The February 20th issue of Rubber & Plastics News had a front-page article on the lean transformation at Lauren Manufacturing, a custom rubber extruder. I'm usually skeptical about such articles since in most cases they are simple publicity stunts, but two quick facts from the story immediately changed my mind:
- A change from decreasing growth to increasing double-digit sales and profit growth
- Upon embarking on the lean transformation, the company guaranteed the jobs of its employees
In other words, they get it. Unlike the Shingo Prize and other performance apologists, they understand that the bottom-line metric of lean is making money, and they understand that lean isn't about laying off employees to create savings but instead requires a commitment to employees.
But this story gets much better.
Not only did they increase sales and profits, but they did it in a very tough business: seals and gaskets for the automotive industry. An industry under the thumb of the likes of Ford and GM who prefer to pound on suppliers for price concessions instead of working with them to eliminate internal waste. While other companies moan and complain, chase ever-elusive labor savings overseas, ask for bailouts, or even shut down, Lauren found a better way... and made money. They looked inside.
And not only did they guarantee the jobs of their employees, they did while working with the United Steelworkers union, not against them. Lauren's management sat down with the union, presented their lean plans which included job flexibility, and won a new contract. This relationship has worked out so well that a recent vote on a new contract, which will extend until 2010, passed with overwhelming approval. Unlike what NAM and other groups would like you to believe, the union does not have to always be the bad guy.
They also had the fortitude to see it through. Real lean takes guts. The first couple years can be scary from an operational and financial perspective, and Lauren openly admits that. Their first year showed negative financial results. Simply implementing lean tools doesn't do the trick... it takes months and even years to change a culture.
There are other results that need to be mentioned, just to reinforce the power of lean:
- 80% of manufacturing has been converted to a workcell arrangement... which can be very difficult in process industries
- Key salaried people... engineers and the like... work directly on the production floor, not in offices
- Customer service reps and other support functions often work within the manufacturing cells
- Inventory cut by $2 million and turns have gone from 8 to 30
- 15,000 sq ft (about 10%) of floorspace freed up
- Single piece flow implemented on most lines... another difficult feat in the process industries
So congratulations to Lauren Manufacturing for understanding what lean is really about. You may not have won a Shingo (or perhaps like Toyota you don't even bother to apply, since there's no value to your customer), but we hereby give you well-deserved and public thumbs up.