Lean is a journey, not a destination Washington DC

Northway's business model had been supplying large quantity laminate and melamine components to customer companies to use in their products, as well as custom display products.

Their idea of Lean manufacturing was to set up and run a lot of the same part, and then go to the next customer or part.

Things were good … Then Northway discovered that they competed in a world market!

Don O'Hora, Northway president and COO, relates, "Northway's downturn started fast with one major company only giving a 30-day notice that it was going offshore. The second company phased its supply move to Asia over a longer period, but the loss was about 50 percent of our volume in less than two years."

This level of loss has put many companies out of business.

"Our first reaction was to find more customers like the ones we had just lost," says O'Hora. "What we found out is it is extremely difficult to replace that type of business when much of it is going off shore at a much lower cost."

In order for Northway to survive, the company had to look for other things to do. It had to look for other markets where its knowledge, experience and manufacturing capability could continue to be its strengths.

The company had done some cabinet work for the architectural woodwork market. On the upside, it looked to have long-term opportunity for Northway since it was quicker turn, semi-custom work. On the downside, it didn't fit with the mass production mentality and processes Northway had been employing for the customers they had lost.

This change meant developing a new business model for Northway. It needed to change the way the factory built product from mass parts to much smaller custom product orders, even one piece.

Now Northway's business is split roughly 50/50. The company's focus has changed from mass-produced components to case work, multi-media and customer-proprietary specialty furniture. Some of these items are produced one at a time as Northway's customers, who are Internet marketing companies with no manufacturing capability, receive individual Web orders. Then the semi-custom product order is scheduled into production, manufactured, then shipped assembled or RTA, as requested. This is a growing portion of Northway's furniture business.

O'Hora explains the company's philosophy: "We prefer not to compete with our customers."

This means that Northway sells cabinets to woodworkers who use Northway as a supplier: It doesn't sell directly to contractors. Along with protecting its woodwork customers, the company also avoids issues like AIA contracts, jobsite conditions and project management. Northway remains a material vendor.

These differences in philosophy and approach help to delineate Northway from other case work companies in the customers' eyes.

Internal challenges

Northway also has had internal challenges to be concerned about. To remain competitive and to serve its woodworker customer base better, the company has implemented many lean manufacturing approaches and changes.

When asked why Northway has been so successful with Lean, O'Hora responded, "Every employee has bought into the Lean concept. While some people had to be shown that Lean worked by proving a new process would reduce time and make the company operate better, all are now 'on board.' Our people seem to be very innovative and they each work everyday to improve the processes."

Northway looked to develop a cell manufacturing approach for fabricating the European style cabinets and customer-proprietary semi-custom furniture. The company started out with one cell and through training and growing the business segment has had to develop more. It currently has three manufacturing cells: one operates three shifts, two operate on two shifts, and Northway is trying to hire more people to operate all cells on all shifts.

"That part of our 'culture' is an ongoing process that will always need to be refined as we grow, learn, test, review and challenge our people, both inside and out," says O'Hora.

The lean program and manufacturing developments have created a sense of accomplishment from which all the employees and executives take a lot of pride. This success spurs them to work on the continuous improvement culture and process.

"We put goals up so people can see the expectations," says O'Hora. "The information technology staff has worked hard to develop and integrate the software and Web-based programs that make these Northway programs successful.

When they get a big item or process to evaluate, they try to break it down into "bite-size" chunks. As they accomplish the pieces, employees see the results and they get the projects off the list.

Northway doesn't have an "in-house champion"; rather they have three to four middle management people who take an informal lead in promoting the culture and keeping ideas moving through evaluation and testing. They want to react quickly to ideas. They generate action on items on their Lean database.

The idea originator becomes the team leader for that suggestion. They have the motivation to make it work. Management hasn't found that this inhibits the free flow of ideas. The management team is happy with the results of the Lean idea generation … they get more ideas than they can handle.

State funding

Northway has benefited from using a Lean consultant on a monthly basis, and lean tactics like TPM, Kanban, cellular manufacturing, a vastly improved scheduling system and a new office arrangement that greatly improve companywide communication.

This has been helped through State of Pennsylvania WEDnetPA training funds, Penn State University training clinics and a big management commitment to training and continuous improvement programs.

Northway has established standard configurations for making AWI custom-grade cabinets. With that, it has developed an online system where customers can go and enter their orders for the specific materials, styles and dimensions they need, and have the pricing immediately. This improves order accuracy and saves time and cost both for Northway and its clients. This program was developed in-house with the help of a great group of innovative people.

Northway hopes that what it is doing influences others to work to keep the industry and domestic manufacturing strong.

One reason for Northway's growth and success is the owner's commitment to continual reinvestment of profits into technology to help the company be more efficient and provide a safer working environment for the employees.

Each year, Northway management develops an annual plan with key initiatives to focus on in the next 12 months. They can target any area in the company, including a better use of cell manufacturing, better equipment, new targeted training or research for improved materials. The plan and key initiatives are communicated to everyone in the plant and teams are created for each key initiative, such as Kanban in the hardware room or board purchase practices.

The company is more diversified. It has a bigger customer base than it did before, so that if it loses a customer or two, it won't cripple or kill the company as it did seven years ago. Northway is more diversified in the products it manufactures, and its client base is spread across more industries to give the company more protection.

"As a company, we have a much more flexible manufacturing environment through the use of production cells," O'Hora explains. "A number of our machines are on wheels, so they can be repositioned where they are needed to add to the Lean processes as products and customers change.

"To give us more insulation from offshore competition, speed is everything at every level. We continue to refine estimating, engineering, order placement, scheduling and materials logistics.

"While we have come a long way and have accomplished a lot to be proud of, we still have room to expand upon what we have done. We have more changes that can be implemented on our more complex products, but every area is still open to continuous improvement.

"We are excited about where Northway has progressed with a lean manufacturing culture, serving a multi-industry market. We don't look back We prefer to look to the future. It's a much brighter picture than six years ago when we found ourselves having lost half our business to offshore competition and not knowing which way to go!" O'Hora concludes.

Ed. note: Herb Meldahl has successfully aided companies and organizations in their marketing efforts for nearly four decades. He currently chairs the Architectural Woodwork Institute's (AWI) Marketing Committee. He can be reached at h.meldahl@verizon.net