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Using a Systematic Approach

"People finding a better way" is the rally cry at Dana Corporation, and for good reason. How is Dana finding a better way to serve their customers in the fast-paced, demanding auto-motive aftermarket? For one, the Dana Automotive Aftermarket Group (AAG) Engine Management Division is committed to carrying all automotive parts for all cars in the market. Imagine the complexity in bringing this demanding marketing strategy to fruition. A number of issues would have to be addressed, for instance, how to schedule the lines, how to stock inventory, how to plan ship-ping and receiving, etc. These challenges and Dana's improvement activities were discussed during a recent AME workshop at the Dana AAG Ristance Plant in Argos, IN.

IMPACT for Better Customer Service

In order to support this strategy, AAG has implemented the IMPACT (Improve Performance And Create Teamwork) system as part of its Operation Phoenix (finding a better way) strategy. IMPACT, started in 1993 at six plants, is a sys-tematic and organized approach to help better serve their customers at competitive prices, with unsrpassed delivery. This system is Dana's mechanism to employ lean manu-facturing techniques throughout their value chain. IMPACT is the common thread that weaves all of the divergent operations together. This enables all the Dana employ-ees to communicate in the same lan-guage; before IMPACT, they may have been unaware of other infor-mation or cutting edge techniques.

To bridge the communication gap, Dana has an intuitive website that offers a library of information including chat rooms, best practice success stories, and presentation materials about IMPACT elements. IMPACT elements are listed in Figure 1.

By implementing IMPACT, Dana has realized a significant improve-ment in scrap rates, inventory, and productivity. (See Figure 2.) Even with a year-to-date cost reduction of $631,000 (at just two of the Ris-tance plants; the figure will be much higher for the 700 AAG projects that, will take place this year) trending to, $1.1 million, the management team at Dana realizes that there is a lot of waste that needs to be eliminated. In fact, Dana believes that they have at least $525 million of (waste) oppor-tunity for improvement in the AAG. Their plan for long-term success is a three-phase focus. Dana is in Phase I, concentrating on making internal business units lean. Phase II is elim-ination of external waste by working with suppliers, plus Dana AAG value added facilities and distribution facil-ities. In Phase III, they realize the improvements based on elimination of wastes in internal and external operations.

The focus of the three-phase plan is to reduce the amount of inventory that is carried throughout the Dana system. Inventory that per-meates throughout the business stream manifests itself in the form of material from vendors that support the manufacturing facilities (building in excess of customer order size) and a distribution center carry-ing more than what is pulled by the external customer. Dana's inventory situation is further complicated due to the 96 percent in 48-hour delivery requirement which is the industry norm. The execution of this plan will reduce the amount of inventory carried in the Dana system and allow the manufacturing process to build closer to actual customer demand.

The IMPACT system attacks inventory in bit-sized pieces. IMPACT examines each process under the microscope and applies the appro-priate tools to eliminate the barriers that extend leadtimes and prevent quick order turnaround.

IMPACT Elements
*IMPACT workshop training manuals
*IMPACT specialists toolkit
*IMPACT 5-S program
*IMPACT interactive website
*Lean manufacturing training modules
*EIM video training tapes
(EIM - Excellence in Manufacturing)
*IMPACT specialists mentoring
and training program
*IMPACT lean supplier training
*IMPACT monthly report -
implementation progress
*IMPACT specialists certification
process.

Figure 1.

Measurement External failure Internal failure Scrap and rework Inventory Productivity Cost reductions	Improvement 1% decrease in ppm 56% decrease in ppm 40% decrease 26% decrease 20% increase $10-12 million
Figure 2. Average annual improvements for all the AAG--for over 700 workshops.

Jim Van Gieson, the director of continuous improvement for Dana Corporation and a member of the AME Great Lakes regional board, not only organizes the IMPACT training program but also ensures that improvement activities are focused on areas that require the most help. He said that the changes in "thinking" are best received where plants are underperforming. "Plants in pain come to grips with change at a faster rate than the plants that are feeling no pain," he said. This strategy has yielded significant improvements for Dana.

Ristance Plant in Argos

The first day of the AME educational event was dedicated to discussions on Dana's business strategy as well as instruction in the IMPACT process. The company believes that 25-50 percent of its costs are wasteful, so these techniques are critical to the company's success. The company is striving to become number one or two in each business category. They are confident that executing the IMPACT philosophy throughout their value chain will thrust them to this goal.

