Actionable Data
From selling homemade dressings out of their family's restaurant to today, with production facilities in Idaho and Michigan, Litehouse Foods, a family-owned business, has expanded its customer base to include big-box retailers, national grocery chains and other food service businesses among its customers. In 2005, the company embarked on a continuous improvement program based on lean manufacturing practices.
Working under the belief that it was operating at a 60 percent efficiency level, Litehouse set out to improve performance without compromising customer service or product quality. Management recognized that in order to succeed, this effort would require a constant stream of accurate, real-time and actionable information -- something Litehouse's manual data-collection system was not providing.
INCOMPLETE AND UNRELIABLE
Aside from data accuracy issues, Litehouse was concerned that a significant amount of data wasn't being captured or collected in a timely fashion, especially when it came to difficult-to-track events such as minor line stops.
"We would often have lines going down 20 times during a run for 30 or 40 seconds at a time," says John Shaw, IT director, Litehouse Foods. "Those stoppages add up quickly, but they weren't being recorded. So we weren't going after them. Maintenance would fix the problem and we would just move on."
To improve data collection, Litehouse decided to design in house a highly specialized shop floor system to automate the collection of high-level production data. Although the company felt that this was a first step in the right direction, the investment was sizable and entailed a 12- to 18-month implementation. Moreover, Litehouse estimated that even using this approach, it would still take the company several years to meet most of its continuous improvement objectives. And because the system lacked integration with Ross ERP, Litehouse's system of record, there was still the issue of error-prone, manual data entry.
THE SOLUTION
In October 2006, Shaw came across CDC Factory at a Ross customer conference and he realized that the tool could potentially do in six months what they originally estimated would take five years.
Shaw and CDC Software personnel embarked on a detailed, three-day performance review in November 2006 at Litehouse's Idaho plant. To Litehouse's surprise, the analysis revealed that it was operating at a 40 percent efficiency level - not 60 percent as the company previously estimated. The report also indicated that out of the 60 percent improvement opportunity, 8 percent inefficiency would always exist. That left a 52 percent opportunity for improvement, which CDC further broke down into specific areas such as mechanical downtime, minor stops and hidden losses, setup rate and waiting for product.
Litehouse management estimated that, even if they could only improve a quarter of the 52 percent efficiency improvement opportunity, the company would see ROI in less than 12 months. The company halted the design of the data-collection system it had been planning, moving forward with CDC Factory in December 2006. The system went live in the Michigan facility in April 2007 and in the Idaho facility in June 2007.
IMMEDIATE IMPACT
"Just the fact that shop floor personnel knew we were now carefully looking at things such as start and stop times and downtime led to increased output the very first week we used the system," says Fred Alexander, manufacturing manager at Litehouse's Michigan plant.
As of July 2007, output had increased on the main retail line by 47 percent per shift in the Michigan facility, breaking that plant's longstanding record.
"The impact of this improved output is significant," according to Shaw. "We can now produce in four days what used to take us five days. And because we no longer have a capacity issue, we don't have to turn down new business or increase capital spending on new plant and equipment."
Many of the shop floor personnel never used a computer before, so there was a high level of anxiety before deployment. However, Alexander says, after just a few days of working with the touch screens, operators realized how simple the system was and how much easier it made their jobs.
In the past, it took Litehouse 24 to 48 hours to get information on critical items such as downtime and run rates. Furthermore, because the data was collected manually, the information was prone to error and often incomplete. "Now I have accurate, complete and real-time information in front of me all day long, which means we can act on issues as they're happening," says Alexander. "Previously, it could take months to gather enough information to identify the root cause of a recurring issue."
Everyone now knows when a line or piece of equipment is down. There's no confusion, no excuses. And as soon as something goes down, the escalation process automatically begins.
Shaw indicates that he and the executive team satisfied with their decision to implement this solution.
"Capturing data is one thing, but actually bringing it into a format that someone can use to make better and faster decisions is completely different. CDC Factory makes the data actionable -- and that is making a significant difference in our continuous improvement efforts," he concludes.