When Todd Wyman joined Ingersoll Rand (www.ingersollrand.com) in 2010, he had one marching order: Turn the diversified industrial manufacturer into a growth-oriented operating company.
Up until that point, the organization, with North American headquarters in Davidson, N.C., had been run as a holding company for a family of recognizable brands, including Club Car, Thermo King and Trane. But, though the product portfolio was impressive, the company’s overall performance was not. In fact, when the Ingersoll Rand leadership team benchmarked its operations against more than a dozen of its competitors on such metrics as revenue growth, operating margins and return on invested capital, it often fell short.
For the past four years, Wyman, the company’s senior vice president of global operations and integrated supply chain, has focused his attention on three strategies: Growth excellence, operational excellence, and creating a winning culture. And, Wyman says, the principles and practices of lean manufacturing are critical to the company’s successful transformation in these areas.
Lean—a concept conceived and developed by Toyota over 50 years ago—is underpinned by a five-step thought process, the core strategy being to create customer value by eliminating waste without gaining overhead. The term itself certainly has staying power, but many companies (some pundits say as much as 98 percent) have attempted to replicate the Toyota Way over the past few decades, and have failed.
Yet Wyman is betting on this venerable value system to turn Ingersoll Rand into a competitive threat. “I do believe lean is absolutely good enough,” he said. “In fact, it is a differentiator in the marketplace.”
>> The Status of Lean at Ingersoll Rand: Click to read how the transformation underway there will touch every division around the world
Wyman is not alone. According to a 2013 survey conducted by LNS Research, 73 percent of the 270 manufacturing management professionals who responded to the poll indicated they have formal programs planned for next year that are focused on operational excellence. Most of the companies are combining a few techniques, such as good manufacturing practices (11 percent) and Six Sigma (22 percent). But 29 percent cited lean manufacturing as the most important program to be implemented.
The key is to do it right. And that, say industry experts, is a difficult endeavor because it requires much more than a lean philosophy to pull off a successful transformation. More importantly, it takes leadership, culture and technology adaptation.
Principles vs. practices
The traditional lean principles, centered on optimizing the flow of a process, are definitely still relevant. But the implementation of lean practices as it pertains to value creation, the removal of wasted steps, and identifying customer pull must evolve to keep up with the demands of modern-day manufacturing that includes global competition, pricing pressure, new regulations, and higher customer expectations around quality and product delivery.
“Sometimes the practices should not only change to keep up with the times, but they should be utilized differently,” says John Shook, chairman and CEO of the Lean Enterprise Institute (www.lean.org). Communication, for example, a core lean “tool” used to understand customer needs, must adapt to the way consumers interact with manufacturers.
“Twenty-five years ago, a marketing department would do surveys and focus groups and then turn that information into a set of specs from which products would be engineered and designed,” Shook says. “Now, with social media, customers do so much research on their own before they buy a product,” which means companies must be engaged with them on a variety of social media channels.
According to Don Busiek, general manager for manufacturing software at GE Intelligent Platforms (www.ge-ip.com), the ability to capture comments from Facebook and Twitter and tie it back to manufacturing has helped one of GE’s customers in the consumer packaged goods industry. The diaper manufacturer couples big data analytics (which is aggregating chatter from the social media channels) with the vendor’s data historian software deployed across about 80 plants. “In real time, they are pulling data from a variety of sources and tailoring plant floor manufacturing processes based on what the consumer is asking for,” Busiek says. “If people are on Facebook saying they like Elmo diapers, they can change the [production] runs to create more Elmo pattern diapers.”
Social media on the customer service side and the ability to collect data down to the sensor level of an asset in manufacturing is causing an explosion of data that makes deploying technology an important part of any lean strategy today. The type of technology to deploy, however, depends on what the organization is trying to do.
At Ingersoll Rand, technology plays into the operational excellence strategy. Automation is applied in places where quality, capability and tolerance exceed human capabilities, Wyman says. “We also have networks of excellence in technology to look at synergies across the company. Whether we are compressing air or refrigerants, we create a synergy through technology from an engineering, design and manufacturing standpoint.”
