Business Blitz
By implementing the Kaizen philosophy—and its Kaizen Blitz method—Kato Engineering has tripled its sales, upped production rates and improved overall efficiency.
BY ANDREA LAHOUZE
Within the past five years, Kato Engineering has more than tripled its sales without adding a square foot to its facility. Why aren’t workers breaking a sweat? One word: Kaizen.
Kaizen Blitz Kaizen is both a method and a philosophy. The method—called a Kaizen Blitz—consists of short, intense periods of brainstorming among workers to facilitate quick changes that reap real benefits. Kaizen philosophy stems from the thought that every improvement—no matter how small—adds up to a better business overall, and that everyone from the production floor up should be responsible for initiating and making improvements, creating a gradual culture shift that makes every worker a part of and accountable for a company’s advancement in the market.
After 33 Kaizen Blitzes, Kato’s improvement is in the numbers. Not only is it making more than 3 1/2 times more sales than in 2003, it also boasts a record 98-percent on-time delivery rate to its customers, up from 60 percent in November 2003. Neal Benson, Kato’s director of lean enterprise, says that these factors give Kato a distinct edge over its competitors. Cycle times have also improved. For a high-voltage alternator product, the cycle time at the beginning of Kato’s lean enterprise efforts in 1994 was 22 weeks. Now, it takes only a month.
The North Mankato electric generator manufacturer has experienced a recent surge in demand, in part due to skyrocketing oil and gas markets. Kato generators—which range in power from 1 MW to 15 MW—can be used anywhere for backup or primary power. Kato is a preferred supplier of the U.S. Navy, and its generators are used on as many as 90 percent of U.S. land drilling rigs. “It’s a very vibrant growth market,” says Benson. “But we also put ourselves in the position [to succeed] with continuous improvement on several fronts.”
In 2003, with predictions that market demand for its generators would increase in future years, Kato wanted to boost production before it became overwhelmed without having to expand into any new space. The company had already begun its lean enterprise journey—initially with the use of demand flow techniques and more recently with Enterprise Minnesota—and wanted to do more to eliminate waste and ramp up efficiency. Having implemented a new Enterprise Resource Planning (ERP) system in 2003 to link the company’s different departments into a single computer database of information, it seemed like good timing for more waste elimination improvements. Kato was attracted to Kaizen’s promise of higher production rates, less waste, greater flexibility in adapting to market changes and better profitability.
The History of Kaizen
Although Kaizen means “improvement” in Japanese—stemming from “kai” meaning “change” and “zen” meaning “good”—its roots lie in the United States.
To help rebuild Japan in the aftermath of World War II, General Douglas MacArthur appointed Dr. W. Edwards Deming and other experts to help the Japanese economy reboot its business sector in the face of low investment, scarce resources and a demoralized workforce. He conceived 14 key points for management that emphasize better teamwork, improved communication, a company-wide commitment to quality and, most importantly, continuous improvement of both the company and the individual worker. As Japan’s surging business economy became the envy of the world in the 1970s, U.S. manufacturers began adapting it to their own businesses.
Kaizen at Kato
Kato Engineering first incorporated Kaizen in 1993 as part of a lean enterprise goal of bringing more efficiency to its manufacturing process. By rearranging the factory floor according to the order of production and determining the ideal pace for each production area, more products can go from start to finish in a shorter amount of time than in a traditional batch-and-queue style. Because such a large transformation can be intimidating, the Kaizen method is helpful as a tool to make smaller improvements that as a whole would result in a total overhaul of Kato’s processes and appearance.
In its Kaizen Blitzes, Kato uses the 5S model developed in the 1950s by Toyota management, in which each “S” stands for a different step of company improvement:
• Sort—Separate things you need from things you don’t need, and keep only the essential items. When in doubt, throw it out!
• Set in order—Arrange tools, parts and machinery to best promote workflow.
• Shine—Bring tools, working conditions and machinery back to their original clean condition.
• Standardize—Make rules to standardize Kaizen Blitz work practices.
• Sustain—Keep to the rules that have been established in order to maintain the positive benefits achieved.
Kato also added a sixth “S” for “Safety,” and made it the first in the order, calling it the “1 + 5S” model. Although some experts argue that safety is already embedded in the 5S model when followed correctly, Kato wanted to highlight its importance because of the heavy machinery it produces and the tests it must conduct to ensure its generators work properly before being shipped. “If you’ve got a crane that’s lifting 40 tons, safety has to be first. If you’re putting 70,000 volts on something, safety has to come first,” says Samuel Gould, Enterprise Minnesota process engineering specialist.
But each Kaizen advance was undermined by the urgencies of day-to-day operations, causing maintenance of Kaizen improvements to fall lower on Kato’s list of priorities. “Like a lot of companies, what we really had done was about 3S,” Benson remembers. “We didn’t sustain it very well.” Although Kaizen teams got through the Shine stage, lack of an established strategy for maintaining the improvements meant an eventual reversion to the pre-Kaizen state. Work areas became cluttered with unused tools. Workstations that had been placed in an inconvenient location were once again dirty from lack of regular cleaning. And employees were once again frustrated that they couldn’t find what they needed and felt they lacked sufficient space to work.
