by Vanessa R. Franco with Robert Green
This article first appeared in the March 2000 issue of Quality Digest.
Fleetwood RV's plant 77 in Chico, California, was having growing pains. Despite a slow start—the oil embargo kept the plant from opening until 1984, five years after it was built—by 1997 its annual gross sales had reached $110 million a year. Nevertheless, the plant had hit a manufacturing plateau and production had leveled off. Plant 77 had introduced a quality improvement process in 1992 that involved a five-step problem-resolution process, corrective action teams and process model work sheets, but progress was slow. To grow, the plant needed more room and higher production numbers, but it needed to attain them without the expense of added labor or new construction.
The recreational vehicle (RV) market can be a difficult one in which to succeed. Primarily products for the affluent, RVs have a more limited market than do other vehicles. Recording $1.73 billion in sales in 1999, Fleetwood's RV division flourishes because it offers a wide variety of RVs and is known for quality—according to its customer satisfaction surveys, more than 90 percent of Fleetwood buyers would recommend Fleetwood RVs to a friend.
Plant 77 found a way to re-energize production when Operations Director Steve Hulft discovered Kaizen—the Japanese methodology for promoting continuous improvement by reducing waste. Anand Sharma, president and CEO of TBM Consulting Group, notes that Kaizen originally implied slow, step-by-step improvement, but due to Toyota's influential implementation has since come to mean rapid evolutionary change. The Toyota Production System was developed to allow the Japanese company to compete with Ford while expending less money and time and fewer resources, in part by maintaining a lower inventory, assuring customers of on-time delivery and producing higher-quality product.
Plant 77 ultimately adopted TBM's Global Production System (GPS), essentially a tailored amalgam of the Toyota Production System and lean manufacturing principles driven by Kaizen methodology. In contrast to the Toyota Production System, which was tailored for the automotive industry, the GPS was designed to apply to virtually any industry. It also helps companies establish the change culture necessary for successful application of Kaizen--Toyota already had such a culture in place, so its system didn't address problems other companies would likely face when attempting to effect change. A GPS's primary purpose is to help the company produce more with less while adding value constantly.
What made plant 77 an ideal candidate for implementing a GPS was its potential for growth and its management's support of the process and determination to improve, explains Sharma. "Change affects every part of an organization," he says. "If management isn't ready, it will kill the enthusiasm required for success."
Once its consultants determined that the company was a good candidate, it was time for the two-day launch process. During the launch, plant 77's management team learned where they were to begin work and how to prepare and also selected a team leader. Additionally, the team and the consultants scheduled monthly interventions, which average four days per month but present an opportunity for progress reviews and on-the-spot advances. During interventions, visiting consultants actually work in the plant to identify problem areas, such as having to leave the work station to obtain tools or materials, and improve them.
"We strive for improvements of 30 percent, 40 percent, even 50 percent, and we achieve them, because the potential is there," Sharma says. "Kaizen isn't magic. There is simply so much waste in most production systems that Kaizen principles create quick and obvious results."
Near the end of the launch, senior management set new policy and worked to align their objectives with their newly developed skills. Among the objectives they identified were reducing work-in-progress, increasing workers' daily piece production, solving specific safety and ergonomics issues, and fixing specific quality problems.
The next big step was the in-house Kaizen "event," which had to involve at least one manager who would demonstrate by his or her presence on the shop floor that management supported the process. A week-long Kaizen event can be either public or private (in-house). Both types are designed to involve and empower everyone, helping to break down inertia and the resistance to change. During each event, the Kaizen team is assigned an improvement project with specific goals. Following four to eight hours of classroom training, the team and consultants examine the existing manufacturing process, identify areas of waste and non value-added operations, and begin generating improvement ideas. The team then applies the ideas directly to the factory floor, keeping those that eliminate waste and contribute to building a one-piece-flow manufacturing process.
Plant 77 held its first in-house Kaizen event in July 1998, which proved so effective—reducing cycle times by 28 percent, work-in-progress by 73 percent, labor hours by 19 percent and floor space waste by 59 percent--that all of Fleetwood's other motor-home plants began working with TBM. Eventually, managers at plant 77 decided to stage a public Kaizen event.
During public kaizens, representatives from other companies—and other industries—visit the host company both to learn and to contribute by offering suggestions for process improvements. To understand the process more thoroughly, plant 77's production manager, John Fedele, and general manager, Al LaBelle, had attended public events at Maytag and Black & Decker before setting out to build Fleetwood's own GPS.
In December 1999, plant 77 became the first Fleetwood plant to hold a public Kaizen event, hosting 48 participants in five teams and working in five areas. Among the visitors were consultants from Japanese and Brazilian firms and representatives from Safari Motor Coach, Kaiser Aluminum and Perkins Diesel Engine. Notably, plant 77's was the first public Kaizen ever held on the west coast of the United States and the first in the RV industry.
The public Kaizen is basically a five-day workshop. During the first day and a half, participants attend basic training, where they learn about Kaizen methodology and develop new tools and skills they'll be using in the following week and beyond. After training, team members watch and assess one-piece-flow production as it takes place. They time and record current work practices, making note of areas in which waste occurs. On the third day, the participants implement their suggestions for change, and maintenance crews work through the night moving equipment and materials. After the shop floor has been reorganized, teams spend the fourth day refining changes, generating more ideas and re-timing production cycles to provide evidence of improvement. On the last day, participants gather to discuss the changes they've made, which usually include productivity gains and significant reductions in work-in-progress inventories, defects, lead time and wasted floor space.
