IW Best Plants Profile - 1999

The Heart Of Improvement Johnson Controls gets bigger and better -- and sets bolder goals. By George Taninecz A rhythmic thumping sound resonates throughout the Johnson Controls Inc. plant in Athens, Tenn. The sensation hints at what drives this facility to continuous -- often miraculous -- improvement. No, it's not the 23 stamping presses that pound out components for more than 50,000 automotive seating frames every day. It's something far more difficult to grasp. It's the hearts of the employees, all 950 of them, beating in a culture of "mutual trust and respect." Hokey, you say, or unbusinesslike? The results are all business. The Johnson Controls plant, tucked off a shaded two-lane road on the outskirts of town, combines the hearts and humanity of its employees with world-class manufacturing know-how to deliver near-perfect performance -- an average of 22 ppm customer defects in a market that mandates annual price reductions. And this occurs while a burgeoning workforce takes on a mammoth new account in record time. "We have a lot of different key operating philosophies," says Paul Pratt, plant manager. "One of the main ones that has been ingrained in the plant since Day One we call 'mutual trust and respect for each individual.' Those words, I guess, sound pretty good. But the key to that is how you behave and how you act daily and translate those words into real actions. Words are pretty cheap in our business. What you do means a whole lot more than what you say." What the 21-year-old plant does do is manufacture high-quality seat frames and components at an astonishing just-in-time pace (cycle time per part is less than six minutes, and order-to-shipment leadtime is just eight hours). And the plant has hit 100% on-time delivery for the last five years, shipping product to 26 different locations around the globe and eventually into the vehicles of Ford Motor Co. (52.4% of FY2000 sales); DaimlerChrysler AG (37.2%); and General Motors Corp. (10.4%). In FY1999 DaimlerChrysler business accounted for less than 10% of plant sales, and this increase has put the hearts and minds of employees to the test. In late 1998 the plant broke ground on a 25,000-sq-ft addition to build seat frames for Mercedes M-class vehicles; by September 1999 the plant was producing the most complex frames ever manufactured there. Operations manager Jeff McCay says Johnson Controls vigorously sought the new seating program, promising an unheard of development cycle of less than one year. "A lot of plants ran away from that product when they saw it," says McCay, "but we want to put things in this plant that give us a global competitive advantage." "We've added roughly 200 people in the past two to three months," says Pratt. "We've got a tremendous opportunity, a brand-new job with Mercedes. In our business, 20 to 22 months is pretty typical to take a program [from] start to Job One. This opportunity came along, but it came along with, we'll say, a lot of hurdles. One hurdle is that we had to do it in 11 months." The Mercedes program will mean a 45% increase in sales out of the plant, but grabbing that business hasn't caused the plant to slip up elsewhere. "We're still maintaining quality at a high level and still maintaining safety at a high level and not losing profitability. That's been quite a feat," notes Pratt. In fact, the plant's external quality hit an all-time best 14 ppm in July 1999, the first full month with the new hires (since 1997 quality has improved from a then-respectable 177 ppm). The majority of new hires have been skilled welders, who are not exactly crawling out of the woodwork in eastern Tennessee. The plant, with a good local reputation, didn't want to pillage others' workforces in this low-unemployment community, so it developed a three-phase approach to quickly attract and train employees. The plant worked with a state vocational school and got it to offer evening adult education in welding certification; it worked with local high schools to get non-college-bound seniors to sign up for welding certification; and the remaining recruits were attracted locally. The new training consisted of one week of classroom training; a week of "shadowing" (no actual welding, just accompanying an operator); and a third week of supervised run time on an actual job. Pratt and McCay credit Janice Hardaway, employee-relations supervisor, for ensuring that -- beyond just the sheer feat of locating 200 new hires -- the incoming talent meshed with Johnson Controls' culture. Hardaway can "look in people's hearts," surmises Pratt. "When we hire a person, or especially 200 people, we make sure we hire people with the right kind of heart. . . . I'd rather have your heart than have your brain. I can put things in your brain if it has live cells," says Pratt. "I can teach you how to build seats, I can teach you how to run a welder, but there are things in your heart that have been there since childhood that your parents put in. It's hard to work on somebody's heart." As Pratt walks through the plant, he's as much a friend or neighbor, asking one employee about her twins and another about a new motorcycle. He also leads a close, cohesive operational management staff. "We watched our kids grow up, we've been through tragedies, we've been through celebrations, we've been through heartaches," says Pratt. "We know how each other thinks. If somebody has a bad day, we must pick them up and get them through the next