Larry Davis shares the history of Daman Products and the vision that has made us the well-respected company that we are today.
Video courtesy of Gemba Academy www.gembaacademy.com.
Ron Pereira: All right. So we are back here with Larry Davis at Daman Products. So Larry, thanks again.
Larry Davis: Hi, welcome.
Ron Pereira: Yeah.
Larry Davis: It's good to see you.
Ron Pereira: Thanks for letting us come in.
Larry Davis: You're very welcome.
Ron Pereira: We visited with Larry on a podcast. Many of you probably heard that already, but now we're going to see the real thing here at Daman.
Ron Pereira: So let's start Larry, just give us an overview of who Daman Products is, and kind of the products you make and customers that you serve.
Larry Davis: Sure, sure. The company was founded in 1976 by my father and we think around March. We didn't keep real good records. I was hired in June of '76 and we really had ... Neither of us had any manufacturing experience. So it was an interesting process. My dad had worked in hydraulics, had gone through part of an apprenticeship that went into a drafting organization and that's where he got introduced to hydraulics and then went into selling hydraulics as a distributor.
Larry Davis: And eventually, ended up running a power unit shop where he used manifolds and that's where he saw the need for a supplier who could better provide better quality and delivery, and would actually do what they say they were going to do.
Larry Davis: So the company was founded on the premise that we would build custom and standard products. Today, we build manifolds that range in something you could hold in your hand to 4000 pounds. The industries we serve, the big one would be oil and gas, energy, but we provide manifolds for hydraulic systems on construction equipment, mining equipment, shipbuilding, food applications, robotics, machine tools.
Larry Davis: What people don't understand is the role that hydraulics plays behind the scene in all of our lives. It's a huge industry.
Ron Pereira: Give me an example.
Larry Davis: The trash truck that picks up your garbage. Hydraulics all over it. Not only in the braking systems and steering systems, but the mechanism that picks the trash up and dumps into the bin and then crushes it.
Ron Pereira: So we see some Daman Products inside of it-
Larry Davis: You could very well.
Ron Pereira: Interesting. All right. So let's talk a little bit about just your overall kind of company philosophy. What drives Daman?
Larry Davis: Well from the beginning because of my dad's experiences, it was always follow-through, do what you say you're going to do, product need to look impeccable, even though that wasn't necessarily a functional necessity. But it was important to make a good impression. At one point, we changed from brown corrugated boxes to white corrugated boxes as shipping containers just to perpetuate the appearance of quality.
Larry Davis: So we've always been driven with that desire to serve our market. But haven't always had the culture or the equipment or processes in place to follow-through. So it was 1997 when the concept of lean was introduced to us and unbeknownst to us, was the beginning of developing a culture and those processes that would help us actually fulfill what my dad wanted us to be as a company from the beginning.
Ron Pereira: So throughout the day as you know, we're going to talk to a lot of different people. Many folks, I don't know what the average time of employment is, but it's like 20 years of many of the folks that we're going to talk to and so, one of the questions I'm going to ask again and again, is tell us about Daman pre-lean and post-lean or maybe pre-lean, trying to be lean and then-
Larry Davis: Lean struggle?
Ron Pereira: Yeah, yeah, yeah, yeah. So I want to ask you that. So you've been here, gosh what is it?
Larry Davis: I think we're going on 39 years.
Ron Pereira: Thirty-nine years. What was it like at Daman when you were in your twenties? I don't know, well however old you were when ... Trying to do math in my head.
Larry Davis: We won't go there. Well it was a lot of trial and error. I had three years of business school in at Western Michigan at Kalamazoo and I didn't go back for my senior year which was 1975, '76 and then in '76, dad started the business. So we did our best. We limped along and we overcame simply through perseverance and working long hours.
