Factories Of The Future -- Strategic Design

Dec. 21, 2004
GM, Ford and Steelcase integrate best-practices goals into new-plant planning.
Editor's Note: Strategic Design is the first installment of a three-part series: Factories Of The Future. In June the series will examine product development. In July Part 3 explores the manufacturing process. No longer can companies safely relegate factory design to a traditional passive role in manufacturing strategy. Process and environmental technologies are converging-requiring that management rethink every element, starting with the factory buildings themselves. Properly designed, the factory building can add a competitive edge by leveraging and enabling the latest process concepts. The process concepts in turn can synergistically reduce the size and cost of the facility itself. And some new facilities are showing that environmentally friendly buildings can be designed to produce benefits that add to the bottom line. By ignoring that you would be handing your competitors a potent weapon. But as this first installment in a series of articles on the factories of the future indicates, it is not a matter of applying a quick fix. Systems thinking on an unprecedented scale is required-beginning at the planning stage. The ideal manufacturing facility-what is it? What should it be? Rest assured that the factory building has new, unexpected strategic roles to play in the factory of the future. Until recently the factory building was an almost incidental enclosure that was related to the manufacturing process in the vaguest of ways. Often the architectural criteria for yesterday's traditional factory building was just to provide cost-effective weatherproof protection, admits Robert E. Anderson, plant manager of General Motors Corp.'s (GM) new Lansing Grand River assembly plant. "In the past, GM was no different than any other manufacturing firm," he admits. "We went to architects and engineers and said, 'We're going to build a new plant-please advise us.' "Typically the result was a rectangular 'box,' a configuration the architect would defend on the basis of efficiencies that had little to do with the manufacturing process." Anderson says an architect's conventional default criteria seldom went beyond seeking a design that was the most energy efficient or the easiest or cheapest to build. Often the building design was, and still is, regarded as a stepchild to other considerations. For example, in the past some decision makers might strategize more about the geographic site than the building housing the manufacturing process. Often obsessed by the quest for low labor costs, they think nothing of shipping an assembly job off to Mexico. Such thinking would balance Mexico's labor costs versus 6,000 miles of travel and additional weeks in the production cycle. Never mind that the module might only have one minute of direct labor! With the advent of new manufacturing technology and concepts such as lean manufacturing, the production facility acquires a new strategic role. In factories of the future now being built, the buildings actively empower and enable the greatest benefit from the production processes being housed. To gain maximum competitive benefits, experts say the design of the manufacturing facility must be carefully integrated with the production processes. At stake: product goals and revenue potential. Brownfield To Leanfield In February GM's John Devine, CFO, was quoted saying, "Over all, we're feeling reasonably good about where this market is and where we are," (New York Times, Feb. 26). While his comments seem inspired by market share reflections, his optimism also is supported by an ongoing corporate manufacturing renaissance. The latest manifestation: the opening of GM's all-new Lansing Grand River (LGR) assembly plant dedicated to luxury vehicles such as the Cadillac CTS. Located on a brownfield redevelopment site, the $559 million investment will employ about 1,500 people and build approximately 130,000 vehicles a year when it reaches full two-shift operation. The LGR facility is the company's first new assembly plant in the U.S. since beginning construction of the Saturn plant in Spring Hill, Tenn., in 1986. Marked by a careful integration of building and processes, the result is about half the size and cost of what would traditionally be required to meet production goals, says Anderson. "Most of that accrues because the building was designed for lean material handling techniques. In the general assembly building we have no fork trucks for material delivery-just for maintenance department tasks involving heavy equipment. "Eliminating lift trucks was enabled by 'shrink-wrapping' the building design around an optimum process flow," adds Anderson. Traditional plants tend to remotely segregate the receiving docks. At LGR, Anderson's team helped architects lay out an assembly building that placed receiving docks at the points of use. "We asked [ourselves] what do operators need to do their job-it's parts and tools-and how do you most effectively get those parts to the person? So while we've got the delivery truck here, why not have the supplier bring those parts and tools directly to the user?" For example, at LGR racks of