NO EASY FIX

For Donald L. Tufts, co-founder of Tufts Grinding Inc., the epiphany came when he realized that to walk from one end of his steel bar processing plant to the other, “you had to know the secret route,” so thickly were all pathways strewn with inventory.

What’s more, recalls his brother and co-owner Art Tufts, “we were digging for steel constantly … everything you needed was on the bottom of the pile. When a truck showed up to ship, you could bet that the load he needed was somewhere on the bottom.”

Those weren’t the only trouble signs the Tufts family saw in 2005. Although sales at the South Chicago Heights, Illinois, company were rising, its safety record was poor, machinery breakdown rates were high, ontime delivery rates were mediocre, and there was a stale sense about the place. Well past its precarious early years, the business lacked a unifying sense of purpose. It felt like Tufts Grinding was going nowhere.

“We all had this feeling,” says Bryan D. Tufts, Don’s son and the company’s vice president and general manager. “All of a sudden, we just kind of hit this level and we were stagnating. We felt like we were stuck.”

“We still had better visions for what we could be out there,” says Art.

“We were just keeping on, keeping on. I thought, ‘We can do better than this,’” says Don.

Thus unanimous about the need for change—Dan, Bryan’s brother and the plant manager, was nonspecifically anxious, too—the Tufts family cast about for a tonic to rejuvenate Tufts Grinding. How about going for ISO quality certification? That might shake up the place and give everyone a better reason than the paycheck alone to report for work each day.

Potential consultants were found to help guide the process. But as they surveyed the vast, crouching battalions of steel that occupied all available space, ISO certification seemed a bad fit. What was needed, one consultant advised, was not just a fix, not just a tool for improvement, but a willingness to commit to the whole “continuous improvement” enchilada. What was needed, the consultant said, was lean manufacturing.

In for a Penny

That advice, received in August 2005, was not instantly understood. For one thing, the older Tufts brothers had no idea what lean manufacturing might involve. “We were still in the mass production era,” says Art. The younger brothers thought the term “was a buzzword,” not the systematic, intensive cultural transformation that lean manufacturing really is.

But the family agreed to look into it. Bryan began to read everything he could find about lean manufacturing. The consultant described the lean manufacturing process and offered an initial framework for Tufts Grinding to begin its improvement journey. Don and Art thought it through and decided that yes, lean manufacturing was probably the right course of action, but no, they were not the right people to lead Tufts Grinding into it. That task would fall, instead, to the next Tufts generation, Bryan and Dan, who assumed day-to-day operational responsibility for the company. Don and Art promised to do whatever was required of them to make it all work.

“We wanted it to work, but we thought they could do a better job of carrying it out than we could,” says Don of the plan.

Bryan, now 35, and Dan, 33, were a good fit for the task. Bryan, who holds a business degree, pushed his first bar into a grinding machine when he was 11 years old. “I grew up with the business, and I always hoped I would end up here,” he says. He joined Tufts in 1995.

Dan is an electrical engineer who worked at Tufts Grinding while in high school. But he didn’t really expect to return to the company because “I didn’t expect them to be able to support my degree.” After surveying a number of opportunities, however, he changed his mind because Tufts “was going to give me the most flexibility. I wasn’t going to be narrowed into that one little field” that large companies typically demand of newcomers. Dan joined Tufts in 1999, and his job is nothing if not flexible. As plant manager, he is responsible for operations, automation, hydraulics, pneumatics, structural issues, machine maintenance and upgrades. If it moves, it has Dan somewhere around it.

What it Means to Be Lean

For those who don’t have a firm grasp on the concept of lean manufacturing—and that would include perhaps 80% or more of North American manufacturers that have yet to “dabble in or include lean manufacturing in their thinking,” says Mark Tomlinson, executive director and general manager of the Society of Manufacturing Engineers (SME)—it is as much a calling as it is a way of doing business. Just about every critically important lean manufacturing concept originated with Japanese automaker Toyota. The Toyota Way, by University of Michigan Professor Jeffrey K. Liker, is the Rosetta Stone of the lean manufacturing culture. Correct application of lean manufacturing concepts requires relentless dedication to the cause of waste reduction and operational improvement in every aspect of an enterprise and for all employees of all ranks, from the CEO to the night janitor who empties wastebaskets and wipes down lunchroom tables.

“It is a commitment to continuous improvement, to recognizing and celebrating change,” says Tomlinson, whose SME is a lean manufacturing proponent that, among other things, operates a practitioners’ Web site called the Lean Registry. “The philosophy of continuous improvement goes back for decades to the Crosby quality system, continuous process improvement and Six Sigma. Those are all tools, a process. Lean manufacturing is a culture, not a process, and its true value is the cultural transformation that takes place inside the organization.”

