Santa’s North Pole Experiences Success Implementing Japanese 5-S Strategy

With all the buzz about lean strategies we thought we’d take a moment to share with you some insight into the latest buzz on supply chain strategies.  While this strategy isn’t necessarily new, the Japanese 5-S Strategy has received a lot of press in supply chain circles in 2010. 

While the concept was designed for manufacturers, we think it applies to every company.   MaxQ will soon be moving to our new offices and as we look at all the stuff we’ve accumulated over the last 10 years, we may give the 5S strategy a shot. We were struck by how easy the concept is, yet how difficult it is to start and maintain.  So take a look around your own workspace and see what improvements you might be able to make in 2010.  The following is a primer we wrote to explain the Japanese Lean Strategy called The 5 S’s set in a very familiar setting.  If you never saw the 1964 animated classic TV special “Rudolph The Red Nose Reindeer”, we feel very sorry for you.

Enjoy and Happy Holidays from all of us here at MaxQ Technologies.

North Pole Experiences Success Implementing Japanese 5-S Philosophy 

Even the North Pole is not immune to taking a hard look at Lean strategies for their business.  In an effort to streamline 2010 operations, reduce costs and improve elf relations The North Pole began a major initiative after the 2009 Christmas season as part of their 5-year Lean Implementation plan.

After much contemplation and surfing the net for the latest in business trends, Santa Klaus, CEO and President of the North Pole, rounded up his management team last January for an exploratory meeting to see if The 5 S’s strategy might be a complementary approach to their Lean initiatives.

The 5-S Strategy is based on 5 Japanese words that begin with the letter S, and focuses on workplace organization and the standardization of work procedures to maximize efficiencies.  By reducing waste and non-value-added activity, manufacturers and distributors simplify their work environments which maximize quality, efficiency and safety.

Implementing Lean Manufacturing initiatives over the past 5 years has not been easy for The North Pole.

“Years ago kids were satisfied with Tinker Toys, Hot Wheels, or Twister,” said Heinrich Frieze, CFO, North Pole.  “We used to rely on receiving hand written lists from our customers which helped us manage inventory, but that model is a thing of the past.  Today we’re moving so fast monitoring Facebook and Twitter, and adapting to changes in demand, that we leave a wake of clutter and mess behind that actually decreases our ability to improve efficiencies.”

“Implementing The 5-S Philosophy is an easy concept, but staying with it is another matter,”  said Yukon Cornelius. “We’ve been diligent about maintaining our new changes and experienced a fantastically smooth 2010 season thanks to the changes we implemented.”

SEIRI (Sort)
The first S of the strategy focuses on eliminating unnecessary items from the workplace.  In the first quarter of 2010, North Pole elves placed a red tag on all items in their workplace that was not required to complete their job.  The Sort process is for evaluating “red tag” items.  Items that were used occasionally were moved to other areas, while unneeded items were discarded.  Sorting provided a way to free up valuable floor space and eliminated things like broken tools, old cardboard game spinners, scrap and excess raw material.  An added benefit for the North Pole was that this phase assisted in combating the “just-in-case” hording tendencies prevalent among elves.

SEITON (Set In Order) is the second S and focuses on efficient and effective storage methods.  Each elf was required to ask themselves:

1.) What do I need to do my job?
2.) Where should I locate this item?
3.) How many of this item do I need?

In the second quarter of 2010, the shop floor at The North Pole decided to paint their floors to outline work areas and specific locations.  They installed modular shelving and cabinets to better organize items like trash cans, tape, gift wrap, Allen wrenches, etc.

“These items should be readily available to all elves and in a place where all elves can find them,” said Clarice Thedoe, who became certified to implement The 5-S Strategy for The North Pole.  “Once we eliminated the debris that cluttered up our workspace, and found proper homes for items that we use, the next step was to thoroughly clean the area.”

SEISO (Shine)

“Seiso means Shine.  With daily shining we consistently keep areas neat and efficient,” Clarice continued.  “The idea is that clean and clutter-free work areas help to create a feeling of ownership in both the equipment and our facilities.  Elves are now able to notice much more quickly when our ribbon bow machine is misaligned, or if the gift boxes are produced off-spec.  Items like these, when left unattended, could lead to equipment failure and loss of production.  Our Xbox demand is just too high for us to risk anything that could impact our production lines.”