Plant 77 is now holding two private five-day Kaizen events a month, making its way through every department on the line. "For one of those events, we have a consultant here," notes Ron Rabo, plant 77's Kaizen Promotion Office team manager. "The other we'll do on an in-house basis because we have very capable group leaders who have been sent to other plants to learn what has to be taught to the people who are involved in the event. In between those, we'll do three-day point kaizens. We'll put a team of people together and look at one specific process or procedure."
Less is more
Kaizen events are designed to be a learning process for everyone involved. One skill particularly important for Fleetwood employees is being able to identify waste.
"You're learning to recognize non value-added activities like waiting," Rabo explains. "[Waiting] is the worst sin of all because you're not doing anything. You never want someone standing around waiting for a part or waiting for other people to finish their work. You learn to recognize jobs that are being done inefficiently for a host of reasons."
Among the first waste issues the teams addressed was lumber. At the time of the public Kaizen, the plant used eight-foot lengths of lumber, which the supplier cut from 16-foot lengths. However, the teams discovered that, in most cases, seven-foot lengths were all that were necessary. The supplier now cuts from 14-foot lengths, which are more easily available and less wasteful—and save Fleetwood money.
Lumber also played a role in one of the primary problems that team members wanted to solve: a lack of floor space. "We used to have whole bunks of lumber stacked at each cut station," Rabo elaborates. "But we took out most of the lumber, and now we bring it into the shop in much smaller quantities, which frees up quite a bit of floor space. That way, we don't have to build a bigger building if we want to produce more coaches. And that's a key concept: building more with less." It's a concept that the plant is learning well: eliminating excess lumber storage, reorganizing tools and raw materials, and removing elevated work surfaces increased Fleetwood's available floor space by 29 percent.
Rabo admits that even for him, seeing was believing. The plant used to use large, heavy jigs to construct pine RV frames. "They were heavy metal jigs that you'd have to pick out of a big rack that took up floor space," he recalls. "We changed our way of thinking and made new jigs out of light material, 0.07-inch fiberglass skin. The new light jigs can be stored in little slots under each work station table. Workers can pull the appropriate jig readily without leaving their work areas. Just creating those new lightweight jigs saved floor space and time formerly spent looking for the right jig and improved safety by not making people move those heavy, cumbersome things around anymore."
Resistance to these kinds of changes can be one of the biggest initial obstacles for such an ambitious project, but the teams' attitudes toward change evolved during Fleetwood's first public Kaizen. "Once the group started to see the positive results from making changes, they began to understand," Rabo explains. "It wasn't easy, because it's culture, not just behavior. You learn that in the first few days of a Kaizen event. You learn that culture and behavior are hard to change because they're learned over a period of time of doing things a certain way day after day. It's hard to go in and turn a department on its head. But once you do that and have some success, it spreads throughout the plant."
As Fleetwood has worked to increase production efficiency by building more with less, plant 77 has been able to reduce labor usage by about 14 percent. This might have led to layoffs in many companies, but it didn't at the Chico site. For employees to truly cooperate in making the GPS implementation successful, they need to feel that they're not going to improve themselves right out of jobs.
A successful change culture requires a commitment from management that improvements won't result in layoffs. "Everyone must be encouraged to take part in creatively coming up with ideas to make improvement," says Sharma. "But if they do that and at the end of the day the company lays off two people who helped engineer the change, how would those two people feel? More important, how would the eight people feel who are left over? Do you think they're going to participate next time to help you do the same thing?"
The solution is a proactive growth strategy: As the company grows, present workers whose jobs have been eliminated due to efficiency increases are assigned new duties. This accomplishes two objectives: current employees have the job security they need so they'll continue to contribute to improvement efforts, and the necessity to hire and train new employees vanishes. Fleetwood had already begun a growth strategy, so it can also use attrition to its advantage: as workers leave, the plant won't replace them. Moreover, the company is starting to place an emphasis on in-sourcing. As the people, machines and materials are already paid for, there's no need to send materials out to cut costs.
Envisioning the future
So far, 19 of plant 77's departments have been "kaizened," resulting in a 65-percent overall reduction in work-in-progress and a 22-percent overall reduction in cycle times. The Chico site has also jumped from last to first in customer satisfaction among Fleetwood's five RV plants. Despite these tremendous advances, the plant has no plans to slow down — Kaizen is, after all, about continuous improvement. Without adding any additional buildings to the plant, the present goal is to increase production from the current average rate of 55 units per week to 150 units per week, eventually working up to 200 units per week. The plant currently produces two classes of RVs on one line, but managers would like to be able to produce each class on its own line to increase efficiency and boost production numbers. To do so, space within the plant would be reassigned for new activities, and two parallel production lines, one for each class, would replace the single U-shaped line now in use. The market would certainly allow Fleetwood room to grow--the plant currently has a 1,300-unit backlog.
Rabo envisions ultimately producing the RVs on a pace-line system, in which each coach (along with its customized work order) is slowly pulled through all production stages on a chain and doesn't stop moving until it's finished. Realizing this goal would make plant 77 the first in Fleetwood's RV division and one of the first in the RV industry to implement a pace-line system. Regardless of whether it attains these improvements, however, Fleetwood's plant 77 is a clear example of an organization that has embraced the spirit of Kaizen and is enjoying its rewards.
Vanessa R. Franco is Quality Digest's managing editor. Robert Green is Quality Digest's assistant editor. E-mail your comments to firstname.lastname@example.org.
(Reprinted, with permission from Quality Digest, copyright 2000, QCI International. All rights reserved.