GA 589 | Implementing Lean at Small to Mid-Sized Manufacturers with Justin Goethe

From the bottom up, you can implement some tools, you can implement some of the pieces of Lean, but for it to become a culture, defining part of who you are as an organization that has to be driven from the top. So I like to, whenever possible, start with the CEO and the CFO to get them on board and explain the vision and what we're trying to do. And if you can get them bought in, then the rest of the team will follow.

Today I'm excited to welcome Justin Gothy to the show. Now, as you'll hear, Justin has a really deep, strong background with Lean and just continues improvement in general. And today we focus in on the work that he does with small to mid size manufacturing companies. And we really sort of just hone in on that, on that particular niche and talk about why implementing Lean is so important. I mean, it's important for everybody.

But.

But what we talk about, like for these small and mid sized companies who many times, for whatever reason don't have any sort of Lean initiative going on, like why that' important to get it going. And then we sort of talk about what the struggles are and what their unique challenges are compared to say, some big giant company. And then how he goes about kind of sort of countering those issues. And then towards the end we get into sort of just a talk on consulting and what the challenges can be with more of like a traditional consulting approach and what we might be able to do to make that a little bit better. So it was a really fun conversation. Again, Justin's got a really strong, deep, lean background. So it was a good episode. So show notes can be found over@gembapodcast.com just look for episode 589. Again, gembapodcast.com, look for episode 589. Okay, enough for me. Let's get to the show. Justin, welcome to the show. How's it going?

Great, great. Really appreciate you having me, Ron. Thanks.

Yeah, my pleasure. So where are you calling in from?

I am in Somerville, South Carolina. So I'm about 30 minutes west of Charleston.

Okay.

All right.

You've been there a long time.

I grew up here. Yeah. Actually. So the, the family, I'm a geek when it comes to family history. They came over in like 1780.

Oh, my word.

Came in through Beaufort and you know, we made it about, I don't know, 30, 40 miles north and that's where we stopped. Wow. So, yeah, we've been here a long time.

That's amazing. That's amazing. That's a long time, man.

Yeah, yeah. Yeah, it's. It's funny, you know, the. The famous Goethe, if you're German and, you know, my German accent's awful, but he wrote Faust. The Faustian bargain. Anyway, he was actually a cousin, so my grandfather got kicked out of Germany for some reason, we don't know. But he came over here, and we've been here ever since.

Okay. Love it. Love it. All right, well, good stuff. So. So, Justin, you know, like, as we get started in these PODC podcast, we'd like to begin with our guest sharing a quote. So what do you got?

Yeah, so I got one. You know, knowing is not enough. We must apply. Willing is not enough. We must do Johan Wolfgang von Goethe, the famous one.

What's that mean to you?

You know, let's not talk about it. Let's be about it. You know, I get really, really frustrated when we're working in a team and we get into this analysis paralysis phase where, you know, it's, well, what if this happens? Well, what if that happens? Like, well, let's just try something. Let's do something.

Yeah.

Then if it doesn't work out the way we intend, we'll drop back and punt. You know, we'll. We'll go a different direction. But. But doing nothing is also a decision, and it's usually not a great one. So let's. Let's. Let's go. Let's move in a direction, and then we'll adjust as we. As we see fit.

I wonder what. What it is because we've all done it right. We've all been hesitant to sort of take action for whatever reason. I wonder if it's just some primal kind of safety mechanism in us or something. Like, what do you think? What is that?

You know, I really kind of think it's more. It stems from leadership. You know, I've worked. So I worked for about 15 years in the automotive component space, and for 10 of those years, I worked for the Robert Bosch plant here in Charleston. And we had awesome leaders. I mean, they were really just wonderful. I consider myself very fortunate to have worked there when I did under the folks that were there. But one of the things that they were always really preaching is, hey, you know, what's your idea? What do you want to do? What's the vision? And then we all talked about it, and we came up with something that we thought worked, and then we moved forward with it. And it wasn't this. This. This environment of, oh, you did that wrong, or that didn't work, or why did you do it that way? It was, you know, fail fast and then adjust. Right. I mean, they really kind of lived out that ethos of we want to fail fast and then we want to find a better way to do it, so let's get to it. And so I think without that environment, folks are second guessing. So yeah, they don't want to be the guy that's going to get held responsible if things don't go right. And they can only be freed up to really utilize that creative potential and really drive those improvements when they get that freedom from their leadership or from the top.

