April, 2014

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New and Renewing Companies

A Couple of Gurus
Advance Corporation
American Custom Rotomolding
APG Cash Drawer
Arete Enterprising
Banner Engineering 
Bellcomb Technologies
Best Source Electronics
Bilfinger Water Tech
Brookdale Plastics Inc
Brunn Industries, Inc
Buhler Versatile USA
Clean Air Products Inc
Code Welding & Mfg Inc
Crest Healthcare Supply
CSM Bakery Products 
Dalsin Industries Inc
Dan Dorst
Despatch Industries
Doherty Employment 
Dynamic Group
Eaton Corporation
Ecolab Inc
Emerson Process Mgmt
General Label Inc
Global Finishing Solutions
Graco Inc
HIRED-Mpls
Illume Candle
Intek Plastics Inc
IRD Glass
JunoPacific Inc
Lake Region Medical
LASX Industries, Inc
Le Sueur Incorporated
Lifecore Biomedical Inc
Liquid Waste Tech
Loram Maintenance of Way 
Mate Precision Tooling
Mazzitelli Group LTD
McCord Executive Search
Mereen-Johnson Mach 
Metro Mold & Design
MGS Machine Corporation
Michael Foods- Gaylord
Minco
Navy Island Plywood
Northern Brewer
Pallet Service Corporation
Plymouth Industries
PN Products
Ritchie Engineering Co
Robinson Rubber Products 
Sauer-Danfoss Company
Specialized Recruiting 
System Designers Inc
Tenere Inc
Tennant Company
Turck Inc
UMC Inc
Uponor
Versique
Visions
V-TEK INC
Welding Training Solutions



2014 Spring Scholarship

Congratulations to Dan Lorenz from Advance Corporation for winning the 2014 Spring
Scholarship, sponsored by Patterson Thuente.

This Scholarship offers training assistance to companies and their key employees who are
interested in additional leadership or continuous improvement skills.



Completed Certifications

Congratulations to the following individuals who have completed their certification in the first quarter of 2014. Job well done!

January 2014       
Brett Saburn-Bermo     
Sherri McCallum-Whirltronics     
Wendy Bredeson-Colder     
Sheri Neuhaus-Starkey     
Abdi Abdirizak-Colder     
Jim Boden-Nystrom     
       
February 2014     
Dan Nelsen-Starkey     
Robyn Quist-Tennant     
Andy Leininger-Starkey      
Sherry Stern-Manuf Alliance     
       
March 2014     
Jingli Zhao-Baxter     
Josh Fritz-Baxter     
Dale Walker-LeSueur     
Kencey Busick-Baxter   



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Minnesota Cup Seeks and Rewards Breakthrough Business Ideas

The 10th annual Minnesota Cup, the largest statewide new venture competition, is accepting entries through May 9. Sponsored by the University of Minnesota Carlson School of Management, the competition seeks innovative ideas from Minnesota entrepreneurs, inventors and small businesses.

Last year’s grand prize winner was Preceptis Medical, Inc., a med-tech developer of surgical tools for ear-tube procedures. Grand prize is $50,000, as well as $30,000 and professional services for winners in the following divisions:
Food, Agriculture & Beverage (new)
Energy, Clean Technology & Water
General
High Tech
Life Science & Health IT
Additionally, $20,000 will be awarded to winners in the Social Entrepreneurship and Student divisions.



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Article Index

MN Economic Outlook
Article by: Dr. Ernest Goss

For 16 straight months, Minnesota’s Business Conditions Index has remained above growth neutral. The index advanced to 66.1 from February’s 64.1. Components of the index from the March survey were new orders at 65.0, production or sales at 71.7, delivery lead time at 64.5, inventories at 74.8, and employment at 54.7.


Book Review- "What Matters Now – How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation"
Article by: David Haynes

“If I can't dance, I don't want to be part of your revolution." – Emma Goldman There's something discouraging about the subtitle of Hamel's book: "Relentless", "ferocious", "unstoppable". Those are not adjectives that I'm eager to spend my days worrying about.


