At A Glance
- Productivity increased 65% in five years.
- Since 1990 a 50% increase in production without added square footage.
- Manufacturing cycle time for Sawzall product reduced 97%.
- Order-to-shipment leadtimes for all products is two days, down from five months.
- Reduction in scrap/rework of 48.6%.
- First-pass yields of 97.7% for all finished products.
- Product-development cycle time dropped 35%.
- Warranty activity per unit shipped reduced 48% even though company maintains a 30-day no-questions-asked return policy.
- Safety performance improvement of 65%.
- 100% of production workforce in self-directed work teams.
- On-time delivery of 98% based on date customer requested.
Harry Peterson rolls out an old, table-length blueprint and shakes his head. Even he can't believe the five-year transformation of Milwaukee Electric Tool Corp. (METCO) in Jackson, Miss. Gone are the long manufacturing lines for producing heavy-duty electric hand tools and the massive inventory area that once housed them. The Jackson plant opened in 1973, METCO's first facility outside of Wisconsin. In 1984 it grew from 60,000 sq ft to 106,000 sq ft, and in June 1990 Peterson was named to manage the 400-person plant and plan for the opening of a METCO facility in Kosciusko, Miss. He says the Jackson plant was effective, producing all it could run using traditional manufacturing methods. Yet in October 1990 Peterson and Jerry D. McCormick, VP-manufacturing, announced that the plant would implement just-in-time (JIT) production using a cellular organization and a workforce focused on continuous improvement, or
. "It was a very courageous move, pretty gutsy, to say, 'We're successful, we're going to change radically to cellular manufacturing with all the attendant changes that go with it,'" says Peterson. "It was a courageous choice by the local Jackson, Miss. folks, my boss [McCormick], and the president of the company [Richard Grove]." By May 1991 the plant was fully cellular and demand-flow implemented throughout. Production processes now include steel machining, aluminum machining, gear manufacturing, induction heat treating, armature-shaft and armature manufacturing, field manufacturing, and tool assembly and test for Sawzall, Super Sawzall, Sawzall-Plus, D-Handle Drill, and Screwdriver products. The productivity improvements in 1991 were immediate, dramatic, and sustained, enough to cause METCO to delay the Kosciusko opening until January 1995. Using JIT, quick-changeover techniques, and lot sizes of one, Jackson slashed order-to-shipment leadtimes from five months in 1990 to two days, and inventories fell 33%. Customer fill rates improved to 98%, up from 70% in the 1980s. The lead brand Sawzall led sales increases with growth of 150%. Total Quality Management -- emphasizing
techniques, stop-the-line mentality, and do-check-verify routines -- produced a 48% reduction in warranty activity over the last five years. The plant also changed to a process-hour accounting system from a standard-hour cost-accounting system. "We threw out traditional measures and began to focus on broader measures," says Peterson. "In the old system, we'd encourage you to run parts, keep the machines running, keep the efficiency and utilization up. It's important, but today we focus on having the line run what the market needs." That move pushed the business departments to quickly adapt, and an equal if not greater burden was placed on the workforce who were asked to function as self-directed teams. "We recognized going in that some folks would be uncomfortable with this," says Peterson. "But the basic position we took with the workforce was very honest and upfront: 'We want you to be business owners with us.' That is the only way we can unleash the power that we have as a workforce -- in a team environment." A full 100% of the production workforce now participates in self-directed work teams and the employee-to-supervisor ratio rose from 18:1 to 50:1. This flattened the organization and drastically reduced the communications chain; no more than two levels exist between cell members and plant manager. Although a few employees initially left the plant, annual job turnover is now less than 1%. The self-directed teams are accountable for production performance, quality performance, problem solving, daily communications, and interfacing with support personnel. Cell teams -- organized around tool assembly, component parts manufacturing, or accessory manufacturing -- concentrate on eliminating waste using
, and generate visual control boards that chart cell productivity, quality fill rate, warranty issues, and problems. They also establish and maintain a
system with internal and external suppliers. Peterson says some vendors have devoted cells in their respective plants to respond to Milwaukee's
signals from cell teams. In addition to the cell teams, the plant has cross-functional
teams, a personnel team, pay-for-knowledge (PFK) team, and improvement teams that focus on safety, productivity, quality, and housekeeping. One team composed of Supersaw and Sawzall cell volunteers conducted a
workshop that developed the cellular layout and staffing for a new Sawzall-Plus cell. Peterson says the end result was nearly flawless. "We go after 10% productivity improvement per year. That's part of our mission, vision, goals, and objectives," says Peterson. Actual improvement has been 65% in the last five years, while costs have dropped 15%. "You can get a good bit of that with a business change from batch to cellular, but there is a point in time where those returns are diminishing. You're still improving, but the opportunity for 1% per month gets tougher. So there have to be other areas, and those areas are problem-solving that makes the problem go away forever; world-class technologies; and the right use of the technologies that are out in the world. These require a workforce that's really energized, because we literally expect our hourly team members to drive a lot of that, especially problem-solving." The plant develops its workforce by emphasizing education. The plant is committed to 40 hours of annual training per employee, including
workshops. A new Milwaukee Electric Tool World-Class College will provide an additional 40 classroom hours over a 10-week period. The plant's PFK system encourages employees to achieve new job certifications. Peterson cited two reasons for PFK: "We want highly motivated, highly flexible employees. And you have to pay for that. That gets your agility. A second issue, we wanted our employees to continue to grow their base of knowledge so that as we bring in world-class technology we don't [need to] bring in people to run it. "We've got a $4.7 million state-of-the- art motor line on order now that we will be able to run with very little help from outside because of the pay-for-knowledge system. Prior to PFK I had one employee on the armature line who was technically competent to troubleshoot the line. Now we've got the equivalent of eight." (The plant has steadily upgraded machinery. In July METCO was acquired by the Swedish manufacturing conglomerate Atlas Copco AB, and more capital investment is likely.) Under the PFK system employees are involved with determining their training schedule, pay rate, and daily work assignments. PFK job responsibilities include set-up, operation, and troubleshooting of equipment; preventive maintenance; job rotation and re-certification; and adherence to cycle/
time (in repetitive operations the cycle time between completion of units), quality expectations, and safety requirements. A job must be performed once in an eight- or 10-day period, says Peterson, and some employees carry up to nine certifications. Employees mark their job activities on team boards in the cells and are encouraged to decertify themselves if they're not meeting requirements. Employees can also be decertified if they show a pattern of failing to meet PFK obligations, which other cell members can note during peer evaluations. Employees log onto a PC on the plant floor and confidentially evaluate cell members. The ratings are then tabulated by management, which also prints hard copies for a review process. The cell teams can also recommend corrective actions, but their suggestions come short of discipline. Peterson acknowledges that peer evaluations are a trying process for cell members, as were the many other changes they've encountered and those that are likely to come. "We've made great progress," says Peterson, "but I'm like a quarter horse in the gate. I want to move faster. But you have to be careful to assess how much you can do and how quickly you can do it. We'll be finished with five years of aggressive activity in December, and it will be a good time for us to look back."