E106: Lean and Green Case Study – Prefab Home Manufacturer Saves $300K

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In this podcast, I share a “Lean and Green” case study I supported for a prefab home manufacturer in California in 2020-2021. I was asked to speak to the Industrial and Systems Engineers class by Professor Corey Kiassat at Quinnipiac University in Hamden, CT. He contacted me after my presentation at the Lean Global Connection conference in 2022 and my first book Lean Six Sigma for Good, to see if I could share some more Lean and Green case studies. He is incorporating more sustainability into his coursework.

The case study discusses how this organization took the online Lean training from 6sigma.us and the coaching from me to evaluate their processes. They identified many opportunities using process and spaghetti maps, 5s, time studies, visual controls and preventative maintenance. After the improvements, they saved $6,000 per week in material cost, and $3,000 per month in wood waste. They reduced 165 hours of time in the processes, and saved a total of $290K per year.

You can learn more about the Lean Agent training and certification I discuss at https://www.6sigma.us/lean-agent.php

You can watch the video below, or go to https://www.youtube.com/watch?v=AfF6YU6E62Y

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Transcript

Corey (C): Hi, everybody. As promised, Mr. Brion Hurley is with us. He’s a Lean Green expert. I’ve seen videos, I’ve read papers of a lot of the great work that he’s done, and today, he’s graciously accepted to spend some time with us to take us through some of his work, maybe a deeper dive in one project that he’s been involved with. Without further ado, Brion, I turn it over to you.

Brion (B): Thank you so much. Thanks for having me today. I’ll do a little introduction and share my screen so you can see my slides.

I’m considered a Lean Six Sigma Master Black Belt, which just means I’ve been doing this quite a long time. My background is in statistics; that’s what I studied in school. I went on and did a Master’s program called quality management and productivity, probably an early insight into a Six Sigma type of Master’s program. They didn’t call it that, but looking back, I had some industrial engineering courses, I had some business courses, and I had more statistics courses so it really set me up as a business analyst/process improvement person.

I started at an aerospace company, worked there for 18 years, and my job was pretty cool. It was basically go around and just be helpful. We know we need your help. We’re not quite sure where exactly we’re going to need help, but here’s a couple of groups that have already done some of this work in the past with the past statistician we hired. Talk to them, and then just find your niche in this organization and help us get better at doing this kind of work. So I got to really roam around the company and learn about the different operations and go just be helpful and useful as a mentor or a coach or an internal instructor. I had to develop some courses on how to look at data and statistics. There’s a lot of people who have taken a statistics class maybe in school, but it didn’t really sink in or they haven’t gotten to apply it much.

Our company had a Lean program that they had started because they were a supplier to Boeing, and Boeing was going through a big Lean initiative with a lot of the top Japanese consultants in the mid-1990s, so my company, as a supplier, was going through the same transition. They had just started maybe a year or two before I began working there. For that 18 years, I was bringing in some Six Sigma methods but I was also learning the Lean methods, and that really gave me this unique perspective to see both of these approaches and how they work really well together and blend. That’s really a lot of my background. I worked at a couple of different facilities. I grew up in Iowa, and I worked in headquarters in Iowa. I then transferred to Florida, I went out to Portland, Oregon, and then back to Florida where I’m residing right now.

I want to walk through an example of a project that happened a couple of years ago when we took this idea around Lean and Six Sigma and applied a sustainability approach to it, which I think is a really big opportunity for businesses these days is to not just use these methods to improve their operations, but to also reduce their environmental footprint, and also look at their social and their employee diversity and make sure that they’re doing the right things in a methodical, proven methodology. Versus I think a lot of my experience has been people come up with ideas and they go off and implement those ideas, and they have no idea if that’s the right solution. They just hope and across their fingers that it makes things better. That’s a very expensive and time-consuming way to get there, so we want to bring these organized, proven methods to try and get to the solution that’s going to be the most effective as quick as possible. But to get there, you have to back up a little bit and you have to do the research, you have to collect the data, you have to study the process. It doesn’t come quick, but it comes effectively. That’s the trade-off a lot of organizations struggle with is they want answers right now, but they really want the right answers and that takes time to develop, so I’ll walk through this example here.

Please feel free to connect with me, if you want to reach out, through the website, or through my email, or LinkedIn I’m pretty active on, so you can reach me there.

