Lean Manufacturing in the Pandemic Era

Problem-solving steps up for metal fabricators in uncertain times of the COVID-19 era.

During the depths of the lockdown in April and May, Lean manufacturing—especially just-in-time inventory management—got some bad press. Were supply chains too Lean? Did manufacturers need to scrap JIT and start holding more inventory?

“There’s a lot to be said for diversifying your supply chain, of course. So much has gone to Asia over the past 30 years, and that’s going to change. Many manufacturers are reshoring and finding redundant sourcing, but I certainly don’t agree that JIT is a dead duck.”

So said Gary Conner, a recently retired consultant with the Oregon Manufacturing Extension Partnership. The two-time Shingo Prize winner has written six books about Lean manufacturing, including several about Lean in the small job shop, and got his start at a custom precision sheet metal fabricator.

Lean manufacturing’s definition seems to vary with one’s perspective. A CFO might view Lean as rooted in lead-time reduction and cash-flow improvement: reducing the time between paying for a job and shipping and receiving payment for it. Shorten a once-lengthy delivery time and you increase capacity by default. But what good is all this capacity when demand dries up entirely?

“Look to Toyota.”

So said Jeff Fuchs, President of Baltimore, Md.-based Neovista Consulting, who added that, yes, custom fabricators might not be able to apply Toyota’s approach to single-piece flow and cellular manufacturing, but that doesn’t mean they can’t look to the automaker for inspiration, especially when it comes to navigating a downturn.

The company’s San Antonio truck plant “was scheduled to open [in 2007]. As the worst of the recession took hold, Toyota furloughed across the board, but there were no layoffs of rank-and-file employees. The company ran at a low rate of production in some portions of the line, but it also built classrooms along those production lines.”

This, Fuchs added, exemplifies a broader definition of Lean manufacturing. “It’s really about developing the problem-solving capabilities of people.”

The Lean Toolbox and the Pandemic

Consider a fabricator with a well-established 5S program—sort, set in order, shine, standardize, and sustain. “5S captures all the important aspects of maintaining a safe work environment.” The “shine” component is especially applicable now. “Shining is essentially sanitizing,” Conner said.

“Standardizing” also helps when multiple people need to access the same workstation over different shifts. And this might be more common now as shops split staffs into multiple shifts, so fewer people are on the floor at a given time. This, Conner said, broadens each employee’s job as everyone carries work through multiple manufacturing steps.

The pandemic hasn’t changed the foundational aspects of the Lean toolbox, but it can affect how tools are applied. Conner described the act of identifying value-added and non-value-added activities. Customers pay only for value-adding activities, but that doesn’t mean that all non-value-adding tasks are unnecessary and wasteful.

Consider a fabricator, pre-pandemic, that implements cellular manufacturing for some portion of its product mix. Cell designers work to reduce motion (a classic Lean waste), and in doing so they move workstations close together. Employees need not waste time walking to the next station; they just hand off the work to their co-worker a few feet away.

Now imagine a fabricator designing a cell, or adjusting an existing one, to the pandemic. Nothing has changed except for one aspect: determining which non-value-adding activities are necessary and unnecessary. The extra space required for appropriate physical distancing used to be unnecessary waste; now, of course, it’s very necessary.

Fabricators are no strangers to physical distancing, particularly when it comes to process automation. They are used to safeguards around automated cutting, bending, and welding systems, which keep operators at a safe distance. That thinking now just needs to be applied to other areas of the shop floor, like assembly.

As Conner explained, an external challenge like COVID-19 might help operations discover how to do more with fewer resources. Does an assembly cell need 10 workers doing a single job, or can it get away with five cross-trained, physically distant workers? If so, could the team be split into two shifts? If that’s the case, what would be the resulting throughput?

In this situation, certain Lean tools really shine. For instance, standard work practices—documented on paper or, even better, tablets or laptops, complete with videos and pictures—help cross-train employees. Those communication tools in turn help train-the-trainer programs. “Someone can be the best press brake operator in the world,” Conner said, “but that person still might not be able to train someone effectively.”

Conner recalled his days in precision sheet metal when he used to train co-workers using a boxful of broken press brake tools and bad parts. Whenever he could, he showed these parts to new operators and walked through how and why the problems occurred: incorrect tonnage calculation, improper bend allowance and bend deductions for the die openings, and so on.

If such training becomes regular—just a recurring part of the workday, week, or month—knowledge spreads. When a crisis hits, trained people are ready to adapt.

