Table Of ContentMr. Lean Buys and
Transforms a
Manufacturing Company
The True Story of Proftably
Growing an Organization
with Lean Principles
Mr. Lean Buys and
Transforms a
Manufacturing Company
The True Story of Proftably
Growing an Organization
with Lean Principles
GreG lane
Foreword by John Shook
Productivity Press
Taylor & Francis Group
270 Madison Avenue
New York, NY 10016
© 2010 by Taylor and Francis Group, LLC
Productivity Press is an imprint of Taylor & Francis Group, an Informa business
No claim to original U.S. Government works
Printed in the United States of America on acid-free paper
10 9 8 7 6 5 4 3 2 1
International Standard Book Number: 978-1-4398-1516-8 (Hardback)
This book contains information obtained from authentic and highly regarded sources. Reasonable efforts
have been made to publish reliable data and information, but the author and publisher cannot assume
responsibility for the validity of all materials or the consequences of their use. The authors and publishers
have attempted to trace the copyright holders of all material reproduced in this publication and apologize
to copyright holders if permission to publish in this form has not been obtained. If any copyright material
has not been acknowledged please write and let us know so we may rectify in any future reprint.
Except as permitted under U.S. Copyright Law, no part of this book may be reprinted, reproduced, trans-
mitted, or utilized in any form by any electronic, mechanical, or other means, now known or hereafter
invented, including photocopying, microfilming, and recording, or in any information storage or retrieval
system, without written permission from the publishers.
For permission to photocopy or use material electronically from this work, please access www.copyright.
com (http://www.copyright.com/) or contact the Copyright Clearance Center, Inc. (CCC), 222 Rosewood
Drive, Danvers, MA 01923, 978-750-8400. CCC is a not-for-profit organization that provides licenses and
registration for a variety of users. For organizations that have been granted a photocopy license by the
CCC, a separate system of payment has been arranged.
Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are
used only for identification and explanation without intent to infringe.
Library of Congress Cataloging‑in‑Publication Data
Lane, Greg.
Mr. Lean buys and transforms a manufacturing company : the true story of
profitably growing an organization with lean principles / Greg Lane.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-4398-1516-8
1. Semiconductor production equipment industry--Management. 2. Semiconductor
production equipment industry--Cost effectiveness. 3. Production control--Cost
effectiveness. 4. Organizational effectiveness. 5. Lane, Greg. I. Title.
HD9696.S42L36 2010
658.5’6--dc22 2009045800
Visit the Taylor & Francis Web site at
http://www.taylorandfrancis.com
and the Productivity Press Web site at
http://www.productivitypress.com
Contents
Foreword ............................................................................................. xiii
Preface ................................................................................................... xv
Prologue: The Purchase.......................................................................xix
Chapter 1 The Beginning
Observation and Documentation ...................................... 1
1.1 Introduction ......................................................................1
1.2 Observing ..........................................................................2
1.3 Getting a Detailed Understanding of the
Processes I Would Be Responsible For ..........................5
1.4 A Lack of Training Can Be Costly .................................6
1.5 Training as a Machine Operator ....................................8
1.6 Discovering a Lack of Documentation ..........................8
1.7 I dentifying Skill Sets Tat Needed to Be Replaced ......9
1.8 Workplace Organization (5S) Opportunities .............10
1.9 Discovering Diferent Methods Being Utilized
for the Same Task (No Standardization) .....................12
1.10 Discovering Difcult Processes to Standardize .........13
1.11 Tis Much Observation Required Me to “Divide
and Conquer” ..................................................................14
1.12 Summary..........................................................................16
Chapter 2 Standardizing the Estimating Process ............................ 17
2.1 Hiring a New Programmer/Estimator ........................17
2.2 Writing the First Draf of Standardized Steps
for Programming and Estimating ................................18
2.3 Considering the Complications with Quoting ...........19
2.4 Minimize Training and Start-Up Time
by Utilizing Similar Equipment .................................. 20
2.5 Continuing to Determine Where Skill Sets
Would Be Lost .................................................................21
2.6 Meeting the Customers ..................................................22
v
vi • Contents
2.7 Starting Some Measurements ....................................... 24
2.8 Visualizing the Measurement ....................................... 25
2.9 Plan, Do, Check, Act (PDCA) ....................................... 26
2.10 Summary......................................................................... 28
Chapter 3 Learning the Office Processes ......................................... 29
3.1 Introduction ....................................................................29
3.2 Inputting Orders ............................................................ 30
3.3 Problems Working without a PDCA Cycle
in the Estimating Process ..............................................32
3.4 Repricing Discussions Are Easier if Based
on Accurate Data ............................................................33
3.5 Learning to Purchase .................................................... 34
3.6 Scheduling the Shop Based on Tribal Knowledge .....36
3.7 Job-Shop Planning ..........................................................37
3.8 Simplifed Short-Term Planning ...................................38
3.9 A More Comprehensive Work Order Package ...........39
3.10 Poor Work Order Packages Can Increase Setup
Time ..................................................................................41
3.11 Closing the Books ...........................................................41
3.12 Collecting the Money .................................................... 43
3.13 Summary......................................................................... 44
Chapter 4 The First Days Alone ....................................................... 47
4.1 Introduction ....................................................................47
4.2 My First Pricing Decision Alone ................................. 48
4.3 Creating Extra Capacity with 5S ..................................49
4.4 Establishing Normal versus Abnormal .......................52
4.5 Problem Solving versus Firefghting ............................55
4.6 I dentifying the Need for Shop-Floor Visuals .............55
4.7 Converting Small Productivity Improvements
into Proft .........................................................................58
