TBM OpEx Review December 2012

OpEx Review

December 2012 | Issue 5

Issue Focus:

A TBM Consulting Group Publication

Operating on a Global Scale

‘Unreasonable Ambition’ Puts Alstom on the Fast Track for Growth Operational Excellence with clear business objectives should pay back more than just incremental, plant-level improvements.

In 2006, maintenance issues on a new fleet of trains that Alstom Transport had introduced for Virgin Trains were causing them to miss availability targets. To turn things around, Alstom used lean techniques—rapid changeover tools and policy deployment, in particular— to transform its maintenance practices. Policy deployment, also known as strategy

deployment, translates business goals into specific, measurable actions.

The company’s primary goal: Immediately improve train availability for Virgin and grow sales within Alstom Transport’s U.K. and Ireland operations by 100 percent over a five-year period.

realization that we needed to find a new way of working, a new way of operating,” says Tim Bentley, managing director of Alstom Transport.

“So it’s a realization and understanding that the way we’re going to do this was not a traditional top-down telling people how to do stuff.”

“We had come quickly to a

(continued on page 4)

Also in this issue: 2| Culture: Embedding Global Excellence 2| Garment Industry: Lean-Driven Sustainability 7| Leadership: Driving Success at Big Companies 10| Q&A: MANN+HUMMELL’s Fast Transformation

www.tbmcg.com

Leading Thoughts

Global Supply Chain

December 2012 | Issue 5

Create a Global Culture of Excellence Whether a plant is in Detroit or Toyota City, Seoul or Stuttgart, auto manufacturers try to build vehicles the same way in every location. Not only does this enable the most efficient assembly methods to be replicated everywhere, it lays the groundwork for future advances.

Operational Excellence programs at large, global organizations need to be developed and rolled out in the same way.

There has to be a consistent philosophy that says, “This is how we do business improvement. These are the metric definitions that we use. This is our methodology. These are our tools.

This is how we engage our people.” Such an approach will create a common language that makes it easier for everyone to share both what works and what doesn’t.

Besides taking a unified, global approach, business leaders cannot lose sight of business fundamentals, and must maintain a balance between working “on the business” (the strategic breakthrough objectives) and working “in the business” (their operative implementation and day-to-day measures of success). A global operational excellence program won’t be successful if it creates only isolated pockets of excellence that don’t have a meaningful impact on the overall strategic direction and financial performance of the corporation.

In addition to work discipline, a collective will to succeed and generate results is indispensable. How those results are achieved will reflect and build the culture that business leaders are trying to create.

After all, you’re not just trying to achieve targets and solve problems. You are creating problem solvers. The more problem solvers you create, the more successful you will be.

Richard Holland is Vice President and Managing Director of TBM Europe. He can be reached at rholland@tbmcg.com, +44 077 1732 1481.

Send OpEx newsletter feedback and story ideas to opex@tbmcg.com.

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Can Lean Transform the Garment Industry?

Skeptical Companies Become Believers

By M.L. Phan Momentum to improve sustainability in the global garment industry is gaining speed, and lean management is poised to become a key enabler of change. Although some professionals remain skeptical that lean will “work” in the garment industry, TBM and its clients are proving otherwise: A lean Operational Excellence strategy reduces waste, improves working conditions and increases profitability for garment manufacturers.

Aiming for a Greener, More Profitable Future Sustainability in the garment industry refers to environmental and social protection, as well as supplier viability, and addresses concerns that have peaked during the past 20 years as supply chains realigned geographically in response to looser trade rules. Many of today’s top exporters are Asian countries, where suppliers make clothes, shoes and accessories for popular brands. The industry employs more than 30 million people globally (mostly low-income women) and is growing as buying power increases in highly populous countries such as China, India and Indonesia.

But suppliers face ongoing challenges that could hold back wages, capital improvements and other investments as the world’s wardrobes expand: high worker turnover, low productivity, tight profit margins, escalating labor costs and fierce competition as new producers jump into the expanding industry.

“In Indonesia, labor cost increases every year, especially in Jakarta,” says Marinee Yuprapan, Director at Sumbiri, an Indonesian women’s clothing manufacturer that is participating in a customer-sponsored lean-improvement project at its bra plant in Jakarta. “This year [labor costs] increased by 30 percent. With that expected to continue every year, the only way to stay competitive is to become more lean, remove waste around production, and make ourselves more efficient.”

