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CASE STUDY - The story of Norwegian furniture manufacturer Haugstad Møbel who was able to transform its culture and harness the potential for sustainable growth thanks to Lean Thinking.
Words: Eivind Reke
In 2016, Haugstad Møbel was a small manufacturer of wooden furniture. Walking into the factory, not much had changed in the past 30 years. It had been 70 years since the company was founded. At that time, the owners saw potential in the products they were making and soon decided to move the factory to new facilities. A new factory building was built and opened in 1963 and they invested in modern machining equipment until 1989. After that, everything settled down and sales remained more or less the same for 30 years.
There has always been a "monozukuri" culture at the company. So much so that when Steinar Gulaker took over as CEO in 2015, he was expected to pick a machine for himself and get to work on production himself. But monozukuri without hitozukuri - the passion for making people - leaves a company stagnant. And Steinar knew Haugstad needed to move forward. His mission was to build on the passion for making things, develop a passion for developing people and create a culture of "Kotozukuri" - the passion for making things happen. And things were going to happen.
In 2017, Haugstad Møbel began the first of three research projects with SINTEF Manufacturing, funded by the Norwegian Research Council. The first project explored the possibility of integrating digital technology into old production equipment. It gave Steinar a chance to study modernized factories across Europe that produced products similar to Haugstad's. What he saw made him realize that it wasn't wages that were preventing Norwegian companies from competing. Haugstad was decades behind the best companies in Europe when it came to applying both modern production technology and lean manufacturing principles.
Haugstad had an old, manual production cell for gluing and pressing laminate onto the wooden boards, which were later cut to make parts for the final product. The cell consisted of four machines, and it took four operators to produce 100 sheets per day. Given the heavy lifting, many operators struggled with their physical health. When Steinar suggested using this line as an example of how both productivity and production conditions could be improved, the team was not too enthusiastic. But once the new line was in place, no one wanted to go back to the old way of working.
The new line was fully automated, with all processes seamlessly linked together in a single flow, eliminating the need for heavy lifting. Now one operator could operate the entire line and produce 110 sheets per hour. Despite initial skepticism about this new and modern approach to production, a transformation was taking place. And that was just the beginning.
The visits to European competitors were a revelation to Haugstad's senior managers. Tours of modern factories equipped with modern production systems designed for both flow and flexibility made them realize that their outdated equipment, which had been poorly maintained for years, offered them little chance of progress. The lean ideal, of course, is to start with what you have, make it work, and make sure it flows by solving problems. But, as the sensei story goes, "TPS well. Sometimes: Be flexible." And in Haugstad's case, most of the old equipment was beyond repair and required investment.
Fortunately, the owners and their bank saw an opportunity in Haugstad. There were passionate people who really cared about their work and the company. Therefore, the necessary investment in modern, digitally integrated production equipment to grow the business was approved. Haugstad soon discovered that brand-new solutions come with brand-new problems, and the journey from designing the new production lines to putting them into service proved to be long and winding.
First Covid struck and delivery times for many of the machines suddenly became much longer than originally expected. The first test run was due in October 2020, but it took another eight months to ship enough production equipment to Norway and get it ready for testing. By the end of 2022, only one of the three new production lines was fully operational, and it would take several more months to get the other two up and running. Haugstad is still waiting for one of the new machines to arrive, but the manufacturer loaned them a similar machine for free. Finally, the new production lines were running in the summer of 2023, three years after the planned first test run. While implementing the new equipment, Haugstad discovered that new stuff doesn't change old habits and that new equipment capacity is useless if you don't also develop people, the market and internal logistics and distribution.
In the fall of 2021, Steinar invited lean sensei Michael Ballé to visit the factory during his road trip through Norway. I had previously teased Steinar and Olav (his production planner) by saying that, for two men who claimed not to like putting stuff on pallets, they did have a lot of stuff and pallets lying around. After the gemba walk, Steinar asked Michael for his opinion on the new production equipment, but Michael was not really interested. The sensei's role is to help CEOs find and address their real problems, and Michael noted that the main concern was not the new production equipment, but logistics - something Steinar needed to address.
As a first step, Michael suggested that Steinar completely separate logistics from production to clean up the mess. During the visit, parts and pallets were scattered everywhere, with the prevailing approach being "if you find a free spot, put it there." The result was a disorganized plant with operators constantly walking back and forth to find parts.
