A Lean Manufacturing Case Study/Article

Introduction
During the past several years, Lean Manufacturing has received a great deal of
attention in its application to manufacturing companies. The results can be dramatic.
The savings achieved in WIP reduction, MCT reduction and other manufacturing related
metrics have been unprecedented and far outweigh those achieved by traditional
improvement methods. The Lean Manufacturing methodology is a life-changing way of
doing business that creates significant sustainable results. These new ways of thinking
have typically been so different they prevented the firm from fully implementing Lean in
the organization.
Gone are the days of building the perfect balance between all of the various points in
your manufacturing operation and building product in huge batches. Gone are the days
of not noticing product problems until there is a huge amount already built. Gone are
the days of low yield. Product quality as measured was good, but the process has led
to the build up of analysis mills for the sake of output. Lean Manufacturing implemented
as described in this article will dramatically improve all of these areas and leave your
workers as happier and more productive people. It enhances managements
understanding and control of operations, and improves the decision making process.
This summary describes the partnership that formed between the Client and the
Consultant. Together, they developed Lean Manufacturing methodologies that have in
one area reduced WIP by over $400,000,000 over a six-month period in 2001. Use of
these methodologies caused a $20,000,000 drop in WIP in one product area in 2000.
The background history of its development and a brief overview of the process are
contained in this article. Although, the actual creation and implementation of this
process took approximately one year, once developed it was fully implemented with
over 1,000 Associates and in another part of the facility in only six months. Each
subsequent implementation was on a larger scale. This dramatic change in
manufacturing methodology is helping Client meet the difficult challenges faced by hitech.
Introduction to Client
The Consultant worked with the Client in one facility from 1997 to 1998 using traditional
methods of shop floor controls in its improvement efforts and achieved significant
results from the project. In 1999, the Consultant was invited to study an area at another
facility. Based on this assessment and an agreed upon mutual approach the following
areas were concentrated upon to form the basis for a project:

Shop Floor Control

Accelerated Ramp Up Mode

Getting them Ahead of the Power Curve

Improving utilization and efficiency

Development of the Lean Approach

As the year progressed, the area agreed to a feasibility study.
In February of 1999, the Client held an off-site management meeting to determine the
future challenges and opportunities. WIP Reduction and MCT (Manufacturing Cycle
Time) were two key areas.
These goals also tied into an internal reports recommendations completed in 1997.
This report said that a cellular method should be the future methodology for the facility.
The old ways were firmly entrenched though making it extremely difficult for the facility
to implement this method using only their own personnel. This led the facility to address
these concerns and to seek outside specialists in implementation and training to assist
with developing an improved manufacturing process.
Initial efforts received the typical been there done that yawn from the Client personnel.
At the first two progress review meetings, management was displeased with the Client
Consultant coordination. They pushed for a closer working relationship and more of a
team approach.
During the next six weeks, the Client and the Consultant focused on a team approach
with key staff in one focused area. The name given to the group was a Tiger Team.
Ultimately, this area was the first to develop the direction that the entire plant would
subsequently adapt. These key Client members would later win a coveted award for
their accomplishments on this team. They focused on an improved method to get the
product through the process and out the door to the customer. They modeled a
synchronous flow operation that indicated that a WIP reduction of approximately
$3,500,000 (WIP currently measured $5,000,000) was achievable. The catalyst to this
improved method was this large reduction in WIP. This opportunity galvanized the team
into ACTION!
The Team modeled various approaches. Implementation of the model was delayed to
coincide with the end of the quarter. There was an intense pressure at the time to get
the product out using the current batch methods. The changes were made to the area
on a weekend so that on Monday it was ready for production. Key Associates and
personnel from the Facilities Group came in on the weekend to help setup the area and
assist in the move. Key Associates came in to assist in ergonomic issues. The
modeled approach used a combination of Lean, Kaisen, Kan Ban and Cellular
Manufacturing designs and techniques. Cornerstones of the approach were the
combined elements of Deming (Quality) and Goldratt (Theory of Constraints and The
Goal). Implementation of this new method coincided with the start of the new quarter.

The First Cells and Results

POU

Child Board
Assembly

Functional Test

Functional Test

POU

POU

Heat Chambers

POU

POU

B
B

POU

Note:
Assume 6.5 h/shift

Receiver
Assembly

Child Board
Assembly

I
B

B
B

POU

Receiver
Assembly

Functional Test

Child Board
Assembly

Functional Test

M aterial Cage

Child Board
Assembly

Receiver
Assembly

Receiver
Assembly

POU

52 Transmitters &
52 Receivers
per shift

The first cells constructed were modeled using the movement of product from station to
station in buffer sizes to prove that the concept worked and to identify potential glitches.
A W shaped cell was formed to feed output before going to the test areas. Half of the
area was converted to this cell design. Throughput of the cell was managed by using
buffers between each station. The pacing of the cell output was designed to always
meet the bottleneck capacity. The Team monitored the cells using 24-hour coverage
during the first week.

