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Freudenberg-NOK

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Getting Lean Everywhere and Every Day

Of all of the practitioners of lean that we’ve ever encountered, Plymouth, Michigan-based Freudenberg-NOK continues to be an exemplar of what can be done through dedication to doing things in a better way. Here are some of the new things we’ve learned about this muda-eliminating firm . . .

Freudenberg-NOK—a firm that is an amalgam of a German company and a Japanese company and an American company—practices kaizen.

Which is, perhaps, the most understated observation you’ll ever read.

Thomas A. Faust, FNOK’s vp of GROWTTH and Continuous Improvement, explains that if the number of kaizen events performed by Freudenberg, NOK and FNOK are summed, the number is in excess of 14,000. That’s continuous improvement. In fact, it might better be described as relentless improvement. And it should be noted that the company (or companies) produces sealing packages for transmissions, engineers, brakes, axles, and steering; NVH components and packages; and an assortment of rubber, plastic, and PTFE components for suspension, electrical and fuel systems. Or put another way, the products that are turned out of the network of plants are essentially things like gaskets and various and sundry other parts that are essential to the performance of cars and trucks (and in addition to being an automotive supplier, aerospace, appliance, business machines, and various other industries are served), but which really don’t garner a lot of attention from the public at large. (Of course, absent these things produced in an optimal manner, there can be puddles of oil on driveways and tooth-jarring rides on the highway.)

An important point: Regardless of the product you are making, the processes and the product can be made in a lean manner.

Faust concentrates his efforts on North America, the FNOK part of the business (6,000 employees; 21 locations). He says that in this region, there were 1,100 kaizens performed in 1999; he anticipates in excess of 1,200 this year. And they have been performing kaizens since the early 1990s.

An important point: Continuous improvement really does mean on going. Faust strongly discounts the “idea of diminishing returns.” You can keep getting better. In fact, Faust says that if there aren’t double-digit improvements made even in areas that have already been improved, then the people aren’t stretching far enough.

Evidence 1 
Here is an example of Freudenberg-NOK’s lean activity in action:

Part: Valve 

 BeforeAfter
People:42
Off-line operations:30
Distance traveled:12 miles28 feet
Total manufacturing cost:$2.19$1.25

Faust distinguishes between “major” and “minor” kaizen events. The major events are four-day activities that include cross-functional teams consisting of from six to eight people who are given stretch improvement objectives in specific areas. Minor events may last one or two days, but Faust points out that instead of a straight run like the major events, the time may be separated by a few weeks because it may be that the team members (there are fewer: three or four people) may make a change, then collect data on that change over a few weeks’ time. So of the 1,100 kaizens, just under 400 were major events.

While events are, in Faust‘s words, “a significant part of our strategy”—and he insists “continuous improvement must be aligned with the needs of the business,” not something done just for the sake of improving the factory floor (which explains why the most zealous proponent of lean within FNOK is not Faust but Joseph C. Day, chairman and CEO of the company, who has spent his time on factory floors throughout the organization, participating in kaizen events)—Faust notes that what they have done is create “a culture of ‘Kaizen Everyday.’”

An important point: If the boss isn’t behind lean activities, then while there will still be improvements, there really won’t be a payoff of any real significance.

It should be noted that this culture didn’t come in a box. It required a significant amount of thinking—and training. The overarching program (and that is too weak a word for it) at FNOK is “GROWTTH” which stands for “Get Rid of Waste Through Team Harmony.” It is their spin on TPS (Toyota Production System).

 

Evidence 2 
Here is an example of Freudenberg-NOK’s lean activity in action:

Part: Oil Seal 

 BeforeAfter
People:143
Presses:2(450-ton)4(75-ton)
Cavities/tool:497
Machine cycle:189 seconds102 seconds
Floor space:598 sq. ft.442 sq. ft.

For example, on the plant floor, they reorganized the traditional batch manufacturing processes (note well that FNOK is a typical firm in that it has the same sort of conditions that most manufacturing companies encounter on an on-going basis: this wasn’t a case of the parent companies opening the vaults and providing all-new equipment for greeenfield sites).

