By Brian E. Clark
WisBusiness.com
Mike Erwin always thought his company was well organized.
But Erwin, president of Tailored Label Products in Menomonee Falls, sensed that there was waste to be trimmed at his 36-employee plant.
Still, he never thought that the "lean manufacturing" program he adopted 18 months ago would be able to cut more than 30 percent out of the cost of producing the wrist bands Tailored makes for water parks and other customers.
"We will save enough money in three years from changes in making wrist bands to buy a new press worth around $180,000," he said. "And we’ve used lean techniques in other areas that have resulting in increased efficiencies, new business and savings."
The story is much the same at other firms around the state, including the Ariens Co., which makes outdoor power equipment in Brillion.
CEO Dan Ariens is a big backer of lean manufacturing, first pioneered by Toyota. Lean techniques have helped improve productivity at Ariens, a 700-employee company, by nearly 18 percent a year since 1999.
And Greg Smith, production control manager at the 400-worker Donaldson Co. in Stevens Point, said his firm has been able to significantly improve delivery times, control inventory and make other improvements by using lean techniques in the past year-and-one-half.
The program is practically the mantra at the Madison-based Wisconsin Manufacturing Extension Partnership. The private, nonprofit consulting organization’s goal is to help small and mid-sized manufacturers become more competitive.
In the past year, WMEP officials said lean techniques have helped 522 Wisconsin manufacturers cut $15 million in costs, retain and increase $78 million in sales, and save or create 1,468 jobs.
The WMEP-aided growth included a reported $25 million in investments in new plants and equipment and an additional $8.6 million in state tax revenues.
Erwin said Tailored’s sales grew from $5.3 million in 2003 to $6 million in 2004. He predicted sales will jump to $7 million this year and $8 million in 2006.
"We are clipping along and lean is one of the main tools we are using to get there," he said. "It’s an ongoing process, one that has resulted in us going an entire year without being out of stock or late with any order."
Erwin said he sometimes speaks to other tag and label manufacturers about the benefits of lean.
"I’d say about 50 percent are using it, the other half are fixin’ to get on board or at least kickin’ the tires," he said.
Without lean, Erwin said his company would not be focused on productivity.
"Lean is an excellent way to get your arms around operational excellence," he said.
"I couldn’t imagine doing business without lean," he said. "The way I see it, either you get religion or you continue to fumble around until the cows come home.
Michael Klonsinski, executive director of WMEP, said lean techniques help companies become faster, reduce waste, cut unneeded effort and better meet customer needs.
"It’s pretty much been the No. 1 strategy for manufacturers in the United States and beyond for the past couple of years," he said.
"If you are not doing lean, you are at a competitive disadvantage," he said.
Klonsinski said it is not unusual for companies to cut reduce costs by 20 to 30 percent by going lean. He also said it has helped firms that had poor on-time delivery rates of 50 to 60 percent increase that figure to 95 percent.
"It can mean the difference between keeping multi-million dollar accounts or losing them," he said. "Or even staying in business."
Klonsinski said lean’s mindset runs against the typical American process of solving a problem and then moving on.
"Lean means you work on something and work on it and work on it some more so that it becomes a habit," he said. "That’s how you get dramatic changes. It means changing the culture of the workplace."
Klonsinski said lean can help Wisconsin companies do a better job of competing with Asian or Latin American competitors that have much lower labor costs.
"Lean means fast response to the marketplace," he said. "We can certainly compete with a six-week boat trip from China."
Klonsinski said lean practices have been generally accepted by workers who understand that manufacturers need to change to survive and grow.
"This process provides for greater opportunity for input and ownership by those who are making the products,"
he said.
"It’s about going to the floor and asking workers ‘how would you make this better?’ and ‘how would you rearrange the workplace to better do your job?’"
Klonsinski said lean tools also have what he called "tremendous applications" for the non-manufacturing environment.
"There is a huge amount of waste in paperwork and invoicing," he said.
"Government, health care, academia and service industries could apply lean rigor and make great gains," he said.
"But in manufacturing, clearly the pressure is on not only from China, but from places like Wal-Mart or Home Depot reducing what they will pay," he said.
"Lean doesn’t guarantee you will thrive or even survive, but it certainly will help," he said.
For more information on WMEP and lean manufacturing, call (877) 800-2085 or look up its Web site at www.wmep.org.
