IW Best Plants Profile - 2001

Breaking The Mold Bold changes to production processes and a local vendor base accelerate auto supplier's growth. ByTim StevensTextron Automotive Co. de Mexico SA de CV, Saltillo, Coahuila, MexicoAt a glance

Officially recognized by the State of Coahuila as a pioneer in the hiring of disabled workers.

Achieved an overall quality and delivery rating of 95% (excellent) from DaimlerChrysler AG in 2000.

First three-time winner (1997, 1999, 2000) of Textron Inc.'s President's Safety Award.

Scrap/rework as a percentage of sales reduced 96% in the last five years.

In-plant defects reduced 61% in the last five years. Colorful Mexican serapes come to mind as a visitor passes by a group of employees discussing production issues in a cellular work area. For easy identification employees in each company department sport a different color of polo shirt: process control in royal blue, quality in red, production control in yellow, human resources in white. And why not? This is Textron Automotive Co. de Mexico SA de CV in Saltillo, Mexico, a town whose name once was synonymous with fine serapes dyed without fixatives so that their bands of color bled into each other. Today this bustling town of roughly half a million people, nestled in the Sierra Madre Oriental mountains 200 miles south of the Texas border, is famous for a different kind of handicraft. Nicknamed "Little Detroit," Saltillo now is home to tiers of suppliers serving carmakers in Mexico. This year alone 50 new companies have opened their doors in Saltillo, most serving the automotive industry. They join established manufacturers such as the Textron operation, which supplies parts to General Motors Corp. and DaimlerChrysler AG assembly plants in Mexico. In this compact molding and assembly operation there are no U.S. managers, and -- a rarity in manufacturing anywhere, let alone in Mexico -- the plant is managed by a woman. But then breaking the mold is a major reason for the success of Textron Saltillo, which has transformed itself from a plant highly dependent on its ties to U.S.-based suppliers and expertise to a more independent, standalone operation. That transformation is a great source of employee pride, says Maria Luisa Rico, vice president, operations, as she conducts a tour of her spotlessly clean, smooth-running, 100%-union shop that turns over inventory 80 times annually. In 1997, when the workers were challenged to come up with a slogan to represent how they felt about making products at the company, they responded with "Empacado con Orgullo" ("Packed with Pride"). This label, with its accompanying eagle logo, adorns every product leaving the facility. "The secret here is ownership -- people feel responsible," says Rico, who joined the facility as controller when it opened in 1995 and was later asked to run the plant while the American vice president of operations took an interim assignment. Rico was given full responsibility almost two years ago. Presently consuming about 18 million lb of plastic annually, the QS 9000- and ISO 14001-certified facility fabricates about 350,000 parts a month including instrument panels, interior and exterior trim parts, and massive cowl grills. Starting with two injection-molding machines in 1995, the 345-worker plant currently runs 20 injection-molding machines and a blow molder. It operates two assembly areas in a three-shift operation six and sometimes seven days a week with 15 empowered natural work teams. One of Textron Saltillo's greatest triumphs is the creation of what Rico calls Supplier City, a community of key U.S. vendors the company has enticed to establish operations virtually at its back door. To assist these moves, Textron Saltillo helps the new company with hiring, training, dealing with local regulations, and logistics. The result is big savings in transportation costs, improved service, and better quality. All suppliers offer just-in-time delivery, as frequently as every two hours to point of use, and 60% provide vendor-managed inventory. The plant's Ohio-based supplier of instrument-panel reinforcements, for example, was attracted to the area and eventually set up manufacturing facilities in Ramos Arizpe, eight miles away. Having this local source of supply saved Textron Saltillo $3 million in transportation costs. "Besides the cost reduction, there was an improvement in quality, with less breakage and faster response to problems," says Rico. A Wisconsin-based supplier of air-conditioning ducts set up in Saltillo at Textron's request, saving Textron another $330,000 in transportation costs annually. Also, tooling that once was sent back to Michigan for engineering changes and maintenance is now serviced by a company in Saltillo that has partnered with a U.S. firm in Grand Rapids, saving Textron and its customers hundreds of thousands of dollars in tooling change and repair costs. JIT delivery plays a big role in keeping Textron lean and mean. There is an impressive lack of inventory on the floor, either from suppliers or of finished goods that are quickly whisked away when they are complete. An instrument panel has a lifetime in the plant of just five hours. For a GM plant assembling the new Chevy Avalanche in Silao, Mexico, some 12 hours away, Textron dispatches 20 trucks a day. Real-time electronic communication links enable the company to pace production and synchronize with end-user needs. Lean-manufacturing concepts were first introduced at Textron Saltillo in 1997, and virtually all the measurements associated with plant operation showed a significant improvement that year. Customer rejects, for