GA 233 | How to Develop a Strong Lean Culture with Raye Wentworth

Last week we heard Kevin Hancock's powerful keynote address from the 2018 Lean Systems Summit in Portland, Maine. Today, I'm excited to share another keynote address from the same event. Rae Wentworth has been with New Balance for 34 years, 19 of those in finance and 15 in manufacturing. She's responsible for managing the fast moving high tech manufacturing facility in Skowhegan, Maine, which employs approximately 300 associates and produces over 700,000 pairs of shoes each year. These products are handcrafted through cutting, stitching, assembling and final packaging to consumers. During her talk, Ms. Wentworth talks about their journey with Lean and how they've developed an incredibly strong Lean thinking culture. Show notes for this episode can be found over@gembapodcast.com just look for episode 233. Also be sure to check out our AME Conference page over@gembacademy.com ame where you can grab a coupon code that will save you 10% on the registration cost. You can also RSVP for our annual cocktail party, which is an incredibly good time. Again, that's gembacademy.com Ame okay, enough from me. Let's get to the show.

I'd like to start off this morning by saying Happy Friday to everyone on this beautiful day. And I would also like to thank SILC for giving me this opportunity to share with you all my learned journey at this year's Lean Summit. I'm not a seasoned speaker, you'll find that out real soon. I don't have a lot of PowerPoints. I speak from my heart, but it's humbling to be asked to join this elite group of Lean goers. And I see many familiar faces in this forum that I'm happy to see again. I see Walter and I also see you that I thought would retire a long time ago. You've told me how many times that you've retired and you have not yet. So it's nice to see you again too. I shared at the I got the opportunity to speak at the AME Convention last year and again it's not my forte to speak in large groups. However, my passion is around Lean Systems. All that they can do for you and and the people. Those are my two passions. So with those two, when I speak about special people, I'm really speaking about all of the people that I've had the opportunity to interact with with Lean, but most importantly the incredible New Balance associates that I am so privileged to work with and have over the last 35 years. And because of that I never seem to Be able to decline offers to speak. Even though I'm not seasoned, I am a coach and I am a leader. And I'm very fortunate to work for an Incredible company for 35 years. It's given me a lot of opportunities and the biggest is to work with the associates. And you'll hear a little bit more about that. This company has been, as Ann has said, has been committed to keeping the jobs here in the United States for many, many years. Jim and Ann Davis purchased New Balance in Maine in 1972. I'm sorry, in Boston. And then it moved to Maine in 1980. Because they are so committed to keep these jobs in the United States. They're also committed to their people. And these people have made their American dream come true. And that's to keep jobs here in the United States. I've been blessed to have the opportunity to work with over a thousand associates and the best shoemakers in the country. I would even say in the world. We are the only athletic manufacturing shoe in the United States. However, this title will be taken away from us very soon as jobs are coming back into the United States and our competitors are knocking on our doors. We have recently invested over $1.5 million to produce our soles here in Boston in our Boston facility in order to produce our very first 100% American made product. This product is for our military, where every component is produced right here on American soil. And we just received our first contract with the government where our men and women in the military will be wearing our shoes. For this reason alone. It's why we need to be relentless in our lean systems in order to stay ahead of the cutting edge. I'm going to start out with a little bit of history. I started, and it's not all about me, but I think that my journey is very important as to why I realized what was important and how people and lean work together. I started in 1983 as an accounting clerk. In 19 years I was in finance. In the late 90s, mid-90s to the late 90s, there were 33 shoe manufacturing companies that closed their doors. It was either to shut down their business because they didn't invest in it, or it was because they were moving their business overseas. It was very devastating. The shoe industry was very large in central Maine and Maine and New England as a whole. And it was a craft. And as these shoe businesses were leaving, they were taking that craft with them. And we now, the associates that have been working for the shoe industry for 40 years are now retiring. So our opportunity is to take their knowledge and to transfer it into our newer, not so seasoned associates. And it's a challenge, I will be very honest with you. But it's something that we have to protect here. We did. New Balance had many, many changes over the years. And if they had not continued to change, we wouldn't be here today. They invested in their business, but more importantly, they invested in their people and the development of their associates as well. As we went from sitting down at sewing machines to