As I indicated in the last article, I recently had the opportunity to visit three small shops in the United States and one in Australia. Management at each of the shops considers their operation to be lean, but, by the accepted definition of lean, only one of them is headed down the right path. The last article highlighted three of the shops that are headed toward an uncertain destination, while this article will illustrate the difference between the perceptions of lean that management at those shops have chosen to pursue and lean reality and the necessary course to arrive at the right destination.

Pacific Manufacturing is a Phoenix-based mass-customizer of upholstered furniture for the designer market, or at least that was their business niche until the economy went into a tailspin in 2008. Pacific is a second-generation family-owned business. Mark Erwin, the company CEO, assumed the leadership role from his father in 1992. Although Mark, like many young people in family-owned businesses, learned the trade early in life, his passion and chosen career field was computer science and the possibilities that technology could bring to manufacturing. While he’s had the opportunity to pursue his passion while leading Pacific for the past two decades, Mark realized that technology was not the only solution for achieving success.

Size doesn’t matter

Pacific employs about 30 people. It would seem that a company of that relative small size would be immune to issues like excess inventory, non-conforming parts and processes, lack of flow, and poor workplace organization. However, it has been my experience that these and other issues can be found in any organization regardless of size or regardless of the inputs and outputs. When I teamed with the people at Pacific in 2005 to facilitate their transformation to the Lean business model I discovered chaos and confusion everywhere as can be seen in the before pictures throughout this article.

When I told Mark that he could do all of his current production in less than half the space, with fewer resources, at less cost, and deliver a quality product on-time, every time he thought I had to be talking about some other company. After all, Pacific had been in business for more than 50 years, obviously they had to be doing something right! It wasn’t that Pacific was doing everything wrong, it was just that there was room for improvement and lean is the catalyst that, when mixed with the creative and innovative juices that are bottled-up inside every one of us, provides the recipe for success.

Confusion rampant

Mark’s skepticism quickly vanished after a couple of successful applications of 5S thinking. Work-in-process inventory had become completely unmanageable with upholstery frames so tightly nestled together that internal customers would rather order another one from the frame build department than try to search for the one they needed. Sewn covers were more visible, but they were still piled in such a state of disarray that much productive time was lost searching for the right one. A lack of coordination between the cutting and frame build departments resulted in an availability of frames without covers or covers without frames. The outcome was partially completed units cluttering the shop and exacerbating the confusion. Excess work-in-process and partially completed units at various stages in the production process made continuous flow impossible.

Matching work to demand

The first priority was reducing work-in-process to a level that matched demand. Frame inventory was sorted, set-in-order, shined to identify possible quality issues before the pieces moved to the internal customer, and standardized so a maximum of five frames would be in inventory at any time to sustain flow.

The same strategy was applied to the sewing process. The results are readily apparent in the before and after pictures for both the sewn cover and frame storage areas. Frame inventory was reduced from 70 pieces to five pieces, and the frame inventory picture taken in 2012 clearly indicates that sustainment is working.

Better flow

The next step was to consolidate processes to create flow and enhance internal customer and supplier communication, collaboration, and mutual support. After upholstery was consolidated into a cell for greater flexibility a large amount of floor space was created. Cutting and sewing were shifted into the open space, which enabled all of the internal customers and suppliers to have line of sight with each other and created more of a team concept for manufacturing. The pictures taken in 2012 show the upholstery cell and the cut and sew processes in relationship to upholstery. I want to note that none of these pictures were staged for this article.

Creating a lean culture

Pacific has not only successfully transformed to the lean business model in their manufacturing operation, but Mark has created a lean culture throughout the marketing, order entry, procurement, production, and delivery processes as well.

The transformation has not been easy. Personnel turnover, including a change in general managers, has challenged all of the staff to stay the course. Fortunately a good foundation was laid in 2005 and the subsequent involvement of everyone at Pacific in the continuous improvement process has changed the culture so dramatically that those who remember how things used to be aren’t considering returning to the ways of the past. Plus, new employees are looking forward to a continually evolving and better Pacific in the future.

Computer interface

Parallel to the lean transformation process, Mark utilized his computer science skills to develop an operating system that allows the customer to build a customized product from a library of manufacturable parts, view the product with a variety of trims and fabrics, cost the end product, query material availability, and determine the ship date based on material status and existing orders in queue. When released for production every manufacturing area has visibility of the order along with the production planning cycle for that area so all of the parts come together at upholstery at the same time. When the unit is complete it is photographed in a small studio set up in part of the space created through the previous process consolidation, and the photo is tagged to the order for reference as necessary.

As Mark employed this new system at Pacific, he recognized that the methodology could apply to any business. In fact, he thought it was so generic that he named the system “widgetator.” It is now in use at other furniture manufacturers, a sunglass shop, a cake decorator, and other companies with a library of manufacturable parts that can be configured in a variety of ways to provide the customer with a product detailed exclusively for them. You can check out the system at www.widgetator.com.

Leveraging lean

Pacific’s management team has high praises for Lean and what 5S thinking has done for their company. When the housing market failed in 2008, Pacific was in a very tenuous position. Had it not been for the process flexibility that was created through lean, Pacific’s future would have been bleak. Pacific was able to leverage their core competencies, tap into the creativity and innovation of their engaged, enthused, and empowered staff, and broaden their market to include contract furniture.

The future is bright, their backlog is at a comfortable level, and chaos and confusion are a thing of the past. Mark’s response to my tag-line question, “What makes lean successful?” would emphasize the three key management inputs of commitment, commitment, commitment, and employing the six Es of lean as defined in the last article.

If you would like to know more about widgetator or how Mark and the Pacific staff have overcome obstacles to change, contact him at [email protected] or contact me at [email protected]. We’re all in this together and sharing best practices will make our industry stronger.