day." Although Johnson Controls recognizes the soft side of employee management, it also challenges employees intellectually. In addition to knowing and using tools to constantly improve their specific areas of operation (the plant trains 8.4 days per employee per year), employees understand the consequences of their actions on the plant's competitiveness. "We want our employees to know as much about the way our business works as we can possibly give them," says McCay. "The more our people understand the competitiveness of this business and the more they can understand how flexible they need to be and the plant needs to be to continue to compete, then they're going to be more willing to do that." Today the plant produces and ships product to its customers at lower prices than it did a decade ago, despite inflation and escalating operational costs, says McCay. Like other auto suppliers, the plant is regularly challenged to reduce costs and leadtimes for automakers. It's an environment in which new goals are continuously put before the workforce. But instead of pushing employees to work harder, Pratt notes, they find ways to work smarter. One way that occurs is through kaizen activities. Floyd Hughes, manufacturing quality manager, and Mike Nunley, engineering manager, say kaizen events not only improve production efficiency, but they're recognized by management and employees as a means for employees to step up to challenges and improve their jobs -- making them safer, more ergonomically correct, more efficient, and more rewarding. Johnson Controls conducted 37 kaizen events in the last five years and plans to conduct two every month. One kaizen activity in FY1998 netted more than $6 million in savings and quality improvements from just one manufacturing process. "We break the plant down into what we call 'current plant' and 'future plant,'" says Pratt. "It's a little unique in that we have a plant today, but we're always going to be a different plant tomorrow, next month, or next year -- a better plant." As the plant brings in new business, it pursues new activities, looking for better results. "If we do it the same way as 'current plant,' we'll just expect the same results," says Pratt. "We're constantly looking at what we call the 'surrogate process' to see how we're going to do it differently in the 'future plant,' so we don't have the same scrap rate, the same quality rate, the same inventory, the same productivity. The big key for us getting better over time is to make sure we do it differently. Same way equals same results every time." The Johnson Controls facility meticulously tracks activities and performances to see just what the "future plant" can look like. In FY1998 it completed about 1,700 different continuous-improvement activities, classified and tracked in eight categories, ranging from Best Practices Projects to the Athens Creating Excellence (ACE) plan. ACE is a gain-sharing program that pays out based on improvements to quality, safety, plant supplies, and productivity. Based on a three-year average, the financial gain splits 50/50 to employees and the company, says Pratt. In 1998 each employee received about $2,000 through the gain-sharing program. Johnson Controls also uses a "world-class continuous-improvement road map" to break down measurement of plantwide activities and results, each tracked by YTD actual, annual goal, and percentage of attained goal. For example, through July the plant had identified 24 "zero ppm road map" projects (62% of the year's goal) and completed seven of those (20% of goal). On the results side, internal quality was at 5,568 ppm (86% of goal) and external quality was at 23 ppm (109% of goal). The plant also intricately tracks 32 far-reaching best practices, ranging from morale to space optimization, and logs the current status of the practice, its performance measurable, YTD results, and the practice's "champion." But improvement doesn't come only from within Johnson Controls. In 1997 the plant benchmarked more than 40 companies around the world and, says Pratt, that cycle is about to be repeated. Johnson Controls, likewise, is a hot spot for benchmarkers, hosting 47 different groups -- other Johnson Controls units, customers, suppliers, and even a competitor -- in the last year, with some visits lasting up to a week and coming from as far away as China. Many visitors, Pratt says, are looking for a "genie to pop out of a bottle" and improve their plant. There are no genies, he chides, but Johnson Controls has come up with a list of 10 "magic switches" that both epitomize the plant's moral beliefs and come close to being "magic." The list of 10 includes such down-to-earth principles as "If you're wrong, admit it" and "Do not view all problems as bad." "About 65% of the people that hear this say, 'I understand, that's basic, now what are you really doing?'" says Pratt. "And I say, 'You've missed the point. This is what we're really doing. You practice these things daily.'"

At A Glance
  • On-time delivery over five years -- 100%
  • Customer retention over five years -- 100%
  • First-pass yield -- 98.8%
  • Reduced internal costs by $3.5 million
  • Average 1.8 days of total inventory on hand
  • One-half-day finished-goods inventory on hand
  • OSHA lost-workday rate of 3.8 over three years
  • Eight-hour order-to-shipment leadtime
  • Scrap as a percentage of sales -- 0.38%
  • Rework as a percentage of sales -- 0.09%
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