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CLASSROOMKANBANCOMPANIONCASESTUDYSERIESSERIES KANBANCASESTUDY – 9 – t didn’t snow much during that particular winter. The average temperatures were the sev- Ienth highest ever recorded in the northern hemisphere. “The winter of ’06–’07 nearly killed the industry in ,” recalls Eric-Jan Kaak, Chief Information Officer at Blizzard Sport, an Austrian ski maker. At the end of that season, the company had 30% of their production left in stock at the factory. Blizzard Sport had been making in Mittersill, in the Salzburg- er Land region of Austria, for 60 years. It had grown to be the largest employer in the Salzach valley. Many people living in the Pinzgau region of the Alps relied directly or indirectly the success of Blizzard Sport for their livelihood. In addition, Blizzard is a brand synonymous with Austrian sporting achievement and a great source of pride for the Austrian nation—many Austrian alpine skiers have won Olympic and World Championship medals on Blizzard skis. As the last snow of that ’06–’07 season melted, Blizzard’s new owners, Tecnica Group, from It- aly, had much to consider regarding the future of the factory in Mittersill and the future of the Blizzard brand as a renowned innovator in Alpine technology. Now, six years later, workers at the Blizzard Sport factory feel a lot more secure than they did then. A fundamental shift in the process and in the internal organization of the company has made it resilient to the uncertainty of the winter season as well as to the changing trends in such a competitive industry. Blizzard has optimized the way it produces skis, becoming the first Lean ski manufacturer in the world. For the past few years, Blizzard Sport has continued to set trends in the market and recently won two ISPO1 awards for inno- vation. Lean thinking has spread throughout the company, and Eric-Jan has driven a Kanban Method adoption in the IT department. The implementation has not only improved perfor- mance of the IT team, which has direct influence on the quality of all of the company’s IT systems and the flow of information between them, it has also brought Eric-Jan the 2013 CIO Award for Best IT Manager in Austria. This is the story of how a Lean transformation and the Kanban Method strengthened Blizzard Sport and freed it from depending on the increasingly fickle winter weather in the northern hemisphere.

Background Skiing carries particular importance ski factory has been making skis in ski models, as well as the manufac- and zeal in Austria. It is the sport in Mittersill since 1945. Throughout the turing of all the higher-end models which Austria has truly gifted racers years it has employed people from the with wood cores, is done in the Mit- who have won many medals, a genuine entire Pinzgau region, situated in the tersill factory. An additional factory source of national pride. Skiing up in Western part of Austria. It is the larg- was built in Ukraine, which employs the mountains is a passionate way for est employer in the region, currently another 200 people, and where the Austrians to spend their leisure time. employing 200 people, and it works skis at the lower end of their range of “Above 1,000 meters here in Austria with various local suppliers, thus en- models are produced. Counting all people are all equal. Societal differenti- suring the livelihoods of an additional models in all colors and all sizes, the ation and formality in the communica- 50 to 60 people from the valley. Bliz- two factories combined make a vari- tion that might exist in the world be- zard Sport was acquired by the Italian ety of more than 800 different kinds low are left at the entrance of the cable conglomerate Tecnica Group in 2006, of skis in various quantities. car,” Eric Jan explains. Even though the which includes the ski brand The traditional cycle of ski pro- elevation at the Blizzard Sport factory in its portfolio of companies. After duction begins a year before the is 210 meters short of that virtual bor- the acquisition, Nordica’s ski manu- skis are on the market. Skis for the der, the company attempts to have this facturing was moved to the Blizzard 2006–2007 winter season would have sort of equality. factory. Nowadays, design and devel- begun production in November of The Blizzard Sport traditional opment of all Blizzard and Nordica 2005. The process to determine how