An ongoing focus of lean manufacturing is to identify and eliminate waste in all parts of the business, not just the shop floor. “Most often, when lean fails, it is because companies feel it is only for one segment of the organization,” says Tomlinson. “… the decisions that are made on the factory floor have impact in accounting, in human resources, on finance, in purchasing and material control, on the CEO and on the strategic plan. It all fits together.” Or it all falls apart.

Another misconception, says Tomlinson, is that lean applies only to traditional manufacturing. “You have to understand the definition of ‘manufacturing,’” he says. “It includes the design process, the part process—how you make it—the machinery required to make it and the supply chain. It’s not just the shop-floor component, and when you understand that, you see that everything is manufacturing. A doctor in emergency surgery is manufacturing a solution to a problem.” A writer is manufacturing a part for a magazine, perhaps. “That’s why lean can be used across many different industries and professions,” says Tomlinson.

At Tufts Grinding, the dominant culture in 2005, some 22 years after Don and Art started the company, was traditional mass production. As a bar processor, Tufts buys round steel bars of up to six inches in diameter, then turns (cleans and roughly sizes), polishes and grinds them to exacting specifications (with laserguided tolerances of 20 millionths of an inch) for size, straightness and surface finish. The company can grind bars as large as six inches in diameter, but turns only those three inches or smaller. The ground bars are used to make a very wide range of parts, such as cylinders, pump shafts, conveyor system rollers, propeller shafts—“anything that needs a bearing on it,” says Don.

Starting Out

Don and Art learned the business the old-fashioned way, from their father Woody, a metallurgist whose entire career was in the steel bar business. Woody cranked up his own company, Kraftsman Industries, in 1969, also in South Chicago Heights; Don and Art joined him in the 1970s. Woody’s business was eventually sold.

So in 1983, Don and Art each threw $500 into the pot and started Tufts Grinding, occupying the same 600-square-foot space where Woody got his start with Kraftsman. They had one World War II-vintage grinding machine. Don handled sales and some night grinding chores; Art ran the shop day and night. They had one major customer.

“The old way here was to run as much as you possibly could on every machine all the time,” says Bryan. It didn’t matter if more product was needed for downstream operations.

“The new way starts with the customer. It’s a pull system. If a machine has run enough product for the next machine downstream, then you can shut down the upstream machine. There’s no sense adding to a pile,” says Bryan. Adds Don, “We used to say, ‘Keep the grinders running.’ That was the big thing. It didn’t matter if they couldn’t package it all and get it out the door.”

Under the new system, everyone in the plant attacks bottlenecks. If packaging falls behind, machines contributing to the backup are shut down, and employees help the packagers until the normal flow can resume again. Any employee can shut down any piece of equipment if a problem is spotted. All employees—and there are 45 of them today—are expected to pitch in to resolve the issue if that much help is needed. Bryan and Dan are no exceptions; they have run into the shop at 4 a.m. to help the overnight workforce resolve a problem.

That kind of culture requires a workforce that understands expectations and knows how to deliver. As a first step, Bryan and Dan gave everyone in the plant a raise of from $2 more an hour to as much as $7.50 more an hour. “They came to me and said they wanted to give everyone raises. They said, ‘We can’t do this without better people,’” says Don. “For me, that’s where the rubber hit the road. They wanted to give everyone raises and hadn’t made any improvements?”

Adapt or Leave

“They told everyone, ‘Either you will adapt to our needs, or we will be able to afford someone who can adapt,’” recalls Art. Ultimately, about a third of the workforce left for more traditional pastures.

Next, the brothers began to remove the excess steel inventory. The No. 1 item of waste in any lean system is excess inventory. In an ideal state, parts arrive for processing at each manufacturing stage exactly when they are needed, in the exact quantity needed. There is no extra inventory anywhere.

Inventory reduction is, of course, a hallmark of any efficient system, but in the lean world, it takes on an almost mystical meaning. An oft-repeated metaphor, one that Bryan especially likes, is of a lake at high water. The water, or inventory, covers all rocks; boats may navigate freely, oblivious to inefficiencies and flawed procedures. But when inventories fall—when the water level dips—rocks begin to appear. In a lean environment, each rock is a flaw in the system that must be addressed at its root cause. The lower the water, the more rocks to address. “Remove that rock, fix that problem,” says Bryan.

As the inventory was hauled away, the workforce worried that the company was going out of business. That huge pile of steel, actually a cause of some workplace injuries, had always been there as a comforting safety net.

Next, the company embraced machine maintenance and moved away from simple repairs. “If you don’t have a stable process, lean won’t work,” says Bryan. By that time, Tufts had a half-dozen grinding machines, some of World War II vintage, and a German turner purchased from a company in Italy. Dan knew the machinery was not reliable. He turned now to finding the root cause of the breakdowns, following the “five whys” methodology of lean to identify the real issues.

