IW Best Plants Profile - 2000

Feb. 14, 2005
Road To Excellence Manufacturer of automotive climate-control systems follows lean-manufacturing map. By David Drickhamer Valeo Klimasysteme GmbH, Bad Rodach, Germany At a glance Lead time cut from 11.8 to 5.2 days in last one and a half ...
Road To Excellence Manufacturer of automotive climate-control systems follows lean-manufacturing map. ByDavid DrickhamerValeo Klimasysteme GmbH, Bad Rodach, GermanyAt a glance
  • Lead time cut from 11.8 to 5.2 days in last one and a half years.
  • From 1995 to 1999 injection-molding-machine changeover time reduced from three hours to 15 minutes on average.
  • First-pass yield of 99.6%, within injection-molding autonomous production unit.
There's a comforting regularity to the German countryside surrounding Bad Rodach. Hardwood forests and fields of wheat, corn, and hay roll over hills free of advertising billboards. Buildings in the town are almost uniformly painted a shade of tan and capped by red tile or metal roofs. The area is known for its hot springs, where elderly Germans come to relax. This serene environment belies the high-volume production and rapid pace of improvement within the Valeo Klimasysteme GmbH complex. Headquartered in Paris, Valeo SA has 12 branches. Within the climate-control branch, Rodach is one of 16 production facilities worldwide. In addition to this site, which includes division headquarters and a 220-person research and development operation, the German climate-control division includes one other plant in the Czech Republic. The Valeo corporate structure is significant because it provides the framework for many of the cultural changes, process improvements, and lean-manufacturing techniques adopted so effectively at Rodach. Valeo managers focus on five core strategies: personnel involvement, total quality, supplier integration, Valeo Production System (VPS), and constant innovation. A well-documented road map presents the various elements of each of these strategies and further divides them into tactical components. Personnel involvement, for example, is broken down into employee recognition, development, and participation, each of which has various ingredients and five carefully defined performance levels. Administered at the group level, the program's targets are elevated every few years. To evaluate conformance, company facilities undergo annual Valeo 5000 audits. Their scores are tallied and compared with other Valeo operations. "We know the tools. We know the targets. We know how to achieve the targets. It's a matter of time. A matter of speed. A matter of people. We know how to get there," says 32-year-old Herv Vandenberghe, industrial director, who oversees the 550-person factory. Within the 400,000-sq-ft facility, an injection-molding autonomous production unit (APU) produces the plastic housings used in the assembly of the heating, ventilation, and air-conditioning systems. Almost all other components, from 100 to 180 per completed assembly, come from outside suppliers, accounting for 75% of production costs. Valeo maintains the injection-molding operation and toolmaking capabilities in-house as core competencies. With only one set of tools feeding every product line worldwide, and less than two days of inventory in the pipeline, this toolmaking expertise is critical. On a daily basis the assembly teams build 3,000 climate-control systems for high-end German cars such as the Mercedes E-Class, BMW 5 Series, and Opel Omega/Cadillac Catera. As part of the facility's 5S housekeeping program, all walls and machines are painted white, making dirt and clutter much more noticeable and more likely to be cleaned up. White also is the standard dress code. Women account for 83% of the workforce in assembly. They work four- to six-hour shifts depending upon demand. This flexibility is built into the union contract, and is one factor that allows the plant to compete in the world's most expensive labor market. Western Germany's labor costs average US$22.65 per hour, according to the Institute of the German Economy, Cologne. The flexible six-hour shifts work better than constantly hiring and training temporary people, says Vandenberghe, who characterizes the union relationship as open and cooperative. Division management meets with the workers' council on a monthly basis. They review company strategy and discuss day-to-day problems. This way, if it becomes necessary to lay off workers, members of the council have a detailed understanding of the economic justification. Both sides then work together to ensure the best outcome for workers. In one case, for example, a new company was formed to gain flexibility and reduce fixed costs. A special project team made up of company management, people from facilities management, and the workers' council got together and came up with the idea of forming a new company to handle facilities management. The new company has guaranteed revenues for the next three years and employs 10 Valeo people at their former salaries. In addition to the injection-molding and assembly groups, the plant has an APU dedicated to logistics and material handling, and another to spare parts. This organizational structure keeps everyone focused on the needs of internal customers. Plant goals are cascaded down to the APUs and on down to work teams. To help them meet their goals, special project teams, know as "workshops," are formed to tackle incremental objectives. Vandenberghe meets with the APU managers every Thursday to discuss their workshop targets and their progress. For example, the