Case Studies: Process Improvement Drives Operational Excellence

February 1, 2008
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In September 2006, glass producer AGC partnered with the Juran Institute to launch an initiative to drive operational excellence and improve profitability. This initiative has been coined JPI (Jikko Process Improvement) by AGC and is based on the principles of Value Stream Management.



Competitive pressures compounded by increased customer expectations with respect to quality, service and price has prompted many businesses to seek creative solutions. A wholly owned subsidiary of the world’s second largest glass producer Asahi Glass Co., Alpharetta, GA-based AGC Flat Glass North America operates 45 facilities throughout North America, all of which are experiencing pressure to provide the lowest total-cost product with rapid order fulfillment in a highly competitive market.

In September 2006, AGC partnered with the Juran Institute (Southbury, CT) to launch an initiative to drive operational excellence and improve profitability. This initiative has been coined JPI (Jikko Process Improvement) by AGC and is based on the principles of Value Stream Management.

One of the first facilities to implement the JPI process was AGC Hebron, a fabrication facility located near Columbus, OH. Hebron serves the Ohio market and neighboring states. Hebron receives glass from one of AGC’s primary glass facilities and transforms these raw materials into a number of end products, including single pane products, sealed insulated units for window manufacturing and tempered (heat-treated) glass for safety applications. Hebron fabrication processes include cutting, tempering and insulating unit assembly.

An initial assessment of the facility was performed and the results indicated that manufacturing lead times were exceeding seven days with wide variation of up to weeks in some cases. Excess inventory made it nearly impossible to quickly find a specific job or determine what to fabricate next. There also was a concern for employee safety, specifically because of the risk of injury attributed to the large cut glass inventory.

Variation in product demand placed on manufacturing also served to complicate matters. Some days the plant capacity was under used, while on other days customer demand exceeded capacity by two fold.

A cross-functional team was formed to drive the improvement efforts. Team members included sales, production control, purchasing, production employees, corporate JPI members and a Juran transformation coach. In the first days the team was introduced to Value Stream Management, the concept of focusing all business functions to drive customer-focused improvement. The team quickly developed a Current State Map, a tool to help them to understand the actual situation on the production floor and in-order fulfillment activities. After completion, the map clearly told the present story and set a firm direction for future improvement.

The first step to improve the efficiency of the work place focused on implementing the 6S process (sort, set-in-place, sweep/shine, standardize, self-discipline and safety). After the initial training the team began to attack waste-sorting unnecessary items from needed items, implementing visual control for tools and materials, cleaning everything and putting in place a robust auditing system to sustain the gains.

From there, the team focused on their Current State Map. Points of delay and inventory builds were addressed and in most cases eliminated. Equipment was relocated to aid product flow, which reduced movement and product queues. To further consolidate inventory, more than half of the material handling racks used to store glass were removed. The reduction in inventory in a matter of days translated to improved lead times to the customer.

At this point the Hebron team adopted the motto, “There is no tomorrow.” Inherent in this philosophy is the idea that customer delivery requirements will be met and all products can and will be produced in a single day. This expectation was well within the plant capabilities for cycle times.

The team also studied demand patterns compared to the demonstrated capacity. After this relationship was understood and lead times were reduced, the plant could successfully be level loaded, thus further solidifying delivery reliability to levels above 99% on time. This percentage was well above historic levels.

The improved product flow quickly identified quality issues that were previously hidden by excess work in process. In the weeks that followed, a number of other enhancements were included such as improved equipment maintenance to ensure reliability, mistake-proofing methods, kanbans for supply replenishment and a focus on faster changeovers.

During the time the physical changes were occurring, another important transformation took place-the culture slowly changed. The plant began running differently. Employees knew what the customer needed by the hour and produced accordingly. Orders moved seamlessly through the operations, making work life easier and, more importantly, safer.

Within weeks the customers began to see and feel the changes. Customer complaints turned to compliments. Overall demand steadily increased as past customers lost because of service issues began to return and new customers began to come to Hebron for their glass needs. The financial results followed as Hebron experienced a turn around in profitability.

Commenting on profitability after implementing Value Stream Management, Jerry Hackler, Hebron’s operations manager remarked, “The effect of the bottom line came quickly. Even in the early months the facility generated more operating income on fewer sales, a clear indication of the cost improvement impact.”

Looking forward, AGC Hebron is well positioned for increased market share and profitability with continued building on the principles of Value Stream Management. As for the condition on the plant floor, Plant Manager Bill Bryan states, “The operations are safer than ever before and employee moral is the highest I’ve seen in my six years with AGC.”
    Juran Institute Inc.
    (203) 267-3445
    www.juran.com
    Reply 11


Benefits

  • After implementation of the JPI initiative, AGC experienced a steady increase in customer demand and profitability.

  • The initiative resulted in a safer work environment and higher moral for AGC’s employees.

  • The initiative brought AGC’s on-time delivery reliability to above 99%.
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