“The pandemic gives shops a chance to reassess,” Conner said, “but only if they take advantage of it, not if we just sit around and moan and whine instead of looking for opportunity.”

Opportunities take many forms, and some might be short-term. Conner described one fabricator in the Northwest that shifted gears to produce UV light boxes for use at hospitals, so essential workers could sanitize and reuse their PPE. Demand for these boxes isn’t likely to last, of course, so it wouldn’t make sense to spend millions of capex dollars on the project. But the fabricator didn’t, of course. Instead, it used its Lean tools to make those UV light boxes without significant capital expenditures.

Historically, many have viewed Lean manufacturing initiatives as job killers, and it’s an understandable view. After all, if Lean is about freeing unrealized capacity, what if that extra capacity can’t be sold (like during an unprecedented lockdown and economic recession)? Say a 60-person company lays off 20 people, only to realize that with improved processes and waste reduction it can get by with 40?

Fuchs referred again to the definition of Lean manufacturing. It’s not just for shortening lead times. It’s about developing an organization of problem-solvers—hence the significance of those classrooms Toyota built in its San Antonio truck plant during the worst of the Great Recession.

The Human Element

Fuchs recalled a story of one Lean transformation at a factory in Maryland that involved moving pieces of equipment in different departments into one cross-functional department. It made at least one operator break down and cry.

“As an outside consultant I was dumbstruck,” Fuchs said, “until one of the team members pulled me aside and pointed to two indentations in the concrete floor. For 19 years this woman had stepped off the machine and onto the floor at that spot. It was as if I came into her home, changed all the furniture and repositioned everything without asking. Unless we provided closure for the old way of doing business, the new way of doing business was simply not going to happen.”

Fuchs added that this is where Lean manufacturing draws from psychology. When faced with disruptive change, “it’s important to maintain islands of stability and knowability. That’s absolutely key for moving people forward.”

How an operation tackles this exactly depends on the people in the team being disrupted. Some might appreciate being part of the team involved in the process change from the get-go. Others might appreciate news of the change not all at once but over time and being given a chance to make suggestions. The key is to maintain that “knowability” and not spring massive change on people from out of the blue.

It’s the first step to help people to think differently—beyond the work center in front of them—and, with enough training and coaching, become expert problem-solvers. As sources explained, the problem-solving aspect can make a company truly sustainable in the face of brutal market forces that can make products and even entire business models obsolete.

Consider again the 60-employee custom fabricator that implements Lean manufacturing purely to shorten lead times. The faster employees can get a job from the first operation to the shipping dock, the better. They standardize work instructions. The company identifies certain product families for certain value streams. Train-the-trainer programs proliferate, creating teams of cross-trained employees who can move where needed to free a constraint.

The Lean effort has made those 60 employees more valuable, and the top line improves as a result. The fabricator increases its share in existing markets and enters new ones. All seems right with the world.

Then the pandemic hits and markets dry up entirely. What now? The fabricator uses all the options at its disposal to avoid layoffs, but eventually it has no choice. It’s now down to 40 employees, who through thinking creatively find ways to reduce waste and increase throughput. They shorten lead time and become even more competitive on delivery and price.

But what about the next downturn? Or what if competitors find ways to shorten their lead times further? Eventually people feel like they’re trapped in a hamster wheel, running ever faster, forever doing more with less.

This, sources said, is exactly why Lean manufacturing is about more than just shortening the order-to-cash cycle. It’s not just about solving problems inside a manufacturer’s four walls; it’s about solving a range of customer problems too—not just delivering the right quantity of parts at the right time and price.

These opportunities can improve the top line. They send the company off the hamster wheel, so to speak, and in a unique direction where competitors can’t follow, at least not immediately.

To illustrate, Fuchs described his experience working at a small aerospace manufacturer in the 1990s. “We started our focus with flow through the factory to increase capacity. Over the course of years, we reduced the non-value-adding work and had more capacity than we knew what to do with.

“So we turned our attention to solving other customer problems. We created overnight delivery service for composite parts, a service that was unheard of at the time. Within one year after launching that business, it was greater than 50% of our revenue.”

Some precision sheet metal fabrication operations have had quick-turn departments for prototype and low-volume work. Conner himself was part of his shop’s four-person “hot shot crew.”

“We had about 130 people at that point in the shop, but the four of us in the hot shot crew could take an order and turn it within 24 hours,” Conner recalled. “The job never went through engineering or programming. We were experts in sheet metal. We could draw it, program it, and run it, then give all the data back to the engineer in case we ever ran that part again.”

