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Source: Business-improvement.eu
Lean: Value adding organization
Entrance AupingCraftsmanship and efficiency can coexist
The long Lean journey of Auping: ‘Everybody feels the customer’

By Dr Jaap van Ede, editor-in-chief Business-improvement.eu, 10-02-2016. This article is available in Dutch on Procesverbeteren.nl

At the Dutch bed specialist Auping,  mesh bases, bed houses and mattresses smoothly move through the factory. Everywhere the customer is visible: at each production step, the employees can see for whom a product is made. A warehouse for finished products Auping doesn't need anymore. The entire output of each production day is loaded into trucks immediately. The company shows that it is possible to preserve the craftsmanship of a family business, after a transformation to a truly Lean business.

How did they do that? The first success factor is perseverance: In a Lean journey of ten years and in four stages, this preliminary end result was achieved. During the first stage, Auping experimented at one place with Lean. Next, a period of freely improving by everyone, everywhere followed. After this, the emphasis shifted to structuring and aligning. In the fourth stage, Auping switched company-wide to demand-driven production.

The second success factor was the centralization of all production activities at one location. This not only meant less transport. In addition, everybody now sees immediately which problem the next production step faces, when for example a takt time is not met. Besides this, a critical mass for a Lean culture was created, in which everyone learns from each other.

Johannes Auping opened a smithy in the city of Deventer 126 years ago. The company he founded is still located in this Dutch town, but otherwise a lot has changed! Auping has grown into a sleep specialist with approximately 350 employees. And during the last decade, the company switched to Lean production, without this being at the expense of their craftsmanship and the quality of their products.

Auping during their early years: the company started as a smithyAuping during their early years: they started as a smithy, more than a century ago

Modern factory hall
As a part of an interview I have with logistics manager Arno van Ingen and COO Harry Gruben, I visit the modern factory hall. In the first section I enter, the bed mesh bases of Auping are woven from steel wire. The mesh bases are tensioned with a pulling force of up to 3000 kg, before they are placed in steel frames.

Earlier, a bit upstream in the production chain, those steel frames were welded together, starting from cut to size steel profiles. Legs and other accessories are laterally inserted in the production stream much later.

Every production activity follows the 'takt' or production rhythm, which is a reflection of the customer demand. The end product of this part of the factory: complete bed bases.  In this ´steel section´ most tasks are robotized. ´There are several reasons for that´, says Operations Director Harry Gruben. ´It's repetitive work, which must be performed very accurately. I addition, the work is heavy for humans. And finally, it is becoming increasingly more difficult to find good welders these days.´

Operations director Harry Gruben and logistics manager Arno van IngenOperations director Harry Gruben (on the left) and logistics manager Arno van Ingen

Feel the customer
Since all production activities were moved to this partially new factory in 2014, at every production step you can feel the customer. 'Everywhere you know for which bed shop and even for which specific end customer you are producing.'

Robotics and ICT are used wherever this is convenient. Smart industry - digitizing the process from order to delivery - is however not a guiding theme. 'We think that smart people, who help to make the materials flow, are far more important. Without those people, nothing becomes smart.´

The work in the sewing shop has remained traditional, but the organization around it has changed significantlyThe work in the sewing shop has remained traditional, but the organization around it changed significantly. Mattress-covers now flow from production step to production step, with hardly any intermediate stock.

Sewing shop
The production process starting with steel wires and metal profiles, and ending with bed mesh bases, is only one of three material flows in the factory. Where the 'steel flow' is the most robotized, the flow of textile is accompanied with the most manual work. Especially the sewing shop on the first floor looks traditional. Craftsmanship is needed here just as hard as in bygone days. Behind a large number of sewing machines I see employees making mattress-covers out of rolls of fabric. However, the organization around these people changed a lot. When the mattress-covers are ready, they are transported immediately to the ground floor of the factory, where they are slided around the cores of mattresses. So there is no time for intermediate stock to pile up.

The third flow in the factory, besides that of steel and textile, is that of wooden materials. In this part of the factory, housings for the beds are made from wooden panels. I descry big sanding robots, but also here the craftsmanship did not disappear completely. For example, I see am employee crossing the t's and dotting the i's with a small hand sander.

