case study – meercat construction division , buford study_mcd buford... · case study – meercat...

Student Case Competition of 25 APICS-Chicago 2011 Copyright CfPM 2011

Case Study – Meercat Construction Division, Buford Meercat was formed 7 years ago, when the global conglomerate, YDNH, acquired controlling interests in the two of the largest, old line, best known, independent North American heavy equipment manufacturers, and merged both of the acquisitions with YDNH’s existing Global operations. This merger gave Meercat a workforce of 21,000 employees at 30 manufacturing locations and 11 R&D centers. In market terms, Meercat has global sales, and accounts for just over 20% of all heavy equipment sales in North America. Meercat is divided into four SBUs/Divisions based on the functional business segments they serve. These Divisions are Agriculture, Construction, Mining, and Service Parts (which are also used to support the other 3 Divisions). Sales, by revenue, are spread among the Divisions as follow: 37% Agriculture, 32% Construction, 21% Mining, and 10% Service Parts. Usually, but not always, depending on the specific customer and configuration, earthmoving equipment is sold through either Construction or Mining distribution outlets. While YDNH senior management is non North American, Meercat’s President, and most of the management team are from the US; many of these managers were senior level managers with one or the other of the two US based acquired companies. At approximately the same time YDNH formed Meercat, YDNH implemented a corporate wide initiative at its holdings throughout the world designed at modernizing YDNH management and functional processes. With this wide ranging mutli year program well underway, YDNH is now turning its attention to Meercat. YDNH had expected stronger financial performance from Meercat. Though, up to now, YDNH Corporate has observed a hands-off approach relative to Meercat, recently YDNH sent its corporate training teams into Meercat to bring Meercat processes in line with YDNH Corporate’s, and to, where possible, drive additional margins. Meercat’s Senior management team, and, in particular, Meercat’s SVP, who is President of the Meercat Construction Division (MCD)and the MCD management team, headquartered at MCD’s flagship plant in South Milwaukee, Wisconsin, see this foray by YDNH Corporate training team, as a “shot across the bow”, a clear signal that they need to rapidly improve performance…or else. To immediately address the challenge, Meercat’s senior managers have been directed to bring in additional resources where necessary. Meercat corporate has brought in one of the large consulting firms, the Imperious Consulting Group (ICG) to review Corporate strategy and business practices. Each of the Divisions also hired consultants to look at specific functional areas. Meercat’s Senior Vice President, who, as stated, is MCD’s President, has just hired your consulting firm, Small Consulting Associates (SCA) to look at specific issues at MCD’s Buford, Wyoming Plant. About Small Consulting Associates (SCA) – Based in Chicago, SCA was started almost four years ago by two forty year old men who had each worked as project managers in separate small consulting firms before becoming senior consultants in the consulting arm of a large international organization where they both worked together. Two years ago, the partners split, leaving Gene Rogers as the sole proprietor. In addition to his experience as consultant, immediately after graduating from college, Gene had held a job as a production planner. Currently, SCA has 22 employees, including your team, working on three projects besides Meercat. One project is for their largest client, DLC, a large spin-off of an international company with 3 large


manufacturing plants, two in the US and one in Canada. The DLC project is resource intensive and uses all SCA staff not otherwise dedicated. Your team, all hired in anticipation of getting the Meercat project, is on probation. To familiarize yourselves with SCA protocols, techniques and procedures your team members, all hired within the last month, have been working on the DLC project. Gene had been to South Milwaukee about six weeks ago to make a presentation to MCD’s President, and was surprised, while making a routine follow-up call on a Tuesday morning, to get the go ahead to start a project at the Buford Plant, which would be, in part, an exhibition of SCA’s ability to work with MCD, Meercat Global, and YDNH. To demonstrate to MCD that SCA is aligned with Meercat’s sense of urgency, Gene committed to MCD that the team would start work in Buford on the following Monday. Gene stopped in a Starbuck’s on his drive back from South Milwaukee to excitedly email all project managers to inform them of his success, and to email all Meercat MCD team members, to set-up a conference call for late that afternoon. The late afternoon conference call had four purposes: (1) Team organization - to make certain all team members are on board to go to Buford on Monday, and to delineate the team’s hierarchy; (2) to coordinate travel and lodging arrangements; (3) to provide the team with the background regarding the project; (4) to outline immediate first steps/next steps. The following bullet-point list is a recap write-up from that call:

• 2 co team leaders are appointed, Phil and Boyd. Boyd is to be responsible for client contacts and scheduling team members and coordinating team member efforts. In addition to the SCA team members, the team will have the support of 2 subcontractors, Arnold and Marty, whom Gene contracted to provide specific skill sets that maybe required on the Meercat project. Arnold was recently laid-off from his position as IT department manager of a large logistics firm and has a deep understanding of IT and logistics. Marty holds an APICS CFPIM designation and has been an independent consultant for 20 years specializing in planning, production and inventory control.

• Everyone makes their own air arrangements, but is supposed to coordinate their arrangements so that all team members can meet at the Denver airport and drive together using a maximum of 2 rental cars.

