Pumps and Systems, May 2009
From the front office to the factory floor, lean initiatives (and more advanced Six Sigma training) can help companies increase production, improve quality and contribute to a more viable bottom line.
Some companies have employed Lean manufacturing programs for more than a decade. Others see it as one way to ride out a turbulent economic wave. Regardless of the motivation, experienced Lean practitioners say believe these initiatives can directly affect a company's production, efficiency and balance sheet.
Peerless Pump Company believes so much in the concept it has made a significant investment to send one-fourth of its workforce (approximately 100 people) to the University of Tennessee (UT) for intense week-long Lean Enterprise training. "Lean and Six Sigma mean different things to different people," says Scott Patterson, Peerless' global director of quality and continuous improvement. "We try to use a common-sense approach to apply either a Lean tool or Six Sigma method to solve a problem. It could be a quality problem, a safety issue or a manufacturing problem. We have learned that there are many things we can do to address our specific needs."
What is Lean and Six Sigma?
Lean manufacturing is a process management philosophy derived mostly from the Toyota Production System (TPS), in which tools are used to increase efficiency, decrease waste and implement empirical methods to decide what matters most in an organization. As waste is eliminated, quality improves while production time and costs are reduced.
Six Sigma is a business management strategy, initially implemented by Motorola, which today enjoys widespread application in many industry sectors. This methodology uses a set of quality management and statistical methods to create a special infrastructure of people within the organization (Black Belts) who are experts in these methods. Each Six Sigma project executed within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase).
Simply put . . . "Lean is a tool set that allows you to reduce waste in your process. Six Sigma is the tool set that eliminates variation in your process," explains Doug Calvin, director of Operational Excellence for Tyco Flow Control Americas.
What Lean Is:
An enabler to business strategy
A way to remove waste from processes and practices
Focused on process speed and flexibility
Driven by quick-hit, high-impact team events to solve problems
A way to visualize processes through value-stream mapping
A way to teach people how to "think" about streamlining
What Lean Is Not:
A business strategy
Only for manufacturing companies
About headcount reductions
Only about the tools
Six Sigma Defined
What Six Sigma Is:
Source: AIT Group, Inc.
Tyco Flow Control began its Lean journey in the mid-1990s. "I can really appreciate the dedication a company makes as they embark on Lean operationally," Calvin says. "We participated and worked through many training sessions and from that we grew into what we now call Operational Excellence."
Tyco Flow Control has three major tool sets it uses for Operational Excellence training. One is Six Sigma, which Calvin defines as reducing variation, or the good vs. the bad. "We struggled getting our quotes out on time, or if we didn't ship a product on time-that is a Six Sigma opportunity," he explains. The second pillar is Lean, which eliminates waste and often results in reduced cycle times, reduced working capital or improved productivity. The third tool set is Design for Six Sigma (DSS), which is used in the development of new products or processes. "These tool sets intermix. None of them stand alone."
Sometimes the opportunities for Lean improvements are more evident. Cheryl Hild, a faculty member at the UT Center for Executive Education, says that an observant, inquisitive walk through a manufacturing plant can create a list of opportunities for improvement that can have a short-term impact. "I like to start at the end of a plant and follow the flow of materials, product and information backward to the beginning of the process," she says. "I look for things like, 'What are the date codes on shelved inventory? How much complexity exists in the information flows?' Large amounts of complexity and hand-offs in information flows often indicate causes of increased cycle times, delays and inefficiencies. Physical flows are important, but if can get a handle on both formal and informal information flows, then I get a good look at significant opportunities for improvement."
Lean Starts from the Top
Rhonda Barton, director for the UT Center for Executive Education, has trained people in Lean and Six Sigma methods for 28 years. She says each company should define its particular needs before solutions can be determined. "Everyone wants the magic recipe book, but there is not one," she says. "It is all dependent on your processes. You may have all the tools and techniques, but be unable to define what will work for you. It takes leadership-someone who understands the tools and the techniques-to drive the program."
Rick Lundgren, president of Tyco Flow Control Americas, champions his company's Lean programs. "With our ongoing, rigorous reviews, we must be committed to the goal," he says. "If management is not driven to success, it will not happen."
