NLI Takes Quality to the Next Level with Lean Six Sigma

Michael Zeher, NLI President & CEO, responds to the article featured June 1, 2007 in Forward Focus, the quarterly MMEC newsletter for Montana manufacturers

“Manufacturing Excellence and what this means to our customers in the evolving regulatory environment, has always been a foundational operating principle at NLI. In fact, it’s one of our key points of differentiation as we compete in the Dietary supplement and Nutraceutical industries. We believe operating under GMP compliance is only the beginning. We proudly tell our customers that they can “Be Certain” because we hold ourselves to an even higher level of quality than the regs require. Our approach to product and process improvement, while focused on Lean Six Sigma, leverages the contributions of a wide range of approaches, best practices, and standards. Our quality systems have inspired breakthrough improvements for our customers in services, products, and the technologies that drive them. We have coupled innovation with Six Sigma within a framework of operational excellence to achieve extraordinary results for our customers and our company.”

NLI Takes Quality to the Next Level with Lean Six Sigma

By Deborah Nash, MontanaManufacturingExtensionCenter

Lean Six Sigma is boosting the results of quality initiatives at Nutritional Laboratories International, Inc. (NLI). The enhancement is part of ongoing improvement to the Total Quality Management system NLI uses to differentiate itself in the health and wellness industry.

Commenting on the strategy, Chief Operations Officer and Six Sigma Green Belt Brad Nylander said he and Continuous Improvement Manager Andy Roche recognized the need for good problem solving tools to ensure measurable outcomes for several targeted projects. Lean Six Sigma is helping them achieve that.

NLI offers premier manufacturing and laboratories services ( and is based in Missoula. It has been in operation since 1997, employing up to 108 workers. The company’s core processing capabilities include encapsulation, tableting, tablet coating, and bottle packaging/labeling for a number of major U.S. supplements marketers. These are subsequently distributed all over the world. The company operates within the pharmaceuticals and dietary supplement industries and adheres to FDA Pharmaceutical Standards of current Good Manufacturing Practices (cGMPs). The company recently earned formal GMP registration through NSF International’s Dietary Supplement Certification program (

Rooted in the Quality body of knowledge, Six Sigma is a process designed to make decisions more systematically based on data. The term hails from the Motorola® drive for defect reduction in the 1980s. Lean Manufacturing targets elimination of non-value-added activities. Together, they are very powerful.

Training Is Key

NLI recognized that investment in training is key to achieving substantial benefit in both Lean and Six Sigma, and Roche set out to identify appropriate tools and training to advance several quality initiatives. He engaged Kreg Worrest, Field Engineer from the MontanaManufacturingExtensionCenter, for a very hands-on approach. Eleven employees from two teams participated in Lean Six Sigma training over a period of weeks from December 2005 through April 2006.

“What made this unique is we had Kreg in for three hours once a week over several months to train on specific tools as the teams worked real projects,” Nylander said. The training schedule was adjusted to one hour a week as teams progressed toward their end goal. “MMEC was really flexible based on the progress of the team; it was very effective.”

Cross-functional team members brought a wealth of experience in how operations currently worked. The training provided tools that would deploy Lean, help capture current situation data, and develop problem solving techniques for data analysis and trend identification. The goal was to implement changes and measure effectiveness.

What made it particularly effective, according to Worrest, was

1) Management being highly supportive because they had real problems to solve;

2) Management holding teams accountable to the process and to achieving results;

3) Teams having significant, real projects to focus on;

4) Teams immediately applying techniques from the class on their projects, and

5) Andy Roche.

“Andy understands Six Sigma methods, and he was able to monitor team progress and provide feedback. He could tell me what worked and what needed more explanation,” Worrest said. He could then tailor each subsequent training session to what the groups needed. “Where they had success, I could reinforce the techniques. Where they had difficulty, I could review the technique again or suggest a different method. That internal feedback helped me modify our original plan to match what each team needed for success.”

Value in Linkage

Unlike boiler-plate training that uses broad examples in order to relate to all participants, the MMEC engineer’s sessions used specific company examples and “spoke the company’s language.” The value of training was greatly enhanced by linking the tools learned to the problems being solved.

Some of the “homework” assigned to team members between classes was to develop a project charter; construct a process flowchart that was very important for a cross-function team working together; create a SIPOC process diagram (supplier, input, process, output, customer); and measure current process performance as a yardstick for future improvements.