These types of synergies have helped the company consolidate operations. In just four years, since the lean journey began, Ingersoll Rand has gone from 97 worldwide plants to 50 plants, and has spun off a few divisions. Today, only 40 percent of the company is in the middle of the lean transformation, but that is deliberate. “We have been very programmatic,” Wyman says, noting that when analyzing each value stream the company goes a mile deep and an inch wide. “Lean needs to be methodical to get traction so that we can be part of the 2 percent of companies that are successful [with lean].”
Not your father’s lean
Despite its proven, though small-scale success over the past several decades, the definition of lean in 2014 has a very different meaning than it did just 15 years ago. While the core principles have held up, the look and feel is different. “It now takes on an enterprise-wide holistic approach,” says Dale Gehring, director of lean enterprise development at ESCO Corp. (www.escocorp.com), a manufacturer of steel wear parts used in mining, oil and gas, and infrastructure development.
Over the years, organizations have moved lean from the shop floor to accounting to finance and the supply chain. “It’s no longer about putting a cell in on the shop floor and calling it lean,” Gehring says. “The dynamic nature of the business we are in relies on our adaptability and understanding of how to solve problems as an organization—full value, end-to-end.”
The problem is that many organizations are set up by department and, though they might be successful automating a process or “leaning out” an area, it might not translate well for end-to-end value.
For example, several months ago, when Jerry Wright was put in charge of lean engineering at Power Partners (www.ppiway.com), a maker of industrial transformer equipment in Athens, Ga., he began by reviewing all of the daily reports produced. There were roughly 47 reports generated each day, but only 18 were looked at by team members. By removing the excessive reporting procedures, Wright also freed up individuals who were in charge of those reports to spend time in areas that needed more help, like procurement.
Many companies have invested money in technology tools that may automate a process or appear to add value—like a report—but it actually adds an unnecessary layer. “Let’s not automate things for the sake of automation,” Wright says. “Automating a report may not take waste out.” And, holistically, if a company wants to deliver the best value from materials to shipping to the customer, sub-optimizing for a department could create bigger challenges, he says. “Maybe a department becomes more efficient in its own area, but the rest of the value stream may suffer.”
The Lean Enterprise Institute’s Shook agrees. “Tools need to be used situationally and develop in an ever-evolving way.” While the harmony between humans and technology is often emphasized as an integral part of lean thinking, if the technology is not bridging a gap, it could become a stumbling block.
To that end, sometimes it’s the good old-fashioned human-friendly practices that translate into the best lean tools. Things like the huddle—when people get together throughout the day and look each other in the eye to share what happened on the previous shift. The checklist—a simplified form of standardized rules that are identified before going to work. And, the non-technical whiteboard to communicate at-a-glance who is doing what on the plant floor.
In a world where smartphones and social media rule the way we communicate, sometimes going lean means going back to the basics. A whiteboard, for example, is a streamlined approach that everyone understands, regardless if they’ve been working on the shop floor for 40 years or for four days.
Bottom line: Employees are important in a lean culture. Understanding that can make or break a lean rollout, because a true lean culture puts value not only on the customer, but also on the people in the process.
“In Toyota’s mind, people were in the equation,” ESCO’s Gehring says. “It was part of their culture, but they couldn’t explain how they did it.” Respect for people and customer value were written into the Toyota house. It was foundational, Gehring says, but many North American manufacturers don’t understand it. “The hardest part of a lean rollout isn’t teaching the tools, it’s changing the culture.”
Commenting on Ingersoll Rand’s continuing journey with lean (see sidebar for details on the company’s current status with the practice), Wyman says, “We are really early in this journey, but we are excited about the results and we think we are onto something.” Failure won’t be an option, but he understands why some companies can’t deliver on the lean dream. “It’s a grind. It takes a lot of discipline to put the standards to work on a daily basis in order to see continuous, sustainable results.”
But is lean good enough? The consensus: Yes, it is.