What do you do if you have a whole lot of new business going into a plant that's already busy? One option, of course, would be to call in the contractors and get an expansion underway. But that's not the one that the management at Freudenberg-NOK General Partnership (FNGP; Plymouth, MI) employ. Bricks and mortar are not the answer in their view. Making the most out of what already exists both in terms of real estate and personnel is the choice that the company makes every day. And this has led to enormous strides in productivity and profitability during the past few years. FNGP has taken the notion of lean thinking and, in effect, hard wired it into the entire organization. It is what they do as they develop and produce a wide array of seals, gaskets, NVH components, and a variety of other molded rubber, PTFE and engineered plastic parts and systems for automotive (and other industry) applications.
There is a method that they use to do this. It is called "GROWTTH," which is an acronym for "Get Rid of Waste Through Team Harmony." They've been using GROWTTH throughout FNGP—and there are 15 facilities operated by the company in North America—since 1992.
GROWTTH is a version of the Toyota Production System that the company has tailored for its culture (after all, FNGP doesn't make cars). The focus is on one-piece flow. Since the official kick-off of GROWTTH, FNGP has performed 2,340 kaizens—and counting. These kaizens are multiple-day events during which teams of people work to change existing methods and operations to lean ones. And they even take on lean operations and make them leaner.
Although some people might think that the one-piece flow concept is fine for other companies but not for theirs because they are a mass manufacturer, not one that makes a few of these and a few more of those, they should know that in 1996 FNGP produced 1.6 billion components. And some 87% were produced with one-piece flow. The goal is 100% by the end of 1997.
So what has this done for the company? According to Joseph C. Day, FNGP's CEO, during the five years they've been thinking and working lean, the organization has experienced:
- A $24-million net savings
- A defect rate reduction of 84%
- A halving of the cost of quality
- A halving of workers' compensation costs
- A 14% improvement in the indexed variable profit margin
- A 40% reduction in the factory floor space
- A doubling of the value-added per employee
- A tripling of sales.
A few comments on some of those numbers is certainly in order. For one thing, the company's sales in 1996 were on the order of $600 million. During that year, the net savings realized through the GROWTTH program was $7.5 million. According to Day, that's roughly twice what the company realized after its first year of GROWTTH—which means that even the lean can get leaner. Getting lean and staying that way is a continual process.
The reduction in workers' compensation is extremely important. Even though the value-added per employee is doubled, this does not mean that the way to profitably improve productivity is by cranking up line rates. That typically leads to an increase in injuries as well as reduction in quality. The lean approach is based on continuous improvement by employees. They are the ones who do the jobs. They are the ones who improve those operations. And yes, in some cases, they eliminate those operations. But the company's stance toward that is to find those people something else to do within the organization. R. Gregory Keenan, vice president of the FNGP Bristol Operations in Bristol, NH, remarks with regard to a huge kaizen undertaking that was performed at that site (more on this below): "We guaranteed that no one would lose their job." Redeployment, not unemployment, is the focus.
The Bristol Experience
Performing kaizen events—continuous improvement initiatives—is not a new thing at Bristol. Although the FNGP GROWTTH program was formally launched throughout the organization in 1992, it was put to work at Bristol in 1989. They are quite familiar with change at Bristol.
FNGP has undergone a major reorganization wherein there is the rationalization of where the company's products are developed and produced. There are now product-focused business units that are called "lead centers," which have specified responsibilities, or take the lead, for product development and manufacture. This has led to the shifting and rearrangement of operations performed in the company's various facilities. In the case of Bristol, there are now three lead centers located within it: Axle and Bearing Seals; Dynamic Sealing Products; General Industry. This means that seals for automotive axles, bearings, shocks, struts, transmissions, and water pumps are produced in Bristol, as are oil seals and mechanical face seals for non-automotive applications. In addition to which, Bristol serves as a resource for other FNGP lead centers: it produces rubber, metal stampings and springs for those facilities.
In 1996, the annual sales of products produced in Bristol were $86 million. The `97 figures are anticipated to be $110 million. And by 2000, the sales should be $130 million or more.
