Four years into Lantech's metamorphosis, there's little question that the new procedures have made the plant's operation not just a paragon of simplicity but a showcase of efficiency. Because each of the plant's 14 assembly carts now represents one particular order and one specific wrapper configuration, there is no longer any extraneous inventory. Under the old system, Lantech produced parts in lots and batches. At any given moment, there might have been sufficient quantities of a particular part for 1,000 wrapping machines. With the new system, Lantech makes one set of parts at a time, fabricating them as dictated by actual orders rather than by spreadsheet projections.
And Lancaster's hunches about cultivating a more involved and knowledgeable workforce have paid off in productive suggestions. Take, for example, the great pallet breakthrough. While Lantech's wrappers are being assembled, they rest on pallets of various dimensions. In the past, the company bought its pallets from an outside vendor. Because the pallets were not designed specifically for Lantech's equipment, occasionally an odd shape or size would interfere with production. However, fixing the problem -- even recognizing that there was a problem -- was no one's responsibility.
The new regime was only a few months old when a shop worker suggested that Lantech build the pallets in-house to its own specs. The company started to do so immediately, with excellent results. As it turned out, the idea made perfect sense, especially with all the extra room available on the factory floor now that Lantech was no longer stockpiling inventory. A breathtakingly simple solution, Lancaster says, but one that probably wouldn't have emerged under the old managerial hierarchy.
Safe to say, too, that manual labor would never have experienced a renaissance at Lantech if the status quo had held. But as the workforce began to hit its stride on the microlines, it soon became clear that Lantech's automated machines were not compatible with the new assembly process. For one thing, outfitting each production cell with numerically controlled machines and rewriting all the materials-handling algorithms in the mainframe were financially out of the question. More problematic still, the high-tech system operated on the assumption that the fewer people with access to data the better. In the new climate of whole-cycle management, Lantech's big machines were dinosaurs.
Today Lantech's mainframe room, once the nerve center of the factory, lies dark and shuttered, the computers unplugged, the mainframe sold. Nobody misses them, and it's no wonder. The low-tech procedures work better, and you don't need an advanced degree in information science to stay on top of the day's tasks.
From where Lancaster sits now, the old system seems downright bizarre. "We were lying to the computer all the time," he recalls. "If we had trouble getting deliveries as fast as a customer wanted, we'd tell the computer the order was two weeks older than it was. The computer would reschedule that job, but then all the rest of the orders would be held up."
"The numbers the computer was working on were never right," Hicks adds. "It might say there were 10 items in inventory, and we could see there were 8 or 12. So we'd just enter the right number over the wrong one. That guaranteed the error would show up again. But we had no idea where those wrong numbers came from or why they were wrong. You could almost never track down where the error occurred." Sums up Lancaster: "We were just automating chaos, buying expensive machines to do wasteful things at higher and higher rates of speed."
The broader lessons of Lancaster's cautionary tale are supported by some important recent studies of industrial productivity. One of the most extensive was a massive survey of the world's automobile industry carried out by MIT's International Motor Vehicle Program over a five-year period. According to its 1990 report, "The Machine That Changed the World," researchers found almost no correlation between efficiency and automation. The most efficient plant (measured by the effort required to perform a standard set of assembly tasks) was one of the least automated, while the most highly automated required 70% more effort to perform the same tasks. Jim Womack, senior author of the report, says that automation imposes three categories of costs that can ultimately offset its benefits: the capital investment for the machines themselves, the high-priced technical and service workers required to look after the machines, and the hidden costs of stockpiling inventory.
The last point is all the more critical for often being overlooked. High-tech processing machines are usually fast, and it only seems sensible, given a fast machine, to make a lot of parts at once. However, it turns out there are lots of indirect costs in having mountains of inventory sitting around a plant, most dramatically when the market evolves out from under all that inventory, leaving the enterprise with an expensive write-off.
One virtue of a system like Lantech's, Womack says, is that the nonautomated machines -- the "hand tools" -- used in the microlines are so flexible that they obviate the need to maintain war chests of inventory. Womack feels that the savings from making parts on demand are so important that he uses the name "lean production" for the whole continuousimprovement system. (A book by Womack on "lean enterprises" is due out this fall from Simon & Schuster. One chapter is about Lantech.) Certainly the absence of towering piles of inventory makes a dramatic impression on anyone visiting the Lantech plant. There's so much space and light, the factory floor feels like a convention center.
Ironically, Lantech's mainstay customers turn out to be manufacturers that are heavily invested in automated mass production. They're the ones most in need of the company's unitizing machines to wrap up piles of parts for transporting from one operating division to the next. If they all were to follow Lantech's lead and switch to lean production, Lancaster would lose business.
Yet according to Anand Sharma, CEO of the TBM Consulting Group, there's not much chance of that happening anytime soon. Sharma estimates that only 50 or 60 American businesses have fully backed out of their commitment to high-tech, division-of-labor management. The obstacles thrown up by institutional cultures are too great, especially when a business is making money anyway.
And even if lean production and continuous improvement do revolutionize U.S. industry over time, Lancaster expects to stay well ahead of the curve. After all, he has his R&D staffers running on continuous improvement too, and their productivity has increased as fast as everyone else's.
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Fred Hapgood (hapgood@pobox.com) is a freelance writer based in Boston.