C.A.V.E. Men
To ensure the third regimen of Kaizen efforts would be the charm, Benson organized an eight-person steering committee to decide which projects to tackle in which order, and to form Kaizen teams. He selected Principal Manufacturing Engineer Mike Miner to be the Kaizen leader, and recruited Gould from Enterprise Minnesota to implement the process.
Their first mission was to bring more efficient flow to the production floor’s messy and cluttered stator wind and hookup assembly area. In addition to clearing out unnecessary items, another goal was to reorganize the tools and the workspaces to help assemble generators in a more efficient manner.
The seven members on Gould and Miner’s first Kaizen team were especially senior—the youngest had been with the company for 33 years—and particularly influential. They were also skeptical of what they saw as the newest “program of the month.” “The team name they gave themselves was the C.A.V.E. Men,” Gould says. “You know, Citizens Against Virtually Everything?”
C.A.V.E. Men in general are a “tough crowd,” but Gould believes they are the most important employees to win over when starting something new. “They have been lauded as miracle workers in the past and they are very politically connected,” he says. “So if you get a C.A.V.E. Man converted, they will do 10 times what an early adopter will do because of their connections.” He also sees them as company safeguards, cautious about programs that might not deliver to a company’s bottom line.
In his presentation of Kaizen to the group, Gould listed its benefits to the company—better productivity, more profits, less waste. The C.A.V.E. Men weren’t impressed.
“How do you know that this lean 1 + 5S system will work in this industry?” one C.A.V.E. Man demanded the minute Gould turned off the projector. “What makes you think it will sustain this time?” another wanted to know. “What other companies have you done this with where you’ve seen sustainable results?”
Gould answered their questions, citing benefits from Kato’s first Kaizen attempt, such as the liquid dispensing machine installed to differentiate one liquid from another, after learning the hard way that pouring the wrong liquid into a machine can destroy it.
Ultimately, the big question was, “What’s in it for us?” Gould replied, “When you’re frustrated, you’re burning at twice the normal energy rate, but you’re getting the same pay. What [Kaizen] delivers is more energy for all of you to take home to your families. The workplace is less frustrating, because you can find what you need to find.” He asked what the team needed and discovered that, for them, Kaizen’s success would come from creating more workspace in the plant and new personal lockers, Gould promised that they could make it happen.
But Gould knew the proof would be in the pudding. “You can’t answer a C.A.V.E. Man’s questions with words, because to them, words are just words,” he says. “You have to answer it by giving them benefits they can see and feel.”
The next day, as the C.A.V.E. Men began the Sort stage, throwing away unnecessary tools and stray items, they started seeing the organizational benefit of Kaizen. Gaining motivation, they threw out more and more items, even accidentally throwing away someone’s lunch with the old lockers.
By the Set In Order stage, the team had arranged to reposition an obstructive paint booth and was organizing tool boxes when George Motto, the lead person in the hook-up area, turned to area unit manager Dave Stelter and said, “You know, this idea of Samuel’s is not all bad.” “Every change idea I had thrown out had been their job to resist, so this was big,” Gould says. At the end of the day, Motto approached Gould and said he thought C.A.V.E. should stand for Can Achieve Virtually Everything. After getting a resounding “yes” from the rest of the team, the C.A.V.E. Men were on board.
More Benefits
The Kaizen event resulted in a reorganized space, a re-energized team and 32 more Kaizen Blitz events to date involving everything from the plant layout to inventory, down to placement of the tape on the floor and tools on the racks. “I felt the cultural transformation required for sustainability was well on its way when team leaders began to request that their areas be placed on the schedule for the next Kaizen event,” says Gould.
To celebrate, plaques hang in the employee entrance with pictures of the teams that have completed a Kaizen Blitz. “You don’t think these plaques mean much, and then all of a sudden you’ve got some guys who don’t have theirs up there yet and are bugging me saying, ‘When are we going to get that up?’ They won’t tell you it means that much, but it does,” Miner says.
The real prize, though, is the end result. “Success has really been an incentive. If people see that things are put together well and it’s well run, and at the end of the day the team succeeds and has an impact on the business, that promotes participation,” Benson says. To date, more than 200 of Kato’s 400 workers have participated in a Kaizen event.
And participation promotes improvement. Aside from the numbers, the factory looks so different that Gould says he wishes he had some “before” pictures. Fans have been moved off the floor to wall mounts, storage and machines have been repositioned, tape on the floor clarifies what should go where, small lockers have been replaced with more spacious models and a production supervisor’s entire office has been moved off the factory floor to free up some extra square footage for assembly. “It looks 100 percent better,” Miner says. “It’s lightened up the plant. It has made it far less gloomy and more appealing for people to go to work in various areas.” In classic lean style, even Kato’s lobby has changed to become unattended, another Kaizen event. Guests sign into a computer system, which notifies the appropriate person of their arrival.
The Next Stage
In the true spirit of continuous improvement, Gould and Miner are beginning a second round of Kaizen company-wide, this time looking for gains in overall efficiency. “Now we’re going after the fruit that’s not low hanging,” Gould says.
Benson believes that Kato employees have successfully adapted to Kaizen as a philosophy at work. “You know, participating in a Kaizen Blitz has become so second nature here now, that it has really become part of our cultural fabric,” Benson says. Once the company hits 40 Kaizen Blitzes, he plans to hold a party to celebrate.