Week 09 - Daktronics D Keen on Lean Manufacturing at Daktronics, Inc

7/22/2019 Week 09 - Daktronics D Keen on Lean Manufacturing at Daktronics, Inc.

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Daktronics (D): Keen on Lean Manufacturing at Daktronics, Inc. 97

Daktronics (D): Keen on LeanManufacturing at Daktronics, Inc.

Nancy M. Levenburg, Grand Valley State University

Copyright 2012 by the Case Research Journaland the authors. Te authors developed this case for classdiscussion rather than to illustrate either effective or ineffective handling of the situation. Te case waspresented at the North American Case Research Association Annual Meeting on October 29, 2010, inGatlinburg, ennessee. Tis project was made possible with financial support via a NACRA case researchgrant and South Dakota State University.

Posted on a message board in the office of Matt Kurtenbach (Daktronics VicePresident of Manufacturing) was the quotation, You can act your way into a newway of thinking faster than you can think your way into a new way of acting.

Indeed, meeting competitive challenges was nothing new to Daktronics, Inc.(SeeAppendix Afor company history.) Following a period of rapid sales growth (see

Exhibit 1), in February 2006 the forty-year-old firm made a formal decision to pursuelean manufacturing. Up until 2006, Daktronics had increased its production capacityby, in essence, replicating its existing operations, adding facilities, equipment, or peo-pleor some combination of the three. Reflecting on Daktronics lean manufacturingjourney in May 2010, Kurtenbach commented:

Four years ago we realized we had to fundamentally change how we were operating.Given our rapid rate of growth, it was apparent to us that this replication method wasnot easily scalable and the growth of the company could/would be limited by the abil-ity to grow our manufacturing output. We simply couldnt build buildings and hirepeople fast enough. Tis realization led to the exploration of lean manufacturing as analternative way to increase our output . . . the driving goal was to eliminate manufac-turing as a constraint on the growth of our organization.1

Exhibit 1: Key Financial Measures

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Sales $177,764 $209,907 $230,346 $309,370 $433,201 $499,677 $581,931

Gross Profit $59,131 $72,471 $73,209 $94,074 $126,597 $147,590 $155,358

Operating Expenses $39,306 $44,941 $53,773 $62,259 $89,682 $109,347 $112,741

Operating Income $19,825 $27,530 $19,436 $31,815 $36,915 $38,243 $42,617

Earnings per Share $0.32 $0.44 $0.39 $0.52 $0.59 $0.63 $0.64

Source: company records. Note: dollars in thousands, except per share data.

NA0238


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98 Case Research Journal Volume 32 Issue 4 Fall 2012

Yet now, amidst a 2010 sagging U.S. economy, the year ahead looked rough. Atten-tion was increasingly being placed on cost reduction. Tere was also talk about leanaccounting . . . and extending lean into the office environment. Was Daktronics readyfor new initiatives such as these? How well had heand the manufacturing opera-tionaccomplished its mission?

DAKTRONICS PRODUCTFAMILIES

Daktronics, which had its corporate headquarters in Brookings, South Dakota, was aleader in the digital signage industry and dominated the high end of the market. Tefirm produced products in five major product categories (or families): (1) Sportsproducts, including scoreboards, sound systems and related computer-controlledhardware and software; (2) Automated rigging and hoist products that were used insports facilities and theatres; (3) Video display systems; (4) Commercial products,including message centers and time and temperature displays; and (5) ransportationproducts that were used for road management, parking, mass transit, and aviation todirect motorists and traffic (SeeAppendix Bfor the full product line.). According toDaktronics 2009 Annual Report, approximately 57.7 percent of its net sales camefrom the Schools and Teatres and Live Events business units, 26.8 percent came fromthe Commercial business unit, 9.6 percent came from the International business unit,and the remaining 5.9 percent was from the ransportation business unit.

Daktronics display systems ranged in price from small scoreboards priced at under$1,000 to large, complex display systems installed in sporting arenas and priced inexcess of $40 million. Mitsubishi was a large and formidable competitor in the largesports venues market (along with smaller firms, such as Lighthouse, ANC, and Barco).(SeeAppendix Cfor major competitors.) In recent years, consultants were sometimesused to assist big-ticket buyers, contributing to greater price sensitivity and difficultyin differentiating.

Sales (and profitability) vacillated, largely due to the impact and timing of orders

for large display systems. Tese, in turn, varied depending on seasonality in sportsmarkets. Sales for football facilities tended to occur in the summer and early fall; thosefor basketball and hockey occurred in the fall; and those for baseball occurred in theearly to late spring. Large product orders generally carried lower gross margins thandid smaller orders, particularly if the project required competitive bidding and sub-contracting work.2

wo primary components formed the basis for many of Daktronics products: thedisplay and the controller. Over the years, display technology evolved from the use ofincandescent lamps to (at present) light emitting diodes (LEDs) and liquid crystal dis-plays (LCDs). LEDs and LCDs permitted a wider range of colors, as well as increasedbrightness and energy-related cost savings. LEDs tended to be used in large displays,while LCDs were used in smaller displays. According to corporate sources, the vast

majority of displays sold utilized LED technology. Daktronics sourced some of its rawmaterials, including LEDs, from a limited number of suppliers, primarily for qualitycontrol reasons or the customized nature of the materials.

Using computer hardware and software, the controller collected and compiledinformation, graphics, or animation furnished by the operator and other integratedsources, and transferred this to the local or remote displays using wire or fiber optic


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cables, or infrared or radio links. Te controller, therefore, managed each of the pixels(literally, picture elementsthe combination of tiny dots in rows and columns) thatformed the message or visual image.

In addition to the display module and the controller, other components in a digitalbillboard as shown in Exhibit 2, were: (1) the power supplies (which converted theAC voltage/current to DC voltage/current to power the electronics and the LEDs);

(2) the cable harness to connect the components; and (3) a cabinet to house theaforementioned.

Exhibit 2: Example of Digital Billboard

Source: Daktronics.com

MANUFACTURINGATDAKTRONICS

In 2006, Daktronics engaged in component manufacturing (e.g., printed circuitboards) and system manufacturing (i.e., metal fabrication, electronic assembly, sub-assembly and final assembly), with the use of subcontractors primarily for metal fabri-cation and loading printed circuit boards. It used a modular approach for manufactur-ing displays, meaning that standard product modules were designed for use in a varietyof different products, thereby reducing parts inventories. While custom projects werebuilt according to the customers specifications, they might be designed to include asignificant percentage of standard components.