• In terms of background, Gene tells the team all the information that has been presented in this paper so far. Gene emphasizes Meercat management’s sense of urgency, as well as the opportunity for SCA to rapidly expand its presence at MCD if they can do well at the Buford Plant. Additionally, Gene shares the most recent information that MCD’s President shared with him.

o Meercat Construction Division’s Buford, Wyoming Plant manufactures implements that are sold with MCD Tractors, and that are also sold as accessories through MCD dealers. Implements include, but are not limited to, blades, buckets, snow plows, augers, backhoes, and trenchers. MCD Buford has 800 employees divided between three plants, North, South, and Fabrication. Each plant has its own plant manager. All Plant Managers report up to MCD Buford’s General Manager (GM).

The General Manager (GM) has the responsibility for everything at MCD Buford. The current GM is brand new having just been hired away from Chrysler Headquarters in Detroit. In addition there is a central management group that has an IT Director, a Director of Operations, who coordinates activity between the three plants, and who has responsibility for inventory, material management/material handling, and distribution in terms of logistics, a Planning Manager (who is matrixed between the IT Director and the Director of Operations), a Maintenance Manager, an Engineering Director, a Human Resources Manager, and a Procurement Manger.


Jerry, the IT Director started at Buford 34 years ago, when it was part of one of the merged North American companies. MCD’s President considers Jerry to be a trusted advisor. The Maintenance Manager, Fausto, a YDNH person, despite having a relatively low-level management function, is considered to be the number 2 person at MCD Buford.

o Project Objective(s) – SCA’s Primary Objective is to fix scheduling.

• MCD Buford is 11 months behind its published 18 month MPS • MCD Buford does not meet its MPS commitments • MCD Buford does not consistently make its weekly schedule • MCD Buford has been doing better lately, but needs a plan to reduce its

backlog going forward SCA is to

• Develop a workable schedule/scheduling process • Clean-up open issues left by a consultant that was working, but is no

longer working at MCD Buford • Where appropriate, work with ICG, Meercat’s strategy consultants • Where appropriate, support efforts by YDNH’s process improvement team

- Building on any relevant ideas that Buford personnel may have developed as a result of YDNH’s facilitation efforts

Although SCA is to focus on scheduling, SCA is to report on any significant issues it identifies at MCD Buford while SCA is working to fix scheduling

Located on the semi arid high plains of Wyoming, between Cheyenne and Laramie, roughly as far north as Omaha and Chicago, Buford Wyoming is an exit off of the Interstate (I-80), which at an elevation of 8,000 feet is the highest town on I-80, and with an official population of just 1 (Buford’s Mayor), it is the smallest town in the United States. The town, which was named after Civil War hero General John Buford, who came through the area as a young officer before the Civil War, was originally founded as a fort in 1866. Today, the town’s focal point, the Buford Trading Post, a 24-hour gas station/truck stop, stands as a remnant of the original trading post. The MCD Buford Plant is located less than 5 minutes off of I-80 (east/west) and close to I-25 (north/south) just outside of the micro metropolis that is Buford. Roughly in the center of a metropolitan area of approximately 115,000 people as defined by the rural population bracketed within the twenty minute drive to either Cheyenne (Capital of Wyoming, pop. 60,000) to the East or Laramie (pop. 30,000) to the West, and by the populations of both cities. Winters are long and somewhat colder than Chicago, snowfall is moderate, but snowfall on the roads through the mountains leading to Denver can be extreme, making the drive from and to Denver International Airport anywhere from less than 2 hours to more than 5 hours depending on weather. MCD Buford is in the center of what has been a high skill, low wage earning, highly educated workforce that is supported by the area colleges, which include: two community colleges; the University of Wyoming in Laramie, WY, 20 minutes away; and Colorado State University in Fort Collins, CO, 1 hour away. These schools provide a supply of interns, graduates as entry level supervisors, and vocationally skilled employees. In bound materials and outbound finished goods are shipped by trucks that use the nearby Interstates. Support in terms of Maintenance, Repair and Operations (MRO) supplies, temp labor, sublet and outsourcing functions have been provided by the established local business network that stretches from Laramie through Denver.


