June, 2010

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NEW! HR & Advanced Lean Leaders Alliance Peer Groups
Advanced Lean Enterprise and Human Resources Management are the latest addition to the Leaders Alliance Peer Groups. Their are 16 total groups, all specific to manufacturers. Other groups include Lean Office, Finance, Product Development, Operations,and more.

2010 Wage Survey Available
Participants who purchase the survey will get a customized, participant profile report ranking their wage data against other survey participants for each position reported. (a real time-saver)

New & Renewing Members
Lake Region Medical
RJF Agencies Inc.
Viracon Inc.
Priority Envelope
Star Exhibits & Environments
PaR Systems Inc.
Anulex Technologies
MnTAP
Trend Enterprises
Ritrama Inc.
H & B Elevators
Frestedt Incorporated
PouchTec Industries LLC
Spec Plating Corp.
Solution Dynamics
Waltz Consulting Services
Water Works Manufacturing
Amstan Logistics


NACMA 2010 Annual Workshop & Conference
Member company Lowell Inc is sponsoring the North American Coordinate Metrology Association (NACMA) annual workshop and conference. The events will contribute to the growth of expertise in coordinate measuring machine technology, improve measurement accuracy and traceability, and to promote awareness and usage of recognized practices and national and international standards. For workshop topics and agenda click here

Members in the News
Congratulations to member companies for being recognized as some of the best places to work in MN according to the Star Tribune's Annual Top 100 places to work award.

General Mills
Graco Inc.
Pearson
Medtronic
Landscape Structures
Padilla Speer Beardsley
and many more


Upcoming Events

February 7th 2023 09:00 am
- The Role of the Leader Online

February 8th 2023 08:00 am
- Creating Process Maps

February 9th 2023 08:00 am
- Sustaining Lean Culture Through Leadership Changes

February 14th 2023 09:00 am
- Learning to Solve Problems Supervision Fundamentals Certification

February 15th 2023 09:00 am
- The Role of the Leader

February 16th 2023 08:00 am
- Conflict, Communication and Collaboration

February 21st 2023 08:00 am
- Learning to Solve Problems 6 Sigma Green Belt Certification

February 21st 2023 09:00 am
- Leadership Style & Versatility Online

February 22nd 2023 08:00 am
- Root Cause Analysis

February 22nd 2023 09:00 am
- Learning to Solve Problems Supervision Fundamentals Certification

Article Index

Lean Goes Public
Article by: Justin Dorsey

Here is an interesting metric for measuring the effectiveness of Lean: a demonstrable reduction in the fights and time it takes to move prisoners from different compounds at the Rush City Level IV prison.   Maybe that sounds like fodder for a joke about government bureaucracy,   but it’s actually the result of a formal Kaizen event facilitated by the Department of Corrections and Tom Baumann, Continuous Improvement Leader for the State of Minnesota.


Water Plus Energy Conservation Equals Big Savings
Article by: MnTAP

In a state where water is abundant, many companies may not consider water conservation as a cost saving measure. However, that can be the case. Companies often pay twice for the water in the facility: once for the water entering the facility and again for the discharge to the local treatment facility.


Modularity – Does your Product Line have the Right “Gestalt”?
Article by: Bill Kaelin


MN Economic Outlook
Article by: Dr. Ernest Goss

For the month of May 2010, reported June 1, 2010. Minnesota’s leading economic indicator, based on a survey of supply managers, continues to point to advancing economic conditions ahead.


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Lean Goes Public

Here is an interesting metric for measuring the effectiveness of Lean: a demonstrable reduction in the fights and time it takes to move prisoners from different compounds at the Rush City Level IV prison.   Maybe that sounds like fodder for a joke about government bureaucracy,   but it’s actually the result of a formal Kaizen event facilitated by the Department of Corrections and Tom Baumann, Continuous Improvement Leader for the State of Minnesota.

Tom is a frank and politically pragmatic 35-year MN state government employee who comes to his current position from the  Minnesota Council of Quality.  Leaving aside the bureaucratic quip, he has a lot to show for his efforts.  In Tom's office his white board is divided into columns of governmental agencies ranging from those who have wholly embraced Lean to those who have yet to participate.  And, the board is top heavy with willing participants. 

