In Good Company General Cable links lean operations to the best suppliers and customers to gain performance and market edge.
George Taninecz General Cable -- Automotive Products, Altoona, Pa.
At a Glance
- Plant: 198,000 square feet
- Start-up: 1988
- 78% reduction in manufacturing cycle time over last three years;
- 30% reduction in order-to-ship lead time;
- Honeywell Consumer Products Group Supplier of the Year in 2002;
- O'Reilly Auto Parts Supplier of the Year in 2000;
- Frost & Sullivan 2002 Market Engineering Leadership Award in the automotive and light truck wire sets aftermarket.
The predecessor of what would become General Cable Corp. supplied the insulated wire to Samuel Morse for the world's first telegraph message in 1844. More than 150 years later, General Cable still knows a thing or two about serving market leaders. Today, the General Cable Automotive Products plant in Altoona, Pa., aligns with leading customers and suppliers in the automotive aftermarket and captures an increasing share of its customers' increasing shares for ignition wire sets. This "win with the winners" strategy, though, is meaningless without the agile customer-oriented operations in Altoona to back it up. General Cable Altoona is just one of two assembly plants in the 28-plant General Cable worldwide family and the only one supplying the automotive market. Nonetheless, Larry Fast, senior vice president of North American Operations, calls Altoona a model facility for the corporation and a breeding ground for best practices and process improvements. Altoona relies on a foundation of lean manufacturing principles to eliminate waste in processes, improve order times and tightly sync its operations with its supply base; and it complements lean with Six Sigma tools to hone critical quality metrics. In the mid-1990s, Altoona began aggregating production processes into lean cellular configurations based on the unique work that occurs in a given cell. General Cable headquarters also began rolling out a corporate lean program, and Altoona then applied the tools beyond cells and beyond the plant's four walls -- directly linking assembly to demand from customers such as AutoZone, Honeywell and O'Reilly Auto Parts. Today, Altoona's assembly is scheduled based on actual customer orders and finished-goods inventory kanbans in the plant's distribution center (DC). The DC maintains low finished-goods inventory based on demand volumes and demand volatility; some products have no finished-goods inventory. Operations responds to the DC signal for goods; additionally a bar-coded work order that moves through the plant corresponds to the visual pull on the floor. Mike Sgro, materials manager, says the work orders allow the plant to track the high volume and high mix of product rapidly moving through the facility (1,000 work orders per week for about 5,000 active SKUs) and allow each assembly cell to automatically scan in productivity incentive rates unique to each SKU. With the exception of unique parts requirements, the wire-cutting operations, material handlers and suppliers replenish materials to assembly cells based on visual kanbans (e.g., open space near cells, rows of kanban carts for wires). Assembly cells have evolved from sit-down batch production to a lean rabbit-chase configuration in which all work elements in a cell, such as attaching terminals and insulators to wire, are performed by each cell member. Cell operators walk and follow each other around the cell (thus the "chase"), and the configuration allows a cell to operate with one, two or three employees as demand requires. Andon lights in the cells and at cutting stations allow operators to indicate when materials reach a low level, when unique material is needed, or when immediate maintenance is required (maintenance responds directly to the lights without supervisor instructions). Bill Yankovich, plant manager, says about two dozen of the current 27 cells have been the subject of a kaizen, relocated or newly constructed in just the last six months due to increased demand and floor-space requirements on the plant. Altoona also is transitioning to cells in which pure flow exists. These cells take raw wire from a sister facility in Lincoln, R.I., cut the wire using state-of-the-art machines located in the cells that are paced to the speed of operators and permit single-piece flow, and then assemble a wire set in less than 30 seconds. (The majority of Altoona cells still pull cut wire from separate work stations that use 30-year-plus batch-cutting machines.) Mary Rickabaugh, general assembler, says, "I didn't think it would ever work, and the company didn't know for sure if it would either." She's now convinced, and she and colleague Diane Sullivan proudly note that the lean flow cell has increased productivity and has reduced defects-per-million units by 70%, scrap by 90%, and cycle time by 50% compared with separate cutting and assembly combinations. Cellular assembly along with JIT delivery to customers, world-class supplier programs and improved demand planning have contributed to total inventory reductions of 37% over three years and about 70% since 1996. Ninety-two percent of the plant's material and components come from just five suppliers that replenish plant inventory daily. Eighty-six percent of suppliers manage their own material in the plant. Altoona has eliminated nearly all purchase orders; suppliers react to daily inventory levels. Yankovich says supplier consolidation has provided tremendous leverage for Altoona, "and I don't just mean leverage in terms of price reductions. When you have those kinds of suppliers, it makes it very easy to work with them on continuous-improvement projects. We've got a lot of efforts going on in that regard, and it's a big part of our