Now attuned to the fast-and-getting-faster world of e-commerce, consumers have come to expect a much shorter time window between when they click “buy” and when that item will show up at their door. That’s true of the average person who’s buying laundry detergent on Amazon, but also of industrial and commercial customers who are ordering specialized parts and components from vendors and suppliers around the world.
Future Electronics is perfecting this practice from its crown jewel distribution center near Memphis, TN, a site visited by a group from the Manufacturing Leadership Council on May 1. With a goal of delighting their customers again and again, Future Electronics faithfully follows a hyper customer-centric and supplier-centric business model. With customers ranging from hobbyists to OEMs, and those customers ordering from around the world, Future Electronics services them seamlessly, while also giving them flexibility for their preferred carrier, shipment speed, and shipment type (for example, parcel vs. pallet).
That vision has paid off for Future Electronics, which has grown to be the third largest electronic components distributors worldwide. Founded 51 years ago in Montreal, Canada by Robert Miller, the company now has 169 locations worldwide. The Memphis distribution center, which consolidated facilities in Bolton, MA, and Montreal, Canada, was built in 2004. The company choose Memphis to tap into its rich transportation network – its airport is the world’s second-busiest cargo airport, only behind Hong Kong. The Memphis area is served by five Class I freight railroads; its location close to several major interstate highways puts it within an overnight drive of more than 150 metro areas nationwide.
What customers and suppliers see on the front end is enabled by what’s behind the scenes: the awe-inspiring technology integrated into the Future Electronics distribution center. Held up as a world-class model of advanced distribution, visitors come from around the world to see it for themselves. The Memphis DC holds copious amounts of inventory and every SKU is stored in a secure, strict temperature- and humidity-controlled environment. Upon receiving components from suppliers, they are sorted into totes to keep like parts with like parts, one product type per tote or pallet, with the same date code range and same country of origin. Kept in 50’ x 600’ racks and retrieved by a fully automated crane system, product storage location is optimized for peak retrieval efficiency based on demand.
Product totes are then automatically transported to pickers to be sorted into customer totes and prepared for shipping. Orders go out on the same day they were received up to 8:30 pm for domestic ground air and next day via air at midnight ET. A seemingly small thing, but perhaps with larger cultural implications: product value is not displayed anywhere on inventory, nor is any customer information visible to employees in the warehouse. In that way, employees aren’t tempted to be biased on how they handle components that have low value vs. high value, or shipments for high-volume customers vs. smaller ones. In total, the facility has the capability to ship more than 120,000 different part numbers overnight.
It should also be noted that in the entire facility, the company has only three forklifts – two in use at any given time, with one spare. The company carries an impressive array of certifications: ISO 9001 (Quality Management System); AS 9120 (Aerospace Certification); ANSI/ESD 20.20 (Electrostatic Controls); ISO 14001 (Environmental Management Systems); and CTPAT (Customs Trade Partner Against Terrorism).
Additionally, Future Electronics offers consulting services to its customers to share best practices for supply chain and Lean practices. The Memphis DC has been so successful that the company replicated a near-exact copy for its European operations in Leipzig, Germany.
Company leadership says that being privately owned has allowed them to do things that would be difficult if their primary business focus was creating shareholder value, vs. creating value for customers and suppliers. Because their growth has been organic rather than through acquisition, they are able to operate with consistency throughout all their locations, including in their IT platforms for operations, warehousing, transportation, and exporting.
Even though the company is a world-leading model of advanced distribution automation, company leaders still see room for improvement. They spare no effort hunting for technology that will help them operate more efficiently, with a current focus on improving KPI visibility for all employees. Like their manufacturing counterparts, they struggle with finding and retaining workers and are working with tech schools and community colleges to develop materials handling curriculum.
With a forward-thinking mindset, a constant eye toward improvement and a solid strategy for growth, it seems there are many more exciting developments to come from Future Electronics.
Hannover MLC Report Day 5 –– An hour’s drive outside Hannover, Germany, lies the city of Wolfsburg, home to Volkswagen’s massive showcase production facility, now Europe’s largest automotive factory, which produces an astounding 3,500 cars a day.
