Carrier Charlotte Chiller Operations: IW Best Plants Profile 2010

Carrier Charlotte Chiller Operations: IW Best Plants Profile 2010

A Winning Formula: An emphasis on supplier collaboration, process capability and employee engagement is helping Carrier Charlotte triumph in the 'war on cost.'

Carrier Charlotte Chiller Operations, Charlotte, N.C.

Employees: 224, non-union

Total Square Footage: 310,000

Primary Product/Market: Heavy-duty commercial chillers

Start-Up Date: 1999

Achievements: Achieved LEED for Existing Buildings certification in 2009; 95% of supplier orders delivered on time; reduced customer reject rate by 56% during past three years; ISO 9001:2008 certification (five years with zero ISO non-conformances)


"Relentless" is a word that Mark Goodman uses frequently when he talks about Carrier's Charlotte, N.C., Chiller Operations. The high-energy plant manager applies the adjective to the facility's quest to achieve "world-class quality," safety excellence and other operational objectives, but his intensity goes up several notches when the topic is the plant's "relentless war on cost."

Lab technician Dan Miller performs a final certification test on an Evergreen 19XR water-cooled chiller.

"We have a bit of a chip on our shoulder, because the operation was unprofitable and had so many issues for so long," Goodman says. "We're just relentless about putting that in the past and about driving value for our customers, creating a safe working environment and taking cost out."

Considering the facility's past, the intensity is understandable. In the mid 2000s, the plant was struggling with key metrics such as on-time delivery, quality, employee satisfaction and environmental health and safety compliance, and facing serious cost issues.

Fast-forward to 2011. The Charlotte facility has made dramatic strides in every operational area and on every key metric, highlighted by a 242% increase in plant-level profitability, a 56% reduction in the customer reject rate over the past three years and a 99% on-time delivery rate.

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Carrier Charlotte in 2009 launched nine new products, all of which were introduced at a minimum of 20% lower manufacturing cost than their predecessors. For the new Puron R-410A refrigerant product line, introduced in July 2009, the plant leveraged lean-at-launch principles and design-for-manufacturability guidelines to consolidate three assembly lines into one -- freeing up 10,000 square feet of floor space.

In its all-out effort to win the war on cost, the plant has leaned heavily on the "Speed" formula. The formula emphasizes three operational strategies: supplier reliability; capability, reliability and repeatability of processes; and an engaged, highly skilled workforce. The plant implements the formula in a number of ways:

  • In an effort to establish quality, delivery and cost-reduction targets and favorable payment terms, Carrier Charlotte seeks long-term agreements with suppliers. Every top-tier supplier receives a monthly scorecard highlighting their quality and delivery performance. A team of Carrier engineers helps suppliers boost efficiency in their operations by conducting component-teardown analysis, training and kaizen events for them.
  • The facility ensures process capability and repeatability -- no easy task when more than 75% of its orders are built to customer spec -- through strategies such as standard work instructions, material presentation, poka yoke, value-stream mapping and critical component-verification technology.
  • Carrier Charlotte fosters employee engagement through monthly plantwide meetings, "Lunch with Goody" focus groups and cross-functional plant-improvement teams that meet monthly with plant leadership to discuss improvement projects and opportunities. Improvement suggestions submitted by employees in 2009 generated $2.25 million in cost savings.

"If we need to spend money, we spend it. But our first choice is always to use creativity over capital," Goodman says. "And it's amazing when you get a couple hundred people focused on that, the power that can bring to the table."

An Essential Link in the 'War on Cost'

For Carrier's Charlotte, N.C., Chiller Operations, a reliable supply chain is the foundation of operational excellence.

One of the strategies driving Carrier Charlotte's remarkable turnaround over the past few years has been the "SPEED" formula, which asserts that the fundamental equation for operational excellence is supplier reliability + process capability + an engaged, highly skilled workforce.

While plant manager Mark Goodman believes that all three elements are important, Goodman notes that the plant's "relentless war on cost" cannot be won without reliable suppliers. Consequently, Goodman and supply chain manager Alex Housten "spend a lot of time dealing with supply chain, right up front at the point of attack."

"If you don't have the supplier reliability, it doesn't matter how effective your processes are, or how good your people are or how well-trained they are," Goodman says. "You're driving [up] cost if you don't have what you want when you want it."

When Goodman came to Carrier Charlotte in 2007, he instilled this philosophy by asking "a couple of very simple things from our supply chain."

