What’s In It For Me? Top 5 Benefits of Lean

As we move on our lean journey, I find myself often putting myself in the customer’s shoes, asking, “If I were the customer, what’s in it for me?” Truly, our lean journey is to make us a better supplier to our customers. To eliminate what causes you pain. To completely change a culture that focuses too much on functional accomplishments and not enough on whether we actually have a customer who is satisfied with our cost, quality and delivery. Following are what I believe to be the top five benefits of Lean. This isn’t to say that we are there yet, but this will give you an idea of where we are headed.

1. Delivery. The biggest pain for anyone, whether it’s in the manufacturing world, consumer world or any other world can be getting what you want, when you want it In the economic times we are in, companies can’t afford to have delays to their customers.

A lot of us came out of 2009 clutching to the orders we had like gold, hoping that any new orders would signal some sort of blip on the radar as to a possible market recovery. Post 2009, we started to see an upturn in orders from our customers only to be faced with the fact that most of the rest of the world did not plan for this or took the “wait and see” approach. After months of trying to keep lines running with limited builds, now we were faced with the opposite – we cannot build because the parts needed are delayed. Now my customer cannot make their sale, I cannot make my sale, and my vendor cannot make his sale. Ultimately, we’ll be lucky if no one cancels their order. What we are learning through lean is how to take customer demand and attach it to our production line – giving the customer what they need when they need it. We are taking the waste out of waiting and creating a quicker order delivery cycle by focusing on what the customer actually needs instead of items like “To get my throughput numbers, I need to build 500 of these, before I can run the next job (that the customer actually needs)”. Nothing is more pleasing to me than when I’m on the phone with a customer who admits they have just received an order they didn’t plan for and feeling the sense of relief when I can tell them that we can quickly alter our production schedule to accommodate their needs. Are there extra costs? Sometimes there are. Morey is creating a premium fast service to help in these times where we can respond within days. We know that at the end of the day our customers need to have delivery of product in the quantity they need at the time they need it.

2. Quality. Shortly behind delivery is quality. Quality is something that has always been there, however through Lean, we are becoming a more highly critical, self improving organization. Just a couple years ago, it was common to see the approach of “if there’s something wrong, just put it to the side and keep going”. We’ve learned through study of Toyota and the subsequent downfall of GM just how much money and time goes into fixing piles of “bad product” to make it good enough to ship. We’ve implemented an “andon system” similar to Toyota’s and gave the people on the floor the power to stop the line if they saw a problem. This was something they used to fear getting fired for, so it took a little work to get them to truly believe that it was something we wanted them to do. On one particular product, we didn’t get a unit finished for three days due to line shutdowns, orders were in danger of being late, and people were screaming at each other to forget the “lean stuff” and go back to the old way of manufacturing in order to keep shipments moving out the door. Rather than give in and go back to building the old way and putting problems off to the side, we kept the line shut down until the problems were fixed forever. Now this product is one of our highest quality products and due to far fewer problems, we have also experienced an increase in capacity and ultimately, savings.

3. Lead times. Similar to delivery, one of the most painful conversations in any customer service environment is the dreaded lead-time conversation. I hate giving the “standard lead-time is 14-16 weeks” talk almost as much as I hate hearing it from suppliers. What have we done with lead-times? Have we managed to put in a buffer safeguard at every level to insure the no one is late for anything? Only then to be able to pat ourselves on the back for meeting our “promised delivery date” while our customer walks away upset that they had to wait so long? Or do we counter this by purchasing large amounts of inventory to have on the shelf for when we need it? Lean helps us to clear out these layers of “fluff” to increase cycle times and speed up manufacturing. How can a customer know exactly how many units they will need 16 weeks from now? Of course it’s going to change! I don’t know now how much gas I’ll have to put in my car during the week of May 17! Lean poses the question of “how can we work with our customers and vendors to keep inventory low, but always be ready to support the needs of the customer with minimal lead time?”

In manufacturing, there will always be a build time, per se, but while working on efficiency and throughput improvements internally, it does nothing for the customer if we have to wait 16 weeks for a part to arrive before we can start building. In working with our vendors, we can create a material “store” scenario where, much like a supermarket, we can go to the store, get the parts we need, have the vendor refill the parts based on what we use and what we see coming, and then they turn around and do the same with their vendors. You don’t see a bread delivery driver at the store dropping off 1000 more loaves than the store needs on a given day and burying the store in something they may or may not sell. Instead, the driver is there on an ongoing basis, checking previous consumption, refilling the shelf, and working with the store on anticipated sales to determine how much to prepare in the coming days/weeks. Toyota used this concept 60+ years ago when they started manufacturing automobiles, because they could not afford to carry shelves of inventory or have a large amount of product sitting waiting for a buyer.

A lot more of our customers are moving to this type of concept in their demands from us. It is interesting to see world-class OEMs, after the struggles of the last year, coming to us and saying “We can no longer carry the inventory like we used to, we need to implement lean principles” and lo and behold, efforts we are working on internally are now tying into those of our customer base.

4. Cost-competitiveness. Of course one of the biggest benefits of lean is financial savings. By focusing on having the material needed to build what the customer wants and continually turning inventory, you are able to decrease the costs the company carries. When this happens, it is much easier to be cost competitive with other world-class manufacturers. What we have started to see is that by showing our ability to eliminate waste, and thereby lower expenses through lean, our customers start to notice that we can provide competitive pricing when stacking up against any other world-class manufacturer. Now, once price is taken out of the picture, it is easier for our customers to stack up the logistical advantages of working with a company in the United States.

5. Customer Driven Mentality. Rounding out the top five benefits of lean is what I feel the most important benefit of lean. The requires a cultural shift to a complete customer focused mentality where all members of an entire organization not only know how their role affects the customer, but thinks first of the customer and what effects we have on them. Most of us are used to companies where people know their job, and that’s about it. They don’t know how their success/failure affects the customer and sometimes, don’t even know how their success/failure affects their own company!

I’ve learned a lot from Toyota over the last year and recommend the book, The Toyota Way by Jeffrey Liker. The customer-driven mentality has caused Toyota over the years to do things that from a business perspective would have most companies screaming “Are you out of your minds!” but in the end, cemented their relationships with their customers. Even as I write this, Toyota is shutting down sales and manufacture of eight models until they understand a quality issue relative to gas pedals sticking. How many companies would risk and take the hit from a financial side in order to cement their reputation with their customer base?

This is the mentality that we are working to adopt at The Morey Corp. – Always, Always, find a way to make every customer happy.

David Seifrid is director of strategic accounts at The Morey Corporation.


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About Dave Seifrid

David Seifrid has been at The Morey Corporation since 2002, originally serving as a strategic account manager/business development manager for Morey's OEM customers. Since 2008, he has been manager of planning and customer support and focuses daily on customer orders, production planning, and logistics. He is a founding member of Morey's Lean Implementation team. Prior to coming to Morey, Dave worked in the SMT industry as a sales specialist of tape and reel products, which led him to the opportunity of launching and managing a satellite manufacturing company in Sweden that produced tape and reel for SMT parts used by Ericsson Mobile Phones. David is a 1997 graduate of the University of Illinois.