1. ISPO is an international sporting-goods trade association.

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BlizzardLayout.indd 2 11/18/13 3:43 PM much to produce was a combination construction, together with the edges facturing method that has been popu- of forecasting and taking actual or- of a ski, determine a key part of the lar for making cars over the last 20 ders from distributors and retailers experience of skiing on the slopes of years. It helped to locate and elimi- of skis. Until early this century, or- the Austrian Alps. But overproduc- nate wasteful activities in the flow of ders placed with Blizzard Sport were tion (tens of thousands of pairs of skis the entire process. Many aspects of made in late December or January were left in stock at the end of the manufacturing are sufficiently similar of the previous season as the dealers 2007 season) threatened the future that Lean concepts can be easily saw how many skis were selling that of the factory and the livelihoods of transferred to different types of man- winter. This meant that Blizzard was hundreds of people in the Pinzgau ufacturing. The sources of waste, seen blindly producing skis for two to region. as activities that do not directly create three months without knowing the Tecnica Group’s first goal was to value for the clients, were much more actual demand from their distribution reduce costs at the Blizzard factory. widespread than just incurring extra channels. But as the winters—and the This required greater information costs. Waste could be an unnecessary behavior of customers—became more visibility and support for process stan- amount of walking in the factory, unpredictable, the orders began to dardization. Eric-Jan and the IT team’s overstocking the warehouse with raw come even later in the winter season, role in these changes was to introduce materials, or the time consumed to as retailers wanted to see the number a new Enterprise Resource Planning find something in the clutter of of unsold skis and adapt their orders (ERP) system within Blizzard. That over-produced skis. The optimization accordingly. But they still required the system was meant to organize in one benefits could be profound, but every- new models by October, when people place all of the information related to one had to accept that the process of begin to gear up for the upcoming the orders, manufacturing, and ship- making skis that they had been used season. That forced manufacturers to ment of skis. The real-time view and to all their lives was going to change. make more skis by forecast and fewer facilitation of all the business processes by actual orders as the window of would help to spot and then cut extra “Tecnica Group found blind forecasting before hard orders costs. As time passed, though, this type appeared grew longer and longer. of optimization reached a limit. “We inspiration in an With a throughput of 300,000 pairs, realized very quickly that a sole focus Blizzard began to carry higher risks on removing costs was not giving unlikely place—the of overproduction. The impact of this added value to the business, let alone automobile industry.” increased risk was clear by the end of satisfaction and motivation to the ski the winter season of ’06–’07. makers. Yes, we were making a pair Naturally, there was resistance of skis cheaper. However, we were not to such shifts of mindset. The pride improving the throughput and our in making skis was standing in the The Turnaround production, which was what we really way of adapting to change that came With the recent acquisition by Tecni- needed to achieve in order to produce from a source in a completely differ- ca, orders were now placed through larger volumes after receiving orders at ent industry. But there was a cultural the group headquarters in . This the end of April [avoiding speculative aspect to Lean manufacturing that increased processing time exposed over-production earlier in the season],” potentially could ease the resistance. Blizzard to yet more risk. With less Eric-Jan says. The focus and motiva- Evolutionary change and continuous and less time to respond to market tion for improvements had to change. improvement, core principles behind demand and still deliver skis for the Lean manufacturing—defining it as new season by October of each year, a continuous journey in a particu- the production process would have to A Lean Ski Maker lar context rather than as a one-off improve. “When I joined the compa- Looking for ways to refocus, Tecnica change formula—advocated for con- ny in 2007, the lead time from order Group found inspiration in an unlike- tributions from the entire team. Un- to delivery to the client for a standard ly place—the automobile industry. der a Lean transformation, change batch of skis (150 pairs) was between Consultants from Porsche Consult- was not imposed upon the produc- twelve and fourteen weeks,” Eric-Jan ing, a subsidiary of the automobile tion workers (the ski makers in the says. This was the thirty-five-year-old manufacturer, met with the company factory); instead, they were given legacy of making skis in the tradition- in late 2010. They suggested changes initial guidance, then empowered to al, craftsman-like style, and this habit in manufacturing that would make evolve their processes and working stood in the way of change. Manufac- the production process leaner and techniques as they saw fit. Learning turing skis had always been a craft for more efficient. Derived from Toyota’s and practicing the craft of ski mak- the Austrians—much of it is manual car-producing practices, the consul- ing would remain, but autonomy was work. The details of the design and tants advocated for the Lean manu- given to change the craft and adapt

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BlizzardLayout.indd 3 11/18/13 3:43 PM The cards indicated when the next workstation was available to take on more work items. Local cycle-times at each station were measured and slow processes were recognized as bottlenecks. The improvements were visible to everyone; craftsmanship and pride-of-workmanship in making skis remained, while objections to the new Lean approach diminished.

