AberdeenGroup - March 28, 2006
Three out of four manufacturers deploying "Lean" techniques across manufacturing and adopting a culture of "Lean" throughout their organizations are realizing larger benefits sooner than anticipated, according to a benchmark study by AberdeenGroup. Simultaneously, by "thinking Lean", market leaders are building the organizational competence that will help sustain market position and performance over the long term.
According to AberdeenGroup, Lean manufacturing processes have revolutionized the way many leading enterprises deliver products to their customers and manage their suppliers. Consequently, the use of Lean techniques has expanded beyond the automotive industry into aerospace, consumer products, and other industries. However, there is a large performance gap between companies simply using Lean techniques on the shop floor versus those that have built a culture based on Lean thinking.
Technology solutions are pivotal in enabling the capture of value stream operational processes, by allowing manufacturers to scale Lean operations across the supply chain and around the world. "Lean ERP, Specialty/MES and homegrown solutions are providing a solid foundation from which manufacturers are defining value stream processes and activities that extend from the customer, through production, and back to the supplier. Emerging technology solutions enable the capture of value stream operating models, scheduling and tracking critical resources, and the ability to promote continuous improvement programs," said Jane Biddle, Vice President of Global Manufacturing Research at Aberdeen, author of the report.
According to the AberdeenGroup benchmark study, 75% of best-in-class Lean companies are meeting or exceeding their Lean program expectations for:
Reduction of inventory and assets
Manufacturing and design cost reductions
Improved manufacturing and supply chain flexibility
Improved product quality
Improved customer service
About the market research study
The AberdeenGroup report, "The Lean Benchmark Report: Closing the Reality Gap", examines that gap and isolates the three common characteristics of best-in-class companies that have achieved operational excellence through deploying a Lean strategy. It then describes the strategic actions these companies take to achieve a Lean culture, the basics of Lean and how leading companies have mastered them, and technologies that enable Lean. It also discusses the dividends best-in-class Lean companies receive, such as improvements in customer services and flexibility -- and how they outperform the competition by pushing Lean processes beyond manufacturing and measuring them daily or more frequently. Finally, the study recommends actions for best-in-class, average, and laggard companies to take to improve their Lean performance.
The study answers such questions as: What is driving manufacturers today to adopt Lean? What are their business needs and expectations? How are the best-in-class implementing Lean? What are their critical success factors and how are these being measured? What tools, techniques, and technology solutions are leaders using to deploy and scale their Lean operations?
The Lean study is available for download from the AberdeenGroup Web site at no charge.
One of the UK's largest snack food manufacturing plants will reduce its energy costs by GBP 10,000/year by optimising the air consumption of its pneumatic automation systems.
One of the UK's largest snack food manufacturing plants, producing some 175 million products a year, is reducing its energy costs substantially by optimising the air consumption of its pneumatic automation. Each of the plant's six production lines is based extensively on pneumatic automation, making it a heavy user of compressed air. The company recently engaged Festo's new Energy Saving Service to provide a detailed analysis of its automation-specific energy consumption.
This identified a number of areas that warranted improvement or remedial action, and the company is now in the process of implementing these changes - which it is estimated will lead directly to a GBP 10,000 per year reduction in energy costs.
The facility operates a Total Productive Maintenance (TPM) program to identify areas for continuous improvement.
The TPM team's objectives were to reduce compressed air consumption in order to directly reduce the cost of energy used, and to ensure continued compliance with the company's ISO 40001 environmental management standard.
A third objective was to demonstrate active energy saving projects, to help retain the facility's discount on extra electricity costs imposed by the Climate Change Levy.
The TPM team sought the advice of pneumatic automation distributor Cymru Automation, who recommended Festo's Energy Saving Service and helped organise a pre-survey visit to identify the most appropriate processing line to examine in detail.
According to Cymru Automation's Keith Fordham, 'The plant is a 24/7 manufacturing operation, making it vital to maintain throughput.
Festo went to considerable lengths to ensure that system downtime would be minimised during the subsequent survey, by familiarising site personnel with the process, identifying key points for consideration, and meticulously planning the installation and removal of test equipment.' As part of its energy surveys, Festo normally physically identifies areas of production lines that need remedial action with improvement tags, but on this occasion, given the food manufacturing environment, elected to use digital photography instead.
The results were presented to the manufacturer in presentational form on CD, which proved an ideal way of communicating the findings and agreeing an activity plan with the line improvement teams.
The survey benchmarked the actual energy consumption and real cost of air leaks on a single representative production line equipped with 10 individual machines.
The cost of air leakage on the line amounted to GBP 1,534 per year, with similar figures anticipated for the facility's other five lines.
The total saving that could be achieved simply by fixing the leaks was estimated to be in the region of GBP 10,000 per year.
Festo also identified a number of operational safety issues and productivity improvement areas, as well as actions that could simplify routine maintenance.
Following the survey, the manufacturer immediately addressed the potential safety issues and then prioritised improvement activities, selecting the four worst case machines - which accounted for 87% of the cost of the leaks on the line - for remedial maintenance.
Typically, this involved repairing leaking pipework, fitting new high visibility regulator valves and upgrading air preparation equipment.
The task was considerably simplified by the fact that Festo produced air flow and pressure drop graphs for each machine, to identify those suspected of having air starvation problems.
In a number of cases, Festo also recommended moving valves closer to the pneumatic cylinders that they control, to increase machine productivity.
The knowledge gained is now being applied to other areas of the facility, and the manufacturer is updating its equipment specifications to ensure that all new automation meets with its best practice targets.
It is also now standardising on Festo equipment, supplied by Cymru Automation, Festo Premier Distributor.
The potential energy savings identified by the survey translate directly into bottom line cost savings - as the facility uses variable speed air compressors - and the payback period will be less than three months.
Issue: 3/2006
Millions of dollars are lost each year because manufacturing companies are not addressing an essential, straightforward issue. The problem? Groups within the company are just not working together.
Regardless of organizational structure or size, manufacturing companies are made up of multiple groups that must cooperate if the business is to be successful. Productivity is at stake when the two main players, those in management of the company and those in non-management positions on the plant floor, are not working as one unit. Competing against larger companies and those around the world, if productivity is at stake so is survival.
The situation is so pervasive today, manufacturing consultant Rebecca A. Morgan is committed to finding solutions. By offering simple, specific tools developed with client companies learning to work together within their organizations, she wants the manufacturing industry as a whole to take notice as well.
Morgan, the president of Fulcrum ConsultingWorks, says that many companies are too close to the forest to see the trees.
