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Automotive Industry

ZF's S.O.P. for Customer Focus - AF Friedrichshafen AG's Self Assessment and Optimization Program - Company Profile

Automotive Design & Production, Oct, 2001 by Kermit Whitfield

Chassis and transmission giant ZF plans to more than double its business in North America in the next few years. To that end, the company is becoming more efficient by standardizing best practices throughout its vast network of companies, strengthening lines of communication between management and workers, and striving to convince automakers that they have the engineering chops to be not just a supplier but a problem solver.

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Years ago, when ZF was primarily a supplier to premium brands like Mercedes and BMW, the company would research and build a chassis system without a specific platform in mind and then call on automakers in search of a buyer. Their thinking was that ZF made such technologically advanced systems that every maker would want them. The reality was that American car companies weren't interested in the bells and whistles and didn't want to pay for them. Today, ZF's approach is markedly different. Because of platform consolidation, there are far fewer chances to get a foot in the door of automakers' new model development programs. So, in order to survive and grow, ZF long ago dropped the "we know best" attitude and replaced it with one that is doggedly customer-focused. Jim Stacey, COO over ZF's suspension, chassis and elasmetall divisions, sums it up this way, "ZF's key advantage is that we listen to our customer and we do something about what he says. We have computer-modeling programs that help the customer save t ime and money in developing systems. We have resident engineers located at the customer, so that it is easy to sit down face to face and talk about any problems they have whether it means business directly for us or not. We help them re-engineer products because of problems that they have with other suppliers, yet we receive no compensation. It's the development of the attitude in our company that the customer comes first and if you don't take care of the customer somebody else will."

S.O.P.

The mechanics of developing that attitude are outlined in an initiative that ZF is currently promulgating throughout its organization. It is called "S.O.P." and stands for Self assessment and Optimization Program. Based on Europe's EFQM (European Foundation for Quality Management) model, S.O.P. takes a holistic approach to creating and maintaining efficient operations. Stacey says, "We see S.O.P. as a framework to guide us as we do business. Everybody wants profits. Profits are a result of customer satisfaction. Customer satisfaction is a result of quality and delivery performance, and attitude and participation. This model simply lines those things up for us and helps us focus our attention on the right areas that will wind up giving us the results that we're looking for. The key difference is in the measurables. S.O.P. has changed the focus of how to achieve the results."

Plants have already gone through a round of initial evaluations under S.O.P. and have started improvement projects based on the results. One goal of the program is to identify best practices within the various components of the company and implement them more broadly. Another is to judiciously pick from among the myriad quality and productivity management tools that exist and tailor them to ZF's needs. Kirby Mynhier, general manager of ZF's rubber metal plant in Hebron, Kentucky, says, "For years there have been lots of good tools like lean manufacturing practices and quality circles, but I think what was missing was a system to direct these tools to where they need to be used--that's what S.O.P. is going to do for us." He adds that tools like kaizen practices and Six Sigma will also be used where appropriate. In fact, ZF's chassis operations have a goal of having at least one Six Sigma black belt in every plant.

Stacey is using the rubric of S.O.P. to attack soft-side issues as well. Having come up through the ranks from the plant floor, he places a lot of stock in keeping workers well-informed. He has instituted a uniform communication policy across the divisions that requires each plant's management team to give a business update presentation to all employees twice a year. Department managers are also required to hold round table discussions with employees on a monthly basis to get feedback. Stacey says, 'The goal is to make sure that management is hearing what the employees are thinking, rather than making the assumption that we already know."

Systematic Growth

ZF's future business strategy places a lot of emphasis on providing turnkey systems for automakers. Its reasons: as the OEMs push more and more of the basic engineering tasks of new model development down to the suppliers, controlling systems development becomes crucial. Stacey puts it this way: "The systems part of our business adds a lot of volume and keeps us face-to-face with the OEM and keeps giving us the opportunities of jointly or independently designing and developing new systems, new platforms, new vehicles. Whoever is the Tier One supplier of the system will be in a stronger--if not absolute--position in deciding where components come from. And components are what we have grown up on."

Automotive Industry

ZF's S.O.P. for Customer Focus - AF Friedrichshafen AG's Self Assessment and Optimization Program - Company Profile

Automotive Design & Production, Oct, 2001 by Kermit Whitfield

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