Cultivating the culture

Brian Montanari, director of global operations for HID Global, tells Martin Ashcroft how a lean implementation, starting with a focus on culture, has produced world class results. Rip Van Winkle wakes up in a parking lot. Cars are arriving at the start of another working day. Office workers balance briefcases, handbags, coffee cups, and paper sacks from DunkinÔÇÖs or McDonaldÔÇÖs, and totter towards the door with their hands full. How can they possibly open it without putting all their packages down?  Bewildered by their bizarre behavior, he watches as women shuffle their shoulders to point their purses at the wall. The door opens. Men wave their wallets in the air. Some stoop or jump until one of their pockets reaches the desired height and direction. The door opens. How do they do that? To Rip Van Winkle, itÔÇÖs magic. To the office workers, itÔÇÖs just contactless smart card technology, of the kind that has made HID Global one of the leading manufacturers in the access control industry. There is more than a little magic, however, in the way that HID Global has become a dominant force in this market. It might not have been, but for a lean implementation begun in 2004. Three years ago, its manufacturing facility in North Haven, Connecticut, was struggling. Lead times averaged 25 days, on-time delivery was a miserable 55 percent, and some 15 to 20 percent of its production was scrapped. It was, at the time, the only HID facility that actually manufactured the cards themselves (others simply programmed them), but its future was far from certain. The company was founded in 1991 as Hughes Identification Devices, a subsidiary of Hughes Aircraft, with headquarters in Irvine, California. It became HID Corporation when acquired by Palomar Technological Companies in 1995, but was then acquired again in 2000 by the Swedish conglomerate Assa Abloy AB, one of the worldÔÇÖs leading suppliers of locking solutions. In recognition of the companyÔÇÖs growth, its name was changed to HID Global in 2006. But letÔÇÖs get back to the magic.ÔÇ£I was brought on board in September 2004 as a lean consultant, one day a week,ÔÇØ remembers Brian Montanari. That quickly became three days a week, then he soon convinced himself it would be better to work full time than as a consultant. Promoted from plant manager to director of global operations in July 2005, Montanari brought in a couple of lean experts he had worked with in the past, Paul Murphy and John Uliano, a veteran of the Wiremold turnaround immortalized in Jim Womack and Dan JonesÔÇÖ book Lean Thinking. The three of them had been part of many lean implementations, both together and separately, but they knew they could not repeat here what they had done elsewhere. ÔÇ£Every time IÔÇÖve led a lean implementation IÔÇÖve started with something different,ÔÇØ says Montanari. ÔÇ£You can read the books like Lean Thinking and you can do exactly what Wiremold did or exactly what Lantech did and fail, because every company is different. Their burning bridges are different.ÔÇØ At HID, they decided to begin by ÔÇ£cultivating the culture,ÔÇØ focusing less on the tools, and more on the people. ÔÇ£We spent a lot of time playing games, opening up a meeting with a focus game or something to get the blood rushing,ÔÇØ says Montanari. One such is a blindfold game, where everyone in the room is given a number. Blindfolded, and not allowed to speak, participants organize themselves into numerical order, through other means of communication like clapping or stamping feet. Another culture changing forum is the picnic. People tend to hang out with their own crowd, Montanari observes, so they are put into random teams which then compete in tug-of-war contests or musical chairs to get people to interact with each other. Behind the games is the serious matter of setting targets to improve the business. ÔÇ£One of the first things I wanted to do was make sure we were focused on the right things,ÔÇØ says Montanari. As the Connecticut facility was the only manufacturing unit in the company, he felt that the sales and marketing driven mission statement was not well aligned with it. ÔÇ£We make ID badges and card credentials,ÔÇØ he explains. ÔÇ£All the other facilities took plain white cards off the shelf, programmed them and shipped them. We were actually taking raw materials and turning them into custom finished goods. So we rewrote the mission statement for Connecticut. ItÔÇÖs very simple: ÔÇÿto provide our customers with the highest quality product, on time, every time, through our pursuit of world class practices.ÔÇÖÔÇØ The need for change was overwhelming, Montanari recalls, so to bridge the gap they set a compass to work towards meeting the mission statement. ÔÇ£The compass for 2005 was that by the end of the year we wanted to have 100 percent of our employees trained in the principles of lean, and we wanted 100 percent actively participating in a lean team. We wanted to have 95 percent on-time delivery with an average of 10 day lead times. When we started we had nobody trained on lean; on time delivery was 55 percent and the average lead time was 25 days. So we did a lot of culture activities, and a lot of different lean activities.ÔÇØ Montanari specified 100 percent lean training and participation because he knew that rapid success would depend upon everybody getting involved, and that nobody would get involved unless they were properly trained. And then there were the cave people to deal with (citizens against virtually everything). ÔÇ£You always have cave people,ÔÇØ he says. ÔÇ£We found out quickly that there were some people who werenÔÇÖt going to change. They were cave people through and through. WeÔÇÖd give everybody ample opportunity to change, and if we found out they couldnÔÇÖt we removed them, because one cynical person can spoil the whole thing.ÔÇØ But there was more than games and training behind the implementation, and the potential infection from the disaffected was controlled, as if by inoculation. ÔÇ£I started with the culture changing games and the training,ÔÇØ says Montanari, ÔÇ£but I also started off with visuals on the factory floor, because nobody knew where any work was at any time, nobody knew how many late orders there were, or which orders on the floor were late. So we put a nice big visual scheduling system in place that showed people where the late orders were so they could start focusing on the right things.