POU

Point of Use with child boards

POU

Point of Use, common material

Results were phenomenal!

Within weeks the area could produce 500 units easily in a five-day workweek where
before the area when pushed hard and working a seven-day workweek might be able to
complete 300 units. This was a very important development and it was far better than
the 150 units possible prior to any efforts to improve performance:

Maximum potential production before Lean: 300 units in 7 days

New production easily attained with Lean: 500 units in 5 days

The areas manager, working with the group, laid down a mandate to assure
sustainability of the results. Controls were prototyped to develop a visual workplace
looking at output and quality. Great success was achieved:

366% Total Improvement in Throughput

71% Reduction in Inventory
68% Total Reduction in MCT

In December 1999, Senior Management initiated a move that pending reorganization,

the Consultant would come back in to continue assisting with the implementation. In
February 2000, the Consultant returned. Client and Consultant, working with the
Supervisors, expanded the Tiger Team efforts to other products. Lean Manufacturing
and the Visual Factory method were expanded throughout the group. Unique to this
six-month phase was ramp up of a new line. However, clouds were on the horizon in
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2000 and the predictions for a ramp up failed to materialize. Lean however enabled
cuts in resources and still make production targets. End August of 2000, the project
ended successfully with over $20,000,000 savings for just that phase.
Storms appeared for the telecommunications business including WIP/Inventory
problems and costs. These haunted Client as projected growth rates failed to
materialize. Changes also occurred in management at this facility. A Ford Motor
Company Manager, with an extensive Lean Manufacturing background came onboard
in OLS. He would prove invaluable in supporting key managers in the engineering and
manufacturing sides of the plant. A management team looked at a Client Consultant
effort to maximize the benefits achieved to combat workflow and inventory/WIP
problems. The Consultant was invited to the facility for an analysis and strategy
session, which resulted in a combined effort to take the Lean Manufacturing
methodology to product lines in another factory at the location.
2001 Lean Manufacturing Project
By this time Client and Consultant had the Team Concepts agreed upon. A rapid
deployment of 8 Teams with approximately 90 + Team Members was developed to
format cells and define/implement buffer strategies and WIP control throughout these
product lines. This project resulted in 40 cells being implemented in six months with the
average of 2 cells per week being put into place and launched. To galvanize the teams
and drive to meet this schedule, these eight teams met weekly with the commitment to
meeting the target dates. A logistics team worked to assume incoming material
planning and processes and meshed with lean manufacturing. A key understanding
throughout this effort was that:

Lean is a Journey, Not a Destination

Results were the key to success
Process had to be Sustained
Creating an environment of Continuous Improvement
Repeatable Process that is Sustainable and Standardized

The OLS group formed W3 (World-Class Waste Watchers) Teams. Core members
mentoring the process were the Consultants. Teams trained by the Client-Consultant
core group are continuing to identify new opportunities, improvements and savings to
their organization. The W3 Teams have matured into a Process
Engineer/Supervisor/Manager group that meets once per week on alternate 3 rd, 1st and
2nd shifts. The accomplishments made in this time of uncertainty, declining orders,
layoffs, early retirements, factory sell-offs and reorganization of Executive Management
is extraordinary. Although Client continues to struggle its way through the high tech
telecommunications slump, it has seasoned managers who have seen the need to
establish a climate of change focusing in on improvements and key metrics.

Additional new areas of focus include Supply Chain issues and Contract Manufacturing.
Key Executives in Key Roles are continuing to focus on all of these improvement areas.
Senior Management is emphasizing these efforts and formalizing the benefits of using
lean metrics such as MCT and WIP control Client-wide. His direction and leadership
has added impetus to the key metrics, the buffer strategy, 5S and the drive to
sustainability.
The Lean Manufacturing Process An Overview
The primary tool for defining and analyzing the production area in order to determine the
bottleneck and setup of a cell is called a FACT Sheet. Pictured below it outlines the
following items:

Process Description (each step in the process)

# of Associates involved in the step
Buffer Size
Engineering Standard (time it takes to complete the step)
Estimated Yield (Particularly important for mechanical or testing areas where the
output may be less than 100%)
Yield or Output area? (Y for Yield Station or Output for final station in the cell)
Additional Remarks Area

PROCESS & FACT SHEET

Cell
Area/
Name:

Area A

Cell No.:

Date:

u/m:
Proc
No.

