IW Best Plants Profile - 2001

Metrics Make The Difference Observing Aircraft Evacuation Systems' decade-long transformation has been "like watching a rose bloom." ByMichael A. VerespejAircraft Evacuation Systems, Goodrich Corp., PhoenixAt a glance

99.5% product acceptance rate from customers.

87% of purchased materials no longer requires incoming inspection.

62% reduction in assembly hours since 1998.

60% of production workers certified as designated inspectors for quality.

100% empowered natural work teams in production. From the yellow rectangular spaces painted on the factory floor that identify where kitted components should be delivered, to the daily metric boards at each work cell, everything at the Aircraft Evacuation Systems (AES) Goodrich Corp. plant in Phoenix seems to have a single purpose: Make clear what needs to be done and make it simple to spot problems. Watching the 160 production workers make aircraft evacuation slides, it does appear that everything is simple, organized, and orderly. But that order masks four things: a complicated manufacturing process where three coats of adhesive must be applied to each piece of fabric for the main slide (as long as 38 ft); between 30 and 100 components must be hand-built and hand-glued to each slide; every slide must be tested in five critical areas and deployed; and the simplicity and smooth flow today are the culmination of a decade-long improvement effort. There are no before-and-after pictures, only a lean-manufacturing showcase displaying some of the old work tools that have been replaced, and the memories of people like Helen Pyle, quality assurance manager, and Keith Norgren, director of mature products and services, who remember how things were before the plant's transformation. "We had problems with delivery, issues with quality, and difficulty passing audits. We struggled mightily to build the products we needed to fill orders and were losing money," says Norgren, who arrived in 1991 as manager of engineering and was materials manager and director of operations before assuming his current job. "We were to the point where Boeing put a representative on-site . . . because of our problems." "To look at it now you wouldn't know how far we have come," he adds. "The place was like a job shop when I started." The transformation has been "like watching a rose bloom." Changes include a shift to work cells with point-of-use materials; staging of kaizen events to reorganize work flow and processes; creation of a single database for production, order entry, and purchasing, augmented by wireless computers on the shop floor; and the adoption of first monthly, then weekly, and now daily metrics. Indeed, on-time delivery, cycle time, product defect rates, and inventory turns have improved dramatically in the last 10 years, which has led to a product-quality turnaround. AES' product rejection rate from Boeing is now 0.5% compared with 8% to 9% 10 years ago. Its most recent product reliability and product ratings from Airbus Industrie -- which in July awarded AES the contract for its new double-decker A-380 aircraft that will need 18 slides each -- were 113.3% and 108.4%, respectively. In addition to production-floor initiatives, AES attributes its quality improvements to empowering production workers to become quality inspectors, as well as a and a program that has turned its key suppliers into partners, says Pyle. Six years ago AES' top five suppliers provided just 50% of the direct materials it uses. Today, they supply 87%, and all five have achieved Designated Source status, which means material from them no longer needs to be inspected when it arrives. Internally, "we realized that quality assurance had to come from inside the manufacturing process," says Pyle. So AES shifted quality responsibility to production operators through a Designated Inspector program begun in 1995. "Eleven years ago in quality assurance we had 19 inspectors on the floor and six in receiving," says Pyle. "Now we have five on the floor and just one in receiving," with 60% of production workers certified as Designated Inspectors. As a result, rework/scrap as a percentage of sales has dropped 75% since 1997, fabric-related defects have declined by 54% since 1996, and overall on-time delivery has risen to 94% from 74% in 1998. Those measures are improving annually. Last year, cycle times were cut 22%, WIP declined by 29%, and 33% more manufacturing floor space was freed up. Significantly, between 1998 and 2000, work-hours per unit have dropped from 126 to 62, with actual assembly time declining from 78.27 hours to 29.5 hours. "We have made huge strides," says former production worker Larry Fink, now a supervisor in the Airbus cell. "Most of the ideas came from operators' suggestions." For example, a worker in the Airbus Cell figured out a way to join the upper and lower halves of a slide at an earlier stage in the process, eliminating an entire day of cycle time. And in the 737X cell, where cycle time has dropped from 24 days in 1997 to four days, operating technicians came up with a way to correct for fabric twisting before the material is joined -- eliminating the need to cut and either add or take out fabric after joining. These types of improvements helped AES produce about 2,000 slides last year with an average 125 production workers and an average cycle time of 11 days compared with the 1,200 slides it produced in 1996 with 180 workers and average cycle time of 27 days. "We have [more than] doubled sales over the past four years" -- from $24.8 million in 1996 to $57.7 million last year -- without increasing head count, boosting plant-level profitability by 275% in the last four years, says Christine Probett, vice president and general manager. The main driver: the extension of metrics called Key Results to production in 1994 when AES also adopted Alternate Rewards, a quarterly bonus system for production workers based on team and individual metrics. "Until we developed the metrics, the operators didn't know what was important to the success of the business," says Norgren, "and