The next day, attendees selected the team they wished to serve on. Teams and focus areas included: Blue Team - productivity in cell #5 (ignition wires); Red Team - setup reduction in termination machines in all cells; Yellow Team - quality improvement in set box labeling error elimination. The teams met at the Ristance plant and started with a plant tour in their respective teams. A Ristance team facilitator who was experienced in the IMPACT methodology guided each team. The teams then regrouped and went through additional team skills training, the first of which was a Lego manufac-turing exercise.

Lego Exercise

The Lego training demonstrated the difference between batch manufacturing and one-piece flow with a Kanban production triggering system. Each team went through this training and the results were truly astounding.

This training worked as follows: Six members volunteered to be batch manufacturers and began to assemble Lego components according to their standard work piece that each facilitator furnished; when 25 units were assembled at each station, they were passed to the next operation. This method continued until 25 were complete. The team then measured the time it took to build 25 units and WIP inventory. Then the team picked three team members to assemble the Legos in three stations; each station signaled production using Kanban circles. This method of manufacturing, which brought superior results, regulated production to keep pace with each operation within the manufac-turing process. All three teams reported 250 percent increases in productivity. One-piece flow drives home the IMPACT of cycle time and waste reduction. This method and traditional batch manufacturing have equal value-added time. The difference is the elimination of waiting time between operations.

Hunting for Waste

After the Lego demonstrations, the teams went back out to the plant floor and conducted "Muda" walking exercises. This training mechanism puts team members back on the shop floor looking for waste-related activities. Most activities (an estimated 90 percent) are waste, according to our IMPACT training.

Figure 3. Blue Team members; they
focused on productivity in cell #5 (ignition wires).

Every process in manufacturing and in administrative/office functions is loaded with waste. Waste activities can fall into these buckets:

Over/under production
Waiting time
Processing
Transport
Inventory
Motion
Defects

After spending an hour on the shop floor, the teams reconvened in the training center to review findings. It was amazing to see all the activities, witnessed by team members, which fell into waste buckets. Some of the activities documented were: waiting for parts, WIP inventory, and transporting items for further processing. Some aspects were waste-related but were necessary to support the current process.

Brainstorming, Planning Improvements

Each workshop team had a Ristance team member from the IMPACT team as a representative of the focus area. This gave the three teams direct access to needed specifics on activities. After discussing the muda items, the teams targeted the areas of biggest IMPACT. Then they went through a brain-storming session that focused on utilizing the tools such as identifying each step and movement as value-added or non-value-added - as well as quantifying the work in process (WIP) waiting time between opera-tions. Objectives were to eliminate waste and allow Ristance to get closer to the customer and in turn, lower inventories.

The Blue Team (the one I was on) devised a plan to eliminate a large conveyor table and link each process in spark plug wire manufacturing together. This plan required us to return to the shop floor and time each operation and determine the takt time of the operation. We completed these activities and determined that the conveyor was not required and in fact, it inhibited the manufacturing process by forcing employees to transport inventory from one side to another.

The team then set up rough guidelines for WIP and created a new layout for the cell with the help of Melaine "Mel" Pipps, the cell representative. The results were quite staggering in transport, travel distances, waiting, excess handling, and WIP reduction.

After the teams documented the potential results from their suggested improvements (teams did not have enough time to implement the changes), they quickly assembled them into presentations for management. It is the Kaizen/IMPACT way for team members to talk about the changes they helped to effect. All three teams met at a local hotel with the AME regional board of directors and Dana's internal Continuous Improvement (CI) team, and pre-sented their outcomes.

For Team 1 (ignition wire) the productivity team summary of results included: floor space reduced 36 percent, down to 1125 sq. ft.; WIP reduced 95 percent to 492 units; staffing decreased 25 percent, to six employees; travel distance reduced 46 percent to 85 feet; wires per person increased 40 percent to 148 units per person; and cycle time cut 95 percent to 0.6 hours.

Team 2 (setup reduction) reported an 81 percent decrease for the time average on machines. Team 3 (quality improvement) reported $12,346 saved (projected annual savings) as a result of error reduction.

The possibilities for improvement are endless for the Dana system. It was refreshing that their management was open and receptive. Jim Van Gieson said that IMPACT is not a destination, but a journey. Improvement is never-ending and IMPACT is the chosen vehicle used by Dana to rid the evil spirits from their operations.

This behavior is a direct about-face from what many manufacturing managers in the old days would have done. Traditional managers would have panicked if someone other than themselves had discovered a better way, let alone outsiders from other industries. Dana has got the improvement religion, and it shows.