“We Don’t Have Access To Adequate Funds To Make Major Capital Investments Into Our Manufacturing Facilities” (Lesson 2)

Case Study: Old Habits Die Hard

The very first company I worked with as a graduate mechanical engineer was suffering from major cashflow and debt challenges.

I was quickly channelled into working in production line engineering with a small stove and cooktop factory in Peakhurst, Sydney. There, I was given the opportunity to lead cutting-edge “process improvement” initiatives based around the same “just-in-time” (JIT) principles that have been successfully implemented by Toyota over the past 50 years or so.

The modest-sized, but aging little factory was made up of five key sections:

  • press-shop section (or sheet metal pressing section)
  • enamel painting section
  • oven assembly lines
  • cooktop assembly lines
  • warehousing of the finished goods.

The press-shop section consisted of eight sheet metal pressing machines that applied massive forces to shape the oven and cooktop metal parts before welding together. These pressing machines, or “presses” as they’re commonly known, typically apply a 20 Tonne or 100 Tonne loading, depending on their size.

The largest in this factory was a 200 Tonne press for handling the larger oven frame pressings. The eight presses were surrounded by about 100 stacks of partially completed sheet metal, commonly phrased as “work-in-progress” (WIP), with all taking up to 30 days to filter slowly through the press shop phase of the fabrication process.

Over a rapid-fire, four-month period, I revolutionised the company’s press-shop section, including streamlining the production processes through “single minute exchange of dies” (SMED) across their sheet metal presses and Kan-banning their raw materials feeding into the section and batch sizes.

Suddenly, the stockpiles of WIP disappeared, and oven frames and liners that previously took the 30 days to flow through the system were now taking no longer than two days before reaching the enamel painting section.

All of these improvements were implemented using minimal capital expenditure—less than $40,000 over the four-month period. Most of this was spent relocating machine presses and upgrading their safety systems for the introduction of SMED improvements into their tool changeovers.

Thus, $500,000 worth of WIP no longer had to snake its way through the section over the previous 30-day lead-time and, once the materials were flowing through the section within two days, we had to hold a clean-out of “obsoleted” or “out of spec” WIP that was cluttering up the section.

The clean-out disposed of a further $400,000 unusable WIP, and now the “reinvigorated” section was ready to commence Stage 2 of the JIT revolution: re-optimising production processes to transform from two-day lead-time to one-day lead-time.

Unfortunately, the press-shop section never realised the Stage 2 transformation. The company changed its focus back to pure cost management without embedding and maintaining the improvement initiatives that were so successful into the company culture.

I was re-allocated to the next “burning” section of the factory. The previous press shop section manager was re-entrusted to continue JIT improvement initiatives after my re-allocation, but soon after reverted back to old habits and 12 months later the section performed like it did originally.

I departed the company at about this time, and the factory closed two years later, with the company brand sold to an overseas manufacturer.

Aside from the great improvement initiatives that were accomplished, there were two key learnings I took away from this experience:

  1. Even the best-laid intentions and efforts by one person or a handful of people, will not necessarily save a company—especially if its senior management and/or elements of its operation aren’t 100% committed to realising the same vision and outcomes.
  2. Until any improvement initiatives have been entrenched into a company’s culture and forged into its DNA, then there will always be a real and significant risk of the company slipping back to its old habits of inefficiency.