The lean manufacturing transformation: From chaos to order

For the past six months we have gone on a journey to look at the impact of the lean transformation at a hypothetical custom fabricator, Typical Fabrication Co. (TFC). We have explored this topic through the eyes of a welder, production supervisor, production manager, and chief financial officer. This month we will wrap up the TFC exploration by looking at the lean transformation through the eyes of the company president, Ron.

Ron represents a composite of several current and past clients of mine. He has been president for the past 10 years. He has worked in almost all functions at TFC at one time or another. His strengths are on the technical side of product and process design, but he also has strongly influenced the sales and marketing functions. In short, Ron is well-rounded and takes great pride in the growth and success of TFC.

He vividly recalls the way the company was run and the issues he routinely dealt with prior to making a serious investment in lean methods. Now his business uses lean not just in isolated areas, but as a foundational system to run the business.

Dealing With Chaos

Prior to TFC’s lean journey, Ron’s typical workday was messy. He never knew what surprises lay ahead from one day to the next. Was the highlight going to be an irate customer, a long list of excuses for why manufacturing was behind, finding out that the supply of one part was short yet again … or all the above?

Sometimes Ron and his team actually thrived in the excitement of fixing a problem or making pain go away. Some chaos was big, other chaos was simply a nuisance. Either way, when chaos happened every day, it became normal.

Ron always seemed to be dragged into solving flow issues. Broken flow meant broken processes. And when you have broken, ill-defined, or nonexistent processes, inevitably most problems become people problems. Ron was always pulled in to solve today’s flow problems, which meant he couldn’t focus on longer-term opportunities, which in turn caused flow problems the next day or week. He was in a vicious cycle.

Then he had to deal with customers. Sure, some customers tried to shorten the agreed-upon lead time. But Ron also dealt with customer lead-time issues that stemmed not from unreasonable customer demand, but from internal operations problems—in other words, it was TFC’s problem!

Ron played the role of arbiter, dealing with irate customers on one end and, on the other, dedicating production, capacity, material, or other scarce resources to meet their demands. And Ron’s efforts didn’t fix the real problem. He was doomed to deal with the same issue tomorrow, next week, next month, and beyond.

Meanwhile, TFC’s performance continued to suffer, and it wasn’t getting better. People continued to produce substandard work and, even worse, weren’t taking the right actions to get better. The staff had stagnated, which frustrated Ron and demoralized the TFC team. Over time people began to wonder if they could do the job right.

Ron knew he shouldn’t have let himself get dragged down into the details and minutiae, but if he didn’t, how would the problems get resolved? At industry events, Ron talked with his peers about this issue. But he always came away dejected because he just couldn’t break the cycle of “We have to get Ron involved!” He knew this was a problem, but what was he to do?

You get the idea of what Ron’s day was like. With TFC’s customers getting more demanding in terms of cost, quality, and timeliness, he recognized that the company couldn’t survive if it didn’t change … a lot and quickly. Ron had reached a tipping point, and knew that both his job tenure and company’s survival were at stake.

The Transition

Once Ron and his partners made the decision to learn about and implement lean methods, a different tone permeated TFC. In the beginning, Ron’s day was still chaotic because people were both putting out fires and trying to make time for modest projects to see if “this lean thing” was really going to deliver changes to the business.

After implementing changes in pilot areas demonstrated remarkable improvements, employees became convinced that lean methods could make a difference. Momentum was building. Ron’s day was less consumed by firefighting. He instead spent his days managing the overall business and making sure that the lean game plan was being implemented quickly, effectively, and decisively. The farther along in the lean journey TFC went, the more Ron liked his job. He could see the transformation happening before his eyes.

On the Lean Path

The work environment is now less chaotic and more predictable. The chaos that robbed Ron of time to actually be company president has subsided as lean thinking, methods, and techniques were rolled out into the business. Daily, predictable activities cut workplace tensions significantly.

Not only is the company flexible overall, but Ron himself seems to be more flexible too. When short-term problems raise their ugly head (they don’t completely go away), employees deep in the organization handle them in a business-like manner. The increased flexibility allows TFC to develop creative solutions for customers. This helps keep Ron out of the minutiae.

With flow stabilized and quality levels high, company leaders focus squarely on growth. Materials flow predictably, processes are in control, standard work enables new employees to get up to speed quickly, and potential customers take notice. Leaders now spend time thinking about the big picture and acting on the future.

When problems do arise, Ron finds that he’s much less reactionary. And when he does react, he does so within a set of reasonable parameters. Instead of being distracted by a stream of problems and leaving many of them half-addressed, he focuses on issues completely, including the root causes.

As TFC matured in its use of the lean body of knowledge, Ron noticed that his operations personnel were much more disciplined in their execution. From schedule completion to the understanding and use of takt time and cycle time to manage manufacturing, plant personnel were making informed, data-driven, methodical decisions.

Ron does not see the “shoot from the hip” sort of decision-making that was common in prelean TFC. Most important, the discipline allows TFC leadership to understand their capacities to take on new business with high confidence of success.

Decision-making now is pushed down closer to the source—that is, those who actually perform the work. After all, these are the people who will be most affected by the decision. Ron rarely gets involved in details that should be addressed by employees deeper in the organization.

In the past Ron allowed the employees to push decisions upward. Every time Ron made a decision for somebody, it reinforced a negative behavior. No more. Ron’s job now is to create and support an environment where this style of decision-making is expected and rewarded.

Ron also sees unexpected benefits. As TFC streamlined operations, cleaned and organized through 5S, minimized work-in-process, and implemented a strong safety program, Ron could negotiate favorable arrangements with insurance and workers’ compensation providers. The agents who spent time at TFC were willing to reward the company’s lean efforts by adjusting rates and reducing costs.

Is the Investment Worth It?

As demonstrated through the eyes of everyone from Harry the welder to Sarah the production manager to Ron the company president, operational results are visible throughout the organization.

Some were nonfinancial: the distance work and people traveled, the percentage of first-operation jobs that started on time, the percentage of preventive maintenance compliance. Others directly tied to the company’s finances: dollars in WIP, fewer defects and rework, incremental sales increases associated with resolving a bottleneck.

Lean companies uncover opportunities for new business and projects that industry peers miss. Their excellence wreaks havoc on those who do not make the lean journey. Yes, the investment is worth it.

Jeff Sipes is principal of Back2Basics LLC, 317-439-7960, www.back2basics-lean.com. Want to know more or have a suggestion for a future Continuous Improvement topic? Contact Sipes at jwsipes@back2basics-lean.com or Senior Editor Tim Heston at timh@thefabricator.com.