A Testiment to Lean Thinking: Cases for Change

We want to thank the staff and management of all of the Perry Manufacturing Companies that we have been blessed to be associated with over the years for their enthusiasm and dedication as they transform their companies to reflect the Lean Business Model.

It was a great honor to have Shingo Prize winning author Gary Connor, President of Lean Enterprise Training, as well as noted author and Lean expert Jim Franz, Vice President of The Toyota Way Academy review our work. They added valuable insight and recommendations to enhance your reading experience.

No writing project like this takes place in a vacuum so we also want to acknowledge our families for their patience and support as we spent many hours buried in our computers drafting the manuscript. As with everything in our lives, we want to lift this book up to the Lord, for it is only through the gifts and talents of His blessings that we are able to carry out our work.

Jim Lewis and Dave Irwin

Introduction

Those of you who remember the Golden Days of Radio should recall the introduction to the program Dragnet. The announcer would say, The story you are about to hear is true, only the names have been changed to protect the innocent. That’s how it is with this story, too, except the names have been changed to provide anonymity to any one business as we blended the successful transformations of several real businesses into one story that demonstrates how Lean knows no business or industry boundaries and is equally applicable in administrative and manufacturing environments. Each of the companies that we have guided to a successful Lean transformation continue to surge ahead of the competition, even in the difficult business and financial times of the second decade of the twenty-first century. Many are experiencing growth and market expansion while their competition is stagnant or withering.

We’ve chosen to name our entity Perry Manufacturing Company. As mentioned above, the company name and the names of the people at Perry are the only things about this story that are fictitious. The process of transitioning to Lean and the subsequent financial results are all based on fact. Every company we have worked with has followed a similar path to success. So, even though the story is about one fictitious company, it is really a composite of many real companies. The various business disciplines that are blended into this book include automotive suppliers, furniture manufacturers, metal fabricators, foundry operations, aluminum die casting processes, printed circuit board manufacturing, visual merchandising products, healthcare, custom products manufacturing, and education. As you can see by this sampling of business segments, the Lean business philosophy is portable and applicable everywhere.

We chose the tag line – Cases for Change – because this book is more than just a compilation of all of the projects from the past twenty years. At the end of each chapter one or more examples from specific projects that relate to the material covered in that chapter will be highlighted as a case study. Hopefully that approach enhances your learning experience.

The first chapter opens with a review of Perry’s history and evolution. The history and evolution of a company are the only differences we have encountered between all of the companies we have worked with. The oldest company was a furniture plant with a rich, family-owned tradition spanning 116 years and counting. The youngest was an automotive supplier that has been based in the United States for less than ten years. The common ground that binds the varying business segments together is their management’s determination for success coupled with the realization that if they continued to do what they had been doing they would never achieve the level of success necessary to compete in today’s flattening world. We share that bit of information with you so you won’t think that your company is too old or too set in the current culture to change.

You may be wondering what is so special about the companies that comprise Perry Manufacturing Company. Well, there’s nothing special about any of them, and that is the primary reason they were chosen as models. The companies that form the Perry Story are as typical as any that you will find. That’s what makes them so special. The lessons their people learned and the process of change that they experienced can be applied to any business anywhere.

What does a typical American business look like? Our experience indicates a profile that looks like this:

•Small public company, but more likely second or third generation family-owned business.

•A company that has been in business for 40 to 60 years.

•The company employs less than 200 employees.

•Annual revenue is $10 to $40 million.

•Most of the employees have little experience outside of their current industry.

•Company leadership has evolved from within the organization.

•Processing of services, product, or information is done in a batch mode using a computer based system for planning and scheduling.

•On-time performance is frustratingly poor.

•Costs are high and margin is low.

•Management has tried some kind of improvement program at least once in the past 10 years with mixed or poor results.

•Supervisors are task managers that spend an inordinate amount of time in an expediting mode or crisis management.

