Background:

In 2020, during the COVID-19 pandemic, Farmers Friend experienced a surge in demand for their core product, caterpillar tunnel kits. However, this increase in sales led to significant challenges in inventory, production, and staffing due to quarantine protocols. At the height of the issue, orders were stacked outside, freight trucks were backed up, and unfulfilled orders resulted in up to $1.2 million in unearned revenue. Customer frustration was mounting due to missed lead times, and the company faced financial losses from canceled orders and transaction fees.

Objective:

The primary goals of the improvement efforts were to reduce lead times and prevent continued risk exposure, while also increasing production capacity. At the same time, the team aimed to improve customer satisfaction and protect the business's reputation by ensuring that orders were fulfilled more efficiently and in a timely manner.

Actions Taken:

To address the challenges, the team adopted the mindset that lead times were a promise to customers, not an estimate, which created a sense of urgency and duty to meet expectations. To manage inventory uncertainty and mitigate risk, sales for certain items were temporarily turned off, and a sign-up list was created to ensure lead times were met and customers potentially retained. 

A key element of the solution was the development of a dashboard to monitor output and manage backlog levels. Trigger points were set at various stages, such as implementing overtime when needed, cross-training employees to assist in other areas, opening a second production line, or turning sales off when necessary to prevent exceeding a four-week lead time. The second production line was modeled after 3M’s approach to meet future demand, ensuring the business was prepared for any unexpected surges in orders. 

To improve workflow, the team used spaghetti diagrams to analyze and optimize the flow of materials and labor, eliminating pre-bundling and allowing work to be done in stages, which reduced motion and increased efficiency. Additionally, large quantities of materials were ordered to prevent future inventory shortages and prevent production lurch. Although this led to later challenges, such as defective cardboard cores from outdoor storage and increased liabilities. 

Despite these efforts, the company hired approximately 15-20 employees to manage the workload, but ultimately, the issue was found to be more systems-based than workforce-related. This led to the difficult decision to let those employees go due to near insolvency before the systems improvements were fully realized.

Results:

Lead Time Reduction: 

Lead time, once as long as 6 weeks, was reduced to an average of 3 days, with a target of 1 week consistently.

Increased Production Capacity: 

Order fulfillment capacity increased from 30 orders per week to 50, with occasional peaks up to 70 orders per week.

Improved Morale & Customer Satisfaction: 

Team morale improved significantly, and customer satisfaction rose as the team was able to meet demand and promise accurate lead times.

Financial Impact: 

Monthly unearned revenue was reduced to an average of $200k, significantly lowering financial risks.

Key Lessons:

Lead Times Are a Promise: 

The importance of meeting lead time expectations cannot be overstated. This mindset shift helped improve customer trust.

System Improvement Over Staffing: 

Adding people doesn’t solve root problems. Focusing on systems and processes improved capacity without needing excessive hires.

The Power of Measurement: 

By measuring capacity and tracking progress, the company was able to make informed decisions and improve accuracy in fulfilling orders.

Learn from the Past to Prepare for the Future: 

Like 3Ms response to SARS prepared them for Covid, learning from past challenges can lead to better preparation for future demand surges.

Team Effort: 

Every member of the team contributed to the packing blitzes, from top leadership to the floor workers, making it a shared responsibility.

Caution with Unbridled Sales: 

Unchecked sales can erode profit margins. When fulfilling orders becomes a risk, it’s better to pause sales rather than promise something that can't or may not be able to be delivered.

Conclusion

The fulfillment improvement effort was a challenging but ultimately successful initiative that significantly enhanced the company’s ability to meet demand while maintaining customer satisfaction. By focusing on process improvements rather than simply adding more staff, the team was able to reduce lead times from six weeks to just a few days, increase production capacity, and improve operational flow. 

Although there were difficult decisions along the way, such as letting go of additional employees and dealing with inventory-related liabilities, the team’s ability to adapt, measure progress, and learn from past experiences was key to the success. These improvements not only ensured that the company could manage the increased demand brought on by the pandemic but also established systems that allowed for sustainable growth and better risk management moving forward. 

The experience reinforced the importance of treating lead times as a promise, continuously measuring capacity, and learning from past challenges to better prepare for the future.

Reflection for Action:

How would you have balanced the risk associated with pausing sales, inventory fluctuations and delays, and long lead times? How would you rank these in importance?

How would you respond to requests from shop floor workers to hire more help to handle demand?

How would you handle tension between teams who had to flex and felt that their departments were not appreciated and other departments were underperforming?

Do you see lead times as a promise or an estimate? Explain your thought process. 

