In 1993, United Technologies Automotive (UTA) owned a facility in Howe, Ind. The facility produced automotive interiors. On May 1, a new plant manager arrived at the facility to find the following conditions:
- 250 people, unionized facility
- The previous month, the plant lost $400,000 (and had been losing money every month)
- The plant was operating at a quoted efficiency of 42 percent. In UTA’s world, 85 percent was expected from the plants. At this point, the Howe plant was at 49 percent of where the corporation wanted it to be. Stated another way, if it was supposed to produce 10,000 pieces per day, it was only producing 4,900 pieces.
- Premium freight charges (only the premium) during the previous 12 months was $68,000
- There were 32 lost-time accidents during the previous 12 months; workers compensation charges for 1993 were $155,000
Basically, the understanding between the corporation and the management group was that if the plant was not operating profitably in 12 months, it would be closed. We at the plant didn’t feel threatened by this understanding – it was a fact of business that we understood – because companies are in business to make money. It did, though, create a sense of urgency for change.
What We Changed
1) The first all-associate monthly meetings were started on May 7. We wanted to share financials with the associates and it took us five days to close April. This was a three-shift operation, so we conducted two meetings, first and third shifts together and then second shift (optimum is one meeting because everyone should hear the exact same presentation and the exact same questions and answers). Attendance at these meetings was mandatory. They were held monthly like clockwork.
In the first meeting, we laid out the status of the plant and the financials in a non-threatening manner. No one outside the management group had seen the financials before. It took some explaining. We told everyone that we were in this together and that the key was teamwork – we would either win as a team or lose as a team. There would be no individual winners or losers.
It is interesting to note a comment that was overheard from a company supervisor after the first company meeting, which was about an hour in length. “What a waste of an hour. We could have been making parts all that time!” My thought was: “Yeah, and at 42 percent efficiency!” Sometime later, this supervisor made the comment that the problem with the plant was that all of the shop-floor people were stupid. Shortly after that comment, this supervisor was given the opportunity to contribute at another company.
2) On day two, we discovered that it was difficult for the production associates to communicate with the rest of the facility because the plant was long, narrow and divided into three sections by walls. If a particular production line or manufacturing cell had a problem (for example, they needed more raw material, had a quality problem or one of their machines had broken down), they had two choices. They could go to a supervisor’s desk and page the person over the public address system (which some people didn’t like to do), or they could wander around the plant looking for the appropriate person. While this person was looking for help (all motion waste), the line was generally not running (waiting waste) – all due to poor communication.
Figure 1.
To improve communication between the production operators and the rest of the facility, we installed andon or signaling lights like the ones shown in Figure 1. This is nothing more than a column of different-colored lights, where each light has a specific meaning and each column is numbered to represent different production areas cells. A green light indicated the production cell was running and meeting the customer’s production and quality requirements. A red light indicated the production cell was down for a machine or quality problem that the team couldn’t fix themselves and immediate assistance was needed. This light was wired so an alarm rang when it was turned on. A three-person response team (quality, maintenance and supervision) was set up to go to the particular cell number on the andon display. Only a member of the response team could turn the audible alarm off. A blue light indicated the production cell needed raw material delivered or parts picked up. An amber or yellow light was the signal that a supervisor was needed in the area. The white light, which the teams nicknamed the “brag light”, meant that the team had implemented an improvement which allowed the production cell to run quality parts at a rate higher than the “standard” rate.
3) One of the rules in lean is that you must first standardize and then measure any activity you wish to improve. At the UTA-Howe plant, we set up production boards, like the one shown in Figure 2, in all production areas and cells. Production boards like these generally invoke fear in the production associates because they are typically used by traditional managers as tools to beat people up. In lean, they are used strictly as communication tools.
Figure 2.
The board shown in Figure 2 was used as follows. Each hour, the customer requirement for this particular part was 38 pieces. If after the first hour the team produced 38 pieces, the team would post the 38 pieces on the board for that hour along with the total for the shift, which, after one hour, was also 38 pieces. Let’s say during the second hour the team had a quality problem that reduced their productivity to 30 pieces. On the board, they would post 30 pieces for the second hour and now, after two hours, the total is 68 pieces. The team was also responsible for noting in the “comments” column what prevented them from doing what the customer required that hour – producing 38 pieces. It was then management’s responsibility to review the boards to determine what problems the teams needed their help solving. When cells were not producing to the customer’s requirements, it was a problem for the entire company team.
Information was collected hourly (real time is even better) on the production boards because, if the team fell behind because of a problem, it was possible for them to make adjustments and catch up. Without the production boards, the cell team and the rest of the company had no idea where they were in their schedule.
4) To raise the awareness of safety problems in the plant, a safety incentive system was started. OSHA will caution companies about using safety incentive systems because they believe that people will be tempted not to report accidents if it will hurt the incentive system. This is a legitimate concern that must be addressed in the development of the system.
