Kiowa Corporation

Gaining a Competitive Advantage with TOC

“At Kiowa Corporation we certainly have become very firm believers in the process of Theory of Constraints. We have seen firsthand what it can do at our organization and we have become as much a disciple of this as possible.” – Gregory M. Brown, President, CEO & Owner, Kiowa Corporation

Kiowa is a full-service manufacturer of machines and sub-assembles aluminum and zinc die-castings. Their primary markets include casting for diesel engines, farm and construction equipment, hydraulic systems, power tools, electronics, computer equipment and automobiles.

Today Kiowa is the industry leader in new product development and in overall quality and delivery service to its customers.

Kiowa’s mission is to serve its customers through the strength of all employees. This has been the driving factor since the company’s inception in 1927. Kiowa will search out the changing needs of existing and future customers, and through its daily commitment to the continuous improvement in employee excellence, Kiowa will continue to improve in all aspects of quality, delivery and cost of the service provided to customers. The company’s two original customers remain customers today.

Located in Marshalltown, Iowa, Kiowa operates from a single 100,000 square foot plant site and employs 150. The company ships its products worldwide from this location, as well as from a joint venture it has in China. When company president Gregory Brown presented at TOC World^® 2001, Kiowa had $17 million in annual sales.

TOC Beginnings
In 1989, Kiowa’s president read The Goal and did nothing. Eight years later, a key staff member persuaded him to attend a two-day TOC program. In 1999, the company’s Leadership Team attended an extended TOC program.

The team recognized all of the problems that Alex Rogo had in The Goal as their own – high and growing inventory, late deliveries, expediting, and capacity beyond belief.

Soon after the extended TOC program, Kiowa began working with AGI Associates Suzan and David Bergland to focus improvement efforts and develop and implement a game plan.

They started with TOC’s Five Focusing Steps. They identified the constraint. They exploited the constraint. They subordinated and elevated and started all over again…They addressed the basic fundamentals without sophisticated systems, without major expense.

The immediate results were that delinquency went away. Kiowa found its excess capacity, got out of the expediting mode, and got out of the overtime mode. This afforded them the opportunity to sit back and look at things a little closer and do a more complete business analysis. The analysis determined that the constraint, which previously was internal, had moved into the market.

Kiowa knew they had to go out and capture the marketplace. But, how?

The company did a survey of existing and potential customers to determine their needs. Kiowa realized that it needed to understand the needs from an industry standpoint. What were the pains that the die casting industry was causing its customers? The issue wasn’t ‘what was the problem with Kiowa,’ but ‘what upsets the customer about the supply industry as a whole.’

As they completed this, Kiowa began to find the direction of the solution. They found that the die casting industry was not providing velocity – speed of product to market – speed with direction.

They talked with their customers on what was needed to gain market share. When the customers made a request, Kiowa had to respond – quickly – not only to meet the needs of its market, but also to enable Kiowa’s customers to meet the needs of their markets.

Before they could make their unrefusable offer to their customers, Kiowa again turned to AGI and to Critical Chain Project Management. Kiowa staff was trained so they could provide the needed speed with direction.

TOC Project Management Implementation
Kiowa’s first project was to design and develop three dies. While building and scrubbing the project networks, it was discovered that one of the company’s highly skilled engineers was involved in every task. To address this problem, some of those tasks were re-allocated to other engineers, thus eliminating multi-tasking.

The “Relay Runner” culture was implemented to ensure that the handoff of projects goes smoothly, thus avoiding the loss of valuable time. Kiowa also used the resource buffer concept to keep the outsource producers of the dies on schedule.

After implementing TOC Project Management, Kiowa worked with the Berglands to analyze the market from the perspective of the customers. They strived to identify the deep issues and pains of the market. These pains included:

• Suppliers’ lead times are too long
• Suppliers don’t maintain an ongoing relationship with the customer
• New product development efforts take too long
• Products often reach the market too late

These problems resulted in a loss of market share, loss in sales opportunities, and a reduction in profitability.

In response, the company developed the Kiowa Velocity System (KVS). Committed to timely day-to-day responses, KVS includes highly specialized TOC-based project management and production systems.

To minimize the customers’ pains, KVS provides short, reliable new product development time, along with design, technical support and prototype support. An integral part of KVS is maintaining ongoing relationships with customers.

Kiowa’s customers benefit from KVS by getting products to market earlier, thus increasing sales significantly while reducing costs. This results in profits significantly increasing.

In order for Kiowa to provide KVS to its customers, the customers must work with Kiowa by providing timely information and complete and accurate models. Kiowa must be allowed to participate in the upfront design reviews and in the design FMEA. The customer must also participate in Kiowa’s manufacturing FMEA.

Benefits to Kiowa
During the two years that Kiowa has been using KVS, the dozen or so new jobs brought in house have averaged a 60% shorter start-up time. Their business with a major manufacturer of diesel engines is growing from $1.5 million to $7 million per year because that manufacturer is so impressed with what Kiowa has been able to do (very impressive for a $17 million company). And, two new customers – a power tool manufacturer and a manufacturer of SAN systems – have created a 40% growth in revenue.

Lessons Learned

• Develop more than one internal TOC expert
• Present the Market Offer to the appropriate decision maker in the organization
• Continue to challenge all of your assumptions to determine ways to shorten your project schedule during network scrubbing
• Short, reliable lead times do get customers’ attention – they’re willing to pay for them and to move business to companies that can supply them

Advice
Kiowa’s CEO advises that those looking to TOC for improvement get the help and guidance TOC Experts can provide in the implementation process, and once you embark on the journey, stay the course, do it quickly, and reap the gains.

These results were presented by Gregory Brown, President, CEO & Owner of Kiowa Corporation at TOC World^® 2002 in Los Angeles. The presentation is available on video (#JLA-2).