27 January 2000
A flexible workforce is key to Siemens' just-in-time operations. David Arminas reports from Forchheim, Germany, and asks if the UK can learn from its example
Just-in-time production (JIT) delivers many benefits if the processes, including employee attitudes, are focused firmly on customer satisfaction. Manufacturing giant Siemens has found its JIT supply chain operates best when production teams meet the customers.
Klaus Hambuchen, president of Siemens' Computed Tomography (CT) division, has the air of a man who is confident he is building a better mousetrap. "We don't do nuts and bolts," he said. "Fifty per cent of our cost is in the computer program, which is all done in house."
The mousetrap in this case is a medical catscan, a large, expensive and complex diagnostic machine that generates computer images of internal parts of the body. The patient lies on a bed that passes through a 400kg circular scanner, which rotates every half-second and can pinpoint the exact location and size of problems, thereby saving costly exploratory surgery.
Around 1,000 catscans a year are produced at Siemens' CT division in Forchheim, Germany. In December, the division won the German round of consultancy AT Kearney's Global Excellence in Operations Award.
JIT production has turned the division into an "owner of information infrastructure". Only five assemblages, all made by suppliers, go into the production of a catscan. The computer program is one of the most guarded parts of the machine's development.
The market is highly competitive among the world's four catscan manufacturers. Hambuchen has placed his faith in the division's revamped supply chain to create a competitive edge. For the past two years, it has introduced and been refining JIT.
Lead times have improved from 22 days to seven and the number of suppliers has been reduced from hundreds (the exact number was unknown) to 25.
Franz Grasser, the division's vice-president of logistics and manufacturing, has the evangelical zeal of the converted when it comes to JIT. He is doing everything he can to get rid of paper in the supply chain. He has already discarded 18 of the 19 forms needed for ordering an assemblage. That last one, he said, is one too many.
The division is due to pilot a programme this winter to get rid of that last form, which alerts the supplier to bring in an assemblage. Instead, video cameras will feed information directly to the supplier.
Importantly, stressed Grasser, the workforce has agreed to be flexible and work only when there is work to do. If there's no work, they can go home.
"It sounds like Siemens has cracked it," said Nick Rich, senior researcher at the Lean Enterprise Research Centre at Cardiff Business School. "It is not paying lip service to the empowerment of employees below management level."
Frank Hasselberg, Siemens' director of logistics, admits that getting the flexible working system was hard work with the unions, but it is the crux of JIT. The groups work on one order from beginning to end. "I don't care who works when, as long as the production is completed," he said.
The company insists that training has not been sacrificed. Staff have been trained to be generalists, so that they can interchange their jobs. The "customer order to customer installation" philosophy is adopted to the full, as the same production staff install the order that they worked on for the customer.
So, can this approach work in the UK? "We're not quite at that stage," said Mick Crowe, head of logistics for internal supply at BAe Systems' Samlesbury Aerodrome, where Eurofighter production is under way.
The company now uses a one-piece flow supply chain for building around 50 planes a year. Since the mid-1990s, it has been re-engineering its production to integrate suppliers and Crowe said many lessons had been learnt from BAe's JIT policies for manufacturing Airbus components. There is less handling of "widgets", he said, and more handling of completely assembled components from suppliers.
BAe Systems has introduced cell manufacturing - a group of multi-disciplined, integrated product teams that follow the plane from design right through to support after delivery. The production of a Eurofighter takes around 18 months, compared with 40 months for its predecessor, the Tornado.
Crowe realises that processes have to be improved as customer demands became more stringent. "Changing working methods is a very big step," he said, "but it is also quite exciting."