Advanced Manufacturing - Lean Manufacturing: Case Study

Perhaps you recognize the slickered Fisherman and the television jingle 'Trust the Gorton's Fisherman," but few people recognize that Gorton's has been around for over 150 years. Gorton's, based in Gloucester Massachusetts, is focused on delivering high quality, great tasting seafood and is the leader in the frozen seafood category. Gorton's family of products include Gorton's branded products sold in the United States and Blue Water Seafood branded products sold in Canada.

In 1998, Larry Coté visited our plant and challenged us on our lack of visual flow. Because the production facility operated on multiple floors, problems existed in communication and product flow because we had isolated pockets of activities on each floor. We were challenged to greatly simplify our plant by putting all of our production activities on one floor.

At first this didn't seem to make sense. We had been leaders in our industry since 1849. Our production processes were "state of the art", using equipment common to the frozen seafood industry, much of which had been developed by Gorton's. We viewed the comments with skepticism. But once we got into analyzing what our customers would pay for in terms of value, our eyes were opened. We needed to get rid of the waste in movement. It was like light bulbs going off!

In early 2000, The Vice President of Operations asked me to move from the Finance Department to coordinate Lean implementation and training. We also assigned individuals to function as Value Stream Managers. That was where it all started rolling and, while it has taken time, we have eliminated a phenomenal amount of waste throughout our company!

Our initial Current State Maps showed us that our food manufacturing processes were too complex and convoluted. There was considerable waste in movement. It was obvious from the mapping exercises that we had to look at consolidating the multi-floor operation into one.

Raw material was brought into the plant through the second floor freight entrance but was then stored on multiple floors. Our products were processed on the second and third floors. Then the finished goods were shuttled back to the cold store via a first floor warehouse entrance. Linking the processes were multi-floor spiral freezers that moved the products between processing and packaging activities.

For the plant employees there was no visual connection between the first, second, and third floor activities. A fish stick would appear on the third floor but where did it come from and what had been done to it? Line workers simply didn't know what was going on at various stages of the process. After products were processed on the second and third floors, they were palletized and sent to the first floor warehouse. There was too much "picking up and putting down" motion. Communication was difficult - a packaging problem was relayed to manufacturing by radiophone. Misunderstandings and slow downs were inevitable.

We decided that the Seafood Center would immediately begin to make changes but without involving big equipment investment (for example, replacing the freezers). Where should we start?

Should We be in the Warehousing Business?
Inventories and warehousing tied up working capital and operating expense. We started with a 40,000 sq. ft. offsite facility and reduced it to a 20,000 sq. ft. on site warehouse space. More recently we further downsized the required space to less than 10,000 sq ft. Further, Gorton's decided to contract raw material storage through our neighboring cold storage warehouse facility. These initiatives have significantly reduced costs. We are carrying 50% less inventory and we receive materials on a JIT basis. These benefits were achieved without spending significant dollars.

By the time we had made the warehousing changes, the useful life cycle for our huge freezer system was ending. This presented Gorton's with a big opportunity at just the right time. We could redesign our manufacturing processes in a major way.

Over a two-year period we went about rethinking every aspect of our production systems. Gorton's plant manager, John Gates, has been a strong proponent of Lean implementation. Under his leadership, the production engineers began working with our equipment suppliers to redesign the conveyor systems, the breaders, batter machines and our tempering and cutting equipment. When they design their equipment, OEMs (Original Equipment Manufacturers) don't always think about Lean equipment design with its simplified maintenance, parts standardization, and quick changeover capability. We encouraged these companies to design their equipment with fewer moving parts and, with mechanisms that were visible and easily cleaned. We involved them in our Lean process, and some very creative solutions were developed. Our objective was to replace our antiquated batch-oriented manufacturing processes with new continuous flow high technology equipment.

It sounds obvious but opportunities like these can be hidden by habit until you start to use Lean methods to 'see' the waste where it is actually happening. Getting rid of our huge conveyor systems allowed us to begin to consolidate four production lines, spread over multiple floors, to just one floor.

