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Every
day brings news of another manufacturing
plant moving operations overseas to
capitalize on lower labor costs. The
fact that an hour of labor and benefits
may cost $2-3 in Mexico and less than a
dollar in China is a compelling reason to
abandon manufacturing here in the U.S.
Lower materials costs and less restrictive
government regulation can also tip the
scale in favor of offshoring for
many.
But
some companies are rethinking the strategy
of chasing the lowest wage rate. By
learning how to eliminate costly, hidden
inefficiencies in their own operation and
tap the creativity and motivation of their
workers, many manufacturers have been able
to compete effectively in the global
marketplace while revitalizing their
business and adding jobs.
A few
years ago, a manufacturer of printing
supplies laid off three-quarters of its
work force -- 850 employees – and
moved assembly to Asia. But the hidden
costs of offshoring forced them to rethink
their strategy. Was it possible to produce
in the United States and still compete
effectively with Chinese workers making
one-sixth as much?
Managers
needed to learn how to make products more
efficiently. They knew they would have
to drastically cut costs, reduce defects
and boost productivity. But the workers
didn't need convincing, just
direction.
By
applying a few key Best
Practices
and building a committed, capable work
force, throughput skyrocketed. Quality
defects dropped from 12,000 per million
units to 250 within three years. As
productivity improved and defects dropped,
more business was brought in and jobs have
been added. By tapping into the innovation
and motivation of workers, the factory now
pumps out five times as many ink
cartridges per worker as its sister plant
in China.
More
and more companies are embracing the twin
essentials for global competitiveness in
manufacturing: Process Efficiency and
People Effectiveness. Process
Efficiency involves the continuous effort
to eliminate manufacturing waste –
those non-value-adding activities that add
huge, but often hidden, costs to an
organization. Proven methods that prevent
defects reduce the cost of finding and
fixing them. Fewer errors mean lower
rework costs. Strategies that improve
process reliability eliminate the costs of
downtime, late shipments and
work-in-process (WIP) inventory. Process
efficiency drives out cost and delivers a
better product in less time.
People
Effectiveness involves the capability and
commitment of the work force. Learning
about and applying Best Practices in their
own areas of responsiblity, associates
develop confidence - and commitment - to
achieving an organization's goals. Rather
than 20 problem-solvers, you can have 200,
all looking for root causes of failure and
improved work methods. The combination of
a skilled, motivated work force and a
strategy for applying Best
Manufacturing
Practices
is a powerful competitive
weapon.
Increasing
Asset Utilization
A few
years ago, a major home appliance
manufacturer began facing fierce
competition from Chinese manufacturers
looking to establish a foothold in the
American market. It was the largest
manufacturing plant of its kind in the
world, but they knew they needed to do
things differently or face falling market
share and shrinking profits.
The
plant’s improvement plan involved two
key components: maximizing both the
reliability of its assets and the
contributions of its work force. The
strategy was to make production operators
and maintenance technicians jointly
accountable for equipment effectiveness.
Cross-functional teams were set up
spanning all shifts, focused on a critical
piece of equipment. The teams were trained
in the principles of team-based
maintenance, which involves:
- Monitoring
and maintaining equipment
conditions
- Developing
a comprehensive Planned Maintenance
system
- Continuous
identification of
improvements
- Group
problem-solving using root cause
analysis
Rather
than involvement for the sake of
involvement, operators perform PM
tasks such as cleaning and lubricating the
machinery, changing belts and hoses and
monitoring heat strips and gauge tape.
They also handle many predictive
maintenance tasks. Shifting many of the
maintenance functions to operators has
allowed operators to take more
“ownership” of the equipment.
This, in turn, allows maintenance
technicians to focus more on activities
that actually prevent mechanical
failures.
As a
result of the combination of improvement
tools and associate involvement, asset
capability rose from the mid-60% range to
the mid-80s in just three years. Not only
has this increased plant competitiveness,
but it has energized the work force to
continue improvement efforts.
A
contract manufacturer of precision
machined components for heavy
equipment industries has successfully
captured market share by utilizing the
same concepts. By developing a passionate
commitment from the work force for
Continuous Improvement and Process
Reliability, the company has been able to
double its business in just three years.
For makers of machined parts, it bills
itself as an alternative to offshore
manufacturing.
Their
ability to excel at both Process
Efficiency and People Effectiveness
has enabled the plant to grow the business
utilizing existing floor space and add
jobs here in the U.S. Understandably,
employees are proud of their success and
enjoy a high morale, high-energy work
environment, which helps sustain the drive
for new ways to produce product better,
faster and cheaper.
