OPEX Corporation | Improved Business Operations

OPEX Corporation | Improved Business Operations

Success requires change in corporate culture

Published: July 2013

By: Sheryl S. Jackson, MHI Solutions

When your company is in the business of helping customers improve productivity, it makes sense that reducing waste in your own manufacturing process is part of your corporate culture. Implementation of lean principles throughout the organization is the route taken by many companies to achieve optimal performance and provide high value service to customers.

OPEX, a manufacturer of high-speed mailroom automation, document imaging and material handling solutions, always strived to increase efficiencies in manufacturing operations but began lean training in earnest in 2008, says John Kretzu, manager of production. “The driving force behind our lean efforts at the time was the fact that our product offerings were growing and we needed to manufacture more than one product line using the same workforce,” he explains.

At the time, one product line was built each week using a batch assembly method, which often meant last minute challenges at the end of each production week. “It became increasingly difficult to meet our deadlines, so we made the decision to transform the assembly process to a Single Piece Flow (SPF) cell.” This change enabled OPEX to build more than one product line per week in an area.

Although the term “lean” was used by researchers to describe car manufacturer Toyota’s business model in the1980s, lean principles can be applied to any size company in any industry, says Yavuz A. Bozer, Ph.D., professor, department of industrial and operations engineering at the University of Michigan in Ann Arbor, Mich. “Any point in the supply chain can benefit from lean principles.” Even office-based activities such as insurance claims processing can be improved, he adds.

While a lean organization is committed to reducing waste and providing high value service to customers, the transformation to lean requires more than implementation of a few tools or techniques, points out Bozer. A lean organization becomes a “learning organization” in which all employees are actively engaged in identifying opportunities and recommending changes for improvement.

The biggest challenge to implementation of lean principles is the change in corporate culture, says Kretzu. “Getting people to try a new way of doing things was a challenge in itself,” he says. “There were certain “sacred cows” and people who were used to doing their work a certain way for many years and were resistant to change.”

The first step in OPEX’ transformation to lean was training. Supervisors and team leaders were sent to a Principles of Lean Manufacturing class offered by New Jersey Manufacturing Extension Program (NJMEP) and when they returned they trained all of their employees. Additional training in lean assembly was provided by a trainer who conducted onsite sessions.

“We simulated lean transformation of an assembly task and the exercise highlighted the challenges involved with batch assembly and the benefits of conversion to an SPF cell model assembly,” says Kretzu. The demonstration and involvement of all employees is important, he points out. “Your workforce has to be comfortable with the transformation and once they understand what you are attempting to accomplish, they are a gold mine of information.”

Include employees in transformation

Once employees were educated, the first kaizen event, (an improvement team session focused on improving a specific area or facet of your business) addressed one OPEX product line. “We were trying to build two products on one assembly line so the team included representatives from both products,” explains Kretzu. Once the overall plan for the change was developed on a whiteboard, the actual assembly area was broken down and rebuilt by the team.

The rebuilding was not just physical, it also addressed all the rules and procedures involved in the assembly process. “We focused only on one assembly line at first because it was important to have a successful first project in the transformation.”

There was no transformation needed at LeanCor, a third party logistics firm that also provides lean consulting and education services. “We have lived lean principles since our beginning,” says Robert Martichenko, chief executive officer and co-author of Lean Enterprise Institute’s workbook, Building a Lean Fulfillment Stream.

“The purpose of lean thinking is to make problems visible every day and provide employees with the skills and time needed to solve problems.” This means employees and managers not only need education, but managers also need to schedule time for problem solving. “You can’t assume that managers can just add problem solving to their existing responsibilities, they have to be able to prioritize the task and take time to focus on it,” he says. If supervisors, managers and employees are not given permission to prioritize problem identification and solution, they will continue to focus on putting fires out rather than stopping the fires from starting, he adds.

Companies can introduce ideas such as kaizen events and the 5S philosophy, which focuses on effective workplace organization and standardized work procedures, the most critical component is connecting the “tools” to employees’ “thinking,” says Martichenko. However, he found when a company that he consulted implemented 5S and visual management in the warehouse they did not see improvements.

In fact, further evaluation showed a high rate of employee turnover, which led to the discovery of a critical human resource issue that no number of lean tools would address,  he says. “Tools by themselves won’t solve problems, you need to identify the problems and solve the root causes, and they are not always on the warehouse floor or assembly line.”

Use technology to address issues. Technology can support a lean transformation by automating picking and inventory control as well as other activities. Although investment in technology is easier to justify at the start of a lean transformation, organizations should evaluate new technology at any point at which the company is faced with change, says Tim Archer, sales training manager for KardexRemstar. “Management or ownership changes that bring new perspectives, as well as expansion of product lines, provide an opportunity to see if there is technology that can support changes in a lean organization.”

Determining the return on investment for technology in a lean organization needs to go beyond straightforward productivity improvements, points out Archer. “Take cost avoidance into account when evaluating technology expense,” he says.

Finding technology that improves accuracy and quality in the assembly process enables an organization to avoid the costs of handling returns, repairing defective products and potentially, losing customers. “Improving accuracy by several percentage points can have a big impact on a business.”

Archer points to Joanne Fabrics, a Canadian company that operates as J.K. Fabrics in the United States, as a good example. The company expanded its product line from decorative  fabrics for upholstery and draperies to include decorative hardware for drapery when fabric sales plateaued. “Handling 1,100 pieces of hardware was very different from handling bolts of fabric so the order accuracy rate at first was 92 percent,” says Archer.

Investing in technology that utilized pick to light technology along with a photo database to automate storage and retrieval of inventory resulted in an improvement to 98 percent order accuracy, and the company has expanded the hardware line to include 1,600 pieces. “The cost savings on the decrease in inaccurate orders is significant and the company was able to expand without increasing its workforce,” Archer adds.

Creating a lean culture requires buy-in from the organization but unlike some business strategies, C-suite executives are not the most critical audience, says Martichenko. He adds, “It is nice if the chief executive officer is an advocate of lean thinking and leads a company-wide change to lean management but a transformation can only be successful if the people doing the work embrace the change.”

Profile of a lean transformation: OPEX

The first step toward lean management for OPEX, a manufacturer of high-speed mailroom automation, document imaging and material handling solutions, was thorough education in lean principles for company management and employees. The next step was a series of changes in the production lines that were designed to improve efficiency, decrease risk of mistakes and increase quality.

Some of the most significant changes, according to John Kretzu, manager of production, include:

•  Movement of inventory to the point of use (POU) to reduce employee travel time;

•  Standardization of workstations to remove any unnecessary tooling and documentation while ensuring the proper tooling and documentation for tasks is correct and easy to locate;

•  Creation of Single Piece Flow assembly cells to enable better monitoring of takt and cycle times during the assembly process;

•  Improvement of the visual confirmation of inventory levels by having the inventory at point of use where the workforce can more easily identify part shortages;

•  Performance of daily 5S tasks to help keep areas clean and well organized.

“The use of SPF and 5S both help us identify problems in the assembly process sooner,” says Kretzu. Not only are problems resolved more quickly but the risk of repeating the error in subsequent assemblies is eliminated, which improves overall quality, he explains. “SPF also makes it easier to inject an emergency order into the cell without having to wait for an entire batch of order to be completed, which improves customer satisfaction.”