Making the grade: How to implement enterprise-wide Lean system

Neptune Technology Group’s two-year Lean transformation

By Susan Fotovich Mccabe, AME August 24, 2016

As a pupil of Lean manufacturing, Neptune Technology Group could well be considered an "A" student. The Tallassee, Alabama manufacturer took a studious approach to understanding what it takes to achieve excellence by implementing an enterprise-wide Lean system. Having attended AME’s annual conferences on and off for two decades, interviewing Lean consultants and eventually hiring a consultant that met its needs, the company successfully implemented its own Lean transformation in a two-year period beginning in 2013.

Wayne Pitchford, the company’s vice president of operations, said it undertook the mission with all the seriousness of a scholar in training, despite the absence of any real problems. "There was no compelling reason we began a Lean initiative. We were doing fine and are still doing fine as a company. We wanted to manage the company even better than we were," Pitchford said. "But we fell into the trap that a lot of companies fall into. We implemented a lot of Lean tools, but we didn’t have a Lean culture. So we decided to start in operations."

The publicly traded company was founded in 1972 and pioneered the development of automatic meter reading (AMR) and advanced metering infrastructure (AMI) technologies. Since 1892, Neptune has continually focused on the evolving needs of utilities—revenue optimization, operational efficiencies and improved customer service. The company offers a fully integrated migration path for its utility customers to meet their needs now and in the future. The company’s 300,000-square-foot facility employs 600 employees, 375 of which work in operations. Its operations include a lead-free foundry, machining, assembly and testing, electronics assembly and injection molding. While the company didn’t have a compelling reason to fully engage in Lean, Pitchford said it wanted to improve employee engagement by emphasizing safety and wellness and improve quality by leveraging its culture of continuous improvement. "We just knew other companies were doing things, and we wanted to go from 80% firefighting and 20% continuous improvement to 20% firefighting and 80% continuous improvement," Pitchford said. While attending the 2012 AME conference, Pitchford met with several Lean consultants who were also on-site. Drawn to Incito Consulting Group’s offer to visit the manufacturer and provide an assessment at no charge, Pitchford settled on the San Francisco-based Lean consulting group.

"The first thing they told us was to slow down. He said we had a plan, but that it had been developed in a vacuum and we had no buy-in," Pitchford said. "That wasn’t what we wanted to hear, but that’s what we did-we slowed down. We didn’t know where we were going, but we knew it was to something better." Quoting the consulting group, Neptune "had the will, but not the skill," Pitchford said. While there are many different Lean manufacturing models, they helped the company formulate a system for its own needs. Specifically, they taught Neptune how to use and tailor the system and its tools by facilitating monthly events in the early days of the consulting engagement, taking its Lean team to benchmarking events at other companies to see Lean in action, setting up daily boards and meetings in its operations and instructing them in the use of coaching cards and a PDCA room to suit their needs.

Neptune spent an undisclosed amount of money on its three-year engagement with Incito, with the intent to fade the consultancy, which it did. "The plan was always for Incito to teach us and then get out of the way," Pitchford said. "We did a benchmarking visit at Rex Moore, and that was where the light came on. Obviously, we did spend some money. But at the end of the day, we felt like it was well worth it. It was a leap of faith." That "leap of faith" ultimately produced the Neptune Management System, which focused on a True North vision, a core team, an enterprisewide deployment, employee engagement, a commitment to improve time-to-market and supplier involvement.

The company adjusted its True North vision and held multiple True North sessions, which Pitchford said helped it achieve employee buy-in. Its executive team appointed 12 to 15 employees to a core team, whose mission is to make employees aware of the company vision, to explain the Neptune Management System and to deploy Neptune’s Vision Elements to support its overall company vision. "We did some monthly events for a while at first and report-outs with hourly employees. You could see the fire in their eyes during those report-outs. They were really excited about the improvements. It was like a pep rally," he said.