Gotcha. Gotcha. Good. All right, well, you've already hinted at a little bit of it, but tell us a little bit about your background and, and how you've got involved in all this continuous improvement stuff and then what you're up to these days.

Yeah, so like I said, I worked in the automotive space for about 15 years really as an industrial engineer responsible for warehouse operations, so implementing kanban pull systems, standardized material delivery routes, rfid. And part of that responsibility, I was also responsible for third party logistics providers. So they were the external folks that were responsible for delivering to us on some standardized cadence. And the one who was, who we were tied most closely to, they were delivering every hour. And you know, the automotive industry is very, it's tough, right? I mean, those lines have to run. They can't go down. And when they do go down, the expectation is you stop whatever you're doing and you go out on that shop floor and you get it back up and running. So I was responsible for the 3pls and I was always getting phone calls at 3 in the morning, hey, the line's down because we're waiting on parts. So I'd have to get up, go into the plant and figure out what's going on and get it going. And eventually we, we kind of made the decision of, hey guys, you're struggling because you really don't have good, good standards, right. You know, you're just trying to get parts out, but you don't really don't have a process defined by which you're going to do that. So let us help you. Let's, we'll come on site, we'll help you guys get organized, we'll help you write your standards, will train your associates, and then, you know, we'll do some layered process audits to make sure that you guys are maintaining. And that worked, right? That calmed the waters that, that quelch the fires. And it kind of occurred to me that, you know, there must be a need for a 3 PL out there that really understands continuous improvement and working according to standards. So I started Allied Logistics really to be a 3 PL, and I put together a pitch deck and I started trying to sell it to people. And by that time in my career I had a big enough network where people that knew me would take my phone call and they would humor me. I didn't have any money, I never ran a 3 PL before, so nobody really took me seriously. But fortunately I was too dumb to know that. So I just kept trying to sell it. And I eventually got my pitch deck in front of somebody who looked at it and said, you know, I'm a little confused. Are you a consultant or a 3 PL? And I said, well, that's kind of my shtick. I'm both. You know, I've done the industrial engineering thing and I've also been the warehouse manager. Right, I understand both, so that's what you get. And he said, well, I don't need a 3PL, but I'd love to talk to you if you're interested in doing consulting. So I said sure. So we kind of pivoted and started doing warehouse operations consulting. And that worked out great. It got us off the ground. It got me, it got me working. But I quickly realized that, or at least for me now, you know, this may not be true for everyone, but for me there wasn't enough, I didn't have a big enough network and there wasn't enough demand for warehouse specific projects. I had to broaden my scope if I was going to stay in business. So we've kind of branched out to a more traditional Lean consulting firm. And we're currently working on rolling out our fractional CI manager program, which is, which is really a coaching program meant to help small to mid size manufacturers start their lean journey and get going on the road towards continuous improvement. Because what we find is a lot of these guys, the reason they're they exist is because they make something really well, right? And they make a product that people like, but they get to this point in their growth journey where demand starts bumping up against capacity and they don't know how to scale it because. Because to date all they've been able to do is say that's, that needs to ship by Friday, I don't care what you do, ship it by Friday. And they work hard and they get it done, but that's not scalable. So you know, how do we implement standardized processes? How do we teach you how to, how to do this in a way that is both Scalable while still maintaining respect for your people and not, not killing everybody.

Yeah, it's interesting. So it sounds like you're really focused in on small and mid sized manufacturers. Is that accurate?

Yeah, I mean that's where I see a lot of the, the, the opportunities. These folks, they know how to make their product obviously and obviously people like it. They just, they don't know how to make it at scale without burning people out.

