(Editor’s Note: This is part two of a two-part series of articles on lean manufacturing; part one was published in the November issue.)
In the previous article we explored the topic of lean manufacturing or ‘doing more with less.’
Brian Brashaw, program director of the Natural Resources Research Institute at the University of Minnesota, explained eight key factors of waste that lean manufacturing can eliminate: defects, overproduction, waiting, not utilizing employee talent, transportation, motion, and extra processes.
What the previous article also showed is that, although lean manufacturing appears to be a great concept, it has been slow to be accepted in the forest products industry. There is considerable resistance and also lack of understanding.
To counter this, Brian is trying to spread the word in cooperation with various organizations, including state and federal agencies. His efforts include providing one-day training sessions, special three-hour modules that employers can implement on-site, tours at facilities that have adopted lean manufacturing, and one-on-one consultations with individual companies.
"We’ve provided training broadly to about 100 wood product companies over the past three years," he said. "We have a small staff, but instead of trying to develop just a few companies and try to turn them into showcases, we work with a wide number, get them started on a specific project, and hope they can take it from there."
In working one-on-one with 15 companies to date, Brian reported they experienced production gains ranging from 20% to 60%. That’s the good news.
The bad news, he said, is that only three or four of the 15 have embraced the concept fully and are moving from the first specific project forward to encompass the company as a whole. The rest have either maintained improvements they achieved in one particular problem area but are not moving forward to make company-wide changes while others have experienced temporary benefits because they did not institutionalize organizational changes for continuous improvement. Part of this is due to the fact that these experiments have been going on for only the past year or so. But there have been other reasons, too.
"The employee buy-in to the program is not as great as we would have liked," Brian said. "What it’s really going to take is a cultural change on all levels of a company."
The State of Minnesota has supported the program, Brian said, "because we have 60,000 employees working in wood products. We see what’s happening in terms of the whole global competition issue and have seen what has happened in North Carolina with the loss of the furniture business. We’ve worked very hard to develop our skills to help our companies be as competitive as possible. I’ve gone on trade missions to China to see what we’re up against, and I think we’ve developed some good programs. We have a strong kitchen cabinet focus here, and we have a lot of customization. There are 1.5 million options in terms of sizes, shapes, and finishes. And customization is not where China is now. So, if we can do the custom work and get it done in two to three weeks rather than a couple of months, that can keep us ahead of the game."
The principles of lean manufacturing evolved from the continuous improvement system started at Toyota, Brian noted, and the transition of the principles from one industry to another is not automatic. It is not "paint-by-the-numbers." The principles that worked in the automotive and other industries have to be thought through and applied fresh to forest products. Moreover, the progress to date has been with the secondary wood products sector as opposed to the sawmill sector, Brian observed.
One academic who is taking a close look at the application of lean manufacturing concepts to the rough mill or sawmill sector is Chuck Ray, assistant professor of wood products operations at Penn State University. His position is that applying lean principles that work in the secondary arena to the primary one can put the latter out of business.
Chuck explains. "The objective of lean manufacturing is to eliminate waste in all its forms, of which the primary is inventory," he said. "Through pull-type lean production techniques, called kanban systems, firms learn to produce only those components needed for the current production file. In manufacturing products that utilize homogeneous raw material (such as steel for automobiles) kanban works well; parts are machined from the raw steel stock as required and the remaining stock awaits the next call from the system."
Chuck acknowledges that this system can work well in the secondary wood products arena because these products are made up of individual components, analogous to automotive parts, but
it breaks down when applied to the
raw material.
"In the rough mill of all secondary wood products producers, the more advanced companies attempt to optimize recovery through computer-aided edging, trimming and defecting," Chuck observed. "Since the major raw material cost of these companies is the wood itself, any successful optimization of processing that increases yield lowers raw material cost, and therefore increases the profitability of the mill."
"The yield optimization procedures naturally produce by-product components that must be stored in an in-process inventory for use when called for in future production schedules," he continued. "In implementing lean and attempting to reduce or eliminate their in-process inventory, these companies find themselves faced with the potential of discarding good wood."
The secondary market tolerates a certain amount of waste because its purpose is to machine wood to a current production schedule rather than maximize yield, Chuck noted.
"However, yield is a primary component of a sawmill," Chuck said. "A mill which ignores yield quickly goes out of business. Wood costs are typically 50%-80% of the operation, so if you let your yield drop from 80% to 70%, you are driving up costs. Yield and costs are intimately related."
Because sawmill production planners apply lean principles by trying to machine wood to their current production schedule rather than a yield-optimizing cutting approach, after a time they may conclude that the reductions in yield cannot be justified by any increase in efficiency due to the elimination of in-process inventory, according to Chuck.
