Freudenberg-NOK to train suppliers

CEO says suppliers will jump on board or lose business

Joseph Day, CEO of Freudenberg-NOK, said Tuesday he will use his employees to train the company's entire supply base in the Toyota Manufacturing System, or lean manufacturing.

2001 Management Briefing Seminars index
The costly move follows the supplier's massive supply chain consolidation, in which its vendors were reduced from 430 to 110. The consolidation was designed to make Freudenberg-NOK's supply chain more manageable and help reduce waste. The Plymouth, Mich., company supplies sealing packages and components for suspension, electrical and fuel systems.

Day said Freudenberg-NOK has guaranteed its remaining suppliers 100 percent of its business if they get lean. Suppliers unwilling to meet the company's demand will be dropped from its supply base.

Of the $100 million Freudenberg-NOK estimates it spends on waste annually, $40 million comes by way of vendors, he said. Examples of waste include idle machine and labor costs, unnecessary equipment costs and low-quality products.

Automakers and Tier-1 suppliers spend millions of dollars "to drive lean (practices) into their organizations," Day said. But smaller suppliers — under $75 million in size — that make up most of Freudenberg-NOK's supply base, lack initiatives to sponsor a full-scale lean training program.

Speaking at the Management Briefing Seminars in Traverse City, Mich., Day said Freudenberg-NOK has already trained 35 of its suppliers to meet its lean manufacturing specifications.

The company is extending its in-house training to its remaining suppliers, and it expects them to sign up.

Day declined to say how his company would finance the training and couldn't give a starting date for the program.

Tatsuro Baba, a general manager with Chiyoda & PAC Co., a firm that provides automakers and suppliers with lean manufacturing training, said Freudenberg-NOK is undertaking a major and costly task.

He said such training can take three to nine months and cost as much as $1.5 million per plant, depending on the extent of work needed. His estimates are based on work done by a fully staffed consulting firm and not on in-house training.

Freudenberg-NOK ranks 43rd on the Automotive News list of the top 150 suppliers to North American automakers with $960 million in sales in 2000.

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