Nov 23, 2009

Lean team competes with Asia--and wins

Mity-Lite makes chairs and tables for auditoriums, conference venues, and other gathering places. Its newest product, the Mesh One chair, is expected to be a game-changer. 20% lighter than most other chairs, it can support a 1,000-lb. load. It’s thinner and takes less storage space. Its durable, breathable rip-stop nylon mesh seat and back conform to the shape of the sitter. For even more comfort, it’s 1.5 inches wider than most other chairs in its market.

As manufacturing planning for the Mesh One chair progressed, however, it looked like it would have to be built offshore to meet cost targets. That’s when a continuous improvement team came forward and asked to bid on the job. Or that’s what the Salt Lake City Tribune said.

To find out if that was true, I spoke with CEO Randy Hales a few days ago about what really happened. He said, “I had faith that the team could get there eventually, but our continuous improvement plan was new and the teams only had about four months of experience with it. I just thought that it was early for them. But they came and said, ‘We want to bid on this project competitively, just like the factories in Asia.’ They submitted their bid and won the business.”

Hales said, “They had done their homework well--facts and figures. They knew what we would have to spend in order to upgrade facilities. They had a plan as to how they would get there. They felt confident but there was no guarantee, where our Asian teams were saying, ‘No problem, we’re there, turn it on tomorrow.’”

Hales said, “We’ve asked this group to go through a continuous improvement process. We’ve challenged them to make significant differences, and now they’re coming to us saying, ‘We can do this.’ It wouldn’t support what we’d asked them to do if we didn’t give them a shot. They had convinced us that they could, on paper. But there was a fair amount of risk. There’s a big gap between making it look good on paper, and practically applying those principles and being able to do it.”

Hales continued, “They’ve done a fantastic job. They were so motivated to make sure they did everything that they set out to accomplish to prove that it could be done. I knew that there was some risk, but it was minimized by their level of interest.”

Not only did the team have the passion and the desire, they were also able to speak the language of finance. The decision makers would consider the complete cost of manufacturing and procuring the product, its total landed cost. Hales said “A big component of the decision was lead time, cycle time, carrying cost of inventory, communication hassles. While you can’t put a dollar figure on the communication challenges, it certainly plays into the whole perspective when you are evaluating things like that.”

The lean team considered all those criteria. Hales said they were very well prepared to make their case. Coupled with his desire to support them in what they had been asked to do, the team’s thorough homework won them the job.

Production of the chair is still in the early stages. Hales said, “Outside suppliers have some capacity constraints on some of the components, but our team is right on target with everything they said they would do. We’re still a couple dollars high on our labor content, but that’s a function of volume, and we believe that we’ll get all of our targets in November.”

So how did Mity-Lite’s leadership and front-line employees get on the same page so effectively?

Before taking the helm at Mity-Lite, Hales had seen the results of lean initiatives in manufacturing facilities around the world. Nevertheless, his view was from an arm’s length perspective, leaving the improvement process to others. He describes one reason for that distance as “Not feeling like I could contribute, I was standing back and watching and saying ‘Hey, you guys go do it.’”

Hales began to think differently as he talked to others who had undertaken similar transformations. Then what he heard when he arrived at Mity-Lite gave him his “aha” moment. Employees had already gone through two failed attempts at lean. They described senior management saying, “Go do that and let us know how it goes.” Employees told Hales they didn’t feel like they had the commitment of senior management. Management didn’t understand why changes had take place in the facility, sometimes with some capital required.

This brought home to Hales that it’s very difficult to go through a transformation if senior management isn’t committed and doesn’t understand what’s going on. He saw that management needs to help set the metrics, work on the plan, and watch what happens. He says, “I wanted to be very involved, hands-on, with the sleeves rolled up, and to be part of the planning process and execution.”

Even with his involvement, Hales saw the need for day-to-day operational leadership. He believed that the problem with earlier attempts at lean was that it was more a textbook understanding of lean, not a practical application. He visited facilities that Don Blohm had taken through a lean transformation. As he understood what Blohm could do, he said, he knew he was the right man for the job. Blohm came on board and, with Hales, began to guide the company’s continuous improvement journey.

Lean practices are quickly spreading throughout the company. Hales said, “It started out as an isolated group on a small project or two. But it spread so quickly through our facilities that we found people saying, ‘Hey, we want to do this. We want to be a part of it.’ We’re hearing great things, we’re seeing big changes. It has moved through our entire facility. And were hitting on all fronts. There isn’t an aspect of our domestic manufacturing any longer that isn’t in the middle of a continuous improvement.”

Hales said the people in the office and administrative areas are starting to hear the rumblings. “That’s going to be a focus of ours in 2010,” he said. “We started with our G&A team, and it’s been fun to watch. They are now completely paperless. So we’ve started to take some steps, but a true continuous improvement emphasis in the front office will take place early next year. “


Create your own economic recovery

Hales sees continuous improvement as a way out of the current business doldrums. He said, “Any under-optimized company--and in my mind that is any company that that hasn’t gone through a continuous improvement program--has the responsibility to create their own recovery. Rather than waiting on a macroeconomic recovery, we should be creating our own recovery, regardless of what’s going on in the economy right now.

“We have doubled our EBITDA in the last twelve months. Every bit of that is due to the continuous improvement and lean transformation and becoming more efficient. You can do that if you really embrace what continuous improvement means, and you get it implemented accurately. All companies are disadvantaged if they are not focused on this kind of transformational change right now.”

1 comment:

Harry Moser said...

Karen, great story! The combination of looking at total cost and using continuous improvement can bring back maybe half of what we have lost, even at the current currency and wage rates.
The Reshoring Initiative provides tools to help companies understand total cost. Readers can help bring work back now by applying the tools of the Initiative which drives the return of work by showing companies that they have offshored more than is even in their own short term interest. A 2009 Archstone Consulting survey found that 60% of manufacturers use only rudimentary methods to calculate offshored product costs and miss at least 20% of the total cost, which disappears into overhead, inventory, opportunity costs, etc.

To help companies make better sourcing decisions the Reshoring Initiative, www.reshorenow.org, provides:
- a free Total Cost of Ownership (TCO) software that helps them calculate the real offshoring impact on their P&L,
- publicity to drive the reshoring trend,
- an online Library of 99 articles about successful reshorings, and
- linked NTMA/PMA Purchasing Fairs to help them find competitive U.S. sources.
An integrated 5-step program has been launched in Illinois to demonstrate the Initiative’s effectiveness. We anticipate improving companies’ profitability while bringing “permanent” manufacturing jobs back at a cost of $1,000 each, less than 1% of the cost of 1 year Stimulus program jobs.

Readers can help bring back jobs by asking their companies to reevaluate offshoring decisions. Suppliers can use the TCO software to convince their customers to reshore. You can reach me at harry.moser@comcast.net.

Copyright @ 2005-2014 by Karen Wilhelm