Lean at ArvinMeritor
How a Tier I automotive supplier adopted lean manufacturing and won the Shingo Prize
By Patrick Waurzyniak
Competing in the cutthroat business of supplying automotive OEMs, ArvinMeritor Inc. (Troy, MI) turned to lean manufacturing techniques years ago to help the $8-billion Tier I auto supplier trim costs, refine manufacturing processes, and improve part quality and customer satisfaction. Earlier this year, ArvinMeritor's continuous-improvement efforts paid off when its Light Vehicle Systems (LVS) Gladstone Avenue exhaust manufacturing facility in Columbus, IN, was awarded a 2004 Shingo Prize for Excellence in Manufacturing.
Modeled closely after the Toyota Production System, ArvinMeritor's lean manufacturing system initially rolled out company-wide in the early 1990s, notes Mark Frazier, site manager for ArvinMeritor's Gladstone manufacturing plant, using the ArvinMeritor Performance System (AMPS) that follows standards set by the earliest lean manufacturing practitioners. At the Gladstone plant, which was built in 1955, more than 70 employee involvement teams among its 800 personnel helped the 403,000 ft2 (37,479 m2) exhaust-system manufacturing facility improve quality and productivity to levels leading the unit to become a Business Prize Recipient of the 2004 Shingo Prize for Excellence in Manufacturing. The Shingo Prize is awarded annually by the College of Business at Utah State University (Logan, UT).
The lean journey for Gladstone employees actually began 12 years ago when ArvinMeritor implemented lean manufacturing practices in 1992 with the goal of dramatically cutting costs and waste at the company. After being named a finalist for the Shingo award in 2003, Gladstone employees took to heart the many insights offered by Shingo examiners, and from outsiders visiting the plant, enacting further lean improvements that helped win the Shingo this year. The facility's most recent efforts were concentrated on continuous-improvement workshops and value-stream mapping.
As a result of its lean efforts, the Gladstone facility has made substantial gains in several metrics marking quality, productivity, and employee involvement in the past few years. When it submitted the Shingo bid last year, the ArvinMeritor Gladstone plant's quality had improved markedly since 2000. The unit lowered customer PPMs by 72%, decreased supplier PPMs by 99%, and reduced scrap by 43%.
Among productivity gains, the plant increased finished-goods-inventory turns by 30% since 2000, averaged 36 total inventory turns, posted an on-time deliver average of 99.99% since 1999, reduced MRO inventory by 73% since 1993, and increased sales per employee by 12% since 1999. The Gladstone plant also has fully implemented cellular manufacturing in 100% of its work units, which consist primarily of welding cells with tube-bending machines that are used for manufacturing full exhaust systems for automotive OEMs.
The decision to adopt lean can be traced mainly to ArvinMeritor's need to cut costs and reduce waste as much as possible to compete in the tough auto supplier business. "I'm not sure you can point to any one particular thing, but I think at the time management thought our costs were getting out of control," recalls Frazier, Gladstone's site manager. "Management looked at labor and costs, but it wasn't really that. We looked at it and there were many non-value-added activities going on."
Once the company decided on lean, the TPS-style lean system was implemented from the top down, notes Frazier, and as is the case with most initial lean efforts, employees took some time to get used to new ways of working. "We're constantly learning. I would say we ran into some things," Frazier says of the company's first lean steps. "Basically, it's something that you have to start doing to prove to yourself and to everyone that it works. We're not out trying to lose jobs, we were out trying to gain business or add more jobs."
One of the first things ArvinMeritor management did with lean was require that employees dive head-first into the program, with all employees taking a 40-hr indoctrination course in lean training. "Another thing we did initially was bring union officials to some of the early classes," notes Mark Rediker, a business unit manager at the Gladstone plant. "We brought them into the early classes, and they could see right from the beginning that this approach would strengthen the company."
Lean buying-in also was bolstered by good relations with rank-and-file workers at the plant, as evidenced by the facility's subsequent ability to post impressive gains in employee involvement. In addition to the 40 hr of annual training per employee since 1997, the unit has averaged 21 kaizen ideas submitted per employee since 1997. Annual savings per employee is $4285, at a cost of $204 per kaizen idea since 1997. The idea implementation rate is 95%, and safety incidents declined 86% since 1999. Incident rate has fallen 48% since 2002, and the lost-time rate/hr has dropped 60% since 2002. The plant's successes have earned more than the Shingo award, as it has been recognized as a Ford Q1 supplier, a Ford Full-Service Supplier, and a four-time recipient of the State of Indiana Quality Improvement Award.
Employee involvement at the plant stands out as key to gaining the requisite cooperation for implementing lean systems. "We had a pretty strong employee involvement already by then," Frazier states. "You really have to have that in place before you just jump into this journey. We were already getting pretty good at employee involvement, so we already had good communications."
Unlike many lean efforts, the ArvinMeritor system does not employ extensive outside lean consultants, such as a lean sensei (teacher), instead relying on internal resources for lean training. "One thing that we really pride ourselves on is that we didn't have outside consultants--we did it ourselves, training ourselves," Rediker says.
At Gladstone, lean training involves on-site lean workshops most of the time, Rediker adds. "We do both. I'd say that we do maybe 90% of it here," he says. "We do a lot of training the trainers, and spread it out that way. To be an employee here, we require our 40-hr training session for all new employees, where they learn how to identify and eliminate waste."
