Slim Down That Waste

Everyone wants more efficiency, whether it's better gas mileage or just getting more tasks accomplished in a day. Lean manufacturing is a production system that dates back to the early 1900s with Henry Ford's automotive assembly line and Frederick Taylor's concept of Scientific Management which stated that every task could be distilled down to one best method by performing time studies and standardizing.

Taiichi Ohno, founder of the Toyota Production System, says that the purpose of lean is to "produce what is requested by the customer." Seems simple, but there's more to it. Producing what a customer requests means producing nothing more and nothing less than what is asked for, and delivering no sooner or later than scheduled.

Toyota began instilling lean practices in the late 1940s and continues to develop its lean manufacturing processes because, as says Jerry Jackson, president, APEX Precision Technologies, "Lean is a journey, not a destination." You will never reach ultimate leanness, because there will always be things that can be simplified, improved and made more efficient.

APEX Precision Technologies, Camby, IN, is a certified manufacturer of precision machined parts, including CNC milling and turning capabilities.

Founded in 1951, the company's core customer was Allison Transmissions and Allison Engines, as well as aerospace components. Tim Lamb, vice president - marketing and sales, came to APEX in 1993 with a plan to infiltrate the off-highway market in order to help the company increase its production volume.

Lamb and the APEX team successfully moved from sporadic orders of 25-50 parts into volumes of around 15,000-20,000 parts per year of a specific part number.

With a consistent working partnership with manufacturers such as Toyota Industrial Equipment Mfg., Dana, Arvin Meritor, and Mitsubishi Caterpillar Forklift America Inc., APEX wanted to do more for its customers.

Three years ago, APEX decided that with an increase in sales, $3 million in 1999 to $27 million in 2008, going lean would develop the business and its capabilities even further. The initial attempt at implementing lean practices involved reading lots of books and a do-it-yourself attitude, but after the first quarter of the year, it was time to bring in outside help. Jerry Jackson, at the time an owner of a lean consulting group and acting consultant, was called in to help.

Steps to going lean

"I start with the fundamentals of lean and go back to Ohno and Toyota production systems," says Jackson. "The first thing is to develop the 'eyes for waste'. The seven wastes to look for are time, motion, defects, inventory, overproduction, transportation, and unnecessary processes.

"These wastes are things that customers do not want to be paying for anyway. If a customer knew you were wasting time or doing unnecessary processes, they wouldn't want to pay for that, which goes hand in hand with giving your customers the value they are looking for."

After the eyes are developed to find the waste, it must be eliminated. To effectively do so, a supplier must know and understand exactly what its customer is looking for. Not just general volume numbers, but every last detail. For example, making a part look "pretty" may or may not be an important part of the manufacturing process. If painting a gear adds no value, it could be an unnecessary process wasting time, energy and materials.

Thirdly, employees must realize that if the waste is not found and eliminated, a competitor will. APEX found a way to give incentive to its workers with a Gain - Share program. A set percentage of the value added is designated for people costs. If APEX falls below the percentage (reduces people costs), the amount saved is split 50/50 with the workers. "I don't mind paying that," says Jackson, "because when we're paying Gain - Share, APEX is making a lot of money."