IW Best Plants Profile - 1994

By adapting flexible just-in-time manufacturing concepts to a high-mix, low-volume environment, and adding ingenious home-grown computer systems, the Auburn-based Electronic Products Division of Coherent Incorporated (a 1994 Best Plants award winner) has achieved some remarkable gains. Productivity is up more than 60 percent. Overhead costs have been sliced by 58 percent and order-to-shipment lead time by 90 percent.

In late 1990, production supervisory posts were eliminated, and self-managed work groups assumed responsibility for hiring, firing, daily planning, and other duties. Operations director Diane Breedlove recalls some uneasy moments. "In the first three months, our productivity went down the tubes. And delivery went into the tank," she admits.

Adopting a gainsharing plan in 1991 helped ease the early struggle to adapt to the new system by compensating workers for their new responsibilities. Under the gainshare formula, employees get 50 percent of identified savings. The base amount is tied to productivity improvement, with a bonus/penalty adjustment based on quality and delivery performance.

Several computerized systems have helped propel the continuous-improvement process. One of the plant's most intriguing innovations is its Auto-Que system, using software developed in-house, which establishes real-time production priorities. Working with MRP projections, Auto-Que calculates a recommended kanban quantity for each component or subassembly. It then assigns priorities based on current inventory levels, and can also deal with "hot" customer orders. In effect, the Auto-Que priority ranking, which shows up on computer screens at the start of each production line, becomes the daily production schedule.gains. Productivity is up more than 60 percent. Overhead costs have been sliced by 58 percent and order-to-shipment lead time by 90 percent.

In late 1990, production supervisory posts were eliminated, and self-managed work groups assumed responsibility for hiring, firing, daily planning, and other duties. Operations director Diane Breedlove recalls some uneasy moments. "In the first three months, our productivity went down the tubes. And delivery went into the tank," she admits.

Adopting a gainsharing plan in 1991 helped ease the early struggle to adapt to the new system by compensating workers for their new responsibilities. Under the gainshare formula, employees get 50 percent of identified savings. The base amount is tied to productivity improvement, with a bonus/penalty adjustment based on quality and delivery performance.

Several computerized systems have helped propel the continuous-improvement process. One of the plant's most intriguing innovations is its Auto-Que system, using software developed in-house, which establishes real-time production priorities. Working with MRP projections, Auto-Que calculates a recommended kanban quantity for each component or subassembly. It then assigns priorities based on current inventory levels, and can also deal with "hot" customer orders. In effect, the Auto-Que priority ranking, which shows up on computer screens at the start of each production line, becomes the daily production schedule.

Coherent Inc., Electronic Products Division
Contact: Diane Breedlove, Director of Operations
12789 Earhardt Ave., Auburn CA 95602
Employees: 110
Major products: Laser assemblies

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