exhaust systems are unloaded, one at a time, from supplier trucks at the assembly building and arrive at the user's location in proper sequence via a simple conveyor system. And when one rack is empty it cycles back via a low-cost conveyor system to an empty adjacent truck that will return a load of empty racks to the supplier for reloading. "We're presenting material to the operator with a minimal amount or absolutely no human interaction. By laying out the general assembly building in the shape of a T, every main conveyor in the building is exposed to all of the truck docks on the outside building wall." Simulation software helped Anderson's team "see" how the plant would operate even before the first brick was laid. Using 3-D math modeling, GM created a "virtual factory" that helped manufacturing engineers refine the relationship of the building to the manufacturing process elements. "In the past GM couldn't validate the integration of buildings to the equipment, tools, fixtures and machinery until everything reached the plant floor during startup," explains Anderson. Using the virtual factory process, GM saved time in the design and validation processes and reduced costs by making it easy to identify and resolve problems up front. Anderson says the process enabled the completion of LGR in just 21 months. "Math-based technology is fundamentally changing manufacturing," says Gary Cowger, group vice president and president of GM North America. At the site dedication in 1999, G. Richard Wagoner Jr., GM president and CEO, identified one of the guiding principles behind GM's ongoing manufacturing renaissance. He explained that "LGR gives us the opportunity to merge our best manufacturing practices from around the world." LGR's processes evolved from the experience gained through NUMMI, the Fremont, Calif.-based joint venture with Toyota Motor Corp. What GM learned from the Toyota Production Systems techniques was taken to the next step at GM's plant in Eisenach, Germany, and further refined as GM built new plants in Poland, China, Thailand, Argentina and Brazil. To capture that knowledge for current operations and future plants, GM established the Manufacturing Integration Center at Pontiac, Mich. Sustainable Architecture If governments mandate environmental concerns as a corporate responsibility, is the ROI limited to compliance and corporate citizenship? At Steelcase Inc., Jim Hackett, president and CEO, expects more from his new environmentally friendly Grand Rapids, Mich., factory. Opened last fall, the 600,000-square-foot wood furniture manufacturing facility grasps efficiencies both from the architecture and the production process. His expectations evolved from observations that "environmental performance is gaining significance as a crucial measure of organizational effectiveness and capacity for innovation and growth." Hackett also believes that "environmental performance impacts a company's ability to attract and retain the best workers, add shareholder value and maintain committed customers." The new facility augments Steelcase's existing wood furniture capacity in Michigan, Indiana, North Carolina and San Francisco. "Our strategy is to pursue, as we need new capacity, an environmental philosophy of having facilities emulate wood's image of renewability and sustainability," says Hackett. He proudly notes that the plant is the only manufacturing facility in the world to receive the U.S. Green Building's Council Leed Award for Leadership in Energy and Environmental Design. (The award evaluates commercial, institutional and high-rise buildings.) The award is based on five categories-sustainable site planning, improved energy efficiency, conserving materials and resources, enhancing indoor environmental quality and safeguarding water. The award evaluates environmental performance from a "whole building" perspective over the structure's entire life cycle. Important to the Leed award is the facility's state-of-the-art low-emission wood-finishing processes. Hackett says the shift to a new water-based technology is expected to reduce VOC (volatile organic carbon) emissions by 380 tons or 70% per year, even as wood furniture production increases significantly. "An important side benefit of our new water-based processes is the significantly improved look and feel of the finish," Hackett says. "We've been able to improve our cost structure, produce a more desirable finish while being significantly more effective environmentally. "Our experience raises an important business issue: If a manufacturing company does not take environmental issues into account, can they really be the most efficient from the overall cost and customer benefit standpoint? I'm convinced that efficiency is being lost if environmental effectiveness is not factored into the value chain. The customer will pay that cost. We have determined, from building this factory, that all of our plants need to have this same environmental inspiration." Hackett says lean manufacturing needs to be an enterprise goal that extends beyond the agility and flexibility needed to achieve process efficiency. Rouge, Green and Lean By mid-year ford motor Co.'s Tim O'Brien will have overseen the planting of 10 acres of sedum sod, a