Tom was charged with starting his department in January of 2008. Technically, he is a part of the Department of Administration.  Then and now, his low key approach is to work through the 24 cabinet level state agencies’ senior leaders.  His starting point is usually  the same: “Does your Agency have any processes that generate recurring public complaints, result in high employee turnover, or just generally drive-you-crazy?”  If the answer is affirmative, Tom asks whether they would be interested in putting together an internal Kaizen team to evaluate the situation.  As a general guideline, Tom recommends a 3-5 day event with a team of 7-9 participants.

Hundreds of Kaizen events later, Tom has numerous success stories.  One story comes from the Department of Health – Lab Division.  Before their Kaizen event, 36% of the 45,000+ annual water samples were “late” and took an average of more than 9 days to complete.  After the Kaizen, there were no late samples and the turnaround time had been reduced to 1 day.  At the Department of Human Services, the process for qualifying Personal Care Attendants once took an average of 4-5 weeks with resulting backlog of 3,000 applicants.  After the Kaizen, the queue was reduced to 400 with a turnaround time of 2-3 days.

As Tom wryly observes, “No process is perfect and imperfection in the public sector makes for good reading.”  To illustrate, he referenced a recent situation where it was “uncovered” that there were 565 instances of overpayment – out of 4,000,000 invoices reviewed. Tom responded, “The private sector would envy that kind of failure rate.”  He’s not being at all flip.  “We understand the public’s concern about  waste and inefficiency, we really do.  It’s a part of today's bi-partisan political landscape that Minnesota’s government infrastructure needs to do more with less.  Statewide, we reached a high of about 38,000 employees in the late 90’s.  Today we’re at 35,000 – and shrinking.  It’s one of the main reasons I give for doing Kaizen events  It’s just a fact.  We  need to figure out how to do more with less.”

In all, Tom has been extremely encouraged with the positive reaction that Minnesota agencies have taken towards Lean.  He states proudly, “Only Minnesota and Iowa have enterprise-wide Lean programs. We’re routinely fielding questions from other states and other countries about what we’re doing.  Interestingly, after the United States, the #1 visitor to our internet site (www.lean.state.mn.us) is India.” 

The Lean efforts have drawn attention and solid support from the private sector.  As Tom says, “General Mills has been a huge benefactor.  It’s no secret that the private sector has been practicing Lean a lot longer than the public sector.   My first exposure to it was reading about Walter Shewhart’s work at Bell Labs in the 1920’s. General Mills’ insight is invaluable.  Their Director of Global Capability Development has even been willing to sit on our State Lean Steering Committee.”

If there is a “but” to all of Tom’s success stories, it is that he is unsure of the will of the political process.  “I’ve been here a long time and seen lots of administrations come and go.  One of the things that all political parties have in common is that they always run on a campaign of ‘change.’  One party might advocate a ‘change’ in the direction of expansion, while the other advocates for contraction.  However, change is the constant.  Will our Lean Enterprise survive that?  I hope so, but I don’t know.  What I do know is that it has played a measurable part in the current trend towards smaller government by allowing fewer employees to maintain – in my opinion – the same or better level of service.  Having been a part of that process has been professionally rewarding.”      

Justin Dorsey, Director of Sales & Marketing, Advanced Capital Group located at 50 South Sixth Street, #975 Minneapolis, MN 55402. call (612) 230-3009, email jdorsey@acgbiz.com, or visit www.acgbiz.com.

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Water Plus Energy Conservation Equals Big Savings

In a state where water is abundant, many companies may not consider water conservation as a cost saving measure. However, that can be the case. Companies often pay twice for the water in the facility: once for the water entering the facility and again for the discharge to the local treatment facility.

Therefore, recycling or reusing water in the facility can lower those costs and save money. Analyzing energy use and determining what energy conservation measures can be employed will help companies save money. One company recently worked with an intern from the Minnesota Technical Assistance Program (MnTAP) to develop cost saving measures for both water and energy use.

