IW Best Plants Profile - 2001

Picture Perfect Kodak achieves its goals of agility and flexibility, continuous flow, and visual manufacturing in Guadalajara. ByDavid DrickhamerKodak de Mexico, Single-Use Camera Div., Guadalajara, Jalisco, MexicoAt a glance

Over 50% productivity improvement over the last four years.

20% reduction in manufacturing costs over the last four years. (At the same time the plant has absorbed the economic impact of a combined inflation/exchange rate of 27%.)

0.12 work-related injuries and illnesses per 100 employees, compared with an industry average of 4.6 per 100 employees. In one corner of the Kodak de Mexico Single-Use Camera factory, near the receiving docks, operators methodically crack open and disassemble camera bodies. Returned by film processors, they arrive piled in large bins, which offer a sharp contrast to the carefully shrink-wrapped pallets and refrigerated trucks by which many left this same factory some six to eight months ago. This may be the end of the line for these cameras, but it's the beginning of the manufacturing process, and one of the keys to the plant's success. "If you force me to choose one [competitive advantage], it's to be able to receive the recycling stream and convert that into a brand-new camera efficiently with good quality," states Daniel Perez Munoz, director of Eastman Kodak de Mexico's Single-Use Camera Div., Guadalajara. "Recycling is a much more complicated thing than a virgin build. We needed to learn how to do this." And learn they did. To date the factory has shipped 170 million-plus cameras, and recycled over 100 million cameras. The recycling process includes testing and reusing some components, including the circuit board, the single most expensive part, and grinding and repelletizing the plastic parts. Camera labels are made of polystyrene so that they can be ground up along with the camera covers. Beyond being good for the environment, the recycling stream has helped the business maintain profitability as product prices have plunged 62% over the last four years. Responding to 15% annual market growth, the Kodak board of directors okayed the investment in the single-use camera facility in September 1996. The plant shipped its first camera in May 1997. One of the people on the start-up team, Perez is quick to point out that the factory was designed to be "the fastest, best-quality, least-cost" single-use camera factory in the world. At the outset the team did extensive benchmarking to see what the best companies were doing in molding, assembly, and people management. A set of guiding principles was created to guide daily decision making. These principles, which still guide the facility, emphasize agility, flexibility, simplicity, continuous flow, visual manufacturing, continuous improvement, and the importance of people. That was the vision. Today, standing at almost any point on the well-lit plant floor, and after becoming accustomed to the unusual lavender walls, a visitor sees twin batteries of sparkling-clean injection molding machines equipped with robotic picking arms and other automated equipment. These machines stand in close proximity to a well-equipped tool shop. In the center, beneath some decoratively painted arches, kanban carts holding two hours of parts wait to be pulled into assembly, where camera bodies move along waist-high tracks and into the packaging process. This is what is meant by line-of-sight manufacturing. The overall focus is on speed and flexibility. In assembly this is accomplished by artfully melding manual and automated operations. Here nine lines build four 35-mm camera models using virgin parts. Nine more lines use a combination of recycled and new parts. Two additional assembly lines produce a single-use camera model that uses Kodak's APS film. Each of the 35-mm camera assembly and recycling lines can build and assemble all four models with little or no changeover time. One of the plant's key measures of rapid flow and agility is the cycle time from raw resin to packaged camera, which has been falling steadily and currently stands at 9.6 hours. Inventory levels throughout the process continue to shrink, a goal that is aided by a dwindling amount of floor space. The factory was designed to produce 50 million cameras per year; current output is 65 million. "I feel more comfortable having the space as a constraint because that forces you not to store product," notes Perez. Although space may be getting tight, a considerable area in the middle of the plant, between molding and assembly, has been set aside for ergonomic exercises. Three times each 12-hour shift assembly workers, laughing and smiling as visitors look on, leave their posts, gather in this area, and follow a series of exercises displayed on video monitors. When the factory was approved in 1996, one of the directives was that the repetitive motion injuries the company had been battling elsewhere in similar operations would not be transferred to Guadalajara. The world-class ergonomics program includes careful attention to work design, job rotation three times