Late 2020, there was an organization, they’re a factory-built home manufacturer based in California, and they were looking for some process improvement training. They were having an increase in wood price, and that was really impacting their business and their profitability. They were also looking at their operations and looking for ways they could look at labor costs. They had heard, I think, about Lean methodology and they had reached out to one of the consulting firms I worked with, and they connected me with them.

One of the things they were looking at, in addition to just labor costs and wood costs, was how can they look at their wood waste. A lot of it is going to the landfill, and they thought there was opportunity there to utilize some of those pieces before just throwing them in the dumpster. So twofold, look at costs and then look at this wood waste specifically.

The training that was offered and that they went through was a blended online course. It went through Lean Fundamentals, that’s the name of the course, and with it came some coaching calls where I was the one that would work with them to basically translate the training they took back to their operations and business. Online, they went through these courses and they had to complete certain courses at certain times of the month. They had a schedule that, by week two, you have to go through the first module, by week three, the next module, so we gave some guidance for them. You’d be surprised at how many people sign up for online training and don’t complete it, or maybe you wouldn’t be surprised, but that happens a lot, so having a little bit of accountability was really important to try and make sure that they were get all getting through the training.

The follow-up calls and discussions were around what did you learn? Does that make sense to how it works in your business? They might have learned about kanban, and we’ll talk about how does that fit. Tell me about whatever processes. How could we switch it from a push system to a pull system? How would 5S apply to your work area? Just having those discussions, like you would in a normal course in a class, was really insightful and helpful.

We went through the core Lean materials, same as the ones you’re getting experience and input on, and then working through a project is really where people learn the most, of course. It’s applying it to real-life situations. I helped them scope out and define what the project would be, and we were looking at these costs and this lost opportunity on the scrap wood, and then at the end, helping them try to document what they did.

That’s another problem I see sometimes is people do a lot of work, but they don’t document what they did and we don’t go back to check to see have those results maintained themselves. Have we kept up the positive results we got, and so just to put it on paper or into a file of some sort, a summary of what all those things that were done? We often forget all the things we do, so documenting these is important just as a best practice, but also for them to earn a Lean certification, we decided that you need to document your whole project, and so that’s what they did. I was helping them piece it together in an organized manner that flowed from here’s our problem, here is the current situation, this is the things we’ve found, these are the ideas we came up with, this is what we actually did, and these are the results. A very logical flow, but sometimes that’s not as easy for people who are right in the middle of it to really step back and look at the big picture and put it into a very structured format like that.

Let’s talk about the actual work and some of the things that they uncovered. Through a series of different activities, and I’ll talk about these tools that they used, the methods that they applied, they determined that they were underutilizing this number three grade wood. It’s actually less expensive than the number two wood which they used most of the time, and also, because of the grade, it’s harder to meet the specs that they have, so they were losing some quality in the suppliers that were delivering it. This was happening in late 2020, early 2021. If you remember back, there was a big shortage of wood because a lot of people were at home, they couldn’t go anywhere, and they started doing home improvement projects and the price of wood skyrocketed. Their business was relying on this wood and now they can’t get it or it’s gone up in price. They were losing wood already with the quality levels that they have to meet, so that was one observation that was made.

They also observed that they could be looking at a lot of these steps and reducing labor and transportation costs, specifically in these couple of areas of reprocessing and setting up cripples and joists. There was unclear guidelines about scrap pieces and what to do with them, which would create higher usage of the number two wood, or if they could salvage this, then they wouldn’t have to grab a new piece of wood. They could grab one from the dumpster, basically, but there was no process there, so it was very complex and time-consuming, and so people didn’t bother. They just said I’ll just grab a new piece instead of trying to fish through this pile of wood that’s disorganized, hoping I’ll find the right piece.

They were wasting $33,000 in waste removal. They thought there could be around $5000 of wood savings by switching the quality of the wood without suffering in the quality of the product. There were safety risks that they noticed with their workers with manual cutting and transporting of wood that can cause injuries or ergonomic issues. There was not a clear grading system for what makes a prime or subprime lumber, so there was ambiguity and so sometimes, people would make the wrong decision. They’d put a poor quality wood through the process or they’d reject something that’s actually usable.

One of the things that caught my attention back in about mid-2000s, I was doing a lot of work in this aerospace company and I was really enjoying the work and I’ve always liked this type of work. It’s really nice to just go in and teach people stuff and educate them and help them solve problems and see their development and skills and knowledge. It’s a great job, but the industry wasn’t anything I was real passionate about. And so when I noticed that there were these challenges going on in our environment and our society, I kept thinking this sounds like a business problem. This sounds just like something I would work on for a product yield improvement or a test improvement or a scrap reduction project. It’s just data and how do I methodically go through and study a problem.

