IW Best Plants Profile - 1995

Feb. 14, 2005
By Polly Labarre At A Glance Productivity as a measure of sales per employee up 89% since 1989. Customer reject rate on finished product decreased by 43% to 18 parts per million. Produced 15 million injectors in 1994 and expects to increase output ...
ByPolly LabarreAt A Glance
  • Productivity as a measure of sales per employee up 89% since 1989.
  • Customer reject rate on finished product decreased by 43% to 18 parts per million.
  • Produced 15 million injectors in 1994 and expects to increase output by 33% in the next two years without increasing employment.
  • Gainsharing payout for fiscal '94 amounted to $1,143 per employee.
  • Won Chrysler's 1995 Pentastar Award for exemplary suppliers.
  • 30% of total plant budget invested annually in information systems and technology.
In the last five years:
  • Manufacturing cost per unit trimmed by 41%.
  • Warranty costs down 64%.
  • 100% of production workforce in self-directed work teams.
  • Manufacturing cycle-time reduced 30%.
A cartoon image of a chain of workers tugging forward on a rope with teeth-gritting intensity dots the walls of the Siemens Automotive Induction, Fuel & Emission Components Div., Newport News, Va. At first glance, this depiction of the division's "Company Wide Quality" (CWQ) program looks like garden variety, words-in-a-frame corporate decor. In this case, however, the real-life incarnations of these line drawings validate the writing on the wall -- rather than the reverse. Individual effort has figured prominently in the collective pull to transform this former maker of automotive electromechanical items -- from car radios to brake shoes to air pumps -- losing an average $31 million each year in the late 1980s into a focused manufacturer of gasoline fuel injectors with yearly sales growth of 35%. Margaret Wilkens, for instance, yanked the quality rope a league or two along the improvement continuum this year in her voluntary redesign of the inventory-management system for the three cleanrooms in which Siemens' Deka family of fuel injectors is produced. Wilkens made over the materials-supply area with a color-coded card system for preparing kanban containers with the appropriate mix of parts for three hours' production of any of nearly 70 varieties of injectors. With a sparkle of pride in her eye, she reports a reduction in work-in-process (WIP) inventory from $450,000 worth to less than $200,000. Walter Tillman Sr., a manufacturing manager of the components group with more than 25 years of manufacturing experience, would file such initiative and command of work processes under: "We've come a long way since. . . ." Remembering when the words "I don't pay you to think, leave your mind outside the door" reverberated on the shop floor, he cites a new spirit of employee involvement for the 40% gain in market share that has propelled the manufacturer from a "distant fourth" in the world market for fuel injectors in 1988, to within spitting distance of market leaders Bosch and Nippondenso. Since its acquisition by the automotive division of Siemens AG in 1988, the former Bendix-owned facility has captured 14 of the world's 28 major automakers as its customers. Shifting from the organization's autocratic management approach required radical measures. "We decided to turn the world upside down," says vice president and general manager John Olson. The deconstruction of the functional organization into customer-focused groupings of self-sufficient product teams -- injectors, fuel systems, components manufacturing, and an operation in Pisa, Italy, each with its own centers of development, production, and finance -- "was a huge shock to the system," says William Fodness, director of the injectors group. "We were a very traditional organization of very traditional boxes with defined responsibility and little budgets." The process of developing the division's mission statement of continuous improvement toward world-class manufacturing status "became a vehicle for consensus," says marketing director John Sanderson. What it says is ordinary enough, but the supporting columns of text describing the guiding values of "people" and "integrity" and the leading principles of "quality" and "innovation" arose out of a hot debate about the relative importance of quality versus people and the ultimate agreement to place them on the same level. Glen Rotella, district director of the facility's union, International Assn. of Machinists & Aerospace Workers (IAM), remembers, "We were very skeptical for the first year or two. We heard management saying over and over that we had to be world-class, but didn't know what it meant. We were afraid that they were just words. But that wasn't true. There was a real desire and commitment to improve on all performance. And from the employee standpoint, we were looking at it as our salvation." The real "test of the integrity of the mission statement," says Fodness, has been management's faithfulness to its 1988 promise to avoid layoffs on the basis of productivity gains accomplished through employee-involvement initiatives, as well as to do everything possible to avoid falling into the automotive industry's typical pattern of layoff and recall. The company sent a message "that people are not expendable" at a time when most companies were wholeheartedly dedicated to cuts, says Rotella. What's more, "They were spending money on training while losing money in production!" Human-resources director Loretta Conen says, "We developed a 45-hour course equal to three college credits, and 180 people volunteered to take it. That's 180 people off the job when we were losing money! But we did it." Developed in partnership with local Thomas Nelson Community College, the World-Class Manufacturing class grew into a "pay for knowledge" (PFK) program that provides employees who achieve skills beyond their "home" job with a premium wage and the flexibility to work outside the narrow scope of job classes without contractual restrictions. In a unique agreement with IAM, the PFK system is layered on top of union rules and procedures so as to "continue to respect the values of the union in terms of seniority, job classification, and rights," says Conen. Sixty percent of the hourly workforce has taken the course, and 30 additional offerings have been added since the program's ratification. This sort of training initiative has contributed to the dramatic transformation in workforce skill levels. The 1988 level of 59% "nonskilled" workers has sunk to less than 35%, while the ranks of the "highly skilled" have swelled from 25% to 37%. Conen reminds that these shifts are not the product of an overnight miracle. "When we started on the path, most of us were pretty naive," she says. "As the process continued we realized that beyond opening doors and offering courses, the challenge was much broader. There was not a culture of trust in the organization. It takes a long time to develop that. People need to believe and also have to have a reason for doing things that are hard." By all accounts, the first reason to believe was the basic need to move the division from the red to the black -- an objective achieved with fanfare in 1993. Aware of the challenge of maintaining upward momentum after attaining this peak, management immediately zeroed in on the goal of becoming the No. 2 independent fuel-injector manufacturer by 1997. The CWQ program focuses on six major elements: training and education, communications, improvement planning, employee involvement, productivity, and rewards and recognition. One reward program, called SHARES, deposits $50 for every implemented suggestion into a central fund distributed equally to all employees at yearend. The volume of suggestions -- more than 800 officially submitted in 1994 -- derives from the fact that "people are not afraid of making an improvement that increases output and might cause them to lose their job," says Mehran Rahbar, production-team coach for the injectors operation. When an idea extends beyond the ken of a single individual, a problem-solving framework called a "small group improvement activity" (SGIA) is available to form a team -- often a cross-section of hourly and salaried employees, customers, and suppliers -- to brainstorm solutions and develop an implementation plan. A variation on the SGIA called POWER ("process optimization with early results") dedicates teams full-time for a period of three to five days to analyze and resolve specific problems. One effort to streamline a fuel-rail assembly line achieved a 21% productivity leap, a reduction in WIP by 99%, and a 37% reduction in the use of floor space. In a series of joint POWER teams with Greystone, a plating and heat-treating supplier that relocated the bulk of its operations from Providence, R.I., to Virginia in order to work more closely with Siemens, the division has "completely shifted inventory from WIP into finished injectors," says Douglas Godfrey, director of logistics. "We've put the inventory where the customer wants it: in shipable product."

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