Lean, one step at a time

Going from a traditional, forecast-driven operation to lean manufacturing is too big an undertaking to rely on one technique or piece of software, says Richard Moon, VP of operations with Husqvarna Turf Care . Getting to lean, he contends, "Is like the riddle, 'How do you

For Husqvarna—a Beatrice, Neb.-based manufacturer of commercial mowing equipment—the lean journey concentrated on service parts first, and entails the use of a software package that supports demand-pull techniques such as kanban. Moon says service parts were a natural focus for Husqvarna Turf Care, whose customers need high uptime on mowing equipment.

"If there are delivery problems with service parts, our customers feel it immediately," says Moon. "When you talk to them about areas for improvement, service parts is the first area that comes to mind."

There are many definitions of lean—ranging from a broader view that equates lean to eliminating waste, to specific flow or lean-pull techniques. For its service parts, Husqvarna deployed lean-pull production. Unlike traditional "push" manufacturing based on forecasts, material plans, and work-center scheduling, lean-pull is triggered by actual demand.

With lean-pull, manufacturers design lines capable of handling a mix of products, then use techniques such as kanban signaling to "pull" work through the line at the exact pace dictated by demand. However, there are complexities and variations to these techniques. Much work is needed to establish the rate at which products must be made to meet demand (i.e., Takt Time), to properly size kanbans, and a host of other challenges. Achieving lean-pull hinges on mastering these techniques, though software deployments, as well as education and consulting, also can help.

Writ large, however, lean manufacturing may overlap with other initiatives such as demand-driven supply networks, says Bill Swanton, a VP with Boston-based analyst firm AMR Research . Subsequently, lean may involve more than a narrow set of tools.

"You have to stop and think about why companies pursue lean," Swanton says. "They aren't looking solely to reduce cycle times or waste at the plant, but to be more demand-driven, and to be able to redirect resources to profitable opportunities faster than their competitors can."

Tony Gorski, COO of JCIT , an Englewood, Colo.-based education and consulting firm with lean expertise, agrees that lean is complemented by supply chain management disciplines. While lean eschews building to forecasts, Gorski says collaborative demand management can lead to a better understanding of demand in advance of pull-based execution. "Major enterprise software vendors are trying to integrate [supply chain management with lean]," notes Gorksi.

Even when looking more narrowly at lean-pull, says Gorski, the best initial step is to back up and examine metrics. Says Gorksi, "You're not changing anything at this point, but rather, identifying the metrics that drive the behavior that make an operation lean."

Where to start

Lean metrics focus on throughput, profitability, and flexibility, rather than raw utilization. Once metrics are established, then it's time to analyze the demand patterns the lean plant should be capable of fulfilling. Once those two steps are taken, says Gorksi, then it's time to apply more specific lean methods like kanban, starting with operations closest to the customer.

Besides identifying service parts as an area ripe for gains, Husqvarna decided early on to use lean manufacturing software to model its resources, calculate kanbans, and analyze demand.

Husqvarna chose Pelion Systems ' Manufacturing Process Optimization (MPO) suite for deployment, beginning fall 2002.

Husqvarna is using multiple functions in the MPO suite, but Moon says that early on, the system's Process Optimizer module handled the core analysis needed to set up lean production. This module supports a technique known as value stream mapping (VSM) in which the current state of a plant is analyzed, then adjusted to support a "future state" scenario. "VSM can be accomplished by gut instinct or a lot of longhand math, but if you do the mapping manually rather than with software, it's not very efficient or accurate," says Moon.

The system's core modeling capabilities support kanban calculations. In addition, the suite analyzes demand patterns against the capabilities of the lean operation. In effect, says Moon, the suite models the "pull chains" in the plant for specific parts, while taking into account customer expectations. "With service parts, we had no effective means of analyzing the peaks and valleys in our demand," Moon says. "Pelion's applications help us do that analysis, and set up the kanban sizes based on those peaks and valleys."

The suite's kanban engine has delivered the most bang for the buck, says Moon. "It's very easy to size the kanbans," he says. "We just did a model-year change, and within a day or two, we were able to generate all new kanban cards for the new models."

Creg Pike, a Pelion VP, says one of the first steps in deploying Pelion's suite is to use Process Optimizer to "create a factory knowledge base" for lean. Says Pike, "The power of the tool is that it has some algorithms behind it, rather than just a visual representation of a process flow. So with this model, you have a viable tool for capturing the factors in your current state, modeling scenarios for improvement, and developing 'what-ifs' around those scenarios."

After the deployment of lean-pull for service parts, Husqvarna saw on-time delivery climb to nearly 95 percent, up by almost 30 percent, says Moon. Next up, Husqvarna is piloting Pelion's supplier-kanban functionality, and using the suite's modeling engine to analyze the layout for a new plant in Beatrice.

ERP's role

Moon readily admits Husqvarna has a long way to go with lean. For one, its end-item production remains driven by traditional methods using a combination of spreadsheets and an ERP system from MAPICS . Moon says this ERP system has been effective, and even with lean production on service parts, work orders still are generated in ERP to record certain costs and transactions.

Many companies practicing lean-pull continue to use ERP as a transactional foundation, and in some cases, make use of newer lean features. OPW Fueling Components —a Cincinnati-based supplier of fueling nozzles, valves, and fittings to the petroleum industry—follows this blending of ERP and lean.

Tom Ciepichal, VP of operations, says OPW's ERP system from Glovia provides "checks and balances" against manual lean execution. OPW's production, uses kanban to dictate the flow of work from one operation to another on the plant floor, and a two-bin kanban replenishment methodology with suppliers. The company may start using some kanban calculation functionality that Glovia has developed, but for now, kanban is calculated off-line, drawing on ERP data.

Though ERP work orders aren't used to control production at OPW, they do exist in the background to support backflushing of materials and labor costs. "ERP aids immensely in making sure all the 'T's get crossed and all the 'I's get dotted in regards to what is being done through lean," Ciepichal says.

OPW also uses Glovia's consignment inventory function, which supports kanban replenishment without cutting multiple purchase orders. In the factory, backflushing is triggered by bar coding integrated with the ERP package. As product leaves OPW's doors, the backflushing kicks in, as does a paperless invoicing and payment process with suppliers. This automatic synchronization of lean processes with ERP, says Ciepichal, "significantly reduces our transactional costs."

On the other hand, lean practitioners rarely see software as much more than an enabler. Mark Frazier, site manager of ArvinMeritor Light Vehicle Systems ' plant in Columbus, Ind., says the lean transformation at the plant took a decade to accomplish, culminating in the plant winning the Shingo Prize in 2004—a coveted award for lean manufacturing excellence.

Frazier says some IT systems support the lean methods. For one, a custom-developed enterprise system has some integrated bar coding that supports lean transactions, and the company also is deploying an application for electronic kanban with suppliers. However, Frazier credits the plant's lean successes mainly to education, top management buy-in, and manual techniques. All employees at the plant, for instance, undergo a four-day training class on continuous improvement and lean called the ArvinMeritor Performance System, or AMPS. Says Frazier, "The key to good understanding of lean is across-the-board education."

AMR's Swanton sees ERP remaining as the core system of record, regardless of lean or constraints-based scheduling trends. "Using MRP explosions, off-set lead times, and detailed work-center scheduling to run the plant—that sort of approach is going away very rapidly," he says. "Whether it's constraints-based scheduling, or lean, or demand flow—all are variants of the same thinking: only produce what you need to meet demand."