Lean manufacturing: No shortcut to successLean manufacturing: No shortcut to success

Editor’s note: In the April 1999 issue of IMM (pp. 30-34) we took you on a tour of Webster Plastics and talked briefly about the company’s lean manufacturing. We revisit Webster this month to explore the concept in greater depth.

Can "lean" work in a custom manufacturing environment like injection molding? You bet it can, and Webster Plastics Inc. is proof. The company recently received an award for a lean manufacturing application at its facility in Fairport, NY. 

When Webster moved into the then-new facility in March 1998, the goal from the get-go was to implement lean principles. The 75,000-sq-ft plant was designed with lean in mind, says Dave Hanna, sales and marketing manager for Webster. The layout is streamlined for product/process flow, and uses a central material handling system with a manufacturing cell concept. 

Flexibility is mandatory for lean manufacturing, particularly in an environment that must accommodate a variety of inserts, or other components of various shapes, and materials (the company uses more than 350 types of resins for more than 600 active part numbers). The cell concept easily accommodates the quick changeovers and setups demanded. 

Customer Customization
Everything the company did to create a lean environment, it did with customer requirements in mind, explains Hanna. That is one of the basic tenets of lean manufacturing. 

But not all customers are treated equally at Webster. In fact, one of the company’s competitive advantages is its customized delivery system. Unique to each customer and established across the entire supply chain, the delivery systems have four common elements: 

Waste Not
Eliminating waste in the value chain is also critical to the success of lean manufacturing. Waste can be many things, explains Alan Gross, director of operations for Webster, and can include things not normally considered waste. These include overproduction, work-in-process, and other inventory-related items.

"Waste is also any disruption in the flow of products from the suppliers through to your customers," says Gross. "Unnecessary motion, moving things from one place to another, waiting for someone to do something, waiting for an answer, downtime, and of course scrap are all considered waste." 

Webster eliminates the causes of waste at its facility systematically. Unnecessarily moving parts was solved by putting value-added operations at the press wherever possible. The goal is to minimize lead time and maximize quality output. Shared assembly processes are located in cells in a separate secondary operations area. 

Gross emphasizes that each step in achieving lean manufacturing must be done with an eye toward the customer. "You have to look across the entire value chain," he says. "You can eliminate something at your plant but it might not be of maximum benefit to the customer." 

To eliminate the waste associated with overproduction, Webster gets pull signals daily from its customers. "They tell us exactly what they want for the next day, or sometimes that day," explains Gross. "They give us forecasts but they’re not committed to taking any more than what they need. That’s key [to lean manufacturing]—getting the pull signals." 

By design, Webster has limited space allocated for inventory of any kind, thus optimizing manufacturing floor space. Products are moved quickly to subsequent steps in the process, and then shipped to customers. A limited warehouse shares space with shipping and receiving. 

Results
The results of lean manufacturing can easily be tracked directly to the bottom line. Most noticeable is the reduced response time—from four weeks to a single day in most cases (a 1400 percent improvement). "For custom products this is significant," notes Hanna. 

Through the implementation of lean manufacturing, Webster reduced total inventory, including raw materials and finished goods, from three months to three weeks (a 333 percent reduction). Delivery performance improved to 98 percent, up from 70 percent, despite more than 400 customer-driven changes processed per week. 

Productivity (sales/employee) improved 27 percent. Yield efficiency went to 99 percent from 92 percent, and machine utilization rose to 70 percent—almost optimum for the molding business—from 40 percent. 

Lean manufacturing improvement projects at Webster have an actual cash value of $2.6 million per year, notes Gross. And the efforts continue. "We have seven projects in process now that will help us take lean manufacturing to the next level," he says. 

Webster went from stagnant sales and profits to realizing consistent sales increases and substantially improved profits, affording the company a strong position in the markets it serves, which include automotive. "Our best sales tool is the plant itself," says Gross. "It’s noticeably different, more effective than what customers and others experienced in molding expect when they walk into a plant." 

Hanna adds, "Companies that employ these lean manufacturing principals will be stronger and realize more growth." 

Creating value

In 70 percent of companies participating in high-performance supply or value chains, the CEOs, presidents, or vice presidents are responsible for value-chain improvements.

The new product development cycle at companies within high-performance value chains is nearly twice as fast as cycles at firms struggling within poor-performance chains. 

Companies with highly effective value-chain strategies are nearly four times as likely to have their suppliers heavily involved in new product development as those manufacturers without value-chain strategies. 

Manufacturers with highly effective value-chain strategies turn total inventory 40 percent faster than companies with no value-chain strategy. 

Ninety-four percent of companies within high-performance chains report that increased sales are a benefit of sharing information with value-chain partners; four of 10 companies within poor-performance chains see no such sales benefit. 

Source: Industry Week/Ernst & Young, 1999 Value Chain Survey 

The meaning of lean

A molder had a picture on the wall of his office of two tigers he had named Lean and Mean—signifying how his company operated. But what does "lean" really mean? James P. Womack, president of the Lean Enterprise Institute in Arkadelphia, AR, noted at a recent seminar sponsored by Industry Week that the fundamental objective of lean manufacturing is to shift the focus of management from existing organization, technologies, and assets to the product.

To get on the road to a lean manufacturing environment requires a map of what Womack calls the "value stream" or "value chain." The value stream consists of all those activities that provide value to the customer. Mapping the value stream crosses all organizational boundaries, because typically companies are organized by departments or functions (i.e., mold design, mold build, molding, accounts receivable, and so forth) rather than the flow of value-creating steps. 

It also requires differentiating value from waste, with the goal being to enhance value to the customer through a flow process and to identify the value stream from the standpoint of the customer. Too often, manufacturers implement what is of value only to their business, not their customer’s, says Womack. 

Creating flow involves putting all the manufacturing steps into a position that lets the customer "pull" the process to supply products as needed. A pull system is one in which products are made in response to customer order, not "churned out merely to keep equipment running," says Womack. 

The goal is manufacturing "perfection," which Womack defines as a state achieved in which every step provides value. Womack offers these steps:

The future of manufacturing, says Womack, is "no work-in-process, no inventory, no raw materials, and few assets in relation to value."