Lean & Nimble beats Slow & Far

Still Built on the Homefront – WSJ.com ($$$)

The Wall St. Journal surprised me — today is the start of a 4-part series about manufacturing, “Still Made in The U.S.A.” Today's feature is Bobcat, which has 1300 employees in little Gwinner, North Dakota (a town of only 750 residents). If you don't have a paid WSJ subscription, we can hope a free version of the article appears online later today (check back and I'll post a link if I have one). Good article, even if there's a bias in the graphic used (shown at the left). It's a needlepoint, as if the WSJ is saying “how quaint, we still built stuff here.”

An overview:

While many U.S. manufacturers are decamping to greener, and cheaper, pastures overseas, Bobcat, a division of Ingersoll-Rand Co. Ltd., has found advantages sticking close to its North Dakota roots to build the little machines that, among other things, are used to clean barns, dig dirt and plow snow. Bobcat has exploited its location to keep a finger on the pulse of its core market of small landscaping and construction contractors, helping it quickly develop and ship products. Also, the company's rural setting, executives say, has bred the kind of culture where problems are solved with the can-do, make-do ethos of the farm.

A few key points in bold above. Staying close to your customers is key for two reasons: 1) fast delivery (highlighted later in the article) and 2) understanding your customer's needs and use of the product (also highlighted with an example in the article. Another key point — the rural nature of the company site and employees, and the engrained frugality and common sense, reminds me very much of Toyota (a company whose executives still like to portray themselves as simple farmers).

…the company usually can deliver any of the hundreds of attachments it sells for its machines to a customer within four days, a feat almost impossible and certainly costly for any company with long supply lines stretching overseas. And by keeping manufacturing, engineering, and marketing closely linked, with people in those roles sometimes living across the street from each other, the company is better able to anticipate how markets are shifting and find new applications for its machines, says Mr. Pedtke.

The rural location poses some people challenges:

The area around Gwinner is sparsely populated, which does pose a recruiting problem — about 1,000 of the factory's workers commute up to an hour a day.

“We've pretty much soaked up all the available labor within a commutable distance,” says Herbert L. Henkel, chief executive of Ingersoll-Rand, the Bermuda-based conglomerate that bought Bobcat in 1995.

But it turns out the people who are available often make very good factory workers. Most were raised on or near farms, where they learned mechanical skills and a no-nonsense work ethic. And since there are few other employers who pay as much in hourly wages in the region, the company commands a high level of loyalty. Hourly pay averages $19 an hour, which is high by even big-city standards. The average hourly wage in North Dakota is $14.83.

Notice that the company doesn't take advantage of their workers by paying below-average pay. They create a lot of loyalty by paying a good wage and undoubtedly save money by not having constant employee churn and turnover.

Some more nice lean sounding examples, although lean or TPS isn't mentioned directly in the article:

Leading the way onto the factory floor, Dan Antrim points to an example of why he thinks farmers are good in factories. “That press was built in 1913,” says the plant manager, gazing up at a two-story-high machine used to stamp sheet metal in various shapes. Bobcat bought the machine used from another factory that was getting rid of it. The massive metal parts in such a device have changed little over the years and would be similar even in a brand new machine.

“But our guys have retooled it with the latest in controls,” says Mr. Antrim, saving the company money that could be poured into other, more important machinery, such as 200 state-of-the-art welding robots.

That's a great example, above, of “creativity before capital.” You don't need the latest and greatest machinery if you know how to run it properly (not run it to death) and know how to maintain it properly (I would bet they use some version of TPM — “Total Preventive Maintenance” or “Total Productive Maintenance.”)

The company has also imported the latest ideas for hiking productivity, such as streamlining the flow of work by bringing operations that put together components closer to the assembly line. On the line that makes the smallest machines, where this revamp is complete, assembly time for a single machine was cut from eight hours to two.

That's a nice example of improving flow by changing the factory layout — a very typical application of lean thinking. The “assembly time” is probably more a measure of cycle time or throughput time, meaning “how long does it take to get through the system.” In the old flow, I'm sure there was a lot of batching between component manufacturing and the assembly line, which adds time. That six hour gap was probably all waste (waiting), the difference between the old time (8 hours) and the new time (2 hours).

In that case above, “Assembly time” is probably not the amount of value adding time (or the amount of “touch labor”) since that time isn't usually reduced dramatically. Lean isn't about doing the value added work faster, it's about reducing the waste and the waiting time.

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