Let’s Connect: I’m Here to Help

If you have any questions about increasing capacity to reduce lead time in any aspect of the business, or if you're curious about any additional details in the case study, I’d love to connect with you and offer insights at no charge. Whether you're exploring Lean for the first time or looking for ways to refine your current process, feel free to reach out with any questions – I'm happy to help!

If you’re looking for more in-depth support, such as analyzing your capacity data or developing a full-service plan tailored to your organization’s needs, I also offer consulting services for a fee. We can discuss your goals, identify challenges, and create a strategy to drive lasting improvements.

Don’t hesitate to reach out, and we’ll find a time to chat. Whether it’s a quick question or a more detailed discussion, I look forward to connecting with you!

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Problem:

Farmers Friend was struggling with sustaining 5S improvements, experiencing reversion where previously established standards would not be followed, areas would accumulate clutter, and improvements were forgotten or repeated. The lack of clear accountability and understanding of the 5S principles hindered long-term success.

Solution:

Nick developed a custom 5S Assessment system using Google Forms and Sheets to track compliance and identify areas for improvement. The system was structured with clear inspection criteria, where each section of 5S (Sort, Set in Order, Shine, Standardize, and Sustain) was assessed with yes/no questions and scored. The tool allowed the inclusion of images, provided a transparent method of tracking results, and encouraged accountability.

Implementation:

The system was tested and refined with input from the Gemba Group, consisting of Nick, Mike, Brandon, Chris, and Dylan. Early challenges included inconsistent results due to fluctuating assessor participation and engagement, limitations of the digital system used, and lack of clarity for line workers. However, after debriefing and adjusting the strategy, the team started to see significant improvements. The results were shared in departmental reports and later presented in an all-hands meeting to communicate the goals and strategies for improvement.

Key Results:

Score Improvement: Compliance increased over 12 months from 40% to 86%.

Quarterly Percentage Increases:

First Quarter: 40%

Second Quarter: 57%

Third Quarter: 69%

Fourth Quarter: 79%

End of Year: 86%

Operational Benefits: 

The company saw improvements in workflow, including smaller batch sizes and enhanced Kanban card system efficiency. Out-of-stock items were reduced, shipping accuracy increased from 80% to 99%, and dock time dropped from seven days to one.

Cultural Shift: 

The shop floor developed a strong lean culture, but challenges persisted in non-manufacturing departments, such as customer service and tech, where lean principles faced resistance.

Lessons Learned:

Alignment: 

Greater alignment between leadership and departments was necessary for achieving even better results.

Gemba Approach: 

A stronger focus on on-the-floor leadership could have fostered better engagement and results.

Direct Communication: 

Nick learned the importance of having direct conversations with leadership, including the CEO and other department leaders, to ensure better alignment.

Investing in Software: 

After two assessments, Nick realized that investing in software sooner (like Safety Culture) would have improved implementation and results earlier.

Accountability: 

High standards with present leadership should lead to accountability, which can include termination for non-compliance with 5S principles.

Conclusion:

The 5S Assessment system was effective in increasing compliance, improving operational efficiency, and fostering a lean culture on the shop floor. However, ongoing challenges in organizational alignment and leadership engagement highlighted areas for future improvement. Nick’s experience emphasized the value of direct leadership involvement, the importance of investing in tools and systems that can streamline processes, and the necessity of high accountability standards to ensure short and long-term success.

Reflection for Action:

• How are decisions made in your organization? Majority Rule, Authority Decision, Voting, Autocratic Decision-Making, Consensus, etc.

• What kind of growth is needed or expected in terms of speed?

• What would be key benchmarks of success that you would want to see from implementing a 5S audit system?

• What problems would you want a 5S audit system to solve for your organization?

• Explain if you have a preference for 3S (Sort, Set in Order, Shine), 5S (Sort, Set in order, Shine, Standardize, Sustain), or 6S (Sort, Set in order, Shine, Standardize, Sustain, Safety). What is your reasoning for that preference?

• Explain if you believe 5S audit systems are a necessary part of 5S. 

• What one action will you take after reading this case study?

Let’s Connect: I’m Here to Help

If you have any questions about implementing a 5S audit system, or if you're curious about how it might benefit your organization, I’d love to connect with you and offer insights at no charge. Whether you're exploring 5S for the first time or looking for ways to refine your current process, feel free to reach out with any questions – I'm happy to help!

If you’re looking for more in-depth support, such as implementing a comprehensive 5S system or developing a full-service plan tailored to your organization’s needs, I also offer consulting services for a fee. We can discuss your goals, identify challenges, and create a strategy to drive lasting improvements.

Don’t hesitate to reach out, and we’ll find a time to chat. Whether it’s a quick question or a more detailed discussion, I look forward to connecting with you!

Contact Page