Despite its industry’s reputation for less-than-scrupulous globalised manufacturing practices, training shoe maker New Balance still makes some of its shoes in the UK. In fact, it can do so more cheaply than many of its Far Eastern suppliers.
The reason for this is that since 2005 the company has adopted the principles of ‘lean’ manufacturing, which advocate the elimination of waste and constant efficiency improvement.
New Balance turned to lean manufacturing after a customer satisfaction audit found that retail partners thought it inflexible and unresponsive to fluctuations in demand. By painstakingly mapping out the processes by which New Balance creates value for its customers, the company could identify points of waste, which it proceeded to eliminate – starting on the factory floor.
The results were impressive. For one of the company’s key retail partners, for example, the replenishment cycle went from 110 days to five days, allowing it to match stock levels to demand and preventing New Balance from manufacturing unwanted shoes. And quite amazingly, the annual output of the UK production facility tripled.
“The management’s response to this was, ‘Great, now let’s ‘lean’ the office,’” recalls operations director Eddie McDermott. However, in applying lean principles to administrative processes, success was much harder to come by. “Our experience was not positive,” he says.
Two problems beset the lean office project. Firstly, it was much harder to map administrative processes and to see where the inefficiencies lay. “In the office environment, we couldn’t see where the problems were,” says McDermott.
And even when it had identified areas for improvement, it was impossible to make process changes stick. “Even after a year’s worth of employee workshops, we still couldn’t deploy or sustain the agreed process improvements,” explains McDermott. “We were passionate, but we couldn’t move beyond documentation.”
To help in both mapping existing processes and implementing process changes, New Balance turned to business process management (BPM) software from UK vendor Nimbus. Deploying the Nimbus tool on employee desktops gave New Balance visibility into how work flowed through the organisation. The system also allows process changes to be pushed straight out to employee desktops.
One example of the benefits of this approach comes from the financial operation of New Balance’s German subsidiary. The subsidiary had €1.2 billion of overdue payments as a result of operational errors such as incorrect shipping.
Using the Nimbus software, the company was able to link financial events – including overdue payments – back to the operational processes that preceded them, and stop the errors at the source. Within three months of the Nimbus deployment, the total value of overdue payments was down to €750,000, and it has since fallen to €160,000.
By substantiating business processes in a visible and manageable form, New Balance’s Nimbus implementation is allowing it to pursue the lean ethos across the entire organisation.
“‘Lean’ has been the impetus,” says McDermott, “but without Nimbus we wouldn’t have had the information we needed.”