The last three winners of the ProSales Dealer of the Year (Jackson Lumber and Millwork, 2014; US LBM, 2015; and Franklin Building Supply, 2016) all were cited, among many attributes of operational excellence, for their emphasis on implementing lean principles.
Although the LBM industry has been a little slower than other industries in embracing lean, these last three winners indicate that lean has finally grabbed a toehold in the industry. If you are a dealer president, owner, or operations executive, and you want to begin your own lean journey, how should you start?
Definition of Lean
To begin the journey, you need to understand what lean is: the systematic elimination of waste in all of your processes. Processes may be product-related (such as the distribution of products by your truck fleet, or the production of doors, window frames, trusses, and millwork), or they may be service-related (invoicing, sales order entry, purchasing). There are up to eight types of waste evident in any process, all of which lose time and therefore increase your costs.
- Inefficient motion: Taking extra steps to complete a task, such as walking over to a bench several times per day to get a tool that should be stationed within the immediate work area.
- Overproduction: Manufacturing items or processing services in large batches not in tune with the most immediate needs of your customers.
- Over-processing: Adding extra, unnecessary process steps, such as double-handling of a sales order or reworking a door or truss before shipment.
- Defects/Errors: Any product or service item that the customer cannot or will not use, requiring rework or a credit against an account.
- Waiting: Delays in the processing of products or services, causing your resources to sit idle.
- Incorrect inventory: Having too much or too little stock on hand, causing a cash flow crunch or delays in shipments.
- Inefficient transportation: Moving products more times than necessary to process them through your production facility or your yard.
- Loss of creativity: Not tapping into the knowledge and skill set of your employees to help you identify and solve productivity, efficiency, and quality problems.
Setting the Culture for Lean
The word “journey” is chosen on purpose—because although you will arrive at lean milestones, you never stop. Lean is highly dependent on continuous improvement of your products and services. Whenever you reach a goal, you set a new one and work hard (many times even harder) to achieve it. From a company culture standpoint, there is both a top-down and a bottom-up commitment necessary to successfully embark on the journey.
First, dealer ownership needs to foster the environment to let everyone in the organization participate in lean. Second, but just as important, the dealer’s employees need to drive improvement through the use of a variety of lean tools.
If a dealer’s ownership doesn’t encourage employees to try changes, fail many times, and keep trying until a breakthrough is achieved, lean won’t work. On the other hand, if the dealer’s employees don’t freely provide feedback to management, lean won’t work. You really need both sides to cooperate.
The Lean Toolbox
Once you’ve identified the sources of waste, there are a variety of tools that can be used to eliminate waste and improve the processes. Most of the time it takes a combination of tools to adequately address the problem; the key is to observe and collect information before prescribing solutions. The most common lean tools are easy to understand and can be implemented with a concentrated effort:
- 5S (sort, stabilize, shine, standardize, sustain): A disciplined approach to daily/weekly cleaning and housekeeping that involves all layers and all locations of an organization.
- Visual Management: Organizing work areas so that everything is easy to see, easy to find, and any out-of-place items are easy to identify.
- Single-Piece Flow: Reducing batch-processing as much as possible, with the ultimate goal of handling only one product or one service function at a time.
- Production Smoothing: Minimizing lead time for all product lines and services by carefully balancing sales, purchasing, and production requirements.
- Set-up Time Reduction: Reducing downtime between production jobs, between truck deliveries, and, if office staff has multiple responsibilities, between office functions.
- Error-Proofing: Developing methods of identifying and preventing errors from occurring in your process.
- Versatile Operators: Cross-training all employees to do a variety of job functions in order to balance work schedules and handle surges by redeployment.
In my experiences with LBM dealers, no two dealers have been alike on their journey. The journey for Jackson Lumber and Millwork began in 2005 in the interior door shop in Raymond, N.H. The initial focus was lead time reduction for interior doors, a process that dropped to three days from two weeks. Soon afterward, 5S and visual management strategies were rolled out to the door shop and eventually to the three lumber yards. All operators in the door shop have at least two sets of production duties (versatile operators), which allows for changing assignments at mid-day if necessary to meet all customer shipments for that day.
Jackson Lumber vice president Joe Torrisi has the perfect attitude for implementing lean: Be relentless in the elimination of waste. “To be successful with a lean initiative, ownership and management need to be actively involved with the process,” he says. “Lead by example, and let everyone in the organization know this is not a passing whim. This is the new way of running our business.”
Franklin Building Supply has been on its lean journey for several years, focusing on 5S, which it categorizes as “spring cleaning every day” (sort); “a place for everything, and everything in its place” (stabilize); “cleaning every day” (shine); “clarity” (standardize); and “employee involvement” (sustain).
Another program in place at FBS is a Kanban card system; a sample is shown to the left. Kanban cards are small, laminated cards containing information about the stocked product (name/description, part number/SKU, and order quantity). These cards are placed toward the bottom of pallets of product, which indicate to yard personnel that the stock is almost depleted, triggering a reorder (or “pull”) for a new order of replacement stock.
“To be successful, lean must involve employees at all levels in a fundamental way,” says Rick Lierz, president of Franklin Building Supply. “Our goal is to be a company filled with problem solvers, and the first three S’s are easy to get people involved in the daily journey.” Lierz continues, “Kanban cards have helped us reduce inventory in some areas by introducing a visual tool that is easy to operate.”
Other dealers that have taken significant first steps on the lean journey include Tague Lumber (Philadelphia) implementing 5S and production smoothing in its door and millwork shops; the distribution centers of Mathew Hall Lumber (St. Cloud, Minn.) and Shepley Wood Products (Hyannis, Mass.) optimizing layout and product flow (truck turnaround time reduction); and 5S and visual management rollouts in the Northern Division of Curtis Lumber (Plattsburgh and Ray Brook, N.Y., and Burlington-Williston, Vt.), in McCray Lumber and Millwork’s interior and exterior door shops (Kansas City, Kan.), and at the lumberyard of The Building Center of Essex (Mass.).
For dealers who haven’t yet taken that first step on the lean journey, what are you waiting for? Get started!