Again the timing was excellent. We knew our business was growing and that we would need additional production space and a new building in 2005. By implementing Lean and moving our production lines to one floor we gained a whole floor of available space. As a result we can now accommodate 7 retail lines in the space that had previously held only 4. This is a huge long-term financial benefit, one that can be seen at every level of the organization.

The move to one floor is taking place over a two-year period. This fall we completed moving two old lines out and putting two new ones in place. In the spring we will replace the other two old lines with two new lines to complete the reconstruction of the Seafood Center.

With the two new lines production is becoming visual - you can see from the beginning to the end of each new line. People understand the process better and they can move more freely through the functions. Communication about problems or potential improvements is faster, clearer and less prone to misunderstanding.

We can now keep all needed raw materials right at the end of the line. Every 20 minutes the supply of raw material required on the production equipment is refreshed. We're now working with our suppliers to receive incoming raw materials in increments that match our 'flow' needs.

Our Culture Changed
Through the leadership of our plant manager, John Gates, we experienced a significant cultural change with our Lean implementation. We are now seeing those benefits. We are able to work with people to do changeovers better and faster. When they couldn't see the end of the line it took the pressure off. You no longer hear, "Oh, do they need that?" People are on top of what's needed because they can see the entire line in action. Interestingly the whole line is also more easily cleaned and maintained. There are fewer moving parts, fewer problems and a real chance for everyone to focus more on the customer needs. The use of Value Stream Maps really helps our employees see the waste in a process. We use these maps to communicate the Current State issues and enable our employees to begin designing the next Future State.

Lean in Our Offices
As we began Value Stream Mapping in the plant, our home office became interested in the benefits of Lean. As a result, we have worked to simplify administrative processes in our Accounts Payable, Quality Control, Purchasing, Office Services, and Distribution departments.

For the past 5-6 years we have held annual Operations Conferences with our suppliers, the companies that provide us with fish, flour, breaders, batter, warehousing and trucking goods or services. In 2000 we advised them we were going Lean and have kept them updated on our implementation at each conference.

At first they kind of nodded and said, "Yeh, here comes another improvement idea." But they're really getting it now that we can report back on measured results. They've become very interested in applying Lean to their businesses. They saw what we were accomplishing, that we were sustaining our interest, and more than meeting our goals. They saw the change in our warehousing utilization, and the drop in outstanding inventories of 50%. At every annual Operations Conference we were able to report significant bottom line improvements and the success of our implementation process.

In fact we issued them a Lean challenge three years ago. We told them that we would provide the training and help them acquire the right tools, if they started their own Lean implementation. Then two years ago we initiated an award called the 'Gorton's Lean Corporate Challenge'. The award is a hand crafted crystal eagle given to the supplier or service provider who achieved the most significant benefits in their Lean journey. Two companies were recipients this year, AmeriCold Logistics and Hub Folding Box Company.

AmeriCold has done a great job of applying Lean outside of the manufacturing environment. They saw that Value Stream Mapping could be applied to the warehousing industry and took off with it. Their operating costs are primarily energy driven. Through consolidation of processes and the elimination of wasteful steps, they achieved substantial savings in electrical costs.

Hub Folding Box Company was the other winner. They understood the Lean process and are starting to reap the benefits. Their success is helping to drive down the costs with other customers, while making them much more competitive in their own industry.

How to be Successful Introducing Lean to Your Supply Chain
There are some key approaches to making progress on Lean throughout your supply chain:

• You have to be fact based and not just rely on rhetoric about the improvements to be gained.
• You have to be willing to share information at a very detailed level to help them see the savings potential.
• You have to demonstrate a commitment to the long-term with your implementation - it isn't just a 'flavor of the month'.
• Most importantly, you have to give them support in terms of training and troubleshooting. Basically you're in it together and the benefits work both ways. You help them and they are more willing to work with you on issues. You both see that from a competitive standpoint, Lean is your key differentiator.
• If possible, you demonstrate the potential benefits of Lean not only to their company but also to all their customers, covering both the bottom line and service points of view.