An enterprise resource planning (ERP) system coordinated order entry, produc-tion, customer service, and other functions, and facilitated communications amongemployee teams throughout the sales, design, production, and product delivery pro-cesses. In April of 2006, Daktronics employed approximately 1,400 full-time employ-ees and approximately 700 part-time and temporary employees, including studentsenrolled at nearby South Dakota State University (SDSU). In fact, it was estimated

that about 18 percent of the labor force in Brookings were SDSU students. Te break-down of employees by type of role within the organization is shown in Exhibit 3.None of its employees were represented by a collective bargaining agreement, and thefirm believed that its employee relations were good.


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Exhibit 3: Number of Employees by Function

2006 2007 2008 2009

Manufacturing 900 1,200 1,300 1,200

Sales, Marketing, & Customer Service 700 1,300 1,300 1,500

Engineering 300 400 500 500Administration 200 300 300 300

Source: company records.

Prior to 2006, Daktronics manufactured nearly all of its products at its main facil-ity in Brookings (approximately 375,000 square feet on a 45-acre site). In 2007, Dak-tronics opened a 120,000 square foot production facility to build larger digital bill-boards in Sioux Falls, South Dakota. According to Daktronics 2006 Annual Report:

We are incorporating lean manufacturing concepts as we reconfigure our manufactur-ing to take advantage of the new space available to us. We expect to gain efficienciesin labor and space utilization, along with improved inventory turns, improved quality

control, and reduced lead times as a result.In 2007, the company added an additional 80,000 square feet of manufacturing

space in Brookings and began manufacturing the Galaxy line (smaller displays, usedprimarily for on-site advertising) in Redwood Falls, Minnesota. Te two primary rea-sons for manufacturing the Galaxy product line in Redwood Falls were: (1) it was ahighly standardized product; and (2) the lower ceiling height in the facility precludedbuilding larger video displays or billboards there. Te Redwood Falls facility measuredapproximately 100,000 square feet, which was primarily manufacturing space. At thattime, the company also expected that its investments in the Redwood Falls manufac-turing facilities would increase, due to recent successes with the Galaxy displays andgas price digit displays.

Also during 2007, Daktronics total full-time employment grew by nearly 900employees to 2,290, and its part-time and students to 935, with the employmentbreakdown by function shown in Exhibit 3.

In 2008, Daktronics leased approximately 17,000 square feet in Shanghai, China,for sales, service, and limited manufacturing to serve the Chinese market, and enteredinto a lease agreement for a new building of approximately 90,000 square feet, primar-ily to be used for manufacturing of architectural lighting products and final assemblyof video displays. Due to ramping up the facilities in Brookings, Sioux Falls, and Red-wood Falls in 2006/2007, capacity constraints did not exist in 2008. Te companyexpected that the Commercial business unit would represent one of the fastest growthsegments of the business in 2009. Daktronics also anticipated growth in the U.S. andoverseas digital billboard markets, in on-premise advertising displays, and in higher

definition displays at sporting venues.3

Daktronics touted several accomplishments during 2009, including furnishing dis-play systems for Yankee Stadium and Citifield, home of the New York Mets, and themajority of displays for the New Meadowlands Stadium, home of the New York Jetsand New York Giants. Overall growth rates, however, were not as stellar as in prioryears (see Exhibit 1), with warranty costs contributing to a decline in gross profit mar-gins. Daktronics attributed these costs to issues associated with new product designsand quality in display systems.4However, company officials believed that because of


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investments in more sophisticated product reliability testing equipment (and person-nel), future risks would be minimized.

At the close of fiscal year 2009, Daktronics employed approximately 2,500 full-time employees and approximately 1,000 part-time and temporary employees. Econo-mists predicted that the U.S. economy was only about halfway through a recessionthat would be the longest and most severe since the Great Depression. Daktronics set

its goal to emerge from the downturn stronger than it had entered it. As was stated inthe 2009 Letter to Shareholders (from Aelred L. Kurtenbach, Chairman of the Board,and James B. Morgan, President and Chief Executive Officer):

Going forward we will continue with our efforts in becoming a world class organiza-tion utilizing lean concepts to systematically and continuously identify and eliminatecosts that do not add value for the customer. We have already achieved dramatic pro-gress incorporating lean principles into our manufacturing processes since we initiatedour lean program in fiscal 2007. . . .5

DAKTRONICS LEANJOURNEY

Goals of the Lean InitiativePrior to 2006, Morgan saw inefficiencies in manufacturing processes (so many partsand tools) and relatively little standardization, which resulted in problems with plan-ning inventory and tools. As he reflected in January of 2010, We had to do somethingfundamentally different. We want to be a billion dollar company. What we were doingwas not scalable.

Furthermore, Daktronics used fixed-price contracts for nearly all of its productsales.6Tis meant that costs that exceeded their estimated amount reduced profits,since the firm had a limited ability to recover cost overruns. Cost increases could resultfrom a number of factors; for example, increases in the cost or shortages of compo-nents, materials or labor, or unanticipated technical problems that required project

modification. On the other hand, Daktronics benefited from cost savings.So, lean manufacturing represented a way to generate cost savings, by reducing the

time between a customers order placement and receiving cash payment. o do this, agoal was to eliminate all sources of waste, while delivering products to customers ontime. Seven sources of waste were identified in transportation, inventory, motion, andso on, as shown in Exhibit 4.

Exhibit 4: Seven Sources of Waste

Transportation Moving material does not enhance the value of the product.

Inventory Material taking up space, costing money, and potentially being damaged.Problems are not visible.

Motion Any motion that does not add value to the product is waste.Waiting Material waiting is not material flowing through value-added operations.

Over Production Producing more material than is needed (inventory).

Over Processing Extra processing not essential to add value from the customer point of view iswaste.

Defects Causes lost production time and the cost of rework or scrap.



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Gearing Up for Lean

o begin the journey, Daktronics partnered with three consulting firms. Te Prag-matek Consulting Group, headquartered in Bloomington, Minnesota, and knownprimarily for its SAP and Business Process echnology Alignment services, was chosenfirst. According to Matt Kurtenbach, this firm was selected based on its nearby loca-

tion and on the strength of one of the firms consultants who would be working withDaktronics. In Kurtenbachs words:

We had already decided what the first lean project would be and that was convertingour production of the LED modules from batch-and-queue to flow [one-piece flow inmanufacturing cell production processes].7We had a new production space designatedand we had new equipment on order . . . remember that building, buying, and hiring

was the way we had been growing prior to lean. So, we had the big things covered, butwe wanted/needed help with the details and methodology. We hired Pragmatek to helpus with those details.

