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Lean Production Experts Discuss MHRA's Research Program

TECHNOLOGIES spoke with Dr. Michael Mullens, director of the University of Central Florida's Housing Constructability Lab, and Dewey Warden, Lean Manager of Senco Products, Inc., a major supplier to factory homebuilders, about the application of lean production techniques to factory homebuilding and the MHRA lean production research effort. Following are their comments.

TECHNOLOGIES: What is the UCF Housing Constructability Lab?

Mullens: The UCF Housing Constructability Lab is an applied research organization dedicated to creating production innovations for U.S. homebuilders. The Lab is housed within the Department of Industrial Engineering and Management Systems at the University of Central Florida in Orlando, one of the largest universities in the U.S. The Lab typically supports 2-3 Engineering faculty and 6-10 graduate and undergraduate students.

TECHNOLOGIES: Dr. Mullens, tell us a bit about your experience with factory-built housing.

Mullens: The genesis of the Housing Constructability Lab was the Energy Efficient Industrialized Housing (EEIH) research program initiated in 1989 by the U.S. Department of Energy (DOE). In collaboration with leading architects and building scientists, the Lab supported this program from its inception, assisting both wood frame and SIP panelizers, including contributing to the implementation of the first successful automated wood frame panel line in the U.S. (profiled in the August 1995 issue of Automated Builder Magazine). When DOE transitioned the EEIH program into the current Building America research program in the mid-90s, the Lab expanded its research role to include modular homebuilding and adding energy testing capability. More recently, the Lab has collaborated with the MIT School of Architecture in research funded by the National Science Foundation, exploring the use of factory produced modules to build multi-family urban housing incorporating open building, flexible infill concepts. Late last year the Lab began a multi-year effort with the Manufactured Housing Research Alliance (MHRA), focused on bringing the benefits of lean production to HUD Code manufacturers.

TECHNOLOGIES: Dewey, what is Senco's experience and commitment to lean production?

Warden: In 1988 we formalized our continuous improvement process with a total quality management system which we call SPQI, or Senco Process Quality Improvement. This has been an excellent foundation to build upon and lean fits perfectly with that foundation. In 1992, Dr. James Womack, author of Lean Thinking, assessed Senco for a lean fit and suggested that we work with Toyota to implement lean at Senco. The consultants from TSSC, Toyota Supplier Support Center, worked with us for about nine months to help us implement lean. We implemented the 5S's (sift, sort, shine, standardize and sustain) throughout our facilities. We learned how to analyze cycle time, takt time (the rate at which a completed product is finished) and standardize work so that we could design single piece flow in our cellular manufacturing cells. We learned how to do quick changeovers and we implemented a kanban pull system to help level production and decrease inventories. Because of the many improvements we have made in safety, quality and productivity, we continue to use lean today and envision it as part of our SPQI foundation well into the future.

TECHNOLOGIES: Just what is lean production and how can it benefit factory built housing?

Warden: Lean production is a different approach to manufacturing and its support functions. Lean is getting what the customer wants, when they want it, where they want it with the least amount of waste in the value stream. There are two types of value streams, product flow and production flow. Product flow is the design flow from concept to launch. Production flow is from raw materials to the customer. Lean encourages the mapping of the material flow and the information flow within these two value streams to identify the value added and non-value added steps or processes. After identifying the non-value added waste in the value stream you can then use rapid process improvement events or kaizens to eliminate that waste and improve your safety, quality, and productivity while reducing cost.

The goal of lean production is to satisfy the customer by delivering the highest quality at the lowest cost in the shortest time, using less of everything. This is accomplished by continuously eliminating waste in all forms: defects, overproduction, transportation, waiting, inventory, motion and processing. Originating with the Toyota Production System, lean production is the result of decades of development by automobile manufacturers, who have reduced average labor hours per vehicle by more than half with one-third the defects. Other industries have followed the automobile industry's lead, achieving similar results. Early studies have suggested similar opportunities for housing manufacturers.

TECHNOLOGIES: What techniques are in the lean production tool box?

Mullens: Lean initiatives start with value stream mapping - charting the steps necessary to create value for the customer. The map is used to document the current operation and to identify wasted steps that can be challenged and eliminated. Lean initiatives then seek to provide a continuous flow of work to create this value, which simultaneously eliminates all waste and provides quick response to the customer. There are many proven lean tools. Lean concepts that may prove especially useful for housing manufacturers include: visual management - providing cleanliness, organization, and standardization in each workstation, production leveling - smoothing the peaks and valleys of daily production so that the production system can produce at the same pace every day, workload balancing - equalizing the workload of each worker or production team to meet daily production and maximize efficiency and capacity, proximity - locating machinery/materials/people close together so that they can provide value continuously, and kaizen - an empowered workforce focused continuously on seeking a better way.