Drive to Buford The team gathers at the Denver Airport on Monday morning, where Phil picks-up everyone, but Arnold, who will be driving in from the airport with Gene around noon, and Boyd who came in on Sunday, and is already at the Plant. Phil suggests that since everyone is not present, and since there will be a two hour drive, instead of holding a briefing at the airport, as planned, that discussion can take place in the van on the way to Buford. Phil leads-off by explaining that Gene directed him and Boyd to go to Buford last Wednesday. Phil had stayed in Cheyenne over the weekend rather than flying back and forth. Boyd left for the weekend and returned on Sunday night with Phil picking Boyd up at the airport - So this was Phil’s second four hour trip in the last twelve hours, and Phil let it be known that he had not had a fun weekend, and that he was not happy driving. Phil went on to explain that Boyd went to a scheduled 8AM meeting with Jerry, and that is why he was stuck making this second airport run. During the drive, Phil, using more colorful language, characterizes the Buford Plant as being ‘messed-up’. When asked what ‘messed-up’ means, Phil explains, “Everyone does what they want. They don’t work off of a schedule. They pick and choose their work. The machine stations are down more than they are up. They don’t know what they have in inventory. They don’t have the components they need to keep the assembly stations busy. They essentially have no discipline.” When pressed for a more detailed explanation, Phil, who has a three day beard and seems as if he hadn’t slept all weekend, continues, “They don’t know how to group work together, and they don’t know how to run their own machines. I watched them spend almost three hours setting-up a Variaxis, run parts through the machine for thirty minutes, and then start on another set-up that they were still working on at shift change. Sure, whenever you set-up a 5-axis machine for the first time, it takes longer to get it running right, but they should have everything they’re going to run in production pre-programmed. And if they are going to take that kind of time to program, why don’t they stay on that part? I’m telling you I’ve watched them do three long set-ups in two days. It’s like it is the first time that they are making everything.” One of the team queries Phil, “Did you ask them why they were incurring so many lengthy set-ups?” Phil answered, “Sure, I asked. But their answer was some gobble-de-gook. Maybe you’ll be able to decipher what they’re talking about – I think they are just covering their behinds. I don’t think they have an answer.” “What exactly did they say,” inquired the team member. “They said they have a maintenance parts policy that they have to adhere to. What does that mean? Why the heck would they be making maintenance parts on the manufacturing floor? You ask them about this maintenance parts policy when you get there, and see what you can make of it,” Phil replied. “They have a 7-axis Mazak that they haven’t even run once since I have been here.” Phil went on, “Their material management is a joke. They can’t find the parts they have. There is one location in the computer for everything – WIP.” As the drive to Buford continued, Phil continued with anecdotes indicating broken processes, loose procedures, and lax management. Phil’s tales included stories of hours spent by teams of material


handlers hunting for parts while workstations lay idle, machine operators choosing which jobs to run and when to run them, and management seemingly paralyzed, not knowing what to do to effectively change the situation on the floor. All in all what Phil described was a lassiez-faire operation where, on a good day, instead of management controlling the workflow, the work was driving the work – and on many days it was not even that. The drive ended with Phil informing the team that he had set-up a late lunch with a consultant from ICG, who had been on site last week, and who would be speaking at a management meeting the next morning. In Phil’s words, “He is kind of a good guy, and kind of a jerk. I guess I would say he is alright.” Boyd – Orientation “Welcome to MCD Buford,” Boyd stood-up and said as the Team filed into the room. “We are going to split into two groups, and go on Plant tours. Phil will take everyone on this side of the room, and the rest of you will go with me. Everyone must wear hard hats, safety glasses, and ear protection. There is absolutely no walking on the lot without steel-toed boots, and you cannot walk through the Plant unescorted without steel-toed footwear. So, tonight we will stop at a shoe store after dinner where you will each purchase steel-toed boots. Take 5 quick minutes to find a place for your things, use the facility, and get washed-up. I will give you the thumb nail sketch of my morning meeting, show you a PowerPoint of the Plant layout, and then we will have lunch before we walk around.” At the 5 minute mark Boyd started, “I met with Jerry this morning. Jerry is our friend, and will meet with us all up here this afternoon at 3:30PM to answer any question you folks may have, after you’ve seen the operation. “ “This morning meeting was cut short because, due to conference room availability, they had rescheduled the Inventory meeting for this morning, and Jerry, of course, had to be there to get things kicked-off. Jerry agrees with us that there needs to be start shift meetings on all shifts in all three Plants– right now only the supervisor of North Assembly does anything like that. Jerry will bring that up at the weekly supervisors meeting this afternoon. The other big thing was that Jerry will talk to Don, the new GM, as soon as Don gets in next week, about rescheduling the weekly Management meetings for Thursday mornings so that we can provide updates on the current week, and project numbers for the next week. Don will not be here this week, because he had to take care of some personal business around selling his house and moving. ” Boyd, who had been tinkering with his computer while talking, turned on the projector and continued, “I’m going to give you a quick run-down before we walk around in the Plant. Now don’t laugh, these are some drawings I’ve done to give you an idea of how the Plant works, and to give you a map so you won’t get lost. These are not to an exacting scale so don’t use the paper copies I’m giving you to make calculations. “Figure 1 shows the grounds. MCD Buford is really three Plants: North, South, and Fabrication or just Fab, laid-out like a sideways ‘U’ with Fab forming the bottom of the U and North and South the legs. As you can see the main office area sits in front of Fab and forms the front of the complex. MCD Buford is a relatively big operation. The three Plants, without the office space, have approximately twenty acres under roof.” [editor’s note – refer to Figures 1 and 2 in the appendix]