Daktronics used the other two consulting firms for training and development pur-poses, such as Making Materials Flow concepts and A3 Tinking and Coaching.8According to Matt Kurtenbach, Tey were chosen based on their credibility and pastoyota experience . . . We had the opportunity to participate in some short workshopsin Minneapolis and decided to bring them into Daktronics to help further develop ourmanufacturing leadership.

Te lean team, which reported to Matt Kurtenbach, consisted of a Lean Man-ager, two Lean Manufacturing Engineers, and six Lean Coordinators for businessunits, including one each for the Sioux Falls and Redwood Falls facilities, as shownin Exhibit 5. Over the next four years (during the lean implementation), numeroustraining opportunities were offered to employees, as shown in Exhibit 6.


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Exhibit 5: Manufacturing Organizational Structure circa 2009

VP Manufacturin

Matt Kurtenbach

Lean Manager

Lean CoordinatorCommercial

(Sioux Falls)

Lean CoordinatorCommercial

(Redwood Falls)

Lean CoordinatorTransportation

(Brookings)

Lean CoordinatorSchools and

Theatres(Brookings)

Lean CoordinatorLive Events

(Brookings)

Lean CoordinatorCorporate EA(Brookings)

Lean ManufacturingEngineer

Lean ManufacturingEngineer



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Exhibit 6: Lean Operations Training

Topic Participants

5S and Lean 101 Simulation All manufacturing employees (direct and support)

Lean ools Employees on an as-needed basis as plans are kicked-off(developed/given by Daktronics)

Lean ools(5 days at Univ. of St. Tomas)

All Lean personnel (Lean Coordinators and Lean Engineers)

Lean ools and Lean Leadership(2 days at Univ. of St. Tomas)

Plant Manager, Materials Manager, Manufacturing Engineer-ing Supervisor, HR, Finance, Lean Coordinators, DivisionSupport Staff

Managing Value Stream Projects(2 days with Lean Enterprise Institute)

Lean Coordinators and Lean Engineers

Making Materials Flow echniques(1 day at Daktronics)

Conducted by external consultant (former oyota employee).Plant Manager, Materials Manager, Lean Coordinators, Divi-sion Support Staff

Lean Problem Solving, A3 thinking(8 days at Daktronics)

6 days conducted by external consultant (former oyotaemployee). Plant Manager, Lean Coordinators, DivisionSupport Staff


For example, employees were trained on the 5S housekeeping system: . . . sort,straighten, shine, standardize, sustain.9According to Jeff Pekas, Electronics Assembly(EA) Plant Manager, prior to lean implementation, the batch production floor plancontained almost fifty shelving units that were positioned between every insertionmachine and along the length of one side of the walkway. Other shelving units, scat-tered around the production floor, were used primarily to store tools, tooling,10or mis-cellaneous items. Te shelves of these units were used to stage work that was waiting forparts, waiting for queued processing, or, according to Pekas, were literally waiting to berediscovered amidst all of the other work that populated the area. Consequently, batchproduction leaders often spent the better part of a workday searching for work orders,which meant that they constantly needed to reprioritize queued jobs.

It also meant that product quality issues were sometimes not detected until theywere four days post-production, which delayed quality-related investigation and prob-lem solving. Tis, according to Pekas, was not the fault of employees:

Te assembly staff worked hard . . . very hard. Te deep well of patience that eachemployee started their day with was, by the end of the day, emptied by the many produc-tion frustrations that they plowed through on a daily basis. Dont get me wrong . . . manygood things happened in the batch area, but the good things required so much effort thatit was extraordinarily taxing to the people who carried out any successful effort. Moreoften than not, the effort always included an overtime shift or two.

Lean Implementation with LED AssemblyAccording to Pekas:

Tere was a great deal of team discussion about the [lean implementation] plan andthere were even discussions on how to plan for the plan. Te team knew what had to bedonethe batch production area was a haven for inefficiencies and waste, but how toeven begin spurred very serious, passionate, and sometimes even loud discussions. Te


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team meeting schedule was set at three times a week for the duration of the project andseveral meetings come to mind, especially early in the project when we would adjournin a stalemate or something was literally talked to death. Admittedly, there were times

when nothing from the meetings could be translated into anything actionable; westruggled sometimes, but only sometimes.

As a first step, the LED assembly process was broken down into manageable parts,

and examined in detail vis--vis proof of concept exercises.11When doing these exer-cises, manufacturing engineers used stopwatches to document operations, taking notesand recording employees feedback. At the conclusion, a product was selected for aprototype experimentone that had twenty-seven hand-inserted parts, includingeleven gravity drop-type parts, nine parts that required hand tools to attach, and eightparts that required hand tools as well as hand-soldering.

Te former means for transporting the product between assembly stations was touse simple push carts; one cart, pushed by one person, was used to convey one printedcircuit board on to the next station. So, discussions ensued concerning how materialscould be more efficiently transferred and moved between stations along the produc-tion line. According to Pekas, those discussions directed us to rely on an energy sourcethat would always be availablegravity. Consequently, gravity conveyors were pur-chased; not for the entire length of the line, but for at least one key location, which wasequipped with an automated section to provide a timed release into the productionline. Finally, to maintain control of work in process, trays were used (two feet long xeighteen inches wide) on which the printed circuit boards would be placed. Based on100 feet of conveyor length, the conveyor held up to fifty trays.

While there was also a desire to test the product as it was being assembled, theproduct test time exceeded each of the work station assembly times. Consequently, itwas decided to forego live testing initially in favor of collecting First Pass Yield data,12though all agreed that in-line testing was imperative eventually.

wo nearly identical proof of concept exercises were conducted in order to demon-strate the benefits of product assembly using a flow line to the two production shifts.

At post-build meetings, information was presented (e.g., assembly times) and employ-ees were invited to share their thoughts. According to Pekas:

Te feedback received from the employees was both positive and negative and bothextremes were expected; it was something newa dramatic change for everyone. Allof the feedback was recorded, regardless of the positive or the negative tone and manyof the concerns the employees voiced became a part of the planning conversations asthe line developed. Tere were also some people in the audience who recognized andunderstood the value that this flow approach to production would bring right away.Tese same people would become flow line advocates and became a supportive voiceon the line for the people who had trouble coping with the velocity of change oncethings started to roll.

Rolling Out LeanWithin the Electronics Assembly area, there were approximately 350 different partsnumbers, excluding those produced for Customer Service.13Te initial testing sought toidentify which products would work best on the high mix flow line. According to Pekas:

Once this sort began, it seemed like it would never end. Tankfully, a team memberwho was suffering from boredomjust like the rest of usexperienced a revelation.


