2/28/2021 Knife Company Hones Competitiveness by Bucking the Status Quo | Lean Enterprise Institute

Knife Company Hones Competitiveness by Bucking the Status Quo

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Tonya Vinas

Knife Company Hones Competitiveness by Bucking the Status Quo

By Tonya Vinas

Although lean principles and practices have broad application in manufacturing, the ease of that application can vary
based on what is being produced, to whom it is being sold, competitive pressures, location, corporate structure, workforce
characteristics, availability of raw materials, contractual obligations, and other attributes that make each lean journey
different.

Buck Knives, a Post Falls, Idaho-based manufacturer of knives for outdoor recreation and personal use, had more reasons
than most to eschew lean:

Its three biggest customers are large chain retailers and catalogs, who can be highly demanding of suppliers and are
notoriously inconsistent with replenishment and sales-forecast accuracy.

Making high-quality knives involves craftsmanship skills, which don’t translate easily into standard work.

raw materials include both metals — which have long procurement cycles and volatile prices — and specialty
materials such as giraffe bone and mother of pearl — which are rare, strictly regulated, and have complicated
procurement requirements.

Forty to forty-five percent of sales come in the last three months of the year, making for highly unleveled demand.

As it started implementing lean, the company also had to relocate its company headquarters and manufacturing
facility from San Diego to Post Falls and implement a new enterprise resource planning (ERP) system.

Despite these challenges, Buck Knives has so fervently embraced lean that it now does nearly everything differently —
from allocations of costs for shop-floor supplies to working with its key retail customer to level load fulfillment. Buck’s
efforts began with the creation of a single assembly cell while it was still a large-batch producer and occupied a plant that
was 45% larger than its current plant. Since then, lean ideology has changed leadership’s thinking so much that they have
thrown out their old performance metrics and are in the process of creating new ones that reflect the goals of lean.

Becoming Lean to Survive

Several factors led Buck leadership to determine in 2001 that the company had to drastically change if it wanted to keep
manufacturing in the United States. The cost of doing business had risen dramatically in California, Buck’s home since the
1940s. Additionally, a sudden and unexpected sales drop of a key product and the recession that followed the 9-11
terrorist attacks led to three unprofitable years. Simultaneously, competitors in China were becoming better at
manufacturing quality knives, and Buck managers calculated a 30% cost differential between their company and its
overseas competitors.

“The business reason for launching lean was survival,” said CEO C.J. Buck, a descendent of company founders. “Tweaking
was not going to keep up with the bleeding.”

The company created a five-year plan to reduce costs by at least 30% that included three key elements: moving to a state
with lower energy, labor, and regulatory costs; buying a new ERP system; and creating a lean-oriented culture. The first
two goals had long-term timeframes, but the company started on lean right away. They employed consultants, sent a
group of 25 employees for off-site lean training, and began targeting production for improvement. At the time Buck
operated with a mass-production model with disconnected functional areas. Finished-goods and WIP were everywhere.

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“At any time, one of the production areas easily had two-to-three months of inventory,” said William Keys, director of lean
manufacturing. “Five batches here, 10 batches there. And a batch ranged anywhere from 25 to 50 knives. We literally had
thousands of knives in WIP inventory.”

Their first step was to convert from mass production to assembly cells. Keys said the first cell was created during the
initial lean training and was successful. Leaders started with one group, and then that group trained another group and
helped them to convert into a cell. This continued over several months until most of the production floor had been
converted. By this time, the company began focusing more on its out-of-state move and devoted less time to expanding
lean principles to other areas of the company. The cells continued to function successfully, and the company would
occasionally hold teaching events. Although managers had much to do related to the relocation, lean thinking continued
to influence their decisions.

“One of the things we realized when we were creating the assembly cells was that we had consolidated into an area that
was about half the size, and we had reduced WIP by 60%.” Consequently, they decided that their next facility could be
one-third smaller and should be designed to support flow. Also, once the company did relocate in 2005, it needed to hire
about 200 new employees, all of whom it trained in lean concepts right away.

