Analytics at Lie-Nielsen Toolworks: Custom-Built Data Tools for a Unique Small Manufacturer
Case
Author: Joseph Warren Clark
Online Pub Date: January 15, 2020 | Original Pub. Date: 2017
Subject: Management Information Systems, Family Business
Level: | Type: Direct case | Length: 8804
Copyright: © 2017, JITTC, Palgrave Macmillan. All rights reserved.
Organization: Lie-Nielsen Toolworks | Organization size: Small
Region: Northern America | State: Maine
Industry: Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles
of straw and plaiting materials
Originally Published in:
Clark, J. W. ( 2017). Analytics at Lie-Nielsen Toolworks: Custom-built data tools for a unique small
manufacturer. Journal of Information Technology Teaching Cases, 7, 79– 91.
Publisher: Palgrave MacMillan UK
DOI: http://dx.doi.org/10.1057/s41266-017-0017-3 | Online ISBN: 9781529700640
© 2017, JITTC, Palgrave Macmillan. All rights reserved.
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SAGE Business Cases
Page 2 of 20 Analytics at Lie-Nielsen Toolworks: Custom-Built Data Tools for a Unique
Small Manufacturer
Abstract
Lie-Nielsen Toolworks (LNT) is a small, family-owned company manufacturing very-high quality woodworking tools in coastal Maine. They face three major challenges: the sparse rural labor market makes it difficult to find and retain talent; their extreme quality standards lead to scrap and rework; they struggle to forecast demand and schedule production due in part to offering a large number of SKUs in small quantities. Having reorganized the factory layout and upgraded its CNC machines over the past two years, LNT is now turning to information systems and analytics as tools for improvement. Advised by an internal IT staff of one, an external ERP partner, and a consultant from the state university, Tom Lie-Nielsen must decide how to approach these information technologies, what benefits he can expect, and what organizational changes might be necessary to effectively leverage them.
Case
Keywords: business analytics; manufacturing; ERP; Lean; API; family-owned business
An Heirloom-Quality Tool Maker
It might be fair to say that no other company in the world does what Lie-Nielsen Toolworks (LNT) is trying to do: manufacturing over 100 different products in small quantities, while holding themselves to extreme quality standards, and doing it all with a labor force drawn from a sparsely populated rural area.
Here in a small factory on Route 1, the scenic highway along Maine’s coast, the world’s premier maker of wood-working hand tools brings long-vanished tools and techniques back to life. Now a veritable pilgrimage site for woodworkers, the company began in 1981 with one man casting bronze in his backyard in nearby West Rockport to re-create a discontinued Stanley hand plane, the “no. 95” (Figure 1). In just over 35 years, Tom Lie-Nielsen’s company has grown to about 90 employees making a broad assortment of tools including planes, chisels, saws, and more.
Three issues in particular combine to make this small manufacturing business uniquely challenging:
• Because LNT offers over 100 tools that sell in relatively small (hence unpredictable) quantities, LNT struggles to forecast demand and schedule production of the right tools at the right time, resulting in stockouts and backorders.
• LNT’s uncompromising quality standards mean it must cope with scrap and rework when raw materials or finished products do not pass inspection; and re-orders of some parts, such as metal castings from the foundry, can create substantial delays in production.
• The small-town setting means that experienced local talent is rare-to-unavailable, so LNT must work hard to find workers with potential, train them from scratch, and retain them once they have acquired marketable skills.
These challenges have increasingly been at the top of mind for Tom Lie-Nielsen and his management team. Despite revenues of approximately $9 million, sales growth of about 10% from 2015 to 2016, and a cult following of enthusiastic customers, LNT is making almost zero profit. The business needs some kind of change if it is to be sustainable for much longer. With this in mind, over the past two years Tom has made major changes to LNT’s manufacturing space, redesigning the shop layout, adding more square footage, and replacing aging Johnford CNC machines with a dozen new American-made CNCs from Haas Automation.
Figure 1: A Lie-Nielsen no. 95 bronze edge plane.
SAGE © 2017, JITTC, Palgrave Macmillan. All rights reserved.
SAGE Business Cases
Page 3 of 20 Analytics at Lie-Nielsen Toolworks: Custom-Built Data Tools for a Unique
Small Manufacturer
Now satisfied with improvements to the physical space, in 2016 LNT is increasingly focusing on information systems and analytics initiatives to try to achieve further strategic and operational improvements. Drawing on the skills of an internal IT staff of one, an offshore ERP partner, and with help from a faculty member at the University of Maine acting as an analytics consultant, Tom is working out how best to implement information technologies in his operations, what benefits he can expect from them, and whether and how the business might have to transform in order to leverage them effectively.
Struggling to get manufacturing working right over the past few years has dampened spirits in LNT’s management team, forcing them to divert precious attention away from what they would really love to be doing: rediscovering classic hand tools, bringing them back to life for modern wood-workers, and sharing the art of hand tool woodworking with the world. Sitting for an interview in a classroom surrounded by antique tools, LNT’s marketing director, Robin Nolan, put it this way (Figure 2):
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