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Friday, May 28, 2010

PCMC takes the Great Lakes Group on a Lean Journey



















































(As submitted to Flexo Magazine)

What does it take to achieve great results? How do you improve quality, drastically reduce inventory costs and free up valuable floor space? How do you develop a management model that provides sustainable bottom line profitability?


For Paper Converting Machine Company (PCMC) and the Barry Wehmiller family of companies, the focus is not on the results themselves. Rather, they choose to focus on the means to achieving great results: a leadership philosophy predicated around respect for people and continuous improvement. This was not always the case. It has been a long process of cultural transformation. On May 18th, the FTA Great Lakes Group (GLG) was privileged to go along on a Lean Journey with Craig Compton, PCMC’s VP of Operations as our tour guide.


For PCMC, as with many companies, the management philosophy had long been based on a traditional bottom line mentality. Unfortunately, bottom line management based on command and control often leads to fragmented actions, which lack alignment with organizational goals. Management mistakenly considers the bottom line result to be the goal, using metrics and status reports to control and monitor progress. In this environment, management dictates blanket solutions, which are not focused on root causes. This puts employees in a defensive mode, worrying more about justifying their actions than coming up with solutions.


A Lean environment, by contrast, is process oriented. Managers don’t view themselves as managers. They are leaders who teach and mentor their team members to become problem solvers. They engage team members by creating an environment where their ideas are valued and it is OK to fail. Ideas for improvement are not force-fed to underlings, but flow from a team atmosphere where problems are identified and solved together. Craig said his favorite saying is “what did you learn?”.


Rather than fragmented thinking, a Lean environment encourages “systems thinking”, where processes and people are aligned with organizational goals. By focusing on improving processes, people and systems, a Lean environment produces substantial bottom line results.


So what is Lean? Some would say reduced waste, improved throughput, greater value to customers and associates, process improvement or improved quality. While these are all potential benefits of Lean, Craig sees Lean as the basis of a fundamental enterprise-wide shift in expectations, measures, performance and culture. He termed the shift, a “Lean conversion”, which, in order to succeed, must become a central pillar of the company’s business strategy. By engaging, empowering and entrusting every associate, a Lean conversion provides a sustainable competitive advantage. And although it is easier to see tangible results on the plant floor, the same focus on systems, people and processes drives operational excellence throughout the organization.


People-centric “inspirational” leadership is the key to achieving and sustaining a Lean culture. Inspirational leadership begins with a vision to foster buy-in throughout the organization. Barry Wehmiller came up with a vision in 2002 called “Guiding Principles of Leadership”. Inspirational leadership grows with recognition of the daily examples of leadership at all levels within PCMC. Craig said the have celebrated and recognized more exemplary leadership in the past four years than in his previous sixteen years with the company. He then went on to describe Barry Wehmiller’s SSR program, one of the many ways the company recognizes exemplary leadership.


Bob Chapman, CEO of Barry Wehmiller, has a fleet of Chevy SSRs. SSRs are essentially Chevrolet trucks with Corvette engines. He sends around the SSRs to all of the divisions. The SSR program lasts for 10 weeks. During the program, anyone in the organization can nominate a fellow associate for exemplifying the leadership principles within the business. A committee made up of non-formal leaders and former SSR winners select a winner from the nominations submitted. They then invite everyone out to the front lawn, where a tent is set up. They have cake, ice cream and refreshments, and then talk about the great thing the person has done and award the car to them for 7 days. The winner gets a $150 gas card to go along with it and the rest of the day off. “You talk about having a profound impact on that individual? You can’t measure that… and what it does for the culture of the business.” This is one way PCMC upholds the behavior they want emulated within the business.


PCMC’s “Guiding Principles of Leadership (GPL) include a clear and compelling vision, leadership, communication, measurables, and stewardship. The GPL aspire to a leadership environment based on trust and communication that brings out the best in the individuals. It allows everyone to have a meaningful role, and in so doing inspires pride. It challenges everyone to grow personally and professionally, liberating them to realize true success.


27 members from across Barry Wehmiller participated in a dialogue on Leadership to create a vision for the convergence of Lean and the GPL. In an attempt to articulate the culture, they came up with a saying that is part of the process: “We measure success by the way we touch the lives of people.” Craig said “we believe can have a profound impact on the quality of life of every one of us. We believe as business leaders we have a profound opportunity and responsibility to those people.”


One of the most profound components of the Lean journey is the word “fulfillment”. “We want people to leave every day with a sense of fulfillment. If they do that, they will do some really great things for the business, some great things for our customers, (and for their families). Getting better operating income, higher end productivity turns, reduced inventory. That’s great stuff. Those are byproducts of this (process)”.


In a typical Lean journey, you want to focus on non-value-added activities. Machining parts adds value for the customers. The time a machinist spends looking for a program, materials, tooling and fixtures does not add value. So Lean activities typically revolve around reducing cost and lead times. As part of PCMC’s journey, they want to see empowerment and fulfillment increased.


Improvements are made through an ongoing series of “Kaizen” events. Kaizen is a Japanese term, which means “change for the good”. At the conclusion of every 1-5 day Kaizen event, the team will get up in front of a group of people from throughout the organization and talk about the great things they have done, improvements made, and how it feels to be a part of that process. During one Kaizen event, team members brought the manufacturing time for a spindle down from an average of 8 hours to 51 minutes. Those testimonials provide recognition for the participants and serve to help engage non-participants in the process.


Craig spoke to the personal impact of Lean. “It enhances how we communicate. 4 ½ years into this journey, I didn’t realize how poorly we communicated in our business until we were at where we are today”. We have daily meetings today in every part of our business. The first thing we talk about is celebrating and recognizing our individuals. Then talk about the current issues in our process.”