I found these EPA toolkit booklets, that I’ll show you all the different ones here in the second, but what it did is said that you can use these methods of Lean and Six Sigma to improve your environmental footprint and reduce your impact as a business. These do work, and they have culled together a bunch of examples already showing that this has already been done by some major companies and businesses. That really got me excited on the sustainability path to say that’s something I’m really interested in. That’s something that seems meaningful and important.

I found this graphic that they published, and it talks about when you identify waste in your process, it has an environmental impact. When you have inventory, that means you have to protect that inventory, and you have to get more packing materials, and you have to store it in a facility. That facility takes physical footprint, and it requires a building. Someone had to have constructed a building to store the stuff, and you probably have to light and heat and cool that space, and that has an environmental impact too. When you have defects, you have to throw this away or send them off to recycling. Recycling is good, but we don’t want to send stuff to recycling because you’ve lost the value of that item. You bought something at full price and then you get pennies on the dollar in the recycling of it, and you didn’t even get to use it as full value, so we don’t want that to happen. Just like in the wood waste, you don’t want that scrap waste.

There’s waiting, and especially when things can possibly degrade, the longer it waits, the more likely it’s going to be a problem and it could hurt the quality of the product, especially food. You can’t wait forever to make the food or consume the food or it goes bad, so waiting can cause delays. In this wood process, actually, they noticed that the quality of the wood would change over time as it got stored longer and longer if you didn’t store it properly.

All of these different wastes have an impact, and so when we identify these wastes and start to remove and reduce them down, we have a positive impact on the footprint for that business. I use TIM WOODS as my acronym for wastes. There’s also DOWNTIME is another acronym you can use. I just lined up those letters with the wording. Here are the toolkits that I found. One is around Lean and environment, one is around Lean and energy, Lean and chemicals, Lean and water, and then just a general one for environmental professionals that aren’t used to Lean or Six Sigma methods, how to learn more about them and get the basics and try to apply these apply these into the work that they’re doing. Maybe they’re working on hazardous waste cleanup. There’s methods we can use to make the process safer and more streamlined and faster. There’s data analytic techniques to look for where to prioritize and focus our improvements. It kind of confirmed what I thought, is that these things can be used for sustainability. My goal is to try and get people in the business world to start to do more of these types of projects at their work. A lot of people get stuck in their operations or manufacturing part, but I’m trying to get them out into the environment, safety, health group and the facilities group and start working on those or to get people in the sustainability field, get them exposed to some of these Lean and Six Sigma methods.

Let’s go back to the case study. What they applied was some spaghetti diagrams, and they looked at the route and movement of the material, and how much transportation it required, and how much time that took. They did a process map for how they constructed a wall and they looked at that process. They also did a hazard job analysis to identify risks and potential problems with a process to identify safety concerns. They looked that their work constructions and SOPs and created some of those. That’s a standard improvement technique is to document and come up with a standard way of doing the job or the best way to do a job. They developed a maintenance plan for a new piece of equipment they purchased so that it wouldn’t break down as quickly or have as many problems. They implemented some visual controls to create safety and simplify the process.

They implemented 5S, which is a pretty broad topic. It has to do with decluttering and simplifying the layout, and organizing the workspace, and labeling and color coding everything, and marking things properly, and having a system of managing and keeping that organized. They implemented a lot of that around the facility. And then they did some time studies to measure how long does it actually take us to do this work. Let’s watch and observe those workers performing the job, and watch them multiple times and see if we can pick up some of these wastes in the process.

What they ended up doing, based on what they found and what they saw– and again, I was coaching them remotely, so I didn’t go and tell them what was broke, but the training gave them some things to look for. What kind of things are waste, start there. Look for your backlogs in inventory, look at motion and transportation. All these things can get in the way of you getting a home built. Whatever holds up the home getting built and doing the actual work is potential waste that we can remove. Just having them have a better understanding of what to look for, they spotted some of these opportunities. I’m sure some of these, already had in the back of their mind as well, and that’s great, but we just want to make sure we have a full understanding of the current process before we just jump into solving and fixing things.

