Taking stock of the lean rough mill: a new study by Virginia Tech finds lean manufacturing is gradually finding its place in North American rough mills.

Designing robust rough mill systems with high-processing speed capabilities was a significant challenge in the development of optimized rough mills a decade or two ago.

Fast forward and we now see processing speeds of more than 600 linear feet per minute commonly advertised. Other recent developments include built-in databases, which compile lumber characteristics and processing data, allowing for simulations to optimize cutting solutions. Some systems are even equipped to allow off-site diagnosis and repair of software-based problems through an Internet connection.

Many rough mill improvement initiatives--technology focused or otherwise--while helpful in improving rough mill efficiency, rarely consider the dynamic nature of downstream demand for parts produced in the rough mill and the impact of that changing demand on the rough mill system. In other words, it is possible to achieve an overall high part yield while the parts produced may or may not supply any real or immediate demand, which negatively affects manufacturing flexibility downstream. It becomes increasingly difficult to supply changing customer demand if resources are occupied producing low demand parts, regardless of overall yield measurements.

Lean manufacturing offers a set of tools and techniques, as well as a systematic approach, for eliminating manufacturing waste and increasing manufacturing flexibility, while creating a continuous-improvement-based organizational culture. In lean manufacturing terms, waste reduction relates not only to material-related waste, but to all manufacturing waste. These wastes include: overproduction, defects, excess inventory, waiting, excessive transportation, wasted motion and inappropriate processing. Some view lean manufacturing as simply another tool or buzzword promising production improvements. However, a broader perspective and a closer look at lean manufacturing reveals impacts on human resource management, performance measurement, information flow and cost accounting procedures, all of which can influence business-level decision making.

Industry Survey

Are lean manufacturing and similar initiatives the missing link for achieving a more flexible rough mill?

To answer this question, the Department of Wood Science and Forest Products at Virginia Tech conducted a nationwide survey of secondary wood product manufacturers in the spring and summer of 2004. Questionnaires were mailed to a list of subscribers to Wood & Wood Products, including manufacturers of: wood furniture, cabinets, flooring, dimension and component products, and moulding and millwork. A total of 145 usable questionnaires were returned and analyzed to better understand the current state of the industry with respect to the impact of lean rough mills.

Responses were split roughly 50-50 between companies identifying themselves as a single-facility operation and those indicating that their plants were part of a multiple-facility company. Average annual sales were calculated at $40 million for the sample. The average responding facility employed 258 people, produced 2,119 individual stock-keeping units (SKU) in the rough mill and required 22 people per shift to operate the rough mill area.

When comparing sales per employee (a productivity measure) across industry sectors, the upholstered furniture industry leads with approximately $275,000 in annual sales per employee, while flooring lags at just under $100,000 per employee.

Inventory Levels and Lead Times

The average respondent held roughly 286,000 board feet of dried lumber in inventory for processing in the rough mill and roughly 225,000 board feet in ripped-chopped parts (Figure 1).

[FIGURE 1 OMITTED]

The moulding and millwork sector and the flooring sector each reported holding more volume in ripped-chopped parts than dry lumber. This could be an indication of outsourced cut stock in those sectors or the presence of specific bottlenecks downstream from the rough mill.

When asked what percentage of their ripped-chopped part inventory could be classified as "high demand" or "products representing a majority of customer demand," the average respondent reported a value of 66%. Responses to this question generally were in the range of 60% to 70% for all sectors except flooring, which reported a sample low average of 30% "high demand" parts.

Respondents were asked to indicate their average order to delivery lead-time in days. An average of 23 days was calculated (Figure 2).

Study participants also were asked to indicate the status of outsourcing products/production in their facilities over the past five-year period. A majority of respondents reported either an increase or no change in outsourcing (Figure 3).

Of those reporting an increase in outsourcing over the previous five years, the average rate of increase was calculated at 50%. Comparatively, those reporting a decrease in outsourcing, on average, saw outsourcing decrease by 15% in their facilities.

Lean Manufacturing Implementation and Performance Measurement

Study participants were asked whether or not their facility was involved in implementing lean manufacturing. Overall, a small majority of the companies (55%) indicated that they were implementing lean manufacturing at the time of the study. The average responding company currently involved in lean manufacturing began its lean transformation roughly 30 months prior to the time of study.

Of those respondents involved in a lean implementation initiative in other areas of the shop, a large majority (83%) characterized their rough mill as "not lean". When asked what was preventing the implementation of lean manufacturing in their rough mill, respondents cited several constraints, including: "inflexible machinery, forecasting paradigm, too much focus on yield and not enough on demand, performance measurement constraints, long changeover times, inability to control production offal or residues and variability of demand."