strategy and our success." The responsiveness of suppliers and the agility of Altoona operations make it easier for the plant to be responsive to downstream demands. For example, Altoona customers want to be first to market with aftermarket products when they see a hint of consumer demand, but predicting when OEM parts will begin to fail en masse is not an exact science. Small-lot-size production enables General Cable to efficiently provide the low-volume early runs of such products and, with suppliers walking hand-in-hand, incrementally ramp up as aftermarket volume rises. "We not only try to partner with the best suppliers in the industry, but the best customers," says Yankovich. "Not only are we winning business because we're taking business from our competition, but our customers are taking business from their competition. That's resulting in additional sales volume for us, additional benefit for us." Increased volume has resulted in about 70 new hires in the last six months with another 25 to 30 employees working their way through a probationary period. New hires receive training on lean, Six Sigma and safety, and they are assimilated into the operator-led environment with mentoring from veteran employees. Yankovich says the new-hire surge has resulted in no negative impact to quality and safety, and as new hires grasp the system, the plant's labor productivity trends upward. Altoona operates in a two-story plant constructed in 1956. The plant physically looks much like a manufacturing plant of the 1950s, but just as lean processes are generations removed from the post-war mass production era, so too is the attitude and culture of the workforce. As recently as the 1990s, Altoona was the site of management/union friction. But the vast majority of associates are now part of an "operator-led environment." Recent and current management has fostered more amicable, consistent, progressive labor relations, allowing the plant to implement lean and Six Sigma and apply kaizens (11 in the last year, some of which were requested by associates) with the approval of International Union of Electronic, Electrical, Salaried Machine and Furniture Workers of America, Local 123. Tom Myers, union chief steward, says, "We try to be the best at what we do. People take pride in that, and we work together." Jim Porter, maintenance and manufacturing manager, says, "It's not so much your job or my job anymore, it's our job."
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General Cable Corp.'s Altoona plant partnered with the Tauber Manufacturing Institute of the University of Michigan last year to develop a demand-management solution for the plant's high-volume, high-mix product lines. The result was that Altoona now segments demand into three categories based on demand volatility (how consistent is demand) and demand volume:
- High-volume and low volatility demand is met through finished goods at a 98.5% fill rate with the remaining 1.5% through manufacturing in time to meet customer lead times. This means that 1.5% of the time there will be no finished-goods inventory to meet the demand, but a "hot" order on the floor can still be made and shipped within the required time.
- Low volume and high volatility demand is produced directly to customer orders with no finished-goods inventory accumulated. "That's the stuff that was driving all the obsolete excess inventory that we had," says Bill Yankovich, plant manager.
- High volume and high volatility demand is filled from finished-goods inventory at a 95% fill rate, with 5% working its way through manufacturing. Order quantities are also half of what they are for the high-volume low-volatility products, while production runs are twice as frequent.
Because the plant doesn't have infinite capacity and encounters seasonal swings, it's also incorporated an inventory buffer during its three-month slow period for the high-volume low-volatility SKUs that go through constrained cells: i.e., during peak demand season cells that run unique SKUs won't need to be running common orders as well, but instead can focus on the seasonal demand. The Altoona demand-management solution has enabled the plant to double finished-goods inventory turns and improve customer delivery performance. Eventually Altoona hopes to link its demand-management planning directly with customers' real-time point-of-sale data, which would hone production requirements even closer to actual demand.
Bringing Parties Together
General Cable's "win with the winners" strategy extends to suppliers on one end and customers on the other, with Altoona operations squarely in the middle. The physical metaphor for this is the annual Supply Chain Conference, which allows Altoona customers to communicate expectations and issues directly to Altoona and the five core suppliers that supply 92% of material purchases. "With our existing customers, we're winning supplier of the year awards and we're suggesting to them -- taking to them -- programs that they don't see from their other suppliers or offering them things that they're not asking for in terms of delivery time," says Bill Yankovich, plant manager. "We've reduced our lead time to our customers 10-fold, and they haven't, in many cases, requested that." Getting suppliers face time with customers helps drive those achievements, and Altoona also helps suppliers improve by providing lean training and participating in supplier lean events. Altoona also develops and defines improvement ideas and captures cost savings through periodic technical reviews, and supplier performance is managed though quarterly report cards. Altoona suppliers typically own materials although they reside in the plant, and this has resulted in dramatic reductions to inventory, lead times, space, and infrastructure.