“When I tell them they don’t understand their manufacturing processes as well as they think they do, they tell me they’ve been in the business for years. I say ‘great’ but then I help them understand that when they make a change, they need to be able to predict with accuracy the impact of that change. When they can’t do that, that tells me there are things they still need to learn about their processes,” Morgan says.
A willingness to learn is fundamental to any successful company.
When the management team and the production and maintenance team both realize they are more powerful together, a company can produce one winning team. No longer is it “us” vs. “them,” but instead a powerful force emerges that knows how to recognize problems and how to solve those problems.
Here are just some of the ways she says management and plant-floor teams can start working together to gain a competitive edge:
1) Obliterating false divisions. “What struck me at one recent client was the language that emphasized whether a person were ‘union’ or ‘company.’ I worked diligently to get everyone using the same vocabulary: everyone is now ‘WE.’ Not only did I have them unlock the doors between the production areas and front office, I told them to keep them open as well. Trust began to build, grievances were pulled, and a team began to emerge – one that focused on ‘our’ issues.”
2) Creating seamless shift changes. “ Communication and support issues resulting from shift changes are problematic for many companies. Second- and third-shift workers are often left feeling like second-class citizens and not part of the picture. I advise companies to create a check list of important information that all shifts need to know for discussion as part of the shift-to-shift handoff. Common categories for the checklist are equipment, people, process and quality issues.”
3) Keeping a clean house. “In lean manufacturing, a methodology called 5-S provides guidance to keeping everything neat, clean, organized and ready to use. An unkempt factory sends a message about the work environment to employees: We don’t care about the customers or the product. Sometimes simply painting the word ‘trash’ on drums used for trash to differentiate them from drums containing material can kick-start the ‘no clutter in my house’ mentality. Management can reinforce the message simply by picking up trash they see whenever they walk the floor.”
4) Listening to all employees. “In many underperforming companies, employees I interview often say management doesn’t listen to them and ‘they just don’t care.’ Ironically, when I interview the management team, they say workers aren’t reliable, don’t show up or can’t follow instructions. While it doesn’t sound like it, the fact is both sides care deeply about what they could accomplish together. Management needs to acknowledge employee requests and communicate back to employees with status reports or even a posted note on the bulletin board. It shows respect and demonstrates management does care about things important to employees. By demonstrating respect, management gains it.”
5) Recognizing individuals. “Each of us has a basic need to feel like we belong and to believe we are valued as an individual. That need doesn’t go away just because we’re at work. Something as simple as taking a photo of each individual employee and posting them together as a group in a high traffic area can go a long way in helping employees feel they belong. Use the caption ‘Our Quality and Customer Service Team’ to emphasize the point. The importance of the individual plus the role each has as part of the team is made visible.”
6) Finding the frustrating fixables. “Find the one or two things that frustrate your employees the most and fix them. One company’s third-shift employees complained that the vending machine was always picked over before their shift. Another company’s die-casting employees had to knock out parts with a hammer physically demanding and unsafe. Fixing frustrating problems helps open communication lines and adds to management credibility.”
7) Defining success. “Having metrics to measure performance will be lost if employees don’t understand how they relate to them. Identify one or two metrics each for quality, safety, delivery and cost and ensure results are measured constantly and consistently, shared with everyone, and explained in a way that helps employees see how their decisions impact the numbers.”
8) Requiring a written summary for changes. “Off-the-cuff changes created in hallway conversations without specific goals and cause and effect thinking create chaos and an environment of unaccountability. Bring a disciplined thought process for change by requiring that proposed changes are outlined in writing by defining the goal, how the change will be implemented, and evaluation criteria to evaluate if the change had the intended result. This provides the opportunity to teach structured problem solving, gain additional points of view and have an educational post-mortem on the reasons for any unexpected results.”
Says Morgan, “While many of the items on this list are easy to do, all too many manufacturers neglect them because they don’t understand the power these small steps can have.”
Blackanthem Military News, WRIGHT-PATTERSON AIR FORCE BASE, Ohio, March 18, 2006 10:55
The Air Force Materiel Command work force has been asked to re-think how it conducts its business. The command needs to stay in front of its adversaries by continuing to dominate air, space, and cyberspace. To do this, the Air Force has adopted a mindset of continuous improvement through a concept called Air Force Smart Operations for the 21st century, or AFSO21.
Did you know that an improvement process called Lean has been employed by industry for more than 50 years? For example, Toyota has a history of using Lean techniques. After repeated Lean improvement events, they have increased their efficiency with each event and are still improving the process!
I recently became the Installations and Mission Support Directorate's AFSO21 lead. The directorate nominated Wright-Patterson Air Force Base's vehicle re-registration process as a "quick-win" initiative for improvement.
As the directorate's lead for AFSO21, I'd like to tell you what went on during the improvement event we just completed.
First, our team was given a sensei. This is someone with formal process improvement training and experience. Our sensei helped us select the correct tool to examine our process. Although many tools are available like Six Sigma, Theory of Constraints, etc., we selected the Lean tool and our sensei led us through the first phase of improvement.
Interestingly, our process had previously been identified for improvement with an automated solution. I thought, "Well, we are already improving this process. Shouldn't we pick something fresh?" What I learned is Lean can validate improvements in processes and highlight areas we may have overlooked.
We began our Lean event with an overview of Lean concepts and tools, as well as reviewing some of the improvements made by air logistics centers. We then reviewed our charter. The boundary of our effort was clearly defined and our target population for the re-registration effort was primarily active-duty military and civil service employees working on Wright-Patterson.
Our sensei helped us identify the entire value stream for this process. In other words, each step in the re-registration process was defined with start and stop events. We walked and timed the entire process. Our process measured anywhere from 15 to 37 minutes.
We then identified whether or not a step added value from the customer's perspective. Each step was labeled as 'valuable', 'no value but required' or 'no value'. I found this different from previous improvement events. In other events the process focused on saving time and dollars, with the assumption that a product produced faster or cheaper must be better. This might not be true from the customers' perspective.
Value can only be defined by the customer in terms of a specific product meeting the customer's needs at a specific price and at a specific time.
We brainstormed ideas for improvement. Automating part of the process seemed like a viable idea. Also, processing re-registration via mail seemed viable. Both ideas were tested. The automated solution times ranged from 7 to 15 minutes, while the mail option took 11 to 12 minutes.
So, the improvements to the process ranged from 46 to 78 percent in time reduction. The current automation effort was verified. Additionally, this improvement was accomplished with no additional manpower and cost only approximately $3,000! The savings from the process improvement far outweigh this low cost.
It dawned on me that there is no end to reducing effort, time, space, cost, and mistakes while offering products that the customer actually wants. As one of the team members said, "I'm not so [arrogant] to think that an old process can't be improved." I would add that an improved process can be improved also!