Responses were varied when asked, "What would you cite as your main motivation for beginning implementation of lean manufacturing in this facility?" However, a number of respondents noted "cost reduction" as a significant motivator. Other responses included: "need to remain competitive, customer dictated, changes in customer demand, need to achieve shorter lead times and increased flexibility."

Study participants were then asked to indicate, from their perspectives, the key accomplishments/ milestones that must be reached to signify a "truly lean" operation. Again, responses were varied. However, a number of respondents cited "100% buy-in throughout the organization" as a key. Other responses included: "reduced inventory levels, shortened lead times, minimized changeover times, the ability to produce what is needed--when it is needed, 100% on-time shipments, continuous flow, use of lean-based performance measurements" and simply "culture change."

Study participants were provided a list of 22 lean manufacturing-based tools and asked to indicate which were used in their rough mill. More than 80% cited "cross training," followed by "waste reduction" (72%), and visual controls (63%).

A major goal of lean manufacturing is to reduce lead times, in many cases through inventory reduction. On average, "lean" companies reported shorter lead times (19 days) compared to "unlean" companies (28 days). No differences in inventory levels were detected at either the infeed or outfeed of the rough mill. Therefore, inventory reduction appears to be taking place elsewhere in the value stream.

Study participants also were asked to select, from a list, all metrics for which they compared their operation's performance to, either benchmarked performance levels in their industry or in other industries (Figure 4). Customer satisfaction, lead time, profit margins, on-time shipment rate and sales volume are all benchmarked with relative frequency compared to others listed. Interestingly, three of the top five benchmarked metrics are customer service related, two are specifically time related and only two are focused on financial metrics. By contrast, metrics related to employee satisfaction were benchmarked relatively infrequently.

[FIGURE 4 OMITTED]

In an effort to better understand respondents' perceptions of performance and understanding of key lean manufacturing concepts, participants were provided a list of activities and asked to indicate whether each activity would be considered "value-added" or "waste" in their facilities (Figure 5).

[FIGURE 5 OMITTED]

According to the frequencies reported, respondents seemed to agree that a majority of the listed activities were wasteful. However, some ambiguity is evident regarding expediting special orders, remanufacturing to increase yield and batch production. Also of interest, there appears to be contradiction in the general perception that remanufacturing to increase yield is a value-added activity, while work-in- process (WIP) accumulation as a result of maximizing yield is perceived as wasteful.

Summary and Conclusions

The need for lean manufacturing and similar process improvement strategies designed to closely align production with demand is clear from the study results. Overall lead times in the industry ranged from one to five weeks and the average respondent reported more than 2,000 unique SKUs in the rough mill area alone. With this type of demand amid ever-shorter lead time requirements, the need for manufacturing flexibility is paramount in satisfying customers.

Moreover, study results suggest that, while lean manufacturing is being implemented to some degree in the secondary industry, lean thinking does not appear to be permeating the rough mill. This is evidenced by several key findings in the study:

1. Of those companies involved in lean, nearly 85% have not implemented it in the rough mill.

2. While a difference in lead times between "lean" and "unlean" companies was found to exist, no differences were detected in rough mill inventory levels between the two groups. This suggests that lead time reduction is occurring elsewhere in the value stream.

3. Respondents noted several barriers to lean manufacturing in the rough mill, i.e. misaligned performance measurements and machinery constraints.

4. Several of the fundamental building blocks of lean manufacturing, i.e. cellular manufacturing, total productive maintenance and Kaizen events, are not frequently utilized in the rough mill.

Considering the time that some companies in the industry have been involved in lean manufacturing, 30 months on average, it is unclear as to the depth of understanding of lean manufacturing tools and concepts. Therefore, implementation could be constrained by a need for more in-depth training in lean concepts, tools and techniques.

Lean manufacturing concepts appear to be taking hold in the secondary industry and study results reveal that companies involved in lean manufacturing are shortening order-to-delivery lead times. However, not unlike other industries, there is evidence of a variety of barriers to full implementation in the secondary wood products industry. These barriers must be identified and action taken to overcome them before the full benefits of lean manufacturing can become a reality in the industry.

Figure 2: Lead time (days) by industry sector

ORDER TO DELIVERY LEAD TIME (in number of days)

Non-Upholstered
Furniture          36
Cabinets           29
Moulding/
Millwork           18
Upholstered
Furniture          13
Dimension &
Components         12
Flooring            7

Note: Table made from bar graph.

Figure 3: Production outsourcing over past five-year period

OUTSOURCING STATUS

Increased    49%
Decreased    11%
Unchanged    40%

Note: Table made from pie chart.

Dan Cumbo is a research associate and Dr. D. Earl Kline is a professor at the Department of Wood Science and Forest Products, Virginia Tech, Roanoke, VA.