IW Best Plants Profile - 2000

'Lean Sigma' Synergy Aircraft-controls firm combines strategies to improve speed, flexibility, and quality. ByJohn H. SheridanBAE Systems Controls, Fort Wayne, Ind.At a glance

• Order-to-shipment leadtime slashed 90% in a low-volume/high-mix environment.
• Value-added productivity soared 112% in five years.
• Work in process reduced by 70%.
• Product reliability improved by 300%, based on mean time between unscheduled removals of equipment in service.
• Zero lost workdays in 1999.

Encased in a 15-ft-long hallway exhibit, an elaborately crafted 3-D model depicts the layout of BAE Systems Controls' plant and office complex in Fort Wayne, Ind. It's often a starting point for visitors embarking on a tour of the facility, but not because it offers an accurate preview of what they're about to see. The model is simply a point of reference, a look at how things used to be. Since change has become a way of life for the aircraft-engine-controls manufacturer, any attempt to update the display would quickly become an exercise in futility. One section of the model, for example, shows a receiving and inspection area-since eliminated with the adoption of a "dock to stock" materials program and extensive vendor quality certification. (A video training center and an expanded service-support operation now occupy that space.) Also gone is the adjacent "kitting" department that was made obsolete by the implementation of a kanban pull system and point-of-use storage bins on the plant floor. "The kitting area," recalls logistics manager Bob Hoffman, "was one of the biggest bottlenecks in the plant." Improvement initiatives have ranged from the creation of lean-production cells to the installation of highly automated, mistake-proofed equipment. And the changes keep on coming. "I get goose bumps," says plant leader Todd Rash, "when I walk through this place and see all the things that are going on." Blending lean-manufacturing principles with Six Sigma quality tools, the 600-employee facility has fashioned a coherent "Lean Sigma" strategy designed to increase velocity, eliminate waste, minimize process variation, and secure its future in the evolving aerospace market. Established in the mid-1980s by General Electric Co. to supply controls for GE aircraft engines, the Fort Wayne plant has undergone two changes in ownership in the last four years. After GE sold it to Lockheed Martin Corp. in early 1997, it became the primary manufacturing site for the Lockheed Martin Control Systems division. Earlier this year, an agreement was negotiated to sell that division to BAE Systems North America, a subsidiary of UK-based BAE Systems PLC. The acquisition, approved by the U.S. Justice Dept. on Sept. 1, became final late last month. Engine controls, such as the plant's FADEC (full authority digital electronic control) units, are essentially computers that are mounted on aircraft engines to monitor engine performance, control engine speed, and optimize fuel efficiency. They have to withstand extreme temperatures and vibration. And because they're used on a wide variety of military and commercial aircraft, including every type of Airbus and Boeing plane, they must be highly reliable. "Every four seconds, one of our engine controls takes off," notes Dave Herr, director of operations. "At this instant there are a quarter of a million people flying somewhere, trusting our engine control." That explains why quality, especially in terms of product reliability, is a paramount concern. Thanks to extensive functional and environmental stress testing, the controls produced at the Fort Wayne plant have compiled an enviable performance record. The in-flight shutdown rate, for example, is just 0.7 incidents per million hours. "That means you'd have to fly 24 hours a day, every day for a century, to experience one in-flight engine shutdown-and you probably wouldn't know it," Herr explains. The plant's Lean Sigma strategy was shaped at an off-site meeting three years ago, shortly after the sale to Lockheed. Management concluded that it would become imperative to do everything faster, to improve flexibility in responding to customers, and to do things right the first time. Over time the plant staff recognized a high level of synergy between lean manufacturing initiatives and the Six Sigma quality program launched while still in the GE fold. A central thrust in getting lean has been the creation of takt-time-driven product cells, fashioned through a series of kaizen events that have reshaped the plant floor. Today, lean-manufacturing cells turn out 80% of the plant's dollar volume. Each of the plant's complex engine controls, which contain as many as 5,000 different parts, comes in a variety of configurations. Thus the one-piece-flow cells operate in mixed-model fashion, producing various "flavors" within a product family. The build-to-order cells are able to respond to customers' requests for configuration changes on as little as one week's notice. The conversion to lean cells required development of a multiskilled workforce, an initiative that has been supported by the plant's union, Local 901 of the International Union of Electrical Workers. "Through the years, we've learned that working together and making improvements hasn't harmed the employees here," says Ronald Camp, grievance representative for Local 901. "What it has done is secure their jobs for the future." Thanks to the lean initiatives, productivity -- measured in