Yeah, well what's interesting about that is if you think about the big, you know, GM or 4, I mean they're just monsters, right? And so they've got armies and armies of folks who can, you know, make continuous improvement of thing. I mean they still got to work at. It's not easy for. But yeah, but it's been my experience sometimes with these small to mid sized folks they may not have, you know, anybody with any experience in that area or you know, or they've got to hire it in or bring in a consultant in and get going. So it is interesting to seeing like that gap in these small to mid sized folks is. That's kind of what you're seeing as well.

100 what I see. So most of my clients, they don't have industrial engineers on the payroll, right. They have, they have shop floor managers, they have, you know, executive leadership but they don't have their light in the engineering resources. They may have development engineers but not really process engineers. So you know, the first thing that we try to get them, or at least I try to get them to understand is, you know, in my experience it's good to have somebody, the concept and execution pieces separated, right? Where I have somebody responsible for developing the concept, the process and then another responsible for developing the execution. Because to me where, what I find is it, it leads to some good friction, right? Where you've got the process folks trying to develop a process that works, is, is efficient and maintains some budgetary constraints and then you've got the operations folks that are charged with actually trying to do it and giving that feedback to say, hey guys, I understand what you're trying to do here but it doesn't work like this. We need to come out here and let's, let's focus on this. So that good push and pull between those parties, you know, I think is what really drives improvement and drives innovation. So you know, I try to get folks to see, hey, you know, we need to dedicate some resources. If you don't have the heads, maybe we dedicate a portion of somebody's time and let us coach them Let us teach them how to write standards, let us teach them how to validate that standard. You know, how to use these Lean tools like PFEP or, or standardized work to really get these improvements wedged in place so that we can start looking ahead to the next, to the next thing. Right. And really kind of drive that ball.

So in these smaller to midsize companies, if you had your magic wand and, or you could sort of pluck out the folks that you would want to pour into, assuming they have nothing. Right. As far as Lean or anything like that, is it, is it like who would you target? Is it the management team first or.

Okay, I mean to me, and, and maybe you have a different opinion here, but to me Lean is a top down driven.

Yeah, for sure.

You can do from the bottom up. You could do some, you can implement some tools, you can implement some, some of the pieces of Lean, but for it to become a culture defining part of who you are as an organization.

Yeah.

Be driven from the top. So, so I like to, whenever possible start with the CEO and the CFO to get them on board and to explain the vision and what we're trying to do. And if you can get them bought in, then the rest of the team will follow. Right. Because people want to do a good job. Nobody wants to go to work every day and fail.

Right.

Don't necessarily know how to do that. They don't really have the tools and the training to be able to define what good looks like. They've never seen good. Right. All they've ever seen is this firefighting.

Yeah, I remember. I'm curious to hear your, your thoughts on this. Like I, I remember back in my industry days I worked in, you know, many different plants and there was several times, and I don't mean to pick on my financial friends, but there several times where I, I interacted with financial controllers, God bless them, and I swear the fact that we actually had to manufacture and produce something was annoying to them. You know, it was like, to them it was just like, duh, make it, you know, but I'm like, yeah, we're trying.

But.

So like, I don't know if you've ever experienced that again. I know, I love my controller friends and all that, you know, and they mean well because you know, they're just, they got what they got to do is a very difficult job. But like what, what do we do to help sometimes with, I don't know, get that whole financial community to really embrace and understand, like hey, this is tough. What we're doing out here, you know, is that, I don't know, has that been ever your experience or if so like what can we do?

