After more than a decade in its lean journey, where the emphasis was on operations, the company has taken its lean expertise to sales and marketing, to sourcing and to in-sourcing.
Many companies have taken their lean methods beyond the factory floor to the front end of the business. The problem-solving practices work just as well in administration as they do in factory management. That’s a given.
Indeed, value steam maps are incomplete if they don’t reach beyond the factory floor to the offices. There is just as much waste to eliminate in the offices and defects to correct there are in the plants.
Lean disciplines can work to improve any process, so why not all areas of the company?
Bob Bradford, senior vice president of global operations at Ariens, a manufacturer of snow blowers and mowers based in Brillion, Wisconsin, reported recently to a group from the Association for Manufacturing Excellence (AME) that his experiment with applying the principles of lean to sourcing was going well.
The company dropped its material costs from 54% of total costs in 2009 to 48% in 2010, helping the company’s bottom line greatly. He looks for a 10% year over year improvement in such metrics.
Each of the top suppliers has been addressed in what’s called an A3 document, which essentially lays out the scope of the improvement initiative. Derived from that were 14 actions plans for better prices, quality and delivery.
The biggest gains came from the biggest spend: engines. One round of gains came from standardizing the engine categories to cut down on the number of models being purchased.
You get the idea: pragmatic solutions to wasteful past practices. “The guts of it is problem solving,” said Bedford.
The lean applications carried over to in-sourcing. Don Becker, operations director, a veteran of more than 100 kaizen (improvement) events, explained that many internal ideas were captured to use existing, simple machinery to move from buying parts to making them in-house at Ariens.
An example was picking up inexpensive machinery at a liquidation sale so Ariens could produce its own pulley wheels. It’s a complicated process, but Ariens people pulled it off within several months of receiving the equipment.
That move alone saved the company $900,000 per year.
It also helps the company live up to its promise of not laying off workers because of productivity improvements through lean exercises. A position eliminated through lean can be redeployed to an in-sourcing cell.
It was appropriate that the AME meeting was being help in Appleton, Wisconsin, because the Theda Care Health System down the street from the hotel is the citadel for introducing lean methods to health care. Millions of dollars in waste have been saved at its hospitals and clinics; hundreds of thousands of errors and process defects have been put to bed; and infections have been eliminated in its operating rooms.
Ariens people mentored Theda Care at the beginning of its lean journey a decade ago. It’s win-win because Theda Care is a vendor to Ariens for health care, and any improvements will therefore help both organizations.
Maybe Ariens should go the next step and develop an A3 for Theda Care.