terms of sales per employee -- is up 97% and customer leadtime has been slashed by 90% in a high-mix, low-volume environment. And floor space once cluttered with work in process has been freed for more productive use. For example, the space required for the T700 DEC production team, which makes controls for the SAAB 340 regional turboprop and the Sikorsky Apache helicopter, has been compressed from 6,000 sq ft to just 1,200 sq ft. "About a year and a half into lean, we had half the main floor completely empty," recalls Hoffman. Much of that space has since been devoted to new product lines as the plant's business volume has grown. In addition, support staffers have been relocated from their office cubicles to the plant floor "where the action is." Spearheading the Six Sigma program is a cadre of "black belts" who've had intensive training in statistical methods and team leadership. "Their primary focus is variation reduction within the processes," explains Mike Kenyon, the plant's Six Sigma leader. "But we've seen good synergy between Six Sigma and the lean manufacturing techniques." For example, in the early kaizen events, Six Sigma black belts were assigned to work with the kaizen teams. "If a team ran into a difficult technical problem, it had someone who could do a data-driven, engineering-type analysis." Whereas kaizen events typically implement improvements in a week's time, Kenyon notes, "it may take us four to six months to complete a Six Sigma project, but it will ultimately help the lean effort." Six Sigma techniques can generate the data needed to justify major changes, including equipment upgrades. And Six Sigma tools such as cause/effect analysis often play a key role in getting the kinks out of a lean-production system by pinpointing the causes of process variation. In one early cell, two work stations had trouble achieving the "pass times" required to keep work flowing to the takt-time beat. "At first we thought it was that the people needed more training," recalls Dave Herr. "But with cause-effect analysis, we discovered that the problem was [caused by] unreliable equipment that kept breaking down. That was a case where a black belt went in and fixed a lean problem." Web Exclusive Best Practices BAE Systems Controls, maker of aircraft engine controls. By John Sheridan Benchmarking contact: Todd Rash, plant leader, [email protected], 219/434-5362. Kaikakus While five-day kaizen events often target incremental improvements, the kaikaku version is one in which a team starts from scratch in laying out a process, such as converting from batch production to one-piece-flow cells. "It's a start-over," explains Bob Hoffman, logistics manager at the BAE Systems North America plant in Fort Wayne. "A lot of the lean events that we ran early on were really kaikakus. You completely tear down an area, lay it out [again], redefine the flow, and restaff it. The difference is one of magnitude." The plant is now applying the kaikaku approach in transitioning new products into full production. "We need to make sure that they are introduced as lean products," Hoffman explains, "not as something that we have to lean out later on." At the Fort Wayne plant, kaizen events aren't confined to shop-floor improvements. "We've started doing lean events with whitecollar, transactional processes like our hiring process," Hoffman adds. "It now takes 10 weeks to hire someone on the hourly side. We want to compress that down to three weeks." The plant also has conducted a kaizen event on its invoice-handling process to reduce the time and travel distance (between departments) required to process a troublesome invoice. One benefit: improved cash flow. Lean Leadership Early on, the staff at the Fort Wayne plant recognized that the transition to lean manufacturing had to be driven by top management. "We said that top management at this plant needs to understand what this tool is and how to support it," recalls Hoffman. "They need to provide the people and the resources that are going to be critical to success." Consequently, arrangements were made to send 12 key plant leaders to the University of Kentucky's Lean Leadership Institute, where they received "intense" training. In addition, UK experts have conducted in-plant training for 30 salaried support staffers. And, to overcome early skepticism, union officials were invited to participate in the first lean kaizen event. The kaizen events have helped to create a "Why?" culture, says Dave Herr, director of operations. "There are a lot of things that we question today. We're not afraid to ask why we do something. If an activity is not value-added, if the customer is not willing to pay for it, we really shouldn't be doing it." One of the keys to achieving success in lean manufacturing is to learn from mistakes, rather than letting them derail the effort. In one case, productivity slipped initially in one product line that had been converted to a lean cell "because we let a lot of people flow into that cell who weren't trained on that product," Hoffman notes. "But we learned from that, fixed the problem, and didn't let it happen again." Vendor Support Key vendors are heavily integrated into the materials management process at the BAE Systems Controls plant, but their role depends on the type of material or component they supply. Using an ABC classification system, different strategies have been deployed with different suppliers. The "A" items account for just 300 of the plant's 7,500 