Larry Davis: As we added people, things seemed to get more complicated and more complex and we thought it was a top-line issue. As soon as we do a million in sales, all of our problems will go away and then it was a 15, a million and a half and then it was two million. But instead it got more complicated, more difficult and by 1997, we were drowned. We were profitable. We were respected in our industry. But getting work done-
Ron Pereira: And you always wanted to make a quality product, I guess.
Larry Davis: Right.
Ron Pereira: That's never changed right?
Larry Davis: Right, right. But at the time, we had equipment that was less than adequate. They were open loop systems so that we could program to move 18 inches and tap a half 14 tap, but there was no guarantee it was actually going to move 18 inches. And the horsepower on the machines didn't always allow for that to have 14 to fully tap. Built into the system were ... Made it very difficult because of the quality of the equipment that we had.
Larry Davis: So at any rate, in 1997, we're starting to build this building. Steel is up, concrete's not poured and we're really ... The higher you were in the organization, the more frustrating it was because all the problems rose to the top. And of course we had to approve everything that would happen down below. And it became more and more difficult to see how we were going to continue to add people and machines and keep a lid on this place. We wanted to be world class in a desperate way. But we had no idea what that meant. But we knew it wasn't what we were doing.
Larry Davis: So we were in the process of buying a $50000 software package from our accounting firm to lay over the top of our chaos as we were in major firefighting mode.
Ron Pereira: Software was going to fix it, right?
Larry Davis: Exactly, that was the plan. So the software guys-
Ron Pereira: And this is '95, '96?
Larry Davis: Oh no, this is '96, '97.
Ron Pereira: Okay.
Larry Davis: So it really was-
Ron Pereira: Right before.
Larry Davis: The fact that we were going to buy that software was what set the events in motion, that got us to lean, because this accounting firm, also had gotten into the manufacturing consulting business and had hired a guy by the name of Doug Gakin away from Arthur Anderson. So it was the accounting guys unbeknownst to them, had no idea what this manufacturing guy really did. You got to check him out. They're cross-selling within the industry, within their company.
Larry Davis: So he comes in and he's asking a series of dumb questions for which we had dumb answers. Like, why do you have a tooling room and why are the programming guys upstairs in a room, things of that nature. Why do you have four purchasing cubicles when you only have one purchasing guy? And the responses were, "Well we need X amount of room for growth and we don't want to have to go through that overhead development. The tooling room, we need to keep tabs on what we have," and his deal was, "Well what if, what if? We had the tools out, were at the point of use, what if as we grew, we didn't need as much purchasing?" Not only that one person, but less than one person.
Larry Davis: That all seemed like pie in the sky, but it was like, "Yeah, well sounds good, but nah, don't know how that's going to happen." And in the end, he made a pitch to the executive team at that time and essentially said, "Here's the deal." He's like, "I can help you improve your through put," we weren't sure what that meant. "We could reduce your costs. We can improve your quality and reduce the chaos. But in order to do that, we're going to reduce all inventory, finish work in process and raw," which was counter-intuitive to us. We were going to run fewer parts which meant in our mind, more chaos. And we weren't going to forecast anymore.
Larry Davis: It was like, "Holy cow. How will we know what to build?" But we were so desperate to improve, we believed this guy and we didn't know ROI calculations. As a team, we all agreed we need to try this. So it was a major leap of faith and required as leaders of the company, it required us putting things that we had believed in for years. Things that are taught in school. Things that are time-honored in the business world. We had to lay those things on the table and accept the fact that we were wrong. That there was a better way to run a business. And that was the beginning.
Ron Pereira: So okay, well-
Larry Davis: We never did buy that software by the way.
Ron Pereira: Really?
Larry Davis: His message was why would-
Ron Pereira: And he worked for the company that was selling the software, right?
Larry Davis: Oh yeah.
Ron Pereira: So the software sales guy probably wasn't too happy I guess?
Larry Davis: No, no, but they really were oblivious to what each other really did. His point was why don't we get a handle on the chaos, smooth out the process and then see what we need in the way of software.
Ron Pereira: Okay.
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