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o paraphrase this persons statement, he said we should simply accept the idea (fornow) that everything will flow, everything. Tis statement would capture at least 75percent of the product mix and 85 percent of the volume. He went on to say that theproduct mix is not the problem; the insurance policy to managing a high mix-drivenproduction schedule is machine redundancy, and at this time we are fortunate enoughto have duplication of every automated process needed to produce any product in our

mix! With these comments, the product sort discussions stopped because it made sense:adopt an everything will flow philosophy and filter out the exceptions that have unac-ceptable production parameters (such as an extended test cycle).

Te everything will flow philosophy led to consideration of whether the equip-ment should be laid out as a single line with side-by-side, duplicate resources, or as twoindependent production lines. Pekas continued:

Te benefit of a single production line with duplicate resources is that idle equipmentcould be undergoing a setup for the next product while another product is running.Tis configuration mitigates flow line downtime that would result from a high prod-uct mix because it can drive the need for many different machine setup iterations. Asingle line configuration would simplify production line leaderships responsibilities(only one line to manage), staffing level needs would be better understood, preventative

maintenance could be done while products are running (duplicate resources), and thisconfiguration would promote a balanced or equal use approach to equipment utiliza-tion. Ultimately, product velocity and production, in general, could be maintainedconsistently down the flow line.

So, duplicated flow line resources (equipment) is simply a production insurance policycomprising two things: changeovers have no production impact and as an equipmentbackup strategy for unplanned outages. Being duplicated can certainly translate tomean underutilized, but the additional expense of carrying underutilized equipment

was the preferred option because of the assurance that the line would always be in acondition to provide predictable and steady production.

We discussed two independently operated lines (since we had two of each piece ofequipment) as a possible configuration, but we really didnt have the staff to position attwo lines and we were not in a position to hire additional people. Another concern was

with machine failures; if any one of the machines failed on a producing line, the resultwould require relocating assembly parts, people, and tooling. In addition, this wouldrequire equipment setup efforts for all machines on the line versus having to set uponly the single, back-up machine on the producing line. Certainly there would be idleassembly staff during the setup time of the second machine on the down line, but thisproduction-vacant time could be planned for andfilled with a teambuilding exercise,training, safety reviews, or other policy reviews.

o prepare for high mix flow line production, work instructions were prepared,identifying both preproduction (preparatory) tasks that were not value-added andassembly work . . . and not simply paper-based (as in the past), but electronically. Akit prep area was also established to ensure that all of the parts to be used for assem-bly (primarily by hand) were properly organized, accounted for, and in good condi-tion, prior to commencing production. If a kit was incomplete, it was quarantineduntil the problem was resolved. Both cleared work orders that were ready to build anduncleared work orders were posted on a scheduling board. Te scheduling board wasused to determine the order of production, taking into account product similaritiesand necessary changeovers. Te goal was to always maintain a few orders (approxi-mately four hours worth of production) in the kit prep area. According to Pekas:


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If a work order doesnt clear kit prep because its missing parts or contains inappropri-ately formed parts, the result is downtime on the line. Tis means idled employees,product rescheduling, equipment tear-downs and setups, and a whole host of otherissues that are detrimental to a flow line. Te success of the entire value stream dependsgreatly on detailed attention provided by very sharp people who understand the conse-quences that a kitting error creates.

Manufacturing engineers observed that machine operators spent a good deal oftime searching for parts, resolving parts and programming problems, and that variousother issues took them away from their machines and their primary responsibility ofsetting up and operating machines. However, by having resource [machine] duplica-tionrather than two independent linesflow line downtime would be minimized.

Exhibit 7 shows before and after 5S photos. Check sheets were used to createaccountability of daily, weekly, monthly, and quarterly tasks. For example, at the endof each shift (twice daily), employees logged accomplishments of such items as: sweepfloor, empty garbage, return tools and other items to proper places/retract cords, andclean and organize tables with WIP.

Exhibit 7: Before and After 5S

Before After


Reflecting on the implementation of lean, Matt Kurtenbach commented:

Our efforts started in manufacturing where we were producing the highest volume(and most expensive) assembly within our display, our LED modules. Historically,these were done in a batch-and-queue fashion, so our first project was converting theseto flow. We also drove 5S in the early stages to help start a visual workplace and disci-plined approach.


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According to Morgan, the decision to move from batch processing to moduleassembly was a big change. When you walked into assembly, youd see a bunch ofracks. Te process was like trying to put your pants on, on the runits tricky! We puta pedometer on an employee, and in one day he had walked eight miles looking fortools. So, according to both Morgan and Matt Kurtenbach, employeesin generalwelcomed the change because it was so much more efficient.

According to Matt Kurtenbach:

One way to measure the success of our efforts has been to see the difference in manu-facturing. We no longer have stockpiles of finished goods and WIP [work in process],

which translates into increased cash flow. Products and projects move through manu-facturing at a much faster pace, which has enabled us to lower our lead times withoutadding capacity (buildings, equipment, or people). Lowering our lead times has ena-bled us to grow by increasing revenues (manufacturing is no longer the constraint) andserving our customers in a more predictable fashion (on-time delivery, for example). Allof this, of course, has lowered our production costs.

Te buy-in by leadership and allocating the appropriate amount of resources haveplayed a major role with our transformation to date . . . resources being staffing dedi-cated roles, significant amount of training for manufacturing leadership, and expectingthat we both run and improve the businessholding people accountable for drivingimprovements. We took the approach that we would teach people these techniquesand hold the factory leadership accountable for successful implementation. Te leangroup does not own our lean implementationour factory leadership does. Te leanresources are there to provide expertise on how to apply the principles. I believe thisplayed a major role in our success to date.

After the success of this project, we put significant effort into converting other batchprocesses. Tis was done across the manufacturing division, touching almost everyassembly that we produce. Once we began to explore lean, the wastes associated withour batch-and-queue production methods became painfully obvious. Te lure of leanand the advantages that come with flow production techniques became irresistible. Iam amazed at how fast we have been able to implement most of our improvements.

Some things seem to take longer than it should, but we have made huge strides in arelatively short (four years) period of time. Tis is a testament to our commitment anddedication to this effort.

Pekas described the continuing evolution of lean manufacturing as follows:

With much of the lean foundational principles in place and close to stabilization, thenext step for electronic assembly was to begin departmental continuous improvementactivities. o kick this off, all eyes were on the batch production area of the factory,

which was a particularly difficult area to work in as either an employee or a leader.