active part numbers, but they represent 75% of the total cost of purchased materials. Several vendors in this category now provide inventory on consignment, delivering their items to a stocking crib that serves as the "mother bin" in a two-bin kanban system that drives material movement in the plant. Smaller "baby bins," containers that hold about a two-week supply of material for a particular product line, are shuttled back and forth between the stocking crib and various production cells. Automatic replenishment has been negotiated for some "B" items, with in-plant supplier representatives monitoring inventory levels. (The plant takes ownership upon delivery.) Some vendors of commodity-type "C" and "D" items, such as resistors and fasteners, manage in-plant stores that serve as mother bins. The plant takes ownership at the point where the materials move to the child bins; however, the "C" vendors submit just one invoice per month, based on actual usage, which has dramatically reduced the number of purchase orders and related paperwork. "It's the only way you can support a lean line in our environment," says plant leader Todd Rash. Currently, 92% of the plant's suppliers have "dock to stock" certification, which has eliminated the need for receiving inspection and a central stock room. Multiskilled Workforce In the past the Fort Wayne plant had seven or eight hourly job classifications. That has been reduced to just three -- assemble, assemble/solder, and test -- to provide the flexibility needed in a lean cellular environment. In addition, there is a special class of "multiskilled" workers who can perform any job on a production line. To date, 25% of the plant's self-directed workforce has earned a multiskill rating, which carries with it a higher hourly wage rate. "When we started our lean production system, we couldn't afford to have empty seats when people were out sick or on vacation," explains Dave Haslup, a solderer/assembler. "Now if someone is on vacation, the team leader can find someone else who is qualified to do a given job." Haslup's T700 DEC cell has a skills resource board indicating which team members have been certified in various skills. A yellow dot indicates that a worker has been trained. A green dot indicates that the person is skilled enough to train others. Mistake-Proofing A variety of mistake-proofing techniques -- including high-tech approaches, as well as the use of simple jigs and fixtures -- have contributed to the plant's 65% reduction in in-plant defects over the last five years. Shop-floor employees have received training in mistake-proofing methods in conjunction with both the lean production initiative and Six Sigma program. "We think mistake proofing has probably been the biggest home run we've had out of all of the training we've done," says Dave Herr. In one highly automated application, sophisticated devices called "contact verifiers" -- able to take voltage readings in a split second -- verify that an auto-insertion machine is correctly inserting the proper parts into a circuit card. In another, the resistivity of the rinse water is monitored in the Emulsonator system that cleans circuit boards. If a reading indicates that the cleanliness of the rinse water is not within the proper range, the computer not only sends a warning message to the operator, but will also shut down the equipment and trigger a lock on the door of the machine -- to prevent an operator from passing a dirty board on to the next step in the process. The equipment can't be restarted until the proper maintenance has been performed. In addition, the cleaning equipment is programmed to monitor compliance with preventive maintenance routines. "If the operator doesn't perform preventive maintenance on schedule, the machine shuts itself down," explains Mike Kenyon, quality process leader. In the soldering operation, an automated optical inspection system checks solder joints and component orientation. A typical board may contain 1,800 solder joints. "The optical system will check every component and solder joint on a board in about two minutes," says Aaron Garcia, a process engineer. "It took two hours in the past when the inspection was done manually." Moreover, the machine is "100% effective" in detecting unsoldered joints, solder bridges, and missing parts, in contrast to the 80% effectiveness of human inspectors. Defect Analysis As information about in-plant defects is captured -- either automatically or by operators processing rework tickets -- that data is transmitted over a local area network to a computer with Hertzler Systems Inc.'s analytical software that performs real-time data analysis. The system can, for example, pinpoint which process was responsible for the greatest number of defects the previous day. "The power of Hertzler is that it enables you to drill down to determine what the defects were and where they occurred to get the defects in front of the team so that it can begin corrective action," explains test engineer Jeff Stephens. "It doesn't tell you the root cause, but it quickly points you in the right direction." Linked to an Oracle database, the Hertzler system also analyzes variable data coming from some 4,000 testing points to determine which processes are most in need of attention. The system can generate SPC control charts, histograms, or Pareto charts. By screening test results for the lowest Cpk values, for instance, it can assist in setting priorities for corrective action.