INTEGRATIVE CASE 6.0 Lean Initiatives and Growth at Orlando Metering Company* It

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INTEGRATIVE CASE 6.0
Lean Initiatives and Growth at Orlando Metering Company*
It was late August 2002 and Ed Cucinelli, vice president
of Orlando Metering Company (OMC), sat in his office
on a late Saturday morning. He had come in to prepare
for some strategic planning meetings that were scheduled
for the upcoming week. As he noticed the uncommon
silence in the building, Ed contemplated the current
situation in his organization.
The Orlando Metering Company was one of several
facilities owned by a leading manufacturer of water
meters for the worldwide utility industry. The facility
specialized in the assembly, testing, and repair of water
meters used to measure the amount of water consumed
by private homes, organizations, and large cities. In
1999, OMC started the process of moving from a
traditional manufacturing to a lean manufacturing
organization with a fully empowered workforce. Due
to the tremendous success the organization achieved,
the corporate headquarters decided to transfer four
new product lines to the Orlando facility in 2001.
This transfer resulted in considerable expansion of the
business, doubling the number of employees and shifts
needed at the plant and quadrupling the revenues of the
organization. As Ed looked through some old pictures
on his desk, he reflected on how proud he was of
everything that his leadership team and employees had
been able to accomplish in the short year-and-a-half
time frame that was given to them by the headquarters.
However, the organization was currently experiencing
some very tough challenges due to the recent change
and expansion. Although OMC successfully brought
in the new business, Ed and his management team
made some mistakes in the transition. When he walked
through the production floor, Ed could feel that the
energy and commitment of the employees were at an
all-time low. He knew that his current 108 employees
were stressed and unhappy. Turnover and absenteeism
were at an all-time high, and productivity and quality
were suffering. The organization had lost a lot of the
momentum it had gained in its implementation of lean
manufacturing. Just last week, Ed had received a call
from his supervisor at corporate, expressing concerns
about the current situation at OMC. The corporate
headquarters had given Ed and his leadership team
three months to turn things around and show some
improvements.
Ed knew that it was time to take some serious
action. He knew that the process side of planning
the inventory and physically assembling the meters

according to the principles of lean manufacturing were
working efficiently in his facility. However, the company
had lost the team-based, lean manufacturing culture
in which the employees took ownership and worked
together as a team to solve problems and run their own
work cells. He knew that to truly take advantage of the
potential of the lean layout and processes operating
in his plant, the company needed to have the culture
to support it. Ed knew that it was the right decision
to keep the lean production process in the operation,
inventory planning, and assembling meters. However,
he needed to decide whether to refocus the organization
on reestablishing the team-based, lean culture and
thinking that it had lost or return to the traditional topdown
management methods of the past.
Background
Fresh out of college, Ed began his career at OMC in
1993 as a mechanical engineer. The company was originally
founded in Orlando, Florida in 1974. The PMG
group, OMC’s parent company based in Europe, was
seeking growth opportunities and saw the United States
as a great opportunity given the size of the market and
the fact that OMC’s product offered a new technology
compared to those available at that time. There were
many styles of water meters for different applications,
and OMC’s new product at that time provided a solution
to issues within the market, mainly suspended solids (i.e.,
sand) in the water. Traditional meters would slow down
and stop due to suspended solids, thus reducing a water
utility’s revenues. This new meter allowed the suspended
solids to pass through and provided better accuracy for
measuring water use, thus increasing revenues. Therefore,
the meter quickly gained acceptance in many markets
and the company had grown since the new meter’s
introduction.
As sales continued to increase, so did the number
of employees and the need for more space. Ed was in
charge of designing and overseeing the construction of
*This case was prepared by Wanda Chaves from Ringling College
of Art and Design and Ed Cucinelli from Crummer Business School.
The views presented here are those of the case authors and do not
necessarily reflect the views of the Society for Case Research. The
authors’ views are based on their own professional judgments.
Copyright © 2008 by the Society for Case Research and the authors.
No part of this work may be reproduced or used in any form or by any
means without the written permission of the Society for Case Research.