The Troubles in IT While the shop floor processes were improving, Eric-Jan was experiencing Each team member has a clothespin that indicates if the person is on loca- issues with his own team. “We have tion in the Blizzard factory, in the headquarters in Italy, on a business trip, or always had a large demand of requests working from home. for the IT team. [They] used to come mostly in the form of queries and re- ports. After the ERP system was im- “Overproduction, high inventory, and long plemented, the nature of the requests lead times were . . . significantly reduced due changed and there were additional process related tasks,” Eric-Jan says. to the reorganization of the floor and the The small IT team, consisting of five people, was taking care of the demand introduction of signal cards . . . ” from both the local and the Ukrainian it for the new world that demanded from the start [of the production factory. Requests came from many faster, more efficient production. season] was the easiest way to handle departments, over the phone and It was a change of culture that the production,” Eric-Jan says. Pressure through a helpdesk e-mail account. employees would have to learn to had been mounting to build a new, “One hundred and thirty people work embrace. larger warehouse to store more and on computers in Blizzard Sport, and The first analysis from Porsche more raw material. It was an expense each one of them is a potential inter- Consulting recognized that the that Blizzard could ill afford. Reorga- nal client,” Eric-Jan explains. processes that relied on forecasts of nizing the warehouse would relieve The team—two developers, two demand were resulting in overpro- the pressure for a new building. It was more who specialize in operations, duction, high inventory, and long lead these sorts of wastes that the company and one who does both development times. Most areas, such as the over- had to find and eliminate, and recon- and operations work—handled all stocked, cramped warehouse, exhib- figure their method of manufacturing. requests that came in. They didn’t ited much room for improvement. To speed production, Blizzard would have a system for prioritization, Roughly cut blocks of wood, steel create a Lean flow system for man- but they never said “no” to anyone. edges, sheets of polyethylene for the ufacturing that spanned the factory Instead, they made a promise to ev- bases, and rolls of fiberglass or alu- from raw-material ordering to fin- eryone to deliver. In order to manage minum for a whole season’s produc- ished goods delivery to client. and keep everyone satisfied, the IT tion were piled everywhere, with no Lean manufacturing principles team worked on everything simul- system for organizing them. “It was were implemented in the beginning taneously. As each new task came a huge expense to have so many raw of 2011. After the initial six weeks, in, multitasking only increased. The materials stored months in advance of results were measured. Overproduc- more requests they were working on, when they were needed. In addition, tion, high inventory, and long lead the more delays accumulated and the people lost a lot of time trying to find times were measured and appeared more restless internal clients became. what they needed in the clutter. But significantly reduced due to the reor- “No, I have not forgotten you. Yes, I without visible production planning ganization of the floor and the intro- am almost done with your task,” they and execution, it [was] perceived that duction of signal cards2 between the heard, but they still didn’t receive a having [all the raw materials on hand] various part-producing workstations. finished task. Most times the issues of

2. Signal cards are literally “kanban” in Japanese. These are at the core of the Toyota Production System, the foundation of Lean manufacturing. Hence, Blizzard had introduced kanban systems into ski manufacturing in 2010 before adopting a virtual kanban system in IT.

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BlizzardLayout.indd 4 11/18/13 3:43 PM “The team was stunned the work that was in progress. He were just too busy to give feedback, wanted to make sure that everyone but to an internal client it might have when they saw . . . would be able to make decisions seemed as if they were doing it on about what to work on and to create purpose,” Eric-Jan describes. Having how much they had flow without the pressure from inter- witnessed the improvements on the committed to.” nal clients and their expectations. Af- factory floor, and armed with the ter a quick online search in the spring assurance that their way of working delays reached Eric-Jan and required of 2011, he came across the Kanban would not be changed, but rather just his time and attention. “Complaints Method for IT. “I read David J. An- visualized, the IT team agreed. were coming from all departments derson’s book over a sunny Easter who saw IT as a big black hole, where holiday, and everything fell right into there was no prioritization of work place,” Eric-Jan says. Motivated by Skiing on a Kanban and no communication,” Eric-Jan the wish to make internal clients hap- Board recalls. A natural solution might have py and the IT systems more efficient The team put up a simple physical been to hire more people, but in con- and supportive of production, he Kanban board. It had only three col- ditions of an economic downturn, presented his idea to implement the umns: Next in Line, Build, and Test. that was not a viable option. Eric-Jan Kanban Method with the IT team. In All five team members had to write looked elsewhere. his view, the transparency and focus down on a post-it note every task The production of skis had im- that were part of a kanban system each of them was working on. “As we proved through the introduction of a could address both the communica- started, we had at least 50 cards as transparent, Lean system that aimed tion and prioritization issues quickly backlog on the wall, and I am sure an- to eliminate waste and improve effi- and without disruptions. “One of the other 50 that didn’t show up,” Eric-Jan ciency with the available resources. “I things that really annoyed the inter- says, and continues: “The team was was convinced this could somehow nal clients was that when their task stunned when they saw the board. It be adapted in IT as well,” Eric-Jan was done, nobody from IT actually was the first time they realized how says. He wanted to have visibility of told them. The people on the team much they had committed to.” The