With positive results, management support becomes easier to acquire and a culture change within the company takes place, Calvin explains. "As we have success, our management team sees the impact, validating our tools. My personal rule of thumb is that we need at least three leadership 'change agents' at a business location to effectively launch a Lean project. Since there will be challenges, issues, deadlines,investments, etc., leadership commitment to the program-people who are engaged to take it to the next level-greatly increases the level of success."
Peerless has employed a Six Sigma program for almost six years. "In the beginning, it took a while for the program to catch traction because it was a trend and seemed like the right thing to do," Patterson says. "What really made the difference was when we gained management support, and it became an operating initiative."
With proper training and implementation, results can be measured immediately, Patterson says. "It is like with any training . . . if you do not reinforce what you learn,or if you are not in an environment to do anything with it, then you are not going to get results.."
Patterson explains that a core principal of Lean involves pulling inventory through a system rather than pushing it. "We try to reduce inventory and only produce what the customer demands as opposed to what we think the customer wants," he says. "Through the process of trying to reduce inventory, improve quality and take care of any safety and ergonomic concerns, we see cost benefits."
Some common-sense results can also be immediate, Patterson explains. "Lean is a great tool for the business problems that have caused problems for a long time. It just gives you a different way of looking at things. Someone may have walked by the same problem every day for 20 years. After a week of Lean training, that same person can have a moment where it all clicks. They can come back and take a look at that same problem and within days move something to a more efficient location or address a safety concern quickly. It is not uncommon to find a $50,000 problem and solve that problem within a few hours.
"There is a goldmine of costs and wastes that can be reduced in every company."
Real-World Examples of Success
Tyco Flow Control has a plant in Black Mountain, N.C., that manufactures valves. In a recent project, it used Lean tools to completely evaluate and modify the way it conducts business, Calvin says. The plant was significantly aligned to be more efficient. Productivity was improved and new savings were realized in excess of $1 million annually. The efforts helped produce a more engaged workforce, product enhancements and improved operating efficiencies. The project investment paid for itself in the first four months after completion of the project.
Peerless identified a project to improve changeover times in its test labs. "When we test a pump, the changeover time from pump-to-pump can be as long as an hour and 40 minutes (including time to switch out the piping and all the other things that go into moving a big horizontal pump off a test stand)," Patterson explains. "Through our Lean efforts, we have been able to essentially cut our average changeover to about 20 minutes. We had not improved that changeover time in 30-40 years, so we have been essentially wasting all that productive time.
"I do not know how to begin to equate what this savings means in terms of overtime and productivity. It is staggering. The real benefit is we will be able to test more pumps and the system with better quality and not have to hurry through the process. Ergonomically and safety-wise, it is so much better. We have gone from tightening hundreds of bolts through colon pipe and flanges down to 20 to 25 bolts. All this was accomplished just by looking at the problem a little differently. We did not have to invest a lot of money. You can make vast improvements without making a huge capital expenditure."
Dave Olecki, continuous improvement manager for Peerless, describes another program that benefited from Lean initiatives. "In one area there is a subassembly where we build large batches of one part at a single time," he explains. "From start to finish, it was probably a month's worth of parts. So we would build 40 or 50 of them and just use maybe two of them that day. The rest would sit on a rack for a month. So not only did you have the extra inventory sitting there, but the workers were not too happy because they had to build these 40 parts really quickly and then watch 38 of them sit on the rack."
Peerless solved the problem by applying Lean with a one-piece flow. "It only takes five minutes to build one single unit," Olecki says. "So we decided to just build one at a time as we actually need them. We now have a very small buffer of inventory of these, maybe one or two. This simple decision allowed us to reduce inventory by 75 percent. The operators are happier because they only have to build the parts as needed instead of rushing, and possibly working overtime, to make a huge batch and then watch them sit there."
Lean for the Beginner
Calvin offers simple tips for companies looking to implement Lean tools. "A lot of what I see in the marketplace-no matter the company's size-is Lean for Lean's sake," he says. "People decide they are going to do Lean and maybe try a few improvements. But the reality is they often did not have a significant customer or business impact. Yes, the project area did get a little better, but if you asked the customers if anything changed, they would not be able to experience it. You often would not be able to see it on the financials.
"What I always recommend-no matter how big or small the company-is to understand what gaps you have in the business. If I am a small company, I may have a productivity issue. I may not be able to get enough shipped out the door with my current resources, and I do not necessarily want to hire more people. It may be that the business in a down market, and I have a cash flow problem. Lean can help in all of these areas.
