Freudenberg-NOK's lean journey

Manufacturing Engineering, Jan 2002 by Olexa, Russ

What can happen when a company institutes lean manufacturing techniques? For Freudenberg-NOK,

a Tier One automotive manufacturer, it has been a profitable journey. In an interview with

CEO and Chairman Joseph Day, Russ Olexa, senior editor of Manufacturing Engineering learns about their lean journey and how it can benefit other manufacturers.

Russ Olexa: It seems that lean manufacturing takes a very common sense approach to maximizing the total manufacturing process. How true is this?

Joseph Day: It goes way beyond that, because although it appears to be common sense, it's counter-cultural to Western thinking and Western teaching. You go to an American university and you're taught how to batch-produce products. If you go to Eastern Universities or Eastern cultures, they think in one-piece flow. So although it seems pretty simple and straightforward, it's rather complicated to install lean in a batch-mentality environment. RO: Where did the batch mentality end and the lean or the singlepiece concept start?

Joseph Day: It was about 40 years ago when Toyota decided to find a better way of putting autos together. They ultimately designed the one-piece flow process and environment. It was about 35 years ago when Toyota told its Japanese supplier base that they must practice its concepts or they couldn't be in the supplier base. Then, of course, Honda, Nissan, and others in Japan adopted a lot of the thinking of Toyota and put their own spin, and name on it. But most of the industrialized systems in Japan today practice one-piece flow from the Toyota platform.

RO: If you are doing one-piece flow, aren't you losing your economies of scale?

Joseph Day: That's the interesting thing about lean. Let's look at the labor content to produce in a one-piece flow environment. In lean you combine or put in sequence all of the value-added steps, so there is never any time or space between them. You eliminate a tremendous amount of cost associated with inventory movement, counting, and relocation to another process. Next, you eliminate the risk of making bad products, but not realizing it because no one is looking at the quality of that part at that time. So when you bring 100,000 pieces back from inventory to run them through the next batch process step, an operator says "Oh my gosh, these aren't good!" You don't have that problem in a one-piece flow environment, because if you get a bad part you know it the minute that it shows up, and you simply stop the process and correct the problem. With lean you have big reductions in waste, scrap, and labor content. In my 10 years of experience and 8000 Kaizens, I've never found a process where one-piece flow wasn't lower-cost than a batch environment.

RO: Why are companies taking so long to embrace lean?

Joseph Day: Toyota said to their supply base 35 years ago, "You must be lean." Toyota had their people in place to teach their suppliers lean, and they have been teaching it for 35 years. In the American economy, no vehicle manufacturer or large Tier One has mandated lean. Also, no Tier One or vehicle manufacturer has the technical skills or the population of teachers to mandate and then install lean. The biggest issues in terms of the pace of conversion are the absence of a mandate and the absence of practitioners. The Lean Center (a new business developed by Freudenberg-NOK) will correct some of this.

RO: What are the main problems hindering companies from adopting lean? Is it because there aren't enough people out there, or they just don't have the time to do it?

Joseph Day: I go back to the fact that there aren't enough practitioners. There are a lot of theorists, a lot of classroom teachers who want you to come to their classroom and sit around their table in a simulated environment, but frankly speaking, you don't learn that way because this is a complex thing. If you are not practicing in your own shop, on your own problems, the learning experience is not retainable. Secondly, the industry has spent too much time focusing their attention on bullying the margins out of their tiered suppliers and not enough time on execution of their own lean strategy.

RO: Is there still a lot of room for OEMs to practice lean auto assembly?

Joseph Day: Oh my gosh, sure! If you think about the powertrain and its assembly, and the way it's being done now, it needs lean. If you walk into a Toyota assembly plant, you see one-piece flow going on all the time. The Big Three's journey began 25 years after Toyota started. They're using lean principles to polish and improve their traditional batch process, and that effort will never close the competitive gap that exists. A stronger and more passionate commitment to lean principles is essential to the industry's process.

RO: What forced the Japanese to do this?

Joseph Day: If you go back thirty-five years, Japanese product quality was just awful. Do you remember the old Datsuns? They were terrible. Japanese industry realized they could not penetrate the American market with the junk they were delivering 35 years ago. They ultimately came to realize that the quality, fit and finish, and customer satisfaction that they could achieve through lean was a competitive weapon.