Warden: I believe lean can benefit the factory built housing industry tremendously by utilizing its tools as part of an overall strategy to eliminate the non-value added waste in the information flow, i.e. from taking orders, to drawing up prints, to getting state approval and scheduling the units down the production line to delivery. I also believe that a pull system could be utilized to minimize inventory to its lowest levels to free up storage space, reduce time searching for materials and increase cash flow. The 5S's can also identify and eliminate waste. Standardized work is another tool from the lean tool box that can be utilized to increase the repeatability and reliability of any process which helps to reduce the waste in that process. There are many others but these are just a few.

TECHNOLOGIES: Are there any examples of housing plants that have successfully integrated lean production into their operations?

Mullens: Some housing manufacturers are already benefiting from the adoption of selected lean production concepts such as Just In Time material delivery, specialized framing tables and continuous improvement teams. However, few plants have successfully integrated these elements into a finely tuned production system. Industry supplier Merillat operates several lean manufacturing facilities including their Atkins, VA cabinetry door facility that was recently awarded the Shingo Prize for Excellence in Manufacturing. Called the "Nobel Prize of manufacturing" by Business Week, the prestigious Shingo Prize recognizes excellence in lean manufacturing.

TECHNOLOGIES: Dewey, how has Senco integrated lean production into its operations and what have been the benefits?

Warden: Senco has integrated lean into our operations as a method for scheduling our production based on customer demand. We use it to schedule our assembly processes, machining and fabrication processes and our nails and staple fastener production. It is the way that we keep inventories at a minimum so that we do not overproduce or create excess inventories. Within two years of implementation we reduced our work in process inventory by several million dollars and we reduced our levels in finished goods from three to six months worth of inventory to just one month. We now have less than just a few days worth of finished goods inventory but still maintain standard setting fill rates in our industry. This was accomplished by redesigning our processes into manufacturing cells, reducing changeover times, implementing a kanban pull system and continually reducing the seven wastes. In the redesigning process we looked for the seven wastes which are overproduction, excessive inventory, excessive processing, excessive conveyance, defects, waiting and unnecessary motion. We videotaped the cells, studied the cycle time, balanced the lines, standardized the work and improved productivity for our tools per hour per person.

In October of 1997 Senco received an award from the Institute of American Manufacturing Society in honor of our implementing lean processing and inventory reductions and in the same month our Senco Cincinnati Fastener Manufacturing plant won the IndustryWeek's Best Plant award. CFM completed process improvements that improved their quality levels to the exemplary standards level of 4.7 defects per million opportunities, reduced customer rejects by 89.1% and reduced scrap reductions by 43% since 1989. We reduced air emissions by 99.3% since 1987 and we reduced our cycle times by 78% and 66%, respectively, for nails and staples. Our warranty costs were reduced as a percent of sales by 81.4% since 1992 and annual labor turnover is typically less than 1%. In April of 1999 the Institute of American Manufacturing Society sponsored 64 people from 32 organizations to tour our Cincinnati Tool Manufacturing plant and our Cincinnati Fastener Manufacturing plant. By 2002 we tripled our cash flow; cut fixed overhead by 28% and cut our work in process by another several million dollars again.

TECHNOLOGIES: What's the benchmarking survey and how will plants benefit by participating?

Warden: In order to develop a strategy on where you need to go and how you are going to get there you must first know where you are relative to other organizations. Benchmarking is an excellent way to see where you are at in the process of beginning organizational change. It will give you an opportunity to analyze your needs and the speed in which you will need to implement change as well as identify the resources you will require. Implementing lean concepts is a major culture change for any organization not using it today. It takes management's commitment, time, money, patience and effort to move forward and sustain the improvements.

Mullens: The first step in our lean production research is to establish current industry baselines on key production and business performance measures. Baseline information is being collected by survey. All factory home builders in the U.S. and Canada are eligible to participate in the survey. Participating companies will receive a detailed report, allowing them to benchmark their performance against those of other manufacturers and identify opportunities to improve efficiency and profitability.

TECHNOLOGIES: What information will be included in the detailed report?

Mullens: Each participant's report will compare their performance against that of other participating manufacturers. Performance metrics will include various measures of sales/production, level of finish/customization, labor productivity, space utilization, inventory turns, safety, labor turnover, absenteeism, service costs, customer satisfaction, worker-centered continuous improvement programs, and incentive programs.

TECHNOLOGIES: Plants and products vary so much. How can a simple survey create meaningful comparisons among the great variety of plants and products out there?

Mullens: This is a challenge. To enable more meaningful comparisons and with guidance from MHRA, we plan to segment the industry based on defining characteristics such as product, plant capacity, location, market strategy and other appropriate criteria. Each participant can then benchmark their performance against all manufacturers as well as manufacturers in the same industry segment.

Warden: Many business practices are common throughout many different types of organizations. Benchmarking is an excellent exercise for any organization to go through to identify those which are the best practices. The nice thing about this survey is that it does give an organization a comparison with itself against others with similar characteristics. These comparisons will be measurable results that can be used to identify any needs or opportunities for improvement.

For more information on the MHRA lean production research or to participate in the benchmarking survey, contact Jordan Dentz at 212-496-0900 x13 or via email at