"As a result, many companies modify their lean concept to allow for in-process inventory under certain or all conditions, or they abandon the effort completely through frustration. In at least one case, we have seen the company conclude that just-in-time for them meant to produce as large as inventory as possible so as to be better able to deliver on demand to their customer base."
In fact, Chuck noted, if lean means getting the most out of what you have, mills are already practicing lean. So if principles used in the secondary market are applied to the rough mill, the results are negative. The operative principle appears to be, ‘If it ain’t broke, don’t fix it.’
On the other hand, traditional sawmills can still improve their efficiency, said Chuck. But he has come up with a different definition of lean. "Here we look at all of the resources consumed, everything — including raw material, labor, machinery, and the rest, compared to the amount of product produced. The lower the amount of resources you need to produce, the better."
Chuck said his theories are still in the research stage and "are still theories that have not yet been proven."
Returning to the secondary market, where lean manufacturing principles are making inroads, Earl Kline, professor of manufacturing systems at Virginia Tech, said, "Where lean seems to work best is where a company is struggling to meet demand. Typically this is the best place to implement lean."
In assessing an organization’s need for application of lean manufacturing principles, Earl suggests asking the following questions:
1. Are you receiving increasing pressure from customers to shorten lead times or increase ordering flexibility?
2. Are you overrun with work-in-progress (WIP) and-or finished goods inventory? Do you notice several
weeks or months worth of WIP inventory at every machine in your operation, or is WIP inventory at every machine in your operation, or has WIP outgrown its
intended storage area? Likewise, are
finished goods inventories swelling with products that do not sell well, or are there products in finished goods inventory that have been there for months or even years?
3. At any given time during the production day, do you notice volumes of material being moved from place to place; e.g., from machine to machine, in and out of inventory, or back and forth between departments?
4. Is production scheduling and inventory management becoming increasingly difficult, requiring more time and labor, while filling orders on time and in the right quantity is also becoming more difficult?
5. Is there a recognizable ‘binge and purge’ aspect to your production flow; i.e. is production rippling through the plant in waves rather than smoothly and continuously?
6. Have you noticed high incidence of employee injuries, such as strains and pulled muscles, resulting in high employee turnover? Does it most often require more than one attempt to complete an order without defects in the product or paperwork?
7. Is work being duplicated in your operations?
If you answered ‘yes’ to four or more of the above questions, your business likely can benefit from lean manufacturing principles, according to Earl.
Let’s end with a success story taken from a paper titled, VEPA 2003 Summer Conference Lean Manufacturing: Doing More With Less. It was written by Earl and a colleague at Virginia Tech, Dan Cumbo, and Rick Lovorn, plant manager for Merillat Industries in Atkins, Va.
At its plant in Atkins, Merillat produces 23,000 SKUs of hardwood cabinet doors and drawer fronts in four different species, nine different colors and 40 different product lines for daily delivery to other Merillat cabinet assembly plants. Targeting waste elimination throughout their process, the Atkins facility has been very successful at deploying lean manufacturing concepts to the wood products industry.
Since the adoption of lean manufacturing concepts in 1998, the Atkins facility reduced plant cycle time (lead time) from 6 days to 17 hours, reduced work-in-process by 80%, increased quality 84%, increased plant safety (reduced lost work days) 98%, and achieved an on-time delivery of 99.7%. Furthermore, plant capacity doubled with virtually no capital expenditures and no employee layoffs, which has allowed the facility to essentially double its SKU offerings. Implementation of lean manufacturing concepts basically freed up 70,000 square feet, which effectively created enough additional space to allow
planning for a new state-of-the-art finishing system.
The biggest challenge for the Atkins facility was developing leadership to sustain a system and culture that drives continuous improvement. Without this leadership, it is easy for an organization to fall back into its old ways. Kaizen team events achieved good results to build leadership at all levels of the organization as well as to implement lean improvements immediately.
It takes time to change an organization’s culture, and a Kaizen event is a good mechanism to prompt and sustain change. Roughly two kaizen events are performed each month at the Atkins facility. Each week-long event involves 8-10 team members. The event starts with lean training and a high expectation of achieving over 50% improvement in their particular process improvement assignment.
The results have been powerful. The Atkins facility saved over $4 million
last year as a direct result of the lean transformation. Merillat recently showed how its lean transformation improved its ability to compete by winning a contract over an Asian competitor. This year the Atkins manufacturing plant won the Shingo Prize, which is akin to a Nobel Prize for manufacturing. Competing with high-tech, automotive, and aerospace companies, rarely does a forest products manufacturer win this kind of award.
