◆ Reducing transportation cost by filling trucks through less frequent deliv-
eries and increasing inventory levels in the plant.
◆ Reducing labor by assigning material handling and setup duties to workers
in a cell, and as a result adding non-value-added activities to the core
value-added workers.
“Lean Sigma” promises to provide the best of both worlds, but the “lean” in
lean sigma is often narrowly construed to be a few technical tools like making
a cell or developing standardized work. The result is point kaizen using both
lean and Six Sigma tools without true flow and without the cultural changes
necessary to support and sustain lean transformation. It has many of the weak-
nesses of the general process improvement approach through kaizen work-
shops and Six Sigma tools.
Case Example: Tenneco Smithville, Radical Kaizen, Phase I
Tenneco Automotive opened its exhaust system plant in Smithville,
Tennessee, in 1994. The first customer was Toyota, and Nissan, Saturn,
Honda, and Corvette followed later. In 1996 the plant was ISO
9000 certified and then QS 9000 certified and things were grand.
Unfortunately, the plant was set up around Tenneco’s traditional
concept of process islands, with stamping, pipe bending, and different
groups of welding machines together by function. Inventory of raw
materials and intermediate products were everywhere, and large batches
of each product type were run between changeovers. On the surface
the plant was performing better than expected, and there did not seem
to be a pressing need for change. It was more profitable than forecasted,
and in terms of their primary measure—labor variances—they were $1
million favorable to plan.
But in 2000 trouble signs started to appear. Profits were low.
Quality for Toyota was acceptable, but delivery reliability was in
Toyota’s words “dangerous.” At one point, because of quality
problems, Tenneco had to express ship parts by jet from Japan for
Toyota at $30,000 a trip. It was clear they needed to do something,
or they wouldn’t get any future business—half the plant’s business—
from Toyota. At the same time, a new vice president of manufacturing,
Joe Czarnecki, was brought in, and he had a completely different
type of measurement. He noted that while the plant was profitable,
by his calculations they should have been 20 percent more prof-
itable. He looked at indirect labor efficiency, overtime, and invento-
ry, which were all negative relative to his targets. Nissan was asking
for a 20 percent price reduction, and Toyota was introducing a new
program of price-downs. The need for change was rising fast to a
crisis level.Chapter 19. Lean Implementation Strategies and Tactics 399