It was in September of 2005 that Buck CFO Phyllis Best took a group of Buck managers to a conference on lean
accounting. Speakers included Brian Maskell, Orry Fiume, Jean Cunningham, and other people who were using new
accounting concepts that better reflect and better support lean management than traditional accounting concepts. (Lean-
accounting principles reward inventory reduction, favor value-creation over piece-part pricing, and give an accurate
portrayal of cash flow and costs. Traditional accounting methods do not support these goals.)

“It was kind of a hard thing to accept,” Keys said. “It made sense, but some of the things were counter to what we had
been doing since the company was founded. But they came back very much convinced that we had to move in this
direction.”

The injection of these new accounting principles into Buck’s continuous improvement efforts — just when the company
was reactivating its lean focus, launching production at a new site, and hiring new employees — acted as a catalyst to
speed the permeation of lean throughout the culture. This happened because managers in the function that most drives
strategic decision-making at the executive level — accounting and finance — became lean evangelists, just like the
operations folks.

Converting to value Streams

One of the first things companies often do when adopting lean accounting is to reorganize into value streams, which Buck
did. Keys and others identified four value streams based on knife designs and added a fifth value stream to represent
sourced knives, which the company manufacturers via contractors in China. They chose value-stream managers
internally, picking the leaders based on experience. As with many companies that reorganize into value streams, Buck’s
biggest hurdle came from operators who wanted to cling to functional roles, particularly in the area of blade fabrication,
which includes a variety of skills with long histories of craftsmanship.

“Reorganizing into value streams is fairly easy,” Keys said. “The challenge is how to move forward after that. For instance,
in Value Streams 1, 2, and 3, we began to include fabrication people. Their actual work didn’t change, but in Fabrication,
people identified with Fabrication. They didn’t identify with a particular product. For instance, they would say, ‘We are
hollow-grind operators.’ You have to realize that with the value streams, in a course of a day we changed how things had
been done for 45 years.”

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Keys said management’s strategy was to keep reinforcing what the goal was, how the company was going to achieve the
goal, and why it was important to achieve the goal. “We still haven’t gotten to where we want to be, but it’s better than
when we started,” Keys said.

Some batching still takes place in Fabrication, which has duties such as grinding and stamping knife blades, some of
which are specialty knives made for collectors. Those batch sizes, however, are about half of their pre-value-stream sizes,
and lead time in Fabrication has dropped from six to eight weeks to two to three weeks. Fabrication remains a target
improvement area for the value streams, one of which has a goal of reducing fabrication time by 50% this year. Leading
this kaizen are Bruce Sundahl, lean/continuous improvement manager, Jim Hypes, value-stream manager and Cindy
Eby, a buyer for the value stream.

Additionally, Hypes and Jeff Hubbard, another value stream manager, are cross-training their employees in Assembly
and Fabrication, seeding the effort with a group of production employees who became certified in lean through a local
manufacturing-assistance program last summer and went through cross-training as part of the process.

Addressing Cyclical Sales

In addition to Fabrication, a small amount of batching still takes place in the heat-treating function and limited clam-shell
packaging, but otherwise the entire production floor is organized into cells that are part of value streams. Each stream
operates as a separate profit center and plans work according to a 30-day forecast that is produced at monthly meetings
involving Sales, Accounting, and Operations. Prior to these cooperative meetings, Sales and Operations never
communicated, and this fed excessive inventories of mismatched parts, overstocked finished goods, and piles of WIP
waiting for the next process.

“When we started having joint meetings, we began to communicate in a new way,” CFO Best said. “And now, Sales is
responsible for the sales forecast, and Operations is waiting to do their planning based on that forecast.”

Materials flow based on multiple kanban systems. Cells track performance on a white board, listing the production plan
for each shift and metrics on how each cell is performing compared with the plan. The individual value streams manage
their own costs.

