Kick Butt Marketing

Kaizen isn’t a Hollywood Baby name…Yet!

Many moons ago at Big Blue, I attended Manufacturing School in Atlanta. This in-house program was designed to get the field up-to-speed on what our clients were dealing with day-to-day and to identify areas where our technology and services could help. We studied best practices like JIT (just-in-time), TQM (Total Quality Management), ISO (International Organization for Standardization) and Kaizen (continuous improvement).  Since then I’ve been hooked on manufacturing. Fast forward to The Principals of LEAN Manufacturing program I recently attended, delivered by a couple of rock stars at NHMEP (New Hampshire Manufacturing Partnership). We manufactured our own desk clocks to experience LEAN. Now I’m a LEAN evangelist. By the way, you can LEAN anything (including your office or your garage).

The whole point of LEAN is to eliminate waste and increase efficiency using five principles:  identify value, map the value stream, create flow, establish pull, and seek perfection in a continuous loop. LEAN cuts to the bone by producing value for the end customer. LEAN demands continuous improvement and uses only what is being demanded (Just-in-Time) by the customer (kanban). No more racks and rows of inventory sitting for months waiting to be transformed into something. Raw material can sit on your books and drive the very astute guy in the corner office with the abacus crazy. They want raw materials off the books and into COGS (Cost Of Good Sold) so that it’s realized by the top line as revenue rather than impacting the bottom line as expense. The finance people totally get this, so do the operations gurus.

So why doesn’t everybody go LEAN? When you consider that the benefits of LEAN are decreased cycle time, reduced inventory, increased productivity, and increased capital equipment utilization, it seems like a no brainer. The hesitation to go LEAN has everything to do with human capital. Like rolling out any company wide program, it’s getting your leadership to drink the Kool-Aid and give you carte blanche to get everyone trained to become a LEAN culture. One of the best kept secrets in New Hampshire is the grant available through Governor Lynch’s Job Training Fund to pick up part of the tab for qualified prospects.

By now you’re probably wondering if LEAN has an economic impact. U.S. manufacturers compete head-to-head with their international counterparts and it’s bloody. In some parts of the world, the cost to manufacture is cheap; there are no labor unions, and fewer standards to deal with like OSHA. This isn’t necessarily an upside when you consider that you need a certain volume to justify creating the infrastructure offshore or finding the right venture partner. Additionally, if you’re creating a product like medical devices, as is the case with Salient Surgical Technologies, it is imperative to be FDA compliant, which must be closely monitored under your watchful eye. VAT, the cost of shipping, and other tariffs can also be cost prohibitive depending on what you’re producing. These are all reasons to keep things onshore and preferably, here in New Hampshire.

According to the NHMEP, the New Hampshire economic impact of LEAN over the past five years is: 305 new jobs, 593 retained jobs that didn’t go offshore or get eliminated, $ 194.9 million increase in sales, $ 75.2 million spent on new investment, and the BHAG …$ 29.1 million in cost savings. Manufacturing alone contributed $ 489 million to the state’s economy. Everything LEAN in New Hampshire seems to have been inspired by NHMEP. They are truly doing the heavy lifting by offering training, consulting, and guidance. Their education programs are transforming operation types into LEAN gurus.

Moreover, programs offered through NETAAC (New England Trade Adjustment Center) are designed to help revive small New England manufacturers that have been impacted by international competitors. The idea is that unless companies adopt programs like LEAN to become more competitive, they are going to risk losing more market share as global sourcing becomes the de facto standard for supply chain managers.

In Dover, RF Hunter, maker of oil filtration systems used in commercial kitchens, has adopted LEAN through a circuitous path. CEO Richard Santoro’s son Gary is a U.S. Air Force reserve Major. He was stationed at Warner Robbins AFB at the logistics depot for the C-5 Galaxy aircraft where Major Gen. Polly Peyer is deploying LEAN for everything from occupational medicine to civil engineering, and the 330th Aircraft Sustainment Wing. Major Gary Santoro came back to New Hampshire so fired up about LEAN that he leaned out RF Hunter’s manufacturing facility. LEAN has enabled them to reduce their inventory costs by over $ 60,000 per annum and significantly decreased their time-to-market. They have gone from using all of their shop floor, to reducing their footprint to a small section for only the essentials delivering value and meeting immediate customer demand. Workstations have been mounted on wheels, now mobile for full-tilt production and then returned to their assigned place, inside yellow lines taped on the floor. Everything is neat, tidy, clean and efficient.

