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Is Your Plant Globally Competitive?

Every day brings news of another manufacturing plant moving operations overseas to capitalize on lower labor costs. The fact that an hour of labor and benefits may cost $2-3 in Mexico and less than a dollar in China is a compelling reason to abandon manufacturing here in the U.S. Lower materials costs and less restrictive government regulation can also tip the scale in favor of offshoring for many.

But some companies are rethinking the strategy of chasing the lowest wage rate. By learning how to eliminate costly, hidden inefficiencies in their own operation and tap the creativity and motivation of their workers, many manufacturers have been able to compete effectively in the global marketplace while revitalizing their business - and adding jobs.

A few years ago, a manufacturer of printing supplies laid off three-quarters of its work force -- 850 employees – and moved assembly to Asia. But the hidden costs of offshoring forced them to rethink their strategy. Was it possible to produce in the United States and still compete effectively with Chinese workers making one-sixth as much?

Managers needed to learn how to make products more efficiently. They knew they would have to drastically cut costs, reduce defects and boost productivity. But the workers didn't need convincing, just direction.

By applying a few key Best Practices and building a committed, capable work force, throughput skyrocketed. Quality defects dropped from 12,000 per million units to 250 within three years. As productivity improved and defects dropped, more business was brought in and jobs have been added. By tapping into the innovation and motivation of workers, the factory now pumps out five times as many ink cartridges per worker as its sister plant in China.

More and more companies are embracing the twin essentials for global competitiveness in manufacturing: Process Efficiency and People Effectiveness. Process Efficiency involves the continuous effort to eliminate manufacturing waste – those non-value-adding activities that add huge, but often hidden, costs to an organization. Proven methods that prevent defects reduce the cost of finding and fixing them. Fewer errors mean lower rework costs. Strategies that improve process reliability eliminate the costs of downtime, late shipments and work-in-process (WIP) inventory. Process efficiency drives out cost and delivers a better product in less time.

People Effectiveness involves the capability and commitment of the work force. Learning about and applying Best Practices in their own areas of responsiblity, associates develop confidence - and commitment - to achieving an organization's goals. Rather than 20 problem-solvers, you can have 200, all looking for root causes of failure and improved work methods. The combination of a skilled, motivated work force and a strategy for applying Best Practices is a powerful competitive weapon.

Increasing Asset Utilization

A few years ago, a major home appliance manufacturer began facing fierce competition from Chinese manufacturers looking to establish a foothold in the American market. It was the largest manufacturing plant of its kind in the world, but they knew they needed to do things differently or face falling market share and shrinking profits.

The plant’s improvement plan involved two key components: maximizing both the reliability of its assets and the contributions of its work force. The strategy was to make production operators and maintenance technicians jointly accountable for equipment effectiveness. Cross-functional teams were set up spanning all shifts, focused on a critical piece of equipment. The teams were trained in the principles of team-based maintenance, which involves:

  • Monitoring and maintaining equipment conditions
  • Developing a comprehensive Planned Maintenance system
  • Continuous identification of improvements
  • Group problem-solving using root cause analysis

Rather than involvement for the sake of involvement, operators perform PM tasks such as cleaning and lubricating the machinery, changing belts and hoses and monitoring heat strips and gauge tape. They also handle many predictive maintenance tasks. Shifting many of the maintenance functions to operators has allowed operators to take more “ownership” of the equipment. This, in turn, allows maintenance technicians to focus more on activities that actually prevent mechanical failures.

As a result of the combination of improvement tools and associate involvement, asset capability rose from the mid-60% range to the mid-80s in just three years. Not only has this increased plant competitiveness, but it has energized the work force to continue improvement efforts.

A contract manufacturer of precision machined components for heavy equipment industries has successfully captured market share by utilizing the same concepts. By developing a passionate commitment from the work force for Continuous Improvement and Process Reliability, the company has been able to double its business in just three years. For makers of machined parts, it bills itself as an alternative to offshore manufacturing.

Their ability to excel at both Process Efficiency and People Effectiveness has enabled the plant to grow the business utilizing existing floor space and add jobs here in the U.S. Understandably, employees are proud of their success and enjoy a high morale, high-energy work environment, which helps sustain the drive for new ways to produce product better, faster and cheaper.