You know. So the first thing that we do with this fractional CI manager program is we do what's called a, you know, we call it a system CIP workshop and that's from automotive days. But, but the goal of the workshop is really to define at a 30,000 foot view where the organization is trying to go and you know, for manufacturing process, if that's what the focus is. Now you can apply this to the administrative piece too, obviously. But on the manufacturing side, we start with doing a value stream map. Value stream design workshop. That's the system CIP portion. So we spend the first day on the shop floor, you know, mapping out the existing processes. And what I tell folks is this is intended for the value stream team. Right. Everybody that supports the value stream, you know, it would be great if we had a representative for that and that, you know, that's not just the manufacturing folks, that's the HR people, that's the purchasing folks, that's the, the finance folks. I mean it's a tough sell at first to, to get them to buy into the idea of I'm gonna go pull my controller who knows nothing about manufacturing out of his office and stick him with you for a full day. But generally by, you know, we do this in nine on a 90 day cadence. Right. So we do this workshop every 90 days. Right. And we try to identify projects that get completed in 90 day cadence as well. So generally the first time I don't get them. But by the second or third time, leadership starting to see, oh yeah, well I do understand how they, how they overlap. Right. How their function in the office affects these guys out here on the shop floor. Right. For example, the, the time allotted per unit. Right. The hours earned. Right. Is really important from a financial perspective. Right. That's how they're quoting business. That's how they're ensuring profitability. But unless the, the finance guys understand what actually goes into making the widget. Yeah, right. They, they don't really get it. Right. The conversations aren't as productive. So, but by the, hopefully the second or third time we've done this, this cadence, leadership has seen that and they're like, you know what? It is worth it. Listen, you're going to take a couple days out of the, out of your, out of your week and we're going to spend it out here on the shop floor so that you can understand how all this fits together.

Right? Well, then obviously there's different, I mean, I'm no accounting expert, but there's, there's different types of accounting. Right. That can lead to bad behaviors out on the shop floor. Yeah, yeah. So that's why.

Yeah.

It's so important to get everybody sort of on the same page and singing from the same hymnal. So, you know, so, so I'm wondering, I don't know, is it been your experience that it's, it's tough or that some of these mid market folks struggle with lean to begin with? Like I got talk about that a little bit.

Well, they do. I mean, what I find with most small to mid sized manufacturers is, you know, at first they're like, hey, we, we want to do continuous improvement. We want to define standards and we, we want to do all these great things that you're talking about, Justin, but the first time that there's a fire out on the shop floor, let's throw all that out and let's go back to what's got us here. Right. Let's get it all done and, and trying to get them to understand. All right, guys, I understand, you know, you've got an urgent customer request, but before we throw the baby out with the bath water, let's take a step back and let's try to use our standardized processes to make this thing work. Or if the standard is insufficient in this case, let's understand why so that we can modify it so that we're not caught in the same, the same place in two weeks. Right? Yeah, let's, let's really try to slow down so that we can go fast.

Now, I know, I don't know if you consider yourself a consultant, so I'll ask a question carefully here, but like, what role do you think, you know, like more of a traditional consultant can play in this, this whole lean transformation area? And you know, how's it going in these situations for these folks?

You know, my experience is traditional consulting kind of breaks down into one of two avenues. Right. The first avenue is the assessment, right? So that's where companies bring in a consulting firm and they'll pay them a lot of money to come on site, review their processes and say, hey, good news, we've found all these areas of potential savings and if you'll just implement these projects, you can realize $2 million in cost savings.

You're welcome.

See you later. Right. Or the second avenue is where you contract with a consultant and they'll come and actually do the process or do the project for you. Hey, we need a pfep. So can you come and put together a pfep, a plan for every part for us? Sure. Right. And they come on site and they do this. You know, they put together the tool and then in both cases they leave and the customer is left in a situation where they're trying to either implement a list of projects that the consultant left them with or maintain a process that they really didn't have any part designing or creating. And neither one of those is great. There was some research done by McKinsey and some of the big consulting firms that found that in as little as six months, 30 to 40% of all consultant led projects are dead.

Right.

No longer. They're no longer functioning.

And that's the consulting company doing it, saying that.

Right?

Yeah.

In two years, 80 are dead. Right. So to me, it's, it's more important that we coach our clients on how to do it themselves. You know, teach a man to fish.

Yeah.

I want you. I want to help build a culture with our clients so that they're able to do this on their own and carry this forward into the future. Because, let's be honest, nobody can pay a third party indefinitely. Right. I mean, there's an end date on my job at some point. I want to make sure that when that end date comes, I've left them in a position where they can continue to grow and improve and get better so that their future is secured and that their people, you know, feel valued and are working at a company where they. They're making a difference.

Yeah. I'm wondering, as you look back on sort of like your career, is there anything that you're, I don't know, especially proud of that you've been able to be a part of or, you know, some work that really sort of just lit your heart up.