The IT department’s Kanban board, the structure of which has not changed much since it was first created. The top row is reserved for tasks related to projects; below that is a row for maintenance tasks, which usually take no longer than a day; the third is a parking lot for tickets that need feedback from an internal source; the fourth row is a park- ing lot for tickets awaiting external feedback.

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BlizzardLayout.indd 5 11/18/13 3:44 PM “The relief for the developers to focus on work rather than wasting time to discuss what to work on was refreshing, . . . ”

team decided that they should clear all of these open tasks before starting anything new. It took them a week to complete all of the open requests. In the fashion of the Kanban Method, each new task was written on a card and put on the board where everyone could see it, together with all of the other requests the team had re- ceived. Because everyone could see the amount of work visually, nobody want- ed to overcommit beyond capacity, otherwise the delays would continue. Performance was quicker and quality much better when each person focused on a single task and finished it. The team adapted another core principal Backlog for tickets related to planned projects. of Kanban and introduced work-in- progress limits for each column of the board. Multitasking was a waste that harmed both the team and the client. “We started to have this acknowl- edgment in the house that if a task was on a ticket, there was a 100% assurance it would be taken care of completely,” Eric-Jan explains. Two types of post-it notes were introduced—green-colored helpdesk and maintenance issues and yellow-colored project-based tasks such as placing new ski models in the ERP system. The demand itself contin- ued to come during a chat at the coffee machine as well as over phone and e-mail, but a new approach developed. Internal clients started writing tasks on post-its and gluing them into the backlog themselves: It was a quicker way to feed the backlog, which avoided the waste for someone from IT to write it and place the task on the board. If an internal client wanted to see the prog- ress of his card, all he had to do was go to the Kanban board that was hanging in the IT room. “Sometimes an inter- This board serves as a histogram of work that has gone through IT; it indi- nal client would come while he was cates how long each ticket was in process. – 6 –

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BlizzardLayout.indd 6 11/18/13 3:44 PM waiting for the coffee machine to make dampening down conflict situations. added to Blizzard’s IT room. Unlike an espresso and by the time he saw Peeks at the Kanban board and quick the Kanban board, which has up- what he needed to know, the coffee discussions in front of it had displaced coming and ongoing work items, this would be just done,” Eric-Jan says. those. He had more time to for one organizes the already-completed The team had set a rule to work improvements. “One of the biggest tickets from the past month by their on tasks on a first-in-first-out prin- sources of delays has always been re- lead times. Split in five columns, de- ciple. But there was still the old habit lated to the demand that requires work pending on whether the task took of people wanting a more expedited from an external software provider, one, two, three, four, or five+ days to response to their tasks. “I remem- which usually happens for systems complete, the board is a histogram of ber this instance when three teams like the ERP. The expected delivery for the team’s capabilities and through- within production brought their those requests was unpredictable and put. “If the internal customer gave a project-based tasks at the same time. I had a lot of explaining to do when request on Thursday and we delivered Since there are just two developers, big delays accumulated. Even I was on Monday, we still count the lead we had to prioritize. I left the devel- surprised at how big of a bottleneck time as four days. It doesn’t matter opers to do their work and invited the they were once all tickets were on the that there was a weekend in between. task owners to the board. We all knew board,” Eric-Jan says. He decided to The client still waited four days,” what was most important for the flow designate a special “parking lot” on the Eric-Jan explains. With that board in of manufacturing, so after a short dis- board for the tickets that were on hold place, expectations from the IT team cussion we prioritized the three tasks. because of external partners; a capital are set even more clearly. At the end The relief for the developers to focus letter E was also written on such tickets of each month, that board has around on work rather than wasting time to for additional visibility. With this in hundred tickets. “I am still amazed discuss what to work on was refresh- place, it has become easier for Eric-Jan how much work we actually manage; ing,” Eric-Jan explained. to hold the external partners account- the backlog is never overflowing, and As time went on, Eric-Jan received able for their inconsistent behavior. the team is proud of how much work fewer complaints. He wasted less time Eventually, another board was they have completed,” Eric-Jan says.