TBM began working with Sumbiri on a lean implementation at the bra plant this summer. Although the effort is still young, the plant has benefited from

Global Supply Chain, continued

Industry Coalescing Around Improvement Another factor opening the door for a lean revolution in the garment industry is an increasingly cooperative effort by major brands to find sustainable solutions. Emblematic of this is the 2011 formation of the Sustainable Apparel Coalition, with a membership list that reads like a shopping mall directory and represents about a third of the world’s garment sales.

decreased WIP (down 30 percent), improved quality (up 16 percentage points), increased productivity per employee; and decreased employee turnover.

Yuprapan says she was initially skeptical that lean would work—and realizes many challenges remain—but she said she is now convinced that lean management can benefit the garment industry.

“I wasn’t buying into lean and neither was the owner [of the company],” she says. “We thought: We know better.

We have been in the garment industry a long time; you have not been. How do you know what we are going through? I went to see a few factories in the garment industry that do lean.

Looking at it with my own eyes, I realized that lean could apply. The possibility in garment is there. So we decided we should give this a chance, especially since the customer is supporting the cost. Even our factory manager was pessimistic. But it’s a completely different feeling now.”

Company leaders at India’s Gokaldas Exports Ltd. (GEX) were skeptical of lean as well, but the company now embraces lean Operational Excellence after launching a plant-by-plant transformation in 2008. GEX’s goal was to improve worker productivity without adding resources, and at the urging of a major client, asked TBM for assistance. In the first year, the program was instituted at four plants and resulted in a cost savings of $2 million; on-time delivery improvement from 80 percent to 90 percent; first-pass yield improvement from 75 percent to 85 percent; an across-the-company productivity jump of 35 percent; and 2 percent revenue growth—during a global recession. This year, the company is increasing revenues at a 6 percent clip despite a decline of 13 percent in garment exports from India.

In August, the Coalition unveiled the industry’s first environmental sustainability standard, the Higg Index 1.0, which has the backing of major brands such as Levi Strauss, Adidas and Nike, plus retailers such as C&A, H&M and Target. Although the current index does not include social and labor components, footwear products and retail practices, these are under development and will be added soon, according to the Coalition.

“I’ve been in the industry for 40 years, and what I’ve seen happen in the last two years in the industry is dramatic in terms of cross-industry collaboration,” says Phil Chamberlain, Director of Sustainability for clothing retailer C&A. “The growth of the Sustainable Apparel Coalition is symptomatic of this. We’ve come together and realize we have a responsibility to move the industry forward in a more constructive and structured way than has been the case so far.” n

The Higg Index 1.0 The Higg Index 1.0 is a tool to help organizations standardize how they measure and evaluate environmental performance of apparel products across the supply chain at the brand, product and facility levels. It is: • A self-assessment tool that enables rapid learning through identification of environmental sustainability hot spots and improvement opportunities; • A starting point of engagement, education, and collaboration among stakeholders in advance of more rigorous assessment efforts.

The Higg Index 1.0 is a learning tool for both small and large companies to identify challenges and capture ongoing improvement. It targets a spectrum of performance that allows beginners and leaders in environmental sustainability, regardless of company size, to identify opportunities.

Source: Sustainable Apparel Coalition, www.apparelcoalition.org/higgoverview

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Case Study: ‘Unreasonable Ambition’ Puts Alstom on the Fast Track for Growth continued from page 1

Client Alstom Transport is part of power-generation and transportation group Alstom, Levallois-Perret, France.

Alstom Transport designs global railway systems for operators, public authorities and passengers. The business unit employs 24,700 people in more than 60 countries.

Alstom Transport processed US $8 billion worth of orders in 2011, with 77.6 percent coming from Europe. Half of Alstom Transport’s revenues come from train sales and half from services, signaling and railway infrastructure.

Challenge Alstom introduced a new train to support Virgin in operating the West Coast Mainline in the UK but delivered a train that struggled to perform. The challenge was in ensuring that 46 trains out of the 52 in the fleet were in service each day. During 2006 they were struggling to provide 38 trains. Trains were shut down during the day to complete maintenance work needed to improve train reliability. This performance was affecting the relationship with the customer and, if continued, could affect contract renewal.

Solution Alstom implemented a policy deployment process to align the organization on what was required to be completed.

At the same time, lean processes were implemented in the business. Initially, the focus was to implement a pit stop maintenance approach to treat the trains like Formula One cars in a pit stop and shorten repair times.