4.8 Challenging the Reported Proft Margins.................. 60
4.9 Summary..........................................................................62
Contents • vii
Chapter 5 Creating and Selling Capacity ......................................... 63
5.1 Only Tinking in Terms of Full Absorption
Costing .............................................................................63
5.2 Overtime as a Positive ................................................... 64
5.3 Setup-Time Reductions ..................................................65
5.4 Continuously Measuring Setup Times ........................67
5.5 Creating a Team Leader .................................................70
5.6 Increased Productivity through Visual
Management ....................................................................71
5.7 PDCA of the Estimating Process ..................................73
5.8 Becoming the Estimator ................................................74
5.9 Summary..........................................................................77
Chapter 6 Getting Everyone Motivated for Improving the
Machine’s Output ............................................................. 79
6.1 Introduction ....................................................................79
6.2 Managing Each Job Visually ........................................ 80
6.3 Te Desire for Independence from Day-to-Day
Operations .......................................................................81
6.4 Preparing for Further Setup Reductions .....................82
6.5 Continuing the Kaizen of Equipment by
Improving the Adjustment Phase of Changeovers ....83
6.6 Running a Machine while Confrming the
Quality of the First Piece .............................................. 84
6.7 Difculties in Creating a Proft-Sharing Plan ............ 86
6.8 Staying Hands-On since “the Devil Is in the
Details” ............................................................................ 88
6.9 Cost Justifying a Team Leader ..................................... 90
6.10 Closing the Books Becomes Anticlimactical ..............93
6.11 Summary..........................................................................94
Chapter 7 Seeing the Administrative Processes from a New
Angle ................................................................................. 95
7.1 Introduction ....................................................................95
7.2 Visualization Confronts Obtaining Information
Either from Computers or in Meetings ...................... 96
viii • Contents
7.3 Not Allowing Excuses for a Late Start .........................97
7.4 Small Businesses Look at the Recruiting Process
Diferently ........................................................................98
7.5 Focusing to Improve the Ofce Processes ............... 100
7.6 Purchasing Is a Critical Administrative
Function to Look toward Improving .........................102
7.7 Unsuccessful at Signifcantly Reducing the Time
Necessary for Quotations ............................................107
7.8 5S for Shared Computer Drives and Files .................109
7.9 Outside Quality Accreditation ....................................110
7.10 Summary........................................................................111
Chapter 8 Moving the Business ...................................................... 113
8.1 Industrywide Downturn .............................................113
8.2 Background for Moving the Business at Tis
Point in Time .................................................................114
8.3 Creating a New Layout from a Blank Canvas ...........116
8.4 A Nondisruptive Move .................................................118
8.5 Simulating the New Layout ........................................ 120
8.6 Introducing Procedural Changes during the
Move ...............................................................................121
8.7 Using a Major Event to Introduce Change in the
Ofce.............................................................................. 123
8.8 Summary........................................................................125
Chapter 9 Accurate Pricing through Better Cost Allocations ...... 127
9.1 Introduction ..................................................................127
9.2 Determining More Accurate Allocations during
Tough Times ..................................................................129
9.3 Using My “Modifed Activity-Based Costing” .........130
9.4 Starting Simplifed Activity-Based Costing
in the Shop Using a Matrix .........................................132
9.5 How to Relate the Matrix to Cost .............................. 134
9.6 A Simple Activity-Based Costing Matrix
for the Ofce ..................................................................135
9.7 Relating the Matrices to Hourly Costs ......................136
Contents • ix
9.8 How Others Ofen Allocate Costs ..............................138
9.9 Keeping the Team Leader Focused during the
Slow Times .....................................................................140
9.10 Increasing Process Capabilities to Reduce
Outsourcing ...................................................................141
9.11 Standardizing the Business Processes Allows
Time for Pursuing Other Opportunities ...................142
9.12 Summary........................................................................144
Chapter 10 Up-Front Delays ............................................................. 145
10.1 Te Measurements Confrm Success .........................145
10.2 Continuously Developing Protocols Allows
More Autonomy from Day-to-Day Operations ........146
10.3 Planning Only Based on Available Materials Is
Costly ..............................................................................147
10.4 Capacity Planning Based on Lead Times ..................148
10.5 Identifying Areas Where We Were Only Being
Reactive ..........................................................................150
10.6 Available Time Utilized to Document Processes .....150
10.7 Lead Time Reduced through “Strategic”
Inventory ........................................................................152
10.8 Prioritizing Problems during Busy Periods ............. 154
10.9 Te Lack of Hands-On Experience Is Very Costly .... 154
10.10 My Personal Experience of Generating Costly
Designs ...........................................................................157
10.11 Summary........................................................................158
Chapter 11 Making Money during the Good Times ....................... 161
11.1 Introduction ..................................................................161
11.2 Improving Processes during Slow Periods Pays
Of ...................................................................................161
11.3 Problem-Solving Skills Developed during the
Slow Periods Begin to Pay Of .....................................163
11.4 Te Leader Keeps in Practice ......................................164
11.5 Diversifcation Would Have Been Helpful ................166
11.6 Te Need for a Second Shif ........................................166
