In my last column (Industry Forum, January 2003), I wrote about promoting investment through innovative business solutions. Based on a recent spate of negative data from the U.S. Department of Labor, it is becoming clear that manufacturers need to do more. The percentage of unemployed workers has increased by more than 50% between calendar year 2000 and the August 2003 annualized rate. At the same time, the trade deficit has sharply increased and may reach $500 billion in 2003, a 20% increase over 2002's record level of $418 billion.
Many companies are taking a quick-fix approach by cutting costs to save this quarter's profit margin. Closing facilities and outsourcing fabrication is often an immediate response. Another path may be to reduce staffing levels to record low numbers. This can cause permanent harm to a company. Damage arises in the form of lost know-how and less control over innovation and quality. So the puzzle to be solved is how to realize short-term objectives without putting a company's future in jeopardy. More simply put, how can we do more for less?
During the last year and a half at Eisenmann, a dedicated team worked to solve this puzzle. Theirs is a story worth sharing. Eisenmann is a worldwide supplier of paint finishing and conveyor systems for both the automotive and general industry.
The team started by asking some basic questions: Instead of out-sourcing work, could we invest further in our own fabrication facility and do more than just fabricate? Could we build and test entire systems before delivery? If possible, the benefits would be numerous.
Allowing entire engineering departments to witness the fabrication and assembly of all system components ensures that the day-to-day issues become part of their blood. The simple problems are found swiftly, allowing us to focus on the smaller details: How can we take 10 minutes off the assembly time of a repetitive item? How can we build this to make it more readily shippable? Or, how can maintainability be improved?
It is more difficult to make progress on these developments when components are purchased from various suppliers and assembled thousands of miles from the home office. The benefit of every engineer witnessing every day is invaluable.
Once we started in this direction, improvement became contagious, both within the company and with our customers. How do we integrate wireways, control panels, piping, duct systems and other components into the assembled structure so that we truly are delivering a completed module? Once the module is functioning, let's invite the customer to thoroughly check it prior to delivery. If this can be done for a $100,000 component, why can't it be done for a $100 million system?
Costs for installation were halved since components were prefit and shipped in the order of assembly. The field time required to install the system was reduced by one-third. The cost of correcting mistakes (often at a labor premium) was nearly eliminated. Customers benefited from a system constructed in 20% less time, reducing cost and bringing product to market quicker. Avoiding external contractors meant that employees often repeated the same assignment, increasing efficiency and the revenue generated per employee.
While preassembling and testing the systems, we also invited prospective customers to see what we were doing. Showing control over each step of our process made a strong impression and contributed to our success at securing additional business.
The ultimate challenge came when we followed this process for a major automotive assembly plant. More than $100 million of equipment was preassembled and tested prior to delivery. The benefits of this large-scale effort were intensively magnified.
Depending on the capabilities or product line of a company, this approach may require modification. Nonetheless, it is worth noting that 100 dedicated employees can make a small dent in the current tide of negative statistics.