The “five whys” is a childlike progression of “why” questions used to identify real problems, not just symptoms. A machine has stopped working. Why? A chain has broken. Why did it break? A part that should have been in the machine to prevent chain wear is missing. Why? Lacking a manual for this older machine, we didn’t know the part was required. Why? We didn’t seek out and find people who could train us in maintenance of this machine. And so on.

“We used to come in in the middle of the night and replace the chain,” says Dan. “Now we ask ourselves, ‘Why is this failing?,’ and we find out what’s really wrong and implement change.”

In one case, Tufts determined that the cause of repeated breakdowns on one grinder was a poorly designed lifter. Dan and his crew designed a better lifter, had it made and installed it.

Such attention to “the why factor” sometimes meant the entire plant was idled, occasionally for days, while fixes were found. The turner was out of action for two weeks at one point. That was considered an acceptable cost of learning a new way to anticipate and avoid problems, and fix those that arise.

A major change required by lean manufacturing is training. Every employee was trained extensively in lean manufacturing concepts at the start of the initiative. Material flows were analyzed, and other companies’ experiences were reviewed.

Now, every week, every employee receives about one hour of training on specific topics: materials, procedures, goals. Sometimes employees hear from manufacturers about maintenance of a particular machine. Sometimes workers in a particular job category meet to hash out continuing issues or discuss their quality record. Meetings are held weekly for grinders, turners and materials handlers. Meetings are paid time for all employees. The plant can be shut down so that full consideration can be given to any issue.

Employees also shut down for up to 15 minutes at the end of each shift to perform another lean manufacturing touchstone, “5S.” 5S stands for activities to eliminate waste that contributes to errors, defects and injuries. In order, they are Sort (sort through items on hand, such as tools, to keep only what is needed); Straighten (putting everything in its place); Shine (keeping the workplace clean and, in the process, expose abnormal or pre-failure conditions); Standardize (procedures to maintain and monitor the first three S steps); and Sustain (keeping a stabilized workplace as part of the ongoing process of continuous improvement). So far, says Bryan, no aspect of the Tufts operation has exceeded Shine.

Startling Changes

Training and a common understanding can lead to significant changes. The old Tufts Grinding found it difficult to switch quickly from one type of bar to another, because every change required adjustments that could take up to 45 minutes to complete. The primary delay was caused by the time necessary to disassemble and then reassemble a hood that prevented easy access to the grinder itself. A grinding machine operator, Antwan Cook (since promoted to leadman of the grinding line), suggested replacing the metal hoods with flexible covers that could simply slide out of the way, providing immediate access to the machine’s interior. The changeover declined from a 45-minute task to one that now requires less than a minute.

So how well is it working? Before, Tufts experienced lost workday accidents every 22 to 23 days, many caused by people clambering over the piles of excess steel. As of early April, Tufts had gone 580 days without an accident.

Pre-lean, the company’s on-time delivery rate was about 78%. Now, it stands at 93.6%. Customer rejects of flawed parts have fallen to 0.21% from 1.84% pre-lean. Tufts has removed its four oldest grinders and now operates with just three grinding machines, yet production is up 20% since removal. On a good day today, Tufts can produce 100 tons of flawlessly ground bars, compared with top daily output of 40 tons before beginning the lean manufacturing initiative.

Tufts sales are now about $25 million a year. Firstquarter sales rose 26% this year after rising 10% year-over-year in 2007 and 5% in 2006.

“The lean approach they have taken has dramatically increased the amount of business we do with them,” says Andrew Moline, vice president and general manager of Enduro Industries, a Hannibal, Missouri-based maker of chrome-plated and induction hardened bars and tubes, and part of PTC Alliance, a tube manufacturer. “They were willing to take a risk to improve their business. For a small company to do that is pretty amazing. They are a quality supplier, and we are open to do more business with them as time goes on.”

Says John Hjort-Olsen, purchasing manager for service center Encore Metals in Vancouver, British Columbia, “Of all the suppliers we deal with—and we deal with a considerable number of suppliers—they rate very highly, certainly in the top 10. Over time, they’ve set themselves apart from some of the other grinders in the Chicago-area group that we deal with. Their performance has improved.”

The older generation at Tufts Grinding is sold, too. “We are safer, cleaner, more organized, more on time and a higher-quality shop than we have ever been, and our sales are going up dramatically as a result,” says Don, who perhaps is biased on this subject.

Not so fast, says Bryan.

“You have to always remember that lean manufacturing is a journey, not a destination. We have a lot more to go. If you want to look back and say, ‘We did it!,’ then don’t go down the path of lean. When I take old customers on tours now, they are amazed to see how much we’ve changed. But I’m amazed at how far we have to go.”