PCMC’s Lean journey started in 2004, but began in earnest in 2005. The journey has not always been smooth, as they have suffered setbacks from early Lean 6 Sigma initiatives. They had some minor successes, but failed to engage the company’s leadership early on in the process.


After PCMC’s purchase by Barry Wihmiller, they built a foundation for their Lean journey on 7S events, where they would clean, paint and organize each target work-space to make it safer and more efficient for the people that work in that environment. Using cross-functional teams, the 7s events focused on 1) Safety, 2) Sorting, 3) Straightening, 4) Sweeping), 5) Scheduling, 6) Sustaining, and 7) Satisfaction. The 7s teams produced visible results when they set about to physically “fix” something in the plant. “You could physically see the change that you made in the business”. This began to create the culture change the company was seeking. They set up a schedule and encouraged everyone to participate. In 4 ½ years, teams completed 275 - 7s events.


Value Stream Mapping helped the company align business processes that bring value to their customers, as well as identify those activities that did not add value. Elimination of non-value-added activities greatly improves the company’s efficiency, customer service and product deliveries.


During the plant tour, one of the team members described how PCMC used to have $21 million worth of inventory on the shelf, yet still were late on “everything”. Material would be received, then physically moved to its predetermined inventory holding location in the farthest corner of the massive warehouse area. 20 minutes later, the item would show up on inventory and a technician would go to the farthest corner of the massive warehouse area to retrieve the part. The repeated handling of thousands and thousands of parts represented an enormous handling expense; and that was in addition to the inventory carrying costs and tremendous amount of floor space (3 entire bays each about the size of a football field) required to accommodate such an inventory.


Despite having such an enormous inventory of stocked items, they only had the needed parts in-stock 70% of the time. Through a combination of Kaizen events, 7S events, and value stream mapping, the company modified ordering practices, receiving systems, and component staging processes. Incoming parts are now immediately identified on the computer system as available and are placed directly into the process, eliminating countless hours of material handling. In-stock inventory has been reduced to $3 million, yet they now have the required parts in-stock 98% of the time.


The company used value stream mapping to help identify the critical components customers need in the event of a breakdown. Those 500 items are part of their “spares” program and are on the shelf, ready to ship, 100% of the time. They have also developed stocking strategies for 5000 other frequently needed components, which are out of stock less than 2% of the time.


Handling vastly less inventory allowed the company to reduce material handlers from over 80 down to 14. (All of the displaced material handlers are working elsewhere in the organization, having been retrained for machining and other value-added activities.) An added bonus was an unbelievable reduction in floor space required for inventory from three monstrous bays to 3 modest shelving units occupying approximately 500 square feet.


The average lead-time on custom-machined parts used to be 41 days. That was based on only four hours of actual machining (value added work). They are now able to ship custom parts in five days and even have accommodations to ship those parts in two days when a customer’s machine is down.


What they found through these events, is a tremendous amount of wasted time. Operators would be scheduled to do a job, but would not have everything needed to accomplish the tasks, whether they be tooling, materials, CNC programs or what have you. The operators would waste valuable machine time walking around looking for the items they needed to get the job moving. In the process, product would routinely be delivered late. PCMC now has systems in place to insure every operator has everything needed to proceed with a job before the job is assigned to them.


Another paradigm shift came in their ordering practices. A purchasing agent, in an attempt to get better pricing on components, would order in bulk to get quantity discount pricing. What they found is that if they needed one piece, the PA may have ordered ten and had the remaining nine placed into inventory. Four years later, they still had nine on the shelf. Now, when they need one piece, they order one piece. The savings realized in material handling, inventory holding and elsewhere far outweighs the “savings’ from bulk ordering.


All of these efforts brought the company from a firefighting mode to what they describe as “synchronized execution”. While many companies fail in their Lean journeys by focusing on the tools rather than the profound leadership changes required, PCMC is enjoying the benefits of a pervasive yet ongoing cultural transformation.


At PCMC, they don’t view Lean as a goal. It is a journey. They are not undertaking initiatives that result in incremental changes. They are experiencing a fundamental shift in their management model, which emphasizes leading, training, mentoring, and engaging employees to become leaders that drive exponential improvements in quality, customer service and profitability. Because of the transformational nature of the process, people and systems; they don’t see it as simply a Lean journey. At Paper Converting Machine Company, it is nothing less than “a Living Legacy of Leadership” or what they refer to as their “L3 Journey”. It is a journey the FTA Great Lakes Group was privileged to experience.

Wednesday, May 26, 2010

JOURNEY TO SUSTAINABILITY: BEYOND PAPER & PACKAGING CONFERENCE


June 22, 2010
Management Resource Association Building
Waukesha, WI

Discover how to implement energy efficient and sustainable strategies in your corporation at the Journey to Sustainability - Beyond Paper & Packaging Conference in Waukesha, WI on June 22, 2010 - conveniently within driving distance from you!

FFTA, in conjunction with Printing Industries of Wisconsin, Printing Industries of America, Specialty Graphic Imaging Association, Wisconsin Department of Commerce and Wisconsin Department of Natural Resources will present exciting educational sessions to help you learn the significance of sustainability in the printing industry, and how the Sustainable Green Printing (SGP) Partnership program can benefit your company.


The conference features roundtable discussions about:

  • Environmental Certification Programs
  • Energy Efficiencies
  • Carbon Footprinting
  • Working with Your Supplier
  • Environmental Marketing
  • Environmental Management Systems
  • Tools for Compliance
  • Public Benefits
Registration Fee:
Members $95.00 | Non-Members $190.00

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