To deal with the cyclical nature of the retail market, Buck decided to reduce finished-goods inventory to one month but
increase flexibility with continuous improvement. It is also beginning to create vendor-managed inventory programs with
some of its larger clients. Additionally, Buck began level-loading production for its largest client, Wal-Mart, which
historically has been good at forecasting 12-month sales totals, but not so good at month-to-month forecasts. Buck takes
Wal-Mart’s 12-month forecast and divides the totals into 10 equal amounts to beproduced each month between January
and October. Now, instead of scrambling when Wal-Mart’s monthly forecasts change, Buck relies on this inventory or its
increased flexibility to respond quickly if inventory can’t cover the monthly order.

“Sales has taken responsibility for the forecasting, and we are holding the plants [the Post Falls plant and contract plants
in China] accountable for anything that they build over the planned, level load, so there’s a little bit of tension there,” Best
said. “Sales might foresee a spike later in the year, and maybe Operations is just building to a kanban. So Sales might start
to panic and say, ‘Maybe we should increase our forecast a little bit because we don’t see Operations responding.’ And
manufacturing is standing back saying, ‘We’ve got plenty of time, we’ve got plenty of capacity. We don’t need to build
that yet.’ We still build things we don’t need, but not nearly as much as we used to.”

As an example, the company historically has held two “clearance sales” each year to sell excess finished goods. In 2007, it
didn’t have to hold any.

One way Buck increased flexibility was through a 5S effort that ultimately led to dispersing the packaging function (except
for a small amount of clam-shell packaging) to individual cells within the value streams. The improvement began in 2007
when Sundahl launched a 5S initiative for packaging, which took place in one area outside of the cells. It was determined
that more space was needed to address a bottleneck in packaging, and such an investment would cost “well above six
figures,” according to Sundahl. Phil Duckett, executive vice president of Operations, challenged Bruce Sundahl to come up

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with an alternative. His response was to work collaboratively with the value-stream managers and shipping manger to
move packaging to the cells. By early fall, they had proved the concept in one cell and in one value stream. Despite the
looming busy season, Duckett gave Sundahl permission to continue with the change.

“Rather than putting their foot on the break, they put their foot on the gas pedal, and I think that helped with how fast the
change happened,” Sundahl said. “Everyone knew that the busy season was coming, and we got it all converted in four
months.”

The packaging move did more than allow Buck to avoid an expensive capital outlay, it also:

Allowed for the reassignment of several employees to other areas because the cell-based tasks require fewer people.

Removed a bottleneck in the supplier kanban system because the signals to suppliers would get hung up —
sometimes for days — while finished goods waited for packaging.

Helped the company to accept and complete all of its orders in the final quarter of 2007. Previously, the company
would concentrate on filling high-volume orders and turn down smaller orders during this busy time. Because of the
level-loading plan with Wal-Mart and because finished goods were packaged before orders came in, the company
had enough capacity to complete all orders. It did not have to decline any sales opportunities.

Uncovering True Costs

Buck has increased flexibility in other ways and has reaped multiple benefits. Some of these opportunities, however,
would have remained hidden had the company not converted to the lean-accounting practices taught by Maskell, whom it
hired for training and consulting.

C.J. Buck gives this example:

The company uses a fine blank machine to cut blades from metal and was faced with having to invest in new customized
tooling for the machine to produce a new product. Tooling would have cost as much as $80,000 and would have had a
four-month turnaround. Maskell asked if the company had idle capacity elsewhere that could handle the increased
demand. They did: a laser cutting machine, but it cuts blades at the rate of 60 to 80 an hour while the fine blank machine
can produce 600 to 800 an hour.

According to traditional-accounting principles, the large-batch option would have been most profitable. But using lean-
accounting principles, which favor flexibility over large-batch production, the laser machine was the better option, and
that’s what the team chose.

“Looking at our capacity, we just don’t have that many products that need a rate of 800 an hour,” Buck said. “We actually
had excess capacity in the fine blank machine. We needed help in the smaller runs. Standard costing says the obvious
solution is to buy the machine that can make the most product, but that’s not what we needed.”

Best attributes the increased use of the laser-cutting machine and other changes with increasing flexibility enough to give
the company a unique advantage. For instance, the company offers quick turnaround on customized consumer Web-
based orders, something competitors can’t do. Additionally, the company expects to continue to save in tooling costs by
using laser cutting.

