February, 2015

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Article Index

Lean Leader of the Month-Matt Graetz
Article by: Matt Graetz

Matt Graetz is Value Stream Manager with Renewal by Andersen in Cottage Grove, MN. He has been with the company for 10 years.

Machine Safety Management: Because Every Machine Injury Is Preventable
Article by: John Hehre

It is very clear why Machine Safety Management exists. They truly believe that every machine injury is preventable and all the work they do is centered on that belief.

Gear Up for Better Results! Blue Ocean Innovation
Article by: Warwick Alcock

There are two key reasons why manufacturers give attention to breakthrough innovation.

MN Economic Outlook
Article by: Dr. Ernest Goss

January survey results mark the 26th straight month Minnesota’s Business Conditions Index has remained above growth neutral. The overall index dipped to 60.1 from December’s 61.4.

Lean Leader of the Month-Matt Graetz

Matt Graetz is Value Stream Manager with Renewal by Andersen in Cottage Grove, MN. He has been with the company for 10 years.

Brief description of your company’s product and service offering:
Renewal by Andersen is the window replacement subsidiary of Andersen Corporation, a company that has revolutionized the window and door business for more than 110 years. Since opening our first store in Minnesota in 1995, Renewal by Andersen Corporation has rapidly grown to more than 100 markets in the U.S., becoming one of the largest replacement window companies in the country. And, since we’ve installed nearly 3 million windows, you can trust us to do the job right.

As we become more proficient in Lean in Manufacturing, it is clear that many of the principles and practices can provide similar advantages on the retail side of the business. We believe that Lean practices can provide a real competitive advantage by allowing us to profitably deliver superior products and service at an affordable price.

Over the last 2 months we have implemented Lean and 5S principles in our Boston location and we have seen dramatic results. We have reduced the time the installers are in the warehouse by 50%.  The crews now know where everything is at (5S-“A place for everything and everything in its place”).

Before: Loading docks cluttered!                  After: We have space to move


Where did you receive your Lean training/experience?
I received a lot of my lean training from Hearth Technologies and Andersen’s internal lean programs, but did receive my Lean Sigma Black Belt from TBM. I also received my Lean Leader certification from Manufacturers Alliance in 2014. 

How, when, and why did you get introduced to lean and what fuels the passion for Continuous Improvement?
I got introduced to Lean back in the late 90’s when I worked for Hearth Technologies.  They introduced me to one piece flow, 5S and the importance of standard work. I spent many hours understanding flow and how to balance work, eliminate waste and work with associates to get to a root cause. The “fuel” for me is the challenge to improve our processes and “win”, plus the enjoyment in working side by side with the people.

What are your current Lean oriented activities?
5S, Continuous Improvement Idea System, Accountability Systems, and Tier management.

What were the lessons learned in leading or training your team on a Lean project?
The most valuable lean experience has been the ability to learn from doing and practicing on the shop floor. You can learn so much from applying ideas quickly, and in most cases failing to succeed on the first try.  But with a relentless pursuit of perfection we try and try again until we ultimately achieve our goal. The power and solutions are in the “People”.  The challenge is getting them to share their ideas they have.  We implemented a C/I (Continuous Improvement) Board in the warehouse and challenged everyone to come up with an improvement idea.  The next day we had 25 ideas and the improvement process was underway. This is a great tool for organizing the ideas, prioritizing and assigning action.

Horras and Mike show off their C/I Cards!

What are the next steps in the Lean journey for your company?
With the pace of growth that Renewal is seeing over the past few years, we need to increase our install efficiency. What that means to me is we need to get out in the field and really understand our install process and look for ways to eliminate waste.   

How would you describe peer-to-peer education & training to your colleagues?
Peer-to-peer education is a powerful way to share experiences with my colleagues. I do participate in the Leaders Alliance Advanced Lean group, where I get a chance to see other facilities and bounce ideas off of a great network group. We get to see a different plant every month and learn about how they are applying the lean tools- It is a great program.

Matt is the Value Stream Manager at Renewal by Andersen in Cottage Grove, MN and can be reached at mgraetz@andersencorp.com

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Machine Safety Management: Because Every Machine Injury Is Preventable

It is very clear why Machine Safety Management exists. They truly believe that every machine injury is preventable and all the work they do is centered on that belief.

