While consulting with a hydraulic pump manufacturer, the executive officer related their company’s revolutionary journey. Walter, a descendant of the founder, was left in control of the company. Walter realized significant changes would be needed to continue a leadership position in the marketplace. Status quo was not an option; it was ‘move forward or die.’

After urging divergent thinking, Walter and his executive team attended a seminar focused on Dr. W. Edwards Deming’s principles. During this seminar, the team decided to develop a new vision for the company which would include continuous improvement and integration of all the parts of the production system.

Dr. Deming, in his books, Out of the Crisis and The New Economics for Business, referred to continuous improvement as the effort to optimize a system. A systems perspective means that a manufacturing company must be viewed as whole made up of segments connected through interdependent relationships.

Where it exists, complexity in the system is reduced as processes are systematically improved and integrated so the organization can do more with less. This helps throughput and plant capacity increase, often with little or no capital investment.

Complexity and flexibility are inversely related. The more complex the design of the product and the processes that produce it, the more cumbersome the overall system becomes. Simplifying the design leads to greater flexibility and significant improvement which greatly enhances the bottom line.

With newfound knowledge, Walter asked his organizational leaders, “Where are we making money? Where are we losing money?”  After reviewing data, it was obvious they were losing money on a customized hydraulic pump made for a customer who ordered a few each year.

Executive leadership agreed to create a cross-functional kaizen team to uncover exactly how much, and why, the company was losing money on this specific product. Though this product was one of the highest priced products, it was a losing proposition.

Initially the kaizen team constructed a flowchart and layout map illustrating the entire process of redesigning the specialty pump, ordering, handling parts and materials, and manufacturing steps. The flowchart showed the process, and a spaghetti diagram displayed the physical layout of the plant and tracked the travel of people, paperwork, and material flow.

The accumulated data told the story. The average lead time for manufacturing was 4 weeks, and the average process time was 118 hours, but actual value-added time (steps in the process that add value to the product) was only 6.5 hours.

The team was advised to contact an operations management and product design specialist for help with developing an overall integration plan which would lead to a continuous improvement strategy. The team learned most of the quality goes into a product at the design phase, and because design is so far upstream in the process, it affects everything downstream. So…improvement in the design helps improve everything downstream in the process.

After some study, the team realized the design engineers paid little attention to manufacturing problems or parts reduction. Therefore, the design had become increasingly more complex and required more parts. This made ordering, stocking, and parts handling more complex increasing process steps, added expense, and a negative effect on bottom line profit.

It was also discovered that designers did not relate the design of this specialty pump to other similar products. Each pump was designed and redesigned as an individual product, not as a family of similar products with which a modular concept could be used to reduce complexity and lower production costs.

Some thought was given to discontinuing this product, but this idea was discarded because the team thought improvement in design could be leveraged across the product line. With a newfound focus on improvement, the executive team challenged the kaizen team to redesign the specialty pump using a more detailed concept of the customer’s needs as well as their manufacturing needs. In order to understand this more thoroughly, a designer and a production engineer visited the customer site to learn how the product was used and to solicit input from the actual users.

The resulting information was used during the next phase to make real improvements. Redesigning the other (similar) pumps was done concurrently with refining the production process, with the goal of having more common parts and production steps. This increased flexibility in responding to customer demands and gave customers more choices at less cost.

The redesigned manufacturing process took 38% less time, and manufacturing lead time was significantly reduced from four weeks to three days! Inventory for the new family of pumps was reduced by 82% because the family shared a significant number of common parts. Not only was the company able to make a profit on the specialty pump, but it was also able to reduce the purchase price of all products, which led to increased sales, and enhanced bottom line results.

As a result of this effort, the team, including the executive leadership, discovered a new recipe for change and improvement. They had developed a profound sense of how the design of a product relates to lead time, costs, and difficulties in manufacturing, purchasing, production planning and control, materials management, inventory size and quality.

Consequently, the organization successfully applied lessons learned to improve many of its other product designs and processes. As a result, the company took on more customized work as it gained more wisdom and flexibility to do so profitably.