In electronic assembly, batch production was the primary production method for sev-eral hundred, if not thousands of different part numbers for over thirty-five years.I cannot speak to the original business reasonor reasonsbehind the decision to

produce products using batch production methods. But it obviously was quite suc-cessful for many years, as is apparent by reviewing the companys growth rate over thepast several years. It was not up until recently that the idea of exploring a differentproduction method outside that of a typical batch method really set in. Tis changein thinking was partly spurred by optimism generated from the success experienced byother manufacturing areas as they introduced flow lines.


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Daktronics also sought to change its approach to quality management. As a tool tohelp identify quality improvement activities, a knowledge brief was usedDaktron-ics version of the oyota A3 problem solving form. According to Pekas, if executedproperly, the document forces the owner to ask and answer why? the problem existsmany times until why? cannot be answered anymore, which finally reveals the rootcause of the problem. After identifying the root cause, data is collected, the problem

is investigated, and decision making proceeds.Quality problems, according to Pekas, during the batch production days:

. . . were not the result of uncaring people or people not trying hard enough; everybodyroutinely went above and beyond expectations to do things right and to do the rightthing. Even with a dedicated assembly workforce there were still quality problems, butit was not necessarily the fix to these quality problems that was the [real] problem. Tebigger issue behind the quality problems was the timing of when these problems werediscovered.

In the batch production system we lived in, it could take up to three days before a func-tional test was performed on a fully-assembled order. Tis delay affected nearly everyorder because, simply put, the batch test stations were usually congested with carts of

other product. Tis congestion contributed to racks of product waiting in a queue tobe tested and within these racks, there were quality flaws that, once discovered duringa functional test, would then need to be repaired . . . so the problems were fixed. Ofcourse, there were reasons for the quality problems, but the biggest problem was thetime delay from build completion to the time when the product receives the first test;this particular situation required attention during the high mix project.

So, to be honest, the integration of real-time product testing that took place duringthe real-time product build was absolutely the best thing that happened during thisproject. oday, if a problem is found at a test station, the production line is signaled tostop until the failure reason is understood and corrective action is taken . . . period. Terisk and cost to continue the build is too great not to stop production, and the bot-tom line is that there is no person or process that will realize any improvement unlessdeliberate and decisive action is taken to understand the root cause of the problem and

correct it on the spot.

Te strategy behind Daktronics live product testing contained several features.First, the number of test fixtures and additional test operators on the line was increasedto keep pace with the line flow. While this was moderately successful, both test fixturesand additional staff were expensive, so products with test cycles longer than three min-utes were redirected to a different station.14Because Daktronics goal was to test 100percent of the products on the line, those that were intentionally skipped were testedat a test bench (detached from the flow line) before the order was released.

Finally, detailed instructions/checklists were developed for production leaders andoperators.15(See Exhibit 8for an example of a Work Instructions Sheet.) Tose devel-oped for leaders were used to assist them in monitoring the pulse of the line, provide

oversight to validate the current state of the production system, and assure that assem-bly guidelines were being followed. Tose developed for operators were posted at eachstation along the high flow line, defining the activities to be performed, the order inwhich they were to be performed, and the time required to complete the tasks.16


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Exhibit 8: Work Instructions


Te value stream mapsfor both the batch-and-queue production and the high mix flow lineappear inExhibits 9 and 10. Te purpose of the value stream maps was to depict the steps to improvementusing leanssymbolsin the effort to add customer value while reducing waste. By developing these maps, production lead-ers and operators could visualize how the desired, high mix flow line should look . . . and develop action plansto transition from the batch-and-queue system to the flow line.


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Ex

hibit9:

HighMi

xBa

tchPro

duc

tion

Source:companyrecords.


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Ex

hibit10:

HighMixPro

duc

tion

Flow

Va

lue

Stream

Map

Source:companyrecords.


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REFLECTIONSONRESULTS

In reflecting on Daktronics results, Pekas observed:

Tere have been many exemplary people who have worked in this factory for manyyears and throughout all these years, each and every one of them endured at least somedegree of change; it is inevitable. However, what is different about the changes that

have transpired over these past few years is that these changes were much more accel-erated (in my opinion) and carried out with a greater purposesurvival; and manycompanies are in a similar situation. Certainly, the weakened economic times inspiredadditional urgency in the grand scheme of things, but even in a robust economic envi-ronment, the dynamic of change should consist of a well-developed plan that is tightlycoupled with a shared sense of urgency. Tis is the recipe for improvement.

Te high mix, flow line is not in a perfect state. Admittedly, there are elements of the linethat do not reflect the desired stability that we believe we need, but to those issues we

will continue to strive for excellence. On the other hand there are elements of this linewhich we recognize as substantial gains, and developing a trained staff is one of them.

As described by Matt Kurtenbach, other accomplishments are shown in Exhibit 11.

Exhibit 11: Lean Manufacturing Accomplishments

Measure Outcome

Production Space Recovery of 928 square feet of production space (50 shelving units and 25carts removed from floor).

Work-in-Process WIP volume was reduced; WIP value was reduced by > 50 percent.

Work Instructions An electronic work instruction template was developed; work instructions forseveral hundred Electronics Assembly products were developed. Tis elimi-nated most of the paper-type work orders as well as work order processing forthis value stream.

Product Handling Product racking and un-racking iterations between machine operations werereduced by over 70 percent.

As a result of the conveyor installation, product handling was reduced,thereby reducing opportunities for handling-related quality defects.

Order Completionime

Average days to complete an in-house work order decreased from 20+ days tothree days (maximum), with some only a few hours.

Quality In-line testing strategy reduced defects and increased First Pass Yield (FPY),which, in turn, reduced the need for full-time, degreed electronic techniciansfrom 17 to 10.

In-line testing repurposed electronic technicians to serve in primarily repairroles; the more repetitive pass/fail-type testing is done by assembly staff.

FPY results for all of FY 10 (May 09 to May 10) was 95.9 percent (goal of96.5 percent). From Sept 09 (the month that in-line testing began) to April10, FPY was 96.7 percent. In five of these eight months, FPY was greaterthan 97.5 percent.

Scrap Te average monthly scrap cost for FY 2009 (May 08 to May 09) was

$9,615; FY 10 (May 09 to May 10) average monthly scrap cost was$2,762a reduction of just over 70 percent.

Source: Matt Kurtenbach

In view of the successes of the lean implementation in manufacturing areas, someat Daktronics were beginning to wonder if lean techniques could be extended to non-manufacturing areas, such as officesif so, could manufacturing serve as a model?


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APPENDIXA: DAKTRONICSCOMPANYHISTORY

Daktronics, Inc. had come a long way from its start in Brookings, South Dakota in1968 by two electrical engineering professors from South Dakota State University(SDSU), Dr. Aelred (Al) Kurtenbach and Dr. Duane Sander.