Salient Surgical Technologies in Portsmouth has a wonderful champion in David LeGault, Director of Operations. Dave came to Salient already trained in LEAN where his former employer wanted to build a new warehouse facility because they were, “running out of room”.  Applying LEAN principals, like kanban and JIT, where you always have what you need in the warehouse and shop floor to match your customer demand, they were able to reduce their current warehouse footprint and saved the company millions of dollars.  By dramatically increasing their supply chain and manufacturing efficiencies, they avoided building a costly high-bay automated warehouse facility; you do the math!   Salient was wise to hire someone with a successful LEAN track record.  When Salient started manufacturing at the Portsmouth facility, Dave’s goal from the beginning was cost avoidance by, “kanbanning components rather than batching or kitting parts to build products.” And Salient has created new manufacturing jobs by growing from 5 to 18 assemblers and increasing production output from 18,000 to 95,000 units in one year.  To support this growth, Salient has hired additional support staff such as Quality Technicians, Manufacturing Engineers and Supply Chain personnel. Like flint, LEAN sparks growth into flame.

After building their beautiful new LEAN compliant facility at Pease Tradeport, Salient is now manufacturing finished goods in-house. The program has been wildly successful since about half of the employees have been trained in LEAN principals, fully support it, and are now looking at ways to lean other departments to eliminate non-value added work while improving efficiency. In fact, Salient has even hosted LEAN training for their business partners to improve their efficiencies and speed their supply chain time to market. Dave envisions the day when Salient extends the kanban concept to their hospital customers so that Salient products are on their shelves when and where they need them, ideally for the exact number of scheduled surgeries. This would make things seamless and much easier for the customer. Sounds a bit like AIXM (Aeronautical Information Exchange Model) in theory.

Zenagui Brahim, Director of Operations for NHMEP believes there is a bright future in Next Generation Manufacturing.  The NHMEP, the EPA and NH Division of Economic Development  have joined forces in a Lean/Green Energy Program. The notion is that when energy is saved, the carbon footprint is reduced, energy credits are gained, and the environment stays greener. For example, in addition to the seven wastes, relevant LEAN metrics have been added: energy use and environmental impact. As you can imagine, by layering these two metrics on top of the seven wastes impacted by LEAN, you can really squeeze cost and inefficiently out of the equation. High Liner Foods and BAE Systems were the in the pilot program.  For High Liner Foods, they identified more than $200,000 in energy savings, $90,000 for the first year and have already begun to realize the payback on their investment. 

“For years, MEPs have been showing manufacturers how to streamline and improve operational efficiency with lean training. It makes sense to now include energy and environmental efficiencies as part of our lean transformation program,” said Mr. Brahim.

The final pilot program was at BAE Systems, another LEAN early adopter. They stated in a press release earlier this year that they have saved at least $40,000 in Merrimack and project more than “$2 million in energy and process improvement savings exist within BAE’s footprint.”  Green is part of BAE’s DNA or LMS (LEAN Maturity System) their branded deployment process.  In fact, they have their own spin on the traditional 5S focus of Lean (Sort, Straighten, Sweep, Standardize, Sustain) to a 7S system that includes Security, Safety and green savings. They have proven that LEAN yields measurable savings, is good stewardship, and environmentally responsible.

In looking at other ways to deploy LEAN, I look no further than my garage to realize its application in everyday life. Now if I can just find the time to LEAN our garage - that would be sweet!

PS:   Join me on September 28^th   for the Governor’s Advanced Manufacturing and High Technology Summit at the Radisson Hotel in Manchester, sponsored by BIA, NHMEP, NHTTC, and DRED. Or contact NHMEP at:    603-226-3200 

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