had to guess" what might improve a process or flow. "The metrics give them a better sense of what drives the business." That has changed workers' mind-sets -- and their performance. "When we first started Alternate Rewards, work teams would get positive scores in maybe two or three of the 10 areas," he says. "If you look at a typical scorecard today, they are getting positive points in eight to 10 categories." Today's typical bonus (tabulated monthly, paid quarterly) averages $1 an hour or 10% of pay. What's more, a switch this year to daily metrics is expected to provide further dividends to AES and its workers. "It allows workers to focus daily on the things that drive the business and their bonus," says operations manager Bob Stabler. There's no turning back. AES is continuing to drive down cycle time to achieve service speed in manufacturing in order to increase its spare parts business. Metrics like those used in production are being applied to functional areas such as human resources, engineering, finance, marketing, information technology, and order entry -- an initiative that Probett began this year. "I want to drive lean through the entire enterprise using manufacturing terms such as cycle time and escapes (errors) in functional areas," she says. Web-Exclusive Best Practices By Michael A. Verespej Benchmarking contact: Bob Stabler, operations manager, [email protected], 602/232-4130. Key Results Manufacturing metrics aren't new, but AES' Key Results program has several different twists. First, metrics are tied to a pay-for-performance bonus tabulated monthly and issued quarterly. Second, individuals most responsible for achievement of the metrics must report the results at a monthly meeting of peers, which include department heads and top management. This year, AES added daily metrics that production operators track. "It involves the operator and you can react quicker," says operations manager Bob Stabler. In addition, it also introduced the Key Results concept this year across all departments -- not just manufacturing. For example, the engineering team reports monthly on all recurring and non-recurring costs. The finance team must report the number of errors associated with its end-of-the month closing process. The human resources department monitors the time it takes to fill positions and the information technologies group tracks how quickly they respond to help-desk requests. AES posts these and the production metrics on white visibility boards -- updated as often as once a week -- to keep everyone up-to-date on corporate performance. "It is a tremendous tool that increases accountability and ownership [and] is ideal for establishing visual, quantifiable goals for performance metrics," says Vice President and General Manager Christine Probett. Flow Specialists Manufacturing flow isn't a technology -- but it should be, says Keith Norgren, director of mature products and services. "In production, everything is flow and we do a good job here [in Phoenix] mapping out and understanding product flow." Indeed, 33% more floor space was freed up just last year through work flow and process changes. Besides, he says, "if we didn't track the flow of materials and the process we would just have to guess" what was needed to be more productive and efficient. "We even track our 'off' days until we get back on track." AES also has improved work flow by having point-of-use materials at each work cell and delivering kitted components to designated spots in each cell inside the factory each morning. That focus on flow has helped cut cycle time by 90% -- from 87 days in 1990 to just eight days last year. "It is a great 'technology' for the production floor that manufacturing engineers [everywhere] need to master," says Norgren. Materials Management Once an impediment to production speed, AES' materials management practices were cited as a best practice within Goodrich Aerospace in April 2000. A supplier alignment strategy initiated in 1995 has consolidated the supply base, eliminated receiving inspections for nearly 90% of materials and led to just-in-time deliveries where suppliers deliver kits of multiple components -- linked to current production schedules -- to either the stockroom or the factory floor. In addition, AES has established a direct electronic link with its largest customer that permits electronic messaging. Purchasing, production, and order entry are linked in a single database so that all know each others needs at a glance. That allows production supervisors to schedule production immediately when a new order comes in and makes purchasing aware of any parts that might be needed. Built in is an electronic shortage board that automatically points out any parts needs. AES' newest inventory program shares profits made in the spare parts market with key suppliers. That is, in exchange for reduced lead times and on-site consignment needed to supply those markets, AES provides suppliers with a price "premium." Masters of Simplicity At AES there is little wasted motion. But that's by design. For example, point-of-use materials racks at work cells were modified so they can be filled from the back without disrupting production. A two-bin system is used to store supplies in the office, small parts in the stockroom, and at manufacturing work cells as an early warning system that parts are needed. When a bin is empty in the stockroom or the office, new parts or supplies are ordered. In manufacturing, an empty bin is placed on the top of the point-of-use rack so the stockroom can visibly see that it needs to be replenished. Similarly, large spools of fabric were moved from the center of the caged stockroom to an outside wall, negating the need for forklifts in the caged area. Similarly, the charged-gas cylinders needed to inflate evacuation slides are no longer taken out of boxes and stored on shelves. Instead, pallets with the boxes of cylinders received from the supplier are placed on a conveyor line, opened, and then the conveyor line is tilted at a 45-degree angle so they can easily be removed as needed.