ÔÇØ The visuals gave employees the information to do their jobs better, and the culture games taught them to work together better, so they began to realize that lean was going to help them. ÔÇ£It wasnÔÇÖt an overnight thing but what started to happen was that the cave people became isolated as others got on board. It was interesting to watch it evolve.ÔÇØBy the end of 2005, 99 percent of employees were trained, and 99 percent were participating. As a result of this, on-time delivery peaked at 93 percent in one month, with an annual average of 78 percent. Lead times fell from 25 days to 8.9 days. The formula was working. ÔÇ£In 2006, it wasnÔÇÖt as important to have 100 percent of our employees trained and participating,ÔÇØ say Montanari, ÔÇ£because we were almost there, so we replaced those two items on the compass with quality and innovation. For quality we wanted to have 99 percent internal yield and 99.9 percent external yield and for innovations we wanted to have 30 implemented innovative ideas by the end of 2006.ÔÇØ Another new measure was the misery index, introduced by Paul Murphy. ÔÇ£For every day a line is late it gets a misery point, so if an item is ten days late it gets ten points. When we started measuring, our misery was over 2200 points. We set our goal to be under 200 by the end of 2006. Culture exercises and training continued, and by the end of 2006 HID had achieved its 99.9 percent external quality target. Internal fell a little short, at 95.5 percent, but still a major improvement on the previous year. On-time delivery rose to 96 percent and the misery index went down to 60. The team empowerment initiative produced 31 implemented ideas. Although pleased with these results, HID is by no means satisfied. More stretch goals have been set for 2007. ÔÇ£For speed, we want lead times to be two days,ÔÇØ says Montanari. ÔÇ£For quality, we kept the internal goal at 99 percent, but since we met the external quality at 99.9 percent we decided to change the way we measure it and look at defects per million opportunities. The goal is for 1500 DPMO. Right now weÔÇÖre at about 5000 DPMO. The delivery target is now 98 percent on-time delivery and for innovation weÔÇÖre looking at two implemented improvement ideas per person per month.ÔÇØNow thatÔÇÖs a target and a half. With around 100 employees, it represents 200 ideas a month, 2400 for the year. And not just ideas, but implemented ideas. ÔÇ£To put it in perspective,ÔÇØ says Montanari, ÔÇ£ToyotaÔÇÖs at four per person per month, so weÔÇÖve still got a long way to go to get there, but the idea of the compass is to set your goals high. IÔÇÖm upset that we didnÔÇÖt meet some of those points over the last two years, but we came so much farther than anyone would have expected.ÔÇØThe litmus test of stretch goals, says Montanari, is how many people get to yell at you. ÔÇ£When we set the goal in the 2005 compass to get to ten daysÔÇÖ lead time, there was not a person in the room who believed we could do that. Everybody was upset with us for setting a goal we could not achieve.ÔÇØ But, he says, even if they had missed the target and achieved only 11 days, it would still have been an enormous improvement on the 25 that had become standard. As it turned out, they achieved 8.9 days. ÔÇ£If I had set the goal at 15,ÔÇØ he says, ÔÇ£I think we would have met 15, but it wouldnÔÇÖt have come down much lower.ÔÇØ So when it comes to implemented ideas, he says, ÔÇ£weÔÇÖre trying to challenge the status quo and blow the number through the roof, because weÔÇÖre now in the third year of the implementation; weÔÇÖre much more mature with it, our people are more involved, and thereÔÇÖs no reason we canÔÇÖt have two implemented innovative ideas per person per month.ÔÇØTo improve quality and bring lead times down, there were many practical problems to solve. One of these was printing on plastics. Clients like Coca-Cola want the colors of their cards to come out exactly as branded. ÔÇ£If youÔÇÖre making a card for Coca-Cola,ÔÇØ says Montanari, ÔÇ£it had better be Coca-Cola red.ÔÇØ But although the test printing would be accurate, by the time it was laminated it might come out purple, ÔÇ£because plastics do funky things under heat and pressure.ÔÇ£We spent a lot of time working on getting better at printing,ÔÇØ says Montanari, ÔÇ£bringing in people with more experience, but more importantly we went out and found some solutions that helped us measure the color. We found a way to figure out what the color is going to shift to when you laminate it, so you can print it a different color and it will it shift into the proper range. We used to run a couple of test sheets, then laminate it and see what happened, then run couple more test sheets, laminate it, etc. But now we can predict it.ÔÇØ Montanari admits that HID also had a bad supply chain problem. ÔÇ£Part of the reason we were so poor in on-time delivery and lead times was because we couldnÔÇÖt control our raw materials,ÔÇØ he says. ÔÇ£We always had too much of the wrong material and not enough of the right material. So we put an electronic kanban system in place that helps link the suppliers to us. And we put internal pull systems in to ensure that we could reduce our lead times. We might have had to carry a little more inventory in some areas for buffers, but at least it was transparent to the customer so if they ordered product today they could get it in five days.ÔÇØ Another area that needed improvement was pre-press, the first interaction the customer had with the company. This is where initial design ideas are proposed and signed off, and it was taking upwards of 72 hours to get a design approved. Gail Pollicita, the graphics manager, picked up on what was happening on the manufacturing floor and started implementing it in her department, bringing down the time to get a proof approved to under two and half hours. Montanari is convinced that starting the implementation with culture initiatives was the right way to approach HIDÔÇÖs problems. ÔÇ£If I had been a typical consultant or acted like a traditional lean implementer when I was plant manager,ÔÇØ he says, ÔÇ£I would have done kaizen blitz after kaizen blitz and told them what to do, and when I left they would have gone back to their old ways. It wouldnÔÇÖt have stuck. IÔÇÖve seen that happen in way too many companies. Paul, John and I could walk out of here tomorrow and weÔÇÖd know that we have a lot of lean leaders here that would keep it going.ÔÇØ