Johnson Screens, New Brighton

In 2009, Johnson Screens, a fabricator of metal filters and screens, explored opportunities to improve processes and upgrade to more efficient equipment in hopes of reducing water and energy use. Prior to hosting a MnTAP intern, more than ten million gallons of water were consumed annually for manufacturing processes. Significant amounts of electricity were also used to support welding operations, air conditioning, lighting, various motors, and compressed air.

Water Use Recommendations

Approximately 2.5 million gallons of water was used to directly cool welds and welding equipment. Despite having a water recycling system in place, not all screen fabrication machines were connected to or using water from the system.

The MnTAP intern evaluated the water recycling system to determine what improvements and replacement opportunities were feasible. Changes that incorporated the current pipes and water system were the most economical way to reduce the amount of water used. First, all machines were integrated into the current recycling system and then new, more efficient equipment was installed, including a centrifugal separator and belt skimmer. The improved water recycling system now conserves up to 2.4 million gallons of water per year, providing Johnson Screens with $9,700 in annual cost savings.

Energy Efficiency Recommendations

Through a compressed air audit, the intern found that the air dryer for the backup air compressor ran almost continuously for about 8,000 hours per year, while its compressor only ran when the pressure of the system dropped to 90 psi or lower, which was about 550 hours per year on average. To conserve energy, a relay switch was installed on the compressed air dryer, so that it only runs when the backup air compressor is on. This improvement conserves 26,000 kWh and saves $1,400 per year. The intern also found and fixed several compressed air leaks, saving over 312,000 kWh and $16,000 annually.

Results

In addition to the water recycling and compressed air improvements, Johnson Screens implemented other recommendations. Overall, the company was able to reduce 150 pounds of waste, 2.4 million gallons of water, over 360,000 kWh, and 3,000 therms per year, with a total annual savings of $36,600. Recently, Johnson Screens was awarded the Manufacturers’ Alliance 2010 Manufacturer of the Year Award for sharing information and experiences that can help strengthen the local manufacturing community.

Making Changes at Your Facility

Water and energy conservation may be important measures for you to explore at your facility. Consider the potential for reusing or recycling water as well as exploring low-cost options for reducing energy use or even implementing new energy efficiency technologies. MnTAP, at the University of Minnesota, specializes in offering technical assistance to help Minnesota businesses prevent pollution, reduce energy use, and save money. For more information or assistance, please contact MnTAP at 612.624.1300.

MnTAP has a variety of technical assistance services available to help Minnesota businesses implement industry-tailored solutions that maximize resource efficiency, prevent pollution, increase energy efficiency, and reduce costs. Contact MnTAP at 612.624.1300 or mntap@umn.edu for more information.

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Modularity – Does your Product Line have the Right “Gestalt”?

Providing a Lean value stream is a fundamental need of any successful enterprise.  Another fundamental need for success is how well the product is conceived and designed.  Product design has the largest influence on the overall cost structure and profitability of an enterprise, but the basic assumptions regarding design complexity are not always approached strategically.

Product design can account for 50% to +70% of an enterprise’s overall cost structure.  Many companies offset inflation with productivity measures, essentially holding costs flat, while hoping the competition does not outpace their productivity gains, turning their advantages into price pressures or R&D investments that create the next generation of winning products.  Product design is especially influential on profitability in complex products and in markets that require large product variations to meet customer needs. 

To attack the problem of complex product architectures, modular methodologies can be employed to increase product variation for the market (creating top line growth) while reducing part number counts and build complexity (creating cost efficiency).   

What is a “module”?  There are three things a well conceived module must have, one with the proper “Gestalt”.  (1) A module provides a function (it does something), (2) it has defined interfaces that connect it to other modules, protecting the product bill of material from non-value added design complexity and (3) it has a strategic business reason for being a stand alone module.  Here are some examples of modules using this definition: 

  •  A phone charger transfers electrical energy to the battery via the universal connector (function and interface) and will be used on all phone models (the strategic business purpose, a “common” module). 
  •  A truck has roof, front cab, back cab and door modules to create the occupant compartment (its function).  Mechanical interfaces are defined to allow complete interchangeability so customers can design their own truck (the “styling strategy” to differentiate this product from the competition).

