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This article: The durable Lean transformation of Océ
Source: Business-improvement.eu
Lean: The value adding organization
Part of the layout of the factory floor before the Lean transformation Shoveling waste out of the factory works better than using a bulldozer
By Dr Jaap van Ede, editor-in-chief business-improvement.eu, 08-01-20141

Lean can be implemented in a technical way, for example by positioning the machines in processing sequence. Guus Cox, operations manager at Océ, compares this with using a bulldozer to push the waste out of the factory. This gives fast but temporary results, because the behavior of the people has not changed. It is far better to encourage the employees, to remove the waste bit by bit themselves. This takes much longer and it requires a lot of management attention, but the end result is much better. You will get a real Lean organization in which the people jointly solve problems, and help to improve every day. You will never need that bulldozer anymore.

However, Cox faced a problem: Océ is a listed company. He had to deliver results fast, otherwise his ambitious Lean transformation would be called off prematurely. To this end, he chose for a Lean implementation in waves, starting with the actions which would give the most visible results.

So, yet again the bulldozer like approach? No, from the beginning there was an essential difference. Everyone was encouraged to think along and come up with objections. Soon, the results became visible. Océ now produces 20% more on 60% less floor space. The freed space was used to insource extra work.

A story about sunrise meetings, soccer teams and a storm that does not die down.

Our company has had a hard time in the past years, says Guus Cox, operations manager assembly at Océ in Venlo.

Guus Cox‘The market for printers en copiers is dominated by Canon, Xerox and Ricoh. We followed at a large distance. It was clear that we could not survive on our own. Therefore, our executive board started to look for a big player for which we would be a nice supplement. This turned out to be Canon.’

‘They primarily make printers in large series for the consumer market, and they distribute by way of dealers. By contrast, we produce custom-made printers in small series, high-mix low-volume production. And we sell directly to companies.’  

Right to exist
In 2010, Canon took over Océ. However, that did not mean that the employment in the Netherlands was ensured for the future.

‘We had to prove that we have the right to exist within the Canon group. Otherwise, our production would be moved to China or Japan. So, after we became part of Canon, our mission became: becoming best-in-class in high-mix low-volume production, at least in comparison with the internal competition within Canon.’

The products of Océ are developed in the city of Venlo in the Netherlands. ‘We also produce some strategical components here, like toners and printed circuit boards. The majority of the parts for the printers are however bought and assembled. Components with a high “value density” we procure in the Far East. Voluminous parts we obtain from companies in the EU. For those parts, transport by truck is cheaper and more flexible than by boat.’

Lean manufacturing
Guus Cox convinced the top management of Océ that Lean manufacturing was the best way to become best-in-class in high-mix low-volume assembly. ‘Promises like becoming more efficient, better and cheaper won them over. I was given permission to start with a small group. What also helped was the fact that Canon has a lot of experience with Lean, so we could learn from them’

Cox visited several production sites in Asia. ‘When I went to those factories, I thought that the gap between them and us would be unbridgeable. However, it was not so bad. Now I think that we can come close to the efficiency of the Asians, regarding production logistics and organization, given our specific situation with high-mix low-volume production. That would make us in some ways unique within the Canon group.’

The factory floor at Océ before and after the Lean transformation
^ The factory floor at Océ before (left) and after (right) the Lean transformation

Just do, then think
Cox noticed how structured the production lines of Canon are arranged, and how improvement is done in many small steps. “Just do, then think”, they said. ‘That was an eye-opener for me. In the Anglo-Saxon culture we are inclined to figure out exactly how to arrive at point B, coming from A. Only then an improvement initiative is started, in the form of a big project.  When you apply Lean, solutions are not worked out in that much detail. Instead, ideas are tried out immediately whenever possible. That way you acquire more knowledge about your production process, then when you remain sitting and thinking behind your desk.’  

Copying Canon’s production lines was not an option for Océ. ‘First, that way Lean will not become embedded in your organization. You will not get the ownership you need for further improvement. Second, our assembly process is totally different. Canon makes large amounts of printers. We produce small amounts, with different models that alternate frequently.’

Fresh pair of eyes
Cox remembered Marc de Jongh, consultant lean manufacturing at Q-Consult. ‘I asked him for assistance, but the real work we wished to do by ourselves. From the beginning I had a durable Lean transformation in mind. So not only introducing the Lean tools, but also creating the matching organization and culture'.

In doing that, Q-Consult had primarily a supporting role. 'They observed every step we took, and told us what we did well, and what we could do better. That helped and still helps us a lot. Two years after we started with Lean, Q-consults still visits us one day each month to monitor one particular Lean aspect. An example is attending our daily sunrise meetings.'