succulent ground cover for the Ford Rouge Center. Actually it's a roof cover for the new assembly plant at the legendary complex that the first Henry Ford established a few miles south of Detroit, on the Rouge River, a tributary of the Detroit River. Thought to be the biggest habitat roof in the world, it is one of many innovative aspects of a $2 billion effort to re-establish the site as a futuristic icon of manufacturing, adds O'Brien, vice president, real estate. "We want to reclaim the mantle." The site has an 83-year tradition of delivering new and creative approaches to mass production, explains O'Brien. "It originally personified the concept of vertical integration; total self-sufficiency by owning, operating and coordinating all the resources needed to produce complete automobiles, one every 49 seconds. All those innovations were attributed to Henry Ford's desire to continuously reduce costs in order to drive down prices." Today his great grandson, chairman and CEO William Clay Ford Jr., is using the same justification to seek greater cost effectiveness with an innovative combination of lean manufacturing and environmental sensitivity. He set the tone at the rededication of the site on Nov. 14, 2000: "This is not environmental philanthropy; it is sound business, which for the first time, balances the business needs of manufacturing with ecological and social concerns in the redesign of a brownfield site." On the production floor, the assembly plant will have world-class flexibility with assembly lines capable of handling three vehicle platforms and nine different models. To fill out the 21st century vision for the Rouge Center complex, Ford enlisted environmental architect William McDonough, William McDonough + Partners, Charlottesville, Va. McDonough is noted as an environmentalist who integrates ecological concerns with the business purpose-to bring benefits to the bottom line. One of his earlier successes is the Herman Miller plant in Zeeland, Mich. "The performance of [Herman Miller] improved 25% simply by moving into the new facility," he says. McDonough's environmental thinking is a step forward from the costly mentality of the pollution conscious 1960s and 1970s. His attitude: innovate with life-cycle thinking to capture environmental gains as well as process, product and service efficiency. For example, the 10-acre habitat roof of the site's assembly building will slow and reduce storm water runoff-even rainfall measured in inches, says O'Brien. The idea is to eliminate the engineering and construction costs of elaborate storm drain systems. McDonough says that roof, plus wetlands in the landscaping and porous paving in the parking lot cost Ford $15 million, but they purify the water and delay its drainage to the river by as much as three days. "That means that Ford offset as much as a $50 million cost in conventional engineering response to meet the clean water act. The landscaping in effect, was free." McDonough says Ford's directors took only 2.5 minutes to approve the project! He says the key to the business benefits of the environmental project was the systems approach. "For example, just doing the roof wouldn't have produced the business benefit. By integrating the system, we obviated the need for a whole other system. "The problem with traditional approaches to corporate environmentalism is that the whole design agenda gets bogged down in simplistic approaches using brute force," McDonough adds. "And it often seems that the only design principle at work is that if brute force isn't effective, you're not using enough of it." The grass cover also lengthens roof life by providing ultraviolet and thermal shock protection, notes O'Brien. Other benefits: heightened roof insulating qualities plus the ability of the grasses to absorb carbon dioxide while producing oxygen. Vegetation also will play a role in ridding the soil of industrial contaminants accumulated over the 83-year history of the Rouge Center. Called phytoremediation, the process is being developed in a partnership with Michigan State University. The plants break down the contaminants into simpler compounds that are used as food. In tests, the plants selected grow more luxuriantly in contaminated soil. O'Brien says the management moral of the Rouge experience "is not to assume that the best decision is to abandon aging facilities and move on. I do think a solid case can be made for reinvestment and renewal." He suggests thinking in the broader terms of the people effects, the process effects and environmental effects, but at all times maintain a very serious business discipline. "And if you're open-mined, approaches can be found that do well in all those respects plus improve bottom-line performance. Don't accept the conventional wisdom that there are inherent conflicts in these areas. Contrary to the conventional thinking that environmental performance is an add-on cost, there is a synergy between lean and green," O'Brien emphasizes. But for success, he cautions that senior management must demonstrate a special, proactive leadership role. "Otherwise, operating staff may make the default assumption that traditional thinking is mandated."

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