So, how do we meet the future needs of our Air Force? We continue to improve how we do business, what we do and what we deliver. If we do not continue to design our future, we will not survive.
By Michelle Corcoran
Installations and Mission Support Directorate
Staff Reporter
Concept of total productive maintenance "One has to learn to use this tool with all its potential"
- Management must communicate with workers, as key aspect of TPM is mindset change
- TPM will help manufacturing units leverage the cost arbitrage advantage
- 30 Indian companies received award for excellence in TPM in 2005
ALL SMILES: Chairman and Managing Director of Sundram Fasteners Ltd Suresh Krishna (centre) with Kinjirou Nakano, executive vice-president, JIPM-Solutions Co Ltd (left) and Surinder Kapur, Chairman, TPM club India, at the 6th TPM national conference in Chennai on Tuesday. — Photo: Shaju John
CHENNAI: The concept of total productive maintenance (TPM) is neither a strategy nor a goal, but a tool that can lift manufacturing enterprises out of mediocrity, Suresh Krishna, chairman and managing director of Sundram Fasteners Limited, has said.
Inaugurating the 6th TPM national conference organised here on Tuesday by the Confederation of Indian Industry, he said it was a tool that becomes better with use. "One has to learn to use this tool with all its potential," he said, pointing out that the challenge for the companies lay in sustaining the "emotional fervour" visible during the launch of the programme.
Towards ensuring the same involvement, dedication and emotional commitment, as at the beginning, the top management must constantly communicate with the workforce, as one of the key aspects of TPM was mindset change.
The mindset of people makes an excellent company and this could be achieved by consistent and proper inculcation of the TPM values.
Underlining the need to communicate to the shop floor employees the vision and goals of the company at every available opportunity, Mr. Krishna said the manufacturing companies must think big and TPM would help them leverage the cost arbitrage advantage available to them. Executive vice-president of JIPM-Solutions Co. Limited, Kinjirou Nakano, said India had the second largest number of companies that had adopted TPM, after Japan.
Underlining the need to groom people for sustaining and maintaining TPM excellence, he said the Japan Institute of Plant Maintenance could depute experts to visit Indian companies implementing TPM programmes and help them identify the gaps.
According to Surinder Kapur, chairman of TPM Club India and chairman and managing director of Sono Koyo Steering Systems Limited, 30 Indian companies received the award for excellence in TPM in 2005 and over 50 kick-started TPM practices this year.
CII director-general N. Srinivasan said in the globalised era Indian companies must focus on the seven Cs of change, complexity of the change, challenges, competition, competitiveness, customers and creativity.
© Copyright 2000 - 2006 The Hindu
These days workholding systems have to accommodate increasing demands for high-speed, lower-volume operation.
In addition to this, new demands are being placed on traditional workholding methods with the increase in popularity of multi-tasking CNC machines such as the mill-turn lathe.
One aspect to the need for high speed is high-speed production. Higher investment multi-function multi-axis machines have to keep operating to be cost effective, so the ability to rapidly position and grip a workpiece is critical.
High speed in the sense of high-speed machining often means greater loads on the part during the machining processes. Workholding devices have to be able to maintain precise part positions under the increased loads and force vectors without damaging or distorting the part.
But workholding is not just a one-dimensional issue. The two biggest facets of workholding, milling and turning, are complex and require an approach that is both commonsense and economical.
According to Dimac Tooling general manager Paul Fowler, there is a lot of scope for workholding-based gains in the metal cutting industry.
“There are three key areas of focus in regards to workholding - safety to the operator and machine tool, the gripping method in terms of rigidity and machining access, and then the cost effectiveness to the company,” he said.
“There are frequent examples where neglect or poor maintenance of a workholding device has caused customers considerable grief trying to maintain tolerances and surface finishes.
“For example, the regular greasing of a power chuck can have a significant impact on workholding performance.”
In the case of turning centres the power chuck is one the hardest working elements of the machine, and a worn chuck can cost a company many times the replacement price when total productivity is assessed.
Wear can manifest in several ways such as poor concentricity when second operations are performed, loss of grip force due to internal friction in the chuck, difficulty machining soft jaws or having to machine a taper to compensate for the jaw flaring and lower quality surface finishes are just some of the issues encountered.
Chucks are a critical part of a lathe setup, but like most workholding devices, they do not always get immediate consideration in process planning or design.
Yet current trends in turning operations are amplifying the role of the chuck. Typical spindle speeds are considerably higher than ever before, for example. These higher speeds increase the forces acting on the chuck's clamping power.
Furthermore, tolerances on workpieces are tighter and workpieces are more likely to have thin walls, delicate features or be “near net shape”, making distortion from clamping forces in the chuck more troublesome.
Move to Lean
The move to lean manufacturing has heightened interest in part loading and unloading, drawing attention to ways in which a chuck lends itself to streamlined, error-proof operation.
According to Fowler, in job shop environments it is also typical to try and grip every job that comes along in the standard 3-jaw power chuck.
There are many variations of top jaws available today to support using a 3-jaw chuck ranging from custom jaws that have been fitted with carbide gripper pads to ensure a reliable and effective grip of castings, forgings and black scaly bar through to custom jaws that allow small volume production of square and rectangle bar (or billets) in a 3-jaw chuck.
There are many occasions however where the tried and tested power chuck may not provide the ideal solution, such as when machining shafts.
High levels of accuracy and productivity can be realised by machining with a face driver. This working device allows a shaft to be machined between centres with the driving force coming from drive pins engaged with the headstock end of the workpiece.
Face drivers have generally been thought of as a finishing device and not very capable at roughing, however Fowler says nothing could be further from reality.
“Having witnessed cuts up to 28mm deep with a face driver quickly changes your perception of what these workholding devices can accomplish,” he said.
The most notable advantage is the ability to completely machine a shaft in one set-up, thus removing concentricity issues associated with “end for ending”. As face drivers can be mounted in 3-jaw chuck with soft jaws, set-up times are minimal.
Careful examination of the clamping application may lead to either a stock solution or a customised workholding device for difficult or troublesome work pieces. This is certainly the case when it comes to static workholding.
Fowler says that when using machine vices, there has been an increasing trend for companies to purchase lower-quality vices.
“Pulldown quality is imperative in a vice,” he said.
“Quality is an indicator of the pulldown ability. The better the quality of vice, the more rigidity it offers and the less chance that the part being machined will move about.
“This comes back to production costs and time. The better the quality of the vice, the higher the overall productivity.”
Magnetic chucks
The approach for milling is to generally use a machine vice. While these very universal devices play a significant role in most machine shops, there are other solutions that can yield greater benefits and profitability depending on the type of work.