“The laser is slower, but it allows you to have smaller batches and not invest in the tooling costs,” she said. “In the past the
sales people would be optimistic about sales, which meant we would invest a lot in tooling sometimes, and then sales
wouldn’t come through. Now we’ve smartened up. Now we say, ‘If demand gets there, we can always order the tooling.’ ”

Using the more holistic lean-accounting approach also led to the company pulling some work back from being outsourced
to six Chinese contract manufacturers. Using theories and methods learned from Maskell, Hubbard documented that
handles that were being manufactured in China at $6 a handle would cost $2 a handle to make at the Post Falls plant. The
production was moved in house, and now the company uses the variable-cost model to plan production for all new
products. (Such a model accounts for actual costs and value created, not just a per-unit price.)

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Chris Potts, cost accounting manager at Buck, said the model evaluates three factors:

1) Capacity and headcount,

2) Material costs, and

3) Additional incremental costs.

“The whole premise here is to look at cash flow and see what the real cost is, not the estimated cost based on a model that
you built back at the beginning of the year when you had certain assumptions,” Potts said. “In the past, we would have
looked at a fully burdened cost regardless of whether we had excess capacity.”

Recently, using this technique led to the decision to produce a $1 million order in Post Falls instead of China. The result
was a much higher profit margin, Best said, because Buck used assets it already had instead of writing a check to a
contract manufacturer and paying related import and transportation fees.

New Model, New Metrics

As Buck was adopting lean accounting and ramping up lean projects at its new plant, it also invested in a new ERP system.
This provided an important lesson learned that Buck mangers repeatedly cite: Don’t attempt to install a new ERP system
while starting massive lean conversions. Wait until you are farther along.

Buck Knives has had to invest countless hours converting the ERP system from its traditional-accounting focus to value-
stream/lean-accounting focus. The work continues. Potts is constantly refining the reports he produces for value-stream
managers that document costs and profits. He does this in conjunction with lean process changes. For instance, the
company is in the process of creating supermarkets at each value stream that will hold production supplies, some of which
are used by everyone and currently are warehoused in a central location. The supermarkets will allow for more accurate
capturing of supply costs by value stream and reduce the need for warehousing.

“Each year as we go forward, we’ll get closer and closer to having a true, actual cost for all of these things,” Potts said.
“This will be the first year we’ll be able to take a look at this year’s actual versus last year’s actual. So we’ll be able to fine-
tune our expectations.”

In addition to the finance-oriented measures, Buck is recreating is performance metrics. This need has arisen from both
the cultural changes that have taken place and the obliteration of the old ERP system. C.J.Buck said this is where most of
his focus as a leader is these days — asking not just what are the answers, but what should be the questions. When the new
performance metrics are rolled out, they likely will be some of the most well-tuned lean performance measures created by
a manufacturer. In so many ways like this, Buck Knives is an idyllic lean operation — a company that is building not just
products based on lean principles, but a culture based on lean principles.

“This is a family business. It has a very specific culture,” Buck said. “I like the way lean invites you to share information
because sharing information can help you. That strikes me as common sense. It also reinforces that I don’t want robots.
Trained people are by far your best asset. And as people learn more and become more flexible, it adds flexibility and
robustness to your operations.”

For More Information

Buck Knives -- Learn more about the company and its history here .

Lean Enterprise Institute Senior Executive Series – Read an interview with Buck Knives CEO C.J. Buck about lean
management as a strategy and how his role as an executive changed. See all the Senior Executive interviews in the Lean
Thinkers’ Corner.

The Lean Enterprise Institute (LEI) runs monthly regional workshops on basic and more advanced lean tools and lean
management. You can read complete descriptions of workshop content with the latest dates and locations at LEI’s
training page. LEI workbooks and training materials – all designed to de-mystify what a sensei does - show you what

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C.J. Buck, CEO of Buck Knives

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Vinas, Tonya;

The LEI senior executive series on …

Lean Leadership

"As a leader you have to realize that people have to be free to fail. They need to learn
from it and minimize it, but you can’t be running around pounding on failures."