SEIKETSU (Standardize)

Late in Q2 of 2010  the fourth stage of the strategy began to standardize best practices in each work area.   “We felt it was critical that Elves participate in the development of best practices as they are an often overlooked source of information regarding how daily work can be better streamlined,” said Cornelius.

SHITSUKE (Sustain)
“I’d say the most difficult stage to implement and maintain was the last stage of Sustaining.  Elf nature, like human nature, is to resist change.  Many organizations take months to complete their first 4 S’s only to find themselves in a dirty, cluttered shop a few months later.  The tendency to return to the status quo of the “old way” is a constant obstacle to a successful implementation, but with a little hard work and determination we saw the benefits of implementing this strategy this Christmas season.”

Morale is up evidenced by a recent survey of Elves who for the last six months have been working in clean and organized work areas.  Best practices are fully defined and the elves are enjoying the results of executing work flows the most efficient way.  The good cheer has bled over to the transportation department who no longer has to wait around in freezing temperatures caused by the elves missing fulfillment and shipping deadlines.

“Overall, we’re quite happy with our 2010 season results,” beamed Klaus.  “Continuous improvement has lead to less waste, better quality and faster lead times.  We were able to execute 30% more on-time shipments this year over last year and are much more organized in how we process orders through Amazon, and Best Buy.  The online world creates a constant challenge for us, but through our Lean initiatives we are poised to rise to the challenge and look forward to a spectacular 2011 Holiday Season.”

We hope you have a wonderful Holiday season and best wishes for a happy, healthy and prosperous New Year.

Solutions for Evolving Supply Chain Concerns May Be Right Under Your Nose

In November, McKinsey & Co. released the findings from it’s Global Survey which indicates the supply chain issues manufacturers and distributors were worried about just before the downturn of our economy have shifted.  Five years ago companies named their number one concern as managing the volatility of customer demand, which doesn’t even make the Top 5 in this new survey.  Companies sited managing increased pressure from global competition, managing the increased expectations about customer service/product quality, and coping with operations associated with the complex patterns of customer demand as their top concerns.

Read The McKinsey & Co. Study

Recent updates and additions to today’s leading business systems help companies better manage these issues, yet we have found that few customers take advantage (or know of) the functionality that may be available in their business systems.  Statistics note that most companies use only 60% of the functionality that is available in their existing ERP system.  One of the best things companies can do to ensure their investment in technology and systems is to conduct a thorough review of your business system every 3 years.  This review will keep you up to date on recent enhancements and modules that are available that you might own (but are not using) or that could yield a high return on investment by adding functionality to solve your business issue.  We’ve uncovered instances where a simple change in processing produced a quick fix for companies.  A business review gives you the opportunity to discuss changing requirements with your vendor, and make the most of the investments you’ve made in your business systems.  A business review can often produce quick results, be more effective and economical than sending a person to a user conference once a year.


Increasing Mobile WorkForce Pushes ERP Software to Go Mobile

SYSPRO recently announced that recognizing the requirements of an increasingly mobile workforce SYSPRO is now making SYSPRO ERP software available via the iPhone. SYSPRO ERP users can now run SYSPRO wirelessly and securely anywhere in the world via the iPhone through the utilization of the SYSPRO On the Go iPhone application, which is available for download from the iTunes store.

According to SYSPRO CEO Phil Duff, “We recognize that mobility is the future, and there is no doubt that the mobile device will be the world’s primary computing tool by 2020. To put this in perspective, right now over 90% of US adults own a cell phone, and the computer in your cell phone today is 1 million times cheaper, 1,000 times more powerful and about 100,000 times smaller than the one computer at MIT in 1965. But equally important to SYSPRO is the increasing number of SYSPRO users who have requested remote access to information contained in the SYSPRO ERP database. The capability in the new SYSPRO On the Go iPhone application is indicative of the ways in which SYSPRO continues to listen to and accommodate the needs of its customers as well as market forces.”


Since its inception in 1978, SYSPRO has been delivering state-of-the-art business solutions to some of the world’s leading companies. As a global leader in the production of world-class ERP software, the company now caters to the specialized needs of 14,500 licensed companies in more than 60 countries worldwide. SYSPRO is marketed globally through regional territory distribution centers and a global reseller network in the US, Canada, Africa, Asia Pacific, Australia and the UK.

SYSPRO is a fully integrated business software solution that provides complete control over the planning and management of all facets of business including accounting, manufacturing and distribution operations in a variety of industries.