Barry-Wehmiller Companies, Inc. is the quintessential “great American manufacturer.” While other organizations were sending production overseas to take advantage of low-cost labor, the St. Louis-based maker of packaging, corrugating, and paper converting equipment kept all of its manufacturing in the United States and has grown 20% per year for the past 20 years.
Even in 2009, the worst recession since the Great Depression, Barry-Wehmiller didn’t crumble under the pressure. The company completed three acquisitions last year, although revenue dipped ever so slightly, to just under $1 billion from $1.2 billion in 2008.
“But we are already showing signs of recovery,” says Craig Hergenroether, the company’s chief information officer.
Much of Barry-Wehmiller’s ability to thrive, even amid a recession, is directly related to lean initiatives, Hergenroether says, but not lean in the literal sense of merely eliminating waste. Following that rule too closely weakens the fundamental principles of what lean strategies are meant to do: create efficiencies and value in the organization through a coordinated effort of people, processes, and technology. Starting with a mandate to simply remove waste from the organization is the wrong value proposition, he believes.
“So many companies say they’ll do lean because they see how successful Toyota was at cutting out waste, but that’s not inspirational,” Hergenroether says. “We embraced lean because it allows our people to become engaged in the business. We have paid them for their hands for years, and what we wanted to do was engage their hearts and their minds.”
Barry-Wehmiller is not alone in redefining lean for its operations. As more companies recognize the benefit that lean processes — such as kanban (pull production control), 5S (sort, set in order, shine, standardize, and sustain), poka-yoke (error-proofing), and value-stream mapping — have had on the factory floor, they are exploring the benefits of similar techniques throughout the organization. And, those companies that embarked upon that journey before the recession hit are entering 2010 in very good shape.
“Time and time again, we are seeing companies becoming more profitable using lean,” says Matt Littlefield, a senior research analyst at Aberdeen Group. “They may have seen revenue drop, but they’ve seen profitability increase.”
In fact, in a recent Managing Automation reader poll, 82.4% of respondents said their companies have adopted lean philosophies, and 79.1% said their lean program helped the company weather the recession. A full 51% of the respondents said their lean initiatives intensified during the recession. And the most important part of a successful lean program? A synchronized collaboration of people, processes, and technology, the majority of respondents said (see Reader Poll).
Similarly, Aberdeen Group recently conducted its own study on the use of lean and continuous improvement techniques, and found that from 2008 to 2009 these programs proliferated across a variety of functional groups.
While manufacturing remains the predominant area where lean programs are applied (94%), logistics/supply chain, procurement, and IT departments are aggressively adopting lean principles as well. In 2008, 36% of the respondents to Aberdeen’s survey said they were using lean in their logistics and supply chain groups, but that escalated to 78% in 2009. A mere 24% of procurement departments were practicing lean in 2008, but the number swung upward to 67% in 2009. And, while only 18% of IT departments had adopted lean philosophies in 2008, a year later 48% were on board.