Lean practices help keep companies afloat

By Joseph Pryweller
PLASTICS NEWS STAFF

PHOENIX (Feb. 12, 11:15 a.m. EST) -- Of the top 100 North American injection molders ranked in 1999 by Plastics News, only 87 still were in the 2002 ranking. This year at least eight more will drop off the list – five were acquired by other molders, and three went out of business.

That Darwinistic survival rate backs up a point made by three executives who spoke at the Plastics News Executive Forum in Phoenix: Nothing is a sure thing in the plastics industry, including a company’s continued good fortune.

“That is not just a slight change,” said Nypro Inc. President Brian Jones, speaking Jan. 27 at the event. “That is major turmoil in the industry.”

But what some see as turmoil in all its dismal forms, others view as opportunity. In the midst of chaos, Nypro has chosen to move much of its operation offshore and speed its work flow. Another good-size molder, United Plastics Group Inc. of Westmont, Ill., has taken an aggressive lean-manufacturing tack.

And a third prominent processor, Tech Group Inc., has targeted Six Sigma techniques and connect-the-dots automation to make its operations hum, said Mike Treadaway, vice president of operations for the Americas with Scottsdale, Ariz.-based Tech Group.

“How you change the culture part, the soft part of the business, is the most difficult to do,” Treadaway said. “But it is as important as technical capability to an organization. Culture changes make the environment change.”

“The company has to be focused on the future,” Len Graham, Tech Group director of tooling engineering, said Jan. 29 during a tour of his firm’s customer engineering center.

In the five years that Tech Group has used Six Sigma, the company has cut scrap rates by half for its operations in the Americas and increased on-time delivery rates by 80 percent. And it has led to a concrete, action-oriented approach to the future.

“We don’t create projects-of-the-month in this environment,” he said. “We don’t want people saying, ‘Here comes management again, jumping on the bandwagon of another project.’ ”

That sense of permanent culture change also pervades United Plastics Group, a $300 million molder that is wiping away the residue of previous inefficiencies. Bruce Smith, president and chief operating officer, said his company has moved wholly to lean manufacturing during the past 18 months.

The culture is imbedded in the way UPG’s 11 locations in North America, Europe and Asia are set up, said Smith, who first learned many of those principles while working in the automotive industry. The firm has created visual factories at each location. The highly detailed information system tracks data and identifies production bottlenecks, Smith said. Parts are labeled and tagged at each step in the production process.

“If today was a bad day, we want to know what happened,” he added.

The firm recognizes employee suggestions in areas such as scrap reduction and work flow. That is done through work teams, so no one person is singled out for rocking the boat. And specific, root-cause analyses of problems are handled on the factory floor, Smith said.

It is a system that forces employees to think constantly of the financial payback behind ideas, Smith said. For instance, workers considered buying hats, donuts and T-shirts for a recent company fund-raiser, but then figured the purchase would eat into about $12,000 in profit. Although those items still were ordered, the thought process had been altered, Smith said.

The work is not easy and needs the blessing of management on all levels to succeed, Smith said.

“Middle managers can put up roadblocks,” Smith said. “If a company allows people in the way to drag their feet out of the blocks, it won’t be successful.”

Nypro takes a similar lean approach, with the goal of gaining speed and flexibility along the way, Jones said. Today, gross margins have been shaved for processors, who see their customers’ margins similarly downsized. Higher-volume jobs have been replaced with smaller, fragmented applications. And product delivery times have been cut to the bone, he said.

The number of inventory turns has become a critical issue. A model is Dell Computer Corp., which turns over personal computer products an average of 6 times a day, Jones said. In contrast, Nypro’s goal is to turn over inventory 30 times a year.

The need for lean is nothing more than the need for survival, Jones said.

“Even good companies can fail,” he said. “If you’re not changing your situation, you might cease to exist.”

Reprinted with Permission of Plastics News, Copyright Crain Communications, Inc.