1999 IW Best Plants: Rising To The Occasion with JLG

The goal was an aggressive one, and plant manager Eugene Swope privately wondered whether it was even doable.

It wasn't that he doubted strides could be made in reducing the manufacturing leadtime required for boom-lift production at JLG Industries Inc.'s McConnellsburg, Pa., facility, but to reduce it by more than 85%? Was that possible?

Even JLG Industries senior vice president of operations Raymond F. Treml admits that the goal -- to squeeze the average cumulative manufacturing leadtime from 76.1 days to 10 days -- seemed impossible in the beginning.

But "in some cases you don't know what you can achieve," Treml says. And besides, "I thought if we got to 30 days we'd be in good shape."

Even halving the manufacturing leadtime -- the longest element in JLG's order-to-shipment process -- seemed a challenging task. Not only do workers at JLG's McConnellsburg plant assemble final product, but they manufacture many of the integral detail parts and major components of the articulating and telescoping boom lifts produced in their plant.


At A Glance

  • Scrap/rework costs -- 0.082% of sales
  • Standard order to shipment leadtime reduced 39% in the last five years
  • Five-year productivity improvement, defined as value-added per employee -- 69%
  • Five-year customer-retention rate -- 95%
  • Plant provides financial rewards for both team-based performance and individual employee performance
  • Lot sizes reduced 73% in last six years
  • About 32% of plant production is represented by new or redesigned products introduced in the previous 12 months
  • On-time delivery rate -- 98%

In-house manufacturing processes include steel-plate burning; fabrication, welding, and machining; sheet-metal processing; hydraulic-cylinder manufacturing; boom-tube manufacturing and assembly; as well as final assembly and testing.

But meet the challenge McConnellsburg did. By early August 1998, the plant had reduced the average cumulative manufacturing leadtime for boom lifts to 11 days. Less than a month later its 10-day goal was a reality, and a plantwide celebration ensued. The slogan "From Steel to Wheels in Ten Days" adorned T-shirts and trumpeted the remarkable achievement.

Continuous Flow is Core Strategy

The accomplishment serves to illustrate an even bigger achievement by JLG Industries: the successful implementation of continuous-flow manufacturing (CFM) as the core manufacturing strategy driving its run toward world-class manufacturing.

This implementation required not only an extensive factory rearrangement and process reconfiguration that continues to evolve even today, but also significant capital and manufacturing technology investments, the establishment of tightly knit partnerships with key suppliers, and the commitment of the 2,000-plus employees who work at this largest of JLG Industries' facilities.

Located in southern Pennsylvania's Fulton County, population approximately 14,000, and nestled against the Appalachian Mountains, JLG Industries' sprawling 500,000-sq-ft McConnellsburg facility is home to the company's corporate headquarters, as well as its boom-lift operations. From this location, JLG manufactures boom-lift products that are shipped worldwide.

Nineteen-year JLG veteran Treml will tell you that the quality of JLG's boom lifts are unparalleled. "Any place you go in the industry, even if it's a competitive lift, they call it a JLG," he maintains.

Equally impressive, he says, is the company's responsiveness to customers and its continuous introduction of new product designs. In fact, Treml goes so far as to say JLG is well ahead of its competitors as a world-class manufacturer of mobile aerial work platforms.

Seven years ago he might not have spoken with the same certainty. The construction industry -- whose health heavily influences the demand for aerial work platforms -- was in a slump. It had become clear to JLG management that to be the aerial-work-platform maker of choice, the company needed to take steps both to operate more cost efficiently and to be more responsive to customers' needs -- while maintaining product quality.

Treml describes the company at that time as "middle of the road or better," but "we wanted to be a quantum leap better." He explains, "We thought we should be world-class manufacturers."

It Began as a Pilot Program

JLG Industries identified the implementation of CFM as a key strategy to reach this goal. The CFM initiative began as a pilot program in JLG's sheet-metal operation. It encompassed two shifts and about 50 people, says plant manager Swope.

JLG experimented with reducing lot sizes, receiving material on a just-in-time basis, and making product in a just-in-time fashion.

The pilot program operated for six months before JLG began to roll out the new strategy on a plantwide basis. To ready its workforce, JLG pulled employees from the shop floor to receive CFM training and arranged field trips for workers to view other manufacturers practicing CFM.

The McConnellsburg plant's CFM initiative also meant forging new relationships with suppliers. Key suppliers were asked to deliver parts and other materials on a just-in-time basis and to point-of-use locations.