2014 Manufacturer of Year
Article by: John Hehre

The Manufacturers Alliance annual Manufacturer of the Year awards ceremony brings local manufacturers together to celebrate and recognize companies that share information and experiences to strengthen the Minnesota manufacturing community.


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MN Economic Outlook

For 16 straight months, Minnesota’s Business Conditions Index has remained above growth neutral. The index advanced to 66.1 from February’s 64.1. Components of the index from the March survey were new orders at 65.0, production or sales at 71.7, delivery lead time at 64.5, inventories at 74.8, and employment at 54.7.

“Expansions among Minnesota manufacturers and value-added services companies continue to push the overall economy into a robust growth range. While not back to pre-recession levels, construction growth has been solid despite the severe weather,” said Goss.

Dr. Ernest Goss of Creighton University, used the same methodology as The National Association of Purchasing Management to compile this information. An index number greater than 50 percent indicates an expansionary economy, and an index under 50 percent forecast a sluggish economy, for the next three to six months.

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Book Review- "What Matters Now – How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation"

“If I can't dance, I don't want to be part of your revolution." – Emma Goldman There's something discouraging about the subtitle of Hamel's book: "Relentless", "ferocious", "unstoppable". Those are not adjectives that I'm eager to spend my days worrying about.

But his "How to win.." teaser disguises the larger question he raises: What does "winning" really mean in the 21st century? His answers are as much a sociological insight as a business one.

I don't want to draw too undisturbed a line between Goldman's political anarchism and Hamel's management anarchism but there are some intriguing parallels. While Goldman believed that capitalism was incompatible with human liberty, Hamel insists that embracing freedom and self-determination is crucial to the management view he advocates. But both issue forceful challenges to the status quo. Goldman said, "I want freedom, the right to self-expression, everybody's right to beautiful, radiant things." Hamel speaks of "mending the soul…ensuring that management serves a higher purpose" – finding ways to rouse the human spirit at work.

Hamel describes himself as a "committed capitalist" and like other defenders of capitalism from Adam Smith to Ayn Rand he believes individual self-interest can feed the common good. Unlike many other modern-day capitalists he insists on one key caveat¬–the linchpin of his entire argument:

"Like nuclear fission, self-interest works only as long as there's a containment vessel– a set of ethical principles that ensures enlightened self-interest doesn't melt down into unbridled selfishness."

And he is not kind, to say the least, to a certain brand of capitalists:

"Unfortunately, the groundwater of business is now heavily contaminated with the runoff from morally blinkered egomania. …we must all shoulder the responsibility for protecting capitalism from ethical vandals."

(For another sobering view of this contamination, see Thomas Piketty's important new book, "Capital in the Twenty-First Century.")

Ethics is the philosophical thread that weaves its way through his pleas to rethink the fundamental assumptions of management. The stories he tells about companies stuck in the past and those experimenting in the present all pivot on how leaders regard their relationship with and obligation to the people who work for them.

Hamel's book is divided into the five categories of things that he says "matter now": values, innovation, adaptability, passion, and ideology.

His discussion of values is first an angry denunciation of the people responsible for the banking crisis and the "blow up" of the American economy, and second, a polemic against the moral decay he sees at the root of the crisis. Not a failure of capitalism but a failure of " the custodians of capitalism." And while he doesn't have a grand plan for the "moral renewal of capitalism", he does insist that we must face up to capitalism's shortcomings "as currently practiced."

There are, perhaps, some unexpected companies in the section on innovation: Procter & Gamble, IBM, Ford – and Whirlpool. See, in particular, Nancy Tennant Snyder's book, Unleashing Innovation, "essential reading", according to Hamel.

But the real rabble rousing comes in the latter half of the book as Hamel challenges the entrenched ideology of management and the relationships in the modern workplace. As he says, "bureaucracy and control have had their day."

