Oct 29, 2007

Hello from the Chicago AME conference

This is AME’s big week in Chicago – the AME conference is the best lean conference there is, as far as I’m concerned.

Today I went on a bus trip and tour to TC Industries in Crystal Lake, IL. TCI is a family-owned firm that started out in the business of art pottery and terra cotta building ornament – thus the TC in the company name. During World War II, the company got involved in heat treating steel, with their core knowledge of how to fire pottery at 2000 degrees for hours on end. After the war, the company decided that they were more about thermal processing than pottery, and that the heat treating and metal processing businesses offered a lot more growth than terra cotta.

Besides commercial heat treating of very large flat and round bar materials, TCI makes cutting edges. Not the teeny, tiny tool inserts that machining companies use, but the giant blade edges that earthmoving, mining and construction equipment uses. As a supplier to companies like Caterpillar and John Deere, TCI found its customers were less and less forgiving of long lead times and late orders than they might have been in past decades. Having decided to focus all its marketing and sales on the heavy equipment OEMs, TCI had to respond to customer pull. And since key customers offered to help TCI become the kind of supplier they needed, change began to happen.

The first and hardest thing, as we learned today, was to see that the company was in a crisis and to get people to believe it. After all, we’d all rather think things are OK, or just about to get better, than that we really need to take serious action. But in 2004, some dedicated leaders at the company turned up the heat and started to learn about lean and continuous improvement. (Actually, they had started with Six Sigma and ISO 9000 the year before.)

Today was the first time TCI had hosted a tour like this one, and it was thorough. We started with an orientation and met some of the key lean leaders, including a member of the family that owns the company. The speakers shared what they did – and wished they had done – with absolute candor. In a post as short as this is going to be, I don’t want to single anyone out by name because there were just too many impressive people there.

Remember, they work with big pieces of material, big parts, and big machines, and because of the scale that steel mills operate at, they had no choice but to keep some big inventories of certain materials. They weren’t going to be able to make simple or quick layout changes. Yet they used “shock and awe” and moved six machines in a week in one memorable kaizen.

TCI has done quite a bit of work on 5S (or however many S’s you like to use) and were starting up a pretty robust idea system. Most of the workforce is Spanish-speaking, probably not unusual these days, and TCI has made a consistent practice of using bilingual labeling, standard work instructions, and other communication methods. Interestingly, TCI started working on lean accounting (and accounting for lean) right about when it started the rest of the journey. In my experience, that’s pretty unusual and I think they will see some significant benefits down the road as they don’t get roadblocked by standard cost and trying to explain what happened to P&L as they started looking at inventory as an expense rather than an asset.

I expect to be writing more about TCI in the future, so will make no attempt to tell anything like a full story. It was a great start to the week, and I want to thank TCI for hosting our group. (If you’re here at the conference, there will be another group going to TCI later this week, so check out the opportunity at the registration area.)

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