That was the venue for the MLC Hannover Fair Delegation’s special plant tour on its last day in Germany. MLC delegates were welcomed with an introductory video of the plant’s history and an overview of its current production scope, before embarking on a guided tour of the plant’s many production halls in a specially-designed people carrier.
The Wolfsburg plant began life in the mid 1930s when German design engineer Ferdinand Porsche was tasked to develop a ‘People’s Car’. The result was the iconic VW Beetle, which eventually went into mass production in 1946 following the end of the Second World War.
Today, the site covers an enormous six square kilometres, and has been expanded to include two fully-automated glass tower collection points for VW customers each housing 400 new vehicles, a multi-building Autostadt campus, a 5-floor auto museum, new VW model showrooms, shopping malls, restaurants, and even its own lake.
The factory is staffed by around 60,000 employees and has multiple automated processes supported by almost 4,000 industrial robots supplied mostly by Kuka and Fanuc. 10,000 of the plant’s employees work in R&D alone, developing next generation vehicles and drive trains.
10 million components and parts arrive at the plant from all over the world each day, including 36 types of steel needed for the production line. The stamping shop processes 2,600 metric tons of steel a day and its heaviest stamping machines apply a force of 7,700 tons every few seconds – about the same weight as the entire Eiffel Tower in France.
Each car has around 8,000 parts and 42 electronic components, and is individually identified by a single RFID chip containing detailed customized specifications and customer information as it passes through the 2-day production process. Visual and manual inspection and testing processes record around 4GB of data for each vehicle.
The paint shop even has arrays of fine dusting systems using banks of delicate Emu feathers to gently remove every speck of dust before the final coats of paint are applied.
The intense combination of human skills, digital automation, and technological ingenuity at such scale provided MLC delegates with an awe-inspiring insight into the complex and highly-orchestrated processes of mass auto production in action.
Some of the best moments, however, were yet to come as the delegates continued on a guided tour of the nearby Austostadt auto museum, featuring a host of classic car designs from both Volkswagen and other automakers through history, including Cadillac, Dodge, Jaguar, Alfa Romeo, Lamborghini, and Bentley.
Included in the exhibition is a replica of the first-ever powered vehicle created by Karl Benz in the 1880s, and the original prototype of the VW Beetle developed by Ferdinand Porsche in the 1934.
And in an architecturally futuristic, deep black, sunken building nearby was one of the latest examples of the marriage of high-end precision engineering and artistic car design – a specially-created version of the multi-million dollar Bugatti Chiron.
The day ended with a celebratory farewell dinner for MLC Delegates at the Funky Kitchen restaurant above the music recording studios in the Peppermint Pavilion on the outskirts of Hannover.
MLC Executive Director David R. Brousell contributed to this article. Photography by Alyssa Dixon.
At the ABB Dodge plant in Marion, NC, the keys to success are integrated business teams that function on a foundation of collaboration and trust, as well as operations that concentrate on standardized processes and a top-grade safety culture.
These were some of the key takeaways from the Manufacturing Leadership Council’s plant tour of the ABB Marion facility earlier this month. More than 50 MLC members toured the Dodge plant, engaged in a question-and-answer session with plant management, and discussed their own initiatives around the tour’s theme of cross-functionally integrated business teams. Tracing its roots from 1883 when Ludvig Fredholm started making electrical lighting and generators, ABB, in its present incarnation, was formed in 1988 through the merger of ASEA and BBC. Today, ABB is a $34 billion global corporation made up of four main divisions: electrification products, robotics and motion, industrial automation, and power grids. With headquarters in Zürich, Switzerland, the company operates in 65 countries and has nearly 135,000 employees worldwide.
The Marion, NC, plant has core competencies in tapered roller bearings and spherical roller bearings, which have primary applications in aggregate belt conveyors for mining operations, grain elevators, and air handling systems for power generation. The 256,000-square-foot plant opened in 1996, and today has 170 employees working over three shifts.
