Some people might posit that given the frequency with which I have written about automotive supplier Freudenberg-NOK (F-NOK; Plymouth, MI) over the past several years that I am somehow a "fan" of the company. Which is not entirely wrong. Any company that is to lean what Toyota is to lean (OK: I admit a slight exaggeration here) is admirable in my book, especially given the number of companies that are non-lean and whose executives think they are lean.
F-NOK has been on the journey to lean since 1992. Yes, nearly a decade. Given the frequency with which companies take up and abandon programs, F-NOK ought to be a paragon with regard to staying the course.
Of course, there have been big benefits realized as a result of the GROWTTH (Get Rid of Waste Through Team Harmony) program; chairman and CEO Joseph C. Day is a businessman interested in results, not in having his people operate a program (Day is an alum of GE, and so results are important). And they're racking them up throughout the facilities that make products including sealing packages for transmissions, engines, brakes, axles, and steering; NVH components; and various rubber, plastic and PTFE components for suspension, electrical and fuel systems—all sorts of gaskets and bushings and other elements that are made in mass quantities but in a one-piece-flow manner (which in itself is worth admiration). These gains through GROWTTH include:
- A defect rate of <50 ppm (from a starting point of >2,000)
- A 60% cost-of-quality reduction
- An 80% reduction in work-in-process inventory
- A 25% annual labor productivity increase
- A 350% increase in revenue per 1,000 ft2 of factory space.
These are the sorts of metrics that are simply part of the company's culture. OK. Strike that word simply. There is a lot of hard work behind this.
Beyond the Floor.
In June, Day made a keynote address at the 13th Annual Shingo Prize Conference (he was inducted into the Shingo Prize Academy in 1999). (For those of you who are not familiar with the Shingo Prize: It was established in 1988 to recognize those manufacturing companies in North America that have made world class manufacturing a way of work; it is named after Shigeo Shingo, a man who was responsible for many of the approaches that are now known to be fundamental to the Toyota Production System). During his presentation, Day acknowledged the benefits that are realized through the kaizen events (i.e., continuous improvement programs that are part and parcel of achieving the gains noted above), but noted, "With the shop-floor kaizen, we're attacking waste on the production floor, where only about 30% of the product's total cost resides. If we can use the lean approach called ‘3P'"—which stands for "Production Preparation Process"—"when we are first developing the product—and the process that will be used to produce it—we can attack the waste opportunity in the other 70% of that product's total cost."
In other words, at F-NOK they have determined that it is necessary to go beyond the factory floor in order to attain improvements. The company does conduct 5S programs in its offices (that's the clearing up; organizing; cleaning; standardizing; training and discipline that is a good place to start in a move toward leanness). But it has gone way beyond that.
Like many manufacturing companies, F-NOK operates a technical center. In its case, it is a $20-million investment that includes 55,000 ft2 of space full of an array of sophisticated equipment that is organized into Materials Labs and Mechanical Labs. Here's a kicker: The labs are laid out in the U-shaped cell approach that is characteristic of lean manufacturing. The technicians' and engineers' offices are located near where the work is being done (those offices that are directly adjacent to lab space have windows into the labs), which is also a lean characteristic. As people work in teams in a lean environment, there are teams organized in the lab and team-sized cubicles available for meetings.
Dr. Theodore G. Duclos, F-NOK vp of Corporate Technology, candidly acknowledges, "R&D facilities have a reputation of not doing anything." But that's not the case in this arrangement. The tech center is literally attached to the headquarters offices, where sales and marketing people can be found: "We want to be close to our customers," Duclos says.
One thing that Duclos emphasizes that is not necessarily thought of in the context of lean, but which can be a natural outcome of following the methods, is speed. He talks a lot about speed. As in reducing time to market. And doing that can occur in a number of ways.
One way is to have an extensive array of test equipment on site. Duclos says that while most companies have labs with 50 to 70% of the test equipment and the people to operate it, they are working at F-NOK to have as comprehensive a capability as makes sense. "The kind of organization we are," he explains, "is one where someone could be thinking about something on a Friday. That afternoon, he runs one extra test. He thinks about the results over the weekend. On Monday, when he comes in, he is ready to proceed. If that test had been outsourced, there could be a loss of five days." Which is not good for speed.
Step By Step.
To be lean is to be methodical. And there is a step-by-step approach that Duclos has operating in the work at the F-NOK Technical Center. Its development process is:
- Value Engineering workshop. "I insist we start here. It defines the process. It's the key to speed," Duclos says. In addition to problem definition, solution options are generated here.
- Evaluate solutions. This takes many forms, from conducting FMEAs to checking patents.
- Select promising candidates. (E.g., Does it meet target costs?)
- Perform test program (Design for Six Sigma; design of experiments)... while running a 3P kaizen workshop in parallel. One interest-ing thing about the design for Six Sigma step that Duclos points out: "It makes us look at what we've done traditionally. People tend to do tests because they have done them. Design for Six Sigma helps break down that barrier of traditionality." Tests are done that provide valuable information, not in order to cover one's assets.
- Propose successful solutions to the customer
- Review the 3P and define the manufacturing process
- Use Six Sigma principles to develop and test the manufacturing process.
Explaining this, Duclos says, "This company is so good at manufacturing and at the GROWTTH process that I've grabbed onto it—to reduce the risk that we come up with something that we can't make or that doesn't provide the right value to the customer."
Which certainly doesn't sound like too many R&D people I've talked with. Which goes to explain why I keep writing about this exceedingly clever company.