On The Right Track
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From its early days in the late 1970s, when CGL Manufacturing Ltd. started life as a small machine shop, the company has built up a steady business supplying components to some of the biggest names in off-road original equipment manufacturers (OEMs).
A look at the company's "Walk of Fame," just off the 77,000 square-foot facility's cafeteria, highlights the heavy duty equipment where CGL parts eventually end up. There are Volvo graders, with CGL brake assemblies; Raymond Industrial forklifts with CGL forks; locomotive engines - even an armored personnel carrier.
THE COMPANY
CGL Manufacturing Ltd. Guelph, Ontario (www.cglmfg.com)
THE PRODUCT
Structural components, including gear housings, drive units, brake assemblies, housings and axles, for off-road OEMs like Volvo, Komatsu and GE Locomotive.
THE MANUFACTURING STRATEGY CGL LEAN ENTERPRISE VISION
In 1999, CGL implemented a three year plan to trim away the muda (waste), reduce costs and become a world class lean manufacturer. After three years of lean initiatives, CGL has transformed its shop floor processes through the use of production cells, Kanban visual signals, value stream mapping and a pull system. The work has paid off: The company has freed up 40 percent of its floor space, halved its machine set-up times, set up a lean supplier certification program, and won accolades from customers and industry groups. Now CGL has its sights set on reaching the Holy Grail of lean manufacturing: the coveted Shingo Prize.
Waste no more
It was complacency, oddly enough, that prompted Guelph, Ontario's CGL Manufacturing Ltd. to embark
on its lean journey three years ago.
The company had built up a steady business making structural components - gear housings, drive units, brake assemblies, housings and axles - for off-road OEMs like Volvo, Komatsu, Raymond Industrial and GE Locomotive since its inception in 1977. CGL had grown to 135 employees in a 77,000 square foot facility and it had its own, decidedly unclean, way of doing things, and no reason to change - until a longtime customer started asking about cost reductions on parts in 1999.
Up until then, notes CGL General Manager Dave Deskur, "we had become accustomed to the luxury of passing on cost increases - typically two to five percent annually - to customers year after year." But then its customers started taking on more automotive style practices where they began demanding cost reductions.
Faced with the unwelcome prospect of losing business, Deskur and his colleagues set out to learn about lean with an eye to driving out waste and reducing costs. "It was all new to us," he admits. "We attended a conference in 2000 on lean manufacturing and saw how smaller companies were getting involved. We brought back some tools to CGL and made a presentation to the president [Bert Penzendorfer], along with a book Lean Thinking by James Womack. He spent the summer reading it and came back with copies for everyone and signed it, 'this is our future, please read it.'"
And so began year one of CGL's three year lean blitz. They developed a strategic plan with third party consultants Grant Thornton LLP, came up with a lean enterprise vision and mapped out some goals and objectives dealing with the four primary areas of the company: customers, innovation and growth, internal processes and finance. Within three years they hoped to have all their lean tools in place - 5S, kanbans, one piece flow and value stream mapping - and have all employees trained and thinking lean.
CGL's first project focused on management. "We did training in value stream mapping, did some lean simulations, so that management thoroughly understood the concepts and could drive it down within their areas of the organization at the other levels," says Deskur.
Not everyone bought in to the new ideas. Prior to going lean, CGL was all batch and queue. They would do a batch of x number of parts and then process it, with the resulting build-up of inventory and costs. As inefficient as the processes were, Deskur and his lean thinking colleagues had difficulty convincing some colleagues otherwise. "We had a lot of challenges with people who were really set in their ways - people stuck in the batch and queue mentality - and a number of senior management people couldn't get on the bus and left."
Within six months of that first training year, CGL was challenged to put some of its new lean tools into practice on the shop floor. Another longtime customer told the company they wanted a 20 percent reduction on parts CGL had been producing for years. "So we decided to put some machines together, develop a cell and see what happens," says Deskur. "We created a cell with welding right beside machining and were able to meet the customer's demands, keep the job and the profit margins are now close to what they were. In that cell alone, we cut 1,000 kilometres in lift truck travel. That was one of our major victories. This was our first major cell, and it was a real area of learning."
It wouldn't be the last. CGL went on to completely reorganize its machining, welding, fabrication and assembly processes and eventually came up with five major production cells - each equipped with the machines to create a particular family of parts.