Three words heard often at ABB are safety, flexibility, and accountability. Hourly employees are cross-trained on a variety of shop floor functions and equipment to allow for flexibility in job assignments. Performance monitoring and continuous communication between all levels of the organization builds a companywide accountability mindset. Daily safety conversations at the start of each shift bring attention to best practices and potential areas of improvement. There is a continuous effort to keep safety top of mind, and the safety culture at the Marion plant is so good that they have had just one lost-time incident in the plant’s 22-year history.
While these integrated teams have improved how the plant works on the inside, it has also been crucial to the company’s mission of improving customer value and streamlines into the company’s voice of the customer process. This process identifies a complete set of customer needs at the start of the product development cycle, with the following goals:
- To define engineering requirements for new product development
- To increase the success rate of new products by focusing them on solving customer problems
- To reduce or eliminate costly design changes to new products once they are delivered to market
Using this process, the company heard from its mounted bearings customers that they wanted to minimize unplanned downtime, more easily monitor the health of their bearings and know when they were due for replacement, monitor bearings remotely, and eliminate the safety risk from internal bearing inspection done by their workers.
From that information, the company introduced the ABB Ability smart sensor for mounted bearings. The wireless sensor monitors temperature and vibration within the bearing, sending a warning if it detects anomalies. A bearing is then more easily repaired or replaced before a breakdown, and physical bearing inspection is no longer necessary. As MLC members witnessed during the tour, the sensor is tapped into the bearing’s housing and can be installed or removed easily through a pipe plug. It includes a QR code that routes directly to the smart sensor website, a resource for bearing data, user information, and customer support.
At the time of this plant tour, ABB was just entering the second month of a tiered accountability improvement system, formally known as the Relex daily management system. The goal of the program is twofold: (1) to drive employee engagement, and (2) to quickly understand a team’s wins and losses when it comes to meeting performance metrics. Utilizing four tiers, the system is designed to identify problems quickly, to empower staff to resolve the issues they can, and to rapidly escalate any remaining issues for swift resolution. Even in its earliest stages, the company has reported that productivity and safety KPIs have improved since program implementation.
As one company official said during the panel discussion: “Our cultural glue is giving people the power to make decisions, but also being accountable for their outcomes.”
When company officials were asked about what they felt was the next level for the Marion plant, they had broad ideas for the future. One said more sensors and more centralized data collection. One mentioned automated conveyance – to end the use of fork trucks on the plant floor. One suggested a universal pay scale for hourly employees to maximize flexibility, and several mentioned building a more nimble supplier base.
With an engaged workforce, culture of accountability, and an eye on products that will be the best solutions for their customers, the ABB Dodge plant is a case study in operational excellence achieved in large part with the help of cross-functionally integrated teams.
A continuous improvement system aligned with a collaborative work culture and linked to a clear set of corporate objectives can create a better future for a manufacturing company, its employees, and for customers.
That was the central message at motorcycle manufacturer Harley-Davidson’s York, PA, plant during a Manufacturing Leadership Council tour last month. About 50 MLC members toured the 607,000-square foot York facility where Harley assembles its Softail, Touring, CVO, and three-wheel Trike families of motorcycles, and learned about Harley’s Continuous Improvement System (CIS).
The structure for that system can be thought of as an inverted triangle enabled by a sustainable lean culture that has three major components – engaged employees, proven processes, and focused leadership, with general management at the bottom of the triangle. And five key principles support the structure: standard work, built-in quality, just-in-time production, continuous improvement, and people involvement.
But the key to CIS is Harley’s manufacturing vision and history. The company’s vision, visually evident on posters in the York plant and embraced by team members, is that “pride drives competitive advantage, and that work strengthens the brand and builds our future.” Harley team members “communicate openly in real time and proactively solve problems together. Together, we create the future.” To demonstrate the commitment to this vision, six Harley team members recited the company’s vision statement by heart at the start of a panel discussion with York plant management after the tour.