They did end up purchasing a better saw tool. We don’t really recommend that as part of Lean because there’s capital investment and time to get that ordered and installed and set up, but it did address a lot of safety issues and time impact that it addressed, so it was a good decision. Usually, we try to figure out what can we do right now to make the process better without throwing money at it right away. They also looked at the air supply lines and reduced the number of connectors they needed, which saved time in getting things set up, and probably gave a higher pressure coming off the lines. They created a mill cart to allow them to move and transport lumber a little easier, and it cut their time from 18 seconds to 80 seconds down to less than 10 seconds. They also developed this go/no-go gauge for determining the prime versus subprime lumber. They came up with a supermarket system to better manage their cripples and their reordering process so they had a dedicated and organized storage area.

They switched their forklift to allow a walk behind approach. I think that saved a little bit of time on set up, and I think there was a safety enhancement with that. They improved other safety areas by reducing transportation and risk of tripping on boards. Some of the processes would leave cut pieces on the floor, and that could be a trip hazard. The new saw, it contains those pieces. They moved the glue rack to free up space. That allows storage underneath it, and that also reduced spillage onto the wood, which would lead to the wood being not usable.

Those are some of the things that they came up, with and here’s a few photos. This is their color-coding system for some of the pieces of wood. There was time being spent trying to measure the board sizes to know if they have the right one, so they came up with this color-coding system that says if you need a certain size wood, if that means it’s a red size, go grab from the red pallet. That cut down their time so much that all their scrap pieces were organized now, and now if they wanted to reuse them into the process, it’s so much quicker and easier so they were more likely to. All they had to do was go through and cut these excess pieces into a usable size for reuse. They had to basically come up with this approach that would allow them to manage the scrap pieces that they had because, otherwise, it would be too time-consuming and wasteful, and people would say that’s not worth it.

This is the mill cart that they created to transport the lumber around. It had some wheels, but it also could be picked up with a forklift, so if it got too heavy, they could move it in other ways. Then they actually cut a hole in the wall down here, which created it shorter pathway instead of going all the way around this wall, and that saved a bunch of time. You’d think that’s a pretty massive change there, but they realize that was worth it. That time savings is going to pay for itself.

On the right here is their gauge that they used. They would lay the pieces of wood next to it, and if the wood was bent too far, the edge of the wood would stick into the red zone. That meant it’s too warped and it has to be degraded to a subprime piece of lumber. If it stays in the green zone, then it’s okay. Before, it was very subjective or left up to the person’s experience and knowledge to know the right decision, and sometimes they’d get it right or wrong. We just wanted to bring clarity and more consistency on these decisions that are made. That’s something I learned over the years too, that anytime it’s left open to interpretation, it’s not black and white on what those answers are, you get a lot of variety in answers, and that can lead to problems where you’re letting bad stuff go through your process or you’re rejecting good stuff when it shouldn’t be rejected. Both can cause excess costs and customer satisfaction problems.

If we go look specifically at the wood waste problem, some of those things helped with their labor costs and utilizing a different grade of wood that would work fine in their application. That goes back to this idea in Lean around value because what does the customer really need, and are we overdoing it or extra processing or overprocessing it by giving them a higher quality wood than is needed for that particular application. They found that this lower quality wood would do just as fine, and it’s a 33% cost reduction, so that was one thing they were able to reduce. The other piece was reusing the scrap pieces or the culled pieces so that it could go back into the process. That was the color-coding system that they came up with.

Before, over a two-day period, you can see they piled up all these scrap pieces, about 66 linear feet of unusable boards left over. Versus, after they put in this process, it dropped to only 5 linear feet over a two-day period. Some of that is just sawdust from the saw that they use. They were able to take these pieces, cut them into standard sizes, put them back on the shelf, basically, for use, and cut their wood waste disposal costs down quite a bit.

The results were a huge improvement just on reducing the type of lumber. They saved approximately $250,000 in doing that. The wood waste wasn’t quite as huge cost savings. It’s roughly 8000 per year, plus another 3000 in the wood waste. I think that’s, total, around 10,000 or 11,000. Total, because there were a couple of other savings that they had, almost $300,000 of savings with these projects. Pretty good results there. From the sustainability side of it, really looking at two things, the wood waste going to the landfill, which eventually breaks down and biodegrades but it takes a long, long time, the transportation of that lumber to the landfill is taking up fuel and cost and extra trips for the trucks, and then there’s time in doing the paperwork of dealing with those pickups and deliveries. Someone has to organize that or schedule that. There’s usually paperwork and processing that has to be done, so there’s some labor that gets saved as well. I don’t think they captured that.