Get committed; Top leadership commitment is critical to success - your people will know the difference!
Get started; don't wait - give Lean a try!
Get trained; Understanding foundational Lean principles will unite the team, as well as increase the Lean benefits!
Get help; Utilize someone that can bring Lean depth, training and experience - especially at the beginning of the Lean journey!
Get a win; Everyone is watching, so make sure the first projects can be accomplished in a short period of time with visible results.
Get involved; Lean is not an armchair initiative - from the top down visible participation is important!
Get a smile; Lean is fun - celebrate together both during the project, and especially when the team reaches their targets!
Director of Operational Excellence
Lean and Six Sigma
Tyco Flow Control - Americas
"Know your target. Know your gap. By knowing that gap and clearly understanding it, that is when you discover what needs to be done, and you can identify the tool set that is going to help this situation. The Lean tool does not need to be exotic or complicated. It is very procedural. You just have to target those gaps and really focus on using Lean principles.
"At Tyco Flow Control, one thing we do well is measuring accurately the results on all types of projects. We involve our finance people. I can understand the answers to questions like . . . 'Did I change my cost on payroll? Did the cost of capital go down? Do I have less tied up in inventory now because I implemented these Lean principles?' Those principles are-in many cases-common sense. But I do not recommend starting with Lean for Lean's sake-start with an identified function that needs improvement. Then, apply Lean in those areas that will help improve the function. As you have successes, then you can expand the focus to larger implementations. The payback can be pretty quick if you do it right."
Lundgren admits that changing the culture of a business through Lean initiatives can sometimes cause tension. "Lean is so powerful, it can be controversial," he says. "Sometimes people fear headcount deductions. Also, it can be a different way of doing things, and it takes a while to learn."
However, Calvin contends that Lean and Six Sigma are both about improvements and change. "Change is not the most welcome thing for some people," he says. "Lean-when properly implemented-is going to have benefits and will make the company stronger. It can open new opportunities for both the business and the employees."
Patterson says Peerless will not displace a worker because of a Lean improvement. "A lot of things we do will challenge a worker so that he can be more productive," he says. "We are changing the environment so we can get more out of him. At the same time, for all the right reasons you have to solve a lot of other problems-ergonomic issues, safety issues, quality problems-and it all leads to more productivity.
"We are firm believers that we are not going to have fewer people working here at Peerless because of Lean initiatives. We will be more responsive to our customers needs so hopefully they see more value in using Peerless."
Trial and Error
Implementing Lean and Six Sigma tools requires patience, Calvin says. Sometimes lessons are learned from elements of a project that did not work as well as expected.
"Even with all the plans, calculations and layouts, sometimes you overlook something," Calvin says. "That is part of getting the culture change across that this is not an end result or a final destination. We are going to continuously improve."
One of the lessons learned from the Black Mountain project involved a challenge as a result of accelerating the production line. "We machine, assemble, test and ship the product," Calvin explains. "We actually sped things up so fast that as the product went through the high temperature steam test we no longer had time for it to cool down before the next operation. This helped us identify that we now needed to install a cooling device in the line so employees would not have to wait for the part to cool down in order to finish the assembly operations and box the product. That is one of those things . . . it is a mistake, but it is one of those good mistakes because our production was happening so quickly that we now had to figure out how to improve cooling time to sustain improved efficiencies."
Patterson agrees that trial and error is simply part of the process. "We cannot be afraid to fail," he says.
"For every good idea that sticks, there should be a dumpster full of initiatives that did not work. During a changeover event, we were trying to eliminate all the bolts on our test stand. We employed some clamps instead of bolts. It was late one evening, and we pressurized a flange and the clamping device failed. It absolutely destroyed the flange and everything else. We spent a couple hundred dollars on the idea and about a day's worth of labor trying to figure out how to make this thing work. But from that failure came a much better solution because it made us consider some things we had not yet thought about. Had that worked, we would not have found a better solution."
Lean must be a company-wide effort and requires support from the workers in the main office to the factory floor, Patterson says. "Throughout your Lean journey, the folks on the floor will be the ones who perfect solutions. They are the process owners-the ones who deal with it every day. A lot of what we do goes toward the psychology of improvement of the guys in the office and on the floor to engage them to come up with solutions. It is not just myself and Dave and his three Six Sigma Black Belts who are coming up with solutions. We end up having several hundred people working toward the same goal."