If this profile sounds familiar, congratulations, you are a member of the family of businesses that make our Country great. If your business isn’t where you would like it to be, tomorrow can be a brighter day for you just as every tomorrow has been brighter for the companies we have worked with. The Perry Manufacturing Story will show how your company can turn the corner towards achieving World-Class performance with minimal use of scarce financial resources, regardless of your industry segment.

Another thing that makes the Perry Manufacturing Company story special is that the story isn’t built around the automotive industry. That’s important because many Lean authors focus on automotive inputs and outputs. That’s not all bad, but many non-automotive managers perceive the auto industry as being more predictable for planning and managing production than the more typical customized product environment. We decided to make Perry a furniture manufacturer because that industry has been decimated in recent years by imports so becoming competitive is exceptionally challenging, and urgent. More specifically we chose a segment of that market that is highly competitive and where most of the product is specified by architects and designers so it is more customized than the furniture you see in a department store.

However, the real emphasis of the story is on the process of improvement through Lean rather than on product inputs and outputs. Perry just happens to be the vehicle chosen to communicate the process of change. It’s a story of how people are successfully transforming their company and how they are utilizing their resources more effectively. If you are willing to make the same commitment to change as the Perry management team has, you can achieve similar results. If you are not a decision-making executive at your company we encourage you to share this book with a person who is; he or she should thank you for your insight and initiative.

To help define how the Lean philosophy can be effectively applied at your company, we recommend establishing study groups to discuss and analyze the tools and techniques of a successful Lean implementation. To facilitate that process talking points have been added at the end of each chapter. You will also find references and other helpful resources at the end of the book.

We hope you enjoy this story and that it will encourage you to consider applying the Lean philosophy to your business.

Chapter One - Roots

"To become different from what we are,

we must have some awareness of what we are"

Eric Hoffer

Author’s note, this story is presented from two perspectives. Perry’s Vice President, Mark Perry, presents the company’s perspective on change in italics, while the change agent’s (Dave's and Jim's) commentary on the transformation to Lean is in standard type. We hope that this approach is not too confusing.

There isn’t anything that can’t be done. There are only those things that we have yet to do.

Envision if you will, the company, department, or enterprise that you own, manage, or are employed at that you have dreamed of creating, but believe to be too impossible to achieve. Then stretch that envelope and imagine actually transforming the business into something two or three times greater than that. The intent throughout this book will be to transform you into a believer that if you can imagine it you can achieve it, and that dreams can become reality.

For everything there is a season, and a time for every matter under heaven: …a time to sow and a time to reap the harvest… (Eccl 3:1–8 ESV).

The Perry’s faithfully sowed the seeds of their business the same every year. Although the fields got larger while the business reached new and expanding markets, the harvest kept getting smaller. Competition from other sowers was crowding the rich, fertile fields. Planting more seeds only increased the cost of business, not the yield. To increase yield, Mark Perry refined the sowing process by using a new set of tools and by employing innovative and creative techniques. Mark willing shares the joy of success in hope that your business might reap a bountiful harvest as well.

Strong Roots Provide a Good Source of Nourishment for Sustaining Growth

There was a television mini-series some years ago titled, Roots. It was a compelling story of the business of slave trading and the anguish and despair of families who were separated and sold as personal property. Tracing the roots of one’s heritage became an almost impossible task for those fragmented families. Not being able to trace your roots leaves a void between where you are and where you came from. Knowing where you came from and what motivated your ancestors or predecessors to pursue their entrepreneurial endeavor can be a motivator for you to continue that endeavor for future generations to enjoy and share.

***

My research into the roots and history of my company has provided an appreciation for this business and our industry that I hadn’t delved into previously. I think many people enter a career without spending enough time considering how the business got where it is and the contribution that generations of unknown peoples made to its success. This experience has filled me with a greater zeal for ensuring that Perry Manufacturing continues to grow and prosper for future generations of our family and fellow stakeholders.