That they were able to do so reflects the unique persona enjoyed by Harley- Davidson, whose motorcycles and rugged image command an almost cult-like following that was created over the last century to enable “people to realize their dreams of personal freedom”. Founded in a small shed in Milwaukee in 1903 by William S. Harley and brothers Arthur and Walter Davidson, today Harley is a $5.65 billion company, with net income of more than $521 million in 2017. In 2018, it expects to ship more than 230,000 motorcycles.
But shifting market and buyer dynamics led Harley in 2016 to launch a 10-year strategy to grow its business. The strategy has five key objectives:
- Identify two million new riders in the U.S.
- Grow international business to 50% of annual volume (it is about 40% now)
- Launch 100 new high-impact motorcycles
- Deliver superior return on invested capital
- Grow the business without growing its environmental impact
The York plant is gearing up to execute on these objectives and has nine new motorcycle models planned for launch. Under construction now is a 56,000-square foot extension of the plant that will house two new assembly lines. A new electric bike that Harley has had under development will be built there. Construction of the extension is expected to be completed by the end of this year. Some of these workers will come from Harley’s Kansas City factory, which is ramping down.
The York plant makes fenders, fuel tanks, and frames in addition to its assembly operations. During the tour, MLC members got to see the fuel tank and frame operations, the painting process, vehicle quality audit, and roll test, an area with five bays where diagnostic tests are conducted on bikes.
A bike frame, for example, has 31 parts that are welded together in four minutes using 264 linear inches of weld. The plant produces 470 frames per shift. It takes seven hours for a single coat of paint to be applied, dried, and cured, and 12 hours for a two-coat application.
Under Harley’s continuous improvement process, downtime is tracked every two hours, workers rotate every 90 minutes, and plant floor team members hold each week what they call Board of Directors meetings to work through any problems that may have occurred in the operation. A Continuous Improvement Board mounted in an area of the plant floor displays health and safety, quality, delivery, cost, people, and sustainability statistics. “If leaders don’t show interest, it won’t get done,” one Harley official said of the Board of Directors. “They need to know it is important.”
CIS itself was implemented in 2009 and was initially focused on compliance, but has evolved to now also focus on plant performance. York goes through a CIS assessment twice a year. The assessment process has four phases: foundation and organizational alignment, expansion and discipline, integration and reinforcement, and sustaining momentum.
In addition to this process, Harley has put in place a cross-functional team consisting of people from its information technology (IT) and operational technology (OT) departments to support assembly line and engineering processes. The IT team trains on PLC systems and the OT team trains on IT. “Their number one priority is to solve problems within takt time to make sure the assembly line is running,” an official said.
During the question-and-answer session with York plant management, officials were asked what their aspirations for CIS are in the next five years.
Proactive problem-solving, as opposed to reactive; better information at the operator level to make decisions; and 100% commitment to CIS by every team member were the top goals cited by Harley managers. M
What manufacturing company doesn’t want to be operationally excellent?
Many companies employ programs and techniques such as ISO 9000, Six Sigma, and operational equipment effectiveness (OEE) metrics to reach the promised land of operational excellence, but these programs often require something else.
At the Dickson, TN, plant of Dal-Tile, which is the largest manufacturer of ceramic tile in the U.S., that something else is a culture that emulates the principles of servant leadership, a concept coined by Robert K. Greenleaf in “The Servant as Leader”, an essay he published in 1970. Servant leaders share power, put the needs of other first, and help people develop and perform as highly as possible.
Earlier this month, about 50 members of the Manufacturing Leadership Council (MLC) had the opportunity to see first hand how the combination of the servant leadership philosophy and traditional operational excellence programs join forces at Dal-Tile’s two-year old, 990,000-square foot Dickson plant to achieve operational excellence. Council members toured the plant’s press, kiln, and logistics operations and then engaged in a 90-minute question-and-answer session with Dal-Tile plant management on the Dickson plant’s operational approach.