For accountability and to keep moving forward, the COO required each team to meet with him every other week for a progress check, review and defense of findings and conclusions. He also asked for updates on what the teams planned next.

The meetings provided a focused time to review difficulties and ensure the next steps were appropriate based on Six Sigma, Worrest explained. “Andy followed up by making sure the teams developed methods to verify that the changes were effective and had long-term controls to sustain the gains.”

Applied learning within a real manufacturing environment brought throughput gains from Team A, a valuable cultural change for the organization overall and exploration of a strong business strategy now under management review from Team B.

Team A and Visual Controls

Roche’s facilitation of Team A aimed at gaining throughput efficiencies. The standard Define-Measure-Analyze-Improve-Control (DMAIC) method was used.

The team goal was to reduce reworked WIP (work in process) by 50 percent, as measured by Rejected Material Reports (RMR). RMRs are generated when anyone in NLI finds nonconforming raw materials, WIP, or finished product.

During the project, the team flowcharted and reviewed the entire production process and identified many small improvements. The visual standard chart now being used for operational excellence shows correct product and defect type. Its purpose is to provide a common frame of reference for operators to recognize and refer to defects in the same way. But it goes beyond defect recognition and is also used as a diagnostic tool.

It helps identify where a problem is occurring and the root cause, Roche explained. Lean Six Sigma shifted responsibility for quality to the operators. Previously, maintaining product quality depended on defect detection at the next operation. Additional training brought each operator up to same level of problem

identification and machine operation. NLI uses statistical process control software on computers

throughout the production floor along with control charts to help operators reduce variation in each production run.

“Using FMEA (failure mode and effects analysis), we learned to scope out the problem and understand the process. The key, we found, is the operators who can realize when a defect happens and take corrective action.” They also learned when a defect is outside their control and can seek help. Metrics were installed that helped eliminate the effect of operators as a cause in process variation as well.

“The training created continuity and a consistent way of evaluating processes,” Roche said. The improvements resulted in identifying potential areas where out-of-specification material (RMRs) could be prevented or the process halted, resulting in only a small amount of material to reject. Production now identifies any out-of-specification processes in production much faster than before.

Cultural Shift

Nylander has noticed the change at NLI prompted by identifying the greatest control point right on the shop floor – the operators. That really gave “ownership” of the improvement process to production workers, he said.

“Recognizing the value of data, they are now pareto-ing even in the warehouse; from kitting to the shop floor, they are charting reasons for delays and analyzing why they are occurring,” he said. “It’s helping see causes we can control and causes we can’t; it really developed through MMEC and Andy, implementing a continuous improvement culture for us.”

“People at NLI are no longer interested in just maintaining the status quo.”

The rework [elimination] project required no capital except training and time for both data gathering and applying lessons learned on the floor.

The COO reported that six months after completing training, Team A has already had good success. “We have had a sharp, NLI signif25 percent reduction in rework and anticipate another 25 percent for 2007.

“I am very pleased with the training; the take away that the team had. They now look at problems with more data-driven observations,” he said. “It has changed the culture of our organization.”

Eliminates Hidden Factory

The project put an end to product rework that Nylander calls “the hidden factory” that swallows up resources and simultaneously impairs productivity.

For example, if 50Kg of tablets out of a 2,000Kg order don’t meet hardness specifications and have to be reground and go back to the tablet press, then time, labor, and cost are added to the product which weren’t included in estimated manufacturing production costs. That takes a bite out of expected profits.

By reducing such rework, Team A created cost savings, improved customer response time and freed up operator and machine time to respond to additional sales. Management estimates that a 25% reduction in rework will yield up to $100,000 in labor savings per year as well as freeing up capacity to generate significant revenue. Estimates at the company’s standard margins are expected to exceed $4 million annually.

Using disciplines like Six Sigma for continuous improvement, companies achieve measurable excellence not only internally but also for processes involving customers, partners and suppliers, according to Roche.

“An important next step is to institutionalize and expand on our successes,” he said.

NLI is now filling the pipeline with goals for 2007, assigning four additional teams to apply continuous improvement methodologies to the sales process, manufacturing excellence, and other top-line growth areas.

“We would not be doing that if we hadn’t gone down this path,” Nylander noted.

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