“Fabrication converts coil and sheet steel into WIP, which is used to manufacture finished goods by the North and South Plants. North makes front-end implements such as Blades, Buckets, Compactors, Scarifiers – this sounds like something from ‘Nightmare on Elm Street’ doesn’t it?, Snow Plows, and Snow Blowers. South makes back-end implements and accessories, including: Augers, Backhoes, Brooms, Cold Planers, Compact Core Saws, Couplers, Forks, Material Handling Arms, Truss Booms, Lift Groups, Hammers, Multi Processors, Pulverizers, Rippers, Saws, Shears, Rock Wheels, and Trenchers. You can see pictures of all this stuff in the brochures in the rack in front of the conference room in the front office.” “Most of North Plants production goes to other Meercat Plants to be mounted on new equipment to fulfill existing sales orders or to be mounted on to rolling equipment that will be sold through a dealer. Right now almost everything North makes goes to equipment that has been sold and is waiting for an implement to be completed. South Plant’s production may go to another Meercat plant to be mounted and sold with a new piece of rolling equipment; or to a dealer to be sold as a dealer installed add-on accessory on a piece of new or old rolling equipment, or sold separately by the dealer for installation elsewhere; or direct shipped to a customer for customer installation.” “As you look at Figure 2, you will note that there are ‘buildings’, A structures and B structures, inside of the North and South Plants. The As and the Bs are all two story structures. We are on the top floor of - South A. South A has two rooms on the top floor, the one we are in, which is normally used as a conference/meeting room by Engineering, and the room through that door,” Boyd said, pointing to a closed door in the middle of the room. “Through that door is a break room/lunch room. There are 2 stairways, one leads up here, one leads to the break room. The break room has 4 microwaves, two hot plates, a sink and a TV. You can use the break room facilities, but don’t hang-out in there. The door locks from this side, so unlock it when you are using the microwaves or the sink, and re lock it when you return.” “Under the break room stairs there is a candy machine, a snack vending machine, and a soda machine. As you saw walking in, under our stairs are racks for welding fixtures. The first floor of both As also has a Men’s locker room, which some of you have already used, and a room with additional weld fixture parts, small tools, and supplies- work gloves, welding gloves, drill bits and the like.” “To help orient you – We are in the Weld area. Looking out that window,” Boyd says, pointing to a window behind a large free standing whiteboard in the front of the room (the side of the room that the stairway door opens onto), “you are looking West, through Welding and Assembly, to South B.” “Phil and I will talk about the work areas during and after the tour. As a note the area where they put Kits together I spelled with 2 ‘t’s, ‘kiting’ made it look like they are flying kites, or floating checks over there.” “You are not allowed to stand on the floor and observe welding without Welding approved eye protection.” “South B has the Supervisors’ and shift offices on the first floor, along with another locker room, and another lunch/break room. The second floor has Engineering offices, and a Women’s dressing room. In front of South B, the large story-and-a-half structure, facing us, is a large paint booth. “ “You may have noticed that most of the implements, and implement parts, are painted Orange or Blue or Black. South’s paint booth is only used for over painting Blue onto the Orange parts to create the Orange and Blue stripping that you see on a few of the implements.”


“North B has pretty much the same lay-out, but North B’s booth gets a lot more use since they have to paint all of the large front-end pieces that cannot hang on the Powder Coat line.” “North A has the same lay-out as South A, with the exception of the space we are in. In North A this space is used by HR and Security for safety sessions, new employee orientation, diversity classes, etc. It is also used to take employee pictures and to make and issue employee ID cards.” “Right now, you cannot go anywhere unescorted. None of us can go outside on the grounds unescorted, except to the parking lot. You will notice that all of the doors to the outside either have Security people or push bars with alarms. Do not set-off an alarm!” “There are two reasons that they control people’s movements on the property: First, There is in and out bound truck traffic, and a lot of material handling activity with forklifts and power jacks. Until you’ve gone through the safety orientation they don’t want the liability of having you wandering around on the property; second, all of the raw material, WIP, and Finished Goods storage is outside or in the WIP building. The only way they have to control their stuff is to limit access to it.” “To finish up on the Plant lay-out,” Boyd continues. “For the most part, material comes in through the doors on the inside of the U formed by North, Fab and South. WIP transfers between buildings using the doors on the inside of the U, or is put into a WIP location using the doors at the ends of the North and South Plants. North Plant ships Finished Goods from the doors on the North side of the North Plant. South Plant ships Finished Goods from doors at the West end of the South Plant.” “You probably have a lot of questions, but due to time constraints we will endeavor to answer questions after we do the Plant tours, after lunch with the ICG guy.” “We will be eating lunch up here. You will see all the vending machine lunch opportunities on the tour. Usually, weather and time permitting, you can ‘have lunch with the Mayor’, which means, you can drive back over to the Buford Trading Post and get a sandwich and soup. Everyone buys their own lunches. Today, because of the meeting, we will eat off of the cart, and SCA will buy lunch.” “Each weekday is assigned to a restaurant from Cheyenne or Laramie. So every Monday, for example, Nick’s from Cheyenne has Pizza or beef sandwiches, tomorrow will be a place from Cheyenne that has tuna melt’s and chili, and so on. There are two 30 minute shifts for lunch starting at 11:55 with 5 minutes in between shits. If you are eating off the cart, it is generally a good thing to get lunch between 12:20 and 12:30 – after the first rush, while there is still some selection.” “Make a list of who wants what – Pizza or beef sandwiches. I’m going to get sodas from downstairs, so if you have a soda preference let me know now. There are paper towels next door that you can use for napkins. Grab a chair and clear a place off for yourself at one of these tables - I’ll be right back.” ICG Guy Lunch No sooner did Boyd return with the sodas, and went into the adjoining break room to get paper towels to put under them, then Peter from ICG showed-up. “Welcome to the last outpost of civilization, or more correctly, just pass the last outpost of civilization,” Peter said wryly as he put his Tumi computer bag on a separate chair next to him. “Of course you are all from the Midwest so I suppose you are used to this. I’m Peter; I hope Boyd mentioned that I would be stopping up.”


