Change: Warehouse eliminated, replaced by component sequencing stations
Initial savings: Several million dollars
Bonus: Worker morale rose 28 percent
Performance benefit: Job quality rose 9 percent, warranty costs fell 26 percent
Overhead savings: More than $12 million a year
Source: RWD, Ford
The Troy, Mich., consulting and training firm isn’t supplying parts to Toyota. It is supplying parts of Toyota to the rest of the U.S. auto industry.
“Our role is to help companies that want to implement lean manufacturing practices,” says Dan Slater, president of RWD’s manufacturing and performance systems group. “Companies today may know all about lean principles. But they might not know exactly how to get there from where they are today.”
With a small army of 80 “lean advisers,” RWD has been attempting to train companies in the manufacturing practices developed primarily by Toyota Motor Corp. Fundamental to those practices are inventory elimination; waste reduction; constant improvement of work routines; and the solicitation of ideas from workers on product and process.
It is a growing field for U.S. automotive consultants. After nearly two decades of contact between the Japanese auto industry and the North American manufacturing community, there is now a sizable pool of U.S. managers equipped to teach the Japanese way to other American companies. The University of Michigan has a “lean manufacturing” program established to help Great Lakes businesses.
Former MIT professor James Womack, whose team coined the term “lean” in the 1980s, now runs the Lean Institute in Brookline, Mass., aided by former Toyota managers.
Womack’s group conducts seminars at which manufacturers in different industries can analyze the way cost moves through their manufacturing stream, to help identify and eliminate waste.
Utah State University’s College of Business manages the Shingo Prize program, which singles out manufacturers who have best successfully adopted lean manufacturing practices.
5 years at FordRWD made the transition into the new lean-teaching wave after starting as a training consultant firm, originally based in the Baltimore area. Last year RWD signed a five-year contract with Ford Motor Co. to help expedite the lean drive at Ford’s Chicago assembly plant, where the company builds the Ford Taurus and Mercury Sable.
Ford has been pursuing lean practices throughout its factory network for more than a decade. Even in the late 1980s, Ford had adopted such lean techniques as plant quality circles, which were designed to empower hourly workers to look for operating improvements on the line, and andon cords, installed to allow workers to stop the production line instead of letting glitches pass downstream.
RWD’s directive from top Ford manufacturing executives was simply to see if Chicago could speed up the process.
“Their idea was to pick out a plant that could have the whole process accelerated,” Slater says. “We were selected to go in and look at the total management of the plant, working with both the top management and the hourly workers, looking for ways to eliminate waste, eliminate repair lines and rework areas. We’ve worked on the body, paint, assembly and material areas.”
No more warehouseOne payoff from the effort: Ford was able to reduce enough inventory to eliminate an on-site warehouse. Slater says that saved $7 million; a Ford spokesman said that figure sounded “a little high,” but said the closing saved “several million.”
The lean campaign triggered other changes at the plant, according to Slater: While the union local initially feared the efficiency push would bring job cuts, the reorganization required the plant to create sequencing positions to guarantee inventory was being delivered smoothly in the production schedule. Worker surveys actually found a 28 percent boost in plant morale at Chicago. The helped push up the plant’s quality measurements by 9 percent and that, in turn, improved its vehicle warranty repair numbers by 26 percent.
According to Slater, those gains represent plant savings of about $12 million a year; the Ford spokesman said the figure was “in excess of $15 million.”
The transplant classSlater’s appearance at RWD mirrors the moves of other Japanese transplant factory managers in recent years. Slater began his career soon after high school as an hourly assembly worker in Ford’s Lorain, Ohio, car plant in 1974. Two years later he took a job with Volkswagen’s U.S. plant in Pennsylvania, where he worked in body assembly for 10 years. In 1986 he became one of the first 200 people hired to start Toyota’s U.S. automaking project in Georgetown, Ky.
That was an initiation, Slater says. Traveling to Japan to train in the Toyota Production System, Slater saw how Toyota operated its plants and also how its Japanese suppliers operated under the same system of rules. He observed that Toyota put a big emphasis on worker training and responsibility, and focused on shop floor communication and teamwork.
All of those concepts were somewhat counter-intuitive, “soft” ideas in an era when carmakers were seeking technology-based answers from robots and computers. But the smooth-running Toyota supply chain appeared to be testimony that such a low-tech approach worked.
A decade later, teaching the ideas in private practice now, Slater admits the concepts still meet resistance from U.S. managers. The idea that manufacturing costs can come down and quality can improve by eliminating waste and focusing on such soft issues as employee safety still confounds some.
‘Boot camp’RWD recently led what it called a “boot camp” of two dozen U.S. plant managers through the Battle Creek, Mich., plant of Toyota supplier Denso International Inc. The realization over five days of observation that lean is total plant culture, not just one more item on a to-do list, left some of the participants emotional, according to Slater.
He recalls one participant testifying at the end of the session: “I never realized that the most important thing in a plant is the safety of my people. If I’d realized that, I might have prevented that person from being injured.”
“It’s not an easy thing for some companies to accept,” Slater says. “I get calls from people who want to quickly fix a bottleneck in their system somewhere with a ‘lean fix.’ They want to cherry-pick a lean manufacturing practice without considering the entire lean culture.
“They’re really wasting their money,” he adds. “Operating lean is an entire approach to how you manage your operation. You can’t change one aspect and leave everything else the way it was. Eventually, you’ll just end up right back where you started.”