Continuous Improvement -- Taking A Big-Picture Approach To Lean

Shipbuilder Northrop Grumman Newport News could serve as a model for U.S. automakers of how far-reaching lean should be.

U.S. automakers have known for years the value of lean manufacturing. As pointed out in this month's issue of IndustryWeek ("Learning From Toyota -- Again"), lean has been in place at U.S. auto manufacturing plants since the mid-1980s. Unfortunately, the plant floor is where lean usually begins and ends for U.S. auto manufacturers.

Until Detroit's Big Two implement lean as part of their companywide cultures, they'll never realize lean manufacturing's full benefits, if any. And once implemented, lean must flow smoothly from the decision-makers at the top down to the engineers and the shop floor. That means ensuring every division throughout the company is practicing lean together.

Getting to this point will require some humility on the part of U.S. automakers. They'll need to open themselves to practices that have made their biggest competitors successful. Perhaps U.S. automakers should take note of how Northrop Grumman Newport News, the Navy's only supplier of aircraft carriers, implemented lean. I first learned about the company's lean practices at the 2005 Association for Manufacturing Excellence Conference in Boston last November. Matthew Needy, the company's director of Process Excellence Strategy, talked to a standing-room-only crowd in a hotel conference room about how the Newport News, Va.-based division of $30.7 billion Northrop Grumman Corp. made lean part of its enterprise-wide value stream.

Like the auto industry, the company initially practiced lean only at the operations level. Needy told me in a recent follow-up phone conversation that in the late 1990s after attending conferences and seeing it work at other companies, management realized lean could be extended to all 19,000 employees.

They responded by deploying lean to other segments, but each division was practicing its own version of the process. The result was what Needy refers to as "fragmented lean." Without a seamless flow of information, lean operations in one area actually could hurt production in another division because everybody had a unique approach to creating improvements. For example, the company risked losing critical information used in the manufacturing process because it might have been "leaned out" in the engineering process, Needy relates.

To get everyone on the same page, the company named a vice president of process excellence in November of 2004 and gathered its top 25 senior managers to form a companywide lean strategy and deployment plan. "One of the things we recognized is that for process excellence to be successful, it had to be owned by the organization, not an individual division," Needy told me.

Hopefully Needy's words will resonate with U.S. automakers because they've taken too long to realize that a piecemeal approach to lean doesn't work. If not, recent restructuring plans announced by Ford Motor Co. and General Motors Corp. won't be enough to remain competitive. And part of the auto industry's success with lean will hinge on a stronger customer focus.

In "Learning From Toyota -- Again" it's noted that most lean events by U.S. automakers have been centered on the plant floor and production efficiency rather than customer value. Northrop Grumman Newport News geared its lean value stream toward meeting customer commitments rather than strictly using it as a means to improve production. The company is constantly measuring its progress on customer contracts by using scorecards that help managers determine how close or how far they are to meeting customer agreements. Through this process, the company has saved on materials, stock time and labor. This includes a 58% materials savings in the torch repair cell, a 61% reduction of touch time in the shipyard and a 5.8-day reduction in dock-to-stock time. In his address to the National Press Club in Washington, D.C., last March, Northrop Grumman Newport News President C. Michael Petters said the company keeps customers apprised of every step in the manufacturing process so they understand why certain decisions are being made.

To this end, U.S. automakers need to make customer value a central part of their lean efforts and bring those products to market faster because they're already playing catch-up on hybrid technology.


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