IW Best Plants Profile - 1995

Scrap cost as a per-cent of sales, 0.82%.
Reduced defects in parts per million from 25 in 1990 to two in 1994.
Achieved ISO 9002 registration from British Standards Institute in October 1994.
Current first-pass yield, 99.1%.
Assemblies per employee (in thousands), 88.3 in 1994, up from 70.1 in 1990.
Received the Toyota "Excellent" Award for Quality Performance for 1992, 1993, and 1994.
During an 18-month period in 1994 and 1995, shipped 1.5 million valve lifters to Toyota-Japan with a zero defect rate.

Ricardo Garcia has been to General Motors Corp.'s Ramos Arizpe engine plant in Mexico seven times in the last two years. The production-line assembly operator acts as a customer-service ambassador for GM's Delphi Energy & Engine Management Systems plant in Grand Rapids, Mich. As a Spanish-speaking hourly employee who was born in Los Nogales, Mexico, Garcia has helped explain the nuances of the Spanish-language product manual, how his plant's hydraulic valve lifters are made, how to identify product defects, and how to store and handle the valve lifters without causing damage. During one trip Garcia solved a vexing problem. When Delphi's returnable plastic shipping containers came back empty to Grand Rapids from Mexico, they had tiny sand particles on the inside. (Sand and engine parts don't mix.) The bilingual Garcia discovered through casual conversations with Arizpe employees that the shipping containers were stored outside the plant near a sand pit where gusts of wind would blow sand into the containers. Now the containers are wrapped in plastic. Problem solved. "GM Mexico had a hard time getting answers to some technical problems because of the language difference," points out Ron Korte, plant manager at Delphi Energy & Engine Management Systems, a division of GM's $22 billion Delphi Automotive Systems Components Group. "Before Ricardo began going to Mexico, conversations and communications were conducted only in English, and that created an instant language barrier," he adds.

When the GM plant in St. Catharines, Ont., called Delphi Energy to report a quality problem, eight employees jumped into a van. By the time they reached the Canadian plant seven hours later, the customer plant had traced the bad part to another supplier. But before heading home to Michigan the Delphi customer- service team stayed around to sort seven pallets of problem stock.

When Suzuki Motor Corp. complained about noise coming from Delphi's hydraulic valve lifters, a cross-functional team of Delphi employees boarded a plane and spent three days in Japan tracing the problem to the oil pump -- made by another supplier. "We take a 'quality with a vengeance' approach," says Rich Erickson, plant quality manager. "We'll even manually sort to protect the customer from manufacturing problems. If it's a concern to our customer, we don't argue. Each year we list the top five customer complaints and eliminate them the following year." Labor and management work hard to create the shortest line of communication between those who make the product and the customer who uses the product. Don Rebentisch, bargaining chairman for United Auto Workers Local 167, by his own admission isn't a fire-breathing, cigar-smoking union leader, despite a family union legacy. "Those days are gone forever," the 19-year plant veteran candidly admits. "I've had to change some of my paradigms. Customers are just as important as union contracts. We separate contract issues from customer issues. Customer problems come first. As far as job security is concerned, that comes from top-notch quality, cost, and delivery. "Anytime there is a crisis, a union/management team goes to the customer. In the past I didn't care about products and processes. That was management's responsibility. Now the union must jointly assist management to resolve these issues." Delphi is a maverick facility that has thrown out the book on some tried-and-true manufacturing principles when they don't make sense and interfere with customer satisfaction. The plant scrapped materials resource planning and replaced it with a customer-oriented pull system of production scheduling. A complex and costly computerized automatic-storage-and-retrieval inventory-control system was scuttled in favor of a placard-based kanban system, and as a result inventory float has been reduced from five to 10 days to virtually zero. Of 30 to 40 basic manufacturing action strategies emphasized by GM-corporate to improve quality, Delphi Energy concentrates on just five. "We picked five key strategies -- workplace organization and visual controls, leadtime reduction, a pull manufacturing system, identification and elimination of waste, and planned maintenance -- because they made the most sense for our plant and our customers," says Korte. To assess how well the strategies are working, Korte meets with 15 to 20 of the plant's 75 to 100 teams every Friday for seven to eight hours. He spends about 30 minutes with each team, and he meets with each team in the plant once every five weeks. "The biggest lesson I've learned is that there's nothing that can replace having personal contact on the floor with the teams," says Korte. "I used to dream about doing it. I used to talk about doing it. Now I do it. It helps me understand their roadblocks and obstacles and how I can help them overcome them. And unless you make a commitment, have appointments and schedules to get it done, it doesn't get done," he adds. Also, the independent-thinking plant leadership doesn't buy into computer-integrated manufacturing, because it produces only a handful of product lines in very high volume and at high speed. The plant's 1,179 employees make about 500,000 precision-machined hydraulic valve lifters a day in the 1.4-million-sq-ft facility. The self-styled plant runs "rogue" (defective) master parts through its manufacturing systems every day. "We want to make sure our error-proofing system is functioning properly," says Erickson. "Our assembly-line operators begin the day's production with known defective parts," he says. The plant wasn't always a benchmarker's paradise. Early in 1990, Toyota Motor Corp. slapped Delphi's face with a figurative white glove for not paying enough attention to continuous quality improvement -- despite Toyota's own estimates that the plant's defect rate was a nearly pure three parts per million. When the Grand Rapids operation added up the feedback from Toyota and other customers, it received quite a wake-up call. Management realized it had to switch its strategy of running a 100-yard quality dash to focus on running a mega-marathon of continuous improvement. Much of the plant's quality improvements -- in 1994 the plant made 100 million valve lifters and had only 200 bad parts -- can be traced to a manufacturing structure that was initiated in 1990. The operation is now structured into three separate product-line-focused plants within a plant. Each of the three is a self-sustaining business enterprise consisting of a manager and the requisite engineering, quality, manufacturing, production control, logistics, and financial professionals. Hourly employees, including skilled labor, have been focused by classification or assignment to specific product teams. Ron Conrad, a screw-machine operator, has seen many changes during his 19 years working at the plant. "In the past, management treated us like a number. Now we are treated more like adults, and the trust factor between labor and management is much higher," says Conrad. "At one time information didn't flow up the organization without being filtered. Now the organization sets realistic goals, and management really supports us. The old philosophy of pissing people off to make them work harder is outdated and doesn't work. There are good checks and balances between labor and management, and that's why this plant works so well."