Wednesday, September 10, 2014

Going Lean: the Sealy way & the Perfect Lean Market

A blog post by Preeti Havaldar

“There is nothing so useless as doing efficiently that which should not be done at all.”
- Peter F. Drucker, Management Expert


Lean manufacturing involves never ending efforts to eliminate or reduce 'muda' (Japanese for waste or any activity that consumes resources without adding value) in design, manufacturing, distribution, and customer service processes.

To understand “lean” in a better way, let us look at Sealy – the world’s largest bedding manufacturer that has adopted the lean way for manufacturing since 2004.




Before 2004: Sealy as an “ordinary” manufacturer  
Prior to lean, Sealy workers would produce dozens of unfinished mattresses and hand them off to the next person in the assembly line who would stitch the mattresses together with the rest of the panel that ultimately developed in a complete bed. The piles of unfinished mattresses not only occupied a lot of floor space but also led to some damage due to brushing of the mattresses against each other. In addition, depending on demand, the unfinished/unsold beds led to heavy inventory costs.

Beyond 2004: Sealy goes Lean
When Sealy adopted the lean methodology, the Sealy workers produce one mattress and hand off to the “stitcher” who would stitch the mattress to the bed frame and build the bed one at a time. This approach optimized space utilization, reduced damage and promoted parallel processing which in turn led to low inventory, high quality and cost efficiency. 


"The big advantage is less material handling, less movement and less dirt on the product. They're only working on one bed at a time." says Mike Hofmann, Sealy's executive vice president of operations. Using this approach, Sealy has reduced its scrap by 69% from approximately 1.8 lbs per piece produced in June 2004 to approximately .43 lbs per piece produced in December 2009. In 2009, Sealy reduced its recycled scrap 3.3% from 2008 and 33% since 2004 (lbs per unit sold).
  
Lean as a recession survival strategy
Sealy was one amongst those manufacturers who remained profitable even in the face of the last US recession that hit the markets in 2007 as its lean model helped it to recover fast. The lean approach that focused on “pull” production (produce as per demand) instead of “push” (produce ahead of demand) led to huge reductions in inventory costs, as it did not hold too many unfinished items.

Lean manufacturing can lead to highly optimized supply chains by good demand forecasting techniques and eliminating the non-value adding activities in the process.  Though waste reduction is a critical aspect of lean manufacturing, it, however, takes more than just waste reduction to transform a lean manufacturing market into a perfect lean market.

Moving towards the Perfect Lean Market
As per economists access to the right information at the right time creates conditions for a perfect lean market. For example, if there is a glitch in one of the production plants, right information at the right time can help recall items only from that plant without having to stop the entire production and leading to delays.

The secrets to a perfect lean market are:
C – Clarity. Free flow of the right information across the supply chain in a seamless manner.
A – Agility. Responding quickly to market volatility.
U – Unity.  Standardizing processes across the supply chain. Unified approach between supplier and manufacturer

By improving communication across the supply chain, manufacturers can target for a perfect lean market. Clear and unified approaches can lead to collective competitive advantage. Manufacturers and suppliers can use the web and other upcoming technologies such as demand sensing to access available information and share it along the supply chain to transform into a perfect lean market. In the era of www and cloud computing, will the dream of a perfect lean market soon turn into solid reality for most manufacturing companies?



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