Friday, March 31, 2006
The automotive sector is making increased productivity, production cost reduction and investment in creativity its priorities. Their survival strategy has paid off with new opportunities, new markets and increased export figures. Oyak Renaut, Anadolu Isuzu, Ford Otosan and Toyota tell their success stories
HAMİDE HANGÜL
ISTANBUL-TURKISH DAILY NEWS/REFERANS
The Turkish automotive sector, in its attempt to counter the negative effects of the overvalued lira, bases its survival strategy on increasing productivity. The sector has lost 23 percent of its competitive power due to the drop in the value of the euro against the YTL. Aiming at reducing production costs, the sector has adopted a strategy of increasing personnel productivity that would result in minimizing energy consumption and economizing the use of raw materials. Some companies in the sector have already succeeded in their goals.
Oyak Renault recorded revenue of 1.2 million euros last year after taking measures to use its resources more productively. Similarly, Ford Otosan launched its efforts in 2001 aiming to reduce production errors to 3.4 in 1 million, saving $26 million last year.
While increasing productivity by specialized personnel, the sector is also opting for innovation to sustain profitability in the highly competitive environment. By producing new products developed by creative ideas, they aim to achieve product versatility enabling higher competitiveness both in the domestic market and the international market. Empowering the engineering staff is likely to be the next step in the automotive sector.
Another problem challenging the sector is the ongoing decrease in incentives for investment. There was a risk of not being able to sustain the success of the past five years when the automotive sector increased its exports from $2.3 billion to $12 billion because of the decline in investor incentives. The sector believes that tax advantages offered the investor are being misread as “loss of revenue.” In order to compete with countries like the Czech Republic, Slovakia, Poland, Slovenia and Romania, where the investor receives exceptional support, the Turkish automotive sector underlines the necessity of the government's support.
Tax reductions based on levels and categories of investment would increase competitive capacity. The inability to attract new factories and new products is limiting exports to existing models. As the existing models become outdated, concern grows that export revenues will decrease. The sector gained $2.3 billion in exports in 2000, moving up from seventh place to second in overall Turkish economic ratings in 2000. The sector's export figures for 2005 were $12 billion.
Oyak Renault:
Exporting two-thirds of its production to five continents and 100 countries, Oyak Renault has a figure of a $6.5 billion export turnover for eight years, $1.5 billion of it for 2005. The company makes more than 50 percent of its purchases of raw materials, parts and supplies from Bursa and surrounding areas. Their 105 affiliated manufacturers recorded a turnover of $500 million last year. Oyak Renault General Manager Alain Gabillet said problems emerged in the sector with the overvaluation of the YTL. In order to counter the effects of an overvalued lira, they have taken serious measures to increase productivity. Still continuing to apply the measures, he said they were standardizing the work shifts and processes with the Renault Production System. “Mistakes are never tolerated. Manufacturers are asked to supply high-quality products with low costs in a short time,” Gabillet said. “We have prioritized staff training to reach optimal performance in human resources. By training our staff, we are aiming to reach an optimal level in the usage of energy and raw materials. Meanwhile, our personnel can suggest productivity and development proposals in any area. Last year, we received 14,000 proposals from our workers, 9,500 of which were applied to add 1.2 million euros to our profits. We will continue doing this.”
Anadolu Isuzu:
Turkish engineers now design the Turquaz and Royal bus models that are produced in Anadolu Isuzu's Gebze plant. The newly designed models are being exported to 18 countries. Ten percent of the 750-strong workforce of Anadolu Isuzu is employed in product design and development. Metin Ecevit, the head of the Automotive Group of the Anadolu Group of Companies, believes that survival in the automotive sector is directly linked to creativity. Ecevit says being ahead of the market should be favored instead of following the market. “If you run instead of walking, then you might be able to stand up on your own two feet. Otherwise, companies will stop profiting in this kind of a highly competitive market.”
The automotive sector has to follow new technologies closely in order to continue being a profitable sector, Ecevit told Referans. “The only way to profit is in innovation. As Anadolu Isuzu, we are working on diversifying our products as well as creating new markets. In this context, our new engines and new models are gradually appearing in the market. We are also developing our marketing capacity abroad. We have created a dynamic pool for the employment of engineers. By hiring 25 new engineers, we will have 50 in our engineering force.”
Ford Otosan:
With two plants in Kocaeli and Eskişehir, Ford Otosan is continuously working on export-oriented capacity-building and investing in new products. It has invested $375 million in extra capacity-building. The annual production capacity of the Kocaeli plant will increase to 280,000 units in 2007 from the current 240,000. They will also update and diversify their models of the new Transit, Transit Connect and Ford Cargo 6x4 dump trucks. Ford Otosan General Manager Turgay Durak said a new design of diesel engine for the Transit and designing and the production of new engine models for the Cargo would follow. “With the help of our new investments, our export revenues will increase from $2 billion to $2.3 billion in 2008. We are also aiming to reduce production errors to 3.4 in 1 million at our Kocaeli and İnönü plants.”
