David Lowry, product team manager at Ford Electronics Manufacturing Coqoration in Markham, Ontario, led the team that won the 1994 Shingo Prize fir Manufartllring Excellence. His background is in quality control, matmals management, and manufmur- ing.

Focusing on Time and Teams To Eliminate Waste at Shingo

Prize-Winning Ford Electronics

David Lowry

Ford Electronics Manufacturing Corporation ’s Markham, Ontario, plant won the 1994 Shingo Prize for Manufacturing Excellence thank to a comprehensive waste reduction program begun during the late 1980s. i%is articie outlines the unique approach taken at the plant to implement its pmgram, which concentrated on inventory management, floorspace utilization, and employee empowement.

aste can take many forms: the waste of manufacturing materials; the waste of floorspace; the waste of time; and the waste of W human resources. Ford Electronics Manufacturing Corporation

in Markham, Ontario, embarked on a program to eliminate waste during the late 1980s. The plans used by the Markham plant focused on three areas: inventory management, floorspace usage, and self-empowered workteams. While all these areas are important, eliminating the waste of human resources and harnessing the intelligence of all employees were by far the most critical tasks-and the most difficult. But Markham’s programs paid off. For its efforts, it was awarded the 1994 Shingo Prize for Manufacturing Excellence and the 1993 Canada Award for Business Excellence, the Canadian equivalent of the Malcolm Baldrige National Quality Award.

Ford Electronics Manufacturing Corporation is a wholly-owned subsid- iary of Ford Motor Company’s Electronics Division. The Markham plant manufactures electronics products such as airbag systems and electronic instrumentation for use in cars and trucks. The 289,000-square-foot facility is located on 17 acres just north of Toronto and employs approximately 2,000 people. Manufacturing processes include surface mounted compo- nent placement, automated assembly processes, wave-soldering, and final assembly. The employees are represented by two unions: the International Association of Machinists represents the hourly work force, and the Canadian Auto Workers represents the nonsupervisory salaried employ-

CCC 0277-8556/95/140257-10 0 1995 John Wiley & Sons, Inc.

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The criteria are established through a series of questions conducted during an on-site audit, which usually lasts a few days.

ees. Products are shipped to Ford assembly plants worldwide and to joint venture customers Nissan and Mazda.

Recognizing that a breakthrough type program was needed to move the business toward its vision of “Be the Best,” in the late 1980s the Markham plant formulated a time-based management plan. It started with a five-year manufacturing vision of the future developed by cross- functional teams comprising management, employees, customers, and suppliers. The five-year plan evolved into a set of annual objectives that ultimately became known as Time and Teams. The manufacturing and support areas focused on doing things fast and right the first time. The plan took off in the fourth quarter of 1988 with inventory and work-in-process reduction projects.

IMPROVED CYCLE TIMES ENHANCE QUALITY AND FOSTER FEEDBACK

At Markham inventory levels were better than industry averages-the key measure here was turnover. Because of the plant’s emphasis on quality, it easily met the criteria for being a Q1 supplier to Ford in June 1989. (Q1 is a Ford-driven program that measures the soundness and integrity of a supplier’s quality program. The criteria are established through a series of questions conducted during an on-site audit, which usually lasts a few days.) But in many ways the plant’s quality measures were distinct from the inventory measures in that inventory tended to hide or mask some of the opportunities for continuous improvement and hindered feedback necessary to be responsive to changing customer demand and quality information. A typical assembly process in the plant at that time (Electronic Premium Cassette Radio-EPC) had about 12 days’ supply of inventory from raw material through to finished skids, much of it work-in-process (WIP). The WIP represented two forms of waste: floorspace and the obvious financial investment. More subtle waste was contained in exces- sive rework costs or obsolescence due to engineering changes.

