites from four to two and is on the way to just one. The lean project began in September 2003. Within 12 months, Culdrose in Cornwall had stopped doing Sea King work altogether and is now concentrating on the Merlin helicopter fleet.
“We set up lean pulse lines at St Mawgan in Cornwall, and Yeovilton in Somerset, and were able to increase our throughput at those two sites without increasing manpower,” Starks said. One of the lines undertakes routine maintenance, the other carries out 10-yearly deep overhaul. St Mawgan is still undertaking maintenance work, while capacity is transferred to DARA (Defence Aircraft Repair Agency), which didn’t get involved in the lean project until November 2004. Sea King maintenance, whether routine or deep-level, is being concentrated at DARA. At least part of the labour time saved has been switched to upgrade work, further extending the life and increasing the efficiency of the Sea King.
“Creating capacity for further upgrade was one of the reasons for adopting lean,” Starks said. “The outcome has also been to make extra aircraft available for use.” Maintenance is a pretty new area in the lean universe. How was it received?
“Initially, we faced a lot of scepticism within the organisation,” he said. “We’re not making cars, of course. There was the feeling that we had our own service ethos and lean ‘wouldn’t work here’.” The solution was to follow the standard approach. With the help of Simpler Consulting, lean was introduced pretty much by the book. “We went through the lean tools and carried out ‘model events’, rather than going big-bang. Previously, we’d followed a garage mechanic approach – the helicopter sat in the workshop until it was finished. The operators went to the stores to get what they wanted, and so on.”
The implications of that were pretty far-reaching and disruptive. Each Sea King maintenance hangar was filled with helicopters that stayed where they were until work was completed – with one exception. When one aircraft was finished, others had to be moved out of the way so the chopper could be taken back out of the building. Then they were all replaced. Because each workstation was doing everything, they all had to have complete sets of tools. The upshot was that the hangars looked busy, but an awful lot of the work was unproductive. The helicopters now move through the hangar, along the pulse lines, from workstation to workstation. Each workstation performs one set of functions, so only one set of tools is required for each task; that means they can be kept in less space and are more easily accessible. The efficiency level has risen dramatically but fundamental changes like that have to be introduced carefully. People have to see that the ideas work before they’ll embrace them.
“When we introduced Lean, we began with components for the overhead rotors,” Starks said. That cut ‘walking and waiting’ time dramatically. Next came the issue of standardised work. “People thought a pulse line wouldn’t work, because maintenance is somehow different. In fact, activities like strip-down are 80 per cent the same. So long as we leave flexibility in the system, to cater for the unexpected, it works. We were able to reduce flow time by 25 to 30 per cent.” Even though the organisation has been operating lean for only two years, Starks feels that it is embedded. “Some areas would be very difficult to change back. There are pockets of excellence but some areas are still untouched.”
Each helicopter now goes through a rigorous diagnostic process before it undergoes maintenance, so the crews know exactly what they have to do and when as the copter arrives at their station. Previously, they would find that a completed task would have to be undone in order to get to another job that needed doing, which was chaotic and wasteful.
While the Sea King Integrated Logistics Team is using lean to raise its game, American Standard – which owns Ideal Standard in the UK – used it to pull itself back from the abyss. When forecasts of market growth after a leveraged MBO failed to materialise, the company found itself drowning in a sea of debt.
“The only way we could see out was to free up cash from inventory,” said Emmanuel Kampouris, former president and CEO of American Standard. “A consultant came with a proposal for what we could do with lean manufacturing, how it would improve our quality, speed, responsiveness and reliability – oh, and we could cut our inventory by half, as well. So we said ‘prove it’. We launched a pilot scheme, saw that it worked, and deployed the technique across the organisation. Within two years, we had transformed all 119 facilities and essentially saved our company.” He and the board set a target of cutting inventory capital to zero. By 1993, it was reduced from $600 million to $300 million, and then, by extending the same techniques to the office, it was halved again. By 2000, the company’s revenues had grown to $7 billion. It had extended its industrial and geographical reach and was involved in residential and commercial HVAC and safety systems for trucks and SUVs – and it was debt-free.
At that time, most companies would have focused their energies entirely on cost-cutting. The results would have looked good in the short-term, then quality issues would have started to filter through to the financials. But the process Kampouris followed didn’t do that.
“This is not a cost reduction programme,” he said, and with some force. “When we implemented lean, we didn’t say we were getting rid of anyone. It was about getting more effective, eliminating waste and non-value-added activities. We analysed how long it takes to make each product. How much real time was wasted? I was pretty sure 90 per cent. If it takes 10 days, and nine days it was doing nothing, well we can manufacture this in one day. When you eliminate waste, you’re being more productive. You don’t need to invest in inventory and you don’t have obsolescence. You can catch any defect immediately and you can be more flexible in delivering to your customer what they want, when they want it. You also gain quality and responsiveness.” Kampouris is a true lean evangelist.