By cutting maintenance times, Alstom could complete the work at night when the trains were not needed rather than during the day. This led to significant improvements in train availability. Ongoing use of the policy deployment process allowed the leadership team to focus then on other improvements needed to significantly grow the business.

Results The company increased availability rate of trains from 72 percent to approximately 90 percent and met its fiveyear goal to grow the business by 100 percent. This was achieved while keeping headcount essentially flat and therefore doubling productivity.

Alstom won renewal of a service maintenance contract with Virgin Trains three years earlier than expected because of its improved service.

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2006: Alstom’s ‘Unreasonable Ambition’ Alstom already had implemented lean process improvement on the plant floor, but a maintenance contract with Virgin’s Pendolino trains on the West Coast Mainline offered another improvement opportunity. In 2006, the availability rate of Pendolino trains was just 72 percent. Alstom faced other service issues, such as faulty air-conditioning units and outof-service toilets. Additionally, crews took six weeks to repair trains involved in minor collisions.

These problems prompted the company to extend lean to the service work for Virgin’s trains on the West Coast line, which runs between Scotland and England. In 2006, Alstom sent directors to LeanSigma® training sessions arranged by TBM. Company leaders defined four objectives during these training sessions: • Meet availability and double reliability • Grow the business by 20 percent • Maintain the current cost base • Provide greater value to the customer Doubling the reliability of the Pendolino trains fit into a concept known as “unreasonable ambition,” says Richard Holland, a TBM managing director in Europe. This means managers are willing to take a risk with the expectation of achieving significant results. Since Alstom decided to double the size of the business, which it achieved, unreasonable ambition became a relative concept.

Culture Change The company identified 15 to 20 potential improvement projects to support the goals, and at some of the five depots along the West Coast line, early wins first required a culture change.

Employees at one of the depots were somewhat resistant to a kaizen event aimed at reducing the time it took to change an air conditioning unit. The maintenance workers didn’t think the kaizen was necessary because they could change the unit in about nine hours, which was a good response time. But they used four people, which totaled nearly one workweek for a full-time position. Also, a spaghetti diagram used during the kaizen showed maintenance workers collectively walked 12 miles looking for tools and other supplies during a unit change.

Case Study: ‘Unreasonable Ambition’ Puts Alstom on the Fast Track for Growth continued

team the detail and corresponding monthly planned achievements,” Holland explains. “The senior leadership team then gets the chance to review their plans on how to achieve and to review the speed of achievement.”

The kaizen team identified changes that would whittle down the distance walked to less than one mile and cut the replacement time to about 2.5 hours. Similar improvements—including the reduction of vehicle repair times from 42 days to just 72 hours at one depot—helped change the mindset of employees.

“When we did make the improvements, we didn’t release any people, which is an important thing,” says Steve Hadfield, an Alstom Transport continuous improvement manager. “We created more work and more hours, and we’ve taken other contracts on. We haven’t used lean to downsize our business. That’s important when you’re trying to [implement] over a long period of time.”

2009: Deploying the Strategy

Alstom created and managed the action plans in an Excel spreadsheet available at its Manchester location for monthly reviews. But this provided a limited, high-level overview of the action plans. A more comprehensive overview was only possible on poster-size paper and could not be viewed in a comfortable format on a computer screen. Additionally, the centralized location of the information created several disadvantages. Offsite managers would have to travel to Manchester for the meetings, often requiring an entire day away from the office. The situation also reduced transparency as changes and adjustments to figures that the team validated during the meetings could be communicated only to the teams onsite and implemented at a later date.

In May 2009, Hadfield learned about a software suite from TBM called Dploy® Solutions. Included in the suite is a web-based tool called Dploy Strategy, which is designed to enable companywide policy deployment across multiple sites and cross-functional teams. One month later, Alstom migrated all the data from the Excel spreadsheet to the web-based strategy deployment module.

Now, annual financial targets and expected actions identified through the catch-ball process are saved directly in Dploy Strategy. This helps ensure everyone in the organization—from the top down to the bottom up—can track and validate specific metrics. (continued on page 6)

One of the tools that Alstom leaders used during policy deployment was the “catch-ball” process, during which the management team “throws” goals, objectives and strategies back and forth throughout the entire management chain.

At Alstom, this chain begins with the corporate level and cascades down through senior management, operations leader, depots and production management, respectively.