The first program was aimed at minimizing WIP and the bank of finished goods that the plant maintained in the shipping area (finished goods shipping buffer). To analyze the inventory, the plant team devel- oped a program of inventory profiles. The profile listed the inventory using a cost/volume formula essentially outlining the inventory in a statistical Pareto chart format. The EPC profile looked like this: five days in buffers; four days in non-value added operations; two days in work-in-trouble (rejects); and one day of line-fill. An examination of the line operations focused on identifying value-added versus non-value-added operations. Buffers, long thought to be necessary to maintain smooth flow of material, were actually only needed in certain locations. Much of the plant’s knowledge on inventory reduction came from the teachings of Eli Goldratt and his popular Theory of Constraints (TOC). The essential characteristic of TOC is management by constraint, or bottleneck operation. Inventory that does not contribute to increased output at the constraint is considered

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Weekly performance- to-schedule measures have been replaced with daily build and ship-to-schedule.

for reduction or virtual elimination. The TOC analysis showed that many of the plant’s financial measures, such as daily measures of labor and overhead performance, created behaviors that reinforced large invento- ries, with stock-banking to ensure making the count being the most popular. Only constraint buffers survive today. The value-added versus non value-added analysis led the plant to eliminate bum-in or module preconditioning, which not only reduced inventory, but also cut energy consumption. The overall program used to analyze value-added versus non value added is Manufacturing Cycle Efficiency (MCE), which deter- mines the ratio of value-added time to the total process time. Doing so requires five steps:

1. Flow chart the process. 2. Identify time spent for each operation. 3. Identify value-added versus non value-added processes. 4. Prioritize improvement opportunities. 5 . Eliminate non value-added operations.

Through this program, the Markham plant improved its MCE rate from 0.5 percent in 1988 to 4.5 percent in 1991. The number of units in trouble was greatly reduced because quality problems did not proliferate through- out stockpiles of inventory. The feedback loop from product testing back to manufacturing, which had often taken days, now takes only a few minutes. After three years of effort, inventory was reduced from 12 days to under one day. (At Markham, inventory is measured in units of time, with the total quantity of units counted multiplied by the process cycle time. This reinforces the use of time as a strategic initiative and represents inventory in understandable measures.)

Other performance measures have evolved over the past few years. In quality measures, yields have given way to throughput (composite yields) and process controls are based on real-time SPC applications. Customer returns have been succeeded by customer satisfaction with improved warranty as a direct result. Equipment capacity analysis on all machines was replaced by capacity analysis of the constraint and investment efficiency. Weekly performance-to-schedule measures have been replaced with daily build and ship-to-schedule. Inventory measurement itself, while still measured in the whole, is profiled throughout its life in the plant. The profiles look at material in transit, stockroom levels, WIP, and finished goods. Just-in-time programs have been applied using the 80-20 rule (80 percent of the value is spread over 20 percent of the volume) and top-dollar usages are analyzed constantly. Labor and overhead performance were replaced by Manufacturing Cycle Time (MCT) analysis by product line, reducing product cycle time by 95 percent.

The MCT program at Markham drove a number of other initiatives. The overall inventory reduction supported other improvements and confirmed the relationships between improved cycle times and improved quality and faster

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The organization separated the manufacturing and engineering functions, with the result that although their goals and objectives were similar, they often conflicted or were assigned a different priority.

feedback. The feedback loops demanded process capability improvements and fundamental changes to the plant manufacturing strategy. Automated processes replaced manual labor-intensive operations wherever possible. As the root causes of errors were identified, mistake-proofing actions replaced repair and inspections. The whole MCT program created such faster learning cycles and accelerated improvements that the management structure became a constraint, because it could not handle the mass flow of information and the immediate need for decisions and actions.

Where are we now? The Markham plant currently measures inventory on the floor in hours, with the present plant total at less than seven hours.

To continue its battle to reduce waste, Markham knew it had to better utilize its existing floorspace. At one time, Markham had proposed to divisional management that the plant be expanded, which would have involved the purchase or lease of additional land. The plant was challenged to find a better way because Ford was restricting capital investments to conserve cash, and all investments were required to show a considerable return. In an attempt to make the best use of the space available to them, the plant's managers began using another MCE type measure, distance travelled. The distance a product travels tends to reflect its use of space and the potential inventory levels and labor needs that may be required to maintain the operation. Markham endeavored to bring new products into the plant with minimal distances travelled and compiled a matrix measur- ing changes year-to-year. The distance calculations affect how Markham plans the layout of the plant manufacturing floor, how products are grouped, how processes are grouped, and how many business units are required (in terms of spans of control, engineering resources, etc).

