2002 IW Best Plants: Honeywell Control Products, Warren, Ill.

Honeywell Control Products, Warren, Ill.

At a Glance

Plant size: 24,200 square feet
Start-up date: 1977
Special Achievements
- Received this mention from Jack Welch, former CEO of General Electric Co. and a one-time visitor, in his book Jack, Straight From the Gut (2001, Warner Business Books): "Frankly, I was blown away. I'd never seen a plant operating with that kind of efficiency."
- The plant has been averaging annual cost reductions of $700,000 via continuous improvements (e.g., increased automation, reduction in inventories, etc.)

On a quiet street in northern Illinois, next to a cornfield and across from a neat, white house, revolutionaries are at work on vital military hardware. They toil with pride and strive for perfection. Their leaders know their enemies well and have formulated a two-pronged attack that they are confident will lead to victory.

Anarchists? Subversives? Secret forces? Nope. Just the Honeywell Control Products plant in Warren, Ill. There, 80 employees manufacture snap-action switches, rectangular devices the size of a large olive that—in addition to being used in military instruments—are widely used to switch power loads in industrial and consumer products such as air conditioners, humidifiers, household appliances, computer joy sticks and ticket dispensers. The devices make it possible for a washing machine in spin cycle to turn off when the door is opened, for instance.

The revolution that has been taking place at the modest-but-modern Warren plant has focused on quality and productivity. What were once row-upon-row of hand-assembly tables are now seven interchangeable automated lines. What once required 200 production employees now takes fewer than 100. And what was once an incentive program tied to quantity is now a team-based philosophy that rewards quality and fulfillment of customer expectations.

"They have always been very responsive to our needs, especially when we have asked for increased requirements to be shipped inside their normal lead time," says Jerry Grubbs, materials manager for Mid-South Electronics, Annville, Ky. "We could not have supported our customers' needs for icemakers without this supplier's flexibility."

Such customer testimony is common these days and the result of a massive turnaround. In the past five years, the Warren plant has reached several exceptional milestones, such as:

A 3 ppm customer reject rate in 2001; nine months of that year operating at 0 ppm.
An increase in annual units per employee of 69% from 1997-2001.
Increased productivity (number of units per employees) of 21% in 2001 over 2000, despite a 24% drop-off in total units produced. Year-to-date for 2002, productivity is up 22%, with a 12% decline in total units.
A reduction in inventories of 42% since 2000.

The plant's revolution started in the early '90s when managers realized—in the face of fierce foreign competition—that they had to formulate an aggressive strategy to compete on cost, quality and delivery. The plan included the change from hand assembly to automation, development of an empowered workforce and deployment of quality programs-such as Six Sigma-rooted in statistical methods.

Perhaps the most striking result of the revolution has been a reduction in customer reject rates from the 250-to-500-ppm-a-year range to 3 ppm a year.

"We talk about before-and-after stories, and this is probably the biggest one for this facility," says Cynthia M. Knautz, manufacturing engineering and logistics manager for Warren and two other Honeywell sites. "In 1998 we were struggling with our ppm numbers. We really took a close look at what was happening. . . . We lacked process control, and we were unable to detect variation in product.

"We also found that we were driving the wrong behaviors. All of our goals were set on output. They [production employees] could build 36,000 bad switches in a day and still get rewarded. Those were the types of things that were driving our ppm issues."

The managers and employees responded by instituting Six Sigma data-driven process controls. They also took a "fresh eyes" approach to particular problem areas. Research showed, for instance, that set-up was one of the most frequent sources for errors. Warren's newly empowered employees reviewed the set-up process step-by-step and established a new method whereby a worker from one line is responsible for a double-check on another line and documents his or her check and sign-off before the line runs.

Also, in 2000 the plant began a "Pit Crew" program in which a dedicated group of production employees specialize in helping with set up when a line is in a changeover. The Pit Crew and the plant's other continuous improvement programs revolve around process ("Process is King" is the plant's motto.). All processes are documented, monitored and tightly controlled.

It starts with components and suppliers. Each year the plant measures its top 30 parts by volume and then audits the suppliers of those parts.

"We look at their process-control documentation; we look at their training documents," Knautz says. "We look at everything to make sure that they don't have any gaps in their process controls that could leak in to [cause] potential problems with us."

More than 900 variations of the switches are available, and the plant collaborates with suppliers to make the process more efficient.

"Our real emphasis is trying to find common components that we can use to customize for our customers," says Karl M. Kastning, Warren operations manager. "There's only seven or eight or so parts in the product depending on how you configure it, and there are many different varieties and applications that we offer the marketplace. Our claim to fame used to be that we would offer anything to anybody, and really in today's economy you can't do that any more."

The plant achieves responsiveness, flexibility and quality through several means. Materials move directly from suppliers to a small stock area on the floor. The assembly lines pull from this area via visual cues. The seven high-volume lines use precision part feeding, testing and labeling. Final inspection and packaging take place at the end of the line. The lines are capable of backing one another up, which allows the plant to respond to customer orders quickly.

The staff also is cross-trained and rotates regularly so that all production employees can perform all tasks required to produce the switches. Motivation comes from tying compensation and rewards to customer satisfaction. Each team has posted goals and rewards for reaching those goals. The team goals tie into the plant goals, which tie into divisional and corporate goals. The entire plant is measured on a divisional score card that tracks productivity, Six Sigma savings, inventory, ppm, OTTP (on-time to customer promise, 97.6% this year), OTTS (on-time to stock, 99.6% this year) and OSHA-reported injuries.

Each metric on the scorecard has a team that works to make improvements on that metric. That progress is tracked via a metric score card. All metrics progress is updated once a month, and performance is posted.

"You have to drive all the metrics," Kastning says. "It's not a one-trick pony. It's a consistent strategy that's been employed over a lot of years and focuses on the metrics-how you get better and better."

Web-Exclusive Best Practices

ByTonya Vinas Benchmarking contact: Karl Kastning, operations manager, [email protected], 815/235-3421

Responding To Customers If in a six-month period the plant has had more than two non-conformances (customer rejects), whether internal or external from a supplier, permanent, corrective action is required. An online form is used. "When you put it (the information) in, it triggers automatic follow ups," says Cynthia M. Knautz, manufacturing engineering & logistics manager for Warren and two other Honeywell sites. "There are emails being sent. It just can't be lost. It has to closed out and corrected to our satisfaction."

Continuous Improvement Warren's Continuous Improvement (CI) Program allows employees to make suggestions or point out problems related to the plant's goals. The feedback is collected and documented by CI team members, who are mandated to follow-up and take action on the feedback. All production employees rotate for four-month stints on the CI teams. The benefits have been cost-saving improvements to processes and increased motivation. "The employees see there is a real benefit to this," says Jill Heim, a production shift leader.

Project Roadmaps This is a documentation method used for all projects at the plant, whether related to safety, lean or another area. The roadmap includes a start date, finish date, capital expenditures required, Six Sigma connection and the "owner" of the project. The roadmaps are reviewed each month. "This is how our resources are allocated and it gives us an idea if one person is overloaded," says Cynthia M. Knautz, manufacturing engineering & logistics manager for Warren and two other Honeywell sites. "Also, it gives us a tool for those times when someone asks, 'What are you doing?' "