An Indiana-based automotive supplier has found a way to stay competitive and flourish—make cost cutting every shop floor worker’s priority.

Cutting operating costs is a critical consideration in managing factories in today’s environment. At BorgWarner Inc.’s Diversified Transmission Products plant in Muncie, Indiana, their approach is simple—make it a plant-wide effort. At this 100-year-old plant, every employee on the shop floor has been empowered to implement his or her idea on how to improve operations and manufacturing efficiency. Workers don’t put their suggestions in a box and wait for management to act. They are encouraged to scrutinize every aspect of the plant’s operation—such as machining, quality control, assembly and maintenance—and to bring together a team composed of everyone—operators, engineers and quality control personnel—who might help execute the idea. In only the last two years, BorgWarner says, these cost-cutting teams have been responsible for an estimated $6.1 million in cost savings and productivity improvements.

The plant has recovered from hard times. Several years ago, the Muncie factory was half-deserted after BorgWarner was forced to sell off its manual transmission product lines and manufacturing equipment. The tier-one automotive supplier decided to focus on making transfer cases—systems that allow a driver to switch to four-wheel drive when needed. With orders booming, the plant is now at 80% of capacity and ascending. The company has been producing these systems, primarily for Ford, since 1974 and now supplies General Motors as well. According to Ron McCoy, operations vice president, a significant part of their strategy is “getting our employees involved in improving our manufacturing operations.”

No part of the plant’s operation is too humble to avoid critical examination. For example, employees were slipping and stumbling on newly mopped plant floors. A CAT (Cost Attack Team) assembled to address the problem. They found that the maintenance staff was “eyeballing” the amount of liquid soap it added to the buckets of water used to clean floors. To prevent overly sudsy water which left the floors slippery, the team recommended a dispenser, a new type of soap and a new way of applying it, which led to safer conditions and even a small savings in cleaning materials. Another CAT endeavor targeted a set of five-axis horizontal machining centers, each of which was topped by a heavy sheet metal chain guard. Removing and replacing the chain guards for maintenance took two workers 90 minutes. A CAT team substituted them with a lighter cover, which hinges open to allow access to the tool chain.

Large-scale improvements in the plant call for the Fat CATs, more permanent teams comprised primarily of management and engineering. They tackle such issues as improving workflow, modifying the assembly line, and purchasing major capital equipment. For example, the plant had a persistent problem with machining transfer case housings. Once in a while, an operator would inadvertently include the wrong housing with a batch being machined. This would damage the high speed machining spindle, which costs $25,000 to replace. The solution was simple but effective. Discovering that one transfer case model has a distinguishing cast-in feature, they placed a setscrew on a fixture on the machining center. This setscrew pushes against that distinguishing feature and does not allow the wrong housing to fully seat in the fixture. Simply adding these setscrews has recouped an estimated $250,000 a year for the company, not including savings in cutting tools, machine downtime and wasted operator time.

The Fat CATs also resolved another housing issue. Making sure these transfer case housings met specification was time-consuming because they had to be taken from the machining centers to a coordinate measuring machine (CMM) in the inspection room and cooled to room temperature before they could be examined. The machining department could not wait the one hour it took for the inspection results; thus, operators went on machining housings, without knowing for sure if the parts were good. The cost-cutting teams decided to purchase and install CMMs right at the machines to allow quicker inspections. These CMMs are temperature-compensated so they can still measure accurately despite the machining area’s variable temperatures. The CMM solution was so effective that the department now has one for every two machining centers and feedback within 6 minutes, not 60.

A problematic machining line became another Fat CAT endeavor. The line that machines input shafts for transfer cases was composed of cells, which made parts with widely varying cycle times. This resulted in large backups in front of the slower cells while the quicker cells were often idle. In addition, setup changes were often necessary because the line produces several different types of input shafts. The line’s problems rippled down to the assembly lines, which would come to an abrupt stop because of a lack of parts. The team reorganized the machining line into three distinct lines, and their new arrangement had amazing results. Work-in-progress inventory was slashed by 90%, from 15,000 parts to only 1,500. Scrap cost was cut by 30%, from 13 cents to 9 cents per part. Labor cost went down by 20%, from 15 cents to 12 cents per part. Overtime for the machining line, which had averaged about 48 hours per week, became completely unnecessary, and unscheduled machine downtime was cut in half.

In 2001, while many shops floundered, the Muncie plant’s large transfer case production saw a 10% increase in productivity, exceeding the company’s goal of a 5% annual productivity jump. The shop may have a thing or two to teach other factories as it enters its second century of production. Other shops and manufacturing firms may not be prepared to reorganize whole departments or factories, but they can certainly improve results by opening the suggestion box.

Source: Taking Cost Saving Seriously
Leo Rakowski
MMS (Modern Machine Shop) Online, April 15, 2002
http://www.mmsonline.com/articles/040204.html