It was during this rocky period that Lancaster began reading about the principles of whole-cycle management, which in manufacturing circles is more commonly referred to as the "Toyota production system." Originally devised and implemented at Japan's "Toyota City," a key doctrine of the system is continuous improvement on a factorywide basis. Higher productivity is achieved not by reducing costs per part, but by lowering costs for the production cycle as a whole, from design to distribution to sales. Yes, you can lower costs by stepping up the pace of certain stages of production. But quicker rates must be defined in the context of the entire production cycle, not as accelerations of a few suboperations. In other words, the job of each employee in a whole-cycle assembly plant is no longer to simply put peg A in hole B as quickly as possible. It is to find a succession of better ways to get the entire cycle to meet the overarching objectives of the business.
Lancaster remembers being struck by how well the idea resonated with his own experience. Time and again, he had seen quick thinking on the factory floor come to the rescue of ill-considered top-down directives. The main thrust of continuous improvement, he recognized, was to systematically cultivate that kind of resourcefulness, not to wait for glimmers of it to surface by accident. "It's always just blown me away how much creative capacity is put into neutral, or even reverse, by limiting people to one specific contribution," he says.
In a plant like Lancaster's, where much of the work is assembly labor, incorporating the tenets of continuous improvement would mean relying on the line worker to spot most problems and to propose appropriate solutions. And therein lay a daunting task. The managerial imperative behind the classic Ford assembly line is to narrow the focus of the workforce as much as possible. The result: Most employees have no real understanding of the full production process.
At Lantech -- and at the majority of U.S. manufacturing enterprises -- the "whole cycle" was a mystery to line workers; and it had become increasingly inscrutable, obscured by reams of computational data. From a continuous-improvement perspective, the theoretical and technological forces driving the American industrial workplace have been evolving in the wrong direction for nearly a century.
"It's my experience that as your business grows, it becomes easier to be talked out of your common sense," Lancaster says. "You turn to automation at a certain stage of revenue growth, and the abstract logic of standard cost analysis takes over. You're looking to reduce overhead by calculating the lowest cost per part, which naturally leads you to match the economic order quantities of the parts required. One setup dictates 100 parts per order; another dictates 1,000. You're building inventory as a buffer between different output capacities. In that kind of accounting environment, you can be seduced into thinking that the black box knows all. Over time, people's common sense gets disconnected, and they inevitably dummy up. The thing that clicked for me about this whole process was that it builds directly on common sense, reinstituting a system that can be understood by the people who are actually running it from day to day."
For Lancaster, all the tenets of the Toyota production system hit home. With the loss of the patent, the technological advantage that had allowed Lantech to carve out up to 50% of the wrapping-machine market had disappeared. For the company to retain its competitive edge, it would have to shift its focus to improving its basic customer services: filling and delivering orders more quickly, customizing machines more readily, producing wrappers with fewer defects and cost overruns. "We had to change the way we think," Lancaster notes. "We had to find a way to turn our workers into stakeholders."
Even so, Lancaster might not have contemplated such a sweeping shake-up had he not happened to interview Ron Hicks for a VP position in the middle of Lantech's doldrums. Hicks had worked for Danaher Corp., one of the first American manufacturers to change over to continuous-improvement production on a major scale, and he knew the problems that had to be faced.
Talking with Hicks, Lancaster began to see that converting Lantech to a system of whole-cycle management would require nothing short of a revolution in the company's institutional culture, but Hicks convinced him that it could be done. In the end, Lantech's business slump was so severe, and its attempts to handle the problems so unproductive, that Lancaster decided to hold his nose and jump. "Being on your back looking up is a good place to be," he says now, though he might not have said so then.
Hicks joined Lantech as vice-president of operations in 1992. The enormity of the task at hand soon became apparent. First, there was the problem of overcoming powerful and deeply entrenched resistance from the workforce. "The old process had created a status hierarchy," Hicks says. "People working on what they thought were the high-status pieces were concerned that now everyone would know what they knew. Others were worried that they were going to be held responsible for everything that happened anywhere in the factory."
With Lancaster's backing, Hicks set about assembling transition teams that evaluated and redesigned every aspect of Lantech's production process. Aided by the TBM Consulting Group of Durham, N.C., a company that helps businesses through the initial transition to lean production, he reorganized production from a "hurry-up-and-wait" pattern, in which inventory was moved in batches from one sector of the factory to another, into a system that consists of several microlines, or production cells. Each of those cells would be responsible for all the processes -- sawing, welding, electrical wiring -- once spread out through the whole factory. The reorganization, in turn, would increase the attention given each step, both because more people would be involved and because the smaller line configuration would make it easier for each person to see what the others were doing.
With this shift from a division-of-labor model to a generalized-labor approach came changes that reverberated throughout the factory. Lantech's mass-production assembly line gave way to what Lancaster calls a "one-piece flow line," which means that any given component moving through production corresponds to a specific customer order.
To streamline that system, Lantech redesigned its assembly carts. Control points were moved out of the computers and made visible. Strips of tape laid out on the factory floor directed workers and carts to the next stage of production. Whiteboards went up all around the plant, charting the production cycle for all to see. Inventory, or "kanban," cards were placed on the bottoms of storage bins; when a card became visible, it was picked up and an order faxed to the supplier.