A fresh pair of eyes sees more. 'Recently, I experienced that myself in the role of observer, during a Gemba Walk. As a Lean manager you visit the working floor or Gemba frequently, to stay in close contact with the things that are happening there. During such a Gemba visit I noticed a couple of empty boxes and asked why these were there. That may appear niggling but as part of the 5S-principles we wish to keep everything clean and ordered. The warehouse worker responded to my question as follows: “Those boxes have been there for such a long time, that I became blind for them.”’

The complex layout of the factory before the Lean transformation
^ The complex layout of the factory before the Lean transformation

Listed company
Ideally, the top management decides that Lean will be adopted one way or another. ‘However, that is not realistic in a listed company. In that case you have to deliver results within a short term. So, my challenge was to demonstrate quickly that the Lean approach works. Otherwise, the introduction of Lean would be stopped.’

One route to quick wins is the project-like approach mentioned earlier. ‘In that case the focus is on the "hard" side of Lean, for example by applying tools like Kanban. Especially in technically oriented companies like ours the temptation to do this is big. However, I did not want that, because I am convinced that Lean will not sink in without matching changes in the people and the organization.’

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It takes extra time if you want to change the organization as well. ‘Implementing Lean as a project is comparable with hiring a bulldozer to remove a big amount of waste from your shop floor. That goes fast, but then nothing happens any more, and the waste even returns. The cause, the way the people think, is still there. If you want to implement Lean as a new way of life, then you should ask your employees to remove the waste themselves, bit by bit. Compare this by giving them scoops. The route to results is than longer because you have to overcome resistance, you have to explain a lot of things, and you have to encourage everyone continuously.'

However, in the long term you win a lot more.

'You will get an organization with people who solve problems themselves, who keep their processes Lean permanently, and who contribute on a daily basis to further improvement.’

The strongly simplified factory layout after the Lean transformation
^ The strongly simplified factory layout after the Lean transformation.
   Half of the factory was freed for possible new production activities!     

Cox faced the challenge to set such a durable Lean transformation in motion, while at the same time making it transparent that tangible progress is being made. To this end he developed, together with the consultants, a way to introduce Lean in different waves:   

  1. Lay-out improvement, aimed at lesser movements of people and materials on a smaller floor space (see the illustrations above)
  2. The introduction of well-organized working places, by applying the principles of 5S. This reduces among others time that is wasted to search for things.
  3. The adoption of visual management, by way of improvement boards with Key Performance Indicators (KPI’s). Production meetings take place around these boards at several levels.
    At the same time, a problem escalation system is put in place. Quick Wins are immediately ‘harvested’ during the daily production meetings. Problems that need further examination are handed over to the weekly meetings of the line teams, which can start Kaizen projects. Problems that are too complex for that, are passed on to the biweekly meeting of the management. This can then decide to start a breakthrough Black Belt project when needed 
  4. The factory wide introduction of continuous and stepwise improvement, aimed at improving the  KPI’s, for example by applying value stream mapping, 5x asking why and Poka Yoke.
  5. Further improvement of teamwork and leadership.

Only applying 5S led already to the removal of ten containers with superfluous things. ‘Starting with 5S and the improvement of the lay-out has the advantage that you get tangible results quickly. Those results are clearly visible for the top management. The first two Lean waves were also relatively easy to carry out. The changes are physical in nature, a fundamental change in behavior was not needed yet.’

Production at Océ. The Varioprint 6000 assembly line
^ Production at Océ. The Varioprint 6000 assembly line

Bend like the reed
Nevertheless resistance to change already surfaced during the first Lean wave. This could not be brushed aside in a bulldozer-like manner. That would have contravened with the goal of introducing Lean as a new way of life.

‘We had improvement initiatives here before, based on TPM and Operational Excellence, but those didn’t persist. That was one of the reasons that a couple of people thought of Lean as the next storm passing by, for which you can bend like the reed. One way to make clear that this is not true this time, and to stimulate involvement, are the group sessions we stage regularly.’

A typical example: Preceding the first Lean wave, a representative group of operators was confronted with an ambitious goal: A 60% reduction of the working space on the factory floor.

‘Next, I asked this group: Why would this not be possible? Every objection raised was taken seriously, and we searched for a solution each time. That way, all resistance was neutralized. A negative mindset was changed in a positive one. After the closing of the meeting, the people went back to their own places of work. There they could explain the Lean story to others.’

Breathing factory
The assembly of the printers encompasses the steps pre-assembly, final assembly, adjustment, testing and packaging. In the past, all inventory stood on the factory floor.

‘That may look Lean, but it is not. We had problems. First, the total inventory was higher compared with a central storage location, because we needed stock at all ten assembly lines. Second, the local stock positions decreased our flexibility, because for some printers you need much more parts then for others. What we wanted, is what we call a breathing factory, in which we can make any type of printer at any place at any time. I mean, without changing the layout regarding the stock positions. And we had a third problem. Regularly there were parts missing on the factory floor. In that case, an operator went to the warehouse to search for what he missed. That took a lot of time.’