Al Kurtenbach received his first training in electronics from the military. He

explained, I served time in the Air Force before I went to college and worked as aradar technician . . . I came to like electronics; learned a little bit about the engineer-ing profession; and decided that that would be a good avenue for life. Kurtenbachwent on to complete his undergraduate, masters, and doctoral programs in electricalengineering. He joined the electrical engineering faculty at SDSU in 1971 where hebecame close friends with Dr. Duane Sander who was already on the faculty. Tetwo dreamed of a company;however, there were obstacles. As Kurtenbach put it,the two would-be entrepreneurs . . . were rich in children but poor in dollars, and,consequently, started . . . with very minimal startup capital and . . . bootstrappedour way up. Te two friends set up their new company in a converted garage, fundedoperations for the companys first four years through a private placement of stock, andtook their salaries in stock for those first four years. Te company name combined the

words Dakota and electronics.Kurtenbach and Sander wanted a company that would employ SDSU students

and graduates and provide opportunities to retain the universitys talent in the area.Te two looked for a niche product. Kurtenbach said the original philosophy was, IfGE (General Electric) is interested, were not. Initial ideas focused on bio-medicalinstrumentation, a reflection of Sanders research interests in the field of electrical engi-neering. However, the firms first product line was electronic voting systems, a line thatenjoyed some success.

Daktronics first electronic scoreboard came about because of Al Kurtenbachsfriendship with SDSUs wrestling coach who identified the need for scoreboards. Dr.Kurtenbach called the portable scoreboard introduced in 1971 the Matside. Dem-onstration of the new product at regional and national wrestling meets developedname recognition for the company and Daktronics leaders quickly realized the impor-tance of working directly with sports customer groups to identify needs and designproducts to meet those needs. Te Matside was the first of the companys growingstandard or catalog scoreboards. Te company subsequently developed a scoreboardfor swimming competitions and continued to develop its product line for a broaderarray of sports applications.

Al Kurtenbach left SDSU in 1973 to devote full-time to Daktronics. Sanderremained on the faculty at SDSU, while continuing to serve on the board of direc-tors for Daktronics. By the following year the company reached one million dollars insales and an employment body of 100. Te company had a growing line of productsthat included time and temperature displays, electronic message centers, custom and

standard athletic scoreboards, and electronic voting systems.In 1983 the company constructed a new manufacturing plant in Brookings, bring-ing its total manufacturing space to 64,000 square feet. Within three years, salesexceeded $10 million dollars. Te company continued to focus on small markets, butplanned to enter larger commercial markets. Te following year Daktronics made itsfirst acquisition by purchasing circuit board manufacturer Star Circuits, and openedthe first company- owned scoreboard sales and service office in Seattle, Washington. Inaddition, Daktronics began to build a nationwide dealer network.


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As President, Al Kurtenbach led the company to striking achievements. CEOJames (Jim) Morgan pointed out, We did the 1980 Winter Olympics and thatwas our first opportunity to work on an international stage. According to Morgan,the 1980 Lake Placid event made him realize how big the company that Kurtenbachand Sander had founded was really becoming. Daktronics went on to provide systemsfor multiple Olympic games including Calgary (Winter 1988), Barcelona (1992),

Lillehammer (1994), Atlanta (1996), Salt Lake City (2002), Athens (2004), Beijing(2008), and Vancouver (2010). In the 1980s, the company began installing displaysin major-league stadiums, leading to its being chosen for high profile sporting eventsincluding the 2005 Super Bowl.

In 1994, Daktronics stock was first publicly traded on the NASDAQ with themarket symbol DAK. By then, the company had over 500 employees. Daktronicsmost significant commercial applications included the 1997 conversion of the famousimes Square Zipper sign to LED display technology. In the 1990s, Daktronicsacquired Keyframe, Inc., and Sportslink, Inc., and introduced LED technology foruse in scoreboards, which resulted in company sales exceeding $100 million in 2000.

Daktronics cited as one of the keys to its emergence as the dominant companyin large electronic displays its creative applications of light emitting diodes (LEDs),which had become available in red, blue and green colors with outdoor brightnessin the mid-1990s. Daktronics pioneered the development of full-color LED videodisplays capable of replicating trillions of colors. Tis enabled the company to pro-duce long-lasting, energy-efficient large-format video systems with excellent color andbrightness.

In November 2001, Al Kurtenbach resigned as president of Daktronics butremained on the board of directors. Jim Morgan took over as President and CEO.Morgan had originally joined the company part-time as Daktronics first studentemployee while he was still an SDSU graduate student. Morgan finished his MSEE in1970 and went to work for Daktronics as the companys first full-time employee. As heput it, he had just happened to graduate from SDSU with my electrical engineer-

ing degree at about the time they founded Daktronics. Morgan headed the companysengineering department from the time he joined the company full-time in 1971 untilhe moved into the position as President and CEO.

Te mid-2000s was a period of continued expansion and growth. Daktronicsexpanded its manufacturing facilities and administrative facilities in Brookings; thenopened a manufacturing facility in Sioux Falls, South Dakota, and another in Red-wood Falls, Minnesota. Te additions brought total manufacturing space to 728,000sq. ft. in the U.S. Te geographic dispersion reflected Daktronics difficulties in find-ing employees in Brookings, population about 20,000.

Te companys sales exceeded $300 million in 2006 when it began to implementlean manufacturing to increase production efficiencies and reduce waste. By 2007 thecompany was becoming too large to run as a single unit; thus it was split into five

different lines of business. Four of the units were domestic and included U.S. andCanadaCommercial, Live Events, Schools and Teatres, and ransportationwitha fifth business unit for International Operations.

In 2008, the company reached over $500 million in sales with over 3,000 employ-ees. CEO Jim Morgan said, If we hadnt gone into lean manufacturing, we couldnthave had $581 million this last fiscal year without chaos. Tat same year, the firmleased 90,000 sq. ft. in a new building in Shanghai, China. Tat facility was used


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primarily for assembly. Daktronics purchased some of the needed commodity parts inChina but flew sub-assemblies in from the U.S.

In 2009, after more than 41 years in business, Daktronics products were found innearly 100 countries on six continents around the world. However, the severe recessionthat began in the United States in 2008 affected Daktronics as well. In fiscal 2009, thecompany began to see the economy negatively impact its Commercial business unit

and, to a lesser degree, its International business unit. Te stock price took a hit, fall-ing from a high of $29.82 in October 2007 to a low of $6.55 in March 2009. As fiscal2010 began, the adverse economic conditions also began to affect the sports businessin the companys Live Events and Schools and Teatres business units. Te companybegan to see costs and selling prices of products being affected by the growth of com-petition across all of its business units. In FY 2010 its challenge was how to weatherthe recession and emerge well-positioned to resume pursuit of its stated goal to be abillion dollar company.

