Small Parts, Big performance Tier-one supplier thrives amid constant change.
Continental Teves, Morganton, N.C.
At a glance
- In-plant defects cut 70% over last five years.
- Warranty costs associated with defects cut 71%.
- Units per day per person increased from 11 to 18 in last three years.
- Unit volume increased 200% over last five years while total inventory dropped 35%.
- 1.4 million work hours without a lost-time accident.
Walking onto the plant floor, you can't miss a massive overhead scoreboard that makes your mouth water for a steaming red hot, a drink, and a program. The color numbers on the board are not balls, strikes, or pitch velocity, but rather individual productivity rates and overall equipment efficiency (OEE) values for seven assembly lines, updated every 30 seconds. Simple, real-time metrics displayed for all to see is part of the visual-management culture that is a hallmark of Continental Teves, a manufacturer of electronic brake systems (EBS) for the world's largest automakers including Ford, DaimlerChrysler, Nissan, Volkswagen, and Toyota. "Let people know what the goal is, and how you are performing to that goal in real time. That's the practice we feel gives us the most benefit," says Charles Russell, manufacturing manager. "Everyone knows where we stand at all times. That has to be coupled with a lot of training, so the data means something to people." Nestled east of the Blue Ridge mountains, in the town of Morganton, N.C., this QS 9000-certified facility of 720 employees will assemble more than 3 million state-of-the-art antilock brake systems, traction-control systems, and electronic-stability packages this year. Starting with springs, valve seats, and precision-machined parts so small that 10,000 wouldn't fill a good-sized cereal bowl, 100,000 solenoid valves are assembled daily in seven highly automated lines. In three additional assembly areas, valves, an in-house-assembled hydraulic pump, a purchased electronic control module, and an aluminum housing come together to complete each unit. While the plant was constructed in 1992, already it is transitioning to its fourth generation of manufacturing equipment, driven by an almost unbelievable 3,000 changes annually in its product line, currently numbering about 40 different types of EBSs. In fact, 95% of its current products either are new or redesigned in the last 12 months. Arising from changing customer requirements, cost reductions, and performance improvements, about half of the modifications are in the control software, but roughly one third require some change on the plant floor. Nevertheless, since 1996 the plant has increased productivity from 8,500 units per day to 13,000 units per day, without additional manpower or manufacturing lines. At the same time, in-plant rejects have dropped from over 5% to 0.5%. Customer rejects have tumbled; over the last 18 months the reject rate has averaged a mere 25 ppm. Explaining this success, quality manager Norbert Kaeslingk cites good advanced quality planning and preparation, highlighted by excellent communication between the plant and product development facilities in Auburn Hills, Mich., and Frankfurt, Germany. Also making a significant contribution to these numbers is focusing on OEE as a performance metric (OEE has improved by 20%) and halting an assembly line any time a reject part is produced. "This forces someone to acknowledge a defect and deal with the issue," says Dennis White, plant manager. "Only by making it painful like that can you get the kind of improvement to really drive down ppm." Scrutiny of product quality presents significant challenges. Even the slightest contamination in the manufacturing process can knock parts out of their micron tolerances. To prevent this the entire assembly area is held under positive pressure to drive off particulates, the bane of the assembly operation. "People come into our plant and say, 'Wow, this place is really clean,'" says Russell. "But the cleanliness we're talking about you can't see with the naked eye, it's microscopic." All plant-floor personnel wear gowns and hair nets, and all incoming parts are put through a computer-controlled washing cycling. After each individual operation, parts are air-washed under vacuum. A clean team roams the plant, sampling individual valves, flushing them in alcohol, and examining the filtrates under a 40-power microscope for particle count and size. Through extensive bar coding and tracking systems, every component (roughly 250) in every unit is tracked, and there is 100% functional testing of all subassemblies and final assemblies. This data is retained for ten years in accordance with governmental and customer requirements. Tracking of parts begins when they are received onto a minuscule receiving dock, hardly big enough for a good game of ping pong. "The dock is purposely small to ensure material flow," says Charles Benfield, materials manager. "We have about 550 part numbers from suppliers, a lot coming in JIT several times a day." Arriving in returnable totes, parts are introduced into the plant's automated-storage-and-retrieval system, a two-story-high vault with 10,000 storage locations. Triggered by kanban signals from the valve assembly lines, parts are retrieved automatically and conveyed to their point of use via a FROG (free roaming on grid) robot. Fundamental direction for the plant was established in 1996 with a mission statement: To be the highest quality, lowest-cost producer of EBS systems in the world. "It's a simple goal people can relate to," says White. "We then defined six focus elements to accomplish that goal, and tried to present them in simple, easily understandable terms." The six points of focus are: customer-driven improvement, value-added activities, employee involvement, just-in-time process, visual management, and total preventive maintenance (TPM). "Management must make people aware of opportunities for improvement and suggest where to look, then allow them to form teams to improve the situation," says White. "As we explored these six points, different people would grab one and run with it," continues White. For instance, a TPM team led by maintenance technicians set up training programs within the plant after shocking management with a study of maintenance activity. At least 80% was reactive. Now it's down to 40%. A quality technician took interest in reducing scrap after hearing a presentation from the company CEO on profits falling short, and in the first year his team cut $2 million in waste. "It's good to see that kind of reaction, because these kinds of initiatives can be hard to drive from the top down," says White. The employees likewise are pleased with their role in the plant's destiny. "I like the way they involve the hourly employees in the team atmosphere and problem solving situations," says Donna Greene, who works in material handling. "It makes you feel you are just as important as the plant manager." Organizationally, the plant went to a cross-functional team concept in 1995. Teams were co-located to further break down barriers. "With everyone together, there's a shared sense of responsibility, a shared sense of pain with issues that occur," says White.