standing up, we went from piecework pay. Does everybody know what piecework pay was? When it was attached to how many shoes you made, was how much money you brought home at the end of the week. And when we did that, when we went to hourly pay, people told us that we would lose 15% in productivity. And we didn't. We gained 15%. And the reason that we gained was because Jim and Ann Davis said, we are going to make our associates our partners. They need to learn about the business. That's the part of the story that I want you to hear is that my role in that was to. I was in finance, was to teach every associate in Maine the business around finance, what was important, what were the metrics. So I had an opportunity to meet with every one of the associates. I also, after that was done, we went from the assembly line production to what we call cells where people worked in groups and they had their first steering committee where we had associates working with the leadership to understand the business, to, we call them, win teams, where we were making improvements and what they did and how it impacted the business. And I was asked to chair that very first steering committee. And it was an experience for me and it was an eye opener for me and it really changed my career. Because what happened was, is I went and sat every week with these great associates and we had great conversations about what they did, how it was important, how it moved metrics. But what I found out about six months into it, they finally said to me one day, you know what, Ray? It all makes sense. It really and truly makes sense. But what happens is that you go back in your office and we go up on the floor to work, and it isn't that way. And I really felt hopeless. And I felt that I couldn't help them in the position that I was in. So I will share this as I've shared with many people. So when I turned 40, most people go out and get tattoos in Harleys and I didn't. Sometimes I wonder if that was the wrong choice. But I chose to go into manufacturing Because I felt that those associates was why we came to work every day. And it was our job to make their jobs easier. So I did that. I think it was in 2001, I was accepted as a production manager, and then I went to the plant manager in the Norridge Walk facility. At that time, there was a tariff that was going to be lifted where it was going to, and don't quote me, but it was something around like $1.40 a pair. It was going to cost us on top of the labor that already was more expensive. Jim and Ann Davis has always, always, always said, we will be here. They have lobbied for years and years that even though domestic manufacturing does not, it's not relevant to their bottom line because of the labor. They're committed to it. And they do source shoes, but there is 25% of their productions that's made right here in the United States. We have five factories. So my last job or responsibility as an accountant was to understand, number one, how much was it going to impact our business and what could we possibly do. So in that transition, I learned that it was about, I think, like I said, between a buck 30 and a buck 40 a pair. And I went to Norridge Walk and started learning about lean. And that's when it all started for me. So this is the part of my journey that I wanted to tell you was the aha moment. That it's about the people and my passion for people and their pride and hard work, and decided that was the route that I needed to take. And I realized real quick that business success is about the people. So the history. And what we did was, like I said, In 2002, between 2000 and 2002, the tariffs for the imports were lifted. I did that scenario. And that's when we began our lean journey. So what we did was we started to read books together. We read Lean Thinking by James Womack and Daniel Jones. We read Learning to See by Mike Rother and John Shook. We learned about Lean through the Toyota Field Book, which is one of my favorites still by Jeffrey Leiker and David Meyer. Getting the right things done. We went to see Pascal Dennis. We also had a factory, wide lean 101. And what we did was we shared our learnings with every one of the associates in the Norwich Walk factory. And we told them, first and foremost is that nobody here is going to lose their jobs because of lean. And to this day, that was back in 2004. And to this day, nobody has lost their jobs because of lean. And you might imagine when you Say, hey, help us become more efficient and reduce heads, right? What does that mean to an associate? Do you think an associate's going to help you reduce the need for their job? Not unless you guarantee them that they will be doing something else and adding more value. So we did that. We painted the Norwich Walk factory four times, but nobody lost their job. In 2004, we began our transition from batch to flow and we started applying our learnings. And we did that by freeing up associates by the improvements that we made. We left on a July shutdown. We had done some upfront work where we had held a kaizen. We learned about Kaizen and we held a Kaizen event. And I remember this. This is when it was like, oh my goodness, this works. There was a laundry list of 75 items. It was a week long kaizen where we were going to take our. We had at that time five departments and they were working on different parts of our huge factory. And we were going to. When they left out for their