The ability to accommodate this growth is not predicated on increasing the size of the 279,000 ft2 plant. As it is, the Bristol facility is the largest of FNGP's 15 North American sites. There has been some recent, sizable spending of late at the facility, such as $2.9 million in `96 spent, in part, on 15 French Oil 450-ton molding presses, finishing machines and testing equipment. There is, Keenan says, an on-going program to secure new capital equipment (based on an ability to show that it is going to make a big improvement over the existing gear).
A key to accommodating the growth is something called the "Bristol Blitz." Now, it wasn't given that name just because it has nice alliteration. But face it: giving it a more-telling name would be incredibly unwieldy, as it would have to be something like the "Bristol Change-Everything-We-Can-In-A-12-Week-Period-In-Order-To-Optimize-Operations."
At Bristol they perform, on average, 48 kaizens a year. "You can do a kaizen a week and make improvements in local areas in the plant," Keenan says. "The beauty of the Blitz is that we worked at optimizing the whole thing." Within the 12 week period, there were 471 people involved in kaizens. They executed 122 major kaizens. This is major as in knocking down walls, moving machinery and other equipment, including boilers.
William R. Purslow, president of the FNGP Automotive Sealing Div., says, "The Blitz means making a radical improvement in the value stream." The value stream becomes something more akin to white water than a common lazy river. The white-water metaphor works in terms of the velocity of the change, but the Blitz was anything but chaotic. There was careful planning in advance. The 12 weeks of blitzing was preceded by three weeks of planning that included input by a variety of people ranging from the corporate office to the union representation at the site. (Yes: there is trade union representation at Bristol, which should put to rest the notion that some people have that lean systems can be created only in non-union environments. Purslow points out, "We have to change our business and operations if we are going to stay competitive." All people within an organization, no matter what the color of their collar, can understand that being noncompetitive is a state that precedes going out of business.)
The goals were aggressive. They aimed for 100% model cell (i.e., one-piece flow) organization. An increase of the value-added ratio by 25% throughout the plant. A 20% reduction in scrap and material variance. And the WIP inventory would go down by 50%. Preliminary numbers at the completion of the 12 weeks (from February 3 to April 25) indicated that they were well on their way to meeting the goals. That is, there was a 23% increase in productivity, a 35% reduction in WIP, and a 100% conversion to model cell operation. Not only is it anticipated that on-going operations will lead to improvements, but there will be a reactivation of the Blitz for eight weeks in the fall to accelerate the change.
Even though there was serious change occurring during the Blitz, the plant was running production. There are approximately 1,000 employees at the site. In order to get the involvement of 471 people while maintaining the required output it was necessary to have 163 external people come in to the plant to help Blitz. Given that the GROWTTH program is a common system throughout FNGP, getting people who could start running was not a problem. (It is worth noting that another benefit of the Blitz is that 250 people at Bristol are now trained in lean systems.)
The bottom line in Greg Keenan's view: "Because of the intensity, commitment and support of the people throughout the company, because the entire workforce rallied around this, great things happened."
Who could ask for more?
On second thought: Keenan and the other people at FNGP probably will ask for more improvements—and by going even leaner, they'll probably get it.
Management Tips for Getting—and
Joe Day, CEO of Freudenberg-NOK, has been committed to lean systems for more than five years. It is this sort of commitment that has resulted in the automotive components supplier as being cited in various places (such as in Lean Thinking by James Womack and Daniel Jones) as being a model of lean production. Here are some of the things that Day suggests that top managers do with regard to moving their companies toward lean operations:
•Do it. As in being committed in more than a cursory manner: get involved on the factory floor; help the organization get lean. "For the first three years," Day says, "I spent almost one-third of my work time in kaizens." When the CEO is working along side production workers, engineers, and other team members, it becomes very clear that this is the real deal.
•Lead and listen. "The best ideas for improvement come from the people closest to the process—the employees on the shop floor," Day comments. So make sure that the people understand that their ideas are sought and that they are important to the success of the program.
•Keep on keeping on. "No matter how ingrained lean systems become in your company, you will backslide if you let up for even a moment," Day warns.
•Focus on the big picture. "Even greater gains can come when you consider the larger process perspective of the supply chain," Day notes. FNGP has involved both customers and suppliers in kaizen events.