And in reorganizing the shop floor, management also started training staff in lean tools. They had employees do substantial 5S (sort, standardize, shine, sustain and safety) exercises around their workstations, getting rid of everything not required to do their jobs and reducing clutter; educated them in value stream mapping; and got them primed for working in cells and in one piece flow.
As of Year Three, CGL has made some impressive gains. The company has achieved a 40 percent reduction in inventories and freed up around 4,000 square feet of floor space. And with 25 percent of annual costs attributable to inventory, that has translated into considerable cost savings. Other milestones include:
After implementing a plant-wide 5S regime, all previous safety records have been broken. The company continues its battle with clutter with "5S Fridays" where staff spend a couple of hours rooting out "muda" (waste) from their workspaces - from the administrative office to the plant floor.
Developing an employee performance management system for staff. "We've identified areas that instill certain lean behaviors - such as involvement in continuous improvement projects, understanding value stream mapping, getting together in teams - that are rewarded. That's how you grow in the company," says Deskur.
Developing a lean-based supplier certification manual. "We want to make sure our suppliers are practicing the same thing that we instill here, because we're only as good as what our suppliers are giving us." Suppliers are tied into CGL's pull system; and are encouraged to provide the company with component "kits," rather than skids of individual parts.
Third-party recognition. CGL's lean efforts won the company a Midori Kai Supplier award in 2001 and the plant is a regular fixture on lean excellence tours.
CGL has come far in its lean journey, but Deskur admits there is still work to do. For example, the company is striving to bring down its machine set-up times from one hour to 10 minutes, while producing a quality first component. "We're about five months into the program and we're down to about 33 minutes. It comes down to getting rid of waste in the flow. A big part of that are the people supplying the tools for the job. They're working to supply the tools just in time to the people on the floor for setups - like the pit crew at a NASCAR race. If we can meet those objectives, we feel we'll be able to cut about $400,000 annually out of our process."
CGL also has its sights on the coveted Shingo Prize - likened to the Nobel Prize of lean manufacturing. The company feels they are a few years away from reaching that goal, but continue working towards the prize by reinforcing a lean culture. Deskur says CGL will have achieved world class once every employee is living and thinking lean: "Our goal is to get an employee momentum going where they pick up an idea, they form their own team and they make it happen - rather than waiting for management. We want to instill a culture where people think 'I'm here to drive out waste, I'm here to make the company competitive, I'm here to succeed.' That's the ultimate goal. If we have that, we can compete with offshore, no problem."
Selling the cellular approach
CGL's shop floor production processes have come a long way
since workers were turning out product via the old batch and queue system.
Today the company's production has been transformed. CGL has reorganized the facility into five production cells, each equipped with the requisite tools - CNC lathes, drills, welding machines - to produce a particular family of parts in a one piece flow.
The cell operators work almost exclusively using kanbans, a visual cue that signals them to build more parts. "The system works much like a grocery store," explains CGL General Manager David Deskur. "At a market, when you pull something off the shelf, as soon as product goes down to a certain level, visually you can see to replenish it. The same principle applies at CGL: We have a supermarket Kanban by which when a customer buys some parts, that authorizing Kanban will go over to a machine operator and that's the authorization for that person to build so many pieces.
"When a machinist needs some raw materials to build the parts, he'll pull raw material from another end of the shop with another Kanban. It's just like tying all those processes to a rope, and pulling on the end and it all comes together at the same time. With traditional production scheduling, it all could be at different stages. There was a lot of waste associated with people waiting on material, or conversely, having too much material stacked up as excess inventory and wasting space."
Other visual cues present on the shop floor include red and yellow flags for each machine in the facility. If a red flag is flying, on say, a vertical CNC machine, that denotes the equipment is undergoing a setup change. A yellow flag means the machine is down because of mechanical or process issues and requires immediate assistance. Similarly, when a cell requires a lift truck, a light starts flashing above the cell.
And during a cell's shift, workers use production boards that identify the planned production, the actual production and the variance between the two. "There's an area on each board where you can identify the problem if you're not able to reach the plan. That way we can address those problems rather than just waiting until the end of the month when you run your reports and find you've lost all this money due to problems that weren't addressed," says Deskur.
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