July shutdown, we were going to make four value streams from cutting. So our departments look like this. We had a cutting department with about 250 cases of shoes and each case has 12 pair in it. So you can imagine it's about 3,000 pairs of shoes. And we had a pre fit, a computer stitch, a stitching and an assembly throughout. And they were all departments and we were going to bring them all into value streams when they were out on a two week shutdown. So when they came back from that two week shutdown, their lives had changed. But back to the kaizen. So the kaizen, there were 75 items that needed to be done from tooling to facilities changes to electricity, if you can only imagine. And every single one of those 75 items was accomplished. That's when I realized, I mean, we sat in meetings all day long and we never accomplish a thing, right? So for us to be able to have that structure and get all 75 things done was an eye opener to me and everybody else who was involved in it. So we started. Once we did that, we instantly went from the eight days that Ann spoke to. It was taking us eight days to make cut to finish shoes. It instantly took us down to eight hours. So I know Ann said two and I'll tell you how we got to the two. But that was the first cut, right? So that was a huge impact to our delivery to our customers. We also started making improvements just by having the value streams which allowed us to free up people. Because what we found out really quick was when you start adding things, you know, you got these lean tools and we wanted champions. When you start adding those to people who already have jobs, they're not very successful. So we realized in a hurry that we needed to free up some people to be able to champion these tools. And we did that. We had a champion for Kaizen, we had a champion for standard work. We had a champion for, for Kanban, we had a champion for A3 problem solving. It was pretty remarkable. And these people took and took some courses, they went to some events and they read books. So they became our champions. So we had then created this on site lean office and our business metrics started to improve and we then partnered with Toyota. And this is kind of a fast forward type. There was a lot, it sounds like it happened so quickly, it was a lot of work. But once we started getting the metrics, and I'm going to tell you what those metrics were. So our results was as we had throughput time reduced from eight days to eight hours, our reject rate reduced from 3.65% to 0.7. So those are our second quality shoes. We had almost 4% of our shoes that was second quality shoes. And by going to these value streams, it instantly went to 0.7 less than 1%. It was incredible. The manufacturing footprint went from 100,000 square feet down to 66,000 square feet. So what that did was that allowed us 44,000 square feet of more room to make more shoes. We also used half of our equipment, so we had the equipment to be able to put into that extra space so that we could make more shoes. Our pairs per person, which is a metric that we use of efficiency, increased by 25% and we reduced our inventory by $500,000. It was pretty remarkable. Since then, we are down now currently today at a 2% second quality rate. And when we did this in 2004, we were able to take 34 people that literally was moving work from here to here to back over here. And we were able to free them up and make an entire extra value stream. And we produced 250more cases a day with the same amount of people. It was pretty remarkable. Now I want to tell you what I've learned. So success comes from the application of these rules. So back in September and October of 1999, Professor Kent Bowen and Steven Spears wrote an article in the Harvard Business Review called the DNA of Toyota Production Systems. Has anybody read that? I encourage you to go online and look it up because this is, in my opinion, the bible of lean. When you accompany that with the people. You cannot lose, but it's pretty deep. So we also, once we got these metrics and we found that it was really impacting our business in a very positive manner and also delivering to our customers much quicker. We partnered with Toyota and it was my job to go to Kentucky and I was supposed to get ahold of Mr. Oba. I had never laid eyes on the guy before in my life, and my job was to just yell at him, this is what we've done, right? And yell out all these metrics so he'd know that we were serious. And I did. I don't know how I did it, but I did. And he and Jim Davis partnered, I believe it was in 2000, I think, six, where he came to New Balance and he met with Jim Davis and Jim told him that Jim wanted to be the shoes of the United States, as Toyota was the cars of the United States. And we had Mr. Oba and his son Hide would come and visit us. And again, when you work with Toyota, they don't tell you anything. They ask you a lot of questions, and that's how you learn, is through those questions. And that's what we did. So these are the four rules of the Toyota production system. Number one is how people work. All work shall be as to content, sequence, timing and outcome. How people will connect every customer, supplier connection must be direct and there must be an unambiguous yes or no way to send requests and receive responses. How the production line is constructed, the pathway for every product and service must be simple and direct. And how to improve