a new facility. Having no prior experience working within
a lean enterprise, Ed designed the new facility as a larger
model of the old. Adding more space and more equipment
did not create a more efficient workplace, but with the right
people, the company still accomplished the job. As he sat in
his office, Ed remembered the long nights working side by
side with maintenance, quality, and production personnel,
all trying to insure that the new facility move would be
successful. The power of teamwork was evident as the
employees completed the project in a timely fashion and
production efficiencies remained stable. At this time, many
of the employees at OMC had been with the company
for nearly 10 years. Employees knew each other and each
other’s families, and they felt a sense of responsibility to
one another. Even though OMC did not have the best
tools, offered a compensation package that did not exceed
the market average, and ran without air-conditioning, the
employees felt that they belonged to something special.
The Decision to Go Lean
In 1998, OMC’s parent company was purchased by a much
larger competitor. Soon after, the board of directors came to
Orlando for a board meeting. The board decided to pursue
a lean manufacturing culture within the organization. At
that time, however, none of the company’s facilities operated
in a lean manner. As a test and learning experience,
the board decided to challenge the Orlando plant, and it
gave the facility an aggressive nine-week time frame within
which to implement the reconstruction of the production
floor and change the manufacturing process to lean.
At this point, Ed accepted the position of Lean
Champion, where he became responsible for implementing
the lean changes and initiatives. Ed knew that all of the
employees at OMC would need to be involved if theorganization was to successfully achieve this nine-week
goal. Immediately, the leaders of the plant held a plantwide
meeting and outlined the goals. Everyone quickly
realized that the small Orlando facility would be closed
and relocated to one of the large sister facilities if the
change was not successful. Ed organized the employees
into teams, conducted lean training, and provided constant
management of the project and deadlines. All employees
responded, and through long hours, many weekends, and
a lot of sweat, all production lines and half of the office
processes were converted to utilize the lean concepts.
Exhibit 1 details the specific timeline that was developed
and accomplished.
Background on Lean Manufacturing
The goals of implementing lean manufacturing at the
OMC facility included improving material handling, inventory,
quality, scheduling, personnel, and customer satisfaction.
In general, the key objectives of the lean facility’s
layout and flow were to deliver high-quality, low-cost
products quickly while maintaining a safe and pleasant
working environment (Henderson & Larco, 1999). By
implementing just-in-time (JIT) production, one-piece flow,
self-directed work teams, and cellular manufacturing, the
leaders expected the following improvements to occur as
part of the new lean environment:
1. A decrease in the cost of space, inventory, and capital
equipment
2. A reduction in throughput time, cycle time, or lead time
3. An increase in capacity utilization
4. A reduction in lost-time accidents
Exhibit 2 details the strategic advantages of implementing
lean manufacturing.

Lean is not only a production system of tools and processes
to continually improve, but it also involves implementing
a culture and atmosphere in which the systems and
tools can be best utilized. Without the culture and support of
all the people, the benefits cannot be maximized. Exhibit 3
illustrates the principal components of lean production, and
Exhibit 4 provides details on lean management and the key
elements needed to sustain a lean manufacturing culture.

Becoming the Lean Showcase
Next, the employees and leaders needed to work together
to transform the company into a lean showcase.
Ed knew that simply making changes to the production
processes would not create the lean showcase that the
board expected. Although employees were supportive and
dedicated, the management team provided most of the
direction and led the change. As discussed above, one of
the critical elements to the successful implementation of
a lean environment is the development and maintenance
of a self-directed, empowered workforce (Henderson and
Larco, 1999). Ed realized that the time had come to transition
to team-based production lines. Over the next few
months Ed and the OMC leadership team, with the help of
a trainer, began an intensive team-based training program.
The employees went through team skills training, including
sessions on feedback and communication, problem solving,
meeting skills, team dynamics, and an informal session on
company financials. The teams began to see the results of
the training and hard work. They began to run their own
team meetings and suggested and implemented 8 to 10 improvements
a week in areas such as quality, safety, and productivity.
The employees were motivated and encouraged
by all of the progress and success.
At the same time, the leaders at OMC were focused
on making a more comfortable and friendly work
environment. This was accomplished by adding new
lighting that tripled the brightness of the facility; painting
the floor, walls, and equipment; and installing airconditioning.
Leaders even placed live plants throughout
the facility. These changes helped promote the concept
that employees played a key part in the success of OMC.

