Editor’s Note: LBM Journal and Epicor are hosting a free webinar featuring lean management expert, Scott Morrison, at 9 a.m. PT / 11 a.m. CT on Thursday, Feb. 22.
In this webinar, Scott will discuss best solutions to eliminate waste and streamline your processes, including:
• Reducing motion and transportation in both yards and production.
• Reducing waiting and turnaround time in the yard.
• Appropriate inventory turns (not too much, not too little).
• Increasing picking efficiency in the yard,
• Using tools and business intelligence to track goals and performance, with examples from Epicor.
Click here to learn more.
Incorporating Lean principles into your yard and manufacturing operation can improve efficiencies and boost your bottom line.
On a given day, how much time do you spend searching for paperwork? How many extra steps do your team members take to stage 2x4s for loading? How much money does your company lose from damaged materials?
Even though it often comes in small doses, wasted time and money from doing extra work adds up and is likely putting a bigger dent in your profits than you realize. Implementing Lean principles may help.
Lean principles have been adopted by manufacturing companies and others around the world as a way of increasing efficiencies and reducing waste in ways that cut costs, improve profitability, and enhance customer service.
But while they are often associated with the likes of Toyota and other mass producers, Lean practices can prove beneficial for operations of all sizes and types, including lumberyards. In fact, Lean practices that eliminate waste, maximize time, and avoid mistakes are an ideal fit for an LBM industry that operates on razor-thin margins and lives by the mantra “on time and in full.”
The principles and practices of Lean are extensive enough to fill up books, conferences, and careers. Yet the overall approaches and concepts can be summarized simply: “It’s the systematic identification and reduction or elimination of waste,” says Scott Morrison, an industry consultant who helps lumberyards around the country get started with the process. Morrison explains how waste breaks down into eight categories:
1. Overproduction: Doing something too soon/before it’s necessary
2. Overprocessing: Rework
3. Excess motion: Taking too many steps, whether a physical step or an arm or hand motion
4. Excess transportation: A product or service is moving more than necessary
5. Waiting: Idle time
6. Inappropriate inventory: Too much or too little
7. Defects: Product defects, broken equipment, or data errors
8. Loss of creativity: Not tapping human capital, brainpower, or resources working in a process
Each of these elements, large or small, adds up to wasted time, wasted energy, and/or wasted material that, ultimately and over time, can contribute to wasted profit.
“The bottom line is you’re systematically identifying and eliminating and reducing waste,” Morrison says. On the manufacturing side, you’re finding ways to more efficiently produce—increasing production rate, improving quality, reducing downtime. On the service side, you’re seeking to turn trucks faster, pick product faster, and have staff complete tasks in fewer steps, among others.
And, ultimately, as you streamline processes and move materials through the yard more efficiently, it’s serving the customer more effectively, says Ben Hershey, owner of 4Ward Consulting Group. As part of the process, either initially or ongoing, you start to understand just how many times something is touched. “Once they see it, then they start to understand why they need Lean. A lot of people know they have issues, they just don’t know how to approach it.”
When Morrison first began working with Ballston Spa, N.Y.-based Curtis Lumber in 2016, the first steps were examining the current layout and functionality of the six stores that make up the dealer’s central district. It started with a big purge, says Lindsay LaRuffa, Director of Sales and Operations, filling countless dumpsters with old equipment, old displays, outdated inventory, unused furniture.
Next, they found a home for everything that was left. Every item in the store and yard now has a designated—and labeled—place, from a forklift parking zone marked with tape to an outline of a tool on a pegboard to a labeled cubby for paper clips under the sales counter. This process ensures no time is wasted finding an item, finding a place to put things, or moving things out of the way to get to something else.
During the initial reorganization, Curtis Lumber also studied each yard’s layout and product placement to streamline movement of people and equipment, including moving high-volume products closer to loading areas and grouping like materials together. They also brought back stock closer to point of sale. “At the end of the day, this has helped us to become more efficient and take fewer steps. It allows us to concentrate on our customers and selling,” LaRuffa says.
After the first full year, management is seeing the results in numbers, too—a decrease in shrink loss as well as an increase in profitability. Efficiencies and creating dedicated space for staging, as well as having trucks loaded the night before, are further helping to keep trucks fuller and better ensure on-time deliveries.
“Everything is so organized that the turnaround time for deliveries, staging, and loading is a lot quicker than it was in the past,” LaRuffa notes.
A key tool of Lean that Curtis Lumber also leverages is the concept of “5S.” “5S is a system for organizing spaces so work can be performed efficiently, effectively, and safely,” explains the website 5S Today. “This system focuses on putting everything where it belongs and keeping the workplace clean, which makes it easier for people to do their jobs without wasting time or risking injury.”
Originating with the Toyota Production System, 5S Today says, the Japanese acronym stands for Seiri (Sort), Seiton (Set in Order), Seiso (Shine), Seiketsu (Standardize), and Shitsuke (Sustain).
Along with the initial reorganization, 5S is part of Curtis Lumber’s everyday process of continuous improvement. This includes having cleaning stations throughout the stores and yards that have all items needed within a designated zone. Each employee is accountable for a certain area and devotes 15 minutes each shift to 5S in that area—cleaning, restocking, facing products, making sure everything is labeled and in its place.
“In the 13 years I’ve been with Curtis Lumber, I’ve never seen our yards look cleaner, more organized,” says LaRuffa. “It’s definitely more efficient for employees. The shopping experience is better for customers.”
