Martin Clocherty, Manufacturing Systems Director at engineering company Hayward Tyler in Luton and East Kilbride, speaks with Roberto Priolo about an 18-month lean implementation and explains how the organisation intends to sustain results.
Roberto Priolo: What was the situation of the business before the lean implementation kicked off?
Martin Clocherty: We are a very well-respected brand, with an excellent track record and a 200-year history, but in the period before the introduction of lean (pre-2011) we were experiencing cash flow problems in our main manufacturing facility in Luton, disappointing our customers with late deliveries and a frustrated and demoralised workforce.
The situation was very difficult: we had significant supplier overdue payments and potential major warranty claims of almost £1 million. In some cases our deliveries were over 125 days late, and we were 15% overmanned. Additionally, the business culture was one that did not encourage accountability. There was a lot we had to do.
RP: How did you structure your lean implementation?
MC: Our “Turnaround Plan” had two strands: one aimed to drive change through new and improved working practices; the other intended to re-structure the business. The implementation of the plan took 18 months in total.
RP: Can you briefly outline the two strands?
MC: The process improvement strand took a year to implement. Of course our workforce was skeptical at first, which meant that we needed results quickly if we were to ensure buy-in.
With the aim to identify the root causes of our problems (that became our new and only approach to treating symptoms), we set out to introduce 5S in the organisation. Without a doubt, that was the driver of our CI efforts and cultural change.
We introduced capacity planning and a target setting system, which we internally call “burn hours”, to improve productivity and ensure people stuck to the plan. We also built an in-house scheduling system that has kanban at its core, in order to minimise work in progress and the use of raw materials.
To drive accountability, we implemented what we call a “view and go” system: all ERP information is displayed on a Management Information System menu, which displays daily KPIs.
Five value stream maps were completed to solve the most complex issues (the “viruses” – as we call them – which we needed to eliminate) and their root causes.
It was clear that a lot of our difficulties were self-inflicted: for example, we had purchased an ERP system years ago, and even bought an upgrade, but we didn’t have the proper controls in place.
From the restructuring perspective, we reduced headcount, outsourced parts of the supply chain to other Hayward Tyler facilities, refinanced the organisation and reintroduced performance reviews for all employees. Without reinstating accountability we wouldn’t have gone far.
RP: It sounds like you had a busy year and a half…
MC: Very much so. In the past 18 months, we have completed five value stream maps, organised over 50 5S events, each with 10 team members (everybody on site has to attend at least one) and 20 one-day kaizen events. What would normally be a five-day event we completed in one, as we couldn’t afford to take the hit. We had to shrink it, of course, which meant we had to plan and prepare in order to be successful.
Our lean efforts were like the attack of an army: we used every possible resource available, from 5S to poka-yoke and VSM, to ensure the principles took root. An 18 month turnaround plan is not a common approach – most organisations do this in five years. The results, however, were consistent and across the board:
- Engineering milestone completion improved from less than 30% to greater than 85%;
- Original equipment average late days down from 125 days to less than 20;
- Spares on-time in full performance improved by a factor 3;
- Turned from loss making to positive contribution;
- Significant user of cash turned into cash generator.
RP: How did you achieve buy-in in such a short period of time?
MC: We understood there would be no point in using jargon to put lean under the radar – instead we conducted a diagnostic review of the business across all departments and carried out five kaizen planning events, which resulted in a one-year Turnaround Plan.
To explain to people how determined we were, we asked them to imagine this plan as a Humvee that we would drive around the business as fast as possible. The plan (Humvee) was driven and steered by us, and people could get on and off. We may have changed direction at times, but failure was not an option. Nothing could prevent us from doing it.
RP: Didn’t the 15% reduction in headcount make it more difficult to get people on board?
MC: It didn’t create problems. A lot of the redundancies were necessary due to us carrying waste through the years. We reduced staff after an agreement with the unions and no tribunal proceedings resulted from the move. We presented our performance improvement plan and leveraged the quick results we had achieved to make them understand the value of what were trying to do.
RP: How do you plan to sustain the results you achieved?
MC: We have purchased a Gemba Academy lean package. Our goal is to have every employee trained in 5S, kanban and seven wastes by 2015, when Hayward Tyler celebrates its 200th birthday. On site, we have three black belts and one green belt. By 2015, we want each senior manager to be black belt trained.
But it’s not just training that is helping us sustain results: we have also implemented 5S weekly audits, in offices and on the shop floor. To try and make them more engaging and less static, we connected them to the ERP system – the results of the audit are loaded on the ERP system, which generates a ticket action item. The right department receives the right information about a fault that is detected, and when this is fixed an email notification is sent out.
Every department in the business is connected to the 5S audits, whether they like it or not. Each employee, department and office area has its own 5S weekly action to complete, during the last hour of the week (which is the least productive). The same happens on the shop floor. Every action that is taken is connected to the system: our bespoke Management Information System is working, to the point that we have very large organisations visiting us to see how we did it.
RP: So, what’s the secret for making lean and IT work together?
MC: Getting the ERP system to do as much work for you as possible (managing the facility), and use the time you have freed up to identify opportunities for improvement and develop better products for your customer.
If we are to make the right decisions, however, everybody needs to be able to access that information at all times.
RP: Once again, it all comes down to communication.
MC: It does. Everybody needs to be given access and everybody needs to understand what lean is all about – that’s why you need real, tangible results across the board. They are your leverage in trying to get people to join you. Japanese terms don’t work – we don’t talk about “poka-yoke” or “jidoka”, but about “burn hours” and “viruses”. To that, our people have responded well.