Lean at Barry-Wehmiller

Matthew Smith

"Lean will allow us to build more than great products - Lean will allow us to build an organization of great people." With those words, Bob Chapman, president of Barry-Wehmiller began the company's lean journey in 2005. Although, still in its infancy, the company has dedicated itself to lean thinking by integrating the ideas of continuous improvement and worker empowerment directly into the company's culture. This paper will document the lean conversion of the Barry-Wehmiller company. Specifically, it will focus on the organizational-level by describing the steps and processes put in place to implement lean. It will also provide insight into the benefits and problems that arose during the conversion.

The Barry-Wehmiller company was founded in 1885 in St. Louis, Missouri. It originally was the sole supplier of packaging equipment to the Anheuser-Busch company. In the late 1970s, Anhueser-Busch decided to open up their supply chain. Barry-Wehmiller was now forced to compete with other companies for Anheuser-Busch's business. This hurt the company and in the 1980s, Barry-Wehmiller was forced to sell off half of the company. In 1987, under new management, the company began a new methodology of growth through acquisitions. The acquisitions were focused in the area of packaging and package machinery. At the time, most shops in the indusry were mom-and-pop shops. Barry-Wehmiller bought these small shops and consolidated them into one of their divisions. The company quickly grew from a gross revenue of $40-50 million dollars per year to $80 million dollars per year.

It was through two of these acquisitions that Barry-Wehmiller was first motivated to begin their lean journey. The first was the acquisition of MarquipWardUnited. When Barry-Wehmiller acquired MarquipWardUnited, they purchased a company that was already implementing lean production. With the purchase, they also got a well known advocate for lean accounting - Jerry Solomon. Rather than disrupt the operations of the business, Barry-Wehmiller allowed the company to continue. The efficiency of the company along with the strong advocacy of Jerry Solomon convinced Barry-Wehmiller to begin implementing lean practices across their divisions. The second motivator came in 2005 when Barry-Wehmiller purchased Paper Converting Machine Company (PCMC). PCMC was a major supplier to Proctor & Gamble. Proctor & Gamble was in the middle of fierce competition and determined that they needed to cut their costs of capital by 40% to compete. Proctor & Gamble issued an ultimatum to PCMC that they needed to cut their cost, as well, in order to continue to be a supplier for Proctor & Gamble. This proclamation sent shock waves through PCMC. Early conclusions suggested that the only way for the company to cut costs was to move their production offshore. When Barry-Wehmiller purchased the company, Bob Chapman adopted this issue. Chapman wanted to keep the jobs in America, so he began looking for an alternative to offshoring production. By chance, Chapman was playing golf at a charity event and was paired with Richard "Dick" Ryan. Ryan was a key participant in the conversion of Wiremold - a company that was featured in the popular Lean Thinking text by James Womack and Daniel Jones. When Chapman brought up the issues Barry-Wehmiller was having with PCMC, Ryan explained the success that Wiremold had with lean production. Chapman was impressed and Ryan was hired as the lean guru to head up the lean transformation of Barry-Wehmiller.

Ryan and Chapman set forth to transform Barry-Wehmiller into a truly lean company. The first step in this transformation was setting up a communication base. This was done through a company-wide meeting where they introduced lean concepts. This meeting focused on success stories at Wiremold and MarquipWardUnited. The meeting also emphasized the organization's commitment to lean at all levels. Chapman saw this commitment as being essential to the success of the company. He even extended the company's vision statement, the Guiding Principles of Leadership (GPL), to include lean principles such as continuous improvement, trust, and cross-functional interaction. This became known as the company's Living Legacy of Leadership (L3). See appendix A and B for more details.

To promote lean at a division level, Chapman created the Guiding Coalition. The Guiding Coalition was setup of key executives and leaders across the company. The Guiding Coalition's responsibilities were to educate and promote lean throughout the disparate divisions. Most importantly the Guiding Coalition served as a visual symbol of high level by-in for lean improvements. To facilitate the actual implementation of lean principles, Chapman created the Lean Promotions Office (LPO). LPO's were setup at the division level and were composed of employees of all backgrounds. These employees were trained extensively in lean concepts and dedicated all of their time to the implementation of lean. They worked with the Guiding Coalition to target areas for improvement and then hosted kaizen and 5s events to implement lean concepts.

Even though the lean conversion is still in its early stages across Barry-Wehmiller, the company has already begun to see improvements. MarquipWardUnited has seen a 22% increase in productivity at its machine shop and a 15% improvement in productivity in its assembly processes. The company has gone from 3.4 inventory turns to 5.6, reduced scrap by 43%, and reduced setup times by 324%. There are also less measurable changes as well. Employees have become more involved in the improvement of the company. Teamwork and communication have increased enormously. Employees have noted that their ideas are finally being listened to. The overall result is that job satisfaction has increased. As the company continues in its lean journey, there are high expectations for future successes as well. They hope to see an improvement in new product development. As they work to align their value streams, the expectations are that engineers will have more associations with customers and production employees. This will have the effect of producing equipment that works better for both stakeholders.

The lean conversion has not been without problems. One of the initial problems was in defining the financial metrics used to measure the success of the company. Lean production looks good on a company's cash flow statement but does not necessarily look good on the balance sheet. The reduction of inventory immediately reduced the value of the company's assets. Care had to be taken to reeducate the company's accountants as well as adjust perceptions to what was important in accounting for a lean company. Another problem was caused by the decentralized nature of the company. Because the company is formed mainly of acquired companies, each division had its own unique political structure. It was difficult for the company to spread lean thinking and manage perceptions across the company. Integrating lean into the company's values along with constant communication has been required to promote lean ideals. The final problem with the lean conversion has been in building trust. People initially fear change and fear losing their jobs. An important part of the conversion was building trusts by issuing job guarantees. This has helped to reduce the anxiety of divisions undergoing a lean conversion.

References

Interview with Brian Wellinghoff. Organizational Empowerment Specialist. Barry- Wehmiller Companies, Inc. Feb. 14, 2007.

Hutton, Kim. (2006, March 14). Barry-Wehmiller Appoints 'Lean Journey Leader' to Accelerate Adoption of Lean Principles throughout Organization. Retrieved January 23, 2007 from http://news.thomasnet.com/companystory/480035

Guiding Principles of Leadership - Our Vision of Our Culture. Retrieved January 23, 2007 from http://www.barry-wehmiller.com/content/menus/bwc/guidingprinciples.aspx

History. Retrieved January 23, 2007 from http://www.barry-wehmiller.com/content/menus/bwc/history.aspx

Touching People's Hands, Head & Heart with Lean. DVD-Video. Barry-Wehmiller Companies, Inc., 2006.

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