When I think about sustainability is are we providing a safe work environment for the workers, and they touched on a few of those with the safety in the saw. It’s a safer operation and also less carrying of piles of wood on their shoulders, which is ergonomic issue. It’s a high risk for back injuries, or trips, or running into things, or other injuries that can occur, shoulder injuries. Again, looking at these things and making sure that people come to work and they have the safest tools and devices, and they leave work the same condition they came to work so they’re not suffering at the job that they’re coming to do. That’s another piece of sustainability that I’ve seen more and more inserted into the assessments and criteria that companies are assessing companies at is how are you treating your workers. Safety is a big concern there, and if you have injuries that are happening pretty regularly, then this has to be something that gets prioritized. Those are the results there.

At the end of this then, they completed all this, they documented it, they submitted this. As part of the process for certification, I review their project, but since I was involved the whole time, it was a pretty quick review. I’d just look over the documentation and make sure they hit on the key things, they used the tools from the training properly, but then it shows that they not only took the training but they applied it to their actual work and had success with it, and so we gave out a Lean agent certification. That was through Six Sigma US, which is a consulting firm I work with.

It took them about nine months to get through. You can see there was a lot of stuff they did. They could’ve probably done a smaller project, but it was such a business-critical that they really wanted to get these kind of results, so they took on a pretty challenging project. But they had some key leadership involved who went through the training and were part of the project, as well as a lot of other people helping. That’s about it for the project itself.

I’m just went to give a couple of links and resources if you want to learn more here. On the website Lean Six Sigma for Good, we have different topics on process improvement tools applied to different nontraditional applications, like outside of a normal for-profit company like governments or food banks or healthcare. There’s a lot of articles and videos you can check out there. I’ve got some free courses you can go through. One is Lean Six Sigma and the Environment where I talk about the use of these tools for environmental problems. I also have a free course that’s on applying Lean at home, so that might be really helpful, especially as you’re going through this course. That one’s pretty short.

Lean Six Sigma for Good website, I’ve also got a book series. It’s called Lean Six Sigma for Good: Lessons from the Gemba, where I’ve got other authors and practitioners who have put together examples and case studies for not-for-profit type of applications. I have a podcast, Lean Six Sigma for Good, and then my consulting website is Business Performance Improvement, at biz-pi.com. I’ve got some tools and templates that people can download for free, and I also have another podcast that I run there. These are some books that I’ve seen or read over the years that touched on Lean and process improvement with sustainability or nonprofit work. These are good you can check out. Let’s open up for any questions you might have.

C: The first question had to do with the process for measuring the wood, and they wanted to know what was the driver of that problem and why was that solution needed to come up with a gauge to help determine good from bad pieces of wood and the warpage.

There was specs and requirements around that, but it was difficult for them to assess that consistently or accurately. It might be a specification that says, after this much linear feet, it shouldn’t be more than X number of inches. Maybe someone experienced knows how to set up and measure that accurately, but someone new may mis-measure that or measure it in the wrong location, or may not clamp the board down properly on the other end, and so they’re getting a reading that they think is okay and that’s incorrect. When they built a fixture, it made the decision making and the measurement more consistent. In fact, that happens a lot is there’s confusion about how to collect data and what that data means. People will make decisions about this is good or bad material based on this measurement that can be done many different ways and get many different answers.

That’s probably one thing I’ve noticed a lot is don’t trust the data. In a lot of your work, a lot of your exercises, the data is assumed to be good, but when I got into the real world, what I found is the data isn’t always good. In fact, it’s often wrong. It’s often misleading, and so if people are recording numbers but they’re measuring it incorrectly, they’re getting the wrong answer and they’re making the wrong business decision. I’m not sure if I quite answered your question there.

C: Brion, we’re very grateful. Thank you very much. If there are any other additional questions, I will make sure to capture it from them and pass it on to you.

B: I’m happy to respond back or email back.

C: Thank you. I’ve personally looked at some of the books that Brion has authored at one point. I think it was the second to last slide. See the link where it says leansixsigmaforgood.com book series? His very first book, he has actually done a really good job making YouTube videos based on the content of the chapters of the book. I think, if I recall correctly, there’s one short YouTube video for each chapter, and the whole thing together is 50 minutes. I highly, highly enjoyed those videos and the content, so I really recommend.

B: That was a short book I did just prior to these ones with the authors in it.

C: It’s a really good read if any of you are interested to know more about this domain. With that, we’ll leave it at this. Brion, once again, thank you.

B: Any time.

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