You have to demonstrate what you've accomplished and prove it's a reality. But you can't push them to Lean unless they're ready. You don't want lip service and wasted efforts. You'll know when a company is ready to make the move. You'll see the light bulbs go off when they're internalizing the training, understanding it, and going back to get started at their implementation. It's infectious!

This work with the supply chain has been phenomenal. Our key suppliers and service providers have been very supportive and, in effect, are partnering with us on our Lean journey.

Get Fresh Eyes to Keep Looking for Waste
We often bring in non-competitive companies to see what we're doing. Even though we've been implementing Lean for a while, we can still fall into the trap of not seeing more opportunities to eliminate waste. It happens to everyone. We ask our visitors to challenge us, "Tell us where you see issues. Where do you see waste?" That way we take advantage of 'fresh eyes'. It's symbiotic, they learn from us and we learn from them!

Today we're just getting our feet wet applying Lean to our product development and I'm starting to work with that group. We're the leader in our industry across North America and we want to stay that way. Our goal is to use Lean methods to help us bring new products to market as quickly and effectively as possible.

We need to engage the entire development group better as we apply value to all the steps, from concept through development to product launch. We are mapping where the wasted activities lie and are beginning to understand this process using Lean, just as we have done in other areas of the company.

Leadership is What Keeps You Succeeding!
Leadership has been the essential building block for our success. It was our Vice President of Operations, Dave Weber, who started the Lean ball rolling. He did the initial reading, became energized and interested in its potential application at Gorton's. He was the one who saw that Lean transcended the automotive and aerospace industries and could be used in the food processing industry.

Dave would say, "If you have a process of any kind then you can map it, and if you can map it, you can make improvements". He had the vision and patience to get efforts started. We started with small initiatives, made them work well and then communicated those successes before tackling more complicated problems. He challenged his direct reports to lead implementation efforts and constantly reinforced the message, "This makes sense, removing the waste and focusing on value creation will help our business"

Our President further supported and helped to promote the Lean vision. Eventually the changes we are making will affect every aspect of our business. Our goal is to become the 'Toyota of Food Processing'! Seeing the results and being part of the implementation helps people believe in it.

• Develop, share and communicate the vision
• Show commitment and long-term persistence
• Demonstrate passion for the changes
• Assign the right people to the right tasks at the right times
• Emphasize and ensure delivery of the necessary training when needed so that people can understand, apply and sustain Lean practice
• Walk the floor, talk to people, see their accomplishments - As Dave says, "What gets measured gets done".
• Be hands on and yet able to delegate and empower the people around you
• Give clear direction and don't waver from achieving the goals

It's a tall order but we're living proof that it can be done. When you do it well you reap the ongoing financial rewards right at the bottom line. Lean requires a continuing commitment. Based on our past five years of progress, I'm tremendously excited about our ability to realize even more gains! Your goals are only restricted by limits to your imagination. Lean really can open the doors to make your dreams real.

Gorton's has implemented many successful Lean initiatives since Larry Cote' originally challenged our lack of visual flow. Along our Lean journey, Larry and his team have been there to help train and encourage us to apply Lean methods. They have offered exceptional guidance with Value Stream Mapping, Lean Material Handling, and Making Value Flow. Gorton's continues to sustain solid results from Lean and have benefited from our partnership with Lean Advisors Inc.

Jeff Whiteacre has a background in Financial Accounting and Operational Management. His work has been involved with the entire supply chain, including work with the plants, distribution, purchasing, suppliers and service providers. His financial experience has been easily applied to Lean operating methods. Jeff now works full time within Gorton's Operations and is responsible for the training, development, and implementation of lean throughout Gorton's entire supply chain. Jeff holds a BS degree in Accounting and a Master's of Business Administration.