February 23, 2014

The Lean Revolution in Lantech - 1992-2003 - Womack and Jones



Ron Hicks as Vice President of Operations started the lean revolution in Lantech in 1992. Ron Hicks was an industrial engineer.

He learnt lean from the Japanese trainers at Hennessy Industries of Nashville, Tennessee, a manufacturer of automotive repair tools and garage lifts. Ron Hicks was the vice president of operations there. Before that Hicks was at General Electric Company.

During the interview for Lantech, Ron Hicks explained his manufacturing strategy.  He would form cells and manufacture one machine at a time. The batch and queue system will be changed. Lantech management decided that Ron Hicks was the best choice for their company and hired him.  After joining the company, he eliminated the existing process based departments and created four cells for the four varieties of machines.  All activities relating to a machine are done in the same cell in a continuous flow. This is the kaikaku (radical transformation) phase as per the plan of Ron Hicks. The existing arrangement was torn apart and a new system was put in place.

To make the system work, standard work procedures were developed and standard times were specified. The quality of the output has to go up at every stage. To form the cells, many machine tools had to be right sized and number of new tools had to be developed so that multiple tools could be used on the same machines in a flexible manner. Quick changeover (SMEDs) were developed.

But in the initial days, number of problems surfaced. Doubts were expressed on the changes created by Ron Hicks. Jose Zabaneh, a production manager came out as a determined person to go through all the problems and resolve them. Pat Lacaster the CEO gave unfaltering support to the new system. The consultant Anand Sharma and Ron Hicks were there with the necessary technical skills. By the fall of 1992, the whole Lantech production system had been converted from batches to single piece flow.

A clear vision or plan or design, technical mastery over the details, and a passionate will to succeed are essential for any lean transition. Some times only a single person may be sufficient to provide the leadership and sometimes a team may do the job like at Lantech. But to sustain the lean system, they must be developed in all people in the organization.

Benefits of lean transformation: The manpower stayed the same at three hundred. But the number of shipments doubled from 1991 to 1995. The plant had 30% extra space in 1995. The number of defects reported by customers fell from 8 per machine in 1991 to 0.8 per machine in 1995. Production throughput time became fourteen hours from the earlier figure of sixteen weeks. On time delivery of machines reached the level of 90 per cent. The wages were increased to $8.5 from the earlier $7.00.

Then the order taking process was also redesigned to be a lean process. A reengineering team has gone through the process. A cost table was prepared that helped the sales to come up with a quotation quickly. Once the order was received, it was inserted into the schedule in two days.  MRP was used for ling-term materials ordering from suppliers, but day-to-day scheduling was done on the shop floor.

In 1993, the attention was directed to product development.  Lantech set up a project team under a Directly Responsible Individual clearly charged with the success of the product during its lifetime. A team of dedicated specialists consisting of marketing, mechanical engineering, electrical engineering, manufacturing engineering, purchasing, and production engineers and workmen. They were asked to work nonstop on the project.  In the process it was found that many people have a broader range of skills than was thought earlier and could learn some skills that were needed during the project. Also, some advance scheduling could release for other important tasks for sometime in between.

The first product that came out of the new development system, the new S series, was developed in one year, compared to the four years that was the standard earlier. The launch was much smoother than in the past and the number of defects reported by customer was very low compared to the previous models during the initial production periods.


Source:
Lean Thinking
James Womack and Dan Jones, 2003 Edition

Further Reading

http://www.lantech.com/about/glance.aspx

Manufacturing Cells Support Lean Production at Lantech - Ron Hicks, 1998
http://www.mmsonline.com/columns/manufacturing-cells-support-lean-production

Leaders to Teachers: Lantech’s Plan to Spread the Faith
by Emily Adams, 2001
http://www.tbmcg.com/acrobat/lantech_story.pdf

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