It was results like a 200% increase in business, saving a client account, and their whirlwind implementation that made ARC Technologies a great host site for the Mass MEP Lean Champions Roundtable in June 2008. Over 50 people from companies across Massachusetts attended the event at ARC’s facilities in Amesbury, MA. Participants came to hear about the company’s Lean initiative, to ask questions, and share their own experiences. The overall impression from the attendees was of awe as they saw everything ARC has been able to accomplish in a very short time.
"ARC is not your typical company and neither is their Lean implementation," said Glenn Gertridge, Manager of Business Development and Strategic Partnering for Massachusetts Manufacturing Extension Partnership. "This company does not rest!"
"We are doing Lean aggressively," Chip Madden, ARC’s President, told the audience. "Out of all the great results you will hear about and see, the biggest value to the company has been the boost in morale and sense of ownership that the employees have. They know that they have some control over the way the company operates. They believe in ARC and are committed to our success."
Adding a Third Building & Still Growing
Alan Sunnerberg, Vice President of Operational Development heads up the company’s Lean initiative. "In 1988 we started working with microwave EMI materials and have grown into a solutions provider for our customers," he said. "We are willing to develop new processes and technologies for our clients and then provide these services for them in-house. We like to be innovators! In 1995, we relocated to our main building which is 52,000 sq feet. We continued to grow and in 2006 added another 40,000 sq feet by purchasing the building behind us. The driving force for us to really embrace Lean quickly was the decision to add a third building and another 60,000 sq feet. And we are still growing!"
Determination & Speed
Most of ARC’s Department of Defense clients were "going Lean" and as a 2nd tier supplier they had to reduce production costs. Competition from the Far East also made it necessary to shorten lead times. Due to their diverse product mix — high volume, quick turns and low volume, and long production cycles — ARC had very different needs to address and had to become more nimble and efficient. They needed to get smarter to keep their customer base.
The company applied for a Workforce Training Fund Grant to assist with costs. Several employees had attended training events put on by the MassMEP through NECC (Northern Essex Community College) in the past and wanted MassMEP to do their training.
"MassMEP and NECC had the correct balance of classroom and hands-on training that we were looking for to create a successful program," said Mary Joaquin, Human Resources Manager and Lean Program Coordinator. In preparation for work to begin at ARC, select groups of employees attended 58 training sessions on Transformation, Planning and Leadership, Value Stream Mapping, and Kaizen. All 112 ARC employees participated in TimeWise LE102 which is Lean training for Job Shops that introduces basic Lean terms and processes in full day classroom and simulation events. These events were lead by TimWadlow, Charley Lincicum, and other MassMEP staff.
ARC believes that this training was the largest factor in their success because it put everyone on the same page.ARC received the $111,000 grant in February 2007 and began work in March… and finished in October!
"MassMEP has provided the tools and guidance to help companies be more competitive. Benchmarking events are a great way to see the rewards of embracing Lean initiatives and have encouraged my team to continue the Lean journey." Guest – Isabel Gutierrez, Production Transition, Varian Semiconductor
After basic Lean training, ARC began looking at the value streams in some of the key "factories." From these came spaghetti diagrams of travel and current and future state maps to help with the strategy for their Kaizen events. During the Kaizen, they "took things apart and put them back together in a better way." The teams cleaned, rearranged, threw out, labeled, organized, and made the areas work more efficiently. They ran eight Kaizen events with MassMEP assistance and have done more than six on their own.
Alan Sunnerberg said, "They (employees) got very excited by tackling the low hanging fruit and seeing all the success. It makes the larger issues less daunting and gives you momentum. The employees are able to carry out their own ideas and see successes. Overall, everyone feels a sense of accomplishment!"
The Plant Tours
As a job shop ARC has a wide variety of products and batch sizes. Their internal manufacturing operations are broken down into six primary categories of production that are referred to as "factories." The event tours focused on four: Core, Thermoplastics, Composites, and Advanced Materials.
"In each of the four areas we visited, the managers reiterated that the thing they have noticed the most was the increased morale and the excitement of the employees. They enjoy coming to work. " Guest – Kristin Yencho, HR Director, Microsemi
Composites: Volume increased by 200%
Composites was chosen as a Kaizen site due to their volume and the high level of processing –effects could be seen and measured better than in some other areas. The work ranges from single piece prototypes to 100 piece lots averaging about 200 pieces per month. There were inefficiencies due to clutter, disorganization, and excess travel of material and people, especially between buildings. ARC made changes that had a significant impact:
Consolidating materials and freeing up floor space allowed for the purchase of a more efficient oven which increased production from 10-60 radomes (covers for antenna) per month to 160…a 200% increase in volume which exceeded a client request for 80-100 per month and kept customer business.
Employees are involved in production teams and are cross-trained.
Processes are housed in one building due to freed up floor space, reducing travel from a quarter mile to 100 – 200 feet.
Procedures are in place to maximize efficiency and outline cleaning operations.
A huge decrease in rework and scrap means about 90% of critical items are being salvaged.
5S helped with organization and avoiding material contamination. Materials were reorganized and labeled, racks were utilized, and the space was reclaimed. HVAC and ergonomic changes were made for comfort.
Inspection time was reduced from two hours to five minutes.
Informal brainstorming is being done all the time and employees are constantly coming up with new ideas.
