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Anderson Steel, Billings, looks to the future, goes lean
When manufacturers speak of "going lean," they use words like "simple" and "cheap." Keith Novakovich, the new Chief Operating Officer for Anderson Steel Supply Company http://www.andersonsteel.com/ in Billings, speaks the same language.
by Leanne H. Frost Western Business News
After working for the Montana Manufacturing Extension Center http://www.mtmanufacturingcenter.com/ and teaching classes on lean manufacturing for six years, Novakovich got a chance to practice what he preached when he was hired by Anderson Steel in March 2001. Since then, he has put lean principles into play.
Although it’s still too early to tell how much of an impact the changes have had on the company, "We were more profitable in 2002 than in 2001," said Novakovich, smiling.
To help him move the steel manufacturing company into a more competitive mode, Novakovich hired production manager Chris Vance in May 2002.
The two share a similar philosophy. "Lean is all about simplifying," explained Novakovich. It’s about making each movement in each procedure count, eliminating anything that reduces productivity or profitability.
The changes Novakovich and Vance have implemented seem simple in and of themselves, yet their overall effect can be impressive.
For example, when Vance implemented a set of lean procedures at Anchor Gaming in Belgrade, now IGT, before joining Anderson Steel, he saw maximum capacity jump from 120 units per week to more than 500 units per week without significant labor increases.
"That was enough to make a believer out of me," he said.
One of the first things Vance did after coming to work for Anderson Steel was to create teams. He selected team leaders with experience and seniority and began to make them accountable for work done by their teams. The leaders meet daily to plan the workflow and regularly as a production group. He also purchased two-way radios so team members could easily communicate with each other. Even documentation is run through the leads. Previously, there was not a specified system to track the paperwork.
Material handling is a big issue at Anderson Steel because of the size and weight of the pieces. They began to "batch" their tasks so that a process is completed from start to finish in one area, thus reducing the number of times the pieces are moved.
Other measures included things as simple as hiring a person to keep the shop clean.
In addition, Vance and Novakovich started sending the entire staff to training last November. "Some guys had been welding for 30 years and never received any training," said Vance. "Typically, a welder is only expected to worry about welding the assembly in front of them, not about organization."
At first, Vance said about 80 percent of the employees accepted the training and new ideas, while 20 percent did not. However, he said, after attending the classes on lean manufacturing, "They were all pretty much on-board, partly because we were serious about following through."
"We’re creating an environment where people want to go to work, not just the drudgery of clocking in. It’s the first times some of these guys feel respected and like their opinions count," said Vance.
Novakovich added that the company’s turnover rate is the now the lowest it has been in five years. "So, if you equate that, it’s the result of people having more value on their job," he added.
There were also safety improvements made.
Vance said the company had essentially stopped making any changes in the mid-1980s. However, as Novakovich pointed out, there was no reason to change because the company was making money. What it wasn’t doing was gaining market share. Since the mid-1980s, Novakovich said profit margins have been decreasing and competition has been increasing.
The company started in 1973 and is now one of four major steel fabricators in Billings. The company primarily makes residential steel construction items, from construction beams to stair rails. In addition, the company supplies doors, frames, hardware and miscellaneous building materials.
"In order to grow the business, we need to do these things. We need to start behaving like the big boys," said Novakovich.
Because of the success the Billings office of Anderson Steel is beginning to see, company president Susan Humble is working with the MMEC to train the Great Falls location and company headquarters as well.
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