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Podcast #83 is an in-depth conversation with Jim D'Addario, the CEO of D'Addario, Inc., a manufacturer of guitar strings, drum heads, and other musical accessories. Jim and his family company were featured on CNN late last year, highlighting how lean manufacturing has helped save and create jobs as part of their business strategy. Jim agreed to speak with me to delve into more detail about their use of lean management principles.

Jim is a hands-on CEO who gets out on the shop floor, which seems to be a big advantage for lean success. He describes his personal transition from a starting point of “not seeing the benefits” after lean was initially proposed to him to reaching a point where he articulates very well how lean allows D'Addario to better serve their customers' needs.

D'Addario started in the warehouse where, prior to lean, the operations strategy involved millions of dollars of warehouse automation. Now, with lean, they have freed up space, they have deployed people, and they can now ship orders that come in by 5 PM that very same day, as opposed to 48-hour performance before lean. Customers are able to hold less inventory and they can order more often in smaller batches. While this might increase order picking costs to D'Addario, Jim emphasized the increased customer contact and the benefits that come from that.

D'Addario has long had a committment to its people, avoiding layoffs as much as possible. In the course of lean improvements, people are redeployed and cross-trained to be more flexible. Now, with lean, D'Addario was able to shut down a California warehouse, resulting in job loss. But, the company has consistently moved to bring jobs to Long Island, acquiring product lines and moving production from China. In the case of guitar straps, Jim emphasized that while the unit labor cost for sewing is higher, they don't have “110 days lead time” coming from China. Customer service is better and that's good for D'Addario's business.

Jim said:

“We've moved more and more work here and we'll continue to do that.”

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