Boyd asked, “Peter, I didn’t know what you wanted so I asked Phil to get a pizza and a beef sandwich. I have no preference, so I’ll take whichever one you don’t want. What would you like to drink?” “Boyd that is very generous of you. No thanks on the drink. I brought with me a powder ginseng tea that I got in Singapore. I’ll go next door, and get a cup of hot water.” Peter continued to speak as he went to get his hot water, “I would share, but I only brought enough to finish out the week. Sorry.” “I’ll have the beef if you don’t mind. It is difficult for me to let anyone spend nearly $5.00 on what they call pizza here. When I was working on my MBA, at Harvard, I could get a whole Harvard House of Pizza cheese pizza for $12.25, and that was a great pizza! People will tell you to try Angelos. The true cognoscenti will recommend Harvard House of Pizza over all others. Order the fresh spinach with artichokes. Remarkable.” After a further exchange of pleasantries, and after consuming his sandwich, Peter turned back to MCD Buford, “You are the Operations people, but I must tell you candidly, I don’t know how much good you can do here.” “ICG is working on the overall Meercat Strat Plan, and I am not so sure that MCD Buford is a fit. Of course this is all off the record.” “Can you say a little more about what that means,” Boyd inquired. “You have the tail wagging the dog. MCD Buford’s inability to stick to a schedule is destroying Meercat tractor sales. Every missed implement shipment is a potential tractor sale for Komatsu. Even if a customer waits and does not cancel an order, how do we sell the next tractor if we are still working to get out an order that should have been in the hands of the customer months ago?” “Everything in this organization revolves around tractors. Tractors not only produce revenue, they are sticky - they attach buyers to us. Buyers that also buy other things that produce revenue. If we aren’t moving tractors we’re dying.” “Are you saying ‘game over’,” Boyd asked. “It’s not for me to say. However, I would be remiss if I didn’t at least put the China card on the table. That doesn’t mean they would or could play that hand right away. It just means that it is out there.” ”You have got to get them to conform to their schedule. If there is going to be any significant hope, they have to do what they say they will do. They have to produce to the Master Schedule, and they have to stick to it over time.” “There is no discipline here. No one here seems to have a sense of urgency. Someone needs to drive the Master Schedule down to the floor. We are all looking to the new guy, Don, to make change, and make it fast. This had better be ‘Change we can believe in’. Don will have his hands full. I don’t think anyone here wants to work.” “Whether this plant continues in this form, in some other form, or not at all, Meercat needs implements today. So anything you can do to bring Don up to speed is going to be helpful in the short run, if not in the long run.”


“As you probably know, I came to ICG from IBM. At IBM you learn very quickly that as a Marketing Manager you are a General Manager. So if you want me to review your work, I will be around until Thursday, and I will be back, probably in two weeks, or so, as I will have to return to speak with Don,” Peter said rising to his feet. Boyd offered, “Same here. I would be glad to review ICG’s plans if that’s possible?” “I wish it were old boy,” Peter said as he walked out. You could still hear Peter walking down the metal stairs when Phil piped up, “That was great of him to share off the record. I thought that he was a decent guy. Now what are we going to do?” “That was the ICG guy doing his version of ’You want the truth!? You can’t handle the truth’,” Boyd said doing a recognizable Jack Nicholson voice impersonation. “Peter is a jerk. He may be dead on, or he may be way off base. Right now it doesn’t matter to us - We have to get the data, and we have to do our own analysis. Let’s not lose this race before the starting gun goes off. As Sherlock Holmes said, ‘Data. Data. Data. I cannot make bricks without clay!’ “ While waiting for his computer to power down, Boyd said, “O.K. then, let’s go on a plant tour. Phil’s group, start here in South. I will take my group to Fab first, on to North, and come back through the front offices. We should all meet back here within the hour. One word of caution before setting out –This is a non union shop and Meercat wants to keep it that way. There are all sorts of rumors floating around, and people on the floor see us as Management – which we do represent. Jerry told me that everything seems to be OK with what happened to Phil here on Friday, but let’s be super sensitive; really really sensitive when speaking with people on the floor.” With that everyone grabbed hard hats and safety glasses and proceeded downstairs. Plant tour South We stood, facing West about 15 feet from the bottom of the stairs, bunched together in an open aisle way, across from a clean, new sign on a distant wall that proclaimed, “Quality Comes First”. “This is the component welding area,” Phil said with arms outstretched turning first right and then left to indicate that the whole area around us was welding. “All the way over there against the far wall on your left is the powder paint line. That line runs day and night.” “Powder paint is the only around the clock operation…when it is running. You’ll see the line is down a lot. There’s a person hanging parts on this end, a catcher taking parts off, and a swing person who hangs and catches when there are a lot of small parts; otherwise he or she completes paperwork for WIP tracking. If there are really a lot of small parts they use 4 people – 2 and 2. There is a person in the booth area that does make-up spraying to coat the insides of joints that the powder doesn’t completely get into – sometimes they have 2 sprayers. There is a line operator who controls the speed and coating and can work as the second sprayer on a spot basis, and a QC person doing inspection/rejection. The rejects get put aside and are hung on a short line for over spraying.” “Most of the steel to be welded is first cut and machined in Fab. Some of the components welded here go over to North for Front-ends, but most are ultimately consumed over here by Assembly and by Kitting.”