First, they create U-shaped cells. Which means such things as one-piece flow, machines—mainly small, inexpensive, dedicated equipment—in the order of the process, standard operations, multi-process handling workers, and short lead times. Then, as time goes on, they transform the U-shaped cells into what are called “best practice cells,” which maintain what is in the U-shaped setup, but add such things as utilizing the 5S (roughly translated: cleaning up; organizing; cleaning; standardizing; training and discipline), visual controls, preventive maintenance, and trained operators permanently assigned.

An important point: Faust stresses the importance of the operators. He explains, “Because they are trained and permanently assigned, they know what they are doing and who they are doing it for. They know the requirements of the part and its application. They know its critical characteristics, and they know how to run the process.” Lean is about involving people in satisfying the customer. If you move them around, they are not going to be involved. What’s more, Faust points out “In a traditional plant, people tend to be defined by function, such as ‘I’m a press man.’ But here, we want the people to identify with a specific customer and a specific product.”

Beyond the best practice cell there is the “model manufacturing cell.” Here, it is a case of maintaining the preceding, but with two additions. One is that indirect support functions—such as materials management, technicians, and quality engineering—supporting the cell are clearly identified. “They are not necessarily dedicated, but they are known by name to the people in the cell.” If, say, there is an issue, then the people in the cell know exactly who to call.

And in this environment, it is kaizen everyday: “Over and above the normal kaizen.” People are involved in both the operation and the management of the cell.

 

Evidence 3 
Freudenberg-NOK’s O-ring manufacturing plant in LaGrange, 
Georgia, received the 2000 Shingo Prize for Excellence in Manufacturing. The plant has a defect rate of 3 ppm, on-time delivery of 99.3%, and has reduced its manufacturing lead time by 75%–all, in large part, due to the fact that 455 kaizens have been performed at LaGrange since 1995.

This is the second FNOK plant to be awarded with a Shingo Prize. Its Gasket Lead Center in Manchester, New Hampshire, attained the award in 1998.

And it must be noted that in 1999, FNOK chairman and CEO Joseph Day was inducted into the Shingo Prize Academy for his efforts in moving the auto industry to lean systems.

According to Faust, by having a building full of model cells you create a focused factory—clearly the sort of place that less lean facilities would prefer not to compete with.

But getting lean isn’t something that is done simply on the manufacturing floor. They are creating model cells within the office environment. “It’s the same principle,” Faust says. “Instead of a functional focus”—quality, design, engineering, etc.—“there is a group that functions around a product, and if they can focus on a specific customer, too, that’s even better.”

They’re calling them “model business process cells.” With an office there could be desks in each corner (e.g., materials management, quality, engineering, accounting) and a worktable right in the middle. According to Faust, whereas in the past, it would take on the order of two to three weeks to process a request for quotation (RFQ). “If you look at the value-added time, it’s really just a few hours,” he points out, adding that it was the series of hand-offs (and sitting in in-baskets) and writing that took the most time. Through the business process cell approach, since all (or at least most) of the participants are in a single place, they are able to work more expeditiously. The RFQ lead time can get down to a day.

An important point: Lean goes well beyond the factory floor.

The business process cells are aligned with a current focus at FNOK, which is called “3-P”: Production Preparation Process. This is a process that is used to develop lean production processes from the very start, a clean-sheet approach. Faust says that in traditional operations, when developing new production processes there is a tendency to concentrate on achieving the lowest direct cost, to concentrate on labor and materials, to concentrate on utilizing resources. 3-P is about minimizing resources: capital, labor, floor space, etc. in order to meet takt time requirements.

There are three phases in 3-P:

1.Information Phase: Define the Proposed State

2.Creative Phase: Kaizen

3.Redefine Phase: Define New Proposed State.

There are two interesting aspects of the kaizen phase. One is that seven alternate processes must be developed for each step (e.g., seven ways to deflash a molded part). When asked why seven, Faust answers, “The first few are easy—then you have to stretch.”

Another step in the Creative Phase is simulation. This is not simulation on a computer screen. Rather, it is a case of mocking up a cell—full scale—in a conference room—with cardboard. According to Faust, this approach has numerous benefits, including that it is simple, quick (it usually takes about an hour), and easy to do. “Everything is visual, tangible.”

Another initiative that FNOK is undertaking is called the “Lean Supplier Initiative.” Faust explains, “About 30% of our total cost is in purchased parts, so it is important to expose a larger segment of the value chain to improvement activities.” FNOK is dedicating resources including six GROWTTH that will go out and train suppliers and a library of materials that it has compiled over the years.