Durak said their efforts to increase productivity have proved successful: “We launched six Sigma systems in 2001 and completed a total of 182 projects in 2005. As a result we have been able to save $26 million in costs.” Durak explained that they were only working with companies that have Q1 certification to improve quality in affiliated sectors. “The Q1 certificates also contribute to the capacity of our manufacturers in terms of new opportunities and competitive power in global markets. We aim to expand our business capacity, both in our own and in our affiliated sector companies. Also, implementing a lean production system has eliminated loss and has also minimized the period spent between order and delivery.”
Toyota:
Toyota is producing the Corolla Verso, Corolla Sedan and Corolla Station Wagon models in its Adapazarı plant. With an annual production capacity of 150,000 units, Toyota has started exporting 90 percent of its production to 30 countries, most of them in Europe. Toyota officials said production companies in the automotive sector have increased their production and exports in the past year. They believed this was a result of the overall improvement in the economy: “The stable situation in the Turkish economy has been welcomed by foreign investors,” an official said. “As long as this stability is preserved, foreign investors will make decisions to invest in Turkey with greater ease. As Toyota Turkey, we desire that the stability in the Turkish economy continues. We export 90 percent of our production. To be able to keep our competitive power, we continuously work on cost reduction.”
Xerox Corporation
3/21/2006 10:38:33 AM
Xerox consulting services put to work to help library improve productivity.
ROCHESTER, N.Y., March 21, 2006 -- In the middle of 2005, in an effort to give patrons greater access to its services, the Houston Public Library turned to Xerox Corporation (NYSE: XRX) and the company’s process management consulting services to explore ways to improve efficiencies.
Xerox deployed a team of specialized Lean Six Sigma consultants to the library to analyze and measure operations -- ranging from computer reservations to circulation -- at four Branch Library locations that represented a service population sampling for the system. Following the collaborative assessment process, Xerox presented the Houston Public Library earlier this month with a report that offered some innovative solutions and recommendations for efficiency gains to best service their customers.
Lean Six Sigma is a rigorous, data-driven, results-oriented approach to process improvement. It combines two industry-recognized management methodologies evolved by companies like General Electric Co., Toyota Motor Corp., and Motorola Corp. By integrating the tools of Lean and Six Sigma, Xerox is helping customers improve quality, efficiency and speed in every aspect of their business.
"Houston Public Library is excited about the opportunity to work with Xerox Global Services on the Lean Six Sigma study to explore strategies for greater organizational effectiveness and efficiencies, and we are very pleased that we have engaged them in this progressive partnership," said Dr. Rhea Brown Lawson, Director of the Houston Public Library.
"Lean Six Sigma is typically used by large enterprises to eliminate waste, reduce redundancies and ensure quality," said Craig Haskins, vice president, Public Sector, Xerox Global Services. "But we’re applying the same guiding principles to help public institutions, like Houston Public Library, expand operations, improve processes and increase both employee and patron satisfaction."
About Houston Public Library
The Houston Public Library system serves the city’s culturally diverse community by offering a broad program of free educational, informational and recreational activities through a central complex and neighborhood branch libraries. The Library system, composed of 36 branch libraries, provides a network of materials, services and programs to Houston’s diverse neighborhoods.
Xerox Emirates has again won the prestigious Dubai Quality award which was presented by His Highness Sheikh Hamdan bin Rashid Al Makhtoum, Deputy Ruler of Dubai and Minister of Finance and Industry at a ceremony marking the 10th anniversary of the Dubai Quality Award.
The company's Chairman; Mr. Mohamed Hareb Al Otaiba, Mr. Andrew Hurt, General Manager for Xerox Emirates and Ashraf Hamed, Group CEO, accepted the award on behalf of the company.
Xerox Emirates was proud to receive the prestigious Dubai Quality Award in 1996, and in 2004 was ISO 9001:2000 certified for the Quality Management System which supports the Service and Logistics Operations.
'We are delighted to win this award and we aim to keep up the momentum in the years to come and continue our relentless support of Dubai's Drive for Quality. Since our inception one of our core values has been to deliver quality and excellence in all that we do. We have recently deployed Xerox Lean Six Sigma throughout the company to provide a powerful way of improving the value we deliver to our customers and simplifying the way we do business with them.' said Andrew Hurt, General Manager, Xerox Emirates.
The DQA is a process for recognising role model organisations and was established under the patronage of HH Sheikh Mohammed 10 years ago. The process provides a roadmap to achieve excellence through the adoption of good practices and soundly-based approaches that are deployed systematically and are continuously measured and reviewed.