Fowler says that while it is common practice to use magnetic chucks in European machine shops, this is quite uncommon in Australia. Magnetic tables are generally considered to be the domain of grinding.
The significant evolution and development of magnetic materials such as Neodymium-ion-Bohr has changed this situation. Heavy milling applications through to thin workpieces are candidates for magnetic chucks, and also often allow a much higher density of parts under the spindle when compared to conventional vices.
Another area of workholding for machining centres that can go unexplored is that of the modular clamp. Available in many forms and function the basic concept is to make a simple fixture which, when fitted with modular clamps, can provide a very high density of workpieces, low cost-per-part investment and great flexibility and tooling access.
Fowler offers the following key points for getting the most out of workholding solutions:
• Avoid the well-trodden path and take time to explore better ways to hold workpieces to gain higher ROI. Customisation should be an important part of achieving the best possible fit;
• canvass the full range of options available;.
• increase part density, and consider how to double or triple the number of parts under the spindle, per cycle;
• don’t compromise on quality. Low cost rarely translates to the best investment when acquiring workholding;
• pay attention to the maintenance of an investment in workholding; and
• always factor in safety and ergonomics to the solution.
Magazine Article, Source : The Manufacturer US
Zone : World class manufacturing
Published : 10 Mar 2006 19:54
Total productive maintenance (TPM) is a critical element in the transition to lean manufacturing, but manufacturers often find barriers in the way of deployment. Rich Weissman looks at the issues
The next time you bring your car in for service, I want to flush the transmission,” says Dan, my Ford dealer’s service manager. “We’re seeing some data on fluid breakdown and I want to make sure that we keep ahead of it with our customers.” And I added a note to my calendar to make that appointment. Why? I’d rather see Dan on my own terms than with my car at the end of a tow truck’s hook. Over the years I’ve learned the hard way that regular servicing, and a well developed preventive maintenance schedule, is better for the car, and more convenient and cost effective for me. When it comes to car repairs, control is better than chaos.
The same thing can be said for tooling and equipment on the factory floor. Downtime, lost productivity, and unanticipated expenses are often the result of poor maintenance and a reactive culture that responds crisis to crisis rather than in a planned and controlled course of action. In a recent survey conducted by The Manufacturer, 27 percent of the respondents said that total productive maintenance was a current business initiative, yet only six percent claimed to be fully operating it.
While the theory of TPM seems so clear and the benefits so evident, it is perplexing that so many manufacturers do not integrate it into their lean manufacturing initiatives. Barriers include a lack of understanding of the effect of well running equipment on productivity, a short sighted approach to cost savings, resistance to change, and a firefighting mindset that is often accepted, and ingrained, throughout the organization.
Many manufacturers take the “I’ll get to it tomorrow” approach to TPM. When it comes to equipment uptime, however, tomorrow may be too late. Total productive maintenance focuses on a formal process of maintaining the tools and equipment that are used throughout the manufacturing process, but TPM is more than just a preventive maintenance program. It includes an intimate knowledge of production processes, a tracking program for scheduled maintenance, an inventory of spare parts and consumable items required for the equipment, workforce involvement, ongoing training of operators and repair personnel, and an organizational and senior management acceptance of, and commitment to, the TPM process.
Strong relationships with equipment suppliers and third party service providers are also important, as their knowledge and support can help to increase the equipment’s effectiveness, throughput, uptime and yield.
TPM is a continuum. Reactive maintenance, the most common maintenance approach, occurs when equipment is serviced only when it breaks down. Preventive maintenance means servicing equipment at regularly scheduled intervals to prevent unanticipated downtime. These service intervals are often built into the production schedule, or occur during nights and weekends when equipment may be idle.
Predictive maintenance, the ultimate state, uses data and surveillance to analyze equipment deterioration and monitor equipment conditions, often with an online system. In the TPM continuum, predictive maintenance is the best place to be, but many companies are not even close, thinking that preventive maintenance will be the answer to their problems.
“Many of the of the small and medium sized companies we work with are still focused on reactive maintenance, fixing equipment that breaks down rather than servicing it on a regular basis to prevent the breakdown in the first place,” says Dave Levine, lean team manager for the Cincinnati, OH based TechSolve, a member of the National Institute of Standards (NIST) and Technologies Manufacturing Extension Partnership (MEP). “We are doing our best to make them see the benefits of preventive maintenance and then ultimately predictive maintenance.”
One of TechSolve’s clients, a manufacturer of thermal batteries supplied to a large aerospace company, found that its downtime was increasing while its output was falling. A cross functional team was established to develop and analyze product line performance measurements. The data showed that the cause of the output issues was a press that converted powder into wafers used in the battery assembly. Analysis showed that a portion of the equipment was misaligned, causing the operator to stop the press on a regular, but unanticipated, basis to sharpen and realign the dies. In addition to unscheduled downtime, the misalignment was causing premature die failure resulting in higher tooling costs. Proper equipment alignment allowed the product line to once again meet its productivity goals. Yet, it went deeper than that.
TechSolve had used OEE to help identify the root cause of the production issues.
“We also work with our clients on the elements of TPM, including the concept of overall equipment effectiveness (OEE),” says Levine. “OEE measures equipment availability, efficiency, and quality, and manufacturing companies need to look at the data behind their maintenance activities to really manage the process effectively.” During the analysis stage, TechSolve discovered that the OEE for the press was at 39 percent, while world class OEE was considered to be in the 80-85 percent range. “Once we identified the piece of equipment that was impacting production, we dug deeper into the analysis, finding that there was actually a raw material problem that was causing the die to become dull and misalign.”
Some industry segments embrace TPM more than others. “I’ve seen greater acceptance and understanding of total productive maintenance in the process industries rather than in discrete manufacturing industries,” says Bob Dean, managing director of new product development for the Durham, NC based lean manufacturing consultancy TBM Consulting Group. “The process industries have actively embraced TPM for the past 10 to 15 years while many in the discrete manufacturing industries still don’t recognize it as an essential step in the lean manufacturing process.”
“TPM is not an all-or-nothing approach,” says Dean. “Companies, especially small and mid-sized ones, can introduce TPM in newly developed work cells or on specific pieces of equipment on the factory floor. They do need to reduce the shotgun approach to plant maintenance which can be quite ineffective.” Dean advises his clients to methodically analyze their manufacturing process and use TPM where it makes sense, utilizing a limited rollout. “TPM becomes quite important in machining cells where equipment reliability and set-up issues can lead to disruptions. This is a good place to start the process.”
