Case Study E – Company T

3.5.1 Introduction

This case study was carried out at Company T in early 2009. They were a Direct

funded company with NZTE and initiated lean manufacturing in 2007. They were 12 months into their lean initiative when this case study was carried out. Two key informant interviews and a site tour were done at this organisation. The key informants were the Engineering Manager (EM) and a shop floor Team Leader (TL). The EM was an experienced lean practitioner and he was the lean champion at the time of this study. The TL had been working at Company T for some years and he had been involved with planning, implementing, and monitoring shop floor improvement activities.

3.5.2 Description of organisation

Company T is a SME based in one of NZ’s main centres. They are a job-shop making large manufacturing and agricultural products. Each product is custom made to the end-users needs. All design and manufacturing operations occur on-site and they have a large export cliental. Company T has been in operation for 35 years and has 60 full time employees. The business gained a new shareholder-CEO in 2007. The EM joined the company two months after the new CEO and he manages the day-to-day running of the business.

3.5.3 The decision to go lean

The CEO had been exposed to lean at previous organisations and was a strong advocate of lean manufacturing however he had little experience in the implementation process. He approached NZTE to join their lean programme in 2007 and NZTE agreed to fund him as a Direct member, providing consultant support for 12 months. Not long after being accepted on NZTE’s programme, the CEO initiated the lean transformation. The CEO did not directly participate in the lean initiative and the consultant was charged with driving the lean initiative on the shop floor.

3.5.4 Strategy for change and implementation steps

The organisation had a vision but they did not develop a strategy to align the improvement projects with this vision. Their entire approach to the lean initiative was

unplanned and lean was driven as a manufacturing tool for downtime. The lean implementation was merely an ad hoc application of common tools and techniques to the manufacturing process during downtime. The TL ‘stated that ‘as soon as we have

a little downtime, it’s back to the lean projects’ validating the compartmentalised

approach Company T took with lean. It was left to the consultant to develop an action plan for the change initiative alongside the shop floor staff with little involvement from the SMT. None of the shop floor staff had any previous experience with lean manufacturing. The consultant’s strategy focused on introducing the staff to some basic lean tools and techniques with the main focus on organising the shop floor using 5S tools.

The consultant split the shop floor staff into cross-functional lean teams and he carried out training during his once-monthly visits. The consultant introduced all shop floor staff to the basic concepts of lean and the team-leaders received a more in-depth focus on leading changes. They picked the most problematic areas to focus improvements on initially. The task for implementing the changes was given to the team-leaders but most of them struggled to cope with this added responsibility. They did manage to start the implementation of 5S’s and they attempted to improve the flow through factory but overall they achieved very little during their 12-month lean programme. The EM stated that they had only made ‘one months progress with lean in the 12

months they had been implementing it’. This statement was validated during the site

tour, as there was little evidence that any improvements had taken place, as the factory was still disorderly and hazardous in many aspects. They only had basic signage and several shadow boards on the walls.

The EM had previous experience in lean manufacturing through his tertiary studies and employment in UK. While the consultant was focusing on the manufacturing section the EM was initiating improvements with the other departments. He had adopted a holistic approach to lean focussing on a long-term culture change. He had carried out detailed value stream mapping in the sales and design departments but had only done basic value stream mapping on the shop floor. However, Company T had not attempted to understand the voice of their customers and there was no alignment between any of their improvement activities with their customers. There was no alignment between the consultant and the EM during the 12-month lean programme

either. The consultant’s role was compartmentalised into a change agent on the shop floor primarily driving short-term improvements whilst the EM focused on initiating an organisation-wide long-term culture change. The EM had planned to roll-out his strategy after the consultant had completed his tasks.

3.5.6 Changes from implementing lean

Overall, the staff buy-in to lean was good and this was mostly due to the consultant’s ability to sell the benefits of lean. There was an acceptance for lean on the shop floor and they were aware that lean would be an ongoing process. There was some resistance at the very start related to the word ‘lean’, which was perceived as job losses but the lean training helped clarify this misunderstanding. Apart from an appreciation and a basic understanding of some common tools and techniques of lean, Company T has achieved very little on the shop floor. They had one notice board in the factory, which was out-of-date and disorderly. They were at the preliminary stages of the 5S project and had only achieved minor improvements to product flow through the factory. Besides 5S’s the shop floor staff had struggled to apply the concepts of lean manufacturing to their job-shop environment.

After the consultants departure the EM took over the champion’s role for the entire organisation and began a ‘full’ lean transformation. He was still formulating a strategy for change during the time of this case study and no improvement activities had been initiated. His initial focus was on completing a detailed value stream map of their entire process and creating a feedback loop with the customers and the shop floor. An upcoming project of note was the implementation of an OFI system on the shop floor to create a bottom-up feedback loop.

3.5.7 Sustaining the lean momentum

Company T’s progress with lean manufacturing was inconsequential. They were only just embarking on a true lean transformation after the consultant’s engagement. The consultant merely acted as an educator for the shop floor staff and his biggest achievement was getting staff buy-in to lean. The consultant’s involvement had resulted in very few improvements of note. Both informants shared a similar view on the Iceberg Model. The TL stated that they were merely touching the surface of

the waterline’ aspects was the real challenge of lean and that Company T should have put more emphasis on these aspects from day one. The reasons for Company T failing to make much progress with their lean initiative are discussed next.

Erroneous understanding of lean

Their approach to lean reflected their compartmentalised understanding of lean. Lean was seen as a tool for the manufacturing department, it was not seen as a holistic organisation-wide methodology for culture change. They basically saw lean as a tool for downtime and had no strategy or KPI’s in place to guide the initiative. They did not do any measurement of improvements and progress was based on anecdotal evidence. Production took precedence and lean was only attempted during downtime. The shop floor approach of lean reflected this understanding as they were under the impression that lean was just a tool for downtime. The consultant’s role was compartmentalised into the driver for manufacturing improvements with no alignment with the EM. The EM only got involved with the shop floor once the consultant completed his term. The EM was running his own initiatives with the other departments whilst the consultant was working with the shop floor staff.

Subsidised funding ‘pushing’ change

The organisation did not have any external or internal drivers for change. The NZTE subsidy was the main driver behind the implementation of the lean initiative. The CEO liked the idea of lean manufacturing but in fact the funding convinced him to commit to lean. When funding came along they made a ‘push’ for full lean implementation. The CEO did not develop an action plan for change and merely pushed the lean programme onto the shop floor hoping to eliminate manufacturing waste.

No internal lean champion

Company T realised the need for a lean champion early on and appointed the consultant as the champion. The consultant was only there once a month in the capacity of the trainer and he did not manage to sufficiently develop the capabilities of team-leaders to drive the change initiative. They needed to have selected an internal lean champion to work alongside the consultant from the start to provide

continual drive for change. Alternatively, they could have appointed the EM as the lean champion immediately after his appointment and aligned his activities with the consultant.

Lack of SMT commitment to change

The SMT showed very little commitment to change. Some of them did not buy-in to lean and none of them got directly involved in any of the improvement projects. The drive for change was left to the shop floor team-leaders. The team-leaders understood the basic concepts of lean but they found that the consultant training did not sufficiently equip them with the ability to implement changes on the shop floor.