Lean Implementation Reduces Labor Costs by 10.45%


Kenco Logistic Services manages a 684,000 square foot packaging and distribution facility for a global diesel engine manufacturer.  The Kenco operation employs 552 employees, shipping 292,000 lines and 3,111,294 pieces monthly. The operation packages 45,048 lines and 4,143,205 pieces per month. Other services provided by Kenco include safety management, engineering, financial reporting, human resources, maintenance, and training and quality.


A solution was needed to achieve the annual cost target which was set by the customer’s budgeting process.


The Kenco operation team took the cost challenge and viewed is an opportunity to implement LEAN.  The implementation plan started with training on the basics of LEAN.  Ten hours of LEAN basics were provided to all managers prior to the facility roll out.  5S (Sort, Stabilize, Shine, Standardize, and Sustain) was the cornerstone on which the program was built.  This provided a chance for everyone in the facility to learn the basics: seeing waste, removing the waste, and looking for opportunities for continuous improvement. Key points for associates to learn were the concepts of waste, the tools that would be utilized, and how to apply the tools in their daily activities.  Once 5S was in place, a pilot team was identified to begin the next step of TAKT board utilization (visual tool that helps people maintain a certain pace in a process), A3’s, Kaizen events, and visual factory techniques.


The LEAN implementation resulted in a 10.45% reduction in labor costs.