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Make: Lean is a Supply Chain Exercise for Gleason

Nov. 11, 2013
This gear cutting tool supplier is convincing customers and vendors that lean logistics is more powerful as a collaborative effort.

2009 was a bad year for Gleason Cutting Tools Corp., as it was for most other companies. But unlike many other companies, Gleason was still able to eke out a profit every month. A lot of that is attributed to its lean efforts which not only helped it retain market share, but helped the company grab some away from competitors, both domestically and overseas. 

Gleason provides the machines, tooling, processes, services and technologies needed to produce bevel and cylindrical gears for automobiles, airplanes, trucks and tractors, as well as power generating equipment. Some of its biggest growth opportunities are in developing countries, including China and India, where the company is opening new facilities to serve those markets locally. To do so efficiently requires following a lean philosophy, which the company is imparting to the employees at those sites.

Gleason teaches lean concepts so these facilities can respond quickly to market demands for its products. It has a global continual improvement team with representatives at every facility. The team meets quarterly and rotates meeting locations among its facilities. 

"If you don't communicate these concepts to everyone in your supply chain or in your own family of companies and business units, you won't gain their full advantage," says Spencer Greenwaldt, manufacturing supervisor for the Gleason Cutting Tools plant in Loves Park, Ill. "We even work with customers to explain to them that if they order 50 pieces, and only consume five a month, they really don't want to tie up their money in 50 pieces. Not only is that bad for them, it hurts our flow to supply other customers."

It is in Gleason's best interest to convince customers they can confidently reduce the amount of product they purchase at one time, knowing that the company will hit its lead times and supply when product is needed. It does that by making products to order. There are no stock items. 

"Because of our lean efforts we can receive an order, get it designed, manufactured and shipped to a customer in Japan faster than they can get it from a domestic supplier," Greenwaldt says. 

Gleason's Lean Start

In 2005 Gleason was operating with 16 to 18-week lead times. Employees were comfortable seeing piles of work at every work center in their site. That was the biggest adjustment Gleason had to make in its move to lean.

"The biggest culture shock in going to lean is getting down to a smooth product flow," Greenwaldt explains. "You'll have one or two jobs and the first reaction is, ‘Oh no, I'll lose my job because we're out of work.' Until they become familiar that you don't have to worry, the next job will be there as soon as this one's done, that's the biggest change—getting people to understand the work is flowing smoothly now rather than piling up. That has helped reduce lead times because the idle time of a job in process has been reduced dramatically." 

Gleason's Lean Chain

Gleason has cut the work in process inventory on its shop floor in half. That effort extends all the way down the supply chain to raw materials. The company purchases from suppliers on consignment. Instead of Gleason holding millions of dollars-worth of raw materials stock in its facilities, the suppliers hold it in theirs and deliver three times a week. 

"They have taken some of the inventory requirements off our books," Greenwaldt says. "We also have vending machines in this building that a supplier stocks for us and we don't get charged until we pull it from the vending equipment. In the shipping area we used to have hundreds of thousands of dollars-worth of packaging materials. That, too, is supplied on consignment and refilled on a daily basis. We are billed once a month for what we actually use. That's everything from corrugated boxes to strapping tape to bubble wrap to molded plastic trays."

Cutting the Paperwork

Ninety percent of Gleason's shipments are UPS small package out of the Loves Park facility. That represents 2,000 shipments per month, serving most customers on a daily basis. Keeping up with this volume requires uncluttered, well organized workstations.

"We're more efficient in the way we package things due to the cell layout of the shipping department," Greenwaldt explains. 

The company's relationship with UPS is another element in its lean formula. 30-35% of Gleason's business is export related.

The carrier does paperless invoicing for some of Gleason's overseas customers. That reduces paperwork and saves money. It also files Shipper's Export Declarations for Gleason, helping the company clear customs at each of the 45 different countries with which the manufacturer does business.

Gleason provides information to UPS in scannable form, relieving the manufacturer of making sure paper gets sent with shipments. 

"We have been able to reduce the number of hours the people in our export department have to work, so they can maintain a 40-hour work week although shipments have doubled," Greenwaldt says. 

Global Information Exchange

The next step in Gleason's lean journey is the implementation of an SAP software system uniting Gleason sites with sister companies so they can better communicate globally. This will also enable better communication of shipment information with UPS, which handles 90% of what the Loves Park site ships. The remaining shipments are LTL loads and some FedEx by customer request.

Gleason's strategy is to continue expanding market share in the U.S., Europe and Asia so it can minimize the effects of events like the U.S. government shutdown or any other regional economic swings.

"The chances of the entire global economy going down at once aren't as likely," he reasons.

During the past eight years of Gleason's lean transformation, business out of its Loves Park facility has doubled and it has reduced its lead times by at least half.  Every aspect of lean comes down to the elimination of waste, including transportation of products internally and externally, the amount of inventory it keeps, work in process and Kaizen events to reduce setup times. Karen Glavin, industrial manufacturing marketing manager for UPS, says Gleason's lean journey has benefitted both companies.

"As you walk through Spence's building you know they're lean through the workstation setup and their bulletin boards," she says. "We help with that throughput utilizing technology (UPS Worldship) with their mainframes so that the process flow continues without interruption and manifesting efficiencies are improved. With paperless invoices there are no catches, either in the shipping room, at customs, or at the other end with missing or invalid paperwork. UPS in turn does not have to open a box or refer to paperwork."

Most of Gleason's customers appreciate these efforts as well, and have visited Gleason's facilities so they can learn some new approaches via three-day Kaizen events.

"This helps them figure out the best solution both for them and for us," Greenwaldt concludes. "For some of them we had to keep six months-worth of their inventory on our shelves. They understand that adds value to no one. By being able to demonstrate how we can supply product in a timely basis to meet their needs, it's a win/win." 

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