Aligning
Multiple Shifts
Recently,
Granite Bay was called in to do an
Operational Assessment for a bulk
chemical manufacturer in the Midwest. The
plant manager was frustrated over that
fact that the 4 crews in this
24-hour-a-day operation weren’t
working together to solve problems and
meet aggressive performance goals.
Operating
procedures varied by shift, causing
quality and yield losses; shop floor
operators and technicians were
“disconnected” from the goals of
the business; performance improvement was
slow and temporary; and processing lines
were frequently shutting down, creating a
chaotic work pace.
Granite
Bay conducted a week-long Operational
Assessment on all shifts and
benchmarked the operation according to a
series of 30 key
performance
indicators.
Informal interviews were conducted with
operators, techs, supervisors and line and
staff managers and an Action Plan was
developed with the following
objectives:
1.
Focus
the entire plant around a common set of
goals;
2.
Engage all shifts to participate in
process improvement;
3.
Coordinate the efforts and activities
across all shifts to accelerate the
rate of improvement
I was
critical to find a common objective that
would mobilize and energize the entire
organization. The Assessment revealed
that significant operating capacity was
idle due to inefficiencies and waste in
the manufacturing process. Late shipments
and firefighting resulted in orders lost
to competitors and sister
plants.
We
challenged the entire organization
– from plant manager to operator
– to recapture this volume by
focusing on removing “waste”
from their processes. For the first time
in years, everyone rallied around a key
objective: to identify and eliminate all
forms of waste in order to bring volume
back to their facility. The excitement was
contagious as teams began working
together, with focused leaders, and
supported with practical, hands-on
training in how to apply Best
Manufacturing
Practices.
Within
6 months, the plant freed up an additional
12% of capacity. Changeover times were
reduced by half in some cases. Yield
losses dropped by nearly two-thirds.
Equipment uptime increased by 30%. Shop
floor employees and their supervisors
actually looked forward to coming to work.
Over time, volumes began to increase and
within a year, profitability nearly
doubled.
But
the most amazing change was in the people.
They began to notice waste and
non-value-adding activities that were
invisible to them before. They developed a
passionate intolerance for inefficiency
and began forming ad hoc teams to
eliminate waste wherever they found it,
usually without management intervention.
From the
plant manager: “We’ve always
said, ‘it’s better to ask for
forgiveness than permission.’ Our
people are real fired up about their jobs
and our plant now. It brought back a level
of pride we haven’t seen in
years.”
Lower
Lead Times = Lower Costs and Higher
Profits
More
recently, Granite Bay was called in to
solve the problem of long lead times
and a huge work backload at a
50-employee job shop. Lead times were
running at 14 weeks and expanding.
Work-in-process inventory was 12 percent
of sales and was creating problems with
both cash flow and shop floor
organization. With raw materials being
shipped from overseas, lead times were
measured in weeks, with materials shipped
in large quantities to reduce
transportation costs.
The
factory flow was typical of that in a
labor-intensive job shop, where each
order was custom-made. There were few
performance measures in place, with no
data on first-pass quality, equipment
reliability or on-time shipments. And the
things that were measured weren’t
shared with the shop floor.
Because
of the labor-intensiveness of the
work, it was essential to engage
employees in the process of improving the
operation. We quickly realized that the
list of improvements required to bring
this factory to world-class standards
would be enormous. We had to articulate a
compelling vision and a common-sense
strategy that would yield the improvements
needed while bringing employees on board
as eager participants.
The
focal point became Lead Time
Reduction. It was the single objective
that tied all of the other performance
goals together, and it was something that
every employee could personally influence.
Overall manufacturing lead time could be
broken down into its components by area
along the process route. Each team could
analyze its own lead time component and
identify innovative ways to squeeze time
out of the process while making their jobs
easier, safer and more
enjoyable.
Granite
Bay worked with managers and associates to
apply several Best Practices,
including Cells, In-Process Quality,
Plant Organization, Goal Deployment and
World-Class Performance Measures. The goal
was a 50% reduction in lead time and an
80% reduction in first-pass quality
defects within 6 months. We were committed
to helping employees develop a greater
sense of pride in their work and more
confidence in their ability to drive
future performance
improvements.
We'd
like to add your plant to our Success
Stories!
If
you need faster improvement, more
engagement and a plant-wide focus on
business objectives, we'd love to hear
from you!
Contact
us
or submit a brief questionnaire
describing your challenges and we'll be
happy to discuss your situation and
suggest some solutions, free of
charge.
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