Mr. Lean Buys and Transforms a Manufacturing Company: The True Story of Profitably Growing an Organization with Lean Principles Book

Foreword xiii

Preface xv

Prologue: The Purchase xix

Chapter 1 The Beginning Observation and Documentation 1

1.1 Introduction 1

1.2 Observing 2

1.3 Getting a Detailed Understanding of the Processes I Would Be Responsible For 5

1.4 A Lack of Training Can Be Costly 6

1.5 Training as a Machine Operator 8

1.6 Discovering a Lack of Documentation 8

1.7 Identifying Skill Sets That Needed to Be Replaced 9

1.8 Workplace Organization (5S) Opportunities 10

1.9 Discovering Different Methods Being Utilized for the Same Task (No Standardization) 12

1.10 Discovering Difficult Processes to Standardize 13

1.11 This Much Observation Required Me to "Divide and Conquer" 14

1.12 Summary 16

Chapter 2 Standardizing the Estimating Process 17

2.1 Hiring a New Programmer/Estimator 17

2.2 Writing the First Draft of Standardized Steps for Programming and Estimating 18

2.3 Considering the Complications with Quoting 19

2.4 Minimize Training and Start-Up Time by Utilizing Similar Equipment 20

2.5 Continuing to Determine Where Skill Sets Would Be Lost 21

2.6 Meeting the Customers 22

2.7 Starting Some Measurements 24

2.8 Visualizing the Measurement 25

2.9 Plan, Do, Check, Act (PDCA) 26

2.10 Summary 28

Chapter 3 Learning the Office Processes 29

3.1 Introduction 29

3.2 Inputting Orders 30

3.3 Problems Working without a PDCA Cycle in the Estimating Process 32

3.4 Repricing Discussions Are Easier if Based on Accurate Data 33

3.5 Learning to Purchase 34

3.6 Scheduling the Shop Based on Tribal Knowledge 36

3.7 Job-Shop Planning 37

3.8 Simplified Short-Term Planning 38

3.9 A More Comprehensive Work Order Package 39

3.10 Poor Work Order PackagesCan Increase Setup Time 41

3.11 Closing the Books 41

3.12 Collecting the Money 43

3.13 Summary 44

Chapter 4 The First Days Alone 47

4.1 Introduction 47

4.2 My First Pricing Decision Alone 48

4.3 Creating Extra Capacity with 5S 49

4.4 Establishing Normal versus Abnormal 52

4.5 Problem Solving versus Firefighting 55

4.6 Identifying the Need for Shop-Floor Visuals 55

4.7 Converting Small Productivity Improvements into Profit 58

4.8 Challenging the Reported Profit Margins 60

4.9 Summary 62

Chapter 5 Creating and Selling Capacity 63

5.1 Only Thinking in Terms of Full Absorption Costing 63

5.2 Overtime as a Positive 64

5.3 Setup-Time Reductions 65

5.4 Continuously Measuring Setup Times 67

5.5 Creating a Team Leader 70

5.6 Increased Productivity through Visual Management 71

5.7 PDCA of the Estimating Process 73

5.8 Becoming the Estimator 74

5.9 Summary 77

Chapter 6 Getting Everyone Motivated for Improving the Machine's Output 79

6.1 Introduction 79

6.2 Managing Each Job Visually 80

6.3 The Desire for Independence from Day-to-Day Operations 81

6.4 Preparing for Further Setup Reductions 82

6.5 Continuing the Kaizen of Equipment by Improving the Adjustment Phase of Changeovers 83

6.6 Running a Machine while Confirming the Quality of the First Piece 84

6.7 Difficulties in Creating a Profit-Sharing Plan 86

6.8 Staying Hands-On since "the Devil Is in the Details" 88

6.9 Cost Justifying a Team Leader 90

6.10 Closing the Books Becomes Anticlimactical 93

6.11 Summary 94

Chapter 7 Seeing the Administrative Processes from a New Angle 95

7.1 Introduction 95

7.2 Visualization Confronts Obtaining Information Either from Computers or in Meetings 96

7.3 Not Allowing Excuses for a Late Start 97

7.4 Small Businesses Look at the Recruiting Process Differently 98

7.5 Focusing to Improve the Office Processes 100

7.6 Purchasing Is a Critical Administrative Function to Look toward Improving 102

7.7 Unsuccessful at Significantly Reducing the Time Necessary for Quotations 107

7.8 5S for Shared Computer Drives and Files 109

7.9 Outside Quality Accreditation 110

7.10 Summary 111

Chapter 8 Moving the Business 113

8.1 Industrywide Downturn 113

8.2 Background for Moving the Business at This Point in Time 114

8.3 Creating a New Layout from a Blank Canvas 116

8.4 A Nondisruptive Move 118

8.5 Simulating the New Layout 120

8.6 Introducing Procedural Changes during the Move 121

8.7 Using a Major Event to Introduce Change in the Office 123