(Editor’s Note: This is part two of a two-part series of articles on lean manufacturing; part one was published in the November issue.)
In the previous article we explored the topic of lean manufacturing or ‘doing more with less.’
Brian Brashaw, program director of the Natural Resources Research Institute at the University of Minnesota, explained eight key factors of waste that lean manufacturing can eliminate: defects, overproduction, waiting, not utilizing employee talent, transportation, motion, and extra processes.
What the previous article also showed is that, although lean manufacturing appears to be a great concept, it has been slow to be accepted in the forest products industry. There is considerable resistance and also lack of understanding.
To counter this, Brian is trying to spread the word in cooperation with various organizations, including state and federal agencies. His efforts include providing one-day training sessions, special three-hour modules that employers can implement on-site, tours at facilities that have adopted lean manufacturing, and one-on-one consultations with individual companies.
"We’ve provided training broadly to about 100 wood product companies over the past three years," he said. "We have a small staff, but instead of trying to develop just a few companies and try to turn them into showcases, we work with a wide number, get them started on a specific project, and hope they can take it from there."
In working one-on-one with 15 companies to date, Brian reported they experienced production gains ranging from 20% to 60%. That’s the good news.
The bad news, he said, is that only three or four of the 15 have embraced the concept fully and are moving from the first specific project forward to encompass the company as a whole. The rest have either maintained improvements they achieved in one particular problem area but are not moving forward to make company-wide changes while others have experienced temporary benefits because they did not institutionalize organizational changes for continuous improvement. Part of this is due to the fact that these experiments have been going on for only the past year or so. But there have been other reasons, too.
"The employee buy-in to the program is not as great as we would have liked," Brian said. "What it’s really going to take is a cultural change on all levels of a company."
The State of Minnesota has supported the program, Brian said, "because we have 60,000 employees working in wood products. We see what’s happening in terms of the whole global competition issue and have seen what has happened in North Carolina with the loss of the furniture business. We’ve worked very hard to develop our skills to help our companies be as competitive as possible. I’ve gone on trade missions to China to see what we’re up against, and I think we’ve developed some good programs. We have a strong kitchen cabinet focus here, and we have a lot of customization. There are 1.5 million options in terms of sizes, shapes, and finishes. And customization is not where China is now. So, if we can do the custom work and get it done in two to three weeks rather than a couple of months, that can keep us ahead of the game."
The principles of lean manufacturing evolved from the continuous improvement system started at Toyota, Brian noted, and the transition of the principles from one industry to another is not automatic. It is not "paint-by-the-numbers." The principles that worked in the automotive and other industries have to be thought through and applied fresh to forest products. Moreover, the progress to date has been with the secondary wood products sector as opposed to the sawmill sector, Brian observed.
One academic who is taking a close look at the application of lean manufacturing concepts to the rough mill or sawmill sector is Chuck Ray, assistant professor of wood products operations at Penn State University. His position is that applying lean principles that work in the secondary arena to the primary one can put the latter out of business.
Chuck explains. "The objective of lean manufacturing is to eliminate waste in all its forms, of which the primary is inventory," he said. "Through pull-type lean production techniques, called kanban systems, firms learn to produce only those components needed for the current production file. In manufacturing products that utilize homogeneous raw material (such as steel for automobiles) kanban works well; parts are machined from the raw steel stock as required and the remaining stock awaits the next call from the system."
Chuck acknowledges that this system can work well in the secondary wood products arena because these products are made up of individual components, analogous to automotive parts, but
it breaks down when applied to the
raw material.
"In the rough mill of all secondary wood products producers, the more advanced companies attempt to optimize recovery through computer-aided edging, trimming and defecting," Chuck observed. "Since the major raw material cost of these companies is the wood itself, any successful optimization of processing that increases yield lowers raw material cost, and therefore increases the profitability of the mill."
"The yield optimization procedures naturally produce by-product components that must be stored in an in-process inventory for use when called for in future production schedules," he continued. "In implementing lean and attempting to reduce or eliminate their in-process inventory, these companies find themselves faced with the potential of discarding good wood."
The secondary market tolerates a certain amount of waste because its purpose is to machine wood to a current production schedule rather than maximize yield, Chuck noted.
"However, yield is a primary component of a sawmill," Chuck said. "A mill which ignores yield quickly goes out of business. Wood costs are typically 50%-80% of the operation, so if you let your yield drop from 80% to 70%, you are driving up costs. Yield and costs are intimately related."
Because sawmill production planners apply lean principles by trying to machine wood to their current production schedule rather than a yield-optimizing cutting approach, after a time they may conclude that the reductions in yield cannot be justified by any increase in efficiency due to the elimination of in-process inventory, according to Chuck.
