The Company
Atlantech Distribution, Inc. has distribution centers located along the Atlantic coast. As a major distributor, Atlantech handles regular inventory of industrial and commercial insulation, fluid sealing products, non-metallic expansion joints, specialty building products and other industrial, commercial, construction and MRO products.

The Situation
Atlantech’s branch manager Tim Haufler was skeptical about the idea of a Lean supply chain management implementation at his Hampton, Virginia distribution center. "When first hearing all that the Lean team wanted us to do, my reaction was guarded,” Haufler explains. “It seemed like a lot of unnecessary detail for such a small operation, but I kept an open mind."

With the assistance of Michael Cory, a manufacturing consultant from the Technology Applications Center (TAC) at Old Dominion University, the distribution center has successfully implemented Lean strategy concepts brought to the company by one of their major customers, Northrop Grumman Newport News (NGNN). TAC, a service delivery partner of Virginia’s Philpott Manufacturing Extension Partnership (VPMEP), is responsible for servicing manufacturers in the Hampton Roads region. In 2003 NGNN and VPMEP initiated a strategic program that extends development of lean manufacturing concepts and methods to NGNN suppliers, including Atlantech Distribution, Inc., nationwide to improve competitiveness.

The Response
Cory’s action plan for the distribution center was to focus on the warehouse floor operations. Primarily this effort would address on-time delivery, quality, and performance to daily rate or linearity. Linearity is monitored at the back of the production flow and is the relationship of the company’s planned daily rates versus the actual production. Working on the following Lean principles positively impacts these objectives: “5S,” Set-up Reduction, Visual Shop Floor, Work Standardization, and Poka-Yoke. The integrity of the company is also supported through the incorporation of these Lean ideals into the company’s Quality Control Manual.

Atlantech’s Hampton distribution center staffs 8 full-time employees. Of these employees Haufler, and inside sales representative Shelley Rose, teamed with Cory to lead the Lean strategy implementation. Haufler’s trepidation about the process was due to the fact that Atlantech "had many initiatives to become more efficient, but none [they] were able to sustain." The company’s first challenge was to endure the incorporation of "5S" principles. Haufler approached the task by remembering the meaning of the last "S", sustain.

According to Haufler, "One of the criteria our company uses to reward each sales office is our average inventory. As a part of the "5S" we were instructed to isolate our slow moving inventory. Atlantech was able to successfully complete the “5S” portion of the project in just 10 business days. During the "5S" process Haufler learned the Hampton distribution center is consistently over budget for inventory in nearly the exact proportion of slow moving inventory. "Looking at it every day reminds me to find a home for it so that I can have that real estate for material that does move and so that our people can begin to receive rewards."

Haufler and Rose were also able to participate in a Lean 101 workshop course, where they learned the difference between a push-system and a pull-system of inventory management. Haufler states, “I am no longer concerned with putting finished goods we fabricate on our shelf. One part we made anticipating future orders has been on our shelf for over six years and has tied up nearly $1,200 in inventory value.”

Management’s Comments
Atlantech's Lean Implementation project was completed in just 12 weeks. "Our numbers prove the success of this initiative. Our on-time delivery score for one key client has grown from 76% to 100%, and we are now one of their most trustworthy suppliers," Haufler boasts. "It’s appropriate to say that I’m one of [Lean’s] biggest advocates. We anticipate revenues to increase significantly as we 'sustain' what we have initiated, while at the same time providing a cleaner safer environment for our people."

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