Lean manufacturing is most often thought of as a solution for the big guys.

Yet in today's competitive landscape, the problems faced by smaller manufacturers mirror those faced by global giants. Likewise, those small companies can reap the same benefits from lean techniques—improved quality, removing steps from the process, and reducing inventory and work-in-process—just like the global giants.

Take UPCO, Inc., a Claremore, Okla., manufacturer of steel sucker rods used in the oil drilling industry. The company has sales of just $20 million a year. Yet, it competes against much larger companies.

To better position itself, the company redesigned its materials handling and informa-tion technology processes to implement lean manufacturing. Central to that transition is a new ERP system designed to support a demand-driven manufacturing environment (INFOR, 678-319-8000).

With a manufacturing system in place, UPCO automated some manual materials handling processes and even outsourced the production of some components to a nearby fabrication shop to streamline processes.

Bill Ridenour, UPCO president

"In the year since we went lean, our sales are up by 35%, our inventory is down by 28%, and we are more productive than ever," says Ridenour.

For UPCO, necessity truly was the mother of transformation.

Six years ago, when Ridenour took the company reins, UPCO competed on price at the commodity end of the market. As UPCO struggled to compete with foreign producers selling at ever-cheaper prices, quality suffered and its past-due orders grew. Ridenour realized something had to change.

"I wanted to go from the cheap and dirty end of the business to the high-quality, high-margin end of the business," says Ridenour. "We had all the equipment to make a premium product. So, it was a matter of repositioning the company."

That meant transitioning from a good company to a great company. If that sounds like the title of a management book, it should. Ridenour developed his roadmap for remaking UPCO from Jim Collins' book of the same title.

The first step was to change UPCO's culture, including a heightened emphasis on quality and customer service.

The next step was to change processes and technology to meet those goals. That included the implementation of a new manufacturing system.

"We had been using an ERP (enterprise resource planning) system all along," says Ridenour. "But it wasn't flexible enough to support a high-velocity manufacturing operation."

What UPCO needed was a system that would allow a customer to place an order for 20 loads of product, but release it in mixed bundles here and there, or to very quickly turn around orders for small batches.

Having a more responsive ERP system also allowed UPCO to change the way it orders raw material. Instead of receiving a large order of raw stock that sat in inventory for three to four weeks, UPCO began receiving smaller and more frequent deliveries, and then moving the raw material through the plant in five days or less.

Finally, the system prioritized orders based on available raw materials and customer service requirements. "This way, the only thing we're working on in the shop is the most critical items we need to ship," says Ridenour. "That's the highest priority throughout the plant."

With that information, the system creates a work order and triggers the release of materials and the beginning of production. Meanwhile, finished goods are typically shipped the same day manufacturing is finished.

In addition to reducing inventory levels, the plant is more efficient. "When we looked at our processes, we found that about 20% of our labor was being expended on things that we didn't need right then," says Ridenour.

Overhead cranes do the heavy lifting between workstations and the docks.

Changing the culture and cycle times were two pieces of the puzzle. A third was to improve the flow of material through the plant.

"This plant was originally laid out in little villages," says Ridenour. "The lathes, the grinders and mills were clustered together. The product flow wasn't functional at all."

As UPCO executives mapped out its processes, one of the things they discovered were extraneous lift truck moves. "We were often moving product from a machine to a holding area, then to another holding area for the next machine."

Ridenour says part of that was the result of the plant layout, and part of it was the size of batches that were being run.

To improve the material flow, UPCO installed a conveyor system to automate some longer moves that were previously performed by lift trucks. In other instances, the dis-tance between machines was reduced. Instead of holding areas, the two machines were linked by conveyor. That allowed product to automatically transfer from one process to the next.

While UPCO's competitors may outsource some work off-shore, UPCO found it could improve operations by outsourcing the production of some components to a machine shop in Tulsa.

"The machines that manufactured our couplings had outlived their usefulness," says Ridenour. "They were often down for repair and the quality was terrible. Instead of fighting the machines, we decided to outsource."

The company found a local machine shop interested in manufacturing the couplings. To optimize handling and batch sizes, UPCO provided returnable containers that are used to transport the raw materials and finished goods between the two facilities.

Since continuous improvement is an important component of a lean manufacturing operation, UPCO executives are still looking for ways to take its plant to the next level.

For one, Ridenour is installing more conveyor to further automate moves still made by lift trucks. The company is also implementing automated data capture with bar code scanning and wireless radio frequency communication. "That means we'll no longer have to wait for people to manually enter information into the system to run reports," says Ridenour. "That will give plant management an extra two or three hours on their planning."

How does Ridenour measure success? Partly by a higher quality product and lower inventory. But most importantly, he says, is the amount of hours worked for each sales dollar. "My sales per hour worked are twice what they were five years ago and improving constantly," says Ridenour.