The facility looked clean and beautiful. Exhibit 5 provides
before and after pictures of the facility.
After an 18-month implementation cycle (which
included the physical changes to the manufacturing floor
as well as the implementation of lean manufacturing
production and administrative processes), the organization
was able to achieve the following benefits:
???? The managers and employees were able to reduce inventory
by 50 percent and completely eliminate finished
goods.
???? Quality control changes resulted in the conversion to
100 percent testing of all products without adding any
additional employees or equipment.
???? The plant was able to cut total production cycle times
from days to minutes (typically one to two days to
process reduced to 5 to 15 minutes).
???? Total floor space was reduced by 41 percent (so much
that a basketball court was added within the facility),
as displayed in Exhibit 6.
Exhibit 7 details the cost involved during the nineweek
transformation of the physical manufacturing floor
to lean production.
Working together, the employees and leaders had
succeeded in establishing the lean showcase, and the
board of directors took full advantage. People from sister
companies around the world came to Orlando. They
toured the facility to learn about lean manufacturing and
the best methods to implement it. Tours were given by
the employees. There was no better evidence of the power
of lean manufacturing and empowerment than seeing an
hourly employee give a presentation to a VP of operations

of another facility. Morale was at its highest point ever.
There were no obstacles that this Orlando facility could
not overcome. At this point, Ed and the leadership team
knew that the OMC facility was being underutilized. They
needed more business.
Over the next year, the Orlando facility continued to
be the “showcase.” Performance continued to improve.
The rapid success of OMC captured the attention of
OMC’s customers as well as other corporate officers. In
2001, the board decided to relocate four new product
lines from a sister facility to OMC. Although OMC had
installed new production lines in the past, this change
represented a much larger scale. It would require doubling
the workforce, quadrupling sales, and converting the

existing production lines to utilize the lean concepts, all
within 18 months.
Rapid Growth at OMC
Ed was the project manager responsible for the transition
of the new business into the Orlando facility. However, nine
months into this project the current VP of operations was
promoted and Ed became the VP of operations, in charge of
the entire Orlando facility.
Although slightly behind schedule, Ed and his
leadership team and employees completed the project
in 20 months, and they exceeded the projected savings.
Lean manufacturing again provided significant benefits to
the OMC operations. Through the change, OMC achieved

significant savings in labor costs, floor space, and process
times, as exhibited in Exhibit 8.
Ed enthusiastically led the new change, but the technical
challenges in the transition of this product proved
more difficult than expected. The union facility from
which the product was transferred relied solely on the
worker’s experience in manufacturing the meters, so the
facility had kept limited product and process documentation.
The engineers at OMC constructed new test equipment
to replace the 40-year-old technology previously
used. There were also many challenges with the products,
as many of them were designed nearly 50 years earlier and
meeting current quality demands proved difficult. The
project had placed a large strain on the resources in the

Orlando facility, and many sacrifices were made. In order
to ensure that the project was completed on time and
that the change was seamless for the customer, the leadership
team focused heavily on overcoming the technical
hurdles with the production of the new meters. In doing
so, the team failed to address the impact on the employees
and the other critical people issues that arose during
the change process. The leadership team quickly learned
that the success it had experienced in the recent past
would be short-lived, as the lean culture had deteriorated
and the team-based structure no longer existed at OMC.
Exhibits 9, 10, and 11 detail the longitudinal changes in
on-time delivery, turnover, and inventory turns as a function
of OMC’s sales.