Yeah. I mean, you know, one of my biggest clients is, is here in the Charleston area. And when I first started with them back in 2021, you know, that was during the, the COVID you know.

Yeah.

Saga. And. But where we were at at that point was the economy was booming. POS just fell out of the sky every morning. Right. I mean, they had a backlog that was a mile long. They couldn't build enough, and they didn't really understand why they weren't building enough. They, at the time, they thought it was a, you know, it was an assembly problem. Right. They. They were constantly working on their, their, their assembly processes. And we were able to work with them and show them that it's not that you can't get parts from the warehouse to the shop floor, right? Your guys are standing around all day waiting on components to show up. You know, we need to put in some, some standardized processes that actually work for this new model that you're, that you're, you're using. So we did that. We, we implemented a pfep. We implemented super common pull systems and supermarkets in the warehouse and they were able to, to double their output within let's say eight months because we, we unleashed the capacity that they always had. So being able to get them to see that, you know, doing these deep dives and, and digging into the actual what's going on on the shop floor, going to the Gimba, you know, really is valuable. It really, it really helps point you in the right direction. And now, you know, we're in the quarterly system CIP cadence. Right. Every 90 days we're doing these, these value stream mapping workshops and we're focused on driving these projects every 90 days. And if you look back, especially in the warehouse where they really bought in, if you look back over the last four years, I mean it's, it's a complete transformation. I mean it's, it's really night and day. So. So yeah, I'd say I'm really, really proud of that also. You know, some of the things that we were able to do before I started Allied when I was just working in the automotive space, you know, going from paper based Kanbans and, and you know, paper based route standards to RFID and autonomous guided vehicles and a complete digital transformation really built on the back of really good standards that we already had. I would say, yeah, definitely, really proud of that. And, and the folks that I was able to work with all along the way, I mean it's been, that's probably been the best part is being able to help, help other people implement all these great, these great projects that they get to take credit for and they get to go back to their leadership team and say, hey, I mean look at what we did, man, this is great. Hopefully put them in a position to where they could continue to advance in their careers.

So there's somebody listening right now who might be in a small mid sized sort of company and maybe they, they haven't really got much traction going yet with their Lean or Six Sigma sort of initiatives. So short of calling you up and bringing you in, what advice do you have for that person listening right now who might be like, gosh, I just, I want to get it going, but I just, I don't know where to start. Like what advice do you have that for that? Folks?

The first thing is you got to get everybody in the same boat, right? You got to define the, the direction of where we're going. You gotta, you gotta define that vision. And if you're in the middle of the management structure, that's a little bit more difficult, right? Maybe, maybe executive leadership already has it. If not, you know, I would try to meet with my, my superiors to understand where are we trying to go, what is the market doing right now, what are we trying to do with the business? Are we looking to take on new products? Right. And what's the vision? Or are we trying, you know, I would like, my vision would be we're going to implement standardized processes, right? We're going to implement, you know, this lean methodology of continuous improvement. But what's the overall vision from the company? And I think once you can understand that, then it's trying to figure out how do we get all the resources in the boat rowing in the same direction. And I think the only way to do that. I know a lot of people get gun shy when I start talking meetings. Like when you say meeting, people kind of treat that as a dirty word. But I do think it's important that to meet with these people and to get all the stakeholders into a room and to align on goals and expectations and then to put in that structure of weekly follow ups of hey, hey guys, we all, we all met, we all committed that this is where we're going and we're going to meet every week to make, to track our progress, to make sure that we're still moving towards that goal. You know, I really don't see how you can do it otherwise. I know people have a lot of meetings already on their calendar, but, but without that accountability structure, you know, it just seems to fall by the wayside and the next fire comes up and nobody remembers they committed to two weeks ago.

I'm wondering, you mentioned earlier several times, plan for every part and Kanban and different things like that reminds me of, I remember back in my industry days, I was a big Lean Enterprise Institute junkie with all their workbooks. The green one, Making materials flow. And what was the red one? Creating continuous flow. I think.

You mean this thing to see. There, there it is.

