Lessons From The Leading Edge

Dec. 21, 2004
The 1999 IndustryWeek Best Plants winners leap into the limelight.

A pressure vessel blows up and two maintenance employees die, and another worker is critically injured. A 50-year-old factory shuts its doors, putting 600 people out of work. Round-the-clock union contract negotiations deteriorate into stalemate and bitter name-calling. These are the tragic circumstances when factories typically make the news, spectacular examples of failed leadership and poor management. Yet there are stories of triumph in manufacturing, as well. IndustryWeek's America's Best Plants competition recognizes the accomplishments of facilities where teams of empowered production employees quickly resolve any safety, product quality, or delivery issues; where training is continuous, both on the job and as part of employee development; where all associates have a keen focus on customer needs and day-to-day plant performance; and where continuous improvement is truly part of the plant culture, not just a sorely overused slogan. What distinguishes the award-winning facilities is how they, led by capable -- often visionary -- plant managers, are able to combine these separate initiatives into a powerful package that not only keeps them out of the evening news but also achieves some truly exceptional results.

Manufacturing Metrics

Average and median measurements for 1999 Best Plants finalists:
Category Average Median
Reduction in order-to-shipment leadtime (five years) 48% 50%
Reduction in lot sizes 66% 70%
Reduction in manufacturing cycle time 51% 50%
On-time delivery rate 97.3% 98.8%
Annual inventory turns 21.2 turns 15.5 turns
Annual raw-material turns 44.3 turns 27.1 turns
Annual WIP turns 165.2 turns 59.7 turns
Annual finished-goods turns 153.7 turns 44.2 turns
Knowledge where it's needed Training is typically the first task of any new hire. Many manufacturers have designed formal orientation classes, often with hourly employees as the instructors, to introduce new employees to company procedures and, equally important, plant culture. To maximize the application and retention of new skills, some of the Best Plants have begun to emphasize "just-in-time" training. "The main focus for all training company-wide is to reduce learning to its smallest, most useful increments and shift our learning paradigm out of the classroom and right into the path of the learner," says John Con, vice president, Dell learning, Dell Computer Corp. Dell's server manufacturing plant in Austin utilizes Web-based training and online work instructions delivered directly to production employees' work areas. When making the switch from a traditional hierarchical structure to a team-based organization, the 1999 Best Plants winners singled out training as the most critical element for a successful transition. At Eaton Corp.'s Aeroquip Global Hose Div., Mountain Home, Ark., employees received training for team effectiveness, team communications, team-based problem solving, increasing human effectiveness, and team leadership. All of this required a new full-time training coordinator, a training design team, certified training specialists for each production process, and designated trainers for each work team. Besides training, effective team implementation requires a clear understanding of team goals. Porter-Cable Corp., the Jackson, Tenn.-based maker of portable power tools, has a formal oversight committee, made up of plant managers and supervisors, that makes sure team goals are consistent and don't conflict. This committee regularly reviews team performance, helps identify obstacles to improvement, and, when necessary, finds the resources to overcome them.
Quality Indicators

