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Many moons ago at Big Blue, I attended Manufacturing School in Atlanta. This inhouse program was designed to get the field up-to-speed on what our clients were dealing with day-to-day and to identify areas where our technology and services could help. We studied best practices like JIT (Just-in-Time), TQM (Total Quality Management), ISO (International Organization for Standardization) and Kaizen (continuous improvement).

Since then I've been hooked on manufacturing. Fast forward to The Principals of LEAN Manufacturing program I recently attended, delivered by a couple of rock stars at NHMEP (NH Manufacturing Partnership.) We manufactured our own desk clocks to experience LEAN, and now I'm a LEAN evangelist. By the way, you can LEAN anything (including your office or your garage.)

The whole point of LEAN is to eliminate waste and increase efficiency using five principals: identify value, map the value stream, create flow, establish pull, and seek perfection in a continuous loop. LEAN cuts to the bone by producing value for the end customer. LEAN demands continuous improvement and uses only what is being demanded (Just-in-Time) by the customer (kanban). No more racks and rows of inventory sitting for months waiting to be transformed into something. Raw material can sit on your books and drive the guy in the corner office with the abacus crazy. They want raw materials off the books and into COGS (cost of good sold) so that it's realized by the top line as revenue rather than as an expense. The finance people totally get this, so do the operations gurus.

So why doesn't everybody go LEAN? When you consider that the benefits of LEAN are decreased cycle time, reduced inventory, increased productivity, and increased capital equipment utilization it seems like a no brainer. The hesitation to go LEAN has everything to do with human capital. Like rolling out any company-wide program, it's getting your leadership to drink the Kool-Aid and give you carte blanche to get everyone trained to become a LEAN culture. One of the state's best kept secrets is the grant that's available for qualified prospects through Governor John Lynch's job training fund.

By now you're probably wondering if LEAN has an economic impact. U.S. manufacturers compete head-to-head with their international counterparts, and it's bloody. In some parts of the world without labor unions and fewer OSHA-like standards, manufacturing is cheap. But this isn't necessarily a plus when you consider that you need a certain volume to justify creating the infrastructure off-shore or finding the right venture partner. Additionally, if you're creating a product like medical devices, as is the case with Salient Surgical Technologies in Portsmouth, it is imperative to be FDA compliant. In addition, factor in VAT (value added tax), the cost of shipping, and other tariffs, and manufacturing abroad can quickly become cost prohibitive. These are all reasons to keep production on-shore, preferably in NH.

According to the NHMEP, the economic effect of LEAN over the past five years is: 305 new jobs, 593 retained jobs that didn't go off-shore or get eliminated, $194.9 million increase in sales, $75.2 million spent on new investment, and the BHAG (Big Hairy Audacious Goal) ...$ 29.1 million in cost savings.

Manufacturing alone contributed $489 million to the state's economy over the past five years.

NHMEP offers training, consulting, and guidance. Their education programs are transforming operation types into LEAN gurus. Moreover, programs offered through NETAAC (New England Trade Adjustment Center) help revive small New England manufacturers that have been clobbered by international competitors. The idea is that unless companies adopt programs like LEAN to become more competitive, they are going to lose more marketshare as global sourcing becomes the de facto standard for supply chain managers.

In Dover, RF Hunter, maker of oil filtration systems used in commercial kitchens, has adopted LEAN through a circuitous path. CEO Richard Santoro's son Gary is a U.S. Air Force Reserve Major. He was stationed at Warner-Robins AFB at the logistics depot for the C-5 Galaxy aircraft where Major Gen. Polly Peyer is deploying LEAN for everything from occupational medicine to civil engineering, and the 330th Aircraft Sustainment Wing. Whgen Gary Santoro returned to NH, he was fired about LEAN and went to work applying LEAN principles to RF Hunter's manufacturing facility. Doing so enabled the firm to cut its inventory cost by more than $60,000 annually and significantly decrease their time to market. RF Hunter went from using the entire shop floor to reducing its footprint so that only a small portion of the shop floor delivers the essentials. Workstations were mounted on wheels and are now mobile for production and then returned to an assigned place, inside yellow lines taped on the floor, when not in use. Everything is neat, tidy, clean, and efficient.

Salient Surgical's LEAN champion in David LeGault, director of operations. LeGault came to Salient already trained in LEAN because when his former employer wanted to build a new warehouse when they were "running out of room" LeGault offered a less expensive option, applying LEAN principals to reduce the warehouse footprint and save the company millions of dollars. His goal at Salient is simple, avoid costs by, "Kanbanning components rather than batching or kitting parts to build products." And Salient has increased production output from 18,000 to 95,000 units in one year, which has also meant hiring quality technicians, manufacturing engineers, and supply chain personnel.

After building a new LEAN compliant facility at Pease Tradeport, Salient now manufactures finished goods inhouse. The program has been wildly successful since about half of the employees have been trained in LEAN principals, fully support it, and are now looking at ways to improving efficiency. In fact, Salient even hosted a LEAN training for its business partners to improve their efficiencies and speed the time to market. LeGault says he envisions a day when Salient extends the kanban concept to the hospitals it serves so that Salient products are on the shelves when needed for an exact number of scheduled surgeries.

Zenagui Brahim, NHMEP's director of operations, sees a bright future in Next Generation Manufacturing. The NHMEP, the EPA and NH Department of Resources and Economic Development have joined forces in a Lean/Green Energy Program. The notion is that when energy is saved, the carbon footprint is reduced, energy credits are gained, and the environment stays greener.

High Liner Foods in Portsmouth and BAE Systems in Nashua participated in a pilot program. High Liner Foods identified more than $200,000 in energy savings, $90,000 for the first year alone,  and it claims it is already realizing a return on its investment. "For years, MEPs have been showing manufacturers how to streamline and improve operational efficiency with lean training. It makes sense to now include energy and environmental efficiencies as part of our lean transformation program," said Brahim.

BAE Systems, another LEAN early adopter, stated in a press release earlier this year that the company saved $40,000 in Merrimack and project more than $2 million in energy and process improvement savings exist within its footprint. BAe even has its own spin on the traditional 5S focus of Lean (Sort, Straighten, Sweep, Standardize, Sustain) to a 7S system that includes Security, Safety and green savings. 

Join Catherine Blake on September 28th for the Governor's Advanced Manufacturing and High Technology Summit at the Radisson Hotel in Manchester. The event is sponsored by BIA, NHMEP, NHTTC, and DRED. Or contact NHMEP directly at (603) 226-3200.

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