President and CEO Jim Morgan remained optimistic. He believed that,

Te interest of our customers in providing more entertainment value at sports venuesusing our display technology is still there. We have a list of potential projects in our

sales pipeline for summer and fall delivery in calendar 2010, but there remains uncer-tainty on how the economy will impact these projects. We will know more about thisas we move through the fourth quarter of fiscal 2010 and into the first quarter of 2011.


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APPENDIXB: DAKTRONICSPRODUCTS

In 2010 Daktronics produced and sold the following major product lines.

Scoreboards and timing systemsincluded scoreboards for baseball and basketball(four- and single-sided) and scoreboards and timing displays for football as well asstadium enhancements that could include video and message displays and sponsorpanels. In addition, Daktronics provided automated rigging and hoist products toinstall and support its center-hung arena scoreboard/display systems for both smalland large sporting facilities.

Video displaysused Daktronics-developed imaging and manufacturing technol-ogy in permanent LED displays, mobile and modular LED displays for concert tours,corporate functions and award and auto shows. Daktronics freeform LED technologyprovided architects with flexible modules for designing and controlling displays onbuildings, and flat-panel displays for creating indoor display networks at businesses,stadium concourses and event centers.

Audio systemscoordinated high-quality sound systems for sports venues with thescoring and video displays for indoor and outdoor venues. Daktronics audio system

offerings included both standard and custom options.

Digital billboardsincluded a full line of LED architectural lighting and displayproducts for billboard displays as well as billboard management software and services.

Transportation productsencompassed a wide range of LED-based displays forroad management, parking (including space availability displays to inform driversabout parking- space status), mass transit and aviation applications including lane use,travel time/toll rate, and variable speed signs.

Software and controllersallowed efficient and easy operation of Daktronics dis-play technology. Some products were designed for simple display management (forexample changing information on the displays) and others were designed for creating

content for LED message signs. Te sport software and controllers served to controlnot just scores, but game and player stats, while the video software and controllershelped process and control digital content for video displays.

Digital and price displays included product lines marketed primarily to com-mercial customers. Products included outdoor time and temperature displays as wellas digital displays specifically designed for the petroleum industry. Tese offered highvisibility and quick fuel price updates using Daktronics Fuelink control software.

In addition, the company serviced the products it sold and, where necessary, pro-vided training in programming and the use of the equipment.

Source: Daktronics Annual Report.


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APPENDIXC: PROFILEOFMAJORDIGITALSIGNAGEINDUSTRYCOMPETITORS

Te following brief profiles represent the breadth of firms that competed in the digitalsignage industry in 2010.

Adaptive Micro Systems, LLC,was founded in 1978 and manufactured stand-ard LED text and video displays primarily applicable to indoor/outdoor commercialadvertising and transportation markets. Te company had manufacturing and salessites in the U.S., Malaysia, and Europe and used an authorized dealer network to sellits products.

ANC Sportsspecialized in manufacturing and selling LED video displays directlyto large sports venues. It had worked with many collegiate and professional sportsteams on custom LED video display designs. It had also worked with other LEDdisplay manufacturing companies, like Mitsubishi Electric, to complete projects usingANCs software and controllers that were used to power large, high-definition LEDvideo displays.

Barcowas a leading global technology company that designed and sold visualiza-

tion solutions for a variety of markets including the digital-out-of-home (DOOH)industry. Its manufacturing sites in Europe, North America, and Asia-Pacific builtstandard and custom LED video displays as well as LCD and rear- or front-projectiondisplays. Barco had sales offices around the globe and also sold to customers throughresellers and system integrators.

Capturionwas a privately owned multi-format LED video display company basedin Laurel, Mississippi with manufacturing facilities owned and operated in Asia. It wasstriving to advance its indoor and outdoor products towards a better, greener LEDsystem.

Daktronicswas considered by many to be the industry leader in manufacturingLED displays. In business since 1968, the company had products installed in nearly

100 countries. Daktronics manufactured a wide variety of custom and standard LEDtext and video displays as well as LCD screens. Daktronics used a vast dealer networkas well as selling its custom products directly and through system integrators.

Hibino Corp., in business since 1964, manufactured LED video displays primar-ily for use in mobile and modular applications. Te company reported it could customdesign and construct completely mobile audio visual systems for nearly any event.Hibino sold directly to its customers.

Hi-Tech LED Displayshad been manufacturing electronic displays since 1984.It mostly manufactured standard LED text and video displays for a variety of applica-tions, but also manufactured some custom displays. Hi-ech sold primarily to U.S.sign installation companies, but also sold directly to customers, and had completed

projects world-wide.

Imago(Odeco Electronica in Europe and ADDCO in U.S.) had offices and part-ners around the world. Its assembly plants in Europe, North America, South America,and India manufactured a variety of standard LED text and video displays. Imago wasbest known for its intelligent transportation systems, but also did some low-end cus-tom LED displays. Te company sold through integrators and resellers to customers.


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Ledstar, Inc., specialized in manufacturing LED text variable message signs (VMS)for transportation applications since 1988. Te VMS used on highways across NorthAmerica provided information to motorists. Ledstars products could be purchaseddirectly from the company.

LG Electronics, located in Korea, was established in 1958. Globally, it had 9.4percent of the LCD V market and 13.5 percent of the flat panel V market in 2010.It had leveraged its V capabilitiesincluding high definition (HD) Vinto com-mercial products for the public venue market as well as many other market segments,including healthcare, transportation, education, financial, retail, hospitality, quick ser-vice restaurants (QSR), food services, government, and small business.

Lighthouse Technologiesoffered a line of LED text and video displays for almostany application. Te company had sales offices around the world and was recognizedfor its custom mobile and modular units, as well as some of its displays in large sportsvenues. Lighthouse was known as one of the industrys leading companies for newproducts and technologies. Te company sold direct and through systems integratorsto customers.

LSI Industriesentered the DOOH industry with its 2006 purchase of SACOechnologies, Inc., of Montreal, which gave it the ability to produce large-format LEDdisplays. Te company manufactured LED text and video displays and LCD displaysfor nearly every application. LSI also had the ability to design and manufacture customdisplays and sold them direct and through integrators and resellers.