'Xerox Emirates is particularly pleased to receive this award in a year where we have once again achieved record business results' commented Mr.Hurt.
Ame Info News
March 14, 2006
Tuesday , 14 March 2006
During his visit to Corpus Christi Army Depot Jan. 25, Secretary of the Army Francis Harvey is shown some of the different pieces of aviation equipment that are refurbished and re-installed on aircraft. More than 25,000 pieces of aviation maintenance equipment has come through the depot in the last year. (Photo, Staff Sgt. Carmen Burgess)
By Staff Sgt. Carmen L. Burgess
Army News Service
A deployment order went out Army-wide on Monday to execute the business transformation principles of Lean Six Sigma throughout the force to free up resources
for the operational Army and to more quickly provide equipment to the Soldier.
"This is the largest deployment of management science since the beginning of the science," said Mike Kirby, deputy undersecretary of the Army for business transformation. This position was created to oversee the deployment of Lean Six
Sigma across the Army. Kirby emphasized the need for both leaders and workers to embrace the principles.
"The increased focus on measuring results brought about by personal leadership," said
Secretary of the Army Francis Harvey, "will ensure that the Army realizes evolutionary transformation in all its processes, and ultimately benefits from revolutionary outcomes."
"Where it has already been implemented, it has been successful," Kirby said. "The
workforce is 100 percent behind it."
During fiscal 2005, the Army Materiel Command saw $110 million in savings and
cost avoidance as a result of implementing LSS practices.
For example, by removing waste and better controlling output, Letterkenny Army Depot, Pa., has been the forerunner in the program in reducing costs by $11.9 million in PATRIOT air defense missile system recapitalization.
Other Army depots have also made dynamic changes by applying LSS principles. Pine Bluff Arsenal, Ark., has reduced repair recycle time by 90 percent and increased its production rate by 50 percent on M-40 protective masks. Red River Army Depot, Texas, has increased the output of vehicle inspection and repair by 220 percent.
"We are turning things around faster for the warfighter," said Gen. Benjamin Griffin, commanding general of Army Materiel Command. "This is showing significant savings and improvement wherever it has been implemented."
To date, nearly 1,400 leaders, referred to as "black and green belts," across the Army have been trained to teach others how to implement the business practice, said Maj. Gen. Ross Thompson, director for Army Programs, Analysis and Evaluation.
"This is a powerful mechanism to change the way we do business," he said.
"This is a proven body of knowledge," Kirby said, "that requires a leadership commitment." In order to accelerate the process, he said a top down and bottom up approach must be taken to implement changes.
This means that management and technicians need to collaborate in order to redefine the process needed to improve speed, quality and cost.
But Harvey doesn't plan to stop the application of the process on the factory floors. He is applying the principles to his own administrative services, installations, military construction, recruiting, medical capabilities and civilian human resources.
In July 2005, the secretary and Chief of Staff Gen. Peter Schoomaker sent out a letter to the Army's major commands requesting an assessment be made of processes that would benefit from business transformation.
More than 230 processes have been nominated by the MACOMs to be revamped.
"We are personally committed to leading these changes," the leaders wrote. "Business transformation is critical to the Army's continued success."
"This is a fiduciary responsibility we have to the nation," said Harvey in a media roundtable Friday. "We are changing the way we manage things. We are going to get more output for the same amount of money."
Harvey's passion is something that he is spreading to others.
"We want everyone to be passionate about transformation," the secretary said. He said he is striving for a three-dimensional business culture that is dedicated to continuous improvement, focused on performance and based on the enduring Army values.
A bit more than a year ago, the management team that owns and operates Myers Container decided to stop buying materials and supplies solely on price and start looking at the total cost of ownership. Management also launched an assault on administrative overhead costs, began to automate process technology, started to streamline the supply chain, initiated the development of waste-free operations and started applying Six Sigma and lean manufacturing principles throughout the corporation.
Results so far? Overall savings of about 50%—and they are only a third of the way into their three-year cost-reduction initiative.
"I always thought we were lean. It took a consultant to teach us there was fat throughout the corporation that needed to be eliminated," says John Cutt, president of the Emeryville, Calif.-based independent drum company. "We know we've got a long way to go, but we're on the way to a leaner and more efficient Myers Container."
It wasn't that the company wasn't considered competitive in its manufacturing niche, or that it had a bloated, inefficient management hierarchy. "But steel prices went crazy, and so did our costs," says Cutt.