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From scratch
The three material streams meet on the expedition. Here I see finished products, ready for shipment. ´This may seem a lot of stock to you, but all these products will go on their way to the customers today. Our warehouse for finished goods has disappeared. At night we do not produce, everyday we start from scratch´

Some customers order only a bed base, others a mattress, and there are also customers that order a bed base with a housing and a mattress. 'Until the expedition the flows of metal, textile and wooden products are independent from each other. However, all things for one specific customer must be ready on the same day. This is the most important reason why we need this buffer of finished goods.'

I'm impressed. The similarity with an assembly line of for example a large truck manufacturer like Scania is striking. At Scania, all components flow seamlessly together to form complete trucks, without any waste or loss of time, and every production step obeys to the rhythm of the 'takt'. This 'car factory for beds' of Auping surely is one of the 'leanest' mid-sized family businesses in the Netherlands I have ever seen.

How did they make it that far? I think there are two reasons. The first one is perseverance: the Lean journey of Auping lasts already ten years. The second is that Auping centralized all production activities in one big factory. That worked out extremely well.

The modern factory hall of Auping today
The modern factory hall of Auping today

Starting point
Arno van Ingen has been logistics manager at Auping for eight years. He can still recall what the starting point was. 'The production of the mesh bases, the wooden bed housings and the mattresses originally occurred at three locations in the city of Deventer. We had separate factories for respectively our material flows of steel, wood and textile. But "flows" isn't a good description of our production methods at the time. We worked with large batches and had a lot of intermediary stock', says Van Ingen.

Besides this, the customer wasn't visible anywhere in the factory. 'All finished goods where stored in a big warehouse. Nevertheless, our delivery times were long. We did have a stock of fast moving products, but even then most beds were already produced to customer order. The warehouse functioned mainly as a buffer. It absorbed the difference in production time of the three factories. That made it possible to send orders in its entirety to customers. For example, in the steel factory the throughput time was no less than four weeks.'

In Lean terms, you could say that there was a lot of waste, in the form of non-value adding activities like transport and storage. 'The situation became even worse when Auping acquired a box-spring factory in the city of Eindhoven, at a distance of about 80 kilometers from Deventer. Parts for the box springs now had to be transported to Eindhoven, were built-in there, and after that the box springs were transported to Deventer to be shipped to the customers, along with other components for their desired sleeping systems.'

The entrance of Auping
The entrance of Auping

Stage 1: Local experiments
The first local experiments with Lean, which I will mention "stage 1" of Auping's Lean journey in this article, already took place in 2005. 'At the time sales of mattresses rose rapidly, which resulted in a lack of space in the mattress factory. This created a burning platform, we simply had to do something. This led to the space project, under the guidance of the Dutch consultancy firm IJssel Technology. By switching from batch production to a One Piece Flow we removed many intermediate stock points, and the flow increased sharply. As a result, the delivery time dropped from 4  weeks to 4 days. This way we achieved our main goal: saving space. Expansion of the mattress factory was not needed anymore.'

Despite this remarkable result, it took until 2009 before Auping decided that Lean would become the preferred improvement method at all production locations. The advent of a new COO, Frank Auer, who was succeeded by Harry Gruben later, induced this.

After a brief reorientation Auping decided that outsourcing their production was not a good idea, and that the production would remain in the Netherlands. 'At the same time we concluded that this would be possible only if we could distinguish ourselves in the eyes of the customers with short delivery times and high quality. Lean manufacturing is the way to achieve that.'

Tidal movement
Theoretically, an overarching future value stream map could have been developed at that time, to have a spot on the horizon. With as ultimate goal: creating flow everywhere, exactly matching customer demand. 'We think however that creating involvement goes beyond structuring and planning. Without involvement you will achieve nothing. Therefore we started with Lean, by granting our employees the freedom to improve anything they wanted. That way, we generated a lot of enthusiasm. We see this as a tidal movement. After a period with much freedom, you start to steer more. And when this reduces the involvement too much, you switch again to a freer scenario.'