This Kanban board keeps track of the quality tests for various pairs of skis. Inspired by IT’s Kanban board, it is one of the latest improvements on the manufacturing floor.

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BlizzardLayout.indd 7 11/18/13 3:44 PM Success! already and what has yet to be done. “It is remarkable The transformation that was achieved The American subsidiary of Tecnica by the IT team in Blizzard Sport has Group has also adapted the Kanban that we achieved helped to create and maintain intel- Method in five of its departments, true continuous ligently connected IT systems that including marketing and HR. observe the flow from the order stage In the early summer of 2013, improvement after at the Tecnica Group Headquarters, Eric-Jan was assigned to lead the Busi- thirty-five years of through production in the two fac- ness Process Management Initiative in tories, and on to delivery to all of its the Tecnica Group in addition to his status quo.” subsidiaries and distributors. The duties as CIO for Blizzard Sport. He integration gives everyone the same spends two or three days a week at the vital for the passionate bond Austrians visibility on the state of the order port- company’s headquarters in Italy, where have with their skis. To acknowledge folio. New information is instantly he works on ways to optimize the flow the achievements of its empowered available as soon as an order comes in, of information through improved and workforce, Blizzard displays pictures instead of waiting to receive it from integrated IT systems on a global scale. around the building showing certain another entity within the group. “It The cultural change is infecting the parts of the factory before and after used to take us four weeks of admin- more conservative IT department of this new way of working. The base istration just to update and match the Tecnica Group. “The team is not the salaries of the employees on the facto- actual orders of skis with the quantities usual IT crowd. There are a few devel- ry floor, which formerly increased with we had produced by forecast. That opers who are over fifty and the rest the number of pieces each employee gave us even less time to react on the are over thirty-five,” Eric-Jan explains. produced each day, are now higher real demand,” Eric-Jan describes. Now, Adaptation to change and empower- for everybody. The incentives that as an order comes in, it goes straight ment has been harder to achieve in come on top are only for the suggested into production. Eric-Jan’s efforts and that team. For decades they had sat in improvements that affect the whole achievements have been acknowledged a classroom-style office. The employ- group. “Oftentimes I come to the floor by the CIO community. At the sixth ees were directly supervised by the IT and I see some new idea that was not annual CIO & IT Manager Summit manager, who sat in front like a teacher present two weeks ago. It is remark- in Vienna he received the “CIO of the in a classroom. They were encouraged able that we achieved true continuous Year” award for the change manage- by Eric-Jan, as their new manager, to improvement after thirty-five years of ment he implemented for the price of a change it if they felt uncomfortable. status quo,” Eric-Jan says. flipchart, a few wall pin-boards, and a Heartened by their new autonomy and The lead time for a batch of skis stack of post-it notes. the permission from a senior leader, through the Blizzard factory, which Kanban—key to satisfaction with- the team turned their room into a used to be twelve to fourteen weeks, in the IT team—has spread back to co-working space where everyone now has decreased to six to eight weeks. the factory floor and more widely into feels equal. Blizzard Sport’s processes now run the Tecnica Group in Italy. The quali- In the meantime, improvements so smoothly that staff have plenty of ty department of Blizzard that checks on Blizzard’s factory floor continue time to worry about what really mat- skis as they are made has added a to emerge. Most of them have been ters—whether Austria’s alpine ski rac- Kanban board that helps them have suggested by the employees who take ers will win Gold in Sochi at the 2014 clarity into what has been inspected ownership of the process, something Winter Olympic Games.

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