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Exteme Lean'

Dave Dixon explains why only those who embrace the latest advances in automation technology, along with a relentless pursuit of business processes, are likely to succeed.

Posted: August 11, 2008

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Our column "Automation and Lean: Can They Work Together?" (Lessons in Lean, October 2007) addressed performance improvement opportunities associated with combining sound Lean business practices with state-of-the-art, automated process technology. We believe this combination is becoming even more important for two reasons:

1. The role of manufacturing in America is undergoing a fundamental shift from relatively high volume, repetitive production to the routine production of prototypes and short runs. This shift is being driven in part by the advent of competent, low cost producers in the Pacific Rim and other regions around the globe, and by the demand for a constantly expanding array of product varieties in the marketplace. Low cost foreign producers are manufacturing the high volume product ? U.S. companies are making the prototypes and smaller lots that just don't lend themselves to global sourcing.

2. Automated process technology is advancing at an astounding pace. Lack of flexibility, the major barrier to using automation in the job shop setting in the past, has been systematically eliminated over that last 20 years. Machine tool builders have responded very effectively to the need to produce small lots at frequent intervals, with much greater levels of productivity.

It is certainly true that the U.S. manufacturing base is shrinking due to the first factor. For those companies wishing to participate in the remaining manufacturing milieu, the performance capabilities supported by the second factor are a key to success.

That October 2007 column referred to a Utah-based machine shop that capitalized on state-of-the-art process technology to overcome the economic doldrums of a "me-too" competitive environment. In this article we will elaborate on this machine shop's experience in an effort to persuade you that traditional Lean value streams ? as good as they are ? may not be good enough.

JD MACHINE

JD Machine was founded in 1978 by Don Wardle, an experienced machinist who started his company after growing weary of the layoffs and uncertainties related to employment in the aerospace industry. Starting in a 1,000 sq ft building, Don built the business steadily over time. When son Matt was just eleven, he began his JD career in shipping, packaging and deburring. In 1991, Matt took over operations. Don remains engaged in company affairs, with a focus on purchasing activities.

Before 1999, the company operated in a traditional "batch and queue" environment. The equipment complement was conventional CNC lathes and mills laid out in a process-functional (departmental) arrangement. Setup times and lead times were long. Productivity was poor ? with 85 employees, the company struggled to make ends meet. In his search for solutions, Matt learned about Lean tools and a continuous improvement culture. And with encouragement and support from major customers such as Boeing, Parker Hannifin, and Autoliv, JD Machine embarked on a Lean Journey.

THE LEAN JOURNEY

By 2000, Matt had driven a complete transformation of the company. Equipment was now arranged into six cells, each containing a stand-alone capability to produce a family of parts. A typical cell consisted of two CNC lathes, a 4-axis CNC mill and supporting equipment. These processes were complemented by deburring and inspection capabilities. With experience and formal setup reduction efforts, most cells were able to run a true one-piece flow.

The results of this transformation gave JD Machine new life. Productivity improved by about 60 percent. Quality improved dramatically. Lead times were drastically reduced, and profitability was restored.

Unfortunately, profitability gained by the Lean transformation was short-lived. Over time, it became necessary to quote ever lower prices to retain repetitive jobs, and an increasing number of new quotes were lost to competitors. At some point in time, it became clear to Matt that the competitive advantage provided by the Lean journey had been significantly eroded.

A NEW VISION

In the midst of this dilemma, Matt attended an IMTS show in 2004 that introduced him to a new genre of CNC machining centers. This equipment incorporated turning, 3-axis milling and drilling into one "multitasking" unit. Careful investigation confirmed that these machines used one operator to perform the same work done in a traditional Lean cell with 3-4 operators.

On the surface, it seemed an obvious decision. But there were two hurdles.

First, the machines were very expensive ($200,000+). Second, the concept flew in the face of traditional Lean thinking which holds that the automated "monster machine" is a "monument" and a scourge on flexibility to be avoided at all costs. There are certainly situations involving other types of processes where such concerns are valid, but given the nature of JD Machine's value streams, the work performed, and the extraordinary flexibility built into the multitasking equipment, the conventional Lean wisdom did not hold up. As to the cost, the economic benefits were so compelling that they easily justified the risk.

Since then, JD Machine replaced every one of its six traditional Lean cells and virtually all of its conventional equipment with 4- and 5-axis multitasking machining centers ? each one operating as an independent value stream. Loading, scheduling and performance measurement all focus on each machine and the value stream that it serves.

EXTREME LEAN?

With the very latest process technology in place, JD Machine is positioned to join the ranks of Extreme Lean? producers. To ensure a maximum return on the investment in state-of-the-art technology, the company continues to drive improvement in supporting business processes using Lean and Six Sigma tools.
In addition, a World Class culture is cultivated through rigorous performance measurement, a formal apprenticeship program and many opportunities for employee involvement in the continuous improvement effort. Quality is at the forefront, as evidenced by the company's AS9100 certification in 2006. The results are enviable:

? A 50 percent productivity improvement and 80 percent reduction in throughput time (up and above the gains made through the implementation of Lean cells). The company now operates with 55 people (down from a maximum of 85) at a much higher level of throughput.

? Sales up 25 percent in 2007.

? Better quality.

? Extraordinary employee satisfaction.

? A very marketable set of services.

? Awarded as one of "Utah's Top 100 Fastest Growing Companies" and "Small Business Subcontractor of the Year."

Most importantly, the company enjoys once more the profits that justify the risk and hard work required to operate a successful job shop. JD Machine may well represent the face of the future for the U.S. job shop. Only those who embrace the latest advances in process technology, in concert with a relentless pursuit of perfect supporting business processes, are likely to succeed. In machining, precision sheet metal, or heavy fabrication, the Extreme? Lean solution is going to win the day.

Note: "Extreme Lean" is a registered trade mark of Technical Change Associates, Inc.

Matt Wardle is president of JD Machine (Ogden, UT), which machines a wide variety of precision parts for the aerospace industry and other customers; 801-782-4394, mdwardle@jdmachine.com, www.jdmachine.com.

David Dixon is the executive vice president of Technical Change Associates and a registered professional engineer with more than 35 years of experience in lean manufacturing, Six Sigma and other improvement initiatives.

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