Stage 2: Improve freely everywhere
So, Auping started with a phase of "free improvement" at all production locations. This marked the beginning of the second stage of their Lean journey!

First, all departments were trained in the basics of Lean. FME was involved as consultancy partner. At the end of each training, Lean improvement boards were introduced, and the employees were asked to make improvements themselves. 'We felt it was important that they started immediately, and put into practice what they had just learned. This resulted in a high level of involvement, and little resistance to changes.'

One year later, on some places only a little had happened. On other places huge improvements were visible, like for example a production line with takt times.

However, all results remained local, and the customer still was not visible in the factory. 'Chain-wide results were our goal: flowing and demand-driven production, resulting in short lead times and low stock levels. However, personally I did not envision immediately how to proceed. Fortunately, Harry Gruben entered our organization at that moment, coming from Scania', says Van Ingen. 'That gave our Lean program a new boost.'

To prepare for the next stage, a number of leaders in the field of Lean, like Scania and Nefit, were visited as a benchmark.

Lean house
Since 2007 Auping already had a so called Lean house, with Lean principles and tools as building blocks. 'This house was however just a copy of what you usually see', says Gruben. 'We wanted it to become something of ourselves, with our experiences at the benchmark companies incorporated in it.'

The two main pillars of the new Lean house became 'demand-driven work' and 'first time right'. In the middle there are four things that should improve every step you take: safety and sustainability, quality, reliability of delivery, and cost. Interestingly, sustainability is specifically mentioned, see also the box cradle-to-cradle. Building blocks with principles like 'go and see for yourself' and 'experience what is happening' emphasize the practical line of approach.

The base of Auping's Lean house contains conditions. These conditions have to be met to make it possible to improve at all. Examples of those conditions: customer first, respect the employees and their skills, and last but not least: standardized methods. After all, if you can not see deviations, you cannot improve. 'We started with that aspect: standardization'

In the office of Auping this circuit was built, to stress the importance of demand driven production
In the office of Auping this circuit was built, to stress the importance of demand driven production! The white cloud (top left) illustrates the large number of bed versions the customers can order.

Stage 3: structured improving
This marks the beginning of the third stage of the Lean journey in 2012: structured improving. Thus far, all departments improved their work at will, now it was time to align all initiatives. 'We named five things that are necessary for standardized work: 5S, takt times, position standards (the best known method to carry out the work on a certain location), knowing what is right and wrong, and finally daily following-up problems. In some departments, some of these things were already pretty well organized. However, our goal was that all principles would be applied everywhere, within two years. To this end all team leaders received an internal training for each principle, the order they could determine themselves. The concept was train-the-trainer, the team leaders transferred their knowledge to their team members.'

From that moment on, takt times at production lines gradually became common. However, the why was still missing: the customer! To this end, the production had to become demand-driven everywhere in each factory. Everyone should become aware for which customer they are producing right now, and they should feel what happens when they do not achieve a certain takt time!

Stage 4: Demand-driven production
Accomplishing this, demand-driven production everywhere, became the goal of stage 4 of the lean journey. To this end, it was already decided In 2010 that it was necessary to merge all production sites - the steel, wood, and textile factory - at one place. For this, the location of the mattress factory was selected. The central warehouse, at that moment also on that location, would be closed and used as extra production space. Of course the freed space was not enough to accommodate all the production streams around wood and steel. Also new factory halls had to be built.

Having all production activities at one central location strongly reduces the need to move materials. Nevertheless the question arises if this is required to make the production demand-driven. Scania for example, the former employer of Gruben, operates smoothly with a network of factories. These factories are logistically so closely connected, that it seems if rivers of truck components come together at the assembly lines. 'Scania also combines factories whenever possible', responds Gruben. 'That way, Södertalje in Sweden has grown into what you could call a Scania village. Besides this, the market for the trucks of Scania is more international than ours. Therefore they simply are not able to merge all their factories at one place. We thought this would be necessary in our case, to achieve three goals: less waste, demand-driven production without a stock of finished goods, and finally: a critical mass of Lean thinking people.'

