Helping customers get lean

Distributors that learn lean manufacturing concepts can help their manufacturer customers gain a competitive edge.

by Rich Vurva

Learning that a major customer is about to adopt lean manufacturing concepts strikes fear in the hearts of some distributors. They assume it will mean a reduction in headcount at the plant, which will impact the distributor’s sales.

But lean manufacturing is good not only for U.S. manufacturers — because it helps them eliminate waste and improve their production processes — it can be good news for distributors as well. The key is to understand lean concepts and how distributors can help customers put them into practice.

Many lean manufacturing concepts grew out of techniques used by Toyota to reduce setup times and convert batch production methods to work cells and one-piece flow (see sidebar for definitions of common lean terminology). A growing number of U.S. companies looking to increase productivity and reduce costs in order to compete against low-wage manufacturers in China, the Pacific Rim and elsewhere, are turning to lean manufacturing for opportunities to streamline.

The basics of lean
In its simplest form, lean manufacturing means eliminating waste wherever it’s found. The goal is to be highly responsive to customer needs. If an activity doesn’t add value to the customer, eliminate it.

The Toyota Production System defines seven types of waste:

Overproduction is producing more material than demanded or producing it before it is needed. It’s excess inventory sitting on the plant floor waiting to be used, installed or shipped.

Inventory or Work In Process (WIP) is material between operations as a result of large-lot production or processes with long cycle times.

Transportation refers to the movement of product during production, which adds no value to the product. Instead of improving transportation, it should be minimized or eliminated (for example, by forming cells).

Processing waste can be eliminated by asking why a specific processing step is necessary and why a specific product is produced. All unnecessary processing steps should be eliminated.

Motion of workers, machines and transport (because tools and parts aren’t where they should be) is waste. Instead of automating wasted motion, improve the operation.

Waiting for a machine to process should be eliminated. The principle is to maximize the utilization/efficiency of the worker instead of maximizing the utilization of the machines.

Making defective products is pure waste. The goal is to prevent the occurrence of defects instead of finding and repairing defects.

Lean’s impact on MRO suppliers
When a company embraces lean manufacturing concepts, suppliers can’t expect to stay under the radar indefinitely. If a key customer goes lean, you’ll have to go lean, too, or risk losing that business.

Doug Ruggles learned that reality in the early ’90s when Martin Plant Services, the integrated supply arm of Martin Supply Co. in Sheffield, Ala., worked with Boeing to supply MRO products to its Delta launch vehicle factory in Decatur, Ala. The facility produces the Delta II and Delta IV launch vehicles for launching satellites into space.

Before implementing any new process or idea, it first had to pass what Boeing called “the lean test,” Ruggles says.

“They did not want their employees working in a cell to have to leave their cell or to punch any button or scan anything. They wanted them to be able to take the material off the shelf and get back to work,” says Ruggles. This idea is central to lean.

To comply with Boeing’s demands, Martin built a temperature and humidity-controlled room to make sure sensitive components stayed within a required temperature and humidity range. Martin’s IT department also wrote programming to include an expiration date on the bar codes of some items that required them. The steps were necessary to make sure when operators pull parts, they’re ready to go and the operator won’t waste time checking them.

Ruggles sees lean concepts taking hold in a growing number of manufacturing facilities. Martin’s experience at Boeing can give his company an edge when talking to prospects.

“If you hear that someone at a company is a Black Belt (a Six Sigma project manager), it’s an opportunity. It means this company is changing. If there’s change going on, you may have an opportunity to change their supplier,” he says.

Just-in-time inventory
One of the most obvious ways industrial distributors can help manufacturers get lean is by devising a just-in-time inventory system to eliminate waste in the MRO procurement process. Steve Pixley, president of AutoCrib Inc., which produces automated inventory control systems for manufacturing companies, says point-of-use dispensing systems can dramatically reduce waste.

At many plants that utilize a centralized tool crib or storage area, it’s common for employees to hoard supplies in their tool box or work station. They don’t want to walk back and forth to the tool crib, and also may not trust the inventory control system to have the products they need when they need them. Pixley says automated point-of-use systems, which might include handheld scanners, automated lockers and cabinets, vending machines and robotic carousel systems, are designed to get material to users in the most efficient manner possible.

“We’ve developed a lean system where, in many cases, we’re able to cut purchasing completely out of the process,” Pixley says. “By putting a vending system in place, the customer sees an immediate reduction in hoarding.”

The system automatically reorders the product when it drops below a pre-set order condition by issuing an e-mail or EDI order. As an operator removes the product from the dispensing system, it automatically triggers the supplier to replenish the order.

Pixley offers one word of caution to distributors before they start talking to customers about lean manufacturing concepts. Selling the benefits of lean is different from traditional product feature/benefit selling, he says. Distributors need to migrate to a conceptual selling process he calls SPIN selling, which stands for situation, problem, implication and need payoff.