As part of a continuing series on leading lean transformations, the Lean Enterprise Institute (LEI) will interview
executives from a variety of companies to explore the challenges lean transformations present to senior managers.

What follows are perspectives from C.J. Buck, CEO of Buck Knives in Post Falls, Idaho. Buck has been manufacturing
knives since 1902. It sells knives through major distributors and major retail outlets such as Wal-Mart, Cabela's, and Bass
Pro Shops.

LEI: Why was lean chosen as a transformation strategy?

Buck: The business reason for launching a lean transformation was survival. Our company had a near-death experience in
1998, following the failure of a very important tool product with sales that skyrocketed and then plummeted, and it just rattled
us. We lost money in 1999 and 2000. In 2001, we did some minor tweaking and were expecting marginal profits, but then 9-11
hit. In our business, any time something rattles the floor in the fourth quarter, there’s just no reaction time. The other thing was
that imports were just getting better and better, and we figured out we had to cut costs by 30%. We realized we had to do
something because we were not competitive. We created a five-year plan that included three key items: moving to a new
location, launching lean, and buying a new ERP [enterprise resource planning] system.

LEI: Had you been exposed to lean prior to that? Were you a believer from the beginning?

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Buck: Back when our inventory turns were one or two [a year], we would have consultants every once in a while tell us that
they could be six, 10, 20 — whatever, with lean. I didn't believe them. I thought they were blowing smoke. Then I got a taste of
the lean philosophy at a seminar a group of us attended that was part of the manufacturing extension partnership program at
San Diego State University. They said we would be more efficient making one knife at a time rather than batching. It made no
sense to me whatsoever. I didn't believe it until they put us through some little manufacturing simulations, I’ll call them "Lego"
exercises. The leaders would do things like introduce a material defect during the simulation, and you could see that at the table
where they were doing batch manufacturing, that little material defect just gave them fits for the balance of the exercise. So for
me it was "seeing is believing."

We were also obviously impressed with the success that Toyota had enjoyed, plus we knew that we had to do something
dramatic.

LEI: How did you show your commitment to this change?

Buck: I learned — I read books, I went on tours, I participated in classroom sessions, I worked on the simulations and the
kaizens.

Also, as a leader you have to realize that people have to be free to fail. They need to learn from it and minimize it, but you can’t
be running around pounding on failures. You need to realize that when people accept change, they do so at great personal risks,
and that’s a tough thing to balance because you still need your corporate disciplines. That’s been one of our struggles. We have
changed so many measurements that we’ve lost a lot of our benchmarks, so we are recreating those.

LEI: How has your role as a leader changed from how you used to run the business?

Buck: Lean is now my common-sense filter. For instance, one thing we realized is that excess capacity is useless unless you
use it. That sounds like a bonehead-simple concept, but I missed it. And every year we would sit down and wonder where that
half million dollars in cost reductions went. It went into excess and unused capacity that didn’t net us anything.

LEI: Your accounting staff is practicing "accounting for lean," which is a practice and movement
that aims to change traditional accounting practices so that they reflect true performance. How
has this helped you to transform the business?

Buck: My background is in marketing management. I’m not a business-finance manager, but I’m not stupid. I realized very
quickly that the questions being poised by lean accounting and the systemic business approach made total sense. For instance,
standard costing says that it takes so many minutes to make a product, every minute is valued at a certain cost, and if you can
shave a minute out of that process time, you will have created another dollar or two per profit per product. It’s just not true. You
have to take a systemic view. If someone here gets done faster than the next person, they just have to wait. You have not netted
an improvement.

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Integration: Bucking Convention

inboundlogistics.com/cms/article/bucking-convention

January 2012 | Feature Stories

January 31, 2012 | By Joseph O'Reilly

Tags: Lean

Buck Knives' lean integration has allowed the company to sharpen efficiencies in its manufacturing operation, increase
output, and pull back production from China.

More to the Story:

Buck Knives' Lean Workflow Gets to the Point

THE COMPONENTS

Company: Knife manufacturer Buck Knives

Challenges: Unbalanced production and demand; customer dissatisfaction with imported products.