APU manager of injection molding currently has an objective of 12-minute changeover times on all machines. The goal is to manufacture small batches of parts and ultimately, if practical, every part number every day. To reach the current objective he initiated a series of single-minute exchange of die (SMED) workshops targeted at specific machines. Before they were approved, the scope of each workshop was outlined on one sheet of oversize paper with the starting point, objectives, team members, start date, and end date. The SMED workshop teams include people from process-engineering, toolmaking, and other departments. The workshops last from one to three months. "I'm not interested in workshops where we start today and will not be finished until the end of 2000," says Vandenberghe. A recently closed SMED workshop reduced tool changeover time on a 1,000-ton injection-molding machine from over 12 minutes to 6.5 minutes. A full-time VPS manager at Rodach supports the activity of the workshops. This lean-manufacturing expert provides guidance and training to the teams, tracks VPS performance indicators, proposes and coordinates improvement activities, and generally makes sure time isn't wasted making the same mistakes twice. To disseminate best practices across the organization the VPS managers meet every two months at the branch level and exchange successful strategies with colleagues from other plants. The company also maintains a VPS database with project summaries to share successful ideas worldwide. On the whole, Valeo's rigorously structured continuous-improvement program is a necessity in a market where the prices of current products are cut 3% to 5% per year, where new products are expected to cost 10% to 20% less than previous models, and where wages increase as much as 5% per year. To maintain sufficient profit levels the whole organization-from purchasing to production to logistics-has a two-year cost-reduction target of 30%. "The automotive industry is a marvelous world," Vandenberghe observes. "You've got the pressure, but you learn faster. What we are living now in the automotive industry will happen in other industries eventually."
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Valeo Klimasysteme GmbH, maker of automotive heating, cooling, and ventilation systems. By
David Drickhamer Benchmarking contact: Hervé Vandenberghe, [email protected], +49 95 64 81 230. Material Handling One of the tenets of lean manufacturing is to produce only what is required by the customer. The Valeo Klimasysteme plant in Bad Rodach, Germany, makes deliveries to its customers on a daily basis while maintaining minimal finished-goods inventory. To stay in sync with customer demand and with an increasing variety of products requires rapid changeover from one product to another on the assembly line. Within the climate-control factory, the standard forklift and pallet system for material storage and delivery has been replaced by a trolley system that carries parts and supplies from raw-material storage and injection molding to the assembly line. A lead unit tows eight to 14 four-foot-high carts, strictly following a path indicated by a green line painted on the floor. Following this path, material handlers deliver only 30 minutes of components to the line at a time, allowing the line to change products every 30 minutes. A previous trolley system, which delivered two to three hours worth of parts at a time, was replaced because components had to be sent back to material storage during every changeover. Apprenticeship Program Five apprenticeship programs within the facility help ensure the ongoing availability of appropriate skills, including plastic injection molding, tool-making, mechanics and electronics, technical drawing, and information systems. Apprentices share a six-month core program before being dispatched to the various APUs. Eleven young people currently share their time between study (20%) and work in the plant (80%). After three years, under the terms of the company's labor agreement, they are hired to work full-time in the factory for one year. At the end of that term, they are asked either to stay on at the company or seek work elsewhere with the advantage of a strong theoretical background and practical experience. Of the 85 people who've gone through the program in the last 10 years, 47 still work at Valeo Rodach. Flexibility Through Standardization One of the goals at Valeo is the simple and flexible organization of technology and people. Workstations can be adjusted to ensure that output equals demand by transferring tasks to different areas and using available backup equipment in the event of machine failure. Worldwide standardization of assembly workstations and injection molding machines allows the company to optimize production and transfer work anywhere when necessary. An intranet database contains all process standards, making them accessible worldwide. Supplier Development Although, as production and logistics manager Herv Vandenberghe states, "there is always room for improvement within the factory," Valeo's lean initiative is now targeted at its supplier base. The plant currently has 106 suppliers, compared with 177 three years ago, and continues to reduce that number. Some, Vandenberghe reports, are well along in their lean efforts and, for example, have been able to start using returnable packaging quickly. With others, it will take a few more years. Suppliers know that in addition to cost and quality they are evaluated on logistics.

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