Exhibit 12 summarizes the overall timeline of the
changes that have occurred at OMC since the facility was
built in 1996.
Current State at OMC
Ed now sat in his office contemplating the current state of
the organization. It had taken 20 months to complete the
project, and OMC had increased its number of employees
from 50 to its current total of 108. Ed and his leadership
team had relied heavily on the use of temporary agencies to
provide them with new employees. Ed looked at the latest
staffing sheets on his desk and calculated that 40 percent
of OMC’s current employees were temporary workers hired
through the staffing agencies. The decision to use temporary
employees was not Ed’s preference. Without a human
resource department to accommodate the rapid growth, Ed
lacked enough qualified staff to help with the rapid recruiting,
interviewing, and hiring of 58 additional employees.
Therefore, he and the leadership team had resorted to the
use of temporary agencies. His hope had been that the temporary
agency would do the pre-screening for OMC and
recruit qualified individuals whom OMC could later hire
into full-time positions. However, the lack of appropriate
qualifications, low levels of loyalty, and high turnover of
the temporary staff, as well as the fees and costs involved
in maintaining the temporary employees, had caused a large
setback for OMC in its maintenance of the lean, team-based
culture that had started to develop when the organization
was much smaller.
Ed also reevaluated the decision made by him and the
leadership team regarding the training and integration of
the new employees into the workforce. Ed and his team

had decided to disperse the existing employees throughout
the various production lines, both new and old.
The intent was to provide a solid base of experienced
and self-directed employees within each cell, lean-thinking
employees in each new production area, as well as to
retain some experience in the already existing production
lines. However, the leadership team failed to provide the
proper training and attention needed by the employees and
relied too heavily on the experienced employees to help
and informally share their knowledge and experience on
lean and the production process with the new employees.
The new employees received very little formal training on
the technical aspects of their job and on lean culture and
teams. Instead, they were placed within the work cells and
expected to learn primarily by observing and doing. This
had worked well for OMC in the past when it was a much
smaller company; however, the changes that had occurred
at OMC in the past had not been such large-scale changes
that needed to be completed within a very tight timeframe.
In hindsight, Ed now realized the importance of formal
training and the constant support needed by employees
through such a large, accelerated change. The lack of both
had now resulted in the dismantling of the lean, team-based
culture that had previously been established at OMC. The
company still had the lean production processes in place,
but the fact that it had neglected to sustain the lean culture
throughout the growth processes had caused the serious
problems that OMC now faced.
The culture of the organization changed drastically
due to the tremendous growth that OMC had undergone.
The organization moved from a small, one-shift, familyoriented
organization to a midsized, two-shift organization

in which many of the employees did not know each other’s
names or each other’s jobs. At this time, 60 percent of the
workforce had been with OMC for less than one year,
including most of the management team. This was an
especially difficult change for those employees who had
been with the organization for 10 or more years and had
seen the organization’s culture change so significantly.
The constant flux of new employees, the lack of effective
training, and limited communications had challenged,
frustrated, and stressed the employees on all the teams in
the facility on a daily basis. Ed thought back to just a short
year and a half ago when OMC was the lean showcase. At
that time, the teams were so successful and confident that
the teams and the leaders felt that there was nothing the
teams could not accomplish. Today, he thought in dismay,
every team in the facility was faltering.
Even members of the management team had lost focus
on the lean culture as day-to-day activities consumed all
their efforts. With more than half of the management
team arriving after the lean transformation, the personal
commitment and management styles varied. The
manufacturing manager had been at OMC for one year.
He was experienced in team-based organizations and
slowly won the support of the production employees. His
preference was a high level of team-based management. The
engineering manager had worked at the company for seven
years. He was a major contributor to the success in growth
and development of new equipment and had excellent
technical and design abilities. His preference was for topdown
management and tight control of the engineering
and maintenance department. OMC’s finance manager
was in her sixth year with the organization. She was
very experienced and understood business in general and
saw the financial impact of the lean implementation and
culture. Her preference was for a team-based approach to
management.
The materials manager had been with OMC for one
year and was very experienced in materials and processing.
However, he struggled with lack of information from
OMC’s outdated business systems. He supported teambased
management functions within a salaried workforce;
however, he did not believe hourly workers would perform
at optimal levels without direct supervision. The quality
manager was in his sixth month at OMC. His prior
experience was within tightly controlled industries where
teams existed, but strict controls limited the ability of these
teams to make significant changes. Given his experience,
he preferred team-based operations with a limited scope on
teams’ abilities. Finally, the human resources manager was
in his first month at OMC and had strong prior experience
in recruitment and personnel development; however, he