Goal: Eliminate materials waste; match production to demand.

Approach: Move manufacturing operations from China to Idaho; integrate lean principles across the enterprise;
upgrade ERP.

Result: Consolidated production space; improved product quality; increased output.

Walk into Buck Knives' Post Falls, Idaho, manufacturing facility, and you immediately sense that it is not a typical
corporate headquarters. The timber-framed entrance, cathedral-ceiling lobby, and interior walls decorated with mounted
animals and rustic ephemera evoke a hunting lodge atmosphere.

The renowned knife manufacturer moved its only plant to Post Falls from San Diego in 2005 after a near-disastrous
product line failure and soaring utility costs forced the company to rethink its business trajectory. A change in scenery to
Idaho's verdant northern panhandle, which has favorable labor, utility, and regulatory allowances, proved an appropriate
fit for the lifestyle to which Buck caters. That Idaho was once home to the family business served as added incentive.

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Location aside, a more telling corporate transformation was already in the works. Along with honing a variety of pocket,
folding, and fixed-blade knives, and other outdoor accessories, the manufacturer was integrating lean principles across
the entire enterprise.

Finding an Edge
By any standard, Buck's manufacturing process is labor-heavy and automation-light. Its prized products are celebrated
not only for their "forever warranties," but also their detailed workmanship.

The century-old company cut its teeth under the leadership of founder Hoyt H. Buck, who made his mark producing
handmade knives during World War II. Today the manufacturer is governed by his grandson, Chuck Buck, and the next in
line, CEO CJ Buck. Like its leadership legacy, the company's clientele is measured in generations, rather than years.

When the company faced cost pressures during the early 2000s, it followed the offshore manufacturing trend to reduce
labor costs and remain relevant within the marketplace. Big-box retail customers such as Walmart and Cabelas were
squeezing margins and demanding the same from their suppliers. Competition from other legacy knife brands such as
Gerber, Kershaw, and Case was relentless.

The company's move to Post Falls contributed to more outsourcing as the new plant got up to speed training employees
and managing internal administrative changes.

Buck's move to offshore production didn't go unnoticed. Loyal customers that had relied on American-made Buck
products for generations weren't sold on buying imports. So the company made a U-turn in 2003 and began executing a
plan to pull back its supply chain from China.

"Our old approach to manufacturing was focused on labor and fixed costs," says Phil Duckett, COO. "Most decisions to
manufacture in China are based on those factors."

On the domestic front, Buck was batch-producing knives to reduce costs. But work-in-process inventory at various stages
in the manufacturing process was building up. Production-to-demand was off the mark, materials were wasted, and
excess stock had to be liquidated at year's end.

"The only thing forecasts guarantee is that they are wrong," says Duckett. "When you miss targets, you sit on inventory."

A Model for Success

Buck rolled out its lean transformation while still in San Diego, bringing in consultants and sending out employees for
training. The first step was transforming its mass production blueprint to an assembly cell model that facilitated flow.

Buck's move from San Diego to Post Falls introduced a smaller manufacturing footprint—from 180,000 square feet to
128,000 square feet—and a new platform to further increase efficiency and production latitude through lean principles.
With the goal of insourcing more manufacturing, Buck also created a more flexible supply chain footprint that was
responsive to actual demand signals rather than inventory forecasts.

The shop floor displays clear signs of Buck's lean integration. If signs like "Quality is Never an Accident" aren't a tell, the
cell manufacturing layout surely is. The various stages of knife production are grouped together in an orderly flow. (See
sidebar below.)

The logic behind Buck's cell layout is obvious at first glance, as the flow of materials feeds the manufacturing process.
Various whiteboards around the facility share numbers and targets to benchmark performance.

But Buck is still a lean anomaly for a number of reasons. The company, by design, is known for craftsmanship. Its
manufacturing process is driven by skilled labor rather than automation, which pointedly contradicts lean concepts of
standardization.