In an earlier work Hamel created his "Hierarchy of Human Capabilities at Work":

    Level 6: Passion
    Level 5: Creativity
    Level 4: Initiative
    Level 3: Expertise
    Level 2: Diligence
    Level 1: Obedience

His contention is that in today's economy it's the capabilities at the top of the list that create the most value. But there's the rub. Telling someone to be creative or passionate won't do much good. People choose each day whether or not to bring those gifts to work – and as Gallup, among others, have shown, mostly they choose not to. The challenge then, is not management getting employees to better serve the organization, but rather creating organizations that deserve the gifts that people can bring to work. Putting individuals ahead of the institutions. It's not a common view:

"Managers the world over have spent the last decade wringing inefficiencies out of their operating processes. Now they need to face the fact that management itself is a swamp of inefficiency."

The last section of the book is titled, "Aiming Higher." Hamel chides us for being too easily satisfied, for not being incensed by "poisonous politicking, squandered creativity, debilitating cynicism, ignoble values, ethical shortcuts, executive egomania…"

In an effort to inspire management innovators he offers 25 "moonshots", intended as a set of grand challenges – management's equivalent to eradicating malaria – a collection of big issues that can inspire innovation and focus action. Hamel's final question: "Who's going to lead and who's going to follow?" Aim higher.

Gary Hamel is the founder of the California-based think-tank The Management Lab. Since 1983 he has been on the faculty of the London Business School, where he is currently Visiting Professor of Strategic and International Management. Hamel is a co-founder of The Management Innovation eXchange (The MIX)– a groundbreaking open innovation project aimed at "reinventing management for the 21st century." (http://www.managementexchange.com)

David Haynes- Owner of Lean4All LLC providing consulting services in influencing change: aligning strategy, IT, process improvement, and organizational communication. David may be reached at david@lean4all.com

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2014 Manufacturer of Year

The Manufacturers Alliance annual Manufacturer of the Year awards ceremony brings local manufacturers together to celebrate and recognize companies that share information and experiences to strengthen the Minnesota manufacturing community.

Our winners this year are PGC, Loram Maintenance of Way, and Starkey Hearing Technologies.

PGC: A Long History of Success
 PGC 4
“People, Planet, and Profit” Leaders at PGC will tell you that they care about their employees and that they want to make sure the company is as environmentally responsible as possible. Such words are not uncommon but PGC backs them up with action.

For example, they have a wellness center that is open to all employees whenever the plant is open. A personal trainer is on contract to support the employees in their fitness goals and program. Cross training is well established and managed. Expectations for employees are clear. They are all reviewed on Safety, Quality, Performance, Behavior and Attendance. One of the continuous improvement goals is for every employee to have “their own numbers” so that it’s clear how they can support continuous improvement. All of this is supported by a very robust and comprehensive training program. One of their key environmental goals is to reduce the amount of waste from production or find acceptable alternatives for reuse or recycling. Profit is obviously important for any organization and success with People and Planet, along with a well-established continuous improvement program, will yield profits.
 
PGC, or Precision Gasket Company, is a sixty plus year old Minnesota based woman owned business. It holds a variety of certifications including ISO 9001:2008 and AS9100C. Superficially, the company makes gaskets but the underlying technology, depth of application and variety of their products is significantly more complex. The company prides itself on its ability to solve customer problems in the areas of Sound and Vibration Control, Adhesives and Fastening, Gaskets and Seals, and Electromagnetic and Radio Frequency Interference (EMI/RFI) Shielding. The company operates in both repetitive and job shop modes, making the planning and inventory control a challenge.

Lean was introduced to the company in 1999. The primary focus at that time was to reduce work in process inventory and to apply 5S principles to clean and organize the factory. These and subsequent initiatives have been very successful. Today, the company has the same inventory level it had back in 1999 but sales have tripled. The company can produce twice as many products with a given amount of labor. PGC also manages inventory for many of its customers. Like a lot of companies PGC had its share of problems along the way. For example, when the level of work in process started to drop, people assumed there was less work to do and slowed down. One way this issue was addressed was to introduce standard work and the concept of takt time, or standard production cycle time. The company has also found a good balance between formal classes and informal on the job training. One typical issue for a successful continuous improvement program is to avoid complacency and keep improving. PGC’s customers help keep the pressure on the company as their expectations for lead time keep shrinking. Where a 90 day lead time for a forecast used to be acceptable, those customers now expect less than 70 days.
Metrics are naturally a key component of continuous improvement. PGC keeps track of safety, quality, delivery and other key metrics as you would expect. Material utilization addresses both cost and environmental issues. The company cuts intricate parts from flat sheets. Waste is inevitable but there are many ways to reduce the amount and the company continues to find ways to reduce and reuse. All the measures are posted regularly and are rolled up and reviewed on a frequent basis. 