The graphic below shows how all three module definitions work over several generations of a camera product line.  Notice that some modules drive cost efficiency, others create product technology leadership and others allow for customer intimacy, creating larger markets, more volume and ultimately more profit. 

 

Figure 1:  A modular multi-generation product plan

Treacy[1] describes the three business strategies as Customer Intimacy, Operational Excellence and Technology Leadership.  Using modular design methods strategically, a business can expand its revenue and reduce costs simultaneously.

What we find typically is that non-modular products will optimize around one strategy, while ignoring or severely damaging the other two strategies available.  How many companies have cost reduced products to the point where they lose customers and/or their product leadership positions in the market?  How many innovative companies, who create new technologies, vanish after fast followers eat up margins with lower prices, running the technology leader out of business?  When companies position themselves to balance all three strategies, in dynamic global markets, utilizing sound modular principles, the chances of winning over the long haul are greatly increased.

[1] Treacy, M., Wierseman, F., 1995.  The Discipline of Market Leaders.  Reading, MA:  Addison-Wesley Publishing Company.

Figure 2:  How modular methods can improve all three business strategies

The Manufacturing Alliance’s network provides some great examples of what modularization can do for an enterprise. 

A local testing and load frame manufacturer has increased variations available to sales from 150 unique products to over 100,000, reduced WIP 75%, reduced OTD cycle from 48 to 14 days and reduced part number counts from 14,000 to less than 800 utilizing a modular product design strategy. 

A Midwestern commercial HVAC manufacturer increased product size offerings from 18 to 26, decreased material costs by 7%, reduced operational costs by 10%, reduced part number counts from over 14,000 to 6,000 and reduced concept to launch development time by 25%. 

CEO’s, VP of Sales, Product Management, Engineering and Operations can create tremendous value for their enterprise by asking some basic product architecture questions. 

  • Do we have a product strategy that is taking advantage of our ability to drive product technology leadership, customer intimacy and cost leadership simultaneously?  Maximizing Profits = Price * Volume – Costs
  • Does our product architecture have the right “Gestalt”, the right form and character?  Is it maximizing variation where customers will pay for it and minimizing variation where they will not?
  • Are we drowning in a sea of complexity, reacting to market demands for variation and shareholder demands for more profit, that we are too busy to learn how to swim?
  • Do our professional staffs in engineering, sourcing, sales and operations spend 90% of their time creating value or, are they spending the majority of their time managing variation (print updates, supplier change management, engineering change orders, inventory management, fixing quality issues, handling “specials”) due to inefficient product architecture?
  • Do we have a lean delivery system AND an efficient product architecture that we can build our future profitability around?

The word “modularity” has many definitions.  By applying the rigorous definition of a module described here, you can begin to define your product architecture in ways that maximize product variation while minimizing complexity costs.  This approach will maximize profits and allow you to use those profits to stay on top in your markets.  Rigorous methods have been developed to create modular global product platforms.[1] 

How does your product line measure up?

[1] Ericsson, A., Erixon, G., 1999.  Controlling Design Variants:  Modular Product Platforms.  Dearborn, MI:  Modular Management AB and Society of Manufacturing Engineers (SME).

Bill Kaelin is the business development leader for Modular Management USA and Lean Manufacturing Solutions Partnerships, driving financial performance for clients with our integrated approach to Lean and Product Architecture methodologies. Bill can be reached at Bill.Kaelin@modular.se.

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MN Economic Outlook

For the month of May 2010, reported June 1, 2010. Minnesota’s leading economic indicator, based on a survey of supply managers, continues to point to advancing economic conditions ahead.

The Business Conditions Index rose to 64.1 from April’s robust 62.4.  This was the tenth straight month that Minnesota's index has risen above growth neutral.  Components of the overall index for May were new orders at 70.6, production, or sales, at 69.3, delivery lead time at 63.4, inventories at 53.8, and employment at 63.1.  “Minnesota’s economy has begun adding jobs.  Since the beginning of the recession, Minnesota has lost more than 125,000 jobs.  Based on the latest state job data and Minnesota’s recovery from the 2001 recession, I not expect the state to fully restore these jobs until September 2013,” 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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