Schneider Electric, Peru Operations: IW Best Plants Profile 2006

Schneider Electric, Peru Operations, Peru, Ind.

Employees: 529, union

Total Square Footage: 392,000

Primary product: Electrical panelboards

Start-up: 1920

Achievements: Implementation of 5S principles contributed to a 47% reduction in medical incident rate. Lean and Six Sigma improvements resulted in 28% increase in productivity over the past three years.

Kyle Hamm chuckles when he stops by a bin labeled "Aluminum Cans" on the bottom rack of a computer terminal where customer orders are generated to produce a line of Square D electrical panelboards. Hamm, senior manufacturing manager for the Peru, Ind., plant, is laughing because he knows that to an outsider, labeling such nonessential items may seem a little excessive.

But for Schneider Electric's Peru operations, part of $14.5 billion Paris-based electrical equipment manufacturer Schneider Electric SA, consistent labeling throughout the 392,000-square-foot plant is part of the plant's lean 5S philosophy of visualization, standardization and order. "You have to go to extremes to get your point across about labeling," Hamm says as he walks through the facility.

Anything to reduce waste is critical since 85% of the 2,200 lighting and power panelboards Schneider assembles and ships each day to commercial and industrial markets are customized orders.

Perhaps the plant's success can be attributed to its 97% on-time delivery rate in 2005. One of the ways the plant has been able to accomplish this is by minimizing production workers' non-value-added movements by implementing visual controls, such as labels, reconfiguring workstations and deploying a water-spider route.

On the kitting line, for instance, where workers select parts for a specific order, parts bins are labeled with the required number of pieces on the front and back sides so the water-spider -- a plant-floor worker who replenishes materials on a regular frequency -- can fill the bins from either side. The goal: "Kitters never run out of parts," says Kristen Workman, the plant's manufacturing engineering manager.

In addition, labels for the bins that carry the breaker switches are color-coded to prevent mix-ups; previously, the breakers were only identified by an inventory code that started with either the letter J or G. "Before, things were more disorganized and confusing," relates kitter Vincent Sampson as he prepares parts for the plant's NF product line. "Now everything is in order."

Move to where the plant makes its I-Line panelboards and the work area is a little more compact. That's because the assembly area was consolidated in 2005 with material racks now located within arm's reach of the production line. Previously assembly workers had to travel hundreds of feet to collect bus bars, the electrical current-carrying part of the panelboards. The plant also cut back from two three-person bus-bar installation lines to one five-person line. This, combined with other improvements, increased productivity by 30%, according to Workman.

The plant's improvements also are a testament to a solid union/management relationship, even after stressful contract negotiations last September.

"We are where we're at because we all work together and we know we have to," says chief union steward Rodney Butler. "We want to get to retirement and they [management] want to advance, so we work together and we both get to the same place."

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Five Critical Pieces

Managers at Schneider Electric SA's Peru, Ind., panelboard assembly plant believe they have taken 5s to a new level. 5s -- which stands for sort, shine, set in order, standardize and sustain -- is used by many facilities to create a clean and orderly workplace, but at the Peru plant, 5s is the cornerstone of its lean philosophy.

Over the past several years, the plant had implemented several failed 5s initiatives, according to Kristen Workman, the plant's engineering manager. That changed in 2004 after Workman attended a Lean Enterprise Institute session. "They said, 'If you can't do 5s, you can't do lean,'" she explains.

So instead of focusing primarily on the sorting and cleaning aspects of 5s, the Peru plant began using 5s as a visual-management tool. Now the plant is more focused on ensuring that employees have solid work instructions and that they understand process flow. This includes the use of value-stream maps, production-rate scoreboards and a pull-driven material-replenishment system.

"I like to tell all the zone leaders that are driving our 5s improvement that when I walk into their group, it needs to be visually apparent to me what the flow is, or what steps are being followed in any given part of the assembly process, or what the trigger is that calls for replenishment," says Kyle Hamm, senior manufacturing manager.

With this visual approach in place, the plant has reduced leadtime for its highest-volume product from 17 days to five days within the past two years. Indeed, the plant's execution of 5s has become one of its strongest attributes. It's one of the first things plant manager Robin Singleton noticed when she transferred to the Peru plant from another Schneider Electric plant in May.

"If you can take a building that is this old and 5s it and make it a showplace, as our facility is on the shop floor, I think it can be done any place. When you walk out there . . . you can tell that it's practiced and enforced every day and that employees have ownership in it because their work areas look good," Singleton says.

Keeping Everyone In The Loop

Plant-floor conflicts between hourly production workers and salaried management are fairly common. And the Peru, Ind., plant where Paris-based Schneider Electric SA makes its Square D brand of panelboards was no exception. In 2004 the plant's annual employee-satisfaction survey confirmed a rift existed. The plant scored low in management's communications to employees about general plant activities, according to Kyle Hamm, senior manufacturing manager.

In response, the plant established a communications council that comprises eight to 10 hourly and salaried workers with various job functions. During the council's quarterly meetings, the group addresses topics such as safety, 5s information, customer-service issues, bulletin board information and ways to enhance cross-functional communication.

"This council is geared more toward plant-level activity, so if we do a charity drive, we use this council to communicate what's going on with that event and we use it to communicate initiatives like healthy lifestyle or to communicate that a major distributor is visiting the facility to let them know who is here and why," Hamm says.

Progress of the council is reported to the plant manager and the human-resources manager.

Additionally, the plant has established a group communications board that is posted on the plant floor. Included on the board is the job-rotation sequence for production workers, 5s audit results and a place for employee suggestions. The board also lists plant-floor managers' names along with their direct extensions so employees can reach them if they have issues or concerns.

Righting The Ship

Before the spring of 2006, moving through the shipping area at Schneider Electric's Peru, Ind., panelboard assembly plant was like dodging traffic during rush hour. Forklift trucks were moving in and out in the same area where production operations were taking place. In a plant where 2,200 line items are shipped per day, that can make for a potentially unsafe and disruptive environment.

Meanwhile, the receiving area was separated from the production area in a central location that allowed for smoother flow. So after a week of meetings, a work team that included three hourly workers from shipping and three people from management decided to swap the shipping and receiving areas, consolidate inventory and add a dock door, says Chris Holland, a storage attendant in the shipping department.

"If you could have seen it before, you would have never believed we could have shipped," Holland says.

Now, the busy shipping area is isolated from the rest of the plant and the receiving area has a shorter travel distance for incoming materials. As a result, the plant was able to increase business volume by 20% without adding employees to the shipping area and 5,000 square feet of less space, according to Holland. "I think we created a flow that we didn't have," he says. "Before it was kind of helter-skelter."