During the catch-ball process, management assembles a toplevel company strategy deployment matrix, and then each functional leader works collaboratively with his or her team to establish improvement projects that support the top level.

“Each team works on the details, then on how to achieve the top-level projects, and then presents back to the top OpEx Review | December 2012 | www.tbmcg.com | 5

Case Study: ‘Unreasonable Ambition’ Puts Alstom on the Fast Track for Growth continued from page 5

All division leaders and directors receive automatic notifications through Dploy to update key performance indicators and action plans in the system in preparation for monthly reviews. The system allows all stakeholders to monitor the progress of projects in a bowler chart and take countermeasures when necessary. In addition, Dploy allows Alstom to conduct meetings and reviews as web conferences, meaning meetings do not need to take place in Manchester.

2009-2013: Targets Met, Future Goals In Progress

By October 2009, Alstom had met its primary objectives and was set to raise its unreasonable ambition even higher. The train availability rate increased to 90 percent, or 47 of 52 trains in service, and the business grew by 20 percent.

Alstom’s contract renewal was another major victory considering Virgin accounts for 75 percent of the business unit’s sales.

Alstom Transport also doubled its productivity to meet Virgin’s planned expansion of Pendolino trains from nine to 11.

Alstom’s success with lean has become a benchmarking opportunity for other companies and industries. Alstom has hosted visitors (including a Grand Prix company and the UK’s national rail authority) from across Europe at its Manchester plant to observe the lean processes.

Moving forward, Alstom plans to continue using policy deployment to support a growth strategy, including doubling reliability again and extending its customer base by gaining a new maintenance contract outside the Mainline. Alstom Transport leaders also believe the business unit can increase the availability rate even further.

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“Having delivered our 47 trains from 52 available from our policy deployment and breakthrough process, we believed it was possible to deliver a 48th or even 49th train by using the lean techniques we’ve adopted,” says Richard Woodroofe, operations director at Alstom Transport UK. “So through some lateral thinking an additional two trains in service is in fact possible.” n

Alstom’s Lean Journey 2004–2006 Introduction of Lean Tools and Techniques • • • • •

Demonstrating the power of lead-time reduction Localization of the repair of key components Implementation of visual planning process Point kaizens on critical business issues only Implementation of 5S regime

2006–2009 Structured Approach to Lean • • • •

Introduction of policy deployment Senior management team aligned to strategy Pit stop approach to train maintenance Structured kaizen program linked to strategy

2009–2012 Operational Excellence • Leveraging lean for significant growth • Policy deployment using Dploy software • Implementation of a daily management system

Leadership

5 Attributes of Large Companies with Superlative Value Creation How Big Companies Can Reap Big Benefits from an Operational Excellence Strategy When large-footprint companies embrace an Operational Excellence strategy, they benefit from better performance, both operationally and financially. Figure 1 illustrates how three large-footprint mid-cap companies that have embraced Operational Excellence compare with the S&P MidCap 400® and the Dow Jones Industrial Average. Hubbell, Danaher and Carlisle Companies have had greater share-price growth over the past five years and recovered share-price value faster following the recession years of 2008 and 2009.

Executives at these companies have learned that Operational Excellence can improve how their firms tackle a variety of management challenges: • Increasing shareholder value • Driving profitable innovation through speed-tomarket and effective commercialization • Implementing a consistent management process across a complex organization • Improving execution, flexibility and responsiveness • Funding growth initiatives without excessive leverage • Acquiring and quickly integrating new businesses • Competing with lower-cost regions across the globe

January 3, 2007 – October 1, 2012

OpEx Firms Outperform Major Indices

We have identified five attributes of large-footprint TBM client companies that have used an Operational Excellence strategy to improve cash flow, open capacity, and achieve efficient growth through cost control and value creation.

1. Commitment to a “Critical Few” Goals These goals are customer-focused and will produce meaningful results (as opposed to incremental returns). In most companies, identifying these goals requires a disciplined process for understanding the “mind-of-the-customer” and the ability to identify and transform unarticulated needs into differentiated products and services.

For TBM client Pactiv, a global producer of food service disposables and food packaging, the customer-value emphasis was on asset utilization, which means big runs of ubiquitous products at a low margin. Pactiv sells what is essentially a commodity product. Customers choose suppliers based largely on cost and availability.

