Wired to Win
Custom wire harness, cable assembly and panel build manufacturer Absolute Quality Manufacturing edges out its competition thanks to lean training with Enterprise Minnesota.
BY ANDREA LAHOUZE
President and General Manager Duane Petersen and Executive Vice President and Production Manager Jeff Zoubek revisit their value stream map to pinpoint the next area for improvement.
Walking the production floor of Absolute Quality Manufacturing, President and General Manager Duane Petersen rattles off a host of improvements that have been made to his plant and operations over the past 12 months. A few minutes into our tour he pauses, trying to remember
what else is new. Then he cracks a smile and says, "It's so second nature to us now that it's hard to even go back and specify everything that we've improved." One year into a lean journey where continuous improvement is key, a steady stream of "second nature" improvements is
Since 1997, Absolute Quality has manufactured custom wire harnesses, cable assemblies and panel builds for a multitude of customers across the nation. Though confidentiality agreements keep customers' names under wraps, it sells to industries ranging from communications and
electronic displays to agricultural, industrial, marine and utility. The company is an outgrowth of Stark Electronics, which began in 1938 as a radio parts distribution business during the medium's Golden Age before making a series of transitions, from radios to television sets to
battery packs and cable harnesses. Today, the two companies share a building and some overlapping employees, Stark Electronics operating as the electronics distribution side of the business and Absolute Quality operating as the manufacturing side.
Lean first lit up Absolute Quality's radar as a solution to the rise of international competition within its market.
"Our competitors are not just the people down the street. Our competitors are [also] the people overseas. We would quote business in the past and then when people took it overseas we couldn't be competitive, so we knew we had to become leaner," Petersen says.
Jason Zoubek, outside sales engineer, had been working closely with a customer that had already begun its lean journey. The customer's success with lean inspired Zoubek to look into the benefits it could provide to Absolute Quality. While researching lean, Zoubek discovered
Enterprise Minnesota and Absolute Quality quickly jumped on the bandwagon for a crash course in lean thinking.
Enterprise Minnesota Business Growth Advisor Jeff Mueller first led Absolute Quality's workforce through Lean 101 training. Aptly named, Lean 101 teaches the basic tenets and techniques of GreenLeanSM and gives employees a common language for discussing improvements. It
also shows companies in very specific terms how they will benefit from switching from a traditional environment to a lean environment.
For Absolute Quality, Lean 101 resulted in a full reworking of its production floor layout. Where row upon row of tables and workbenches used to be, employees assembling like products now sit in clusters or cells with all tools and equipment readily at hand. Point of use
storage provides similar advantages. Centralized receiving and carefully placed equipment have freed up more space on the floor. Jeff Zoubek, executive vice president and production manager, says the floor layout is no longer set in stone, either, but instead shifts to fill various
orders in the most efficient way possible.
"Our production floor is constantly changing to accommodate customers. Now when we think about laying out the production floor, we really think about the amount of steps we're going to use," Zoubek says.
Leaner layout accomplished, Absolute Quality next pursued a companywide Value Stream Mapping project with Mueller to identify bottlenecks within the company's processes. The six-month process required every department from sales to shipping to quantify the time required for
every step in its process, then work first within and then across departments to brainstorm ideas for improving workflow.
Workers eased into early Value Stream Mapping sessions, but were soon eager to make suggestions.
"Some of the staff was a little shy. At first, they didn't know what to say when there were managers in the room. But after a while, they really opened up. ... They've got great ideas because they're actually putting [the products] together," Zoubek says.
Some changes were simple fixes: an extra printer here, another email terminal there, or a switch in a machine's location. Others, like computerized systems for taking customer orders and tracking production efficiency, were more complex. The company's lean efforts to date have
reduced inventory in raw materials and finished goods by $1 million and saved an annual $100,000 in soft costs, fostering a culture of continuous improvement across the business.
Small Steps for Man
Many of the smallest changes had the biggest impact in realizing an 80 percent reduction in steps walked throughout the plant. In the shipping department, the company installed an email terminal for faster, easier communication with the sales department and front office.
Employees in work cells no longer walk to a central location to fetch hand tools, but now have toolboxes in each cell with everything necessary for assembly of its specific product. Extra printers dot the production floor. And pick tickets, which used to be sent to a printer across
the floor for retrieval, are now printed where they should be: right next to the person picking the orders.
Pickers also benefit from electric component carousels, which revolve to bring order components to the picker, similar to the clothing conveyor at a dry cleaning shop. Before the carousels, pickers walked an average of seven miles per day through aisles of metal shelving to
collect parts for each order.
"The amount of miles that they were putting on just walking was huge, and it's just something that people don't notice from day to day. You're so focused on whatyou're doing that you don't take the time to look at some of the things you need to be doing to be successful and
save money," Zoubek says.