Dean sees predictive maintenance as the key value producing element of TPM. “Predictive maintenance will significantly help in increasing productivity and throughput in all business segments,” says Dean. “But there is an investment that needs to be made in order to reap the benefits.” Dean does see an increasing amount of cost effective TPM applications and analysis tools geared to small and mid sized businesses. “This may reduce some of the barriers and help to bring in a more of a widespread acceptance of TPM.”
Some manufacturing companies outsource their TPM activities in order to increase the scope and effectiveness of their maintenance process, especially as they migrate towards more of a predictive maintenance approach. “Maintenance in many organizations is almost 100 percent reactive,” says Mark Hardesty, the regional operations manager for Peoria, IL based Advanced Technology Services, a provider of outsourced factory maintenance. “We’ve also seen many companies reduce the amount of preventive maintenance activities causing more and more reactive maintenance. When you go to lean you just cannot be in the firefighting mode.
“When a company like ATS is brought into a company, senior management knows that they have a maintenance problem that is not being effectively managed at the factory level,” says Hardesty. “Many have successfully adopted lean manufacturing and they are finally getting to the TPM part of their implementation. Others are seeing a decrease in lean effectiveness or see quality issues that point to equipment downtime.” Hardesty sees that TPM is typically embraced somewhere towards the middle of the lean journey. He’d like to see it happen earlier in the process. One barrier to deployment, says Hardesty, is that senior management needs to see a return on investment for TPM activities. There also needs to be an availability of skilled resources across the organization. “TPM is more than just tooling and equipment repair,” he says. “It also includes functions such as safety, technical training, human resources, factory management systems, facilities management, and even six sigma training.” He adds that no TPM process is perfect, and that there is an expectation that there will always be some level of reactive maintenance. “Our goal is reduce downtime by 80 percent. If only 20 percent of the maintenance activities are reactive, we’ve made significant progress.”
Jeff Linville -- Furniture Today, 3/2/2006 9:18:00 AM
Many look for technological improvements
GREENSBORO, N.C. -- U.S. furniture makers are turning to lean manufacturing techniques to survive, causing suppliers to change their business models as well.
The trend was evident at the Carolinas Industrial Woodworking Expo here this month, where lumber and machinery exhibitors saw fewer furniture manufacturers than in past years.
So many factories have closed in recent years that many domestic producers have an excess of machinery and tools and aren’t shopping for more, said some suppliers. On the other hand, suppliers say some U.S. manufacturers are turning to more sophisticated, computerized machinery as a way to create stylish, value-priced furniture with fewer workers.
One company offering new, high-tech equipment is saw maker TigerStop. One complaint the company has heard from saw operators is that it takes too much time to measure wood and readjust for each cut, said Tom Dole, marketing director. A new computerized system attached to a saw can automate many steps, saving time and using lumber more efficiently. Dole demonstrated with a three-foot board. The computer came up with two components that could be made, with only half an inch of waste.
Engineered wood source BlueLinx has found that as more U.S. companies look to cut costs, it has been easier to persuade upholstery manufacturers to try plywood frames rather than solid wood, said Donahue Bottoms Jr., territory manager.
Lumber giant Weyerhaeuser is using lean manufacturing techniques at its own facilities, said Gary Janelle, market development manager. In some cases, Weyerhaeuser’s team has trained its clients on reducing costs, he said.
Because domestic producers have downsized, warehouse space is at a premium for many. Suppliers of lumber and other components are looking for ways to offer smaller shipments at a greater frequency. With downsizing, furniture has become less important to the U.S. woodworking industry, and that was evident at the show. Several exhibitors said they were at the event to see cabinetmakers.
That could change soon, as a few companies said they heard complaints from attendees about Chinese companies getting into the cabinet business. A spray booth supplier said the move to imports was hastened by U.S. regulations, which hurt domestic factories with tighter rules on spray chemicals, emissions and safety.
by derek parker
TO its supporters, it is the way of the future, the necessary if difficult road to efficiency and international competitiveness for the manufacturing sector. To sceptics, it is at best a fad and at worst a means by which sound companies are made dangerously vulnerable to business risks. But one way or another, the concept of lean manufacturing appears to be here to stay, and now the issue is how best to understand and utilise it.
“I see it as having entered the mainstream of Australian business thinking,” said Harry Onsman, a partner in Condico Consulting, a firm which specialises in providing advice on continuous improvement, including lean manufacturing.
“Several state governments have been promoting the idea, and have even sponsored some important conferences, in partnership with key industry associations. And on the educational side there is the new Certificate in Competitive Manufacturing, which has an emphasis on lean manufacturing concepts.”
Lean manufacturing is not a new idea. Its origins can be traced back to the production methods Toyota in the 1950s and 1960s, which introduced a system based on low inventory, just-in-time delivery, waste elimination, stringent quality control, quick response to customer demands, and employees that were both skilled and highly motivated. Lean methods eventually infiltrated Western economies although were mainly associated with manufacturing methods based on repetition and high volumes for several decades.
But in the past decade there has been increasing interest from a much broader range of manufacturers, especially in connection with supply chain changes brought about by the spread of the Internet. In fact, many smaller companies have begun to adopt lean manufacturing methods due to pressure from larger corporate customers – this is especially the case in the automotive sector.
There are aspects of lean manufacturing that seem, at first glance, contrary to good business practice. Lean manufacturing can mean, for example, running production machinery at less than full capacity, which might seem wasteful at first glance. But the real waste, say proponents of lean methods, is to produce goods for which there is no immediate demand, and which will simply go into inventory stock. Excess production, because of the storage costs and the possibility of degradation and obsolesce, is not an asset but a liability to the company.
“A crucial point in adopting lean manufacturing is looking at the whole value stream,” Onsman told Manufacturers ’ Monthly. “In many cases, the individual parts of a company may operate efficiently, but the total process will be less than the sum of its parts. To see the whole, you need a fresh pair of eyes. That is the value, I think, of engaging an outside contractor – although another alternative, especially for larger firms, is to appoint a ‘champion’ from within.
“In either case, the aim is to step back and look at things in a new way, to get away from ‘business as usual’ and promote structural change. A company has to be ready to make the necessary reforms. Some are not, especially in the area of employee relations. For these companies, we provide advice on how to reach the first rungs of the stepladder.”
Analysing performance
Onsman notes that eliminating waste in the use of funds, raw materials, and – perhaps most importantly – employee time is a multi-faceted task. As a consultant, he analyses figures relating to delivery of materials, holdings of supplies, production times, supply chain relationships, and product inventory.
He also underlines the importance of interviewing the people involved, from the workers on the factory floor to the company management. “Yes, every case is a bit different, but a recurring feature relates to factory layout,” he said.
