Keeping It Simple

A profile of a company that had to move away from automation in order to stay competitive.

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Pat Lancaster ran a highly automated company. That was his problem

Pat Lancaster makes no claim to being a low-tech prophet, and his record bears him out. For 20 years, as the founder and chairman of Lantech Inc., a manufacturer of industrial packaging equipment, he roared down the same fast lane as most American industrialists, acquiring ever-bigger mainframes and ever-speedier machines while hiring battalions of programmers, process engineers, and consultants to keep things up and running. He was so gung ho for the cutting edge that at one point he had seven different computer systems operating in his Louisville factory. In short, Lancaster was no Luddite.

But that was then. These days the Lantech plant is running on technology that could have been installed 40 years ago. Instead of a shop humming with numerically controlled lathes and automated assembly machines, workers are wielding drill presses and hand tools. In place of computers generating specialized work orders, conspicuous "whiteboards" diagram the assembly process step by step. And instead of a mainframe crunching algorithms to maintain process control, Lancaster's managers use simple visual aids like cue cards (to signal when to order new supplies) and strips of tape (to indicate the direction of the production flow).

It's enough to make an automation guru blanch, but there's no arguing with the results. Lantech's productivity is up almost 100% since the company scuttled its old high-tech system in 1992. Completed orders now routinely arrive at the shipping dock in 12 hours instead of five weeks. Production defects are down by half. And most impressive of all, a company that seven years ago was reeling from serious losses in market share and a perilous crisis in corporate confidence has found new life in low tech, and its prospects are rosy again.

Lancaster is quick to caution against overgeneralizing from his company's turnaround. Not all the gains can be tied directly to the decision to go low tech, and obviously some companies would fail in a day if they tossed out their machines. But his experience suggests that despite what we're often told, not investing enough may not be a reason we're having so much difficulty increasing productivity in this country. In fact, we might be investing too much.

Anyhow, Lancaster won't deny that Lantech's revived fortunes stem from a profound shift in managerial philosophy. For what Lantech has done is not simply to abandon automation. It has supplanted the dominant manufacturing paradigm of American industry -- division of labor -- with an organizational imperative predicated on precisely the opposite principle: generalization of labor.

In years past, a typical Lantech factory worker would toil away at a lockstep task prescribed by computer printouts, isolated from fellow line workers respectively minding their confined stations. Today, that worker is part of an integrated team that oversees the entire production process from start to finish and is involved in every step along the way. Instead of the traditional assembly line, Lantech workers are now organized into collaborative "microlines," relying on visual aids and manual procedures wherever possible to keep things shipshape and up to speed.

In essence, Lancaster has wrested his production system from the clutches of computer circuitry and put it back in the hands of his workers. Industry analysts have taken to calling this kind of holistic approach "whole-cycle management" or "lean production"; Lancaster calls it "one-piece flow." On Lantech's shop floor, it all comes down to what is literally an eye-opening proposition: Everybody sees everything.

Lantech's conversion is all the more remarkable when you consider how entrenched the division-of-labor mindset had been at the company. For most of its history, Lantech led the industry in the manufacture of "unitizers," machines that bind items together so they can be handled as a single package. At one time, standard approaches to unitizing included metal-strapping and shrink-wrapping (wrapping items with plastic and then heating the wrap to form a single membrane). In the early 1970s, Lancaster found that stretching plastic wrap around the items, so that they are held by the natural elasticity of the wrap rebounding against the strain, works much better and is also cheaper. The market agreed, and for many years Lantech grew at rates in the high double digits.

The job of the Lantech plant is to assemble the wrappers, massive devices that often occupy more than 1,000 cubic feet. They're also complex. The basic components include roller conveyors, ramps, turntables, wrapping arms, frames, motors, belt drives, stretch-wrap threaders, safety shields, and control systems. Assembly is made more complicated by the fact that a significant portion of the orders call for custom designs. Even a "standard" machine can be ordered in thousands of distinct configurations.

Combine all this technical complexity with the pressure of filling orders for hundreds of wrappers a year, and you have an operation that would seem to be a textbook case for assembly-line automation. And that's exactly the gospel that once was preached at Lantech. For its first 20 years, the company modeled its production system after the prototype Henry Ford had pioneered in his Highland Park Model T factories. Lancaster and his managers defined a set of core processes (sawing, machining, fabrication, painting, electrical assembly, and final assembly) and organized internal operating divisions around those processes. Under that system, you raise productivity by increasing the speed of the core processes, usually by intensifying the division of labor and accelerating automation.

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