Note: Links to all of four Japan factory tour posts and the various lessons from those tours can be found here.
Today our Japan Kaikaku Experience team visited our final company. We're lucky it's our final company as another might make our brains explode with information and ideas. Like the first three this one was also pretty incredible.
I've been asked to protect the confidentiality of this company so I'll just say they're a contract manufacturer of low volume high variety electronics boards, with sales a little shy of $100 million. Established in the early 1980s, they now have over 200 employees working on a single shift. Customers range from low tech appliances to large multinational technology companies. They successfully compete with companies that have lower costs as measured by traditional balance sheets.
Once again, our entrance provided some visuals as to why this company is different. They were nice enough to let us take a lot of photos but I will not jeopardize their competitive advantage by showing any photos of the shop floor. However I will show you these two photos to set the stage for my story.
So who do you think that is on the right? How about the president of the company? Yes, that's right. The president scrubs the office floor each morning. In fact, almost all of their employees work on cleaning the entire building, including sweeping the road out front, for thirty minutes each morning. You should have seen the looks on the faces of some of our team when our Gemba guide told us who that was. The president of nearly a $100 million company.
How about one more photo to stress three themes you'll hear a lot of in the next few paragraphs. Looks like a typical office area, right? Sort of, at least. Notice that everyone is standing? That's because no one sits at the company. No one.
Including the president and his executive staff... and you're looking at them. That's the president standing at his desk in the back, on a freshly-cleaned floor I might add. And in the same room, standing at their desks, are his directors of various core business functions. All standing, all in the same room, talking to each other, making quick decisions, looking at the same data on the boards surrounding them.
Notice anything else? That is one clean floor, isn't it! Even underneath everything... because every piece of furniture is on wheels. In fact, everything, everything, at the company is on wheels. Designed specifically to be moved around for thorough cleaning and also for rapid workspace reconfiguration. See that plant? On wheels. Trashcans? On wheels. Fire extinguishers in the corners? On wheels. They even put their vending machines on wheels. I could show you photos of newspaper racks, production equipment, conference room tables... everything. Some manufacturer of casters and wheels made out like a bandit with this company.
What you can't see in the photo is that everything is also labeled and there is a second label to indicate exactly where it should go. Once again, I mean everything. Not just racks of parts and production equipment. Try the clock on the wall, clothes hangers in the closet, individual conference room tables... everything. I would challenge you to find a single item in that entire facility that does not have a label and an indication of where it should go. This is literally the ultimate example of 3S (they believe if you do 3S really, really well you don't need to worry about the 4th and 5th "S" of 5S).
Have they gone overboard? How about I tell you their story before you decide.
In the late 90's the company was having problems. Competition from both domestic and foreign companies was become fierce. The company was struggling. They bid on a large project for a major electronics company that happened to already be on the lean journey, and when that company heard about their long assembly lines they told our friends to go away. But our friends then did something other companies probably wouldn't have done: they asked that potential customer for help. And they got some pointers. Thus began what the company calls their "production revolution." The Revolution has four components: a clear vision, exhaustive 3S, a new production system, and a new operations management system.
The first component, the clear vision, began with a slogan: "If I change, our company will change." Simple, and it really resonated with our tour group as well. How did they come up with the slogan? They asked their employees. The slogan came from one of the shop floor associates, and a badge with the slogan is worn by everyone. By the way, the other slogans were also kept, and have been painted on the vertical portion of stairwell steps so you can't help but read them when you climb the stairs. Also in each stairwell is a poster saying "don't talk about the past, don't talk about other people, don't say you can't do it." Good words.
There are five components to the vision: everyone is an entrepreneur, embrace change before it's needed, customer satisfaction is number one, create purpose and hope, go on offense don't stay on defense. Simple and clear.
The second component of the revolution, "exhaustive 3S", is the primary reason why we're here. "Exhaustive" is an understatement. This company literally had just a couple months to make a radical change or they'd go under. Their 3S component was dramatic, but the alternative was even more dramatic. So how they do it?
Sort: their criteria was if you don't need it for three months, get rid of it. They threw out twenty truckloads of equipment, material, and files. In fact, they decided to get rid of the conveyors and then figure out how to manufacture without them. Some serious guts. They also threw out all single person desks and began doubling up, and now double up on almost all desks. By the way, they have not missed anything they threw out, so there must be something to that three month criteria.
Straighten: the staff built shelves, shadowboards, and organized according to a mantra of "be able to grab anything you need within one minutes"... that included tools, paper, equipment, and raw materials.
Sweep: they painted the facility, stripped and waxed the floors, and even did some landscaping.
It took four months of very intense activity, 24,000 hours to be exact, but it got done. Looking back they're glad they didn't know what the financial cost would have been as they may not have embarked on the journey, which has saved their company.
Now there is 3S activity every morning from 8:20 to 8:50. The managers clean the toilets. Yes, really. I know my staff is probably getting a little scared right now.
As I mentioned before, they got rid of their conveyors and eventually converted everything to U-shaped cells. That shape, combined with the balancing and kanban effect of cells, led to a doubling of labor productivity while reducing space requirements by half.
Similarly, they decided that everyone must stand up. Operators, technicians, engineers... even the president. The only exception is for design engineers. They discovered that the ergonomics of standing are better than sitting, especially for production operators who need to twist to grab parts out of bins. Workplace health issues decreased.
But most importantly they found that standing creates action. When you're sitting you have a tendency to put off going to the gemba, to see what's going on, to go talk to people. When you're already standing it takes less effort. It's hard to daydream standing up so overall productivity goes up. Barstools were initially provided, but are no longer requested. The first month or two of this policy was very tough and created a lot of complaining, but by the third month everyone was feeling more healthy and they felt like they got more accomplished. No one complains now.
3S and the standing policy are what they call the "non-negotiables." Most of our organizations have a problem with discussing issues and opportunities without ever coming to a true resolution. This company, or its managing director in this case, got around that problem by just saying it will happen. Period, end of discussion. Ruthless? Perhaps. But in a future post I'll discuss how we learned over several days that a certain degree of ruthlessness can be a good thing.
One interesting aspect of their 3S program involves electronic files. Many of our companies are moving more toward electronic data, and believe it's not worth the effort to throw those files away. Electronic storage is cheap. This company believes otherwise, and every three months they review files to see what can be discarded.
Along the way the fell into a value stream organizational structure. Initally by decided that there was too much blame going on between sales, purchasing, and manufacturing. They decided that the guy making the sale should also procure the parts to ensure that the parts would arrive on time. Then they decided the same guy should plan the manufacturing schedule to ensure what was committed to the customer would really happen. That worked for a while, but eventually became a bit much for "that guy." However the value stream organizational style remained, with full top-to-bottom accountability.
They have another mantra: "the most powerful salesman is a good shop floor." That has driven many of their shop floor improvements, and now they know that bringing a potential customer in to see their facility nearly always results in a sale.
Truly a remarkable company. Perhaps a little extreme on 3S, but that's what it took to galvanize their company on a common theme that returned them to profitability. It will be interesting to see what happens as they apply that same passion to other facets of lean manufacturing in the upcoming years.