Lean Transformation at United Southern Industries Produces Biggest Profit Margin in 37 Years

Todd Bennett, president and general manager of United Southern Industries (USI) in Forest City, has an extraordinary passion for lean manufacturing. It’s a passion he extols eloquently everywhere in his plants. In fact, he admits he sometimes sounds like his great-grandfather, who was a Presbyterian preacher.

“I have to be the most committed to our lean journey,” he declared. “Our management philosophy, everything, it must change, and it has to start with me. I have to drive it and believe it.”

With the help of N.C. State University, United Southern has embraced lean methods at the senior enterprise level for well over a year now, and the results are impressive. Earlier this year, as a result of a lean management method called “zone control,” the company experienced its largest profit margin and sales/revenue growth in 37 years.

United Southern manufactures custom injection molded, engineered thermoplastic resins, such as automobile bumper components, lawn tractor grills, child safety seats and home products, among others. With two manufacturing divisions and one assembly division located in Forest City, the company employs about 250 people and generates $30 million in annual sales.

Lean Transformation

Many small and medium size molders have downsized, restructured, even shut down operations due to intense competition from abroad. In fact, USI was in crisis, too. But Bennett believed in this company and its people, investing more than $7 million over the past five years in technology and people: new equipment, employee education and support systems.

But even these steps were not enough to continue to drive down costs and guarantee continuous operational improvement. The company had to make a serious commitment to its lean enterprise transformation. Embracing lean manufacturing throughout its operations was a gamble for USI. “To use a doctor’s analogy, with this ‘cure’ you can either be nauseous for awhile or you can die, but we saw lean working and I knew I had to do it,” said Bennett.

NC State University’s Sam McPherson helps businesses improve productivity through lean enterprise transformation. McPherson is longtime lean practitioner, a former injection molding regional and plant manager, and a Shingo prize recipient – the ultimate award for success in lean. McPherson has worked closely with USI since the beginning of its lean journey.

“Sam’s bold and strongly believes that senior leaders need to lead by example,” said Bennett. “He challenged my commitment and told me to be the driver. He told me that he would be a teacher-leader and I would teach and lead my organization. He said to lead our transformation from upfront and not rely on external consultants or staff-level change agents. So now it’s an everyday commitment.

“Each one of our executive team has spent 200-250 hours in lean training and an additional 200 hours of homework assignments, reading and PDCA (plan-do-check-act) meetings, leading zones or kaizen projects— that’s 10 executive staff doing this.”

Zone Control

Zone control implementation occurred due to a slowdown in USI’s business in winter 2006. A little-understood and stringent lean stability management tool, it incorporated daily report outs and the dedication of everyone, including top management. Every management employee learned to run a molding zone before teaching. Following this necessary training, second generation zone leader candidates were selected and deployed to lead the new zones. The training was focused and intense. Zone leaders and team members focused on achieving specific progressive quality, delivery, productivity, safety and team member skills, cost reduction and reliability goals.

All employees got involved, and that synergy created a leap frog effect. The business started coming back, and employees were jazzed and started speaking up, adding to the renaissance. Cross-training with American Greetings, another Forest City company N.C. State University worked with, helped them see how to do things faster, easier and better, and gave them another set of eyes.

“Although we added many valuable services such as tool building, product decorating and complex component assembly to our tool kit to distinguish us from other molders, we had to make even more drastic changes in on-time delivery, quality and cost to survive,” said Bennett.

“We divided one of our plants into three self-sustaining zones, assigned executive managers as zone leaders and gave them trained people and excellent equipment to drive process improvements within their zone. Zone leaders, core team members, shift leaders and line personnel all worked together, hands-on, to reduce waste, drive down costs, increase process efficiencies and develop increased communication through team interaction.”

Radical Approach

McPherson admitted it was a drastic move. “We needed to stabilize operations and this was a radical approach at this point in their lean transformation,” he said, “but I knew zone control would generate the savings and stability needed in the shortest period of time. Zone control surfaces problems quickly, makes you prioritize and forces you to move forward. Leadership and excellent teamwork are critical, and USI has those, so I felt confident they were ready for this challenge.

“The most important thing about zone control is control. This process does for machine intensive operations what cellular manufacturing does for assembly operations. There is a constant progression of goals; if something doesn’t meet a goal, you work on it then, not later.”

Problems are embraced and handled. “What we’re doing is draining the pond a bit further than we ever had before,” said Steve Jones, engineering manager at USI. “What this does is expose more problems, and that’s what I like about lean – it just helps us improve all the time. We recently went through a fishbone process and asked everyone to take a look at it and add to it for a couple of days. Using standard work and motion studies we realized savings of about $90,000.”

Results

In the past few months, USI’s pre-tax profit soared to almost double the custom injection molding industry gold standard. They winnowed down their scrap from 5.7 percent to 3.8 percent – an amazing reduction – and continue to reduce scrap. In one facility they reduced scrap by $25,000 in one month, even though revenues and volume increased. They recently became a tier two supplier for Mercedes, BMW and Lexus.

Last June, USI was honored for its Lean Advancement Initiative with a 2007 Progressive Manufacturing Award; the company was one of 50 recipients nationwide. This award is given by Managing Automation magazine and is based on an independent judging panel.

What’s next?

Bennett says the company intends to be a North Carolina Shingo Prize recipient in 2009 (the gold standard for companies engaged in lean manufacturing). “It’s not the award, it’s the journey; it’s a beacon, a rite of passage and it gives us the credentials,” said Bennett. “It’s our competitive advantage. We are attracting world-class customers, employees and suppliers now and that will only improve as we continuously improve. In the 100 yard dash, I’d put us at about the 30 yard mark now. I know it comes down to me, so I’m living and breathing it.”