per shift, and a full-time, in-plant doctor who conducts random examinations and rehabilitation at the first sign of trouble. As a result, there haven't been any lost-time cases due to repetitive-motion injuries, and only four lost-time cases in over four years and 8.5 million hours of operation. Not coincidentally, these safety initiatives dovetail nicely with the plant's overall flexibility mandate. There are no material handlers. All material is moved in small lots, and operators must retrieve their own kanban bins, giving them another opportunity to stretch their muscles. Job rotation would be impossible without a 100% cross-trained workforce, which also is a prerequisite for running multiple models down the same line. Of course the cornerstone of any good safety program is training. Kodak requires 40 hours of formal training per employee per year. Last year the Kodak de Mexico Single-Use Camera Div. reported almost 100 hours per employee. During the three-week-long orientation program, which includes instruction on safe work practices and quality principles and techniques, new production employees also learn how to build a camera from start to finish. Ongoing training includes extensive certification and recertification with written and oral exams. All employees have an individual development plan that they review and update with their supervisor twice annually. "I continue to be impressed [that] everybody who's there wants to learn more, wants to do more," says Ron Bradley, Eastman Kodak Co.'s director, worldwide manufacturing and product supply, consumer imaging-cameras, who managed the factory for two and a half years. "It's a very refreshing place to be for that fact. People are looking to get better personally and professionally. . . ." This training, in addition to fair wages and a good benefits package, contributes to a low annual turnover rate of 24% (compared with 78% at other local assembly operations). The single-use-camera factory itself employs just over 2,000 and is part of a larger Kodak campus that includes regional sales and marketing offices, a distribution center, a film coating plant that supplies film to the single-use camera operation, and a joint venture that produces DVDs and CDs. Located in Guadalajara since 1969, Kodak has built a solid reputation in the area for stability. In 1989 the magnetic-media division on the site was one of the first, if not the first, location in Mexico to be ISO 9001-certified. The site also has its own wastewater treatment facility, discharging nothing into the city sewage system. There's a tradition of excellence at Kodak in Guadalajara, as well as a long-standing pride in that distinction. Rafael Torres Arredondo, a 29-year employee and secretary general of the union that represents hourly employees across the site, exemplifies that pride. Passionate about the company and the facility, Torres says he has "sangre amarillo," or yellow blood. That would be Kodak yellow, of course. Web-Exclusive Best Practices By David Drickhamer Benchmarking contact: Daniel Perez, [email protected], 011-523-678-6462 Tools For Continuous Improvement The Kodak Operating System (KOS) is a map for implementing lean manufacturing based on a collection of best practices. As part of its KOS program -- which includes extensive mistake proofing, 5Ss, value-stream mapping, and total preventive maintenance -- the Single-Use Camera Division regularly conducts small kaizen events to improve its processes. It also uses two formal, data-driven techniques for improvement. The first is management by fact, which it describes as a stream-lined (one piece of paper), medium-term process improvement program. Recent projects include efforts to reduce flash failures, reduce foil packaging waste, and reduce electricity and water consumption. The second, more rigorous tool has the somewhat foreboding rubric, "Alfa-Beta Methodology." Developed at Kodak de Mexico, this process consists of a series of highly documented steps. In the first stage team members identify the root cause of the problem, identify the economic impact, and perform experiments and analysis to verify their hypotheses. In the second stage they formulate, test, and implement various solutions. Over the last three years the single-use camera operation has completed 28 Alfa-Beta projects. One recent project reduced the cycle time for molding the plastic viewfinder by 12%, and thereby avoiding a $512,000 investment to increase capacity. Phase A (Alfa): Phase to determine the root cause of the problem, opportunity, or idea. Phase 1: Firm Data Phase 2: Validation and confirmation of data Phase 3: Problem definition Phase 4: Economic impact of the problem Phase 5: Scope and objectives Phase 6: Hypothesis formulation to determine root causes Phase 7: Experimentation, statistical analysis, and/or modelization Phase 8: Confirmation of hypothesis for root cause or substitution of hypothesis Phase B (Beta): Phase to determine an effective solution of the problem Phase 1: Establishment of concept solutions Phase 2: Test of concept solution Phase 3: Acceptance