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Continental Teves' plant manager Dennis White likens meetings at his facility to a huddle on the football field. All managers are required to attend this daily gathering that lasts a maximum of 15 minutes and occurs in a large glassed-in conference room on the production floor. Though there are chairs in the room, there is no conference table. "Getting rid of the table stops people from coming in with a lot of notebooks and overheads," says White. In a set format, discussion moves from customer issues that have occurred in the last 24 hours to major production items to materials issues. "It forces you to get out on the floor at least once a day," says White. "Likewise, employees see the management staff out on the floor. It's easy to sit and talk about problems in a sterile conference room, but you get down on the floor, and people will tell you what's wrong in a hurry."
The quality function at Continental Teves has been split into two specific organizations: a core group supporting the entire operation and day-to-day quality operations inside individual production teams. "The quality functions within individual production teams are nearly self standing, but do have strong dotted-line responsibility into core management," says Norbert Kaeslingk, manager, quality assurance. Core team responsibilities include supplier-quality management, advanced quality planning for new projects and design changes, initial qualification of parts with customers, QS 9000 management, customer audits, and failure analysis. Day-to-day quality challenges include tracking of reject rate and yield, and initiation of problem-solving activities directed at process or incoming-part difficulties. One of the keys to success of the quality function, according to Kaeslingk, is "strong direction regarding quality objectives and procedures -- QS-9000 or ISO 9000 will do the same -- so you have a common base that ties everyone together and that they believe in."
Operating Equipment Efficiency (OEE)
While quality is still the key measurement at the plant, OEE (machine availability X quality yield X percent of optimal production rate), is now playing a significant role as a performance metric for the manufacturing operations. On the seven valve-assembly lines, OEE for each is displayed and updated every 30 seconds. "We've started using OEE a lot," says Charles Russell, plant manager. "With OEE, you're not measuring reject rates or downtime. A lot of plants do that. You're not just looking at quality; you are looking at total function of the line. Reported in real time, it's a meaningful working tool for us." Continental Teves started focusing on OEE about a year ago. While the metric itself has increased some 20%, concentration on it is linked to reductions in WIP inventory, decreased reject rates, and improved first-time yield, according to Russell. "It's a terrific metric," he says.
Visual management is a big part of the motivational culture at Continental Teves. Throughout the plant are display mechanisms including a large scoreboard, a real-time graph of final assembly productivity rate, and miscellaneous charts showing team performance. The final assembly-rate display, for instance, is a set of coordinates with three graphed lines, including the productivity rate (updated every 60 seconds), a "best-ever" rate, and a standard based on engineering studies. "We monitor the things we think can be improved or changed," says Russell. "Charting where you are gives people the feeling of accomplishment that they have really done something as opposed to just setting a goal and saying 'we want to be there.' If you chart changes, then even little, almost insignificant changes can make a difference, and you can see that."
To set the workforce up for success in its challenge for continuing improvement, the company put a large portion of hourly employees through problem-solving training. Presented by an outside consultant, the training exposed the group to brainstorming techniques, use of fishbone diagrams, and problem-dissection techniques. In addition, some 150 members of the engineering corps received three days of more technical problem-solving training from Kepner-Tregoe Inc., Princeton, N.J. "This was a conscious decision about three years ago that we needed to upgrade the overall skill capability of our plant, and we set aside a significant amount of money, essentially doubling our budget for this purpose," says White. "It was a very wise decision."
To better understand where plant maintenance was spending its time, a team reviewed maintenance activities, classing them as reactive, preventive, or new processes. The results shocked management in that at least 80% of time was spent on reactive activities. "We were rewarding a guy who could replace a motor in 15 minutes and did it every day rather than a guy who took a couple days so the motor never had to be replaced again," says White. "It was almost totally a fire-fighting approach." Since this epiphany, a total-preventive-maintenance team has been established that provides training and problem-solving skills to the 65 to 70 maintenance technicians at the facility. Reactive maintenance has been cut to about 40% as a result.
Significant scrap reduction has been a highlight of continuous improvement efforts at the plant, with scrap slashed by 50% in the first year of the scrap-reduction team's activity. The team meets weekly, attacking the top three causes of scrap until they are reduced and a different top three emerge. The team was originally formed when a quality technician heard a presentation by the CEO who said the company had fallen short of its profit goals. The technician came to plant manager White afterward, and said, "I know where the money is." He produced evidence of $4 million worth of scrap produced that year. White gave him the go-ahead to form a team and before long the technician had established this disciplined approach. "He was running the show, setting expectations for engineers and supervisors," says White.
In 1996 a cross-functional team was deployed to investigate ergonomic issues in the work environment with an eye to reducing cumulative trauma disorders. This team first attended a training program at the North Carolina Ergonomics Resource Center in Raleigh. Subsequent review of plant procedures and processes by the team led to recommendations that reduced cumulative trauma disorders by 50%.
Because the assembly lines at Continental Teves are linear in their layout, workers do not have the kind of face-to-face-communication opportunities afforded in a more cellular, U-shaped set-up. To provide what plant manager Dennis White calls a "common thread of shared experience," workers rotate positions every hour. This rotation gives them the chance to communicate, and also has minimized repetitive-stress injuries.