The company decided to focus its efforts on improving performance at the production-line level, thus increasing flexibility, shortening lead times and improving productivity. As it became a more efficient producer, Pactiv became more competitive by changing its

Hubbell

Danaher Carlisle Companies

Figure 1 The S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index covers over 7 percent of the U.S. equity market, and seeks to remain an accurate measure of mid-sized companies, reflecting the risk and return characteristics of the broader mid-cap universe on an ongoing basis.

S&P 400 MidCap DJIA

Source: www.stockcharts.com

OpEx Review | December 2012 | www.tbmcg.com | 7

Leadership, continued

production mix to a higher number of smaller lots with shorter lead times—which improved margins through cost reduction and increased availability. The outcomes of this transformation included new customers, more satisfied customers, improved asset utilization, higher profitability and increased revenue.

to planning thoroughly and executing precisely at largefootprint companies because multiple sites, functional silos and management layers mean non-strategic goals are lurking everywhere, threatening to “creep in” and compete with strategic goals.

With the cash generated from its continuous-improvement efforts, Pactiv completed multiple acquisitions. On the cost side, the results have been just as impressive.

How many strategic goals a company sets is less important than resisting attempts to go for easy wins or low-hanging fruit. Define transformative goals that will be noticed within the organization as well as by customers. If need be, start with one plant, product, product line, supplier, etc., that will be most receptive to the transformation.

This improves the chances of fast and noticeable success.

2. T horough Planning and Precise Execution Leadership must take ownership of this from the beginning to be successful. We have found that the more engaged the uppermost executive(s), the more successful a big company’s Operational Excellence strategy. Committing resources to strategic goals includes leadership time and attention. Strategy deployment (Figure 2) is essential

Hubbell Inc., an international manufacturer of highquality electrical and electronic products, has embraced the strategy deployment process for 11 years and has used an Operational Excellence strategy to achieve long-term value creation. According to Hubbell CEO Tim Powers, the disciplined framework of the strategy deployment process has been one of the key contributors to Hubbell’s performance, which includes: • Sales growth from $1.3 billion in 2001 to $2.98 billion in 2011.

• Net income growth from $48 million to $268 million (same period).

• Inventory reduction from 93 days to 49 days, and cash generation of $240 million over five years.

Strategy deployment minimizes silo thinking by providing clarity and direction to all levels and functions. Companies cascade strategic goals down and across the enterprise through purposeful and ongoing communication and

Top executives should expect to devote at least 20 percent of their time to supporting continuous-improvement activities, starting with the strategy deployment process.

Strategy Deployment Process

Step 3: How? Which Key Processes

Figure 2 The strategy deployment process leads executives through a series of steps that turns planning and resource allocation into a multi-year action plan with real goals and measures—all supporting breakthrough transformation that creates more value with the same or fewer resources.

Step 2: How Far? This Year?

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Step 4: How Much and When? Measures

Step 1: What? Breakthrough Thinking

Step 5:

Who? Resource Deployment

Leadership, continued

process-improvement activities that keep everyone walking on the same path. Often, our clients create a unique “business system” or “operating system” to facilitate this.

3. Strong, Repeatable Processes Large-footprint companies need strong, repeatable processes that support daily improvement; standardization—from leader standard work to line/cell operator standard work; and the spreading of best practices throughout the organization.

Managing for daily improvement (MDI) is an example of a strong, repeatable process. It typically involves a daily walk through the business at a defined time by the entire management team. By going to each work area, managers can see any issues firsthand. Having the entire management team present speeds problem solving by freeing up resources and removing the functional barriers that tend to slow down the search for solutions.

Alstom Transport—a Paris-based manufacturer of trains and provider of other transportation-related products and services—demonstrates how such a process supports execution. In the United Kingdom, Alstom Transport employs some 2,000 people, including many maintenance technicians. As part of their daily management process, the members of each department in Alstom’s five depots and the fleet control center meet at 9 a.m. each morning to discuss the previous day’s performance and any problems that require attention.

4. D isciplined Measurement and Reporting Systems Big companies tend to have too much data and not enough accountability. Inconsistent performance measures create large gaps where waste and inefficiency can hide undetected. Inconsistent reporting also sub-optimizes continuous improvement by thwarting the spread of best practices. Fortunately, the reverse also is true: The larger a company, the larger the potential benefit of bringing the entire organization up to best-achievable performance as planned through strategy deployment.