"We asked that they deliver what we want when we want it, meaning that it's good and that's it on time," Goodman says. "And we asked our suppliers to be in long-term agreements, if possible, so we have targets for year-over-year cost reductions, quality and delivery, and we have good payment terms. It's the same thing that our customers are asking from us."

Carrier Charlotte's supply chain management strategy emphasizes collaborative relationships with suppliers. Every top-tier supplier receives a monthly scorecard highlighting their quality and delivery performance, while the plant's supply chain team works closely with its 10 "focus suppliers" through weekly scorecards and "action-tracker meetings" to develop and implement process and product improvements.

A team of SQEs (supplier-quality engineers) helps suppliers cut costs and boost efficiency in their own operations by conducting component-teardown analysis, training and kaizen events at Carrier Charlotte and at suppliers' facilities.

While the approach may seem like common sense, Goodman says there has been some pushback from the plant's supply chain. "A lot of suppliers chose not to do business with Carrier Charlotte," he acknowledges. When Goodman detailed his philosophy in a presentation at Carrier's global supply chain conference in September 2009, the reaction was mixed.

"Some suppliers said, 'We get it. We understand. We really do,'" Goodman recalls. "We had other suppliers that said, 'What's he talking about?' And those suppliers that we're doing business with that get it get more business, generally. And those that don't, in some cases we're not doing business with anymore. Because we have to have capable and reliable partners."

LEEDing by Example

Carriers LEED-certified Charlotte Chiller Operations show customers the power of its green machines.

Green, for lack of a better word, is good. Just ask the folks at Carriers Charlotte, N.C., Chiller Operations.

The plant has reaped substantial rewards from recent sustainability initiatives, including a nearly 30% reduction in energy usage since 2008, when the plants green journey began.

And theres a unique twist to the story for Carrier Charlotte, which makes chillers for the commercial heating, ventilation and air conditioning (HVAC) industry. One of the plants most effective tools for reducing its carbon footprint has been a product manufactured at the plant: the 30XW AquaForce heat-recovery chiller.

Since Carrier Charlotte installed the high-efficiency 30XW chiller in January 2010 to meet its HVAC needs, the plant has reduced its natural gas usage by nearly 50%, saving the plant $130,000 on its annual gas bill. Carrier Charlotte estimates that the chiller system has helped the plant cut its annual greenhouse gas and carbon footprint by 1,037 million pounds of carbon dioxide, a 5.4% reduction.

We have a really good story of carbon footprint reduction, not only from best practices we have brought in from the outside but also innovations that come from our very own factory, says EHS manager Michael Lutz.

The chiller also has been a powerful marketing tool for the plant, which hosts more than 1,000 customer visits each year. After witnessing the 30XW in use at Carrier Charlotte, several customers have been inspired to purchase the chiller to reduce energy costs in their own facilities.

Green is very, very good business. Theres no question about that at all, says plant manager Mark Goodman. And were doing it here. We market it in our products and were living it.

Other green initiatives at Carrier Charlotte have included installation of a high-efficiency T5HO lighting system, a variable-speed air compressor and a Carrier i-Vu web-based building automation control system. The plant also has made an effort to minimize its industrial process waste through strategies such as returnable packaging; shipping pallets that once went to a landfill now are reused or sent to an offsite recycler.

Among the results of the plants green initiatives, through October 2010, Carrier Charlotte has:

  • Reduced its energy usage by 28.9% versus its 2008 baseline.
  • Reduced its greenhouse gas emissions by 30% versus its 2008 baseline.
  • Reduced plant air emissions by 42.9% over its 2006 baseline.
  • Reduced non-recycled industrial process waste by 55% over its 2006 baseline.
  • Reduced industrial process waste by 49% over its 2006 baseline.

The results of its green initiatives inspired the plant to apply for LEED certification from the U.S. Green Building Council, and in July 2009 Carrier Charlotte became one of 11 manufacturing sites in the world to achieve LEED for Existing Buildings status.

Goodman notes that Carrier Charlotte started its green initiatives in 2008 mainly as a cost-cutting strategy. Then a number of Carrier customers pointed out that they were doing a lot of the same things for LEED compliance, so we looked into it.

We thought LEED certification would be a good way to communicate our environmental successes, Goodman says. And there were a few things that the LEED certification criteria brought to our attention that were additional opportunities for us.

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