per/hour

Process Description

Current #
of
Assoc's

Buffer
Size

R/E

Engr Std

Products

Total
Assoc's

WIP
Target

Shift
R/E

Target
R/E

Estimated

Yield

Is it:
Yld or
Output
Point

Remarks

2
3

4
5
6

8
9

"Future"
Goal R/E

Using this document, the team is able to design the cell, determine the cells output or
Reasonable Expectancy (RE) and buffer sizes between each process step. The shift
RE is not meant to be an indicator that is impossible to attain but a reasonable amount
that can be expected to be achieved by the team of Associates in the cell if adequate
parts, tooling, equipment and personnel are in place. The bottleneck operation sets the
drum beat of the cell enabling management to have a better ability to know exactly
how much product can be promised to customers. All personnel operating in this
environment should have a working knowledge of this FACT Sheet so that they are
familiar with the buffer size for each of their positions and the RE of their particular cell.

When the cells are constructed and ready for operation there are several visual displays
used in the operation of the cell. These borrow heavily upon the ideals of Deming who
believed that attributes that are charted by the Associates on visual displays are more
apt to be focused upon and improved upon. The visual displays are listed below:

Quality and Attribute Log

Cell Lost Time Log
Cell Output Tally Sheet
Yield and Output Quality Tally Sheet
Buffer Signs with Minimum and Maximum Sizes
Green Test Set Up and Red Test Set Down Signs
Station Signs
Communication Board (Dry Erase)

The Communication Board is the focal point of all communications in the cell. It is
where the cell debriefings between the off going and the on-coming shifts are held to
communicate the output, yield and issues of the shift. It is shown below:

Each of these items plays a critical role in the operation of a cell. The logbooks help the
Associates to maintain the large Tally/Communications Board, which is located at the
entrance to each cell. They capture important quality and lost time issues for action by
lead personnel. The Tally/Communication Board is a visual monitor of whether the cell
is producing at the expected rate or whether there are issues that need to be acted
upon by management. It is now easy for a manager to see whether they should take
action and where action should be taken. Associates are greatly involved by taking
charge of the amount of WIP in their area. They are now controlling the WIP in the cell
by maintaining the buffer strategies indicated on their buffer signs.
A Team effort is achieved that dramatically reduces WIP/Inventory levels and enables
managers and marketing personnel alike make promises to customers that they know
will be kept on time and in full.
Implementation Notes and Recap of Primary Thoughts

There are several important points to keep in mind when implementing a lean
methodology and creating cells. These are listed here, in no particular order of
importance and not meant to be all-inclusive, and can be discussed in greater detail by
contacting The Consultant:

Use Cross-functional Teams to develop the FACT Sheet(s)

Ensure the FACT Sheet(s) are completed using factual data and not guessed or
estimated standards
Ensure that plenty of room is laid out for the cells (i.e. do not make the cells
cramped and crowded)
Explain the visual controls to all personnel and have plenty of around the clock
support for the first several weeks of implementation/launch
Lay out aisle-ways first prior to constructing cells thereby leading to neatly laid out
cells and straight aisles.
Collect, tabulate and display the achievements of the cells
Many less than ideal cell designs can be overcome by simply MAINTAINING THE
BUFFER STRATEGIES
Dont let a supposed emergency make you break the buffer strategies
What starts in the cell must move all the way through the cell No moving units in
front of other units to change the priorities

Summary
This process was developed through the hard work, drive and determination of many
people at Client and in collaboration with the consultants. It is the culmination of several
years of effort and has shown the outstanding results possible by implementing a Lean
Manufacturing Methodology. Through the implementation of this process, Client has
achieved significant results including:
Dramatic WIP Reductions of 71% and greater
30000
25000
20000
$000

15000
10000
5000
0

Analysis

IOB

WIP

Dramatic Reductions in Interval Time of 68% and greater

30
25
Days

20
15

25

10

15.5

14

12

0
Mar 1999

June 1999 1st /2nd Qtr 3rd Qtr '00

'00

4th Qtr '00

Dramatic Increases in Throughput of 366%

700
600

Units

500
400

700

300
200
100

302
150

0
March 1999

June 1999

Current Lean Cell

Capability

Reductions in WIP of over $150,000,000 in six months

The telecommunications industry is still struggling but these achievements are key
steps in helping Client to make it through the tough times. The methodologies outlined
above are being used to refine and implement strategic plans to reorganize, out-source,
sell and/or relocate operations, processes and product lines. It is enabling the client to
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focus on its latest products and disengage in commodity and legacy activities. This
restructuring is assuring client growth and successful transition to the 21 st century.

Blane P. Jarchow

blanejarchow@aol.com