The company’s enterprisewide deployment included Lean training, departmental communication whiteboards, value stream mapping (VSM) for each functional area (which eventually expanded beyond operations to areas like marketing and R&D, and when combined with its vision elements, drove the company’s rapid improvement events (RIEs)) and a management-review gemba, including monthly gemba walks and a PDCA room. "There’s a million different ways to do it. Our way isn’t the only way, but what we’ve done and embraced has really worked for us," Pitchford said. "The key is to let everyone know how important the Lean initiative is, including executive leadership. It makes all the difference in the world." Cultivating employee engagement was critical for the manufacturer. In fact, it was so committed to achieving it that the company hosted a staggering number of events, including 11 classes facilitated by Incito (totaling 514 employees and 40 suppliers), 53 VSMs, 71 RIEs, 11 strategic events and 16 rattlesnake hunts (finding errors). "We like to do events. We like to take people off the floor for two to three days," Pitchford said. "You can’t just tell employees to engage.

They have to feel it. When you have hourly people get up at meetings and talk about how good the Lean journey has been, you know you’ve made progress." Likewise, safety and wellness was top of mind for Neptune. In order to attract and retain the best employees, the company expanded its on-site college recruiting, created a dedicated webpage with employee testimonial videos and created multiple programs for employee engagement. Some of the things it did to demonstrate employee appreciation included the addition of a wellness center and bringing a physical therapist on-site to teach employees how to avoid work-related injuries. It also did away with its annual company picnic-a big-budget, low-attendance line item-and added its hugely popular 12 Days of Christmas celebration (gifts and all), which generated more employee enthusiasm. Other popular employee appreciation events included adding a quarterly reward, recognition lunches for all employees, safety bingo, an opening day MLB baseball game and celebrating National Pizza Day. Pitchford emphasizes that every company needs a "cheerleader" to achieve employee buy-in.

For the company, messages of safety and quality resonated best with employees. "We kicked off every event by discussing safety and quality-in that order-then onto employee engagement. Our approach really helped to fight off employee resistance," Pitchford said. As for Lean’s impact on its quality and operations goals, its time-to-market improvement efforts included the application of product development workshop principles, a focus on project priorities, cross-functional collaboration, visual workflow management and visual accountability. Pitchford credits a focus on daily meetings, communication boards for each cell, coaching cards and standard work for leader (SW4L) audits, the top five issues or improvement ideas for each area of the company, customer complaints, VSM, rapid improvement events, rattlesnake hunts and kata for helping improve operations. "The most powerful Lean practice the company implemented was daily meetings, with a focus on safety and quality-two things that are non-negotiable," Pitchford said. "Likewise, our rattlesnake hunts encouraged learning, teamwork and employee engagement in an effort to help with 5S implementation. Designed for 12 participants over several days, it is facilitated by supervisors or engineers. We include a report-out at the conclusion of the event." The company addresses customer complaints in a textbook Lean fashion as well, posting them visually on boards in the factory, discussing with each employee during daily meetings and making group decisions on corrective action as part of its continued emphasis on quality. In just two years, it launched a successful Lean manufacturing model for its business that targeted both safety and quality.

Tracking Total Case Incident Rate (TCIR) accident and injury statistics, Neptune has steadily improved its workplace safety by 80 to 90% since implementing Lean in 2013. In 2014, for example, Pitchford said the company reported 37 safety incidents, while the period between June 2015 and March 2016 logged only three incidents. Similarly, its production yield has shown steady gains, particularly after a kaizen event. When tracking its yield 12 months prior to an event and 12 months after an event, there was a 5 to 8% increase, depending upon the production line represented. "Lean was so successful that soon after we launched it in operations, other areas of the company wanted to implement Lean," Pitchford said. Along the way, the company learned a few valuable lessons that continue to guide it today. Chief among those lessons is that Lean is an employee-based effort, but management has to be committed. It’s also important to create a core team to "spread the vision."

Learn from others through benchmarking visits, be able to financially support your company’s objectives and be flexible. Also, while Pitchford acknowledges that not all companies prefer to use or can afford to hire a Lean consultant, it worked for Neptune. The secret is to choose wisely, he said. "Consultants often emphasize ‘what did you do, and how much money did you save?’ by implementing Lean," Pitchford said. "But for us, Lean was not a cost-cutting move. We wanted to make our company better by changing the culture through safety and quality. The rest will follow." Most importantly, according to Pitchford, companies need to understand from the beginning that Lean is more than a "program." "Lean is not a program. If that’s how you see it, you’ll fail. It’s a management process," Pitchford said.

Susan Fotovich Mccabe is editor at Association for Manufacturing Excellence "Target Magazine." This article originally appeared on the "Target Magazine Summer 2016" issue. Edited by Joy Chang, digital project manager, Plant Engineering,