had limited experience in lean manufacturing. His focus
was to rely heavily on the policies, procedures, and benefits
provided by the corporate office. Overall, Ed felt that the
management team had the technical skills necessary to
move the organization to the next level of lean in terms
of production. Yet he had struggled in bringing the team
together in terms of their understanding and support for
the lean, team-based culture that he was trying to maintain
within his organization.
Ed once again examined the staffing data on his desk
and reviewed the turnover and absenteeism figures he had
been tracking. Turnover in the organization had risen to
alarming numbers, with an average of one new temporary
or full-time employee leaving every day for the first six
months after the change. Ed cringed at the thought of the
costs that OMC was incurring due to the turnover and
the temporary agency fees the company was still paying.
Absenteeism rates were also very high, averaging nearly
50 individual absences each month.
The instability in the workforce had also elevated labor
costs, which, in turn, increased manufacturing costs to a
point where corporate had started to show concern and
demanded immediate improvements. Productivity dropped
25 percent in comparison to the past performance of the
organization. This instability had also impacted the quality
of the product and on-time deliveries, and as a result
there had been an increase in the number of customer complaints.
Ed had received a phone call last week from corporate.
The expectations were that the organization needed to
improve results within three months; otherwise, corporate
would dictate future changes to the people in Orlando. Ed
now stood by the window in his office and reflected on just
how quickly success and performance can diminish and
disappear. He was confident that OMC would meet the
goal set by headquarters, as it had done in the past. This
time, however, the situation was different given the current
levels of low morale and instability in the workforce. He
needed to take immediate action. The question was, should
he try to reimplement the lean manufacturing culture and
lean thinking in the new organization or should he abandon
this goal and instead focus on reestablishing the traditional
management methods of the past?

After reading the case, please answer the following questions:

1.     Why was employee morale low?

2.     Why does culture have to fit the organizational design?

3.     What structural change did Ed implement?

4.     What should Ed do to reduce turnover and absenteeism?

Explanation / Answer

1. Employee morale was low becasue when the expasion happened and number of employess increased, the OMC enterd into lean manufacturing was usccessful in the begining but later failed to adopt to new systems and folowed the traditional work an team culture. When concentrating on technical aspects , the firm could not manage the employee amd team realations. Lean cuture deteriorated.The team failed to provide the proper training and attention needed by the employees and
relied too heavily on the experienced employees .

2. Culture has to fit in organizational design for effective implementation of business plans. The exapnsion made employess impersoanl and affected the workings. Culture would keep them stress free and less irritated. Ony better organisational structure and interconnection would help keep employees happy and committed.

3. when the expansion happpened, Ed implemented the lean manufacturing culture and
lean thinking. Due to tremendous growth the cultureof the organisation changed making a imbalance between lean new culture an dthe traditional tight management practices. Technical skills were given more importance than inter pesonal skills affecting the morale of the employess. So Ed resorted to traning the new employees through experienced employees.

4. To reduce trurover and absenteism, Ed has to work to achieve a balance between employee happiness and technical skills. Concentrating on improving lean manufacturing would help overcome the technical difficulties. Employees could be consulted before taking any such decisions.

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