No warehouse anymore
Auping thought it was now time to create the future value stream map mentioned earlier. This blueprint for the logistics was linked to a plan for the transformation of the mattress factory into an integral production location. 'The surface area of the new plant is smaller than that of all three old production sites together, since we didn't need a warehouse anymore. We now only have an amount of stock equal to one day of production, this is 20% of what we had before. At the end of each day, everything moves on to the trucks that bring the products to our customers, as you have already seen during the factory tour. It may sound strange, but our reliability of delivery has risen since we have no warehouse anymore. The reason is that it forced us to improve our processes. Every delayed customer order, and every other anomaly, we now see as a chance to improve. The idea is to prevent the same event from happening in the future.'

Many building blocks
The Lean journey of Auping shows clearly, why it is impossible to transform a company to Lean in a few months. To become truly Lean, you need many building blocks, ranging from involved and "Lean Thinking" employees to standardized work, and from coaching leadership to the redesign and balancing of the production lines. Finally, it is even necessary, at least in the case of Auping, to rearrange and bring together all production lines. Those things you can not do all at once. This is why a Lean transformation takes years.

Despite the advent of modern production methods at Auping, there is still room for craft work
Despite the advent of modern production methods at Auping, there is still room left for craft work

Critical moment
In August 2014, all production activities moved to the new factory. This was a critical moment! For the first time, the "takt times" of all production lines had to connect closely with eachother. This was however feasible, because all the steps in the production chains had been standardized before. 'But still, we had to get used to the new situation. For example, the production line that makes the mesh bases compensated for slow takt times in the morning, by producing more in the afternoon. In the new situation, they could not do that anymore. Now that they became connected to the rest of the plant, it only resulted in a blockage of mesh bases for the entrance of the paint shop!'

Now, it turned out why having all production activities at one location was such a good idea. The people that make the mesh bases understood immediately what happened when they didn't keep to the production plan and the corresponding takt times. 'It was nice to see that they proposed solutions themselves, to prevent delays in future. For example the use of pallets, to make picking of materials easier, and placing tools at fixed locations, conform 5S. The people now experienced themselves why the five principles for standardization are needed and appreciated these more.'

When you are all work in the same factory, you learn from each other anyway. "We not only have daily kick-offs meetings for each production line, on a higher level there are also operations-wide gatherings, to discuss best practices and problems. If you want to show something to others, it is now very easy to walk to a particular part of our plant.'

Stage 5: Lean Enterprise
Auping's Lean journey lasts already for ten years, and they now probably should be counted as one of the Lean SME-leaders in the Netherlands. However, in their own words they have only just begun. Stage five is already envisioned. "We want to become a Lean enterprise. With that I mean that we also apply Lean in the office and in our supply chain. Besides that, we might challenge our people more. In Japan it is quite common to eliminate for example a stock location, after which you ask people to find smart solutions to deal with that.'

Securing the results of improvement actions, to prevent reversion, will also get more attention. 'And we also want to add strategic aspects, like selecting what improvements have priority. These priorities can then be translated into local key performance indicators. Then, everybody will know how he or she can help to reach our most important goals.'

The bed mesh bases are also used as fences in the factoryThe bed mesh bases are also used as fences in the factory.


Cradle to cradle
Auping has an ambitious environmental goal! In 2020, their production must be 100% cradle to cradle. So, they want to recycle 100% of all materials. Besides this, Auping wishes to operate energy neutral. With the design of the new factory, big steps were taken in that direction. After the opening, the consumption of natural gas, electricity and water decreased with 90%, 30% and 60% respectively.

The application of storage of heat and cold in the soil contributed a lot to the reduction of the energy consumption. Examples of other things that contributed are the use of sawdust briquettes to heat a furnace, the smart capturing of daylight and the use of residual heat to warm the offices.

When the layout of the new plant was developed, attention was given to many details. For example, the drying kilns were designed as small as possible, and heat is recovered.

The sustainability program runs separate from Lean, but the programs overlap. For example, when deciding if a certain Lean improvement action can be implemented, the effect on the environment is taken into account. 

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