“There are three robot welding stations over there,” Phil said pointing to our right. “Those robots are a pistol to set-up, but once they get going they seem to work great. Jerry said they are about 3 times faster than hand welding, and the numbers bear that out.” “Most of the other weld stations are either just wire or dual shield FCAW (a combination of Gas Metal Arc Welding [GMAW] and Flux-cored Arc Welding [FCAW]), which they generally use on the heavier materials. They do the fixturing, they may spot tack or run a short bead to hold the pieces in place, and then they weld. They also have a couple of TIGs.” There were flashes of light from behind curtains that defined the robotic weld area. Elsewhere in welding there were people hammering on steel parts, people putting parts into fixtures, and people welding. Several of the weld stations were vacant, and some stations had people cleaning benches, sorting parts, or just hanging around. “You will see welding on the other side (North), but most of that is weld-in-place on the large implements.” The group moved on stopping about two-thirds of the way to South B. “This is Assembly. Almost everything you’ll see being assembled is for the back-end of a tractor.” “That area over there,” Phil said pointing to their right, “is an exception. They assemble components that are either for use in the North Plant or they are sold as Service Parts.” “That workstation over there,” Phil says pointing to their right, “is a perfect example of Assembly. They are putting together a Trencher. Purchase parts and WIP have been staged together here,” Phil says pointing to a white-striped rectangle on the floor, “to be assembled as a back-end implement – In this case, a Trencher.” “If an assembly has a serial number next to it on the router,” Phil says taking a clear document sleeve with a green sheet in it from a cart and pointing at the sheet, “it [the Trencher] belongs to a machine [tractor] and will be assembled, with its mounting brackets, and wrapped in plastic for shipping. Assemblies without serial numbers are for accessory sales. These go to Kitting to be completed,” Phil said as he started walking toward South B. As they approached the B building, Phil said, “Let’s stop in and see the shift supervisor, Jeff.” After asking everyone to wait outside under a new looking sign that said,”Coming together is a beginning. Keeping together is progress. Working together is success." - Henry Ford, Phil went in to check on Jeff’s availability. “I forgot, Jeff took a three-day weekend to go fly fishing. These people here like to fish and hunt.” “Everyone I’ve talked to fishes. I’m going fishing next time I stay over a weekend. They also like hunting. In fact, they like hunting so much they are planning to take a physical inventory around the opening of the Fall Wild Turkey season. They figure they might as well use that as a shut down since they won’t have enough people here to run full shifts.” “So that’s Kitting,” said Phil said pointing toward the back of the building from where they were standing at the back of South B. “Kitting is like Assembly except that they add a small parts kit with the attaching fasteners and instruction sheets, and they use a lot more packaging than Assembly.”


“We have to walk back and go though Fab to get to the North Plant,” Phil said to the group getting everyone turned around. On the way back through welding Marty asked Phil, “On the way through earlier those people were not welding, and they are still not welding. Why? Is everyone here a welder or are those people over there hammering and putting parts in fixtures set-up people?” Phil responded, “I don’t know. We can ask them, but be careful. Last week I thought I was asking an innocent question and I got in trouble. And, since you’re in street shoes, don’t cross the yellow line” Marty walked around to the corner of the work area, which had a bright, clean “Success comes in Cans” sign secured to the back of a weld fixture holding rack. Two men in their early 20’s were speaking with a woman that appeared to be in her 30s. All wore blue overalls. The men wore welding caps with no bills, and the woman wore an American flag sweat-band and leather welding oversleeves. “Excuse me,” said Marty. “This is my first day here, and they are giving us a tour of the Plant. I have a question, if you don’t mind?” Marty said as the three moved closer to where he was standing. “I noticed that different people are doing different jobs. Who is everyone? I mean are some people set-up and others welders? Or…” The woman spoke up interrupting Marty, “No we are all welders. Some of those folks over there”, she said nodding across the aisle, “are apprentices, and those people operating the robots are grade 3s, but we are all welders – no set-up people. Unless you mean the people coming in and out in the blue jackets – They’re material handlers.” “I am not here to check on anyone or make any kind of reports. I’m just trying to understand how the schedule works. So, if I can ask without putting anyone on the spot, how come you folks aren’t welding right now?” Marty said softly. “No. We don’t mind you asking,” the woman replied with her two companions nodding their heads. “All we want to do is work 10 for 10. We are out of parts. We had to reject this lot,” she said picking-up a piece of metal from a cart and rocking it back and forth on the bench next to her. “We can’t hammer something like this flat. And without this piece I can’t weld the component, can I?” “I guess not,” Marty replied, “but what about working on something else?” Again the woman spoke for the group, “They’re supposed to have another job staged behind this one, but that job is missing 2 parts,” she said pointing to a group of stuff on carts. “Material handling said they would have the 2 missing parts here in 25 minutes. That’s why I haven’t changed clothes. That was over an hour ago, and they are still running around hunting for parts. I would start on the job after that, but the lead says they can’t get that staged before shift end. “ “The big problem is they should have never released those out-of-spec parts. I don’t like this standing around. I’d rather work. This standing around just makes the day drag on; you leave here and you don’t feel like you have accomplished anything.” The others once again nodded in agreement. “Does this happen often?” Marty asked. “Way too often,” responded the woman with her companions supporting her assessment with “yeas”.


