KIALOA

 
 
Background/Situation
Founded in 1991, KIALOA manufactures a full line of carbon fiber, carbon fiber/wood hybrid and hand crafted wood paddles for Outrigger and Dragon Boat Racing, and for Stand Up Paddling. KIALOA is owned by Dave and Meg Chun in Bend, Oregon and has eight employees.
 
From 2006 to 2008, KIALOA experienced tremendous sales growth, but the increased sales did not result in additional profits. In 2009, sales continued to be strong despite the weak economy; however, the company struggled in their ability to meet customer demand. Although inventory levels were high, paddle sizes ordered were often out of stock. This led to missed sales opportunities. KIALOA’s owners began working harder and longer hours, but their efforts did not improve financial results or customer service levels. The Chuns had grown their business beyond what they could successfully support and they knew they needed help. In July of 2009, KIALOA engaged the Oregon Manufacturing Extension Partnership (OMEP) to assist them with their growing business.
 
Action/Intervention

OMEP’s Small Business Assessment indicated KIALOA had a good understanding of their product costs, financial landscape and marketplace; however, several opportunities for improvement were identified. OMEP determined that adoption of Lean principles in operations, production, and supply chain management could greatly enhance KIALOA’s business performance. KIALOA’s OMEP consultants quickly became trusted business advisors to Meg and Dave, providing learning and coaching to all aspects of their small business.

 

KIALOA implemented Lean flow concepts to establish ‘Build‐to‐Order’ instead of ‘Buildto‐ Stock’ practices. This allowed KIALOA to better meet customer demand while simultaneously reducing excess inventory. OMEP also helped KIALOA use Value Stream Mapping to identify and eliminate waste in production and to establish Lean pull/flow philosophies where possible. Working with their key supplier and using historical data and lean principles, a mutually beneficial supply chain management system was developed to deliver components at the right time at the right levels.

 

Meg and Dave have embraced the Lean business operating philosophy and the results have exceeded their expectations. The Chuns still work hard and put in long hours, but they are now seeing results for their efforts.

 

Results

  • A new Capacity/Production Planning tool supported full employment, improved cash flow, and reduced out‐of‐stock situations.
  • Production efficiency improved 20%-30%.
  • Build‐to‐Order methods reduced standard lead time from 2 weeks to 1 day.
  • Suppliers replenish product on a ‘pull’ system based on product sold during the previous week. Addressing 2009 ongoing supplier stock‐out issues resulted in sales increases of 55% and 79% in July and August 2010 over 2009 levels.
Testimonials

The greatest thing about the Rural Lean Grant Program is that it allowed OMEP to work with smaller companies. We are currently a company of ten people, but we have many of the same needs that a larger company has. Smaller companies do not typically have the money to hire positions that our OMEP consultants filled… without OMEP we would not have been able to access the information.

— Meg Chun, Owner

In the beginning I was not sure about these guys…..but it became obvious as we started working together that our OMEP consultants had a passion for our business and our personal success….it became obvious and without question.

— Dave Chun, KIALOA Owner