"As a result, many companies modify their lean concept to allow for in-process inventory under certain or all conditions, or they abandon the effort completely through frustration. In at least one case, we have seen the company conclude that just-in-time for them meant to produce as large as inventory as possible so as to be better able to deliver on demand to their customer base."
In fact, Chuck noted, if lean means getting the most out of what you have, mills are already practicing lean. So if principles used in the secondary market are applied to the rough mill, the results are negative. The operative principle appears to be, ‘If it ain’t broke, don’t fix it.’
On the other hand, traditional sawmills can still improve their efficiency, said Chuck. But he has come up with a different definition of lean. "Here we look at all of the resources consumed, everything — including raw material, labor, machinery, and the rest, compared to the amount of product produced. The lower the amount of resources you need to produce, the better."
Chuck said his theories are still in the research stage and "are still theories that have not yet been proven."
Returning to the secondary market, where lean manufacturing principles are making inroads, Earl Kline, professor of manufacturing systems at Virginia Tech, said, "Where lean seems to work best is where a company is struggling to meet demand. Typically this is the best place to implement lean."
In assessing an organization’s need for application of lean manufacturing principles, Earl suggests asking the following questions:
1. Are you receiving increasing pressure from customers to shorten lead times or increase ordering flexibility?
2. Are you overrun with work-in-progress (WIP) and-or finished goods inventory? Do you notice several
weeks or months worth of WIP inventory at every machine in your operation, or is WIP inventory at every machine in your operation, or has WIP outgrown its
intended storage area? Likewise, are
finished goods inventories swelling with products that do not sell well, or are there products in finished goods inventory that have been there for months or even years?
3. At any given time during the production day, do you notice volumes of material being moved from place to place; e.g., from machine to machine, in and out of inventory, or back and forth between departments?
4. Is production scheduling and inventory management becoming increasingly difficult, requiring more time and labor, while filling orders on time and in the right quantity is also becoming more difficult?
5. Is there a recognizable ‘binge and purge’ aspect to your production flow; i.e. is production rippling through the plant in waves rather than smoothly and continuously?
6. Have you noticed high incidence of employee injuries, such as strains and pulled muscles, resulting in high employee turnover? Does it most often require more than one attempt to complete an order without defects in the product or paperwork?
7. Is work being duplicated in your operations?
If you answered ‘yes’ to four or more of the above questions, your business likely can benefit from lean manufacturing principles, according to Earl.
Let’s end with a success story taken from a paper titled, VEPA 2003 Summer Conference Lean Manufacturing: Doing More With Less. It was written by Earl and a colleague at Virginia Tech, Dan Cumbo, and Rick Lovorn, plant manager for Merillat Industries in Atkins, Va.
At its plant in Atkins, Merillat produces 23,000 SKUs of hardwood cabinet doors and drawer fronts in four different species, nine different colors and 40 different product lines for daily delivery to other Merillat cabinet assembly plants. Targeting waste elimination throughout their process, the Atkins facility has been very successful at deploying lean manufacturing concepts to the wood products industry.
Since the adoption of lean manufacturing concepts in 1998, the Atkins facility reduced plant cycle time (lead time) from 6 days to 17 hours, reduced work-in-process by 80%, increased quality 84%, increased plant safety (reduced lost work days) 98%, and achieved an on-time delivery of 99.7%. Furthermore, plant capacity doubled with virtually no capital expenditures and no employee layoffs, which has allowed the facility to essentially double its SKU offerings. Implementation of lean manufacturing concepts basically freed up 70,000 square feet, which effectively created enough additional space to allow
planning for a new state-of-the-art finishing system.
The biggest challenge for the Atkins facility was developing leadership to sustain a system and culture that drives continuous improvement. Without this leadership, it is easy for an organization to fall back into its old ways. Kaizen team events achieved good results to build leadership at all levels of the organization as well as to implement lean improvements immediately.
It takes time to change an organization’s culture, and a Kaizen event is a good mechanism to prompt and sustain change. Roughly two kaizen events are performed each month at the Atkins facility. Each week-long event involves 8-10 team members. The event starts with lean training and a high expectation of achieving over 50% improvement in their particular process improvement assignment.
The results have been powerful. The Atkins facility saved over $4 million
last year as a direct result of the lean transformation. Merillat recently showed how its lean transformation improved its ability to compete by winning a contract over an Asian competitor. This year the Atkins manufacturing plant won the Shingo Prize, which is akin to a Nobel Prize for manufacturing. Competing with high-tech, automotive, and aerospace companies, rarely does a forest products manufacturer win this kind of award.
