How going lean saved these companies

Delegates attending a Canadian Manufacturers & Exporters conference in St. John’s May 22 heard three strong examples of how adopting lean manufacturing principles helped save local companies.

All three companies are part of a CME-NL program funded by ACOA and the provincial Business Department which helps companies adopt “lean” manufacturing principles. CME-NL has six facilitators operating throughout the province helping some 50 companies redesign and invigorate their work flows. Lean manufacturing derives from a system developed at Toyota in Japan which strives to eliminate wastage of time, material and effort in the manufacturing process and increase the value of goods produced.

Mark Gillingham, executive vice president of Blue Oceans – Sky Hawk, said the adoption of lean processes have transformed his company. Blue Oceans started 12 years ago as a supplier of satellite communications equipment to commercial fishing vessels, but has evolved to become a manufacturer and supplier of custom satellite tracking devices for all kinds of assets, including snow plow and garbage truck fleets, emergency vehicles, even explosives and wildlife. Major customers include Rio Tinto, Manitoba Hydro and Hydro One in Ontario, which has 4,500 vehicles, as well as the Government of Nova Scotia. The company’s focus is government type clients.

“As a small start-up company in Newfoundland we have done a lot of things right,” said Gillingham. “But there’s a caveat.”

Gillingham explained that by leveraging distribution networks, such as those provided by Telus, and others, Blue Oceans was able to attract lots of new business, but ran into trouble when it came to getting the equipment out to them correctly and on time.

“We had growing sales opportunities and a large pipeline building,” Gillingham said. “We were going head to head with the top companies in North America and wining business and we continue to. We had a great product, we were competitively differentiated, market-focused, we knew who we were, how to pitch it and how to sell it, we had a very strong and talented team… but we couldn’t put enough correct screws in a box to put an order out the door. We could send a satellite communications signal anywhere around the world and let someone know where their asset was and if there was an issue (with it), but we could not package and deliver units… We were having huge customer support issues because we were having to back peddle and ship twice.”

Gillingham said it took the company six to eight weeks to fill an order. Company employees sometimes had to drive around to hardware stores to find the right screws to complete a unit. “It was just an amazing situation,” Gillingham admitted. “There was frustration internally, and we were struggling to figure out why we couldn’t solve this problem. We had, from our perspective, a lot of very, very smart people inside the room, we had dedicated people, but we couldn’t get this part of the business right.”

It turned out, said Gillingham, the problem did not lie with the company’s people, but with the manufacturing “process” it was using.

“We haven’t had any employee changes and now we’re getting it right,” he said. “It wasn’t the people. It was the system… It had to do with management not having the right systems in place.”

The change occurred after Blue Oceans brought in an expert on lean manufacturing from the CME-NL starting in June last year. It took a second visit from the expert before people in the company started buying in and another visit or two before the changes to the manufacturing process started to gain momentum, Gillingham allowed. But the results have been transformative. It gave the company confidence to set an aggressive goal in 2015 of doing a greater volume of business, faster and delivering units with increased accuracy.

So far this year, revenue is up 350 per cent over the same period last year, Gillingham said. Delivery times have been reduced from the old period of six to eight weeks to just one day and as long as a week in the worst cases. The changes have allowed the company to invoice its customers faster and improve cash flow. Blue Oceans has been able to increase its workforce by 30 per cent.

“We would never be able to do that without these programs,” Gillingham said. “I’m now not only drinking the Kool Ade, I’m starting to serve it... This stuff really, really works and our whole team, to a person, has bought in.”

The key to the lean manufacturing system devised by the CME-NL, Gillingham noted is “the handholding” provided by the association’s expert. Management also has to buy in to the notion that you have to conduct a detailed mapping of every task used in the manufacturing and delivery process so that it can be studied to make it as efficient as possible.

“It’s all about the culture,” said Gillingham. “Our mindset is completely different.”

Renita Dominaux of Dynamic Air Shelters said the lean manufacturing principles taught by the CME helped her company too.

“We at Dynamic always thought we had a good set of instructions,” Dominaux said, referring to the manufacturing process laid out for its production workers.

But it wasn’t as good as it thought. Lean manufacturing changes have resulted in more employee engagement when it comes to submitting cost saving and value added ideas to the tune of about $18,000 annually in manufacturing savings alone, Dominaux said. The philosophy of continuous improvement has resulted in manufacturing changes that have reduced the set up time for the company’s shelters on a customer’s site from 10 days using eight people to two days with three people.

“We’ve been five or six years on this journey,” Dominaux said. “We’ve come a tremendous way. We’re not there yet and I’m not sure we will ever be there, because lean is just continuous and you’ll never be perfect.”

At Restwell Mattresses, said general manager and co-owner Bob Tetford, lean manufacturing saved the company.

Restwell was founded in 1991, shortly after the railway closed and Tetford’s parents found themselves having to order in mattresses by boat and truck to supply their furniture store in Harbour Grace and Carbonear.

“We got our first freight bill for our first load of mattresses and my father (Robert Tetford Sr.,) looked at it and said, ‘Jeeze boys, I can build them cheaper than what they are going to ship them for,” Tetford recalled. “Twenty-five years later we’re still at it.”

The Tetfords got help from ACOA, but when it came to actually making the mattresses, they had to learn how to do it themselves. His parents picked the brains of some established mattress makers outside Newfoundland, learned an “old-fashioned” manufacturing system, Tetford said, and “ran with it. They made it happen and they made it work. They made mattresses go out the door and they sold them and it was great. Were they making any money at it? I don’t know, maybe not.”

Tetford joined his parents in the company when he finished university in the late 1990s “and knew everything,” he joked. His parents were growing frustrated with the manufacturing operation. So at 23, he took on the job of overseeing the plant. In addition to its stores, Restwell supplies other retailers as makes custom mattresses for oil rigs, boats and other customers.

“It seemed to be a situation of Murphy’s Law was just killing us,” said Tetford. “If we stacked up a pile of blue ones to sell, we’d get an order for green ones. I just wanted to be able to make what the customer wanted when the customer wanted it, rather than wait two weeks and make something that we didn’t even have an order for.”

Tetford ended up calling a fellow he knew at the CME-NL, Sean McCarthy, who was working on lean projects. “I called up Sean and said, ‘Come out and sell me on the lean stuff.’ He came out and took a look around. We chatted for a while and I told him my frustration about what was going on.”

McCarthy laid out a vision for Tetford to think about: redesigning his manufacturing process so that the mattresses were made when needed, without huge amounts of inventory and material sitting on the floor. “I said, ‘Let’s do it,’” Tetford said. “We called the employees in and told them what we were going to do…  They did not love that idea.”

But Tetford and McCarthy devised a plan and during two weeks of summer shutdown Tetford and two workers rearranged the 16,000 square foot factory. The workers came back from vacation and were introduced to the new system. “I’m very lucky I got away with that,” Tetford admitted.

Since then, said Tetford, the company has gone through a second lean redesign, but the moves have been critical. “Did we make a pile of money after that? No, but it has allowed us to survive,” he said. “There has been a tremendous amount of change. Wages have at least doubled since we started this transformation… If we had stayed the way we were, we wouldn’t be here now, not even close.”

Posted on May 22, 2015 .