The solution for all these three problems: the introduction of the kitting concept. ‘In the warehouse, we now place all parts for one particular printer on several carts. Next, these carts are brought just-in-time to the assembly stations in the factory. This has an extra advantage: the chance that parts are forgotten is much smaller.’

Just-in-time in this case means hours before the parts are needed. ‘The final assembly of one printer takes for example about 12 hours. So, if the carts with the parts for the next printer arrive a couple of hours before the end of that period, this is soon enough.’

The kitting warehouse at Océ
^ In the kitting warehouse, all the parts needed to assembly one particular printer
   are placed on carts

Lean production raises the efficiency. After a while fewer people are needed to do the same amount of work. ‘Admittedly, this increases the resistance, because people fear that they might lose their jobs. However, from the beginning I stressed that we have no choice, otherwise no work will be left here anyway. I added that I was fully confident that we could preserve the employment here, since it would become possible to insource extra work. The freed space on the factory floor thanks to Lean could be used to start new activities. Indeed it turned out to be possible – and more profitable - to insource production from Eastern Europe. As a result, there are now more operators working here then prior to the Lean transformation.’

In the glass room on the factory floor, production meetings take place at three levels
^ In the glass room on the factory floor, production meetings take place at three levels.

The third, fourth and fifth Lean wave constitute in fact a whole, with as point of departure the introduction of multidisciplinary meetings at several levels.  Those meetings are all aimed at improving specific Key Performance Indicators (KPI’s), connected to the company mission. Matching improvement boards are hanged up in a special meeting room in the middle of the factory, the so-called glass room (see the picture above)

‘The first level of meetings in this glass room are the daily gatherings of the eight operator teams. During those sunrise meetings ideas for Quick Wins are immediately carried out, whenever possible. Only if a problem is too big to solve it within five days, it is passed on to the next meeting level. This is the weekly gathering of the two line teams. If it is regularly returning problem, they can for example decide to start a small improvement project, a Kaizen. This means that a team tries to solve the issue within six weeks. If even that seems impossible because the problem is too big, it is handed over to the two-weekly meeting of the management team. This is the third meeting level. At this level it can be discussed if a big Six Sigma DMAIC improvement project is appropriate, which can take several months. Six Sigma was already applicated within Océ, This way, we integrated that into our approach of continuous improvement.’

There seem to be a lot of meetings. However, those are much shorter and more structured than before. As a result the number of meeting hours dropped by 20%, and the number of reports decreased even by 50%. This means that more time can be spend on process improvement.

Inside the glass room. On the walls, many improvement boards are visible
^ Inside the glass room. On the walls, many improvement boards are visible

In front of the troops

Contrary to the adjustment of the factory lay-out, working with improvement teams asks for a fundamental change in behavior. Signs that this was needed were comments like “we are already working good, and we have done this for twenty years, so why does it have to be even better?”
‘I stand in front of the troops every week to encourage and coach them. I attend for example sunrise meetings’, says Cox. He continuously seeks a delicate balance between pushing things through and allowing the people to solve their own problems. Often the ideas from the shop floor turn out to be the best.‘To be ahead of a possible relapse, I keep repeating what our destiny is, and what we already have accomplished.’

Being a Lean manager, you need to be very visible on the shop floor. ‘See to it that you make time for that. Sometimes I hear that someone is allowed to spend maximally ten hours on Lean each week. In that case you can be sure that other things will often appear more urgent.’

Invariably, you can find Cox on the factory floor between 7.30 and 8.45 am during his Gemba Walk. ‘I think it is important to build good relations with the production employees. I am also interested in their situation at home. This lowers the threshold to come to me with problems during production. If that happens, I will always ask if a certain issue was already presented to their team manager or line manager. I do not want to cut the ground from under their feet.’

Soccer team
To encourage teamwork, Cox often uses the metaphor of a soccer team. ‘We want to score as many goals as possible. In our case this means printers of good quality leaving our factory. I stress that not the improvement of your own production step is most important, it is the throughput overall that counts. In soccer having strong defenders is useless, unless they pass the ball on to the attackers.’

Having success is a reason to celebrate, for example by treating a sunrise team with pie after they completed twenty improvement initiatives. Every year those teams compete for the title of best improvement team, by presenting their results to the management.  

Accentuate our mission
Lean manufacturing has become firmly rooted in the company culture of Océ. ‘Lean and continuous improvement are now an integral part of our strategic vision for the coming four years. In the near future we wish to accentuate our mission: what is our higher goal, and in what way we will fill in that goal.'

'In addition, we are planning to extend Lean manufacturing towards our suppliers, since problems on our factory floor increasingly are caused by external factors. It is likely that we are going to reduce the number of suppliers. After that we will investigate with the remaining ones if just-in-time replenishment is possible.’    

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1) The interview for this article took place in the autumn of 2013

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