Once employees complete that training, then at sometime during their career--depending on need--workers go through the several supporting strategies that comprise the ArvinMeritor Performance System (AMPS), Rediker says. "Training classes can be on pull systems, quick changeover, or things like error proofing."
ArvinMeritor's AMPS lean system is a combination of lean manufacturing principles and employee involvement practices designed to drive a continuous improvement culture that is passionate about reducing waste and costs through production and business-process improvements, notes Frazier. Among the 14 strategies or elements of AMPS are: employee involvement; pull system; quick setup; total productive maintenance; WPO and visual management; machine, office layout; error proofing; containerization/transportation; supplier development; process capability/Six Sigma; leveling/small lot; lead-time reduction; people-supportive practice; and 20 Keys, which is a roadmap of continuous improvement approaches that help steer employees on the lean journey.
The initial 40-hr lean workshops often involve employees from around the country, including new employees from corporate headquarters, even employees from supplier companies, leading to a productive blend of questions and ideas from participants. "Having a good mix among the participants is really key," notes Gary Goble, site continuous improvement (CI) leader. "It's one of the biggest assets of the workshop, because you get different perspectives.
"We talk about indoctrinating new employees with the company philosophy and approach," Goble adds. "We also get suppliers in there for supplier development reasons, so they understand the company's philosophy. We get people from other plants, who may run different processes and different types of operations. Recently, we've had people from different divisions of ArvinMeritor. You just get a mix of experiences, and it adds tremendously to the discussion."
Reactions of employees to the AMPS workshops likely is different now than it was 12 years ago, notes Frazier. "Most people appreciate seeing why, from a business standpoint, you want to get waste out of your processes. They see the benefit not only to the company, but to themselves."
During the workshops, employees have report-outs on a regular basis, sometimes twice a day, for two to three days of the training, Frazier says. "They actually go in and physically report back to the management team things they're seeing out there on the floor," he says. "They go into the calculations of floor-space savings if we do this or that, to learn how to justify things, and 'do we spend this money to do this?' You may not implement during this workshop like you would during a CI event, where you go out and move things, but at the same time, you leave the facility with something to think about, and possibly even act upon."
In the past few years, Gladstone's employees have concentrated on two key areas: value-stream-mapping (VSM) teams and CI events. The VSM teams may consist of a production supervisor, an engineer, and a material coordinator, notes Goble, and if possible, an employee on the production line. "They take a look at the data for the entire value stream, and analyze improvement opportunities in any number of areas," he says. "It could be inventory reduction, or opportunities could be operational things like downtime or scrap reduction. Those teams report every two weeks to our site CI steering committee, or a management group, and report progress or identify any resources they need for support."
Mapping the company's product value streams also includes mapping the flow of material and the flow of information, starting with the customer and working back through the entire supply chain, Goble adds.
"In one example, the value stream mapped out traces back from the customer three different processes or work units in our facility, all the way to a tubing cutter, and to our raw tubing supplier," notes Frazier. "Our goal is to map 80% of our work units every year," Frazier says. "For a 12-month period, we'll look at you once, and then we'll be back to look at you again."
While VSM was introduced widely to the company about five years ago, Goble notes, it is a part of the AMPS system that allows looking at waste in individual processes, in an individual production cell. "Probably one of the bigger benefits of Value Stream Mapping is to step back and see the bigger picture, not just one individual final assembly cell. What about perhaps a muffler cell that supplies it? How much inventory do we have in between each process? The value stream map tool really helped identify our big-picture opportunities."
Most of Gladstone's work units are small cells with very little batch manufacturing, where all the components are brought in and finished products come off JIT, Frazier says. Automated benders and automatic welders are the most common equipment in the factory. The bending equipment is manually front-loaded.
"Within our cells, which are quite small, tight units, we bring in our straight stick of tubing and we bend it and form it," adds Rediker, "as far as sizing the ends and trimming the ends down. We weld it to a muffler, or weld it to a catalytic converter and weld on a few brackets, and then it's ready for the customer."
Continuous improvement workshops build well on the AMPS workshop and philosophy, adds Goble. "The typical format is we identify a work unit that we want to focus on for improvement, with a workshop group of about 10 to 12 people," he says. "The participant mix is really important, getting people who actually work on the work unit is a big key, so that we get their buy-in input. The focus is not only on identifying opportunities, but really trying to get as much implemented over the course of those four days as possible, even to the point of moving machinery.
"What we've normally done is focus on several different disciplines within the same four-day workshop," Goble says. "Workplace organization, standard work, changeover reduction, so we try to really get the most bang for the buck."
Workers may spend half a day doing nothing but cleaning, says Frazier. "We shut the line down, and lock everything out. Team members within the work unit as well as all the participants just go out and clean and organize," he adds. "They try to get it back as close to original condition as possible."
With the VSM and CI efforts, Gladstone's employees built on the progress made with its 2003 Shingo Finalist recognition, taking in suggestions from both the examiners and others to further improve lean efforts. "The examiners leave you with some information on good and bad, they do a lot of talking with you," Frazier notes. "We took everything they talked about and looked at our weaknesses, and then we made our continuous improvement plan for the following year, based on dealing with those weaknesses. We realized we were on the right journey but we weren't taking it to the next level."
This article was first published in the September 2004 edition of Manufacturing Engineering magazine.