In 'Lean Production,' Microdiscoveries Can Be as Important as the Big Picture
Posted October 11, 2018 2:24 p.m. EDT
For a company in Chesterfield, Missouri, it involved something as seemingly simple as attaching a trash can to an employee’s chair.
For one in St. Louis, it meant leaving the cover off an electronic temperature controller.
For others it’s meant gathering employees from the chief executive on down for what’s known as Kaizen events — based on the Japanese word for continuing improvement.
What do these seemingly unconnected efforts have in common? They are approaches to what is known as lean manufacturing — or, more recently, lean production — aimed at streamlining production processes, enhancing employee engagement and increasing profits.
Take for example, Watlow, a 96-year-old family-owned business in St. Louis, that designs and manufactures industrial heaters, temperature sensors and other components of thermal systems. It was founded in 1922 (making heating elements for the shoe industry) by Louis Desloge.
In 2006, with Peter Desloge, the third-generation chief executive charge, the company adopted lean production principles.
“A competitive environment forced us to figure out how to lower our costs while also better engaging our people,” Desloge said, adding, Watlow chose the lean route “because the approach doesn’t just reduce cost and drive productivity, but also “increases value to our customers and engages everyone in the business to eliminate waste.”
This week, for example, the company discovered that it had been supplying a customer in the transportation industry a temperature controller with an unnecessary part. “When it got to their facility, the customer was taking the cover off because they had to install it in their machine. We realized we could ship without it and eliminate both the effort on our end as well as for the customer.”
In the world of lean production, these microdiscoveries can be as important as the big picture.
The approach has its roots in the vaunted Toyota Production System developed in Japan in the late 1940s, which was aimed at streamlining processes to eliminate waste, improve productivity and, ultimately, grow profits. Known as either the TPS or Toyota Way, it advocates for “an organizational culture of highly engaged people solving problems or innovating to drive performance,” according to Jamie Bonini, vice president Toyota Engineering and Manufacturing North America.
Roughly 40 years later the term lean production was coined by John Krafcik, who is the chief executive of Waymo, the autonomous driving car company that was spun off from Google. Krafcik was part of a team led by research scientist James Womack, who became a founder and senior adviser to the Lean Enterprise Institute, a nonprofit based in Boston. Its approach, which differs in some ways, focuses on eliminating waste, rethinking work flow and improving productivity, from entry-level employees to high-level executives.
“When we came up with the name lean production, what we meant was the complete system,” Womack said. “What the world heard was factories. But the frontier has been outside of the factory world for the last 20 years.”
Whichever term one uses, the goal is to improve the production process, said Rachna Shah, a professor at the Carlson School of Management at the University of Minnesota.
But not all companies have the same success because there’s often a lot of starting and stopping. Without working on the streamlining continuously “in a disciplined way over the long term, you cannot have the same levels of improvement in productivity,” Shah said.
Those who do persevere often become evangelists, like Jim Lancaster, author of “The Work of Management.”
Lancaster is chief executive of Lantech near Louisville, Kentucky, whose products include equipment that customers, like food manufacturers, use to stretch-wrap products. His company began to implement a lean approach after it lost a court battle over a patented process and competitors undercut the company's prices.
But Lancaster found that the lean approach only worked for so long “because of the natural deterioration that can occur. People change, tools get dull and an engineer may change the design without preparing others on the line.” Profits from his company's newer products, while meaningful, were offset by declines in its base business.
As a result, he said, the company needed to refocus on its original lines and bolster its processes. “It sounds boring, except for the bottom-line impact,” he said.
Sometimes, seemingly tiny changes exemplify the lean approach. Marc Braun, the president of Cambridge Engineering, a manufacturer of industrial heating and ventilation technologies in Chesterfield said a new entry-level line employee, Justin Meade, realized he was wasting time each hour just to discard trash.
Meade, who had little technical training, came up with the idea of attaching a trash can to a chair to cut 15 steps. Over the next six months he continued to make more revisions, with the help of other employees, to devise an even better version. The result: shaving an estimated 70 minutes from a 90-minute job, Braun said.
Most lean aficionados use Kaizen events that bring together employees at all levels to work and correct a problem. Watlow, for example, holds about 60 a year, Desloge said.
Those who adopt a lean system say that they want to reduce waste but not reduce the workforce in the process. Desloge said he “focuses on areas where we need more capacity. We will not let anyone go as a result..”
Toyota is focused not just on its own workforce, but on using its methods to encourage job growth generally in North America and for philanthropic efforts.
About 20 years ago, the company set up the Toyota Production System Support Center, a nonprofit that aims to help small and midsize businesses, as well as other nonprofits, like the New York Food Bank. The beneficiaries need not be in Toyota’s supply chain. Instead, the company hopes to help smaller companies throughout the United States, Canada and Mexico streamline their operations and, in the process, retain and perhaps increase the number of jobs.
Bonini, who leads the company’s North American efforts, said that the organization had worked with the furniture-maker Herman Miller, the theater-seating company Irwin Seating and Ace Metal Crafts Co., among others. Jean Pitzo is the chief executive of Ace Metal, based in Bensenville, Illinois, near O’Hare International Airport, which fabricates components for food-processing equipment.
Ace applied to the Toyota center and was accepted in 2014.
Bonini helped the company with the welding part of its business, which was often a production bottleneck. Together, they worked on streamlining, eliminating waste and improving employee engagement. As a result, Pitzo said, her business has grown “an easy 30 percent” and profits have gone up. The main reason is that we cut our lead time on new orders by 50 percent.”
But, Desloge advises, don’t try lean processes on your family. “When people understand lean, they will frequently bring it home, suggesting to their husband or wife that there’s a better way of loading the dishwasher,” he said. “That typically doesn’t go over very well.”