Callaway Golf Lean Transformation

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To usher in the Spring season in the United States, I thought I’d share a video of Callaway Golf, one of the largest manufacturers of Golf Clubs, Golf Balls, Golf Shoes, Golf Bags – name it, they are one of the biggest names in Golf. And, to keep in line with the focus of this blog, the video shows the Lean Transformation Callaway Golf went through to eventually win the Shingo Prize in 2008.

PS: Another lean transformation that might inspire you is the efforts of Saskatchewan Hospital. Great story.

Yes, I understand that even though Callaway Golf moved their manufacturing operations to Mexico just 2 years after they won the Shingo Prize, I’m not focused on that debate. I just want to highlight what they did do and accomplish as they adopted lean at the enterprise level.

Below is the video, followed by some general comments on what they implemented in Callaway Golf’s adoption of lean.

Callaway Golf Achievments

According the the Callaway Golf press release at the acceptance of the Shingo Prize,

Callaway Golf Ball Operations is located in Chicopee, MA. The Chicopee golf ball manufacturing plant employs approximately 600 employees in a multi-shift operation, and is the primary golf ball plant for Callaway, with a capability of producing in excess of 12 million dozen finished golf balls per year. Embracing and institutionalizing lean philosophies has resulted in Callaway Golf Ball Operations, Chicopee, becoming a profitable manufacturing center for Callaway Golf Corporation. Chicopee’s continued emphasis on the identification and the elimination of waste has streamlined operations. Listed are just some of the positive results:

• Customer returns decreased by 84%
• 14% improvement in orders shipped on time and complete
• Scheduling points reduced from 13 to 2 through the use of a visual pull system
• Lean time for end to end production went from a typical 21 days to 5 days
• WIP inventory turns improved 65% from 2005
• Total inventory turns improved 26% from 2005
• Finished goods inventory was reduced by $10,000,000
• Packaging inventory was reduced approximately 40%
• Potential loss from obsolescence of packaging is down by 50%
• Order lead times for Custom Ball improved 44%
• 33% of production space opened up as a direct result of lower WIP allowing other growth opportunities. One of those was the transfer of custom club to Chicopee from Carlsbad, CA (Callaway Golf Corporation’s HQ)
• Custom ball customer service level went from 57% in 2006 to 92% in 2007, an increase of 38% Premium freight charges were reduced by 28%
• Employee grievances are down 42%
• All employees have received at least 12 hours of training in lean concepts and methods
• Accidents are down 23.5% resulting in  a $400,000 savings in workers compensation costs
• Incident Rate was reduced by 2.9%
• Achieved a 10.0 ton reduction in hazardous solid waste and a 141 ton reduction of non-hazardous solid waste
• Greenhouse gas emissions were reduced by 1,547 metric tons
• Average Product Cost was reduced by 8%
• Cost savings from waste identification and elimination was $3,000,000 in 2006 and increased to $9,300,000 in 2007
• Inventory accuracy went from 68% in 2006 to 99.7% in 2007, directly attributable to the visual pull systemand inventory reduction
• Quality Levels are at 98.7%

None of this would have been possible if Golf Ball Operations had not adopted Lean philosophies and made the floor
operators the focus of all activities.

The Callaway Golf Vision and Strategy

In 2008 at least, the vision and goal was to keep Callaway Golf manufacturing in Chicopee Massachusetts.

Keep golf ball manufacturing in Chicopee! The ultimate goal is to produce golf balls at a cost low enough to avoid any economic decision to relocate Chicopee products to other parts of the world. Lower production costs results in higher profitability for Callaway and therefore elimination of waste across the entire plant is paramount to keeping golf ball manufacturing in Chicopee.

But, in just under 2 years, Callaway Golf moved their operation to Mexico, abandoning the vision and strategy they claimed in the above statement. Some have found this move disenginius because Callaway Golf won a Shingo Prize for their work, yet they moved shortly after they won the prize.

They continue,

The traditional equation:

• Selling Price = Cost + Profit

is not focused on waste elimination and disregards the notion of what customers are willing to pay. Rearranging the
equation to:

• Profit = Selling price Costs

forces us to rearrange our thinking so that we may be and remain competitive. In order to this, Callaway Golf Ball
Operations embarked on a totally revolutionary method for scheduling and manufacturing its millions of golf balls:
produce only those golf balls that were depleting from the finished goods warehouse. This was accomplished
through the implementation of the following lean methods:

• 5S Workplace Organization
• Elimination of the 7 common operational wastes that traditionally plague manufacturing productivity
• Standardizing all forms of work
• Pull method planning and manufacturing of product
• Visual Control Systems
• Kanban Systems
• Value Stream Mapping to indentify time consuming and non-value added activities that compromise the quality and productivity of our products and staff.

What do you think? Despite Callaway Golf turning away from their original vision, what can we learn from their lean journey?