What had happened was that a year-long transactional price spike had peaked—and boosted monthly costs by 120% for the company's biggest commodity purchase, cold-rolled steel sheet. In studying ways to deflect the price spike, Cutt and his buyers and equipment operators began investigating alternate supply sources, new inventory control methods and ways to expand turnover of raw materials. "Today, thanks in part to a vendor-managed inventory system, we only have two weeks supply of steel," he says. "We used to keep 60-days inventory—actually that sometimes could go out as much as 100 days if there were mill delays in delivery."
The trigger: Cold-rolled sheet steel. But, there were other costs Cutt and his team found they needed to reduce. "We knew we had to do something—actually a lot of things—to get our arms around costs, but it took some effort to find out what the problems were and how we could solve them," he recalls.
One problem the team couldn't control, was that West Coast companies such as Myers pay regional price penalties for energy, transportation and logistics because of the extra shipping charges their suppliers incur. That reality made it all the more important for Cutt to manage the costs he could control. So, his first step was to analyze all of the company's spend with MAS 200 software from Sage Software so he could find areas for possible consolidation. Then, he brought in the consultants.
A team of experts from Ogden, Utah-based Technical Change Associates (TCA) studied Myers' business processes and then adapted its "Extreme Lean" system to do many of the company's supply chain operations.
Combining elements of Six Sigma and lean manufacturing, TCA's Extreme Lean has several components:
Integrating the suppliers with company purchasing and materials management personnel to cut the size of inventory.
Consolidating the number of suppliers.
Expanding raw-materials turnover from the present six times a year to 12 times a year.
Improving production and materials forecasts.
Boosting turns of finished steel drums to 100 times annually.
Consolidating SKUs (stock keeping units), the unique numeric identifiers used to refer to a specific material in inventory or finished product in inventory or in a printed or online catalog.
Developing cost-per-product metrics to help control costs and boost cash inflow.
And ditching those products that can't be adjusted to be made profitably.
"The development of Extreme Lean is a three-year process," says Cutt, "but once you start, you better plan to do it forever." Superb quality, on-time delivery, and doting on the customer had simply become requirements to participate in the marketplace. Continuous improvement had to become part of the purchasing and manufacturing lexicon.
At Myers Container, the lean manufacturing system affects five separate sectors: supply chain management, sales and marketing, mergers and acquisitions, information systems and finance. Because the company has a no-frills management team, each sector has an executive sponsor. Cutt now also shepherds the supply chain organization.
"We did this so our employees would see that management was fully committed to the design and execution of revamped business processes such as 'the new purchasing and materials management system' that aims to eliminate waste and maximize the productivity of every employee in the organization," Cutt says. So, every one of the 350 employees at Myers Container participates in an incentive program based on safety, quality, customer satisfaction and profitability.
Three families—the Cutts, the Stavigs and the Holmes—have been involved in corporate ownership of Myers Containers from the beginning some 89 years ago. The company extends back to George Myers who started reconditioning used barrels in 1917. The company evolved from Myers Barrels into Myers Drum and was eventually sold by Gib Myers to Kaiser Steel in 1968. The company was re-acquired from Kaiser Steel in 1984 by the current management team of Cutt, the chief executive; Kyle R. Stavig, vice president of sales & marketing (who also is the great-grandson of the founder) and Michael Holmes, vice president of finance.
Today, Myers Container has estimated annual sales of $50 million for such products as new steel drums from 8 gallons to 85 gallons in capacity, reconditioned steel drums and plastic drums from 15 gallons to 55 gallons in capacity, and reconditions IBCs (intermediate bulk containers) in 275-gallon and 330-gallon capacities. The firm has steel drum reconditioning plants in Hayward and Richmond, Calif.; Dalton, Ga., and St. Helens, Ore. It operates new steel drum production plants in City of Industry, Calif., and Killingsworth, Ore., and a steel preparation plant in San Pablo, Calif. It also has IBC reconditioning plants in Dalton, Ga., and Portland, Ore, as well.
In separate interviews, Cutt and Stavig point out that the use of vendor-managed inventory systems with a half dozen major suppliers has been a pleasant surprise. The suppliers have been at the plants for some time—and Myers sees the purchasing, material handling and manufacturing personnel cooperating with suppliers and developing tighter business relationships.
Stavig points out that cost-cutting partnership teams often include Myers Container personnel from various divisions—fillers, drivers, warehouse personnel, regulatory staff, packaging design-to work with the customers and the suppliers. One success has been the elimination of a "whole bunch of inventoried parts," Cutt says, "parts and products we don't use or need but are occupying space in the warehouses."
Myers Container at a glance
Business: Steel and plastic containers production
Size: $50 million
Key challenges: Eliminate waste and reduce cost of materials and manufacturing
Key initiative: Implement the Extreme Lean system
"I always thought we were lean. It took a consultant to teach us there was fat throughout the corporation that needed to be eliminated," —John Cutt, president of Myers Container
