Pent Assemblies:
Going Beyond Initial Improvement Results
Target Magazine, Dec. 2003

What's next for folks at a small company, after they've adopted kaizen improvement projects, secured ISO 9000 registration, shortened cycle times, implemented teaming, and so on? Putting all that "good stuff" in place had helped Pent Assemblies (with two plants in Rome City, IN and facilities in Kendallville and Avilla, IN) achieve and maintain top-notch customer service in its markets for wiring harnesses, lighting, custom molded parts, and utility devices (customers include office furniture, lighting, and medical equipment industries). But their internal stress was incredible, taking the edge off their "success."

A high percentage of production used to be make to stock. Their improvement activities had enabled Pent to turn out products on a make to order basis. Yet an essential element of performance improvement was missing. That element was management process improvement, said Chris Edwards, CIO for Pent's parent firm Group Dekko.

" We found that we needed to improve beyond customer service metrics," said Steve Hankins, president of Pent Assemblies. "Our customers had confidence in our quality and on-time delivery performance, but we knew we had to improve our productivity, cash flow, and return on assets." He noted that Pent had implemented ERP software a few years earlier, but they did not simplify management processes to obtain full benefit from the system.

" We knew some things were broke," continued Don Harper, Pent general manager. "We were always scrambling to get things done. Our customers still saw the same high quality and service levels, but we were very challenged to respond to their needs for products with decreasing leadtimes. We'd ask one plant to take on unexpected orders where materials were originally allocated to another order, putting added burdens on a plant to put out finished goods as new orders popped up. We willed things to happen — making the changes by the seat of our pants, but with a great deal of internal stress."

Hankins said Pent senior management started a series of team meetings and management education sessions in early 2001, working with consultant Terry Myers to discuss better ways for handling these problems. Meeting participants included senior corporate managers in addition to managers from all four plants as well as people from sales, plant operations, supervisors, and others. They recognized the need for consistent metrics, although operations varied from one plant to the next, according to Harper. "We need to think of ourselves as a team as we adopt best practices," he said.

" Now we have weekly communications meetings to discuss overall performance and issues within each plant — they have become a way of life," he continued. "Two critical meetings are held each month — sales and operations planning at the start of the month as well as a demand review halfway through the month. We want to track and communicate performance against key measures, including forecasting. We've learned how to do a better job of forecasting demand by product family." Plant-level sessions also cover inventory accuracy (they found more discipline was required) plus shipping and delivery metrics.

Paying attention to the details pays off for Pent Assemblies. For example, BOM (bill of material) accuracy had been assumed. "We needed to involve systems people and our engineers to discover the causes of excess activity related to BOM database accuracy," said Harper. "We audited BOMs versus prints and how products were actually being assembled. If even one part is missing on the BOM, it creates an inventory accuracy problem and excess activity. In the past, we'd accepted 'drop in' orders (unexpected orders dropped into the schedule) based on the availability of required parts; when materials shortages cropped up, expediting had a snowball effect, impacting raw materials as well as finished goods. Our engineers used to scramble to make engineering change orders (ECOs) happen. Now our weekly meetings have helped to eliminate these problems."

Hankins added that the company's problem-solving culture encourages acceptance of new performance improvement ideas. "People here are not resistant to change," he said. "They've been through kaizen and other continuous improvement activities. We've blended a lot of these tools into what we call the Management According to Dekko (MAD) system." He added that Stephen Covey's emphasis on the seven habits of highly effective people (win-win relationships) is "near and dear to our heart."

Asked about "lessons learned" as Pent Assemblies people edge toward even more streamlined operations, Hankins and Harper offered these suggestions:

• Active senior management support for change efforts is critical. Give managers and others the authority and accountability they need to implement change.
• Effective communications are critical. Modify your communications mix to suit your organization's needs. For example, Pent team leaders from each of the plants began meeting on a regular basis to trade ideas on what ideas work best for implementing and sustaining process improvements. Direct, computerized access to schedule performance information is more widely shared than in the past.
• Continue to build teamwork. If one area of the organization is falling behind, others can help.
• Involve suppliers in continuous improvement efforts. They need access to information about schedule, etc. to provide great service.

What's next on Pent Assemblies' improvement horizon? "We'd like to take the lessons we've learned from forecasting, data accuracy, and material planning and link them transparently to our suppliers," said Harper. "That alignment can help our customers be even stronger competitors."