The Manufacturers Alliance has contributed to the success of the program. From formal education to wide participation in Leaders Alliance groups to connections to other companies for peer to peer sharing, the company has taken full advantage of its membership. The company also makes presentations, and hosts events and tours. PGC has even introduced customers and supplier to the Alliance so they can benefit from the opportunities.

As you would expect with a well-established Lean culture, the results are impressive. The best measures of quality are frequently from customers. John Deere, one of PGC’s key customers, has awarded the company its highest supplier certification for 6 years in a row. Last year saw a rate of zero defects per million parts. Delivery performance ranges from 99.6 to 99.8 percent. It’s no wonder the company is experiencing solid growth.

LORAM Takes a Deliberate Approach
Loram 4
“Clean that up!” When the CEO of a company makes a clear and unambiguous statement it pays to listen. It also provides a clear focus, a critical component of any change process.

The object of the CEO’s request was an R&D area and was, in a few words, a mess. Today, the area is clean and well-organized and serves as an electrical subassembly area. Anyone familiar with Lean Principles will immediately recognize the key features of the area, from designated areas for everything to visible data that describes performance. Although not Loram’s first Lean project, it is a visible example of the company’s deliberate approach to Lean improvement.

Loram Maintenance of Way was founded in 1954 to provide maintenance services for railroads. Today, the company is one of the leading providers of track maintenance machinery and services in the global railway marketplace. Services include Rail Grinding, Ditch Cleaning, Shoulder Ballast Cleaning and other activities designed to maintain and extend the life of railroads. Loram also builds much of the heavy equipment used to perform these activities. Lean improvements have been focused on the manufacturing area.

Loram’s Lean Journey began in 2010 with the introduction of the company’s first Six Sigma Black Belt. Since the deployment of six sigma, Loram has added five former or current Black Belts, 15% of the employees have been trained as Green Belts and 85% have received Yellow Belt training. Formal Balanced Scorecard reporting was introduced in 2011. Late in 2012 the company began the deployment of Lean in earnest. Early initiatives focused on the development of a lean culture with common vision, strategy and terminology. In 2013 the company sent 17 people in two groups through the Manufacturers Alliance Lean Practitioner Certification Program. The first group was tasked to work on the new electrical subassembly area. The project was staffed by the first Lean Practitioner group along with over thirty additional employees primarily from the shop floor but also other areas in the organization. Divided into six subprojects, the experience provided direct, hands-on training in the key Lean principles. The improvements implemented highlighted the need to improve the robustness of Loram’s assembly, design and production planning data. For example, information on drawings and data in the company’s Enterprise Resource Planning (ERP) contained many errors. Orders were being released to the shop floor despite the fact that material was not available. Needless to say, these and other issues are being addressed. Another project recently completed is a Kaizen event that streamlined the receiving process. Before the event, product would travel as much as 3,000 feet from dock to stock. Employees were walking more than 6 miles a day! Today, distance travelled is 400 feet or less. Measures are an important component of the continuous improvement efforts and include Safety, Quality, Lead Time and Delivery Performance. The driving force behind the initiatives comes from several directions. Company leadership is strongly supportive. The people on the floor want something different now that they’ve seen the possibilities.

Lean improvement at Loram is controlled by a very deliberate Lean Strategic Plan. The plan provides direction on everything from systems and culture to tactics to specific measures. The timetables are realistic with achievable goals. The Manufacturers Alliance has been a strong partner throughout the improvement process. They’ve been a catalyst for improvement. Peer groups, training programs, connections to other companies and outright encouragement have all been key aspects of support.