Multiple transitions from manual to computer-based systems also save time for Absolute Quality. In assembly, the company recently invested in an automatic wire labeling machine, which can label a wire in two seconds versus the 20 seconds it takes to hand-apply a label.
"We do tens of thousands of wires a month that have a label on it. You think [the time it takes to put on] a label isn't really that much, but it really adds up," Zoubek says.
In the quoting department, Reed Rolfhus, production planner, says creating a value stream map of the company's quoting method revealed a workaround-ridden process with more room for improvement than the company had realized.
Creating a value stream of the quoting process "was something that we bit off thinking that we were going to breeze through it. But it took a long time and steps kept getting added to it. ... It brought [challenges] out in the open for us," Rolfhus says.
For Bill Schultz, production manager assistant, quoting time has been cut in half thanks to an electronic system for placing customer orders. Schultz and others used to type details for orders as they came in, often typing and retyping the same information for longtime
customers with each new order. Now, it has a digital file or "pop up" for each of Absolute Quality's most frequent customers, listing name, address and contact information to eliminate time wasted re-entering data. It also keeps track of each customer's buying history and
Absolute Quality's related manufacturing history.
An electronic scanning system tracking production efficiency helps the company to make and keep promises to customers regarding both quotes and delivery times. The old system was a paper sheet that each assembler would sign indicating the time they started and finished on each
work order. But listed times were often estimates, making it difficult to pinpoint how much time had been spent on each order. Now, assemblers scan one bar code when they begin a work order and another when they complete it. The data is then stored in a computer where it can be
Having detailed production data at hand allows the company to make informed decisions when customers ask for price reductions, because the data measure how much money is invested in manufacturing each product or order. As the flagging economy has shortened lead-times
significantly, the system is also valuable when customers request rushed deliveries.
"Our customers don't like to wait because they have customers and they are going to take every piece of business that they can get. They will call us up to expedite and say, 'Can I get this by tomorrow?' and knowing where it is in production is huge," Rolfhus says.
Supply Chain Successes
Absolute Quality's lean efforts help its customers to be leaner in their operations as well. For example, customers used to receive small orders from Absolute Quality every day. Now, customers send Absolute Quality a weekly order forecast, Absolute Quality stages the weekly
order for each customer on a pallet and makes larger, more complete deliveries once per week.
Packaging for order deliveries is another recent improvement. Absolute Quality recently replaced its old cardboard packaging with reusable plastic totes, which customers return after receiving an order. The mutually beneficial initiative cuts down on cardboard waste for both
the company and its customers.
Establishing kan-ban systems with many customers has reduced client follow-up calls, generating an annual savings of up to $75,000 when all calls between departments in Absolute Quality's manufacturing area are considered. The company even has an early warning spreadsheet for
all customers with kan-ban systems to alert them days beforehand if a part cannot be shipped when they will need it.
Absolute Quality has developed an in-house kanban system with Stark Electronics as well, which supplies many of its electrical components at cost. Product transfers from one company to the other used to occur at random, tying up multiple departments as often as six times per
day. The kan-ban system allows for one transfer per day, saving an estimated $15,600 per year.
The company's greatest lean savings has come from a change in the way it fills orders. With a newly implemented MRP system, Absolute Quality now manufactures product within a window mutually agreed upon by its customers, usually between three and four weeks out. The company
has also reduced its bonded inventory, and has partnered with suppliers to create a just-in-time system for receiving raw materials. Combined, these efforts have cut down on emergency orders and slashed inventory by $1 million.
As Petersen looks towards the future, he anticipates significant growth but remains wary of the recovering economy and whether the rise in sales is a spike or a sustainable trend. Though additional challenges such as the rising price of copper are out of Absolute Quality's
hands, Zoubek says it will continue to focus--and depend--on cost saving efforts within its control.
"To be the best supplier that we can be, we don't just pass on an increase. We have to look at other ways to counter that increase," he says. "If you incorporate lean into your facility, you can make money in other ways than by raising prices. A lot of waste is out there
that people don't see. If we can save there, that will help our bottom line."
To that end, Absolute Quality is one of 10 companies selected to participate in Enterprise Minnesota's Pathways for Business Growth program, funded by a grant from National Institute of Standards and Technology (NIST) Manufacturing Extension Partnership (MEP). The program will
implement an array of training solutions to kick-start innovation and sustainable growth by identifying new products and services to offer and new customers and markets to attract. Its ultimate goal is to double revenues in two years.
"We're in the midst of exploring broadening our product and service offerings right now. Who knows, we might make a Hula Hoop [next]," Petersen says. "We want to work with Enterprise Minnesota to become competitive in a world market."