The driving force behind the philosophy is explained well on their website:

“As a young boy, Jack Reiter came to understand the importance of machine safety.  When his father operated their home table saw, a board began to bind, and then kicked back, detaching most of his right thumb while he was fumbling to find the “Off” switch. This moment in time was etched in Jack’s and his father’s minds, and with it came a determination to guard machines properly to avoid these types of accidental injuries.”

The hands-free emergency stop was developed directly as a result of the experience outlined above. However, the company did not stop there and has built a strong business around a portfolio of standard safety products, a well-developed custom design and manufacturing capability for unique situations that require safety equipment, and a robust cloud-based application that guides users through the complex and challenging tasks of machine inspection, documentation and periodic audits required by a wide array of local, state and federal safety agencies.

Do you have a machine safety program in place?
The cloud-based machine safety application should be of high interest to small and mid-sized manufacturing companies. The patchwork of local, state and federal rules and regulations covering machine safety are extensive and complex. Small and mid-sized organizations may not have the luxury of dedicated safety personnel who can be aware of and monitor changes to these regulations. In many cases, hazards are not easily recognized. Machine Safety Management has developed a deep and extensive database of machine types for both metal and wood working industries. In many cases, the database has specific information about individual makes and models of those machines. The database provides an audit checklist that allows the user to identify specific deficiencies and build a database for each piece of equipment in their shop. Each of the audit questions has direct links to the specific rules and regulations that affect that aspect of the machinery. Once the audit is complete, experts at Machine Safety Management can assist their customers in identifying specific products that can be added to the equipment in order to address the deficiency. Once the database is established, the customer receives regular notifications for any required audits. The database is also used to track all upgrades, maintenance, and repair activities for the life of the machine. OSHA is adamant about documentation – “if it’s not documented, it didn’t happen.” This application makes is much easier to maintain a safe and productive working environment.

Practice What You Preach
When you tour their facility, it becomes obvious that Machine Safety Management takes safety and Lean very seriously. You’ll find many of their products connected to their equipment and each machine has been considered very carefully with safety in mind. We all know that a clean shop is a safer shop. The facility is well organized; there is a place for everything and everything is in place. There is almost no excess material anywhere. Even the spaces below the bench tops are almost empty. They’ve also taken Lean concepts into their design work. As an example, all their designs have been standardized to use only eight different drill bit diameters for manufacturing. Machine Safety Management has also taken excellent advantage of benefits offered through the Manufacturers Alliance. The company has hosted many Leaders Alliance groups, takes advantage of training classes and peer-to-peer benchmarking opportunities. They even challenged a recent Leaders Alliance tour to find areas where safety could be improved, and acted on many of the suggestions received. The company has also adopted the Entrepreneurial Operating System (EOS).

Machine Safety Management is passionate and poised for growth, with sales represented throughout North America. Their products are in organizations from school districts to Fortune 500 companies and everything in between.  They know exactly why they exist – because every machine injury is preventable.

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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Gear Up for Better Results! Blue Ocean Innovation

There are two key reasons why manufacturers give attention to breakthrough innovation.

 1. Breakthrough innovation, as depicted in the diagram to the left, offers a leap in value to customers and correspondingly massive increases in  revenue for innovating companies (represented by the blue circle). However, revenues from incremental improvements are comparatively modest (orange circle).

2. Innovative new companies from anywhere in the world can explode onto the market at any time, transforming markets with disruptive game-changing strategies, destroying competitors, and claiming valuable blue-ocean space. If your company is not giving attention to breakthrough innovation, you could find yourself, suddenly and unexpectedly, fighting for survival.

For both reasons, manufacturers the world over build innovation capabilities, which are increasingly important for financial performance, business growth and strategic success.

What are some of the techniques used to drive innovation?

Business Model Innovation for Blue Ocean strategy
A good starting point: Examine your strategic business model, represented in the diagram left. At the heart of the model is the value proposition (the products & services that you deliver to customers). Value is created by engaging partners, resources & activities, which determine your cost structure. Value is delivered to customers through various channels & relationships, which determine your revenue structure. The difference between costs & revenues is margin. As a business leader your goal is to maximize the margin as cash flows through the business system.