Average and median quality metrics of 1999 finalists:
Category Average Median
First-pass yield for all finished products 95.6% 98.5%
Yield improvement, finished product (five years) 31% 12%
Scrap/rework as a percentage of sales 1.1% 0.4%
In-plant defect rate on all components 9,278 ppm 4,959 ppm
Customer-reject rate on shipped products 1,468 ppm 296 ppm
Warranty costs as a percentage of sales 1.02 % 0.40%
Another facet of successful teams, reported by several Best Plants winners, is finding the optimum team size, which seems to be somewhere between seven and 15 people. Any larger and the contribution of individuals becomes less critical and a few team members tend to cruise along without participating. People power The power of these teams, and empowered employees in general, is the source from which all other improvements flow. Be it quality control, inventory reduction, maintenance, technology implementation, or safety, leading manufacturers rely on the contributions of machine operators, maintenance people, and stockroom personnel to drive down production costs, ensure product quality, and speed product delivery. "When the people closest to the process focus on improvement, great things will happen," says Paul Pratt, plant manager of Johnson Controls Inc.'s Athens, Tenn., plant, which manufactures seat frames for automobiles. Today many of the quality departments at the Best Plants winners play a small roll in monitoring day-to-day product quality. Their larger role is to serve as technical support. At Scroll Technologies, Arkadelphia, Ark., which builds compressors for air-conditioning equipment, production technicians are responsible for shift audits, first-article inspections, and SPC inspections. They are trained in the use of computer-controlled coordinate measuring machines that are located near their work cells. Production technicians can adjust the process to maintain compliance or, if necessary, stop production and summon engineering or maintenance to fix a problem. Foxboro Co., maker of electronic process control systems, perfectly outlined this approach to quality in its Best Plants application. "The philosophy is that there are 177 employees in the quality program. Every employee is empowered to reject poor quality from their 'supplier,' and every employee is driven to understand who their customer is and strive for 100% customer satisfaction." Wired to the customer Information technology has become a powerful tool in helping companies stay focused on the needs of their customers. The leading plants have set up extensive databases to track problems with current products, and to log internal and external suggestions for future models. At Raytheon Missile Systems, Tucson, engineers have linked the tracking of manufacturing defects back to the design process. A database stores information on specific defects and the design attributes that contributed to those defects. Designers now have an optimized design guide that allows them to release more robust product designs to the factory. The facility also has a "war room," where long-term estimates for technology, manpower, and information technology are posted. Customers and suppliers can visit freely and offer their insights.
Workforce Strategies
Average and median workforce performance metrics of 1999 finalists:
Category Average Median
Average formal training per production employee (days) 6.8 days 6.2 days
Annual labor turnover rate 9.4% 7.5%
Number of plant-floor employees per supervisor 38 27
Percentage of production workforce participating in empowered natural work teams 92% 100%
Percentage of 1999 finalists that employ these practices:
Cross-training of production employees 100%
Employees paid for skills or knowledge acquired 76%
Plant employees involved in benchmarking 92%
Production workers participate in process-development efforts 100%
Nonmanagement "team leader" positions 96%
Dell is perhaps the world leader in tracking and responding to customer desires. The company's direct-ship model and sophisticated information system allow it to track up-to-the-minute customer demand for specific products and configurations, and manage capacity with special sales incentives. But like the other Best Plants winners, it also uses more traditional means of collecting direct customer feedback from sales representatives and account teams. At Delphi Automotive Systems, Saginaw, Mich., representatives from the various manufacturing departments visit customer plants on a weekly basis. Customer-service engineers work full time at various customer sites, and plant representatives participate in cross-functional teams for both product development and implementation. Production associates at all of the Best Plants winners have frequent in-person contact with customers through plant tours and by direct visits to customer facilities. The key to these customer initiatives is that they are proactive and designed to anticipate customer needs, not just react to customer problems. This proactive stance also extends to suppliers. "As our facility achieved world-class status, it became clear that we had to direct kaizen, best practices, and continuous improvement toward our supply base in order to remain competitive," Johnson Controls' Pratt observes. While this kind of relationship is critical in the automotive industry, where suppliers welcome any help they can get in meeting annual price reduction requirements, it's a necessity in other industries as well. Raytheon conducts three-day workshops at supplier facilities, bringing together a cross-functional supplier/customer team to examine a current operation, identify waste and non-value-added activities, and implement lean-manufacturing principles. Full-time in-plant supplier representatives at a number of the Best Plants winners contribute both to cost-reduction and product-development efforts. They've also dramatically shortened the lines of communication. "With 'in-plant' representatives, we have achieved virtually seamless vendor communications," reports Ray Treml, retired senior vice president of operations for JLG industries, McConnellsburg, Pa., which produces boom-lift equipment. Communication is something the Best Plants winners are fanatical about. Getting the word out "One of our 32 Best Practices is communications, and we currently have 19 different communication tools to keep the Athens team informed of business conditions, customer expectations, plant performance, quality, and safety issues," states Johnson Controls' Pratt. The other Best Plants winners might not have 19 specific modes of communication, but they do have their fair share. These include daily team and strategy meetings, weekly departmental meetings, brainstorming sessions, across-shift round-table meetings, process-improvement team meetings, and quarterly company review meetings. All aid the flow of information among management, the plant floor, and support departments. Other communication methods include posting goals and performance reports at plant and team levels and using plantwide e-mail. "Effective and open communication plays a huge role in creating a trusting organization. It's amazing what people will do if they just know why they are doing it," states John Hodges, former quality engineering manager for Porter-Cable. One objective of all this communication is that every employee understands and has a sense of ownership of company goals and objectives. When setting plant and team goals, several of the 1999 Best Plants emphasized the importance that goals be clearly stated, measurable, challenging, and rewardable. Overall business goals must be shared at all organizational levels so that employees are pulling in the same direction, working toward common company objectives. As Steve Strickland, senior manager of human resources for Scroll Technologies states, "When broad goals are used to develop subordinate and peer objectives at the various functional levels, and progress is measured clearly, with specific metrics, the foundation is established for exceptional results."

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