Dal-Tile is a division of Mohawk Industries, Inc., the world’s largest flooring company. Based in Calhoun, GA, Mohawk had 2017 revenues of $9.4 billion, employed more than 38,000 people, and operated manufacturing facilities in the U.S., Australia, Brazil, Canada, China, Europe, India, Malaysia, Mexico, and Russia. Mohawk makes carpets, rugs, ceramic tile, laminates, wood and stone products, and vinyl flooring. Its brands include American Olean, Daltile, Durkan, Feltex, Godfrey Hirst, IVC, Karastan, Marazzi, Mohawk, Pergo, Quick-Step, and Unilin.
The company estimates that it has about two percent of the 135 billion square foot ceramic tile market. One of its key growth strategies has been acquisitions. During the past five years, Mohawk has acquired 13 companies, including four in 2017. In the U.S., Mohawk bought a talc mine to support its ceramic manufacturing operations. And earlier this month, Mohawk announced plans to acquire Eliane, one of the largest ceramic tile manufacturers in Brazil, for about $250 million.
Established in 1947, Dal-Tile has 10 manufacturing facilities in the U.S. and Mexico and employs 8,500 people.
At the Dickson plant, the operational approach is summed up by the motto “We Make the BEST Tile”. BEST stands for: Better the community in which we live, Exceed customer expectations, Stand together as one, and Today beats yesterday. On the plant floor, there are three process excellence pillars – safety; quality, supported by ISO 9001; and productivity, supported by lean Six Sigma techniques. But the key to these disciplines is the leadership philosophy.
“The culture in Dickson is that of a very close group that works together and for each other,” said a plant official. “Team members often refer to each other as brother or sister. They spend many hours in the plant and embrace their colleagues and strive to work for the person next to them. In addition, approachability from top to bottom is essential in creating a seamless communications channel. ‘No secrets’ is a way of characterizing the plant team.”
During the plant tour, MLC members witnessed the many steps required to make a ceramic tile, including material preparation, tile press, the journey through the kiln, rectifying and polishing, sorting, and, finally, packaging. The plant has four giant tile presses made by Sacmi, an equipment maker based in Imola, Italy, that was founded in 1919. The plant also has three kiln lines, also made by Sacmi. The one observed by MLC members is 155 meters in length; it takes 47 minutes for a tile to travel through the kiln. The Dickson plant, with about 500 SKUs, makes 80 million square feet of tile per year and operates on a 24/7 rotating work schedule.
Cameras inspect tiles as they move through the process and data is captured using OSIsoft’s PI System data collection tool. On the back end, the company runs SAP’s ERP system on-premise, recently completed implementation of SAP’s maintenance application, and will be moving to SAP’s S/4HANA platform next year.
Although plant officials said they are still “working out the kinks on what data to collect”, data is currently used to make timely decisions on the line. Defect data is used for team member training purposes and to help streamline the correction process. The goal, said the plant official, is to “ultimately understand which pieces of equipment are en route to potentially failing so that proper personnel can act proactively to make sure that whatever problem is set to arise can be fixed prior to a failure.”
During downtimes, team members are given continuous improvement training, which can lead to pay increases and recognition. “It is financially beneficial for the leadership and for team members to be cross training in different areas of the business,” the plant official said. “Using a training matrix, team members get mutually trained throughout different areas so that they can actively take part in different parts of the manufacturing process.”
Looking ahead to the next five years, Dal-Tile’s plant management team voiced several objectives they would like to be accomplished. Two officials mentioned that they would like to see the plant use data coming from operations more effectively, particularly in quality management. Another official said that Dal-Tile should become even more “open-minded” about how it manages operations than it is today. And a third said that the plant should become the “employer of choice” in the Dickson area, with children of current team members becoming future team members at the plant.
“Operational excellence is a by-product of this,” the official said.
Power defines the nature of any organization. How power is wielded determines how an organization is run, and how well it is run.
For decades, the organizing principle for most companies, including manufacturers, was the command-and-control model, under which power largely resided at the top. But with the influence of technologies that have provided more information to more people and have required organizations to coordinate their activities more cross-functionally, the old model has been breaking down.