“Thank you for letting me take your time, you have been very helpful,” Marty said in conclusion. “It was no time. Thank you for breaking-up the day,” the woman said. Fab The tour proceeded into the Fabrication Plant. At the entrance to Fab everyone stopped to get packages of earplugs from a wall-mounted container, which sat under a sign requiring hearing protection with another shiny metal sign alongside that had written on it, “It's the poor craftsman who blames his tools.” “Fabrication makes all of the parts that go to component welding in the South Plant, the mounting and supports for the Front-end implements over in North, and for implement related Service Parts that are sold through the Service Parts Division,” Phil explained taking one of his earplugs out as he continued to walk. “We should need hearing protection, but because they aren’t running much of anything we don’t really need these,” Phil said holding-up the one ear plug. “Still, you should have these on so we don’t get dinged for a safety violation,” Phil said in deference to the area being clearly posted as requiring hearing protection. “This is just what I said in the car, ‘they don’t keep their machines running’,” Phil continued. Going into a walled off section Phil re inserted his ear plug. “This is cutting. They have a variety of cutters: water jet, for clean light cutting; laser; plasma; and oxy-acetylene. Each cutter is approved for a certain type of steel, and a certain type of part.” Phil walked around looking for something or someone. “I don’t see any of the operators, but it seems as if the plasma cutter is down,” Phil said. “It’s a great machine, but from what I can tell the one they have here is down a lot. I was hoping you’d get to see it running. Some things can run on more than one type of cutter, but it is usually a big deal to change a part over from one cutter to another. So when a cutter is down it causes the whole schedule to shift. Cutting is the first operation for 70% of everything.” “As they moved into the next section Phil stopped abruptly, “I can’t believe it. Only one of the verticals (multi axis vertical turning and milling machines) is running.” Phil went over and spoke with a couple of men working on one of the idle machines. Phil shook his head, and then went to another machine that was being worked on and talked to one of the men working on it. “Guess what?” Phil said in an unmistakably sarcastic tone. “They are in set-up!” Phil said, answering his own question. “Unbelievable. I’ll bet some of you thought I was exaggerating when I said in the car this was what has been happening.” Phil went over to the machine that was running and looked at the production order that was being run. Phil looked at two other production orders on clipboards next to the machine that were waiting to be run. Then Phil went over to a desk, which had a tray with production orders in it. Over the desk hung another new sign that said, “The most dangerous kind of waste is the waste we do not recognize.” – Shigeo Shingo. “Take a look here,” Phil said pointing to an Excel printout on the desk. “Thoseproduction orders they’re running aren’t even on this schedule. The operators come over here,” Phil said pointing to the tray on the desk, “and pick the work they want to do themselves. Who’s running this asylum, the inmates?” Phil shook his head, “How can you allow the machine operators to pick and chose what they will and will not work on?”


The tour continued on past rows of mechanical saws sitting idle, through an area of punch press with only one press at work, past various other machines and machine centers. Some machines were in set-up or being maintained, some machines were producing parts, most of the machines were sitting idle. The group walked past an area with steel roll stock waiting to be mounted onto decoilers. “Past that guard rail,” Phil said pointing toward the East wall, “are a set of vending machines with sandwiches, there’s another set nearer to us. If you are here late or here on a weekend, and really hungry, vending machine sandwiches can be an option.” North Entering the North Plant Phil took his earplugs out, and holding one up said, “Don’t throw these away yet, we’ll need them when we cross back.” At the moment Phil stopped talking there was no noise, the air was still with a trace of welding smoke captured by sunlight filtering through the dirty opaque windows lining the tops of the tall outside walls. After about thirty seconds, the silence, which reinforced the surreal stillness inside the large factory building, was broken by unseen hammering in the distance. Phil remarked, “I don’t know what’s going on here today. This is like a weekend, or a holiday. When they are not making Front-end parts, there’s not much to see, but I’ll give you the short tour so that you get a sense of what goes on when they are working – which hopefully will be tomorrow.” Large areas of floor were marked-off with double white lined borders. Some of these areas were divided by additional white or yellow lines. Above each large area hung signs with alpha-numeric designations like ‘W-GX3Y445B6’. Phil explained, “These signs are the codes for implements. I know this one’s for a dual blade box grader that’s used for leveling building pads. The ‘W’ is for ‘WIP’ – they’re making the box here. Over there,” Phil says pointing to the sign hanging over the adjacent area, “the ‘F’ stands for ‘Finished Good’. That’s where they’ll attach the blades to the box, and wrap the whole thing for shipping. I know it’s more a ‘middle’ than a ‘Front-end’ piece, but because it has blades they do it over here.” “We’ll go just a little farther,” Phil said as they walked toward North B. “I think this next stop will give you a sense of what they do, and how the whole thing ties together,” Phil remarked as they veered toward a large orange V-shaped snow plow blade. Stopping in an outlined area with a hanging sign designating it as ‘F-SY1Y112A4’, Phil nodded toward the snow plow in the center of the area. “This is a ten foot V Plow,” Phil said putting is hand on the giant plow. “It goes on the front of a tractor when it is sold as a unit to small and medium sized airports. It also can be mounted on front of a truck for use by municipalities – You see them on the roads plowing all the time. It’s around seven feet tall,” Phil said stretching his arm vertically into the air, “and it’s over thirteen feet wide at its widest point. This big orange bad boy weighs over a ton-and-a-half, so they try to avoid moving it around a lot by shipping it as soon as it’s painted – moving it directly from paint in front of North B onto a truck.” “Now, that isn’t always possible. To save shipping costs they try to nest the plows shipping three at a time: a nine footer inside a ten, an eight-and-a-half inside the nine, or some combination thereof. That doesn’t always work out. Sometimes they are waiting on one of the sizes and they have to either move the finished plow out, onto the lot somewhere to be stored, or pay to have only one or two plows shipped. Also, during the summer they start building plows to meet the winter demand, and those plows are stored outside on the lot – you can see them as you drive in from the west.”