is any improvement must be made in accordance with a scientific method under the guidance of a teacher at the lowest possible level of the organization, which is the associates. Right. If you want to know what is wrong with your processes, you need to go ask your associates, not your engineers. I always look at it, I've said once I've had the experience with this, is that I don't have 300 associates, I have 300 engineers, because they know we've gone from an environment where production, production, production to focus on your process. If you take care of your process, your process will take care of you. Your people will take care of your process if your process is good to them. They come to work here every day, no matter what business you're from. There's not one associate that does not get up in the morning to be successful. And many, many times they go home at night not feeling successful, and it's not their fault. Does that make sense to everybody? It does. And this is where my passion comes and this is what I'm going to start talking about as far as the people. So time is critical, whether in business getting product to our customers or personally getting things we have to do done in the most efficient time to allow us to do the things that we want to do is important to us. Lean tools can be used anywhere. That is the one thing that I have come out of my Lean experience and my Lean journeys with is that it does not matter if it's that chair that broke, your favorite chair, maybe you could have put a little total preventative maintenance on that, right? Maybe it's your 5s in your drawer. Maybe it's that you change the. You have a plan with your preventive maintenance in your home when you change your smoke alarm batteries every year, right? It works for everything. It might be value stream mapping the processes to get your driver's license, which I have to go do when I leave here in Augusta. But to find out how long does it take you to get your driver's license and really what is the value and how long should it take? Or it's a shoe manufacturing where you're trying to improve how long your drying time is for your adhesives, it can be Kanban. Maybe you wonder why you have three boxes of cereal of the same brand in your cupboard or why you might run out of supplies every day. Maybe you need to put some Kanban going on. Every single tool, whether it's a three problem solving, value stream mapping, standard work, it works for any problem or improvement that you might come across personally or in your business. But TPS is, and I said Toyota production systems is what we use. And the reason that I love Toyota, there's a lot of Lean out there. There is, but the thing about Toyota production systems, it's about people. And they will tell you that over and over and over again. And I remember saying back in 2006, oh, I love these associates, I just love them and I genuinely did. But as you get more and more knowledgeable with Lean and you get more and more experienced with Lean and you start thinking about respect every few years, when you say, but I really love those people, it means more and more you have to respect your people. And I'm going to talk a lot about that because not just the Lean tools, the other most passionate thing that I have in my being is about the people that I work with. There has to be a balance between business and associates. And you need to know that there is a balance. You have to have Passion for your people and their successes. Some of their successes may be that they were wrong about something. But you know what? They know more about it now than they did before because they were looking at it factually and not emotionally. You have to develop your associates, you have to invest in them, you have to teach them how to think about how they're doing their work. People do not just go to work and think about why. I wonder why I'm doing this. They do what they're told to do, right? And we're coming from generations of production driven businesses to one that says if you take care of your processes and you give them the right processes and you get things delivered to them, that production's going to come and it's going to come with good quality and good safety as well. You need to communicate. And when you think that you can't communicate anymore, you need to pick it up and you need to communicate over and over and over again. Associates need to know the who, the what, the why and the when. Otherwise it's left open for them to make. They jump to conclusions, right? Because they don't know if they know the who, what, why, where and when. They won't jump to conclusions. They may not always agree with you or like what you're asking them to do, but at least they know and that's respect. You can never over communicate. You need to ensure associates are part of the solutions and the improvements. To me, it is very disrespectful to go to a line and ask a supervisor or a team leader, hey, what's going on over there with this associate? How disrespectful is that to the associate? Why don't you go and ask the associate what is going on over there? They're the ones that's going to tell you and they're going to know more about it than the team leader or the supervisor or even the engineer. We need to be factual and not emotional. We're human beings and we naturally want to muck things up, right? It's very hard, and I'm going to say this over and over and over