“I think it’s an important strategy and not enough companies use it,” he said. “I believe it’s very important to recognise what it is and what it can do, particularly in today’s competitive world, where western companies are in jeopardy of being overtaken and losing markets to the Far East. It can help preserve jobs in the west.” Alan Harrison, head of business improvement at Weir Pumps, in Glasgow, agrees that lean isn’t a cost reduction programme – although cost savings flow from it.
“When we began to implement lean, four years ago, our objectives were to improve quality, cost and delivery,” he said. “We measured our delivery and outputs, in terms of availability and outstandings, with the intention of creating better flow. In almost every single area, we halved our cycle time. We greatly improved delivery and reduced the labour element by at least 30 per cent.” Some of the changes were simple: the operators would do things themselves, like routine maintenance, rather than wait for someone to do it for them, for example.
“We use kaizen events but that isn’t continuous improvement,” said Harrison. “Every employee can raise any concern, at any time, and we review them regularly. We are achieving a series of small improvements, all the time.” Weir makes capital products, for process industries, mining, shipping and other industries.
“Everyone has room for improvement,” he said. “We’re constantly looking to spread lean practices beyond manufacturing. We’re looking at our suppliers, our offices and our transactional processes. For example, we’ve introduced design menus in our CAD programs to replace infinite choices, because infinite choices mean infinite problems for suppliers.” Operators who come up with ideas to improve their activities can save thousands of pounds in new equipment. If there is any key to improvement, then he believes it’s all in the mind.
“I have a message I constantly repeat to myself: don’t let your ego close your mind. No improvement can happen if your mind is closed,” he said. That very much reflects the experience of Bahco’s production plant in Portugal. Pedro Azevedo was the lean manager at the site.
“When we went to Sweden for the first presentation by Simpler Consulting, I had no idea what was coming,” he said. “They asked: are your machines slow enough to produce at the takt time? That was a total challenge to me. Ever since I graduated in mechanical engineering, I worked in process and was always looking for better machines as the route to improvement.” The plant had large and sophisticated machinery that could process three different types of files at once, and was running batch production, with the inevitable consequence: too much inventory and lack of control. The plant management simply had no idea how many files – its main product – it made each day. It was facing increasing competition from China and India and needed a rapid and dramatic transformation for survival. The challenge to think differently led to a remarkable turnaround.
“We brought old equipment, which was heading for the scrapyard, back in to replace the sophisticated machinery and aligned our production to what the customer used,” said Azevedo. “Instead of one machine making everything, from four inch to 14 inch files, we now have three – one making four to eight inch products; another making nine to 12 and the third handling the longest.” The stock of finished goods waiting for customers has been eliminated: when a box is sold, it sends a ‘pull’ signal back up the chain. The machines need less set-up time, they’re simpler to operate and they require less maintenance. Previously, the company had a huge degreaser, which handled 2000 files at a time and took half an hour to clean them. The operators came up with a solution that handled products at the right rate. It has a five-litre tank containing degreasing solution and takes 20 seconds to clean a file, which is more in line with the takt time of 28 seconds. Cost: no more than €500. Efficiency gains: huge.
“Our first rapid improvement event immediately reduced inventory by 67 per cent. It cut floorspace by 50 per cent and improved productivity by 25 per cent,” he said. Now, global efficiency is up by 20 per cent and productivity by 30 per cent. It’s now a ‘visible factory’ – they know how many files they’re producing – and, at the beginning of October, installed a new line to make saws.
Rune Thenander, Bahco’s manager of continuous improvement, says that the company constantly looks at all its activities in its search to drive out waste.
“A couple of weeks ago, we looked at a handsaw. The plastic handle is fixed to the saw by three screws, each of which represents a certain cost,” he said. “What the customer wants is the handle to be attached and if we can reduce the fixings to one screw or none, the customer will still be satisfied.” But doesn’t this require redesign of the product? “Yes. What we do is map the possibilities to give the same or better value to the customer, at reduced cost.” These exercises – of which the company has undertaken several over the past 18 months – typically deliver savings of 25 to 30 per cent, which is more than the normal profit margin.
“We try to apply lean thinking to new product development, also,” Thenander said. “We use a method taught to us by Simpler Consulting. We define the team running the project, define who is the supplier, who is the customer and get a clear picture of who’s doing what.” They go away from the office to a location where they won’t be disturbed, and work on it. “Everyone who can contribute is there and everyone participates. By working in a more focused way, we develop very strong ownership and we’ve been able to shorten development time by 60 to 70 per cent.” He made a particularly interesting point, which is that the principles of lean seem to be better accepted the further a factory is from ‘home’.
“The Spanish and Swedish operations have been harder to change,” he said. “There’s a greater sense of urgency in the remoter locations, a recognition that they have to justify their existence. The motivation of the plant management is higher – there’s sometimes a false sense of security at the centre.”
As lean manufacturing becomes more embedded, experience shows that it continues to deliver results beyond those originally envisaged. It also throws into sharp relief the areas that still need attention: the office and transactional processes are right at the head of that queue. The enemy of lean thinking is a bureaucracy. Also, as manufacturing and operations put their houses in order, they strengthen their hand when they approach suppliers and customers, looking for ways to work together to mutual benefit. The frontier is always expanding.