Now, many manufacturing companies are embracing the notion of a collaborative organizational structure under which power is more widely shared. The Manufacturing Leadership Council’s latest survey on the Collaborative Enterprise, published in April, predicted that over the next five years, manufacturers’ organizational models will essentially invert.
While only a quarter of the survey’s respondents say their companies have adopted a collaborative model today, within the next five years that number is expected to rise to 39%. At the same time, the percentage of those still with a command-and-control structure, at 37% of the survey today, will decline to just 19% by 2023.
This trend was on full display last week at the Manufacturing Leadership Council’s plant tour at Adient, a $16 billion manufacturer of vehicle seats that spun out of Johnson Controls in 2016. ML Council members toured the giant company’s 225,000-square foot West Point, GA, plant where seats for Kia Optima and Santa Fe vehicles are produced and learned about Adient’s High Performance Teams (HPT) program, an empowerment plan for the plant’s 300 employees that is serving as a model for other Adient factories.
On the tour, ML Council members witnessed how a vehicle seat is made. The West Point plant, using steel seat frames made by Adient, assembles the seats with foam, fabric, and trim components using a combination of manual labor and robotic systems based on a just-in-time production model. A typical seat can require about 100 components and the West Point plant produces 183 different seat configurations. Accordingly to plant officials, it takes about eight minutes to build a seat.
The HPT program is designed to drive operational excellence by focusing on key metrics, simple problem solving, and distributing power and responsibility to the plant floor level. The program, targeted to improve results in safety, quality, delivery, and cost, has been in operation at the worker level in the West Point plant for the past 14 months. Over this time period, ML Council members learned that West Point has achieved 453 days without an OSHA-recordable incident, has booked $4.3 million in savings from continuous improvement activities, and has even improved its employee retention rate. Adient officials said that turnover for HPT-involved employees stood at 1.8%, compared with 9.8% for employees not in the HPT program.
Interestingly, the HPT concept reflects the difference in management philosophy between the command-and-control and collaborative organizational models. For example, under the traditional philosophy, managers are thought of as “thinkers”, while employees are thought of as “doers”. In contrast, HPT looks at the role of management as coaching and mentoring.
When it comes to problem-solving, the difference is even more striking. Under the traditional approach, employees identify problems and managers fix them. Under HPT, employees are empowered and both taught and allowed to fix some of their own problems.
On the crucial question of where power resides, the traditional approach clearly has it firmly entrenched at the top of the organizational pyramid. But under HPT, power belongs to everyone, Adient officials said, with the top responsible for breaking down barriers, assigning resources, and establishing the direction and pace of the business.
“A lot of companies have a culture of being more straight-laced, more serious and strict, with hard-core ‘slam the fists’ manufacturing bosses,” said one Adient official. “To be successful at HPT, you have to be a little different and take care of the people. They have to be comfortable about giving up power to the hourly employees.”
HPT is monitored by a scorecard system that uses data from an array of operational processes and also includes a structured meeting regimen. In addition, HPT requires a dedicated HPT coordinator at a plant. And salaried employees have HPT as a component of their annual review. “Scorecard development is huge within HPT,” said an Adient official. “Building the scorecard is very hard. You need things measured across lines and you need to measure the correct things. We make sure they are complimentary and not competitive.”
Right now, HPT is applied solely within the four walls of the Adient plant. But Adient officials said they would like to see the program extended to and embraced by the company’s supply chain. “At this point, we haven’t made an impact on our supply base by what we are doing here,” said the Adient official. “We would like to. Kia is interested and has taken our safety program. But it depends on culture as well.”
In many ways, HPT is indeed more of a cultural approach to running a plant than it is an operational discipline, although it is certainly that, too. Looking ahead, when more and more automation will be implemented in the plant in coming years, Adient officials see HPT blending into the company’s culture in even deeper ways.
“In three to five years, we won’t be using the term HPT,” said the Adient official. “It will just be how we work. We won’t talk about HPT; we’ll just run the plant. As long as we have people involved, you’re going to need something to keep people motivated.”