by Duff McCutcheon
Reprinted with permission from Advanced
Manufacturing
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.