instance, dropped from over 4,000 ppm to 250 (a figure that approaches 18 ppm today). Also in 1997 the company went from batch to one-piece flow in cellular configurations; accelerated continuous improvement efforts with kaizen workshops; and adopted the corporate Textron Operating System that identifies the metrics most responsible for efficient plant operation. "Before 1997 it was all management driven, but after 1997 the improvements came from the operators or middle management," says Rico. "People used to think lean meant they could lose their jobs. It took a while to buy into the concept." The improvements that have accumulated since 1997 allowed Textron to completely rearrange the plant two years ago to accommodate new Chevy Avalanche business, doubling revenues without adding new space. Rico estimates the company saved $6 million by using existing space. Successful labor-management relations is an additional reason for the success and smooth operation of Textron Saltillo, especially under Rico. When needed or as time permits, she enjoys assisting on the factory floor, endearing herself to the production workers. "When we saw Maria working on the line, we saw the possibility to be one, not just Textron and the union," says Ricardo Vasquez, a union official. "The word is leadership." In employee development Textron Saltillo emphasizes both work and life skills, part of the company's goal to be the employer of choice in the region. "To make a better product, you need to make a better person," says Ernesto Ruiz, manager, human relations. In addition to a pay-for-skills program, the company offers coaching in human relations, managing conflict, dealing with complaints, and communication skills. For example, employees have become more conscious of environmental concerns as a result of the plant's recycling efforts. "We are very proud to learn new things that we can apply not only on the job but in our homes," says Juan Carlos Felix, training coordinator, hourly education institute. Web-Exclusive Best Practices By Tim Stevens Benchmarking contact: Guillermo Parga, [email protected], 011-528-411-5454. The 5Ss As part of its continuous-improvement program, Textron Saltillo utilizes the Toyota Production System 5S approach to workplace organization. The 5Ss are separate & scrap, straighten up, scrub, sustain, and systematize. The first S, essentially one of selection, is handled in an efficient manner. Any item -- a piece of equipment, tool, manual, any object really -- that employees feel is unnecessary is noted with a red tag. The tagged item is placed on a list of "Things we do not need", which is posted on a public board adjacent to the work area. Alerted by its presence on the list, the 5S committee gives a 48 hr grace period for anyone to take issue with potential removal of the item, then makes its decision on what to do (restock, discard, apply elsewhere, etc.) Expanding on the 5S system of workplace organization, daily audits are made on the 5Ss plus safety, and each rated on a scale of 1 to 10 based on specific criteria. Audits are made each day by a different operator, based on a schedule that also includes the plant manager. Results are plotted on a spider diagram posted on the public board next to the cell. "This involves all employees in maintaining housekeeping, safety, and organization, and gives people an understanding of discipline," says Guillermo Parga, continuous-improvement manager. Attacking Scrap Scrap is always an issue at a molding facility where many mold changes and color changes are made. To attack scrap, product loss, and rework, operators write up how and why scrap was produced in a process on cards. These are collected by the continuous-improvement committee. Either the committee or the individual operator can initiate formation of a continuous-improvement effort to solve the problem. Mold changeover, color change, or shift start up are now supervised by what Textron Saltillo calls the Petite Committee. This group is made up of production, quality, maintenance, and process representatives, and a tool maker. This group must sign off on any set ups. Their basic objectives are to reduce time changeover and ensure production parts meet quality standards from the first part. This is accomplished by establishing a plan for each changeover considering material change, tooling change, robotic equipment change, and coordination of secondary equipment. In the Petite Committee approach, actions on changeovers are coordinated and occur concurrently rather than sequentially as in the past. As a result, changeover times have been slashed from 120 minutes to 44 minutes, and scrap has been reduced by more than half. A large pink tag is affixed to the station after the first acceptable part is produced after a change. Value Stream Mapping In the last 18 months Value Stream Mapping (VSM) has been applied at Textron Saltillo to make significant improvements in major processes, with an eye toward reducing cycle time, resources deployed, and work-in-process inventory. In this technique, a process diagram is prepared that details material flow, keeping a look out for stagnant inventory and non-value-added steps. A second map is created indicating the desired future state of the process, and process improvements made to reach it. In one application, the manufacturing cycle time for rear quarter panels for the GM Avalanche program was reduced by 5%, but more importantly, the process is now completed with three operators rather than four. Distance traveled by material was cut by 50%, and scrap parts per shift were reduced from 14 to 3.