8.8 Summary 125

Chapter 9 Accurate Pricing through Better Cost Allocations 127

9.1 Introduction 127

9.2 Determining More Accurate Allocations during Tough Times 129

9.3 Using My "Modified Activity-Based Costing" 130

9.4 Starting Simplified Activity-Based Costing in the Shop Using a Matrix 132

9.5 How to Relate the Matrix to Cost 134

9.6 A Simple Activity-Based Costing Matrix for the Office 135

9.7 Relating the Matrices to Hourly Costs 136

9.8 How Others Often Allocate Costs 138

9.9 Keeping the Team Leader Focused during the Slow Times 140

9.10 Increasing Process Capabilities to Reduce Outsourcing 141

9.11 Standardizing the Business Processes Allows Time for Pursuing Other Opportunities 142

9.12 Summary 144

Chapter 10 Up-Front Delays 145

10.1 The Measurements Confirm Success 145

10.2 Continuously Developing Protocols Allows More Autonomy from Day-to-Day Operations 146

10.3 Planning Only Based on Available Materials Is Costly 147

10.4 Capacity Planning Based on Lead Times 148

10.5 Identifying Areas Where We Were Only Being Reactive 150

10.6 Available Time Utilized to Document Processes 150

10.7 Lead Time Reduced through "Strategic" Inventory 152

10.8 Prioritizing Problems during Busy Periods 154

10.9 The Lack of Hands-On Experience Is Very Costly 154

10.10 My Personal Experience of Generating Costly Designs 157

10.11 Summary 158

Chapter 11 Making Money during the Good Times 161

11.1 Introduction 161

11.2 Improving Processes during Slow Periods Pays Off 161

11.3 Problem-Solving Skills Developed during the Slow Periods Begin to Pay Off 163

11.4 The Leader Keeps in Practice 164

11.5 Diversification Would Have Been Helpful 166

11.6 The Need for a Second Shift 166

11.7 The Entrepreneurial Spirit Pays Further Dividends during the Busy Times 169

11.8 Structured Problem Solving Minimizes Opinions 170

11.9 Problem Solving Requires Looking into the Process Details Using a Structure 173

11.10 Equality in Enforcing Your Own Policies Is Critical 175

11.11 Summary 175

Chapter 12 Expanding into New Products 177

12.1 Introduction 177

12.2 The Logic behind Expanding into Sheet Metal Fabrications 177

12.3 Previous Expansion Considerations Resulted in Little Impact to the Current Layout 179

12.4 Filling the First Order 183

12.5 Investing Step by Step 185

12.6 OSKKK Takes to Life within Our New Processes 187

12.7 Once Again, a PDCA Cycle in the Quoting Process Proves Critical 188

12.8 Again, Engineers' Lack of Hands-On Experience Is Costly 190

12.9 Summary 192

Chapter 13 Business for Sale 193

13.1 Introduction 193

13.2 Determining the Process Steps for Selling a Business 194

13.3 Determining an Asking Price 195

13.4 A Marketing Package 196

13.5 Advertising 197

13.6 The First Nibbles 197

13.7 Considerations of Owner Financing 198

13.8 Lowering the Price 199

13.9 Three Serious Buyers 200

13.10 Evaluating Offers 201

13.11 Offer Accepted 202

13.12 Drawing to an End 204

13.13 Summary 205

Chapter 14 Reflections 207

14.1 Introduction 207

14.2 Lessons Learned 207

14.3 Using the Correct Measurements Is Critical to Achieving Results 210

14.4 Cross-Training Is a Critical Part of Success in High-Variation Companies 211

14.5 Team Leaders Increase Profit through Higher OEE 211

14.6 Managing Parts Differently 212

14.7 Activity-Based Costing Proves Helpful in Securing More Orders 213

14.8 A Process to Examine Your Business 215

Appendix A OSKKK Methodology 219

Appendix B Documentation Techniques 223

Appendix C My First Attempt at Standardizing the Quoting Process 227

Appendix D Example of the First Day-by-Hour Board for the Bottleneck Machine 229

Appendix E Real-Time Pareto Chart 231

Appendix F Overall Equipment Effectiveness (OEE) for Bottlenecks 233

Appendix G Typical Team Leader Responsibilities 237

Appendix H Cross-Training or Skills Matrix 239

Appendix I New Layout with Some CNCs Set Up as an "L" Cell 241

Appendix J Initial ABC Costing Matrix for Shop and Office 243

Appendix K Initial Equipment and Area Layout for Expansion into Sheet Metal 247

Appendix L Sequence Utilized for Learning the Business and for Implementing Lean 249

Appendix M Different Applications of Value Stream Mapping and Process Mapping 251

Index 253

About the Author 269