My father, Jack, started the business in 1946. I wasn’t around at the time, but I understand he launched the business without a lot of hype and fanfare. In fact, like most new companies launched after the war, there was nothing particularly note worthy about our start, except maybe my father’s passion. He dreamed of one day owning the best company in our industry. He knew that would require a lot of hard work and a product that was unsurpassed in form, fit, and function. Jack was a marketing guy. He had product ideas that would eventually turn his industry upside down and get the competition scrambling to keep up, but he also knew his limitations. He wasn’t too comfortable in the manufacturing arena. Besides, he had seen a number of great start-up operations fail because the owner tried to wear too many hats. So my father teamed up with another enterprising and energetic young man by the name of Sam Louis to bring his products to market.

Sam owned a local lumber company. Sam’s business was doing pretty well, but he recognized that a brighter future was in store for him if he dedicated his resources to producing for Perry. Dad was looking for a manufacturing arm, not a business partner so both men operated as separate entities, while still sharing a common mission.

My father was aggressive in marketing our product, but he took a conservative approach with his initial product offering. Like most of our competitors of that time the product offering was narrow, but functional. Buyers were accustomed to simple, clean, rectilinear forms. The innovation and creativity genie that my father wanted to unleash would have to stay bottled-up until Perry had established a presence and reputation in the industry.

We initially offered desks made of metal or wood or a combination of both along with wooden chairs, typical of the day, and some office accessories. The complete line consisted of six desks, one table, and four wooden chairs. Once established, our line expanded to include one upholstered sofa, one upholstered chair, a bookshelf, and a cabinet. That product expansion allowed us to cover a broader segment of the furniture industry, but the offering remained narrow, which made it easy for Sam to respond to demand spikes and volume orders.

Jack was spreading his wings, but he had to continually be mindful not to get too far ahead of his audience or the supply base. The United States had just come out of the Great Depression and World War II. People were still very conservative in their buying and that conservatism spilled over to business to business buying habits as well. That ingrained culture that lacked flare and adventure created sort of a chicken and the egg scenario. If creative and innovative designs weren’t available there was no demand for them, and if there was no demand for them they weren’t going to become available.

The roots of that narrow vision can be tracked back to Henry Ford who is quoted to have said something to the effect that people could have whatever color of car they wanted as long as it was black. With manufacturing giants able to control demand and stifle pent-up customer desires, my father’s innovative and creative genius would have to remain under wrap for a while longer. Perry wasn’t big enough to attract the attention our product was going to need to truly break the mold – yet!

***

A lack of creativity in design meant there was little need for manufacturing managers to explore new processes and techniques that weren’t centered on making more of the same thing faster so technology wasn’t being developed to feed Jack’s passion either. These and other controlling factors supported and solidified a dangerous mass production ‘mental model’ that is still prevalent in manufacturing today. That model assumed that as long as manufacturers could collectively limit product variety they were practically guaranteed to be able to sell as much as they could produce. That was great for manufacturing, but bad for the world. It didn’t fit well with Jack’s vision of making a mark in the world that would establish Perry as the manufacturer of choice to its customers either.

We introduced the ‘mental model’ theory to Mark and his staff early in the Lean journey so they would see that where they were was not much different than where every other manufacturer was. What they had to trust us on was that Lean would take them where Jack had envisioned Perry to be when he first opened the doors – leaders in their industry.

Mental Models can Stymie Innovation and Creativity

For those not familiar with the term mental model, Wikipedia.org defines it as,

[Mental Models are] a kind of internal symbol or representation of external reality, hypothesized to play a major role in cognition and decision-making. Once formed, mental models may replace carefully considered analysis as a means of conserving time and energy.

In the ‘50s and ‘60s, and in some cases still today, one of the manufacturing mental models was the practice of mass producing large quantities of the same item and putting them in inventory for internal consumption as sub-assemblies, or worse yet, producing large quantities of finished product and storing it for future orders. As you may know, mass production (also known as batch manufacturing) was widely practiced when manufacturers were able to influence demand by controlling product availability and variety. Since the mass production model is still a part of academia and learned on the job by many of today’s business leaders, application of the mental model of producing large