again, lean is hard. The simplicity of it kills us. It is so simple. Here's your process. Our jobs as engineers and developers is to give our associates processes that work. If they just follow the process, the result will be this. But if we're not following the process, then we jump to the conclusion that it's the associate, right? So when you follow processes, it takes the who out of it and it focuses on the what. I learned that Day one Respect. Ty Bennett will tell you about commitment. We want commitment from all of our associates. But what we have to realize is that associates are not committed to jobs or businesses or work. They're committed to people and they're committed to leaders. He'll tell you that you must love your associates and that this comes from knowing them and their stories. And I completely agree with that. Going back to the business and the personal balance, there is a balance. We have human beings that work for our business, right. And we have a business where we have to meet metrics. They need to know about the business, but we need to know about our associates. We need to know enough about them. When we have an associate that maybe have a loved one that is sick or that is having financial hard times or maybe having a son that's graduating from high school, right. We need to know them to that level. They need to know our business as to what's going well and what's not and, and how they can help us improve it. Everyone has a story and we need to know what their story is. We need to know them that well. When respect is demonstrated, it builds relationships. When you have an associate that is completely dedicated to you as a leader, they will do anything for you within reason. And I wouldn't ask anybody to do anything that's not within reason. We don't put associates in the wrong places. This is something that I learned too. We need to know them well enough to know what their strengths are. Many, many times we put associates in the wrong positions because they may have done something good. Maybe they're a great. In my business we have toe lasters or side lassers that run equipment. Maybe they're great technically, but we put them into leadership roles when they don't have a lot of self confidence and we set them up for failure. And what breaks my heart, and this has happened many times that at the end of the day they are the ones that are going home feeling inadequate and unsuccessful. And it's our fault as leaders. And we need to be that kind of a leader where we know that we are giving them, we are developing them and we're giving them the tools that they need before they go into a position that to me is respect. We have to engage them. And I always use this example in engineering, in Lean, you have the watch, right? You're always timing because every second counts. Give them the watch. You demonstrate to them, hey, time me while I'm doing this and then timey doing that. Let them get the experience of saying, wow, that just saved 10 seconds. They may not be doing it perfect, but they're probably doing it the same way. So it really doesn't matter, does it? They have to be that involved. They have to be part of the solution. We need to celebrate and recognize our associates, and we have to involve them regardless of the outcome. As I said, making mistakes in a lean world are the most important parts. Sometimes that's more important than being successful in making improvements. And you have to build an environment where making mistakes is okay. You're asking people to air their dirty laundry and say, hey, I made a mistake right here. As human beings, is that in our nature to do that? No, we don't want to. We try to cover them up. In a lean environment, you have to be completely transparent, and your associates need to feel absolutely comfortable. That says, this is not working well, and I just made this mistake, and the reason that I made it is because of this, they'll help you fix it. But if they feel that they're going to be shunned or they're going to be embarrassed because they just know that this is the answer, but then they factually use their tools and they find out that it didn't have anything to do with it at all, we have to celebrate that, and they'll celebrate that if the environment is correct. Respect earns respect, and respect earns leads to results. The other thing that I've learned on my journey is that being a change agent is hard, hard work. You have to create a lean culture to sustain improvements. And it is hard. It seems easy, but it's not. As I said before, the simplicity of it kills us. The environment, as I said, must allow us to make mistakes. We need to continue to communicate. Change the way we think about how we do work. That's what we do. No one could lose their job. For that matter. Like I said before, we painted the factory four times. But that was to prove them that we are going to make improvements. We are going to free up positions. That allows you to learn something different, and it helps develop us. What I found in my Lean journey is that anybody heard the expression drinking the lean Kool Aid. Well, you gotta get them to drink the Kool Aid. And it's not easy. What I found is that about 25% of the associates in Maine for New Balance, they think that way anyway. So it's very logical. Many times you hear, boy, lean is just common sense, right? Well, we don't teach common sense anymore. Unfortunately, we don't. But 25% of the people says, well, that makes sense. 