“For example, most production floors are laid out in straight lines, a design which goes back to the days when factories were powered by steam turbines. For purposes of productivity, it’s the worst layout you can think of, requiring the most walking for workers and providing the least amount of sight for quality control. Practically anything is better, although a U-shaped production site is often the best. The point is that doing things without thinking about them, or because they have always been done that way, is a recipe for a waste of energy and time.”
Another common area of waste is the oversupply of raw materials, which must then be stored and maintained. Just as lean manufacturing envisions production of finished goods to meet specific customer demands, so too there is an emphasis on purchasing inputs to meet immediate requirements. Often, this means more frequent deliveries of smaller batches.
The consultant’s audit of company operations eventually leads to a report and a series of recommendations for the senior management team. Despite the importance of inventory control and factory layout, the key changes are often cultural, and the recommendations usually have to be implemented over time.
“You can’t blitz your way to a lean manufacturing system,” Onsman said. “To be fully effective, the process has to be implemented in a series of steps, like climbing a ladder. It can be a long climb, but once you get started it generally gets easier.”
One company that has been advised by Condico Consulting is Mack Valves, a manufacturer of industrial valves and related equipment.
“We chose to use consultants to help initiate and support the lean process, and provide the understanding, skills and resources needed to help us ‘hit the ground running’,” said Keith Goddard, MD of Mack Valves.
“Initially, it was important to identify and develop internal staff to lead the initiatives. We adopted a balanced scorecard approach to identify our goals and to help prioritise and focus our early initiatives. It was tempting to try but we could not do everything we wanted to do in one go.
“We worked hard to make some visible improvements quickly and help get employees involved and behind the initiatives. During the early phases of the lean initiative we found the need to strengthen many internal disciplines and processes. We wanted to ensure that the improvements stuck.”
In the two years since the company began its lean project, there have been significant gains: a 30% improvement in In-Full-On-Time deliveries to customers, a 25% reduction in inventory, and a 10% reduction in overhead costs.
Some of the aspects of becoming lean were fairly easy to implement: keeping tools in an easily accessible location, for example. Others, such as reviewing inputs, have been more complicated.
“We feel we are only just beginning to develop the momentum we would like, and we still have a long way to go,” Goddard told Manufacturers ’ Monthly. But it has been exciting to see tangible benefits flowing from the improvements. We are still facing pressure from imports, but with the increased capacity and reduced costs we can start looking at new products and new markets.”
Focus on processes
Another firm that has reaped the benefits of a lean manufacturing program is boat-builder Riviera Marine, a Gold Coast-based company that specialises in luxury motor vessels. The focus of the program was on adding rigour and controls to existing manufacturing procedures and implementing new procedures. The company aims to eventually increase its production from about 400 to 500 boats.
“We have seen significant improvements in throughput and inventory reduction,” said Bruce Sohier, Riviera’s planning manager. “But anyone looking at lean manufacturing as an overnight solution, some sort of magic bullet, is in for a shock.
“It’s a matter of a 1% increase in a certain area, another 1% in another area. But it adds up across the enterprise, and over time it brings you up to global standards.”
Sohier notes that the changes have also allowed the company to focus more on quality. “We used to be a builder of world-class boats,” he said. “Now we’re a world-class builder of boats.”
Riviera was advised by QMI Solutions, a not-for-profit organisation backed by the Queensland government. Aside from providing advice directly, QMI offers a five-day workshop called the ProEdge Manufacturing Excellence program, which covers issues ranging from factory layout, product documentation, an inventory management system, development of standard operating procedures, visual planning and performance systems, and quality control improvements.
“At QMI Solutions we recognise the great importance of getting an organisation’s practices right before focusing on adopting improved machinery, equipment and other ‘hard’ technologies,” said Ken Porter, CEO of QMI Solutions.
“It is for this reason we have coined the phrase ‘soft’ technologies to refer to organisational practices. “The challenge for small and medium-sized enterprises is to find those new technologies that not only improve efficiency, and therefore productivity, but also help plan the journey to become world class. To really excel, they need to extend themselves beyond short-term visions and focus on filling the ‘soft’ and ‘hard’ technology gaps.
“We have also been working on establishing benchmarks, rating Australian companies against world best practice, as a means of gauging and monitoring improvements. The figures underline the point that sustaining improvements in performance requires new thinking across the organisation, not just commands from the top,” Porter said.
Wary of pitfalls
Clearly, then, the decision to move to lean should not be taken lightly: it effectively involves a remaking of the enterprise and its culture in a long-term program. Moreover, any company looking at lean manufacturing has to be aware that care must be taken in communicating the purpose and details of the project.
“There has been some resistance from employees about the adoption of lean manufacturing methods,” said Onsman. “This has mainly come from misconceptions that it means ‘lean and mean’ – as in downsizing the company and shedding jobs.
“In fact, it’s just the opposite: improving the company to both ensure its survival in a competitive global environment, and underpin the company’s future growth. When that is explained and demonstrated, the resistance usually evaporates.
“In theory, there might be some concern from managers that lean manufacturing, especially because of the low inventory involved, makes a company vulnerable to industrial action. In practice, I’ve never encountered it.
“The unions in the manufacturing sector are generally supportive of lean manufacturing, because they see it as a way of ensuring the survival of manufacturing companies. Being able to respond to customers quickly and efficiently is seen as a way to fight the rising tide of imports. Better a lean company than no company at all.”
For those manufacturing companies that have not yet looked at moving to a lean system, the options are either adopting it by choice or adopting it under pressure – but ignoring it is not on the list.
Over the next few issues, AFDEC Chairman Adam Fletcher provides an overview of the inventory management methods and business models used by electronic component manufacturers and their franchised distributors.
Franchised distribution is a customer service business: franchised distributors must provide the goods and services their customers need at the right price, in the right quantity, to the right quality standard, at the right time and in the right place.
Franchised distributors only really have two assets: inventory and people.
Inventory is only an asset when it is 'turning and earning', the moment this stops inventory becomes a liability. As a result franchised distributors continue to invest heavily in inventory management software, automated systems, skilled people and processes in order to effectively manage this asset. Of equal importance is the warehouse environment and personnel responsible for the inventory QA inspection, location, retrieval, modification, packaging and dispatch.
Cost factors
Many distributors fail to fully understand the true cost of inventory holding to their organisations. Their assumption is that it is a simple calculation of inventory value and the cost of borrowing money. Whilst this is in part correct, it doesn't account for the warehouse facility, taxes, insurance, obsolescence/shrinkage and material handling factors that add significantly to the overall cost. This is all the more surprising, given that the operation of franchised distributors is relatively easy to financially model compared to that of a manufacturing organisation.