During the second plant meeting (June), the plant manager stood next to a 25-inch color television (not a big deal today, but it was huge in 1993) and said that we would raffle off one TV for every month during which there were no lost-time accidents. There was one lost-time accident in June, and then the plant went two years without a lost-time accident.
5) To help develop company-wide teamwork, we also implemented what was called “Adopt a Cell”. Each management person was asked to adopt one of the production cells. The goal was to provide visible, physical, verbal, purchasing, roadblock-breaking or whatever kind of support the production teams needed. It was a way of showing that we were all in it together. Management people ran machines, attended daily cell meetings, and purchased needed cell supplies and equipment. The plant’s financial controller spent two weeks on second shift with the team from cell No. 7. For most of the management group, it was a valuable shop-floor learning experience.
Four to Six Months Later – More Change
As we learned to communicate and teamwork grew throughout the plant, the following additional changes were implemented:
- We held daily “start of the shift production” meetings with all cells. The purpose of these meetings was to communicate schedules, to review cell problems and status of solutions, and to review the previous day’s performance. The meeting length was 10 minutes maximum.
- Customer quality issues became the responsibility of the team that manufactured the product. When a customer called and said it had a problem with our product and needed someone to come to its facility, members of the team that produced it went to the customer’s plant. This wasn’t done to punish the teams; it was done to put the team members, who were the process experts and in the best position to fix a product problem, in direct face-to-face contact with their unhappy customer. It was pleasing to note that none of the teams were required to go to the customer twice about the same problem.
- The plant manager stopped giving customer tours. When customers or prospective customers wanted a plant tour, the plant manager would escort the customer to the first manufacturing cell, where the customer was handed over to the cell team leader. The team leader would introduce the customer to the associates who worked in the cell and show the customer how the cell processed material. When that cell tour was complete, the team leader would escort the customer to the next cell’s team leader. At the end of the tour, the plant manager met the customer at the other side of the plant. This system worked great. Customers liked it, and as it turned out, the cell associate were some of the best salespeople around. It also gave the production associates the proper respect for their knowledge, skills and contributions.
- When we had supplier quality problems, our suppliers also had to answer to the production cells. Suppliers had to be taught that their customer, the people they had to satisfy, was the cell that used their product, not the purchasing department.
Celebrations Along the Way
Celebrating improvements along the way is very much a part of a world-class enterprise. They don’t have to be expensive celebrations, or take a lot of planning or time. We celebrated with doughnuts, hats, T-shirts, cookouts (even in the winter) and jackets. It was a way of having some fun and saying “thank you” to the entire team.
Sometimes we get so focused on what needs to be done that we lose sight of what has been accomplished. Celebrations allow us to look back at the progress so far and, as a result, re-energize our efforts. Often, we were accused of making up reasons to celebrate, but here is a list of improvements we used to celebrate:
- Every 10 percent improvement in company efficiency
- When an individual cell’s performance achieved 100 percent (we mean 100 percent, not the 85 percent UTA would have accepted)
- Every time a new white andon light was on (the record was eight at one time)
- The first year we went without a lost-time accident (and saved $105,000)
What About Results?
- We started our journey in May; by October of that year, the plant efficiency was at 65 percent (a 55 percent improvement)
- November of that year was our first profitable month
- By February of the following year, the plant was at 80 percent efficiency (a 90 percent improvement)
- In April, we made a $186,000 profit (a $586,000 turnaround from the previous May)
- In July, the plant efficiency hit 100 percent (a 138 percent improvement and the only plant in the division ever to achieve this level of performance)
And, the Most Remarkable Part of the Results!
We went from 42 percent company-wide efficiency to 80 percent, and all that was done was develop two-way communications and promote teamwork! It wasn’t until we reached 80 percent that we had the nerve to ask the corporation for money to spend on improvements.
It is important to note that the productivity increases shown in the above example were not achieved because people were working harder or faster. They were working smarter. Working smarter means eliminating or reducing people’s wasteful activities (scrap, rework, machine downtime, machine setup time, searching, hunting, looking for people or things, etc.) and substituting value-added activities (activities the customer will pay for) like more throughput. People would say that morale was much higher and the work environment less stressful when this plant was producing at 100 percent vs. the initial 42 percent.
Managers often look at results like these and make excuses such as, “these were special circumstances”, or “you don’t understand our business; we’re different.” Nonsense … all nonsense! These results are available in any business where the leaders and managers are fully committed to creating a sense of urgency, two-way communication, and teamwork. The managers that make excuses always find it easier to blame “the people” than to look inward at their own performance.
About the author:
Larry Rubrich is the president of WCM Associates LLC. For more information, visit www.wcmfg.com or call 260-637-8064.
