Lean measures for lean times

Thursday, 09 December 2010 14:49

Reprinted with permission from the Business Development Bank of Canada

The importance of a motivated, well-trained staff hit home for Ray Turner on March 16, 2004, the day his eight-year-old son, Jake, was diagnosed with brain cancer.

Turner’s employees pitched in and were able to keep his Edmonton manufacturing plant running smoothly while he and his wife, Lori, spent anxious weeks in hospital at the young boy’s side.

Fortunately, Jake recovered fully after a series of procedures and returned to school.

However, the crisis struck at a time when Turner had become aware that his company, Lenmak Exterior Innovations, needed new ways to stay profitable during tough times in the competitive sheet-metal industry.

He also wanted to give back to his staff for their efforts while he was away. “A light went on that told me I could do both by going lean,” says Turner, 49.

At a BDC operational efficiency workshop, he learned how Lenmak could cut costs, increase output and improve workplace morale. The keys were investing in staff, using technology more effectively and reorganizing Lenmak’s production methods.

Since founding his company in 1996, the Lenmak president has made a point of installing the latest equipment to produce the company’s metal window and door trims, roofing and other fittings for buildings.

But he found that it was not enough.

“It’s how you use the technology,” he says. “And to do that well, you have to be humble and admit you don’t have all the answers, despite years in the business.”

“We now have a bottom-up system where we ask our 36 employees for ways to improve our efficiency. It’s the people on the floor who often have the answers. For example, based on recommendations from the staff, I was convinced to move all our machines and racks to be more productive.”

“It not only improved our production, but our people became more motivated and involved in the whole process. They were proud to see their ideas adopted.”

As part of the lean manufacturing approach, Turner works a bit like a CSI investigator, carefully analyzing each stage of production to track down and eliminate bottlenecks and waste.

“Sometimes the culprit is hidden in the most unlikely places,” says Turner, a client of BDC Financing and Consulting. “For example, the problem might not be something as obvious as an overloaded machine, but a coding system in the office that is too complex and prone to human error.”

An efficient operation also improves employee satisfaction, he notes.

“People are more productive and feel better about their work if they’re not moving materials around unnecessarily, filling out duplicate forms or looking for the right wrench. If eight tools are supposed to be at that workstation, we make sure they’re there.”

Lenmak’s current annual sales exceed $10 million, but as Turner points out: “revenue does not equate to profits.” So his goal is to double the plant’s output using the same number of employees.

“Going lean means you’re always looking for continuous improvement. Lean is a culture that has to be embedded in the company’s DNA.”

BDC Consulting Senior Partner Dave Greenwood says it’s critical to be lean in the current economic climate.

“In many industries, there are tight margins and strong competition,” he says. “So the only way to ensure profitability is to work more effectively.”

Greenwood, who advised Lenmak on its operational efficiency drive, explains that going lean involves an integrated strategy that kicks in the moment an order is placed and continues right through production and delivery to the receipt of payment.

“You make customer orders pull the product through system instead of batching and building up costly inventory,” Greenwood says.

“You don’t say: ‘Hey, I’ve got three guys standing around so I’ll get them to make something and wait for the orders to come.’ That’s a push system and it’s costly in terms of manpower, running machines and paying for space.”

Greenwood also emphasizes the importance of staff training and seeking ideas from employees, especially when production becomes more automated.

“Your people know what’s happening on the floor. You have to listen to them.”

For more information on the Business Development Bank of Canada, visit www.bdc.ca