of concept solution Phase 4: Pilot test Phase 5: Confirmation of effectiveness of concept solution in pilot mode Phase 6: General Implementation of concept solution Phase 7: Confirmation of effectiveness of general implementation Phase 8: Final declaration Ready for the Market When single-use cameras leave the Kodak de Mexico facility in Guadalajara, they are shipped to distribution centers in Mexico, Japan, and the United States. Demand fluctuates as much as five times from lows to peaks during the summer and December holidays. "Our forecasting is never as good as it needs to be. It's always wrong -- we just don't know how bad it's going to be," observes Ron Bradley, director, worldwide manufacturing and product supply, consumer imaging-cameras. "You tend to guess wrong, and then we're sitting with the wrong inventory in the warehouse when the peak season comes. Since we have a significant number of cat[alog] numbers, usually we have the wrong one. That happens every year." With such a high-volume product, most companies would be content to let finished goods inventory buffer their production operations from these wild swings. As the market continues to grow, along with the trend toward mass customization -- for single-use cameras this takes the form of unique packaging designs and configurations -- Kodak is restructuring the supply chain to better manage its assets. To do this, the company hopes to take full advantage of the flexibility and agility of the manufacturing operation in Guadalajara. "If the customer is requesting something, or they are making changes, we would like to provide a product at the moment they are requesting it," says Beatriz Arenas, materials manager. "If we move the fixed zone from five weeks to one week, we will have more flexibility for changes in the market." To reduce the fixed zone -- the horizon time for making changes in the production schedule -- to one week, the single-use camera division is developing a local packaging supplier that can provide the quality the company needs. It also is working on setting up a local "hub" or inventory on consignment system to strategically reduce leadtimes with other vendors. The ultimate goal is a supply chain that's triggered by daily signals based on individual catalog numbers. On-Site Tool-Making Expertise The tool room within the Kodak de Mexico single-use camera facility is equipped with a wide array of CNC controlled equipment (milling, grinding, and EDM) and a Unigraphics CAD system. It receives CAD files and programs from Rochester, N.Y., where the injection-molding tools, or molds, are originally designed and fabricated, and use these files and programs to perform any required maintenance and tool modifications. The tools are very complex and must last for millions of shots. "The original plan was we were only going to do minor tool modifications, tool cleaning, and we would send most of the tools back to Rochester for heavy maintenance and changes and those kind of things. That was the plan four-and-a-half years ago or so," recalls Ron Bradley, Eastman Kodak Co.'s director, worldwide manufacturing and product supply, consumer imaging-cameras. Because the tools are so expensive, the plant does not have a large amount of excess tool capacity, and tool utilization has become almost as important as machine utilization. It became critical that the tools could be maintained and modified locally around-the-clock in order not to interrupt production. The toolmakers took it as a personal challenge, and quickly developed the required expertise. This push was aided by a self-directed team culture, where leadership rotates among team members and individual performance evaluations are conducted by the whole group. "Toolmakers are unique folks. They are artists in some respects and they all want to make complete tools. That's their trade," states Bradley. "We've been trying to prepare them, to put them in a position to do that. . . . They've taken every challenge that we've given them and they've being extremely successful." Leveraging Engineering Talent Worldwide The Kodak de Mexico single-use camera facility is a designated Manufacturing Technology Center (MTC), reporting to the Kodak Worldwide Tech Center in Rochester, N.Y. It provides engineering support to Guadalajara, and is also a key participant in the commercialization process of new products and worldwide improvement projects. More and more of the engineering responsibilities once handled in Rochester, are now being performed here. "Some projects have worldwide impact, we develop it and return it," says Gilberto Rodriguez Leal, engineering manager. "As an example, we are moving toward recycled batteries. We are developing the equipment and processes, as a subset of the worldwide tech center, and they are deploying it worldwide." The purpose of this strategy is to enhance technical skills at the regional level (One of Kodak's core values is continuous improvement and personal renewal), increase global engineering capacity, and thereby minimize transfer time of new products from design to manufacturing.