For franchised distributors the large proportion of activity (cost) is based around the management of inventory, making it possible to reasonably quickly and accurately determine the real cost of holding inventory.
Counting the cost
Let's examine each cost factor and determine a theoretical cost of ownership model for a UK based franchised distributor, 'ABC Distribution', see table.
This quick calculation shows that the cost of inventory ownership for ABC Distribution is 31% or £0.31 for every £1.00 of inventory over a 12-month period. In fact this is at the low end of the cost of ownership range, which is typically between 30% and 50%.
The increased use of 'lean manufacturing' programs by original equipment manufacturers (oems) and contract electronic manufacturers (cems) over the last twenty years has effectively pushed electronic component inventory back down the supply chain. This has resulted in cost saving benefits for the oems and cems who have been able to reduce their raw material inventory accordingly. In turn, many electronic component manufacturers have concluded that a direct engagement with these oems and cems, with their constant manipulation of a weekly material requirement, is much better served via their franchised distributor.
Swings and roundabouts
Whilst this has resulted in additional business for many franchised distributors, they now also have the responsibility of meeting their customers' production requirements with a 100% service level from their inventory. Oems and cems have significantly improved their manufacturing cycle times over the last ten years, reducing both their work in progress and finished good inventory, but they've struggled to accurately forecast their end-customer demand and therefore their manufacturing demand. This inability to forecast end-customer demand has led to significant oscillation in their material requirements with franchised distributors having to manage both large upside and downside demands.
For a franchised distributor, making the correct analysis of electronic component demand across their customer base (in close cooperation with the component manufacturer) is essential if favourable 'inventory turns' are to be achieved. If they get the analysis wrong, a lot of expensive inventory remains in their warehouse facility with the high cost of ownership described above and the capital invested in the wrong inventory mix may have an 'opportunity cost' if other sales opportunities have been missed.
This is cost penalty is compounded when additional investment has to be made in inventory in a bid to recover the situation, and if the 'slow turning inventory' has to be disposed of.
All parties in the supply network are attempting to optimise both their physical inventory and their inventory management procedures. Inventory reduction is a major contributor to improved financial performance, hence my title for this series of articles: 'Inventory is evil'.
College offers sessions on lean manufacturing
BY ANDREA HOLECEK
holecek@nwitimes.com
219.933.3316
This story ran on nwitimes.com on Saturday, March 4, 2006 12:04 AM CST
SOUTH HOLLAND Businesses can't afford not to use lean manufacturing techniques being taught at the Lean Academy if they expect to succeed in a competitive market, according to the program's supporters.
"It's saved us a lot of time and money," said Ron Mika, quality manager for T&B Tube. "I absolutely endorse it."
Lean manufacturing is a way to change management and workers' attitudes about their work in order to eliminate waste -- in time or materials -- during the manufacturing processes.
"Lean production is aimed at the elimination of waste in every area of production, including customer relations, product design, supplier networks and factory management," according to the Production System Design Laboratory at the Massachusetts Institute of Technology.
"Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible."
South Suburban College and the Chicago Manufacturing Center created a Lean Academy to teach this manufacturing philosophy to businesses and individuals wanting to increase productivity and quality of product and services. New sessions begin Wednesday at SSC's South Holland campus.
"This is the second time we're running the Lean Academy," said Denise Rzonca, the college's director of economic and work force development. "It's relatively new, but kind of cutting edge."
Most of the program's participants are from local manufacturing businesses, she said.
"But it can pertain to manufacturing, service or office-related personal," Rzonca said. "It can be used any place you can apply that lean mentality into your business."
Mika, of Calumet City, has been involved in lean manufacturing for six years and wants everyone at T&B to learn its methods and understand its message. The South Holland steel tube manufacturer, owned by Jack Jones of Munster, employs 65 workers and many of them have attended or will attend lean manufacturing sessions.
"We're sending more people to classes, more shop people, operators and assistants. We'll send as many as we can afford to lose for a day," Mika said. "But we can't afford not to do it because, if you don't, it's costing you money that can be your profit."
For T&B, the process has produced tangible results.
"It's changed people's attitude about their work to make things better for them and the company," Mika said. "It's a cultural change. Everyone has to change their way of thinking and be open to new ideas.
"We send shift supervisors and shop-floor employees. They come back with a new outlook on what their areas can be. A supervisor came back and reorganized his area and saved us money on replacement parts."
RONNY RODRIGUEZ, team member at NUMMI auto plant in Fremont, works on the frame of a car. About 1,600 vehicles are made a day at the plant. (YUKI SAITO-MILLER - Staff)
FREMONT — AS U.S. auto industry giants Ford Motor Co. and General Motors Corp. slash jobs and close plants, the last major auto plant in California keeps rolling out low-cost, fuel-efficient cars.
And it has not had a layoff since it opened in 1984.
The New United Motor Manufacturing Inc. plant in Fremont, a pioneering joint venture between Toyota and General Motors, built 417,505 cars and trucks last year and plans to make 425,000 in 2006 to keep up with demand.
Inside the sprawling plant along Interstate 880, welding sparks shoot into the air like fireworks as workers with protective head shields help fasten fenders, doors and other parts to cars. The squealing assembly line and crashing sounds of steel require workers to wear earplugs and hearken back to another day. More than 5,500 workers and 650 robots weld, paint and assemble the cars and trucks on the 1.5-mile line.
At a time when the big U.S. carmakers are slamming on the brakes, the only major U.S. auto plant west of the Rocky Mountains appears to have a vision. It builds cars that sell. Those would be the smaller, modest Toyota Corolla, the light Toyota Tacoma truck and the compact Pontiac Vibe.
The plant never made those hulking, gas-guzzling SUVs that are partially to blame for Ford's announcement in January of a gut-wrenching overhaul of its business model. Ford will fire about 30,000 workers and close 14 plants in the next six years. In 2005, it lost
$1.6 billion In North America and saw its market share shrink. In November, GM said it would fire 30,000workers and close up to 12 facilities by 2008. It lost $5.6 billion last year in North America.
The historic NUMMI joint venture - the first of its kind on U.S. soil between a Japanese and an American carmaker - is something of an industry gem. Its secret to success, besides the common sense of building small cars and trucks that are in demand, has been its good labor relations and adoption of Toyota's "lean manufacturing" techniques. Referred to as the "Toyota Production System (TPS)," it is steeped in Japanese business lore and terms that stress and lay out a road map for quality, efficiency and production advances.
Of course, the plant is not perfect. Despite its high marks for efficiency and building quality cars, NUMMI officials recently had to rededicate their efforts to teach workers the system that is responsible for its reputation.