The approach starts by asking a series of questions to learn the current situation, identify bottlenecks or problem areas, assign a cost to the wasted product or wasted motion, and determine how the company will benefit from a new system.

“Through that process, we build a cost justification for a lean tool distribution system. So, when we go to management, we’re not giving them industry averages, we’re giving them numbers from their shop,” Pixley says.

Teaching lean to distributors
After De-Sta-Co Industries instituted lean manufacturing at its facility in Madison Heights, Mich., executives with the company immediately recognized how lean could also benefit De-Sta-Co customers. So, the maker of clamps, gripping, transfer and robotic tooling solutions for workplace automation developed a program to teach distributor salespeople about lean manufacturing.

“When you walk through a manufacturing facility, there are lean opportunities everywhere you look,” says director of sales Dan Peretz. “It just requires having the knowledge and experience that allows you to see it.”

De-Sta-Co’s Lean Vision seminar is a 2 1/2-day training session involving classroom instruction, hands-on exercises and real-world projects in a manufacturing plant. The seminar provides an overview of lean concepts and classroom exercises. On the second day, participants break into teams of four or five and visit a manufacturing location to look for opportunities to apply what they learned. They’re specifically on the lookout for wasted effort, wasted movement or motion.

“We stress gathering data such as quantities, time and distance and to seek input from machine operators,” explains seminar presenter Doug Ruffley.

Participants then brainstorm ways to improve the processes and return to the plant on the third day to give a formal presentation to plant managers outlining their proposals.

“Our motivation behind this is to help our channel partners become more value-added. We want to help them present themselves as someone who can bring something to the party, not just be an order taker,” Ruffley says.

Fluid power distributor Wainbee Ltd. of Mississauga, Ontario, sent 20 salespeople to a De-Sta-Co seminar last fall. Sales manager Campbell Tourgis says the experience helped his salespeople gain a better understanding of lean manufacturing.

“We’re now able to talk at a higher level to customers and talk not about what kind of fluid power products they’re buying today, but what kind of processes they follow and what kind of pain they’re experiencing,” says Tourgis. “It’s given our sales reps a better understanding of the importance of calling on plant managers and general managers.”

Since attending the seminar, Wainbee completed a number of projects that helped customers improve their processes. For example, Wainbee eliminated a production bottleneck in an injection molding operation. The company had two injection molding machines operating side by side, feeding products to two operators at a single conveyor system. One operator pulled the parts off the conveyor and the other packaged the product. Between the two operators, in any given minute there was 30 seconds of idle time. The company considered eliminating one of the operators.

Wainbee analyzed the process and learned the shipping department had the capacity and need to ship more finished product to customers. Wainbee recommended installing a second conveyor system so each operator could pull and package parts. The change helped the company improve throughput by about 10 packages per minute.

“So, they kept the same number of operators, spent about $10,000 in a conveyor upgrade, and produced an extra 10 boxes into their shipping department. It was a true automation wonder story because no one’s job was eliminated and they invested in automation and were rewarded for it,” Tourgis says.

Faster setups reduces idle time
Component Supply of Ontario, N.Y., applies lean concepts when it talks to customers about changeover reduction. Changeover refers to the amount of setup time required to go from full production on one manufactured product to full production on another product on the same machine or line. Reducing changeovers enables companies to do shorter parts runs that were previously too costly because of long changeover times.

“Lean can be applied to anything but, in my opinion, changeover reduction is key, because that’s basically wasted time when you’re not generating any saleable product,” says sales manager John Quinlan.

Quinlan’s company, Component Supply, partners with Jerry Claunch of Claunch & Associates in Palm Beach Garden, Fla., experts in lean manufacturing and cycle time reduction. Using Claunch’s FasTrack system, an eight-step method to study a company’s current changeover process and recommend changes, Component Supply guarantees to reduce a customer’s changeover time by at least 50 percent.

“At one company, we took their changeover time from about 50 minutes to under two minutes,” Quinlan says.

The process starts when Component Supply videotapes a company’s changeover process, documents every step and recommends improvements. The next step is to review its recommendations with management and employees, including the cost to implement. The third and final step is to implement the new process, quantify the improvement, and develop a Changeover Manual and a Baseline Settings Manual for operators to follow in the future.

“Our goal is to have all changeovers completed by operators, not by mechanics. We want to create simple documents so a new employee can come in off the street and run the machine,” Quinlan says.

The approach gives Component Supply a reason to approach employees at a higher level within the customer’s organization.

Although lean manufacturing might be new to some industrial distributors, the concepts are familiar. When Martin Supply first approached customers about integrated supply in the early 1990s, it would learn how a company procured its MRO supplies and flow-chart the process, then design a system to drastically reduce steps in the procedure.

“In essence, what we were doing was designing a lean business and showing them how it would save them money. We didn’t call it lean; we just called it smart,” Ruggles says.

This article was prepared exclusively for ValueAddedPartners.org, Copyright 2005.

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