Finally, Markham developed a flexibility index formula-total volume x number of products i total square feet. The resulting index gives Markham the ability to determine the effects of various products and processes and design the most efficient layouts to accommodate them.

HUMAN RESOURCES: THE ULTIMATE TEAM CHALLENGE Markham's inventory reduction plan ultimately forced management to

rethink the plant's organizational structure and the utilization of its human resources. The management structure comprised seven distinct layers, from hourly workers to the plant manager. The organization also separated the manufacturing and engineering functions, with the result that although their goals and objectives were similar, they often conflicted or were assigned a different priority. Obviously, a redesign was needed. The answer was teams-in all areas of the organization, from the plant floor through the management level.

The Markham plant replaced its traditional organization-one in which hourly workers reported to supervisors, supervisors reported to superin- tendents, superintendents reported to area managers, area managers reported to manufacturing managers, and manufacturing managers re- ported to the plant manager-with one that divided the plant into five

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The benefits of the reorganization clearly outweighed the disadvantages, and the change from seven reporting levels to four enhanced communication.

business units/commodities. A new position was created: the product team manager (PTM). The area manager and superintendent positions were eliminated (concurrent with the superintendent position was the engineer- ing section supervisor, which was also eliminated), and the duties normally performed by these functions became the responsibilities of the PTM, who reports to the manufacturing manager, who, in turn, reports to the plant manager. The benefits of the reorganization clearly outweighed the disadvantages, and the change from seven reporting levels to four enhanced communication. Some members of management had reserva- tions about the changes, so a steering committee was formed to provide a forum for all to share their viewpoints and develop preventive actions. The marriage of manufacturing and engineering complemented the hourly team structures and focused support areas and functions on the plant floor.

The hourly team structures developed from the plant’s whiteboard program. The whiteboard is a four-by-eight-foot dry erasable board located strategically within all the various areas of the plant (including indirect and support groups). The whiteboard is a place where the following items can be addressed:

Important areas to be managed The foundation for the area’s teams Specific objectives Trends The top concerns for each area as shown in Pareto charts Corrective actions using a problem-solving format Support needs from other activities Shift-to-shift issues Long-term improvement actions

The whiteboard also displays all the measureables related to the performance of the area, such as quality levels, scrap levels, and inventory levels, which are portrayed on trend cham. Since people, or “softer,” measures are critical to the performance of the workplace, housekeeping and safety checklists are reviewed on a daily basis and scored using a scale of one to five. The scores are shown on a trend chart that is also displayed on the whiteboard.

After collecting this data, Markham organized teams around a certain portion of the overall area’s measures. The categories are:

Quality-Throughput (composite yield), SPC, customer re- turns, warranty MCI‘/Attainment-MCT, attainment to schedule TPM-Total productive maintenance, overall machine effec-

Cost-Scrap People-Housekeeping, health and safety, suggestions, atten-

tiveness

dance

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The foundation of a successful team is -g, -g, and more trainin g-

The teams focus their efforts on improving their specific measurable category. Typical teams are made up of approximately five to ten members and an elected team representative. Markham provides one hour each week for teams to meet to discuss the status of their measures and their improvement plans. A management person acts as the sponsor of the area teams to ensure that they have the support needed to accomplish their objectives. The supervisor’s job title was changed to team coordinator to better reflect the new composition of the floor.

All the plant employees are members of a team. Although attendance at team meetings is mandatory, participation is voluntary. The foundation of a successful team is training, training, and more training. All team members are exposed to an overview of the measurable factors and, once on a team, they are given a more intensive program geared toward improving the specific measure. Additionally, team building, facilitation, and software courses on such topics as wordprocessing and spreadsheets are offered to all employees.