Warehouse Shuts Down

This move effectively eliminated the need for McConnellsburg's central warehouse, and it shut down. To improve vendor communications and resolve issues more quickly, JLG Industries introduced in-plant supplier representatives. The strategic use of manufacturing technology also helped to enhance flow and compress inventories. New CNC machine tools, robotic welding, and new paint processes are among the technologies introduced.

The results of these measures to further the CFM process are impressive. During the last five years the plant has reduced its days of on-hand inventory (raw materials and work-in-process) by nearly 68%. In that same time, raw-material turns improved by 188%, and WIP turns increased 128%.

Although Treml says he expected the CFM strategy to improve inventory numbers, even he was surprised at the degree by which work-in-process inventory was reduced.

(Although the CFM initiative has radically decreased the amount of raw and WIP inventory, JLG more than a year ago made a strategic decision to increase its finished-goods inventory. The company says its customers' expectations for ever-shorter delivery times has dictated this decision. Additionally, Treml says, this move smoothes out a production schedule that would otherwise fluctuate tremendously with the seasonal nature of the construction business. It's a bit of a gamble on JLG's part, Treml admits, but he says boom times in the construction industry have proved it to be the right decision so far.)

Any implementation of a new strategy is not without rough spots, but Treml, Swope, and Thomas Horejs, director, manufacturing engineering, are hard pressed to identify significant problems as the plant has converted to CFM. The 55 workers displaced by the closure of the central warehouse early in the implementation initially were upset, Treml says. None of the workers was laid off but instead moved to other positions at the facility.

JLG Industries says that its CFM strategy relies on employee involvement, and all key CFM projects include their input. For example, a recent August afternoon saw welder Matthew Rinker working with other team members on a project to redesign an area of JLG's boom-manufacturing operations.

This assignment meant that his welding duties had been temporarily curtailed, but his overall plant involvement had increased. He wasn't a bit unhappy about it and, in fact, had been given the responsibility for documenting the new process.

Employee Input Key to New Addition

Employee input also played an important role in the layout and design of an addition to JLG's McConnellsburg facility. Prior to the building's construction two years ago, JLG surveyed the employees who would be working there and asked for input into features they would like to see. At their suggestion, better lighting, covered trenches in the floor to house cables that might otherwise pose safety hazards, and a gantry to ease the movement of heavy loads were installed.

Leading a tour through the building, Rinker fingers carpet swatches that have been attached to racks holding painted components. "Another employee idea," he says of this common-sense approach to reducing the potential for nicks or scratches on painted surfaces.

Opportunities for employee involvement abound. Simply put, "If you're not involved, it's your own fault," Rinker says.

And top management must be every bit as involved and committed as it expects its employees to be, says Treml. At the McConnellsburg plant, top management demonstrates that commitment by "actually working with [plant-floor employees]" and being available for significant events such as process changes and plant reconfigurations, explains Treml.

Management Willing to Change

Managers also show commitment by listening and sometimes even by "not having too much pride to change" when events demonstrate that a management idea may not be for the best.

Personal experience prompts the latter observation, Treml admits. Offering an example, he describes how management backed off from a process it had designed to build the upper and lower works of a machine on separate production lines and marry them at the end.

Despite devoting nearly a month to that process, Treml says, "I just had to agree" with the plant employees who argued that management's new process was not the best solution.

"We redid the whole thing again," he adds. "That was kind of a significant event for [the production workers] because they got to see 'By gosh, he is willing to give in.' "

Treml, who will retire at the end of this month, acknowledges that he may have been the voice that issued the then seemingly impossible 10-day goal back when the plant's average manufacturing leadtime stretched across more than two months. Management then set about accomplishing that goal in keeping with a philosophy it espouses: Set both realistic, attainable goals and a challenging stretch goal.

Incremental Gains Lead to Stretch Goal

To that end, no time frame was established for reaching the ultimate goal. Instead JLG annually set incremental goals with the aim of reaching the stretch goal.

"The first years you could really knock a lot off it," remembers Swope. "Just like everything else, the low-hanging fruit's easy." "As we got closer, and we got down to the 20s, everybody got on the bandwagon and said 'Heck, we can get to 10,'" Treml adds.

And by the end, "improvements were measured in 10ths of a day," says Horejs.

Today the plant's cumulative manufacturing leadtime has dropped to 9.7 days, and JLG continues to pursue "ongoing opportunities for continuous improvement." That means extending the CFM initiative into new areas of process opportunity, reconfiguring flow, and rearranging plant facilities.

And contemplating new "impossible goals."

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