75% of the people jump on the fence and it's your job as a change agent to pull them over. And the way you're going to pull them over is to show them not to tell them. And they are going to learn more and they're going to trust that 25% that get it than they are a manager. So you want to invest in that 25% that think that way anyways, because they're going to help you lead the other 75% to drink the Kool Aid. There's 25% that you really gotta pull up onto the fence. And that's what's hard. But here's what I found out. It's been 14 years now in lean and 19 years in manufacturing is that there's very, very few that cannot work in a lean environment. But there are, I think that we've had three associates that just could not do it and was able to say, this is not for me. But when you do the math, that's a very small percentage and I would rather that they admit it and we part ways in a good way for them to stay there. Because all it takes, I always talk about the ship and everybody has got to be rowing the same way. And if you have one associate that's not, it's throwing it off kilter. So we've had great successes at New Balance in regards to getting engaged associates. And I will tell you right now, I worked in the Nordwaq facility for many, many years and I'm now in Skowhegan. And Skowhegan was managed with a completely different manager. And it was all about the numbers. And people were recognized for saving money and putting that elastic around that doodad on that lasting machine rather than buying the right part. So I'm being a change agent all over again to a culture that was brought up that drive the numbers and do it with as little cost as you possibly can. So I'm saying I was 40 at one time. I had a lot of energy. I really wondered if I had it in me to do it again, because it is hard work. But you know what? Just being with the people and when you see them getting it and using their tools, I used to say I'd do this for another 20 years. Now I say six. It is what it is. So again, drinking that Kool Aid has been really important. And peer to peer, I found out was even more important. And please, please don't just tell your associates you need to do this. Please show them, please give them the watch the tools that we've implemented is standard work. Success balance charts, a 3 kanban and poky oak. Following standard work takes the who out of it. As I had said before, I really struggle when I hear people say that it's the associate. They're just not doing what they're supposed to do. When I hear that, the alarms go off and I personally have to go there with that person. And 99.99% of the time, I can prove to them that it is not the associate. It's either the machine, the process, the quality, the material, something. But it's very, very rarely the associate. I've learned in lean works, it brings stability and successes that we have to show, not tell. So in closing, what I've just shared is my history, our lean journey, being a change agent, and how difficult it is and how important it is that we're developing an empowered workforce. You have to invest in your people. I also want to just share a little that is not in here, but I do want to share with you that I've learned over the past four years that leadership has everything to do with it. I came from 14 years working with somebody that was all about the people. Many of you have met Jeff Williams, and we've had a major shift in our senior leadership, vice presidents, directors, in our corporate office. And I found it in a hurry that if you do not have lean coming down from the top, you start chasing the wrong things and you're driven to chase metrics that aren't important. We had, back in 1991, we had a style which was our heritage style. It was the991. And I remember at that time, we had 385,000 pairs of shoes sitting in a warehouse. Our delivery rate was. It was 86%. We applied our lean principles and that 86% went to 99.8% of deliver. And we reduced that 386,000 pairs to 35,000 pairs. It was so big that Jim Davis had his picture on the back of Time magazine and Sports Illustrated with an advertisement. Since then, in the last four years, where we have had two major changes in our senior leadership, I found that it's been a real struggle to get people focused, not on absorption. I don't know how many of you use absorption for a metric, but it is not the right metric. It tends to drive us to make bad decisions. And it's very enlightening to say that we have since then had our second round of senior leadership and lean manufacturing. Not just lean manufacturing, but our Lean production system is coming from our executive vice president of domestic of our domestic chain and it has opened doors where we now is not just about manufacturing. It is now in our supply chain and we have got champions in all facilities and we have one Lean champion that we've never had before. So it's very, very exciting. So please remember, Lean has got to come from the top and it's all about servant leadership. It's got to come and be driven down from the top. But we all work for those associates. Thank you very much for letting me share my story and my journey. And please know that I've been on the journey for 14 years and it never, ever stops. It's a relentless pursuit of perfection and everybody has to have that in their mind. Thank you.

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