I hope the past year was as eventful for your company as it was for mine. If nothing else, it was certainly tumultuous. The next four years could bring further devastation to our industry as executives seek ways to combat projected tax increases and other non-business-friendly governmental programs and mandates.
All does not have to be doom and gloom, though. For those of you who are intent on achieving success, there will certainly be ample opportunity. As a window closes, a door opens. An aggressive strategy of marketing across industry segments, where you can maximize your company's core competencies, coupled with a focused approach to implementing the lean business philosophy, will assure a strong bottom line at the end of 2009.
It's likely you have heard that story before, especially if you have been following my column for a few years. Well, it's not just a bunch of rhetoric. If you would like to talk to the CEOs of a few companies that experienced success recently, let me know. They welcome the opportunity to share their doubts, concerns and apprehensions as they wrestled with launching lean, and their elation upon achieving successes beyond their initial objectives.
Are they satisfied with the results? Yes and no. They are certainly in a stronger position than they were in 2007 and 2008, but now that they have seen what lean can deliver, they're hungry for more of the same.
Let me tell you a little about three of them and why the CEO's are so excited. I want you to note that technology played a role in only one of the stories. As you know, lean is not about technology, it's about creating the most value possible from existing resources, which is what we do best at The Center for Lean Learning LLC.
Old school upholstery
One of the companies is a fourth-generation, family-owned, 106-year-old residential furniture manufacturer. You might think its longevity in the marketplace would provide some insulation from the economic downturn. It has been my experience that longevity is not necessarily an assurance, or even an ingredient, for continued success.
In fact, the longer a company is in business, the more likely management is to continue to do business the old-fashioned way. In the case of my example company, the fourth-generation owners are motivated to ensure that the company is still running strong in the next century. That motivation coupled with a loss of dealers through business closures created a crisis that fueled the need for change.
The plant, located in a small town miles away from any furniture manufacturing center, was vertically integrated in some processes and supplier dependent at others. Not much had changed over the 106-year history of the company. Upholstery was still done with one person completing the entire process.
Upholstery benches were fixed height and attached to the wall. Frame parts were fabricated in batches in the rough mill with frame parts stored in every open area of the first floor of this multi-story building. Frames were built in batches and stored for future use. Fabric cutting was done by hand with either a pair of shears or a small rotary cutter. Much needed to be done to change the culture.
What did we do? Like all other lean initiatives we started by training everyone in the fundamentals of lean. In-depth training was provided on the three tools that would be used immediately: Value Stream Mapping; Workplace Organization; and Changeover Reduction.
The training was followed by a challenge for every person to take one thing that had been covered in the training sessions and immediately apply it to his or her personal work space. That was the first step in engagement and it was well received. The benefits of waste elimination became visible to everyone. The next step was team development. At first the teams consisted of two people.
Then they were expanded to four people and finally to a fully integrated cell of nine people. The only automation that was incorporated into the process was a CNC machine for cutting engineered hardwood for frames, thus eliminating the need for a rough mill, and an automated fabric cutter to increase accuracy, consistency and flexibility.
The end results included a 50 percent increase in capacity, 50 percent reduction in space utilization, reduced cost, reduced lead-time and 100 percent on-time order completion. The company has increased its market share and broadened its market penetration to include exporting to Canada.
Another success story was the conversion of a custom product manufacturer to lean, including the implementation of a flow process. This second-generation, family-owned company was plagued with quality, training, delivery, inventory and cost issues before deciding to pursue lean. We followed the same implementation process and achieved similar results.
Manufacturing and warehouse space was reduced by half, cells were created to make training easier, cross-training added flexibility, and orders were processed on a just-in-time basis rather than building ahead just to keep unneeded resources busy. The latter resulted in a reduction in staff, which is contrary to what we attempt to achieve, but couldn't be avoided in the down-turning market of early 2008.
The final example is a 50-year-old, second generation, casegoods manufacturer. Their market was very competitive so margins were much lower than desired. On-time delivery performance was embarrassingly poor, quality costs were burdensome and work-in-process inventory was creating chaos and confusion in manufacturing. Cash flow was another critical issue. Shop floor leaders were so busy fighting fires and expediting product that they couldn't manage effectively.
The same training plan was followed, but this time we added special training for the leadership team in problem identification and resolution, developing executable plans, meeting management and team development. The results have exceeded expectations.
Profit has increased four-fold, lead-time has been cut in half, on-time order completion has increased 30 percent, productivity has increased dramatically and work-in-process has been reduced by 50 percent, which has enhanced cash flow.
Is there more work to be done at each of these plants? Yes, there certainly is, but they now have a foundation to build on and an enthusiastic and engaged staff to keep the momentum going.
If we can't create more success stories like these in 2009 there will likely be at least 50 fewer domestic furniture manufacturers at the end of the year. Their customers aren't all of the sudden going to suspend buying furniture, though. Instead, they will be looking for an alternative source. Your company will have the opportunity to be one of those alternatives.
Will you be in a position to meet increased demand? Will your company resources have the flexibility and capacity to deliver quality product on time, every time? I see two kinds of furniture manufacturers in 2009. One of them will be liquidating and closing its doors, while the other is reaping unimaginable profit and growth. Which one will your company be?
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