Yeah, that's the one, man. Yeah, that's fantastic. Those guys have done some fantastic work over the years. How many people. That's it. Learning to see. That was the original one, right? Yeah, that's the one.

Yeah.

So talk a little bit about sort of this High level. We don't get a big detail. But that whole idea of a plan for every par and sort of like in the, and the role and why that's so important for sort of like a lean logistics approach?

Yeah. You know, so I've had several clients here recently. We start talking about a PFEP and you know, comes up as a project that we put on the roadmap. We're going to work on this and then they start working on it. And you know, I met with one the other day and the PFEP must have had 100 columns of all the data points they were trying to define for all of their components. And you know, I tell people, I'm like, look, before we start with a plan for every part, one of the most important things we needed to, to do is decide. It's a plan for what, Right. What are we trying to do with these parts? Is it a plan for how we're going to order and, and manage our inventory levels? Is it a plan for how we're going to get parts from the warehouse to the assembly line? Right. What's the plan for? Once we define that, then we can figure out what, in what information we need to accomplish that goal. Right. So if it's a plan to get parts from the warehouse to the assembly line, well, we need to know the Kanban quantity. Right. How are we going to move it? We need to know tote size, what size total we're going to move it in. Are we taking it in supplier, packaging? We need to know the max pull speed of that line. How fast are they going to consume these parts? That goes into our calculation for how, how much material we need to keep on the line, setting that minute in the max. But really, once you define what you're trying to plan for, you know, it all starts making sense of, of what information you need. And, and I hear this response a lot. They're like, well, we've already got an ERP system that has all that information. Like, yeah, I've never seen an ERP system that's not just a huge, big black box. Right. It's not. You're right. It has all that data in it. But being able to pull it all and look at it and actually use it to drive improvements. I've never seen one that does that. Well, right. I mean, you know, I think it's, you know, having that. And another bad word, having that Excel sheet that just has all your parts and all of the pertinent information for, for what you're trying to Accomplish. I just think having that single source of truth is, is much better because I could filter on, you know, in the case of pfep for moving material to the assembly line, I could filter on delivery location and I could find all the part numbers that I'm delivering to this particular rack. Right. Or I can filter on tote size and I can figure out all the part numbers that use this totes and how many are in each supermarket. So I can calculate my total pool. Right. I mean, there's so much that you can do when you've got a really good pfep. You know, for example, I was helping one client define a PFP for how they were going to manage their inventory. Right. So we, we did download a lot of information out of their ERP system, a lot of their planning parameters, and we were looking at it. I was like, hey, for this one part, your safety stock is two years worth of inventory. I mean, so that's the minimum. Like it's. Your ERP system's always going to try to keep you there, you know, Is that, is that right? I'm not saying it's not right. Maybe, maybe it is. Maybe, you know, you get such a deal ordering it that quantity that it makes sense. You know, I, I'm not, I don't want to. I'm not here to tell you. I'm just saying, yeah, me, it looks a little weird. You know, maybe, maybe we need to pick this up or you know, and look at it. So, you know, it, it allows you to, to, to see things.

Yeah.

That you wouldn't see just in an ERP system.

Yeah, yeah. Learning to see.

Right. Right. You know, and that's, you know, when I, when I think about what my job is, you know, I think my job is to teach you how to see. Right. To teach you how to standardize and to use those standards to solve the problem. Problem that you're, you're initially having. And then how do we continuously improve? How do we get into that Kaizen mindset where we're continuously trying to drive forward? If I can get you to do those four things and you got made, you don't need me anymore.

Yeah. Fantastic. Good stuff, man. Well, hey, man, this has been a lot of fun, Justin. I appreciate you coming on. If folks wanted to connect with you personally, what would be the best way?

Yeah, LinkedIn. LinkedIn's great. You know, you can reach out to our website, www.Ally-Law.com, but LinkedIn is probably the best way to get a hold of me.

Okay. Yeah. And we'll make sure we get that all set up in the show notes here. So everybody to scroll down and go connect with Justin. And thank you for coming on the show.

All right. Thanks so much for having me. Really appreciate it.

All right. Appreciate you, man. Take care.

Take care. See ya.

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