Successful large-footprint companies build disciplined reporting systems by providing: • A protocol for problem solving that uses root-cause analysis and includes countermeasures to make up for lost ground.

• An inherent timeframe for solving problems that stresses urgency, i.e., Our goal is to solve problems within 24 hours. This encourages rapid solutions.

• Immediate and clear identification of accountability so problems don’t “fall through the cracks.”

• A record of performance that can provide insight into strategic decision-making going forward.

5. W illingness to Learn, Accept Mistakes, and Recover Leaders at large companies who are going through a deep Operational Excellence transformation will learn how to do things that they never knew were possible, but they must be open to doing so. Those working under them will be learning new things as well, and so the leaders need to understand that mistakes will be made.

Successful large-footprint companies prepare by giving people the resources to create countermeasures when they have fallen short of a goal.

Leaders must also be willing to adjust their plan when it makes sense. If you are focused on customer value, then the need for adjustments will become apparent.

Vermeer, a TBM client that makes earth-moving machinery, identified global growth as a critical goal and focused on a limited number of markets, including China. Vermeer assumed that customers in China had the same concerns about labor efficiency as their North American counterparts.

When sales of a line of large equipment in China didn’t meet expectations, Vermeer started talking with customers on a deeper level and discovered that functionality trumped labor cost in value. A redesign of the product line aligned more closely with Chinese customers, and sales took off.

As Vermeer and our other large-footprint clients have learned, bigness is no reason to expect small results from process improvement. An Operational Excellence strategy can bring exponential benefits if it includes a small number of meaningful goals; strategic planning and execution; strong, repeatable processes; a disciplined reporting system; and an engaged leadership team that is willing to learn, accept mistakes and make adjustments. n This is an excerpt from a Management Briefing written

by Bill Remy, Dan Sullivan, Bob Dean, David Hicks, Joe Panebianco and Angela Scenna. To see the full report, go to the Resources section of www.tbmcg.com.

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Operational Leadership

Pushing the Lean Pedal to the Metal An interview with Kurk Wilks, Director of Operations for MANN+HUMMELL USA. I understand that two days of off-site training on lean concepts and methodologies galvanized the leadership team of your business, MANN+HUMMEL USA. What did you do after that training?

We established a steering committee with our leaders and a representative from TBM [Eduardo Spina]. During the first meeting we reviewed the areas of the plant where we were struggling, and we put together a plan that targeted $2 million in savings in the first year.

Our first kaizen event was a huge eye-opener to everyone in our company to see what a small group of people could do in a week. We were able to remove direct labor, increase flow through the cell, improve the presentation of material to the operator, reduce WIP and make massive 5S improvements. At that point we were hooked.

We established a kaizen promotion office (KPO), and the steering committee set a very aggressive schedule for the first quarter of 2012. Our plan was to do two kaizen events per month, but we ended up doing an average of three-and-a-half per month during the first two quarters of the year. We’ve gone beyond the shop floor and have done kaizens in logistics and business processes using the same methodology.

Every steering-committee meeting continues to focus more and more on the bigger picture and new opportunities. We use our KPIs—direct labor costs, scrap costs, non-quality costs, and freight costs—to guide our kaizen event planning.

How have employees responded to the improvement methodology and process changes?

Don’t make the presumption that change was easy or the road was been paved with gold. It wasn’t. It’s been a big challenge for us to bring people along.

A couple of things made the organization buy in. First, we had top-down leadership support. Francisco Gomes Neto, our President and CEO for Mann+Hummell USA, our CFO, and our head of sales and engineering, they’ve all embraced lean as a “must have” and “will do,” and given it their full support.

On top of that we encouraged participation from our non-operations staff. At this point, over 40 percent of all administrative personnel in our organization have participated on a shop-floor, logistics, value stream or business process kaizen event.

Kurk Wilks, Director of Operations for MANN+HUMMELL USA, is a Detroit-area native with 18 years of automotive industry experience. He has been with MANN+HUMMELL since 1998. Kurk is responsible for manufacturing, quality, maintenance, logistics, project and manufacturing engineering services, and safety, for three U.S. manufacturing locations.

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Operational Leadership, continued

How does what you’re doing in the United States compare with MANN+HUMMEL facilities in other countries?

Each country has a lean toolbox that they employ. It’s different from country to country but we follow the same basic concepts. The concepts of lean aren’t proprietary, but the methods that TBM has taught us have enabled us to achieve better benefits faster.