Aligning Multiple Shifts

Recently, Granite Bay was called in to do an Operational Assessment for a bulk chemical manufacturer in the Midwest. The plant manager was frustrated over that fact that the 4 crews in this 24-hour-a-day operation weren’t working together to solve problems and meet aggressive performance goals.

Operating procedures varied by shift, causing quality and yield losses; shop floor operators and technicians were “disconnected” from the goals of the business; performance improvement was slow and temporary; and processing lines were frequently shutting down, creating a chaotic work pace.

Granite Bay conducted a week-long Operational Assessment on all shifts and benchmarked the operation against our database of other facilities in their industry. Informal interviews were conducted with operators, techs, supervisors and line and staff managers and an Action Plan was developed with the following objectives:

1. Focus the entire plant around a common set of goals;

2. Engage all shifts to participate in process improvement;

3. Coordinate the efforts and activities across all shifts to accelerate the rate of improvement

It was critical to find a common objective that would mobilize and energize the entire organization. The Assessment revealed that significant operating capacity was idle due to inefficiencies and waste in the manufacturing process. Late shipments and firefighting resulted in orders lost to competitors and sister plants.

As part of our Accelerating PerformanceTM process, we challenged the entire organization – from plant manager to operator – to recapture this volume by focusing on removing “waste” from their processes. For the first time in years, everyone rallied around a key objective: to identify and eliminate all forms of waste in order to bring volume back to their facility. The excitement was contagious as teams began working together, with focused leaders, and supported with practical, hands-on training in how to apply Best Manufacturing Practices.

Within 6 months, the plant freed up an additional 12% of capacity. Changeover times were reduced by half in some cases. Yield losses dropped by nearly two-thirds. Equipment uptime increased by 30%. Shop floor employees and their supervisors actually looked forward to coming to work. Over time, volumes began to increase and within a year, profitability nearly doubled.

But the most amazing change was in the people. They began to notice waste and non-value-adding activities that were invisible to them before. They developed a passionate intolerance for inefficiency and began forming ad hoc teams to eliminate waste wherever they found it, usually without management intervention.

From the plant manager: “We’ve always said, ‘it’s better to ask for forgiveness than permission.’ Our people are real fired up about their jobs and our plant now. It brought back a level of pride we haven’t seen in years.”

Lower Lead Times = Lower Costs and Higher Profits

More recently, Granite Bay was called in to solve the problem of long lead times and a huge work backload at a 50-employee job shop. Lead times were running at 14 weeks and expanding. Work-in-process inventory was 12 percent of sales and was creating problems with both cash flow and shop floor organization. With raw materials being shipped from overseas, lead times were measured in weeks, with materials shipped in large quantities to reduce transportation costs.

The factory flow was typical of a labor-intensive job shop, where each order was custom-made. There were few performance measures in place, with no data on first-pass quality, equipment reliability or on-time shipments. And the things that were measured weren’t shared with the shop floor.

Because of the labor-intensiveness of the work, it was essential to engage employees in the process of improving the operation. We quickly realized that the list of improvements required to bring this factory to world-class standards would be enormous. We had to articulate a compelling vision and a common-sense strategy that would yield the improvements needed while bringing employees on board as eager participants.

The focal point became Lead Time Reduction. It was the single objective that tied all of the other performance goals together, and it was something that every employee could personally influence. Overall manufacturing lead time could be broken down into its components by area along the process route. Each team could analyze its own lead time component and identify innovative ways to squeeze time out of the process while making their jobs easier, safer and more enjoyable.

Granite Bay worked with managers and associates to apply several Best Practices, including Cells, In-Process Quality, Plant Organization, Goal Deployment and World-Class Performance Measures. The goal was a 50% reduction in lead time and an 80% reduction in first-pass quality defects within 6 months. We were committed to helping employees develop a greater sense of pride in their work and more confidence in their ability to drive future performance improvements. 

We'd like to add your plant to our Success Stories!

If you need faster improvement, more engagement and a plant-wide focus on business objectives, we'd love to hear from you!

Contact us or submit a brief questionnaire describing your challenges and we'll be happy to discuss your situation and suggest some solutions, free of charge.

GRANITE BAY GLOBAL - 916-797-2263 - email
P.O. Box 2514, Granite Bay, California 95746 USA

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