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Management Services Spring 2012
people looked at me with incredulous looks and dismissive shakes of their collective heads.
The challenge
This particular facility was a Tier 1 supplier to one of the largest automotive companies in the world. They sub-assembled, in sequence, the engine and transmission and shipped them across town to the assembly plant where they were moved from the back of the delivery truck directly line-side where they were then installed into the waiting vehicle.
This type of system tolerates exactly zero problems and will immediately idle the department and eventually the plant. This outsourcing of critical sub-assemblies was fairly common in the last decade or so, as vehicle makers sought to reduce their labour costs. A Tier 1 supplier would be selected, a small facility would be built or leased close to the assembly plant and the supplier would build the required parts in sequence for delivery direct to the line. Essentially the work that used to be done in-house was now done across town at a lower tier wage level. Complexity could also be managed in this way because the responsibility now fell on the supplier’s shoulders.
This particular customer, fearful of any potential line stoppages, had mandated that the line be able to demonstrate a two-hour production run at 30% above the stated volume to guarantee that the supplier would be able to handle volume fl uctuations without jeopardising the assembly plant. Since the powertrain sub-assembly line, which was basically a large racetrack, had to be equipped with countless electric torque wrenches, controlled by a sophisticated
line control system complete with built-in error-proofi ng, the engineering team set up the line to run at the 30% over- speed condition as dictated by their customer. To try to move all the equipment around for a production buy-off run would require double the hours and potentially delay their already tight launch schedule. The trial run was successful and the customer signed off on the production line. The supplier was ready to begin their launch ramp. The beginnings of a problem materialised two months into production, as the customer’s volumes were much lower than forecast and stayed that way. The supplier now had a serious problem on their line. Not only had the engineers set up the line to run at the 30% over-speed rate dictated by their customer, but they also had to deal with volumes ranging from 15 to 30% below what the line was designed for.
They now had a cycle time that was far faster than their customer demand. Paradoxically they were also running overtime to keep the buffer between them and the assembly plant within acceptable limits. It didn’t help that their customer plant would periodically send in their own ‘lean experts’ to review the line and make recommendations. Typically the supplier was directed to combine two jobs into one and their negotiated purchase price would be lowered next week. It was about this time that we got the email.
The Review
As we reviewed the situation, a few things jumped out at us: 1. End of line rework was required on almost 20% of the units;
2. Team members were working out of their
Lean in practice
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