Here is an example of how Casella Wines from Australia stormed the US wine industry through business model innovation. Instead of delivering prestige, quality, personality, tannins, oak, aging processes, taste profiles, judging systems, wine shows and a whole family of wines to knowledgeable wine connoisseurs, Casella Wines simplified their business model to deliver one popular red and one white wine to people who found traditional wines pretentious and intimidating , and who just wanted a fun wine that’s easy to drink. That’s the origin of a wine Casella labeled [yellow tail].

This simple, unpretentious wine won over non-wine drinkers, including beer & cocktail drinkers, novice table wine drinkers, jug wine drinkers and downscaling traditional drinkers. In the space of two years, [yellow tail] emerged as the fastest-growing brand in the histories of the Australian and US wine industries, and the number one imported wine in the US, surpassing French, Italian — and Californian wines. In the context of a wine glut, with 1600 wineries competing in the US alone, [yellow tail] had to race to keep up with sales. That’s a strong revenue structure!

At the same time, Casella stripped out all the costly prestigious wine traditions that made traditional wines expensive. They simplified their packaging and labeling, keeping it functional, but distinctive and easily identifiable. They had no promotional campaign, mass media or consumer advertising. With costs minimized and a colossal leap in market share and revenue, margins were huge. Through business model innovation, they had completely redefined the market, and claimed blue-ocean space where they had no competitors. It’s an amazing innovation success story.

Blue ocean strategy like this has the following distinctive features:

  1. It’s not concerned with competition in traditional markets — it makes the competition irrelevant by creating such a leap in value for customers that it opens up completely new and uncontested market space.
  2. It radically increases market share and revenue for the company, while at the same time reducing the company’s production costs and increasing margins.
  3. Instead of delivering to ever more finely defined customer segments, it works the other way, dissolving the boundaries between customer segments to create mass appeal.
  4. It simplifies business by delivering extraordinary value to the critical few products and services that matter most to its customers.

Another blue-ocean example: NABI, a Hungarian bus manufacturer, outcompeted local bus manufacturers in the US market by changing the rules of the game. Instead of competing on the purchase price of the bus in the traditional way, NABI’s innovations offered a total lifecycle solution that constituted a leap in value for municipality customers.

In spite of a higher initial purchase price, NABI reduced total lifecycle costs through innovative designs and lightweight materials, which lowered maintenance costs and fuel consumption. Lower emissions, aesthetic looks and lower floors for easy mounting made the buses attractive to customers. More capacity accommodated more seats, which enabled greater revenues for municipalities. Municipalities and riders loved the new buses, and, with 20% of the US market, NABI was soon on the way towards the number one slot in market share, growth and profitability. The Economist Intelligence Unit named it one of the most successful companies in the world.

Key point summary
Build innovation capabilities…

  1. Don’t get caught in a red-ocean war of attrition with competitors: get out into the blue ocean.
  2. Innovation drives revenue far more dramatically than incremental improvement.
  3. Use innovation to outperform potentially disruptive competitors from anywhere in the world.

Bottom line
Continuous improvement is no longer a competitive differentiator. Everyone’s doing it. Innovation is the next imperative — It’s the wave of the future!

(This is the fourth of a series of articles on optimizing manufacturing performance.)

Warwick Alcock is a management consultant who helps leadership teams with strategy and business performance improvement. He has extensive experience working with companies both in Minnesota and abroad. He can be contacted at warwick@agilityfirst.com.

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MN Economic Outlook

January survey results mark the 26th straight month Minnesota’s Business Conditions Index has remained above growth neutral. The overall index dipped to 60.1 from December’s 61.4.

Components of the index from the January survey of supply managers were new orders at 66.2, production or sales at 70.4, delivery lead time at 53.3, inventories at 58.1, and employment at 52.7. “Durable goods manufacturers in the state experienced healthy growth for the month while nondurable goods producers lost economic activity for January.  Overall though, the Minnesota economy is expanding at the fastest pace in the region.  The healthy growth will continue for the next 3 to 6 months,” 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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