I didn’t visit Brad’s cabinet shop this month (see last month’s column). Brad encountered a growth bubble that stressed his cash flow so we decided to put the lean journey in a holding pattern until next month. What Brad experienced is a good learning lesson for all managers attempting to grow their business.
The improvements that Brad’s staff put in place over the first couple of months of their journey enabled the company to accept a contract that would have been beyond their capacity before lean. The contract required a 300-percent increase in throughput, which means a proportional increase in inventory levels and a like increase in inventory cost. Initially the supply chain couldn’t react to Brad’s new demand. Resolving that issue was easier than continuing to operate at the increased demand level with a cash-flow stream that is based on one-third the output. The first thing Brad should have done in preparation for the increased level of activity was prepare a plan based on the Tactical Planning Tool that I described in a previous article. Planning doesn’t always ensure success, but a lack of planning will likely ensure failure.
As Brad Sorts through the issues that this new demand has created and Sets-in-Order the priorities for his cash flow, I accepted an invitation to visit another company preparing to launch on a lean journey of their own.
Going lean to compete with Asia
Newport Furniture Parts (NFP) of Newport, Vt., is a unique business. They are a US-based furniture parts supplier competing nose to nose with Pacific Rim suppliers and beating the competition. How they’re accomplishing that is the subject of this article.
NFP management decided to begin the lean journey about six months before my visit. Whether they realized it at the time or not they started that journey by applying the first three Ss of my Extreme 5S strategy. The reason I started this series of articles is because it has been my experience that many business leaders apply the Extreme 5S strategy to some of their tasks on a recurring basis without knowing it. My objective is to establish a new norm and Standardize how tasks get done so Extreme 5S thinking is applied all of the time.
As NFP managers Sorted through the challenges of growing the business and retaining competitive advantage, they examined past practices to determine those that should be retained and those that might not move the company toward its objective. Once past practices were Sorted, the management team Set-in-Order those that were ready for immediate deployment, followed by the practices that needed some level of attention. Topping the list of practices needing attention was the development of a team-based culture.
Need for a team
As is the case at many non-Lean businesses, NFP managers discovered that there was a gap between how they perceived the business was running versus the real world. The gap between perception and reality is a phenomenon that I see in every company regardless of size, market segment, or maturity of the executive leadership. The larger the company, the farther removed the CEO or senior leader is from the executing process and the larger the gap. Even companies with minimal layers of leadership experience the perception/reality gap.
At NFP there was a small core of employees that managers discussed plans with and fielded input from, but the entire team wasn’t on board, so information wasn’t rolling through the organization as senior leaders perceived it would or should. Executors of the plans that managers were making didn’t have a clear understanding of the objectives so targets were continually missed. A lack of clear and concise communication coupled with a not untypical them-versus-us culture meant that employee engagement and feeling of empowerment were limited.
Getting all on board
To overcome these obstacles to continuous improvement and to begin the shift to the team-based culture necessary for a successful lean transformation, NFP retained the services of Dr. Jeffrey Howe, Ph.D., Chairman and President of Dovetail Partners, Inc. Dr. Howe is building a foundation for the lean initiative that all stakeholders will be able to embrace, support, and promote.
He started by helping the management team establish, document, and articulate the vision and values that emulate the embodiment of the perception that the owners, Larry Daigneault and Dave Laforce, have always held for NFP, but weren’t able to effectively communicate across the organization. Managers are now living the vision and values as the first step in shifting the culture, which some of you may know is not an easy task. The next steps are for middle managers and front-line leaders to create alignment by interpreting the vision and values into meaningful language for their areas of responsibility and then effectively communicate them so their empowered staff can make daily decisions that are in keeping with corporate objectives.
Another initiative that NFP executives feel is critical in making the culture shift to a team-based environment is greater involvement in the community. Like most domestic furniture manufacturers, NFP is situated in a small community where both business and community are mutually dependent on each other. Larry and Dave, with the assistance of Dr. Howe, recently released a video (http://www.sawdustsoup.com/video/newport-furniture-parts-values) of the inaugural community gathering. The community outreach and initial stage of the culture shift to a team-based business philosophy have both been overwhelmingly successful.
As an interested party in the success of domestic furniture manufacturing I could get real excited about the future of our industry if more manufacturers were charting a course similar to that of the management team of NFP. They have not officially launched their lean initiative, but they are establishing a foundation that is far superior to anything I have witnessed in over 20 years of consulting work. They are genuinely enlisting, engaging, empowering, and encouraging the staff.
If you are currently importing furniture parts from the Pacific Rim, you need to take a look at Newport Furniture Parts. They have flexible, responsive processes and they will soon be creating greater capacity and capability through the application of lean tools and techniques.
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