On Michael's advice, Steinar took immediate action to separate logistics and production. The gemba walk took place on a Tuesday, and by the weekend Steinar and a few others had moved all the parts to a designated area to serve as the plant's internal logistics department. During this process, they also moved the manual assembly stations to the new plant, creating an assembly area between the production line and the distribution area. Steinar further reorganized the plant into three separate functions: Logistics, Production and Distribution, with clearly defined relationships between suppliers and customers. This move was just the beginning of a journey that allowed Haugstad to realize the full potential of their investments.
Steinar was already developing lean processes, creating flow and implementing 5S, but the breakthrough came after the sensei's visit. When Steinar began his journey with Haugstad, his strategic framework was based on the traditional 4D: Define, Decide, Drive, Deal. However, after working with two different lean sensei, he realized he needed to change his approach. The investments made were necessary and intelligent, but a different strategy was needed to realize their full potential. The 4F framework of lean strategy provided Steinar with a perfect thinking framework to move forward, one that relies on accepting challenges and committing to change by involving everyone in the organization in creating new ways of working.
For Steinar and Haugstad, the Toyota Production System became the frame of reference, acting as an education system for the simultaneous development of people and process. During one gemba walk after another, Steinar and his sensei engaged with operators and team leaders, pointing out areas where the process was not working properly and providing problem-solving tools to empower people on the front lines to come up with their own solutions. As progress was made and problems were solved, they raised the bar higher and higher.
In the CNC workshop, one of two remaining production cells not directly connected to the main production lines, the team struggled with a three-week order backlog and saw no solution to this problem. Sales were increasing, so reducing the load on the cell was not an option. Earlier, an important discussion in daily management had convinced obeya Olav, the production planner, to switch from weekly planning to daily planning of kitchens. The effect was extraordinary because it helped everyone in the production process make better decisions at each step and avoid under-optimizing their own processes.
As the results of this change were discussed and celebrated, the sensei said that the goal should be an hourly schedule, indicating that there was still a long way to go. Ultimately, this became the key that unlocked the CNC workshop. After a discussion with the CNC team, Olav, Steinar and the team came up with an hourly production target and gradually (slowly at first and then quickly) managed to clear the backlog.
With increased capacity from 2,000 parts per week to 2,300 parts per day, the number of orders shipped also increased fivefold. Again, visualizing the flow of information with greater precision proved useful in helping the distribution team find a path to handle the increase in orders without building up large amounts of inventory. The same approach has helped the assembly team align with their downstream customer, contributing to better overall alignment and coordination throughout the plant.
Like all lean transformations, Haugstad's journey has been full of ups and downs. A key insight from Aramis Auto's Lean CEO, Nicolas Chartier, is that the first step of any lean transformation is fixing the team. It involves giving people the right type of job, identifying those who are enthusiastic about Kaizen, developing highly skilled team leaders and reassigning those who don't have what it takes to work in an organization that wants to change itself. This challenge became clear to Steinar as time passed. Together with his sensei, he invested in people whom he thought had the necessary qualities, but more often than not they were disappointed.
The role of production manager proved especially challenging, as the old idea of optimizing each production step by giving everyone instructions and trying to control the result was deeply ingrained. After several failed attempts, Steinar finally found the right person in Olav, the production planner. Developing a strategic theme for finding the right job for the various workers at Haugstad emerged as a means of preventing relapse and counteracting pushbacks, and Steinar seemed to have a knack for it. A former CNC operator who initially did not believe in the idea that the next process is your customer now excels at programming.
It is not often that a manufacturing company of Haugstad Møbel's size invests in the future like this. In addition to four people working full-time on digitization, two product designers are responsible for developing the next generation of sustainable furniture. However, Haugstad is not only focusing on the future of their own products and processes. Just a 20-minute drive from the main factory, they have established a Circular HUB - a learning factory where kids aged 14-15 come to learn about the circular economy by creating their own start-ups, products and circular business models. In addition to being a learning factory, the Circular HUB also serves as a resale, refurbishment and reuse facility, where old products, some unused and still in their original packaging, are given new life.
For lean practitioners, this is the future. Simply improving the linear business model is no longer enough. To face the environmental crisis, we must use our collective lean skills to develop and improve new and innovative circular business models. This means using lean 's 4F framework as an alternative to traditional 4D, which challenges and supports rather than instructs and controls. Then, through Yokoten, our signature approach to knowledge sharing and learning, we have the unique opportunity and responsibility to contribute to a sustainable future both locally and globally. Let companies like Haugstad Møbel inspire us to be the change we want to see in the world.
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