The Pivot

Offering quick delivery is one thing, but what if customer demand dries up entirely? It might be time to ramp up prospecting, but sources added that canceled orders don’t mean an established customer has no need for anything else. To capture that demand, a fabricator needs to identify those unmet demands and then pivot to meet them.

2020 has been a year of the pivot for many businesses across the economy. And as Fuchs described, all those changes—especially ones in starkly different businesses—can be a treasure trove of idea inspiration.

“To stimulate your thinking, consider a nonmanufacturing example, such as [expanded take-out service in] the restaurant business. To limit their exposure, customers want to spend as little time as possible in the restaurant when they pick up their food.”

The restaurant manager might think about ways to speed the cooking and prep process to make the customer experience as efficient as possible. Still, this doesn’t consider the customers’ full perspective. Customers aren’t thinking about the “restaurant experience.” They’re thinking about all the errands they need to run, and, to minimize their risk, they’re wishing they didn’t have to visit so many stores. So restaurants pivoted, offering staples like paper towels and toilet paper, considering they were already connected to those supply chains.

Metal fabricators large and small are no stranger to pivoting. Some have expanded into inventory and supply chain management. Others fabricate material on a toll basis for their metal service center. Some offer integration services, like a custom server-rack fabricator providing on-site integration services. Each product a custom metal fabricator delivers connects to an intricate web of suppliers and customers, all of whom have problems that could use a solution.

Small Experiments

2020 has been tough for many fabricators and yet extraordinarily successful for some, especially those in the right niche. It might be tempting for the lucky minority to dive into a radically new venture with gusto, invest when prices are low, and perhaps incur significant debt. The pandemic has created a once-in-a-lifetime opportunity. Why not take advantage of it?

Not so fast, Fuchs said. “It’s very tempting to get ‘COVID pricing’ and dive right into a huge project. But again, look to Toyota. From an investment standpoint, holding Toyota stock is boring. The company doesn’t take high-risk bets. They use well-proven technology, they’re not on the bleeding edge, and they’re conservative with their cash. Other companies have smaller reserves and have taken higher-risk bets, but they also go through cycles of hiring and firing, and if a company does that, it cannot use culture as a competitive weapon, because it doesn’t offer stable employment.”

Risk, of course, depends on the circumstances. A struggling fabricator might make a seemingly bold move, but the high risk of the new venture is nothing compared to the risk of doing nothing and just letting cash bleed away. Knowledge about the target market factors in as well. But for the successful fabricator, a bold move into the truly unknown might be too risky compared to an alternative practiced by Toyota: small experiments.

“Small experiments are where we learn and then adjust based on what we learn,” Fuchs explained. “It doesn’t require a lot of time and money, and that’s good, because we don’t have a lot of knowledge about some of the situations we’re in.

“I draw from my experiences in the Army here. If you don’t know where the enemy is, you’d better not throw an entire division out there into the unknown. You send scouts, and the same thing is true in business.” The “scouts,” he said, are those small experiments that evolve over time.

A Virtuous Cycle

One challenge in all this is having time to execute those small experiments. Some operations in 2020 might have plenty of time—until, of course, the work picks up. A fabricator might, say, buy a 3D printer to experiment with printing special press brake tooling, custom back gauging, even some errorproof fixturing for an assembly operation. But then the orders start coming, providing immediate revenue the shop just can’t ignore, and so, alas, the 3D printer sits idle, waiting for the next slow patch.

The broadest application of Lean manufacturing prevents this. A fabricator continually scrutinizes its order-to-cash cycle, frees capacity, and fills that capacity with more orders, but it also has leftover capacity for those small, incremental experiments. As fewer people in production produce more in less time, more people can spend time on those experiments, thinking about and developing solutions to customer problems.

There aren’t any homeruns, just a bunch of singles that evolve over time into something significant. For instance, what started as a small experiment in 3D printing might evolve over time into an entire division, complete with custom printing capabilities and even software tailored for specific printing applications. This example isn’t new—such an evolution has already occurred at several industry suppliers—but it does illustrate the potential behind those small experiments.

The small experiments create a new market pie, which demands quicker response. The order-to-cash lead-time reduction continues unabated, which in turn frees resources to increase the top line and continue small experiments into new areas or markets.

It’s not about squeezing every ounce of productivity out of every person and machine. It’s about increasing every employee’s ability to solve problems and harnessing their collective brainpower to create a stable, steadily growing, boring business.

Written by:  Tim Heston, Senior Editor, for The Fabricator.