Advanced Materials: Cut costs by 25%
Product Manager Mark Snow did the presentation about Advanced Materials and the Liquid Resin System, one of ARC’s oldest lines which produces coated aluminum tubes — epoxy metallic filled absorbers. They work with heavy metallic powders that are unforgiving and problems with air bubbles made rework an issue. This was a two person operation but one person spent most of the time walking between rooms. Changes included:
An equipment purchase for coating the absorbers helps avoid bubbles and cuts down on rework and labor.
A second machine now mixes and ejects epoxy into the tubes.
Relocating all process steps within one room freed up the second person to do value added work.
Value Stream Mapping helped identify waste and cut costs 25%.
Batch sizes were reduced 25%.
Handling was reduced 75 – 85%
Wait time was reduced by 1.5 hours.
2000 ft travel for the process was reduced to 200 ft.
Mark mentioned that ARC has quarterly "State of the ARC" company meetings where Product Managers present results of the Kaizen events. This has been a great morale booster and momentum generator. He feels that the Kaizen process is so successful because it takes people involved with the process and mixes them with other uninvolved employees who can look at the situation through fresh eyes.
"ARC management did it right. They removed obstacles and employee objection by having management present and supportive in all communications and meetings. This showed the employees that the managers were committed to the success and that everyone stood to benefit from the work. They (management) were very committed and focused on the projects and respected all employees and took their input seriously. All ideas were considered and acted upon." Guest- Kristen Yencho, HR Director, Microsemi
Core Products: 100 pieces in three days to one piece every 30 seconds
Core Products produces coated foam sheets which are dipped into a carbon loaded spray acrylic then dried for 12 hours. Dry sheets are milled to thickness, run through a press, sanded, adhesive is applied to the back of them, and then they are cut to size. Value Stream Mapping and spaghetti diagrams proved that the layout in this area was all wrong. Two mills were in center of room and everyone ran back and forth between them. A few Lean changes made a big difference:
One larger mill makes one large sheet and has cut production time 50%.
Product now flows from presses and mills to shipping on rollers so there is no walking.
Some popular sizes of foam are precut and stored near the dipping area for added efficiency.
Changing the layout and using rollers has reduced travel time by 247 feet or 38%.
WIP was reduced by 70%.
Total sheet cycle time was reduced by 30%.
Lead time was reduced to less than half from 6-8 weeks to 2-3 weeks.
Single piece flow increased floor space.
36% less travel in the area.
Reduced costs by 22%.
It used to take three days to produce 100 pieces, now they produce 100 pieces in an hour – one piece every 30 seconds!
"At first it was very hard to convince the employees that one piece flow would actually work better," said Jason Burke, Operations Manager, in Core Products. "Basic lean training opened their eyes. You only go as fast as your slowest person or machine. When you take care of the little things it frees you up to deal with the bigger issues more effectively. We did an INTENSE Kaizen and really ripped the place apart. Everyone has seen the results and is really into making things better."
"I was very impressed with the amount they (ARC) have accomplished in the short time frame. Also, it is good to see the buy-in from the employees, as this is what really makes these projects fly!" Guest – Jim Young, Sales Manager, The L.S.Starrett Company
Thermoplastics: 39% Savings on Material Use per Quarterly Cycle
Thermoplastics is housed in the building behind the main ARC facility. Stew Richardson reported that a programmer had the idea to focus their first Kaizen on CNC programs, how materials were being used, and the relationship between scrap and inventory. A customer‘s specifications required that they use 2′ x 4" sheets to machine parts. But that produced accumulating remnants and scrap. ARC programmers proved to the customer that they could machine the parts from a 2′ x 3′ sheet. The savings were significant:
Using smaller sheet saved client money and generated less scrap.
39% savings on material use per quarterly cycle.
Reduced product travel 66% from 487 feet to 216 ft.
Savings of 2.1 hours of time.
Established a better inventory system.
Thermoplastics will save over $100,000 a year.
18 to 24 months of work in just 7 months
ARC was able to complete an 18-24 month Lean program in 7 months! At first, Project Manager Charley Lincicum thought they were insane. But the company felt that attacking things as aggressively as they did was necessary in order for them to have this kind of success. Spending more time would have made people lose momentum.
"We (ARC) had tried several other methods for improvement and this one (Lean) worked," says Jason Burke ."The results are real! We get many unsolicited ideas from employees because the mind set has changed and everyone has benefited."
"ARC has had success because of the way they went at it. Lean has become part of their culture and they are passionate about it." Charley Lincicum, MassMEP, Lead Project Manager
Overall Results
Business has grown 16%. Total investment from ARC was $178,000.
Within six months of starting Lean, ARC had seen a 13% reduction in non conformances (surface imperfections and handling damage).
On-time delivery increased from 83% to a consistent 95%.
Floor space has been freed up allowing capacity to bring in more work.
Lean has been embraced by all employees. They are a part of the improvements and the process. Their opinions are sought and implemented. They keep track of how the company is doing because if ARC makes money they are rewarded through profit sharing. This is a great incentive since Lean has helped them become more productive without more work!
"ARC Technologies is a prime example of commitment to Lean from the top-down. In one year they have experienced a culture change that has empowered employees to identify and eliminate waste." Guest – Isabel Gutierrez, Production Transition, Varian Semiconductor
ARC Technologies, located in Amesbury, Massachusetts, is a leading supplier of microwave absorbers which are made of various materials and absorb unwanted microwaves and turn them to heat. Eighty percent of their work is defense related and twenty percent is for commercial use in wireless technologies like GPS systems and cell phones. ARC also provides a complete range of standard absorber products, dielectric materials, composites, radomes, and radar absorbing structures (RAS).
