Case Study

Wausau Equipment Company

OPRE6364.OW1 Quality Control (Lean Six Sigma)

Professor Kannan Ramanathan

Yiming Li

November 12, 2014

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 (a) What should the management’s next steps be in making further Lean improvements?

Before making further lean improvements, the first thing WECO should do is to
recognize current condition of Lean. Lean improvement and implementation of lean were
generally successful in two fields. On one hand, WECO built an excellent management
team and selected proper tools and approaches that are applicable to the poor
performance. On the other hand, this management team had a specific goal of reducing
waste and achieved it by using correct actions. These two aspects were critical to the
whole project.

Now, Wausau is facing a shortage in experienced labor and reliable equipment. They
rarely hire new employees, and older employees are close to retirement. Furthermore,
Wausau has a culture suspicious of change, employees and managers show resistance
to Lean progress. Employees are resistant to accepting lean or previous management
methodologies because of the fear of being layoff, so employee morale is low. Wausau
is facing other challenges as well. Along with the labor issues, equipment downtime is
increasing, and OEE is decreasing. In addition, the inventory which including work-in-
process and finished goods was almost 30 million, a five-year high, and the company
even lost some customers because of slow response time and poor delivery service.

Initially, the management team used the general approach Lean Dynamics took with the
Gap Analysis and Improvement Process. With this approach, the company could specify
value and identify the opportunities in throughput, work of flow, and maintenance. After
the team found out the disadvantages and non-value-added actions within processes,
they knew where to improve. Then they formed eight specific teams to begin the
equipment-improvement process with the collection of loss data. In this way, every
worker could involve in lean processes that enable people to better focus on their own
performance and they became familiar with lean concepts, operation tools, and safety
metrics.

However, although they knew that every employee in the workplace had to be getting
involved and actively participating in the lean process to sustain improvements, they did
not develop any solutions for employees’ resistance to change. The team needs to
concentrate on the human factor, about how to build up a company culture characterized
by commitment for continuous improvements and everybody's one hundred percent
involvement. What can leaders of Wausau do to minimize their employees’ change
resistance? First, they should know their employees. If leaders don’t understand what
makes their employees tick, they will have no chance at meeting their employees’ needs.
And if those needs are not addressed, employees will interpret the event in a negative
way. And then, they need to think about the desired results. Leaders must consider what
positive results look like, but they must be realistic. They should envision the results they
can reasonably expect from the change they are making, and consider how it will play
out in each one of the links. Finally, leaders should try to create a win-win situation.
Because when making a change, leaders should think about how it will be good for their
team as well as the company.

What’s more, the high volume of inventory takes resources in cash flow, maintenance
labor, space and operations management. In my opinion, to reduce inventory (WIP and
FG), the Kanban system could be introduced for inventory management. The Kanban
system is easy to install and understand. It responds to MSD’s demand without taking

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 much extra resource or labor.

(b) What should the management’s next steps be in the implementation of Lean?

Wausau Equipment Company has improved their operating profit a lot by introducing
lean strategy. The management’s next step should be making further Lean
improvements.

As we know, “SIMPA” is widely used in Lean process. “SIMPA” stands for Specify Value,
Identify Value Stream, Make it Flow, Pull and Always Improving. These phases draw a
long-term picture to lead a team logically from detecting the problems to solving the
problems and make sure that the team can sustain the achievement and keep
improving.
In this case, the lean project was planned to last 39 weeks, which was divided into three
complete equipment-improvement-process cycles. The first cycle focused on getting
tangible improvement results while the last two cycles focused on sustainability and
improvement. We can see from this plan that keeps improving bulks large in Lean
Process. Then why the team still needs to make further lean improvement since they’ve
already finished the cycles and achieved the goal. The answer is that there is always
room for improvement.

In my opinion, Wausau Equipment has at least three aspects need to be improved.

Firstly, Wausau Equipment needs to make more changes to its culture. As it is known to
all, enterprise’s culture is the basic impetus of development of enterprise. In some
aspects, culture and management are more critical than the actual tools and
methodologies of production itself. Only if the culture absorbs the philosophy of lean, the
achievement of Lean Project can sustain.

Secondly, Wausau Equipment needs to make more changes to company metrics.

Company metrics drive company culture, which drives individual behaviors. Change the
metrics in one organization, and you will change people’s behavior. So, to implement
lean thinking, the position goal is to change the metrics.

Thirdly, use the Theory of Constraints. By focusing on the constraint we can balance the
flows within an organization and eliminate the harmful side effects (waste) that are
occurring. This part of learning to implement lean thinking involves identifying, exploiting,
and elevating the constraint while subordinating all else to that constraint.

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  Lean manufacturing

http://en.wikipedia.org/wiki/Lean_manufacturing#Types_of_waste

 How to Implement Lean Thinking

http://www.bizmanualz.com/blog/how-to-implement-lean-thinking.html

 Change Resistance

http://www.velaction.com/change-resistance/

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