Vermeer Corp. CEO Mary Andringa, who is also chair of the National Association of Manufacturers (NAM), is using Lean to lower health care costs for her manufacturing company. She does this through regular kaizen events to increase efficiency and develop best practices.
Andringa’s use of Lean is critical because manufacturers in the US face high corporate taxes, high tort expenses and high regulatory expenses; overall, these differences put the US at a 20% disadvantage versus its trading partners.
According to Andringa, the best way to learn Lean is to focus on improving a specific production line, which she calls a “learning line”. In just one line, she was able to accomplish the following:
- Reduced time from raw steel delivery to out the door from 52 to 50 days
- Reduced hours per unit from 80 to the low teens
- Improved Quality, Safety, and Customer Service
Overall, 70% of employees have been on a kaizen event. To encourage deeper penetration, Vermeer sponsors continuous improvement “blitz weeks” where plants worldwide conduct kaizens. At the conclusion of these weeks, any best practices learned are shared throughout the company.
Andringa says the above techniques have also been used to address rising health care costs. Vermeer accomplished this by establishing an on-site medical clinic for employees and their spouses.
One of the best features of the clinic is a pharmacy run by Walgreens; although it is used 15% more than at other companies, it cost 30% less.
Furthermore, Vermeer’s health clinic reports higher usage and lower costs thanks to efficiency: the average customer wait time is only one minute.
Lastly, employees have annual checkups with basic measurements and wellness coach counseling. Because 30% of Vermeer’s employees didn’t have a primary care physician, these preventive efforts lead to a dramatic decrease in blood pressure, cholesterol levels, and body mass for employees.
As Andringa puts it, “I believe right now is manufacturing’s time. We are in the spotlight in a way that we haven’t been for many decades. Manufacturing is leading the U.S. out of the recession. It is time for a manufacturing rebirth in the U.S.”