Other variables are outlined in a 2008 Lean Enterprise Institute report:

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Buck's biggest customers are large chain retailers and catalogs, which can be highly demanding of suppliers and
notoriously inconsistent with replenishment and sales forecast accuracy.
Raw materials such as metals, animal bones, and antlers present variable sourcing cycles and costs.
— during hunting season and in the lead-up to the holidays—making for highly unlevel demand.

These obstacles aside, Buck does place a premium on quality and defect elimination, two principles of lean. Batch
production competed with the latter, while creating unnecessary waste and cost.

With lean principles now in place, Buck has consolidated space and increased output by creating a logical workflow
through the entire manufacturing process.

On Oct. 29, 2010, Buck set a record when it produced its one-millionth knife for the year—with months to spare. Now that
mark is a provisional milestone, and a new benchmark.

The Long and Short of Lean

At its outsourcing height, Buck was splitting production evenly between Idaho and China. As of 2011, it is split 85 percent
to 15 percent—and that ratio is expected to diverge even further as the company continues on its lean manufacturing path.

But Duckett is quick to clarify one point. "We're not a lean manufacturer," he says. "We're a lean enterprise."

From accounting practices that focus on value streams and workflows to working with customers to level order
fulfillment, Buck has embraced the totality of lean. Much of the credit for this shift goes to Chuck Buck and the executives
who bought into the idea, recognized its potential, and set in motion an aggressive plan to educate and train themselves
and their employees.

As with any lean organization, a central tenet is continuous improvement. In concert with its Post Falls relocation and
lean integration, Buck has also upgraded its technology architecture. After installing the Microsoft Dynamics AX
enterprise resource planning (ERP) system in 2005, and upgrading it in 2010, the manufacturer partnered with Colorado
Springs-based Accellos to integrate its One Pinpoint EDI for AX in 2011.

The Accellos solution brings uniformity to what had been a patchy EDI framework, while realizing the true potential of its
ERP. In addition to simplifying data exchange with customers, the company is saving 30 percent on operational costs
related to EDI.

Buck's lean business approach makes expansion inevitable. The company currently sells to a mix of big-box retailers and
specialty outdoors stores in the United States.

But the offshore market for Buck products is growing. China, for example, has become a big consumer as its middle class
expands. International currently accounts for about 10 percent of Buck's sales, and that number is likely to grow.

When Buck revolutionized the knife industry in 1964 by introducing the Model 110 Folding Hunter "lockblade," it placed
the company on the cutting edge of craftsmanship and innovation.

Now, nearly a half century later, Buck Knives enjoys a similar position as a lean practitioner.

Buck Knives' Lean Workflow Gets to the Point

Creating a cell manufacturing layout at its Post Falls, Idaho, headquarters represented a key component of Buck Knives'
lean integration. The new process sharpened the flow of materials to top efficiency.

Fabrication begins when fine blank machines process lower-grade steel with specifically shaped dies at a rate of 1,000
units per hour. Buck sources raw metal from AK Steel in Ohio, and imports sanding steel from Sweden. A laser machine is
used for higher-grade material, and scraps are melted down and recycled off-site.

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Amid a potent chemical smell, double disc grinders then work blades to proper thickness, followed by stamp machines
that add notches and other features. Every knife is imprinted with "Made in the USA," the Buck brand, model number,
and a unique year code.

In the heat treatment room, ovens slowly bake blades at 2,200 degrees F for 45 minutes. Then freezers chill product at
-110 degrees F, before the blades go back to the ovens for another round of heat. The entire process takes 13 hours.

After further grinding to perfect thickness, blades take a welcome bath, swimming with soap, water, and stones. The
rough tumbling process polishes knives before they move through more fine-grinding, where a row of big, green machines
continue shaping, sharpening, and serrating different types of blades.

The final production stages assemble blades with handles made from paperboard cut-outs or other materials, such as
wood and bone. Knives are hand-edged with Buck's trademarked Edge2x technology, which pairs computerized testing
and skilled training to ensure edge integrity.

Units are next hand-sharpened and tested in assembly-line fashion, then encased in clamshell packaging for distribution
to retailers.

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