What will you focus on in 2013?

We believe that if we stay focused and continue training, and use the steering committee to set a firm event schedule and identify opportunities in advance, then execute, that will keep us on the right path.

We have hired a new lean value chain leader to focus on shop-floor events, and we’ve recruited and trained another person to run business process kaizens. Brian Cervin, our KPO manager, will be stepping up to a higher level to maintain a longer-term perspective. So our CI culture and team are growing.

How else will you sustain your current momentum?

I’ve read a lot of cases where lean has gone well and not so well. One area where companies fail on this journey is lack of leadership. There’s no true buy-in. The second is the abrupt abandonment of existing procedures or processes.

We’re not doing this in place of any rules and guidelines that we already have. It complements our existing TS 16949-certified production process. We don’t deviate from that. We use lean tools to pull the waste out. The certification requires us to inform customers and validate changes in a process if it will affect the customer’s product. So far the process changes that we’ve made haven’t done that.

To help implementation, we have had to speed up our engineering change-management system. Have you ever

been to Disney World and seen the FastPass? The kaizen team has a FastPass. If the team gives me a call and says they need XYZ resources and an emergency meeting to gain approval, they get priority. It’s important because without that the team languishes.

That’s what I mean by a leadership commitment. It’s not that we’re out there saying “Rah, Rah! Go, Go!” Really, what we do is clear barriers for the kaizen teams.

How do you quantify your results?

The payback is exponential. The kaizen activities that we’ve done this year—to eliminate excess labor, to eliminate scrap—have put us in a position to exceed the financial goals that our parent company gave us. Looking forward our logistics opportunities in this company are huge, to a point where we could easily justify the additional CI team headcount.

We have years to go before we get to the highest level.

But that’s our goal. When I tour a Daishin Seiki or Toyota facility, or others, waste is so obvious to them.

We’re nowhere near them.

When it comes down to it, we have to be best-in-class from a cost perspective every time, all of the time, lest we get passed up by our competition. We fight for programs where pennies can literally make a difference. We’re counting on our lean efforts to keep us competitive. n

About MANN+HUMMELL USA Based in Ludwigsburg, Germany (north of Stuttgart), the MANN+HUMMEL Group employs 14,300 people worldwide and reported annual sales of $3.2 billion in 2011. MANN+HUMMEL USA facilities in Portage and Kalamazoo, Mich., and Dunlap, Tenn., manufacture a range of automotive and industrial filtration and related products for almost every OEM that assembles vehicles in the United States. The company began working with TBM Consulting Group in 2009 following the rapid downturn of the automotive market. After consolidating two facilities the business unit needed to optimize space utilization and logistics. To drive further operational improvements MANN+HUMMEL USA launched a more comprehensive LeanSigma business improvement program beginning in late 2011.

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Updates

Online Resource Center: New Case Studies, Briefings

Next Issue: PE Revenue Growth

Social-Media Driven Quality Challenge:

Food & Beverage Packaging Scholle had already achieved Six Sigma quality, but a customer set a higher bar: No negative comments on social media sites. Scholle delivered by using the SigmaKaizen process.

Case Study: The Pexco Transformation

Maximizing Resources for Profitable Growth:

Medical Device Complaint Management

Under private equity ownership, Pexco increased revenues by nearly 50 percent and more than doubled EBITDA. Pexco and PE-owner, Saw Mill Capital, worked together to deliver robust returns for current and future investors. In August 2012, Saw Mill Capital sold portfolio company Pexco LLC to Odyssey Investment Partners. Their success is attributed to strategy deployment, lean business practices, sales force excellence and acquisitions. Tim Nelson, principal at Saw Mill, explains that Pexco’s commitment to Operational Excellence is what unlocked their revenue growth engine.

The good news: This Class III medical device producer was growing. The not-so-good news: The company’s complaint manager was already overwhelmed. Through value-stream mapping, the company streamlined the complicated process while maintaining accountability and regulatory compliance, and is expanding without hiring a new complaint manager.

Managing for Daily Improvement:

The Benefits of Hour-by-Hour Boards There’s been a proliferation of electronic devices on the plant floor, but the low-cost, low-tech, hour-by-hour board can do so much more.

To read the full case studies and briefings, visit the Resource Center at www.tbmcg.com Publisher: Anand Sharma: asharma@tbmcg.com

Contributors:

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