Art Byrne joined Wiremold as CEO in September 1991. He found a classic batch and queue system in production, sales order taking and scheduling process and product development. The cycle time of products was four to six weeks. Order taking process was a week. Product development took two and half to three years from concept to launch.
In this company Art Byrne announced an early retirement package to the aging workforce. Almost all of the eligible hourly workers took the retirement offer, but only small fraction of office staff took the offer. So, he has given to some of the office staff also a forced severance. (Is is right? This is the typical American way, which is in practice even today).
But when the planned manpower reduction has occurred, Byrne called a meeting of the entire workforce and announced to them that there will an improvement exercise in the company but nobody will lose job because of process and productivity improvements. The union did not believe it and went through the promise very carefully. But in the end they concluded that Byrne would honor his word and he has the plan and capability to do it.
But managers were sceptical. Byrne explained to them, while he expects good things to happen, if some expected fall in sales takes place there are tools to manage the downturn. Overtime can be reduced, surplus workforce can be employed in improvement projects, some outsourced components can be manufactured inside, work week can be reduced and new product line can be developed. We are going to make the operators more skilled and management will not be interested to lose highly skilled operators.
Art Byrne led the first training session in the company himself. Byrne implemented lean in his earlier companies. Based on a manual that he developed, he conducted a two day program for 150 people and followed it with a three day improvement exercise to provide opportunity to them to practice what they learnt. He took them around the plant himself and showed them muda (excess resources being used every where). Then he told them that they are going to convert all activities into continuous flow activities that are activated through pull. He promised them the support of top Japanese consultants and trainers.
Soon hundreds of weeklong kaizen activities were started and improvements were made visible. The company was reorganised into six product families. Each team was given its own punch presses, rolling mills and assembly equipment.
A score board was setup which showed productivity of the team expressed as sales per employee, customer service as on time delivery, inventory turns and quality as rework inside and returns from outside.
The expectation per each time is 50 per cent reduction in defects, 20 per cent increase in productivity, 100 per cent ontime delivery, and inventory turns of 20 per year.
To help the teams to improve continuously, the JIT Promotion Office (JPO) was started. The product team leader and the JPO jointly evaluate the value stream(Order, production and delivery process) to determine kaikaku (reengineering a major portion of the process) and kaizen (local operation improvements) activities to be performed. JPO is given the major responsibility to get the projects implemented. The JPO also conducts training sessions and teaches every employee the principles of lean thinking (identifying value to be delivered to the customer, charting the value stream, flow and pull principles and continuous improvement for perfection.). The principles are to be reinforced in the organization periodically to stop people from reverting to the old habits.
The product development process was reengineered next. Order taking process was made lean. Employees were given a share in profits.
Supplier improvement was done converting them into lean suppliers.
Lot of cash was released from the system due to reduction of inventory and was used buy some companies, which were converted into lean companies.
The benefits realized include doubling of sales per employee in five years, throughput time of one or two days, and increase in operating profit of 600%.
Source: Lean Thinking
James Womack and Dan Jones
Simon & Schuster, 2003