Lean delivers impressive results

TWO manufacturing companies in regional Victoria have achieved outstanding improvements in efficiency and competitiveness through the pursuit of lean manufacturing and continuous improvement objectives. Hartley Henderson reports.

TWO manufacturing companies in regional Victoria have achieved outstanding improvements in efficiency and competitiveness through the pursuit of lean manufacturing and continuous improvement objectives. Hartley Henderson reports.

OzPress in Ballarat, which employs some 30 people in producing stamped metal parts and assemblies for the automotive industry, achieved sales valued at $6m in 2006/7 after implementing a lean manufacturing program to attack waste and lift productivity.

MD, Mark Dwyer, says the program was initiated following recognition of the need to reduce costs and improve the bottom line performance of the business in the face of increasing overseas competition.

“Customers were demanding reduced prices and shortened lead times at the same time as our labour and materials overheads were increasing, so we needed to drive down our selling price to meet the global competition.

“In other words, there was an urgent need to cut costs by reducing waste and improving the efficiency of our operations,” Dwyer told Manufacturers Monthly.

“An important element in the push towards lean manufacturing was the adoption of a Hoshin Kanri Strategy whereby business targets were set, metrics were developed, the business plan was redeveloped, the costing and quotation system was revised, and a monitoring system was established.

“Following a review of the company’s operations, a comprehensive cost reduction program was implemented to target factors such as overproduction, waiting time for parts, excessive handling, over processing, inventory levels, excessive movement, and rework and repair,” Dwyer said.

A range of lean manufacturing tools was utilised including 5S housekeeping and safety analysis, JIT techniques (including Kanban, reduced lot sizes and quick die changeovers), as well as single piece flow, standardised work, and visual preventative maintenance.

“Key actions have included introducing state-of-the-art machines such as automated welding, and the purchase of larger (400t) 2 out progress dies which alone has resulted in a 30% process cost reduction.

“In addition, an energy savings plan is in place, and reductions have been made in areas such as lost time accidents, through-put time, sorting time, and set-up time which has improved from an average of two hours to around 15 minutes.

“A major action was to relocate all machines in the factory to provide the most productive layout and flow. This has enabled the operators to easily see products moving and to quickly identify any bottlenecks.

“Particular attention has been given to the ratio of inventory to sales which has resulted in inventory reduction of 200% over the last two years.

“A key target is to achieve a 30% increase in sales per person employed, primarily as a result of innovative processes and waste reduction.

“The lean manufacturing program at OzPress has provided an 87% improvement in productivity over the last four years and has laid a strong foundation for achieving further improvements,” Dwyer said.

Quality pays off

AME Systems in the Western Victorian town of Ararat is a major Australian-owned supplier of electrical harnesses and associated equipment to a wide variety of industries.

Electrical wiring harness and power and signal distribution systems are produced for heavy transport, automobiles, military equipment, special purpose vehicles, motor cycles, marine craft and aircraft.

Having commenced business in a garage back in 1972, the company now has a 13,000m2 facility in Ararat complemented by a finishing and distribution centre in Melbourne and turnover has grown by 300% since 2000.

According to AME’s GM, Chris Carthew, a key to the company’s success is the ability to get high quality products to the customer’s door quickly on a JIT, Kanban or order as required basis.

“AME has a continuous improvement culture that has provided great results, especially in relation to on-time delivery and quality.

“The company has a purpose-written operating system integrating all facets of engineering, purchasing, manufacturing, stores, dispatch, and quality assurance to meet the ever-changing requirements of customers”, Carthew told Manufacturers Monthly.

“This industry is quite labour intensive and in the last five years our workforce has grown from 100 to 330 people, so a lot of emphasis is put on training and skills development.

“At the same time we are investing in the latest technology, such as the recent purchase of a $1m Komax cable cutting machine, which is playing a big part in improving our general efficiency.

“Our cutting department is cutting one third more circuits with no additional staff as a result of continuous improvement and the new equipment.

“Ongoing innovation at AME has been significantly assisted by our involvement in government group initiatives such as the High Performance Consortium which offers the opportunity for people from a wide variety of industries to swap ideas.

“Innovations Insight is another valuable initiative which is a form of industrial tourism that enables participants to view in real life the improvements made by others,” Carthew said.