Lantech CEO offers a close-up, candid look at his personal transformation as a leader and a practical, in-depth, story about lean management success, fall, and comeback.
Deterioration in process performance is inevitable unless management goes to WAR to support the frontlines.
By Jim Lancaster, CEO, Lantech
A mid-sized industrial equipment manufacturer in Louisville, Kentucky, Lantech was one of the first companies outside of Toyota and its suppliers to truly embrace the principles of the Toyota Production System, the prototypical lean management system. In the 1990s, cross-functional improvement teams transformed operations, creating one-piece flow, removing batch processing, improving quality, accelerating production velocity, and freeing up millions of dollars in inventory.
The company’s dramatic improvement was featured in the Harvard Business Review and business best-seller Lean Thinking. Groups of executives, managers, and continuous improvement practitioners visited to see how a company committed to continuous lean improvements operated.
So much energy and opportunity was generated by the initial lean efforts that it took years for Lantech’s leaders to spot troubling signs: processes deteriorated and, as a result, the continued positive impact on the bottom line slowed after the first few years of dramatic change.
Process “Wind and Waves”
Fortunately, Lantech found the missing piece to sustaining continuous improvement efforts. The basic principal was that any industrial or business process is like a sandcastle. It’s beautiful at first but wind and waves will destroy it unless it is maintained. The “wind and waves” in process are changing conditions — a tool got dull, a part design changed, a new operator wasn’t trained properly, or a vendor part’s tolerance moves. The same of course is true for business process only the variables that change are different.
After months of observations, experiments, and some outside coaching, the Lantech team installed a new system of “daily management.” The system is based on overlapping daily and weekly cycles of standardized work activities that managers at every level use to resolve frontline operational problems immediately. The management system shifted the focus of the lean effort to maintaining processes before improving them.
But how does that work in a company with more than 400 people in Louisville and a plant in The Netherlands?
First thing in the morning, operators in production cells meet for 15 minutes with team leaders to verify they have what they need to be successful that day. Do they have the tools, equipment, power, parts, and skills? If they find a problem they can’t fix immediately, they write it on a nearby board.
At 6:15 to 6:30 a.m., the team leaders meet with their corresponding production line leaders to get frontline operators the help needed to resolve problems on the boards not already resolved. They also review process performance metrics, recorded on a different area of the board from the day before. Metrics that are out of standard are marked with a red card. If performance in any process has deteriorated, line leaders help operators get back on track by first observing and investigating what changed to cause the variance in the metric.
Issues that can’t be resolved there are taken by the line leaders to a half-hour meeting at 6:30 a.m. with the materials manager, plant production manager, and the manager of a resources team, staffed by a welder, machinist, and general assembly workers.
Plans for WAR – “Walk-Around-Review”
At 7 to 8 a.m., the production manager checks for process deterioration plantwide by taking a “walk-around-review”(WAR) through shipping and every area in manufacturing. From 8 to 9 a.m. team leaders in technical services, sales, marketing, engineering, product development, and service meet with associates. The agenda everywhere is the same – review metrics to catch performance deterioration, discuss what corrective actions to take and who will take them.
Starting at 9 a.m., a rotating group of senior leaders, including the CEO on Mondays, conducts a 90-minute WAR of the entire company. The manager of each area meets the senior management WAR team at their local boards to discuss any metrics marked by a red card. These daily reviews aren’t peripatetic staff meetings. Staff meetings are about updating the boss. The walk-around-review is about management following standardized work to support the frontline.
Many managers, especially CEOs, will say that the whole idea of personally reviewing dally the performance of frontline metrics is a waste of time; their time should be spent on strategic vision, innovation, or dramatic improvements. These are all important, but the impact of focusing on daily metrics is absolutely huge.
Think about it. A critical piece of being a successful company in the long-term is accumulating competitive advantage faster than the competition by making improvements. Competitive advantage accrues as improvements are implemented and maintained.
The problem is that improvements in quality, cost, delivery, productivity, flexibility — any process improvement — deteriorates over time. It’s inevitable. Failure to stop deterioration means no competitive advantage accumulates to make a company more competitive, more profitable. Solving the problem that presents itself now is more valuable than finding and attacking the most important problem. Solving today’s problems—the immediate problems that might seem simple or insignificant— has helped Lantech continuously improve productivity, quality, cost, delivery, safety, and quadruple profitability without pressuring people to work harder and faster or outsourcing to a cheap-labor country.
Jim Lancaster is CEO of Lantech, known as the worldwide leader in stretch wrap technology and innovation, as well as case handling equipment. He is the author of the new book The Work of Management: a daily path to sustainable improvement, published in March 2017 by the Lean Enterprise Institute. He also serves as board chairman at Jefferson Community and Technical College to personally support technical and vocational education in Louisville and is involved in other educational efforts.