Although like many companies, Loram has a long way to go, the progress they’ve made is excellent and the momentum is strong.

Starkey: Customer Focus Drives Lean
Starkey 4
“Hearing is our concern.” Many companies claim to be customer focused. Imagine that your product goes inside your customers’ ears and affects the quality of their life every moment of every waking day. Then consider the fact that every single shipment of each product is totally unique. Customer focus becomes an imperative. Add to these facts that customers are demanding shorter and shorter lead times and increasingly sophisticated features and performance in their hearing aids and you have clear need for a strong continuous improvement culture. Fortunately, Starkey clearly realizes the need and their employees have responded brilliantly.

Starkey exists to improve the lives of their customers through specific and measurable improvements to a patient’s hearing. The entire organization, from Research and Development through production, and customer service as well as the Starkey Foundation, is totally focused on that mission.

Their continuous improvement efforts began in the late 1980’s and early 1990’s with Just In Time (JIT) methods. In the late 1990’s the company embraced Demand Flow. About ten years ago, the company moved towards Lean. Like a lot of companies, there were a lot of Lean projects including many Kaizen events but progress was slow and gains weren’t sustained. There were a number of factors behind the difficulties. For example, leaders found it difficult to convince workers that 5S workplace improvements were important when facilities were dated and in need of repair. About two and a half years ago, the company decided to remodel the manufacturing space. Leadership decided to remodel around 5S principles. The end result is a factory that looks more like an office environment. Workspaces are grouped in teams that are responsible for specific steps in the manufacturing process. There aren’t any excess tools and the level of work in process is minimal. Orders move through the process in small batches and everything is tracked specifically along the way. The one exception are rush orders. These are carried individually and have a small stick with a red flag on the box. When a rush order arrives at a workstation, the technician completes the current task and immediately takes care of the rush order. Progress has not always been smooth but over time employees have come to embrace the new approach. One of the biggest critics of the 5S initiative was watching a presentation of the new and improved workstation. It clearly looked far too neat and clean to be effective. As the presentation progressed, he was mentally checking off all the tools needed to complete the step at that workstation. At the end of the presentation he realized that exactly what was needed was there, and the area was still neat, clean and well organized. At that point he changed from a critic to one of the initiative’s biggest supporters.

Metrics are a critical component of any improvement projects. They need to be timely, relevant and actionable. Starkey leaders have worked hard to meet all three of those criteria. The measures are very timely: there are three “Standup” meetings every day. Tier One meetings include technicians and production leads, Tier Two includes production leads and production management, Tier Three brings production management together with support staff including customer service, engineering and accounting. The meetings last for ten or fifteen minutes right on the production floor. Current measures and production status are discussed along with any pressing issues that need resolution. Relevance is the next test. An excellent example of a relevant example is rate of products returned. The level of customization and sophistication of the product, along with a somewhat qualitative evaluation from the customer results in a return rate that is significant enough to warrant a lot of attention and return rates are measured and analyzed. Actionable is sometimes more difficult. For example, one of their earlier measures was hearing aids per hour. Although it was clearly relevant as it showed a measure of productivity, it was hard to understand what to do with 0.75 hearing aids per hour. Changing the measure to 90 minutes per hearing aid makes it clear; people naturally start thinking of ways to reduce the number of minutes.

The Manufacturers Alliance has been a key component of Starkey’s continuous improvement efforts. When asked how they had helped, one of the production managers pointed to one of the measurement boards on the shop floor and said he’d gotten the idea from a tour of another company. From formal training to participation in peer groups to hosting events, Starkey and the Manufacturers Alliance have had a long and fruitful partnership.

The leadership at Starkey is far more likely to spend time talking about what they are working on now and where they need to go next, than they are to talk about past accomplishments. It is clear, however, that they have made impressive progress. After visiting the company and listening to the newest features and technology available, I was actually looking forward to the day I might need one of their products. I took the hearing test on their website and it sounds like I’ll have to wait for a while.

John Hehre is a senior operations executive and provides interim management and project based consulting to mid-sized private companies in need of transformative change. He can be reached at jhehre@cprocess.com.

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