Teams make monthly presentations to all of their area’s employees and to management. The presentation usually takes about 30 minutes with a member of each team presenting the status to-date for the measurable factors, any success stories, and the highlights of where additional resources are needed. The management team attends all whiteboard presentations. All the information on the whiteboard is prepared and maintained by the teams. Presenters are chosen by the teams and coached by the team coordinator, engineers, PTM, or sponsor. Participation rates vary from area to area, but typically about 70 percent of the population takes an active role.

AN EDUCATION IN ACHIEVING EXCELLENCE It has been three years since Markham revised its management

structure and formalized its teams. In that time, the plant learned a great deal through the launch and growth of its empowerment program. One of the first lessons was that there really is no perfect plan for launching teams. A few of the key things Markham did right:

1.

2.

3. 4. 5 . 6.

Formed a joint steering committee to plan procedures and discuss issues, such as conflicts with the collective bargaining agreement and training needs; Gained the commitment of the entire management team, including the management of the unions; Developed a structure that all employees could understand; Defined roles and responsibilities (an ongoing process); Defined specific objectives; and Provided both financial and human resources by having a sponsor for each team.

The Markham plant also learned the importance of driving the system

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Fonrsing on Time and Teams To Eliminate Waste at Sb inp Prize- Winning Ford Electronics

Management made sure that al l open- door comments from employees were researched or talked about with the disgruntled employee and the team coordinator together to prevent negative perceptions.

with higher levels of management, gaining the trust of first-line supervisors, establishing permanent trainers, hiring best-in-class individuals, instituting a complementary suggestion system, and obtaining bargaining unit support.

l3riuing the system with higber levels of management. Well after the formal launch, a high-level management employee was named to be the manager of teams. This action served a couple of purposes. Teams were beginning to plateau in terms of development, and fresh dedicated leadership reaccelerated growth. The dedicated manager works only on teams and team development. Although the rest of the management team is involved, the job of running the day-to-day operations tended to fragment their efforts. Additionally, having a single individual dedicated to teamwork reinforced the notion that the plant’s empowerment program was permanent and that teamwork was the way it would continue doing business.

Gaining the trust offirst-line supewisors. The supervisory role was changed along with the name of the job when “supervisor” became “team coordinator.” Involvement by these key individuals was minimal at the beginning of the program. A lot of fear was generated as management talked about increased spans of control, coaching, relinquishing control, and lack of adequate training for the teams and the supervisors. The uncertainty tended to roadblock initiatives on the plant floor. The empowerment program and the reorganization generated fears over job security and inadequacy and created an environment of mistrust. Some of the supervisors felt that dealing with adversarial or disciplinary situations could result in an hourly employee complaining to higher levels of management that the supervisor was not a “team player” or ”changed the decisions of the team.” In an effort to bolster this group, a roundtable session composed of team coordinators was formed. Additionally, man- agement made sure that all open-door comments from employees were researched or talked about with the disgruntled employee and the team coordinator together to prevent negative perceptions.

Establishing permanent trainers. Since training is an essential element of team launch and development, dedicated trainers were required. Short-term, Markham used contractors to teach such skills as meeting facilitation, teambuilding, and other basic courses, but the overall plan was better served by having dedicated trainers. All the trainers came from the existing work force and represented all shifts. The trainers teach a variety of team-based job skills and specific on-the-job skills and provide support during team meetings, ensuring that teams follow basic meeting guidelines (agendas, recorder, facilitator, etc.).

Hiring best-in-class individuals. Teamwork and the ability to work in teams is a skill discussed during the interview process. Markham prescreens prospective employees through five interviewing levels. The first two stages confirm education, job history, and basic mawEnglish skills. The third stage is an interview by employee relations, and the fourth

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David L.owry

The support of the bargatning unit in a U n i O l X k d

environment is essential to the success of an empowerment P-0

is by operations staff (usually product team managers) equipped with interview binders that include open-ended questions designed to encour- age conversation and obtain in-depth answers. The final stage of the process involves two simulated work situations where four candidates are required to assemble small articles in teams and then brainstorm ideas on a process layout. The examiners for this team assessment come from the ranks of the team coordinators (an unusually successful strategy). Most recent hires at the plant demonstrate high levels of motivation for teamwork and good problem-solving skills.

