I visited a spark plug manufacturing facility recently. Nice people there. Excited about their product. Excited about the progress they’ve made in implementing lean and agile manufacturing processes in their plant. I looked around and saw a promising start in their first three years of lean improvements. I wanted to write an article championing their cause and expounding, like I often do, the merits of lean. But something was bothering me. Something about the place just wasn’t right. The people I talked to were worried; I could see it in their eyes. So I asked some more questions and found out that half of the plant had recently been shut down—permanently—and a corresponding number of jobs were eliminated. So much for driving out the fear. Sadly, these people have much to be afraid of—because, in fact, many of their difficulties lie outside their walls, far beyond their own control.
A few years ago, this plant was owned by an OEM. In the words of a current manager, the strategy then was “to let things just go along and periodically throw money at it.” In other words, the plant wasn’t particularly efficient and it didn’t have to be. But then the OEM sold the plant to a supplier, ostensibly because the supplier could attract other business and drive down costs. But the new business didn’t really pan out quite like the new owners had hoped.
New equipment was purchased for a single new account; it now sits idle, waiting for another contract that may never come. Marketing efforts for the new owners’ aftermarket brand have fallen on deaf ears. Of course, the former-owner OEM keeps buying its spark plugs from the plant. But ironically enough, this in itself is a major obstacle as the product requirements of the OEM are different from those of most other customers.
And when the P&L’s are tallied, the plant may as well be still owned by the OEM—the plant’s only real customer.
The legacy of the OEM is also felt in the on-site testing lab, a facility built by the supplier to serve the single OEM customer—and built to the OEM’s specifications. This testing center should be an additional revenue source for the plant, but sadly enough, again the equipment is so specifically geared to the OEM that other customers are few and far between. And without a steady source of revenue from the lab, little corporate support exists for spending additional resources to upgrade the equipment. In fact, little corporate support seems to exist for the plant at all.
What to do?
Amidst these failures, the plant decided to do what seemed like the only logical thing: get lean. Lean is often viewed as a savior for inefficient operations, and rightly so. But despite cleaning up the plant, eliminating middle management, implementing visual management systems, improving quality and productivity, and boasting of a near-perfect safety record, the plant may only be prolonging its ultimate death. Why? Because for the save-the-plant-with-lean strategy to succeed it must extend well beyond the walls of the plant and those beyond the walls aren’t particularly interested in cooperating.
When corporate decision-makers shut down half the plant last year, the ramifications ran deeper than just a loss of jobs. The part of the plant that was shut down used to make the ceramic shells of the spark plugs. Now those shells are shipped in from a far-off location, from a much bigger plant that also houses corporate R&D. It takes the shells three weeks to arrive. When they do arrive, its necessary to keep large stocks on hand because the plant cannot afford to run out. This keeps the plant from really taking its lean initiatives to the next level.
The corporate mentality for this decision seems to have run along the lines of “Since spark plugs are small, the inventory waste isn’t that bad.” This thinking is also present in the attitude of OEM, which wants large inventories available, both for the engine plant and its aftermarket parts supply. But now it also wants a “single global source,” which may be the final crushing blow to the spark plug plant that it used to own.
So the plant hangs on, most recently starting up a six-sigma quality program and hoping that someone outside the plant will notice. They’re trying hard to save what’s left, but it appears that no matter how great the operations within their plant become, it may not be enough.
The moral: Even if lean can win you some battles, it doesn’t necessarily guarantee a victory in the war.