May 25, 2007 in Business

More firms going lean

By The Spokesman-Review
 

When business owner Mike MacKay banned big personal toolboxes from his shop floor, his workers got a little upset.

But they soon changed their minds, after MacKay installed ping-pong and foosball tables in the 400 square feet the change freed up.

That was just one of the results of the transition to “lean management” at MacKay Manufacturing, a Spokane-based company that makes mostly medical and surgical instruments. Instead of wheeling the bulky toolboxes from place to place, workers were provided the necessary tools at each work station.

Lean management is a business model that streamlines production by identifying and addressing inefficiencies and extra steps. While it usually saves a company and customers money, it also can improve a business’ work environment.

“The single most big thing, long-term, is the change for the better in the attitude of my people,” MacKay said. “And that wasn’t one of the things that I thought would happen.”

His switch to lean management also included a 43 percent drop in inventory — meaning a rise in profit — and a 22 percent spike in sales, MacKay said. Those changes came between the end of 2004, when MacKay hadn’t even heard of lean management, and the end of 2006.

His success story brought him to a classroom at the Washington State University Riverside campus Thursday, where he spoke for a half-hour to about 30 other regional business leaders interested in lean management. The meeting was organized by the Inland Northwest Lean Management Consortium and headed by two executives from Berg Co. in Spokane, a company that makes portable shelters, facilities and liquid containers often used in disaster relief.

The LMC organizes monthly meetings and company tours for lean businesses or those thinking of making the change. About 50 organizations belong to the consortium.

Many businesses go lean when they face a crisis. To make the lean conversion, a company must change its way of thinking and transition in bite-size portions.

“There are some speed bumps initially,” said John Dickson, LMC executive board member and Berg’s director of lean and human resources. “Don’t eat the whole elephant at once.”

When MacKay decided to take his company lean, he hired Spokane-based consultant Chris Wood of TenX Ventures LLC, which specializes in lean management.

“That, of course, was a very nervous time for me,” MacKay said during his presentation. “I really, really stepped off the edge on a leap of faith.”

Wood first focused on MacKay’s shipping department. MacKay said he thought that was an odd starting point, but he soon realized streamlining the product delivery eliminated backup and reduced inventory.

And MacKay immediately paid for the $20,000 consultation by selling on eBay $50,000 worth of junk laying around his shop, he said.

Lean management promotes the use of regional suppliers, which can boost the local economy. It also reduces the number of people who work on a particular product and heightens workers’ responsibility and influence on the company.

“One of the driving principles of lean in and of itself … is to make a commitment not to lay anybody off,” Darren Stuck, LMC chairman and general manager of Berg Integrated Systems Co., said in a telephone interview Wednesday.

Keeping workers onboard, he said, helps “set the stage” for a company’s growth after lean practices start affecting the bottom line and expanding the business.

Most firms don’t see significant earnings changes for about 18 months, Dickson said. And lean management generally greatly reduces a company’s lead time.

Berg Co. President Andy Barrett, who also presented at Thursday’s meeting, said the labor required to make a portable shelter plunged from 86 hours to 32 hours when Berg went lean. And its revenue just about doubled every year from 2004 to 2007, using the same number of people.

“It has made an environment that is fun to work in; you’re on a winning team,” he said. “It’s fun to go to work.”

The third presenter, Michael Senske, president and CEO of Pearson Packaging Systems in Spokane, told a story about how his workers tore out a huge shop wall while he was out of town.

As lean management encourages, his employees came up with a way to make the shop more efficient by opening up the room and improving the workflow. And, Senske said, it simply made the space nicer.

“As long as it doesn’t make the building collapse,” he joked.

Get stories like this in a free daily email


Please keep it civil. Don't post comments that are obscene, defamatory, threatening, off-topic, an infringement of copyright or an invasion of privacy. Read our forum standards and community guidelines.

You must be logged in to post comments. Please log in here or click the comment box below for options.

comments powered by Disqus