Implementing the Concept of “ Lean ” Manufacturing

1. Background The client, a Consumer Products manufacturer, consisted of five plants and three distribution centers servicing dedicated sales regions throughout the US. Unions existed in two plants, with contracts up for renegotiation in the next three months. A recent Union attempt to organize was voted down in the largest plant, and a newly implemented incentive program was not getting the anticipated productivity gains. SPG’s Consulting Assignment The client was experiencing record levels of inventory and above-plan operating costs. Sales continued to grow. In order to improve financial performance, a corporate sponsored strategic initiative was undertaken to implement the concepts of “Lean” manufacturing and reduce operating costs. Schrudder Performance Group, Inc. was assigned to work with the local management team of the largest plant to implement “Lean” concepts. SPG - Business Analysis Findings The SPG analysis revealed that the critical success factors for this client would be the blending of a joint design team, local management, and SPG professionals to ensure proper implementation of the change process. Begin the Implementation with management and first line supervisor training to gain a better understanding of “Lean” concepts and the drivers of change management. Provide one-on-one coaching to enable a quick assimilation of newly introduced operating methods: “Lean” Concepts Process Mapping and Value Analysis Process design using Kaikaku Visual displays for process control and Continuing Improvement Kaizen Blitz Conduct an abbreviated Business Simulation with all plant personnel to ground the team in the concepts of “Lean” and to mobilize the organization to embrace the upcoming change initiatives. Results and Quantitative Benefits SPG consultants and client employees partnered in a 30 calendar-week plan to reduce operating costs at a rate of $2.9 million. The project had to be “self-funding” and “cash-neutral”. The client and SPG developed an effective working relationship and designed a team-driven solution. The joint project team was very successful in implementing “Lean” concepts and achieving significant results. The teams evolved into a business partnership with a common goal and quantitative benefits resulted: Achieved an annualized cost reduction run rate of $3.2 million in a 25 calendar-week period. Work in process was reduced by 90%. Schedule attainment was improved by 50%. New All-Time Production Records were set in the first 5 Weeks. Production throughout was increased by 65%. At the end of the 30 calendar-week project, the plant manager believed that the organization had not yet realized their full potential and that the “Lean” concepts, now embraced by his organization, provided them with a solid foundation for future improvements. His plant continues to function at record levels and has absorbed and converted 3 new product lines, assuring their continued growth. Steps to Implementing “Lean” Approach The “Lean” concept is focused on the elimination of waste at all levels, allowing an organization to achieve the highest levels of performance. One of the keys to success is understanding where the organization is at the beginning of the process, and mapping an appropriate migration which builds upon the concepts that already exist. For instance, most traditional manufacturing environments have experimented or even implemented the focused factory concept. They’ve created production cells and have dabbled in using Kanbans to signal the work. If the organization has already “Leaned” the lines, the next logical area for improvement is to balance production levels with the demand and establish a mechanism for the supply chain to react as quickly as the line it’s feeding. The final step would be to establish an environment to embrace future improvements and sustain change management. Implementing the Concept of “Lean” Manufacturing • Schrudder Performance Group, LLC. Proprietary Information - 1003