Instituting a compZementav suggestion system The suggestion system initially was an obstacle to enhanced teamwork. The program tended to support single suggesters, contrary to teamwork, and was cumbersome to administer in terms of response time and analysis cost. Furthermore, it was difficult to assess suggestions for intangible items, such as health and safety improvements. To improve this situation, the plant made a number of modifications to the suggestion program. A scoring system was implemented to provide rewards for intangible suggestions. Suggestions, although administered by engineering and management, were delegated to teams for approvals. The team is composed of employees within a given manufacturing area and the meeting is facilitated by an employee who vohnteers to be the coach for the area. The coach is responsible for helping to prepare the suggestion paperwork (with the suggester), ensuring that the suggestion is logged into the plant database through the plant suggestion coordinator, scheduling evaluation meetings, and organizing the cycle time and suggestions status on the whiteboard. This process improved suggestion turnaround time from an average time- to-close in 1992 of 108 days to less than 16 days by the end of 1993. The program required guidelines, procedures, scoring matrixes, and training for the coaches, but works extremely well. Thanks to the changes, there are fewer arguments among employees and between employees and management and the system implements and rewards suggestions/ suggesters in an efficient and appropriate manner.

Obtaining bargaining unit support. The support of the bargaining unit in a unionized environment is essential to the success of an empowerment program. Markham established a joint steering committee in 1993 to measure the ability to move teams toward self direction and to ensure continuing support from the unions and management. The objectives of the steering committee were to:

Have direct contact with every team, Benchmark other team systems and continue as a group to learn more about team development, Further develop the vision of the team concept beyond the roles and responsibilities guidelines, Achieve a 20 percent improvement in overall team survey results (Markham surveys the teams on an annual basis), and

Focusing on Time and Teams To EIiminate Waste at Sbingo Prize- Winning Ford Ekctmnics

Accomplish goals within a flexible environment that rewards successful teams.

In summary, Markham has learned the following key lessons regarding quality improvement:

The improvement process takes time and requires patience. Trust and commitment of all parties must be built into the design. Joint ownership and joint accountability are critical. All stakeholders must look for common bonds by developing and upholding shared values and principles. Traditional thinking will eventually be an impediment to team implementation. “Clean sheet” thinking must be embraced. Communication will make or break the change process (per- ception is a key factor in successful communication). Learning is continuous and all parties must learn.

Exhibit 1 presents the concepts of the Markham plant’s efforts to build teams.

Assertion

More involvement in the deci- sions that affect one’s work

Exhibit 1. What Are the Benefits of Teams?

Ability to solve problems

?

People as spare parts

- Rotation-sharing of physical

- Team decisions on off-site stress-related positions

visits

- People as valuable resources - Many problems solved by

- Weekly team meetings teams

Empowerment One person decides - Consensus by team

Individual growth and Leave brains at the door - Constant technical/team development of skills training

Job security

A feeling of ownership

Layoffs, sent home, 1/2 here and there

- Recalls, new hires

It’s only a job - It’s my job

Variety and challenge Do the same thing day - A chance to get involved: prob- after day lem-solving meetings, new

tasks, learn new skills

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David Lowry

Ford Electronics shares the Shingo Prize principles of process improve- ment, excellence in productivity, quality enhancement, and customer satisfaction. And the Markham plant found that the Shingo philosophies of world-class manufacturing can be achieved by focusing on improvement in core manufacturing processes, implementing lean, just-in-time systems, eliminating waste, and achieving zero defects.

Capturing the prize drove the Markham plant to higher levels of continuous improvement and a critical evaluation that pointed out opportunities that had not been previously identified. In summary, Markham learned a lot about itself through the process, which validated its strategic initiatives and confirmed Time and Teams as a core program essential to the long-term viability of the plant, 0

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