LEAN, DIVERSE AND PROFITABLE Seattle WA

This month "lean" guru David Dixon of Technical Change Associates begins a series on adapting lean principles to the manufacturing environment without a product line. Throughout the past year I've talked with many readers about the subject. At the beginning of the decade, when I asked job-shop owners about the principles of lean, many would say that, because they didn't have a product line, the philosophies behind lean didn't apply.

In recent years I hear of more job shops—even some who specialize in prototype work and other areas seemingly not applicable—change their minds.

True, says Dixon, some of the "textbook lean" way of doing things does not apply to such environments, but lean can still be adapted. He explains how on page 18.

One contract manufacturer, Jade Corp., covered in our Business Matters column starting on page 14, has followed the path of lean for years with great success. The firm's history shows out-of-the-box thinking, from how managers approach the global economy to their quest to get a complicated piece of high-quality assembly equipment manufactured and out the door as quickly as possible. And lean has helped take them there, with no product line needed.

"Some of our manufacturing environments started implementing the principles of lean way back in the late 1980s and early 1990s," says Craig Marshall, Jade's executive vice president. "Being a job-shop environment, we had many different kinds of jobs and different kinds of customers," from electrical-component makers to pharmaceutical suppliers. "It was difficult to put regimented practices, so we did a lot of adapting. We keep our job lot sizes to a controlled, manageable level. In fact, we're pushing that concept right back into our quoting stage."

As an example, 10 years ago a customer would give a discrete order of X quantity, and Jade would run that quantity along with a few extras for setup and inventory. "Then we'd wait for that customer to buy those extras," Marshall says.

Today, the shop attempts to start longer-term agreements. Jade and its customers agree to a price for that period (12 months, 15 months, etc.), "then we produce the parts in a more repetitive frequency that suits the pull rate—so we stay slightly ahead of the pull rate," Marshall explains.

As necessity is the mother of invention, so necessity was with many of the lean-manufacturing techniques Jade now uses. In one situation, a customer in the electronics industry needed a very complicated automated assembly system in just under two months. No doubt, this was a job that required some serious groundwork.

"The machine involved just about everything," explains Michael Vivian, sales manager at Jade. "It had really close-tolerance tooling, some sheet metal, a lot of electrical assembly. Basically, we stepped up to the plate and turned it around in seven weeks, and delivered it to the customer two days before Christmas—with a bow on it."

The job took advantage of Jade's diverse capabilities: contract electro-mechanical assembly, precision machining and sheet-metal fabrication.

The first week, the company got everything in order and ordered outsourced components. During the following weeks, part prints were on the floor, and machines were cutting chips; sheet-metal fabrication occurred, and workers started building wiring harnesses. By the fourth week, the outsourced frame arrived, and electrical assembly began; other components then went through the necessary finishing operations. The fifth week involved the mechanical build, and the machine was running by the middle of the sixth week.

The machine represented several firsts for Jade. It was then it started a consistent second shift. It also was the first time Jade assigned a program manager to a job. Under a system still used today, the program manager "owns" the job, overseeing material and parts ordering and carrying it all the way through to the loading dock. He ensures all parts come in at the proper time and place, at the point of use—again, following the principles of lean. In fact, the job, in a way, becomes the program manager's "product line."

Work processes exude hues of lean systems initially designed for product-line manufacturing, yet still shine with a customized identity. Oversimplified, managers identify operations that involve repetition and take full advantage of them.

Stacks of inventory and work in process do not pervade Jade's machine-shop floor. The company is as diverse as they come, employing the gamut of metal manufacturing equipment serving myriad customers. But despite the variety of customers and range of jobs on the floor, the shop is well on its way down the lean path.

And, say company managers, they don't plan on stopping anytime soon.

Tim.Heston@cygnusb2b.com