Mitsubishi Electricrated in 2009 as the worlds 215th largest company by FortuneGlobal 500, manufactured standard and custom LED text and video displays, and avariety of other products. It had sales locations around the globe and was capable ofmanufacturing some of the largest custom LED video displays through its subsidiaryMitsubishi Diamond Vision. Te company sold its products through several distribu-tion channels including direct and through partners, resellers, and system integrators.

Nevco, Inc.,manufactured its first scoreboard in 1934, and had been consideredthe largest private scoreboard manufacturer for some time until Daktronics displacedit. Most recognized for its LED scoreboards. Te first also manufactured LED text andvideo displays. Nevco was capable of small custom scoreboard designs and sold directlyto end users and integrators mainly in North America, but also around the world.

Optec Display, Inc., in business since the late 1980s, primarily manufacturedstandard outdoor LED text and video commercial advertising displays. It used manu-facturing sites in the U.S., China, and aiwan and had a 300+dealer network that soldits displays primarily in the U.S., with some global sales.

Optotech Corporation, established in 1983, manufactured both standard andcustom LED text and video displays for a variety of applications, its best known beingdigital billboards. It also made LCD screens and other products. It had locations inaiwan and China, as well as sales locations throughout the world. o sell its productsOptotech used resellers and integrators, but also sold directly to the customer.

Panasonic Corporation, headquartered in Japan, was one of the largest electronicproduct manufacturers in the world, comprised of over 634 companies. Te com-pany offered a wide range of digital signage solutions, from all-inclusive bundled solu-tions, to custom-designed enterprise networks. Panasonic provided hardware, softwareinstallation and support for its customers.


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SignCoEDS manufactured signage for sports and commercial applications. Itmanufactured LED text and video signs as well as LCD video walls and DLP (digitallight processing) displays. SignCoEDS primarily used a dealer network to sell to cus-tomers, but also sold through integrators when doing custom projects.

Skyline Products, Inc., manufactured LED text displays primarily for the trans-portation industry. Skylines VMS provided information to travelers on highways andas a part of intelligent transportation systems. Skyline also manufactured renewableenergy sources and did aluminum fabrication. Skyline products could be purchaseddirectly from the company.

Sony was a Japanese multinational conglomerate corporation headquartered inokyo, Japan. Convergent Media systems, a Sony company, developed Prodokol, afully managed, end-to-end, digital signage platform. Prodokol supported applicationssuch as interactive touchscreen, digital menu boards, and single display or multi-display signage. Its leading managed solutions were banking, retail and quick servicerestaurants (QSR).

Telegrawas a leading manufacturer of advanced traffic management systems forroadways, tunnels, and other transportation applications. It had manufacturing sitesin Croatia and the U.S., as well as sales sites around the world. Te company reportedthe ability to custom design transportation systems for nearly any application and solddirectly through integrators and resellers to customers.

Toshiba, rated in 2009 as the worlds 97th largest company by Fortune Global,manufactured a variety of standard and custom LED text and video displays, LCD andplasma screens, rear- and front-projection screens, as well as a number of other com-munications and electronics products. oshiba sales locations around the globe soldproducts for use in a variety of applications. oshiba sold direct, and through systemintegrators and resellers around the world.

Trans-Lux Corporation manufactured standard and custom LED text and videodisplays as well as LCD and plasma screens for a variety of applications. rans-Lux hadlocations across North America and the globe to sell its products. rans-Lux workedwith resellers, partners, and integrators to sell its products to customers.

Watchfiremanufactured standard LED text and video displays for the commer-cial indoor/outdoor advertising market. Te companys products were manufacturedcompletely in the U.S. and were sold through a dealer network to customers acrossNorth America.

Young Electric Sign Company (YESCO)started building custom signs and dis-plays in 1920. Te company manufactured LED text and video displays as well asother different styles of signs, and was often featured on the Las Vegas strip. YESCOhad several manufacturing and sales locations in the U.S. capable of custom buildingmany styles of signs. It sold directly, and through resellers and integrators.


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NOTES

1. Lean Manufacturing at Daktronics. Presentation for South Dakota EngineeringSociety, April 2, 2009.

2. Small orders generally had margins in excess of 40 percent and large orders hadmargins of generally less than 30 percent.

3. It also felt that the sports business was generally recession-resistant, because buy-ers could use video display products to generate revenue (through advertising).

4. Daktronics officials perceived that excessive custom design led to an increasedrisk of warranty costs.

5. Daktronics 2009 Annual Report, p. 1. Available at: http://files.shareholder.com/downloads/DAK/669959025x0x302969/3d7827ec-d35d-415a-9f34-bb0c397f65b3/Daktronics_%202009_%20Annual_%20Report_%20Wrap_%20062509_%20shareholder.pdf

6. For long-term construction-type contracts, it recognized earnings using thepercentage-of-completion method.

7. Batch-and-queue refers to a system in which large lotsor batchesare pro-duced. When a batch must wait for downstream processing, it sits idly in aqueue. A batch-and-queue system tends to require more production space,and results in greater inventory and lead times than a one-piece flow. One-pieceflow means that parts move stepwise through processes with no work-in-process(WIP) in between either onepieceat a time or a small batch at a time.

8. Te characters A and 3 together refer to the paper size, which is the metric equiv-alent to 11-inch x 17-inch paper. Te A3 technique is a part of oyotas QualityCircle problem solving techniques, which were developed during the 1960s.

9. Tere are various versions of the five S acronym, but the basic idea is to main-tain a workplace that is clean and free of unnecessary materials. For example,Stevenson (2009) suggests Sort, Straighten, Sweep, Standardize, Self-Discipline.

10. ooling (as opposed to tools) refers to machine accessories, which would bemounted to the machine or used in setting up equipment.

11. A proof of concept refers to a rough prototype or working concept that providesan indication of an ideas feasibility.

12. First Pass Yield (FPY) is generally defined as the number of units of acceptablequality (i.e., those not requiring rework) emerging from a process divided bythe number of units going into that process over a given period of time.

13. Tis would generally be considered a broad product mix.

14. Tis conclusion was reached based on a target test cycle of one minute per station,with a maximum of three stations staffed. Products requiring more than three

minutes to test were viewed as out of scope, and were systematically sampled(e.g., every second or third board), which would not slow the pace of the line.

15. Tis follows from Rule 1 of the oyota Production System: All work shouldbe highly specified as to content, sequence, timing, and outcome. Tat is, alloperators should accomplish the same task(s) the same way.

16. For example, if the flow line required the line to operate at a 1.5 minute takttime, then each of the work stations along the flow line would not contain workcontent that exceeded 1.5 minutes.

Documents

Week 09 - Daktronics D Keen on Lean Manufacturing at Daktronics, Inc