In 2002, during a new model year for the Toyota Corolla, the plant got a "wake-up call," said Ernesto Gonzalez-Beltran, NUMMI's vice president of manufacturing operations. NUMMI had hired nearly 1,000 new people to help build the new model, but the launch did not go as smoothly as expected.
The "tribal knowledge" about lean manufacturing had not been passed down to the new workers, and even some veterans needed a refresher course. They received one in the past two years.
"We had a difficult time getting vehicles off the line," Gonzalez-Beltran said. "A lot of older guys were gone, and a lot of folks didn't understand the system."
So they revved up the system that embraces Japanese terms such as "kanban," which allows for the efficient just-in-time delivery of parts to the assembly line, saving the cost of warehousing parts.
Kanban minimizes the number of parts on the line, so there is more room and less clutter for busy assembly line workers.
"Kaizen," another TPS term, means continuous improvement, and a push to make workers' jobs quicker, easier, safer and less costly.
There is also "jishuken," which refers to problem solving. It has spawned worker groups examining the plant's car-building quality, safety and productivity. And these groups have the authority to create change.
"We've seen significant improvements in safety and production," Gonzalez-Beltran said. "We're running the production line faster and more efficiently." Because of such focus, the NUMMI plant and its workers continue to grow while the U.S. auto industry slows down. In the late 1990s, the plant produced an average of 360,000 cars and trucks per year. Production is up 18 percent since then.
The push to reteach lean manufacturing also has been good for some workers.
"We're making the production line better," said Edwin San Pedro, a former welder who is now a safety representative in NUMMI's body shop. "It's making the workers feel better and safer."
One move eliminated five seconds of work time and the hardest weld workers had to make. A robot was brought in to make an overhead chassis weld that required workers to twist their backs.
The plant sped up the assembly line by one second recently. That has been done five times in the last three years.
The plant makes 960 cars a day and 650 trucks. A finished car comes off the assembly line every 55 seconds, and a truck rolls off every 81 seconds. It takes 61/2 hours to make a car at NUMMI.
Toyota just celebrated producing its 15 millionth vehicle in North America. The first one was built at NUMMI, which has made 4.5 million Toyotas in Fremont as well as another 1.7 million GM cars.
Toyota now has two other U.S. auto assembly plants - in Georgetown, Ky., and Princeton, Ind. - and will open another one later this year in San Antonio, Texas.
"The NUMMI plant found a niche, and it works well," said Paul Eisenstein, publisher of TheCar- Connection.com, an online auto industry magazine. "It's a place where the two largest carmakers have a common ground, and communicate and see what each other's doing." It also produces some high-quality cars, he added.
The venture is 50-50 owned by Toyota and GM. It is an independent, private company and is profitable, according to company officials. But the joint venture does not release profit information.
While California is the biggest car market in the nation, autos from NUMMI are shipped throughout the country and world. Its location near the Port of Oakland is strategic, and so is Toyota and GM's commitment to California, considered a bellwether state for car sales.
General Motors is no stranger to the Bay Area. GM previously had a plant on the NUMMI site in Fremont, but GM shut it down in 1982, some 20 years after it opened. About 4,000 local employees lost their jobs in that closure. In 1983, Ford closed its auto plant in Milpitas, which previously had been in Richmond.
The NUMMI factory is helping both Toyota and GM, and they do not plan on ending the marriage in California, said GM spokesman Dave Barthmuss.
"The plant is more than about building great cars," Barthmuss said. "It's set up so we can experiment, study and learn about the manufacturing process from one another."
Which raises the question: Why hasn't GM learned enough in more than 20 years at NUMMI to right its own ship?
Barthmuss insists that the venture has been a boon to GM. He points out that many of the techniques learned have translated into improvements in productivity and vehicle quality.
"Our market share is shrinking, but we still are No. 1 in U.S. car sales," he said.
But GM has another problem: A generation or two of car buyers does not trust the GM brand. They do not have confidence in the improvements, even if they were documented recently in strong quality ratings against Japanese automakers by respected car industry analyst J.D. Power and Associates.
"They have their manufacturing act together, but the problem is the reputation," said Dan Gorrell, auto industry analyst with Strategic Vision, a San Diego market research firm. "It's a question of how to unravel the sins of the past."
Sins such as cars that did not measure up to Japanese vehicles in quality or customer satisfaction.
Tom Libby, director of industry analysis at J.D. Power, said GM has improved substantially in the past few years.
"Their quality is competitive with (Toyota and Honda)," Libby said.
But there is a perception that its quality is not as good as those competitors.
The company also has emphasized discounts to sell cars. So it has to lower costs to become more profitable, Libby said.
That is why, as the U.S. car industry stalls, NUMMI's drive to build cost-effective, high-quality cars remains its key to the future.
"We build cars that sell," said George Nano, president of Local 2244 of the United Auto Workers union, which represents most NUMMI workers. "The workers are dedicated to building great vehicles."
Nano helped negotiate a new four-year contract in August that solidifies jobs for NUMMI workers, gives them raises and clears the road for continued success.
That push for fuel-efficient, lowcost cars "makes us less susceptible to the ups and downs of the economy," said NUMMI spokeswoman Rhonda Rigenhagen. "We can't build enough. We have to work overtime and on the weekends to keep up with the demand."
One day last month, the NUMMI factory planned to build 160 cars by 10 a.m. But a number in bright lights on a mock scoreboard showing plant efficiency indicated that 154 cars had been produced. That was 97 percent efficiency and is considered good. The plant usually runs 95 percent or higher in efficiency, Rigenhagen said.
It costs $12,000 a minute to stop the assembly line, so the plant runs almost continuously for two shifts a day starting at 6 a.m. When the line stopped that Thursday, a blaring horn honked like a London police car, and managers swarmed to the site of the necessary standstill.
The workers stopped. So did the robots, which hoist car seats into passing auto bodies, lift hefty chassis onto frames, and drop engines into cars and trucks.
In less than a minute, the humming assembly line cranked back up after a welding robot was adjusted. The next critical shift at NUMMI is a new model change, planned for 2008. That is when the Vibe and Corolla will go through either a metamorphosis or some significant modifications.
The companies are not talking about details, other than the continued focus on fuel efficiency as well as some design changes.
Toyota and General Motors design the cars, which are built at NUMMI. Regardless of the automakers' plans, the usual goal is in place for NUMMI. That is to make production, safety and quality the best, since NUMMI cannot be the best on cost while operating in California.
"It's very expensive to have a production plant in California," Rigenhagen said. "It costs 30 percent to 40 percent more to make cars here, so we have to be really, really good."
Competitors in cheaper states have lower energy costs, lower real estate and labor costs, and less workers' compensation to pay.
"The aim is to figure out how to close the gap," Rigenhagen said.