Loran Hall, President of Mathew Hall Lumber, began working with Morrison to implement Lean practices after reading about another yard’s success. “We were getting the job done, with good product, but it felt like we were missing something.”
The team studied the flow of product through its truss plant, shifting to a system that runs as a pull through, not a push through, and eliminating pinch points.
Orders and lead times were among those pinch points. Previously, the shop claimed lead times based on all orders—an order was submitted, whether it was approved or not, and production space automatically held, thereby causing even at-the-ready orders to have a 12-week lead time. Now, only products designed and signed off on become an order.
These methods required a shift in mentality for many salespeople—they had to learn to trust the lead time. “If we declare a lead time, that’s our lead time. And we’ll live by it,” Hall says.
The process also established requirements for shipping upon completion so that components don’t sit in the yard, getting dirty and getting in the way.
Hall says the tactics are working: in one measurement, last year the company’s sales were substantially up while overtime was substantially down.
Like Curtis Lumber, Mathew Hall Lumber also reexamined its layout, which had been the same since 1978. The company conducted a comprehensive review of fast- and slow-selling items and rearranged the yard to put frequent items closer to the loading area to help reduce footsteps and equipment trips.
5S is a regular part of the continuous improvement process at Mathew Hall Lumber, as well, though Hall admits it can be tough in a sometimes dirty, dusty setting. “You have to have it in the back of your mind the whole time.”
Keep in mind that Lean is not a one-and-done activity. It is an ongoing endeavor of continuous improvement. “You’re always a little better than you were yesterday. You’re always getting better. You never stop,” Morrison says.
Along with incorporating 5S into daily routines and addressing efficiency issues during meetings, “Kaizen” events are a core method for continuous improvement. “These events are a tool that gathers operators, managers, and owners of a process in one place; maps the existing process; improves on the existing process; and solicits buy-in from all parties related to the process,” explains the iSixSigma website.
It was during one such event that a client of Morrison tackled credit returns, which it had been discovered required involvement of eight different departments. As part of the Kaizen event, the team mapped out the process steps, creating a flow chart for each, then brainstormed areas to improve. What can be done faster? How can fewer people touch it? The solution might be a whole new process, eliminating unneeded steps, or perhaps implementing software. From there, you develop the future state and test it, the third part of what Morrison calls the “Plan-Do- Check-Act” (PDCA) Cycle. The process improvements in this case reduced involved departments down to four.
Getting team buy-in
Like any change, some employees may push back with a “We’ve done it this way forever” mentality, Hershey cautions.
First and foremost, ensure buy-in at the top—the management team must be fully on board for and enthusiastic about the long-term commitment of continuous improvement.
But just as important is giving team members ownership, making them part of the process. “The person doing the work is the one who has the best perspective on how to eliminate the issue,” advises Jeff Tweten, a managing member of consulting firm WorkSafeWorkSmart. Their perspective and ideas will help identify problems and solutions going forward.
For example, an employee at Mathew Hall Lumber’s truss plant who loaded materials onto cutting machines realized that his cart was configured in a way that forced left-handed users to walk around to open the door. As a result of this observation, a button was added to both sides of the cart, cutting out a few small steps that add up over the course of a day.
“It’s amazing. Not only have employees found their lives less stressful, more efficient, our customers have made comments about their shopping experience,” LaRuffa says. “The employees are proud of what they’ve accomplished, and when they get that feedback from the customer, it makes it all worthwhile—because it is a lot of work.”
What’s more, employees are feeling more empowered, she says, and are using creativity to improve efficiencies within their areas of responsibility.
This is particularly true of Millennials, says Tweten. “Millennials are looking for ownership,” he says. “They don’t want to be bogged down by a bunch of rules that don’t make sense. They want results and ownership and to be part of a winning effort or cause.”
Tweten is a fan of the concept of “2 Second Lean,” which was developed by Paul Akers, founder and President of tool and hardware provider FastCap. “Paul has simplified the Lean concept and made it easily accessible to everyone in your workforce,” Tweten recently wrote. “Teaching your workers to spot the 8 Wastes in your processes and empowering them to eliminate waste is at the core of the 2 Second Lean Process. Paul challenges team members to find two seconds of improvement in the job they perform for the company each day. This challenge creates a daily improvement process that establishes a company-wide culture of improvement.”
With all employees, emphasize that it’s not something that happens overnight and it’s also not something that has an endpoint.
Curtis Lumber reviews 5S principles during monthly team meetings, and LaRuffa herself is at a different location each week, conducting walk-throughs with the store manager, acknowledging employees, seeking ideas from them, and learning about any challenges that can be addressed.
“What I always encourage is that during your shift huddle, one of the questions you’re asking is where can we improve? Or ‘I saw this…’. Loop in everybody,” says Hershey.
Constant communication and forethought is key. He also teaches managers to spot-check metrics—What areas can be more efficient? What aren’t we able to achieve? Also, create a communication board to track Lean projects, ideas for improvement, and highlight 5S.
In an industry that competes on price with small margins within which to work, every small increase in efficiency can potentially impact the bottom line. “You can’t always go on price and survive,” Morrison notes. “You have to fit the market price, then improve margins by reducing operational costs.”
“A lot of people fear getting started in this. I really try to encourage them that it’s not as daunting as they think it is,” says Hershey. “The savings you’re going to get in the end are far going to outweigh the investment you’re going to make up front.”