“Move around to the back,” Phil said waving his arm to indicate that we should step into the area behind the plow. “Back here you can get a sense of the work done here, and the contribution by the other Plants. These fillets,” Phil said pointing to pieces of metal welded in as braces between the plow and its mounting frame, “are cut from steel plates on one of those cutters in the Fab Plant.” Pointing to the bottom of the plow, Phil said, “Those shoes are what the plow rides on. The shoe and the carbide blade edge bolted to the bottom in front are formed in Fab, and sent out to Fort Collins for heat treating. The pins that hold the shoes to the plow are just standard pins, made here on one of the verticals in Fab, sent out for heat treating, and used on this plow, and on other implements.” “So when they set-up in Fab for pins,” Phil continued, “they try to consider usage beyond what might be on an order, and, if it’s a popular item number, they’ll run a large number of pins at a time, to avoid incurring additional lengthy set-ups”. Pointing to a series of holes Phil said, “When mounted to a truck, the plow is raised and lowered by two hydraulic cylinders that go between the mounting frame here on the plow, and a frame that attaches to the truck. The hydraulic cylinders and the hydraulic hoses that go to the cylinders are made here in South Plant Assembly. The frame that mounts to the truck is made in South Welding. The truck frame, the cylinders, the hoses and the mounting hardware, which includes purchased fasteners and more pins made in Fab are all crated together to be shipped with the plow.” Phil looked up at us, “Without production running over here we’ve seen everything worth seeing. Let’s head back through the office area so you can see where to find the offices and the conference room.” As we made our way back though the Fabrication Plant Phil was greeted by Brad, the Fab Plant Manager. After an exchange of niceties Phil said, “What’s happening at the Vertical Workcenter, it seems that everything is in set-up?”With a look on his face of both resignation and dismay, Brad put his hands part way above his head and responded, “Maintenance Parts Policy.” “Excuse me for budding in,” Marty said in front of any introduction. “I just got here this morning, and I had heard this mentioned, but no one has taken the time to explain, what is ‘Maintenance Parts Policy’?” “Ah,” Brad uttered with a smile on his face signaling ‘you are going to be floored when you hear this’. “MPP - MPP is the cornerstone of the original company. That’s what we built our reputation on - Maintenance Parts Policy. We made a guarantee to every equipment owner that we will supply any required maintenance part, in most cases overnight –within 24 hours, but in ALL cases within 72 hours. ANY part, around the globe - anywhere, EVERYWHERE, in the world. Based, of course, on their willingness to pay freight - But no matter, we are committed to ship within 72 hours at the outside…and if they’re paying for it, we are committed to ship so they will receive the part within 72 hours.” Brad went on, still smirking, “What do you think of that? It wouldn’t be so bad if we didn’t have equipment fifty years old, and older – still running - All over the bloody world.” Brad went on, his look now changed to dead seriousness, “So now we get a UR, an Urgent Request, for some obscure part, for some obscure, fifty year old piece of equipment being used to build roads in Venezuela or Kenya, and its ‘stop everything’ and make that part. We’re committed. When we’ve had to, we’ve brought people in at midnight on Sunday to make one part. If there is only one thing we don’t fail at its MPP.”


“Wow,” Marty said with a look of amazement, respect, and bewilderment. “Wow,” repeating then continuing, “I don’t know what you can do with that as a manager, but it certainly speaks to a dedicated effort by the Company.” “From time-to-time there has been discussion of dropping the program,” Brad went on to say, “but marketing and senior management universally agree that the good press and goodwill we receive from honoring MPP is significant, and conversely, they feel that reneging on MPP would be destructive – it would create a ton of bad press, we would lose owner loyalty, and we would also lose a significant product-service-market differentiator.” Both Marty and Phil thanked Brad for his explanation and the group started to leave when Brad said, “Now you see why I DO need a scheduling tool. I need to be able to compare planned schedule to actual production. I have to be able to track production by workstation and operator, and by product and production volume. I need to know run and down, and reasons for down. I need to get a handle on scrap and reject rate, and I can’t wait for eighteen more months while they changeover the computer system. I need a tool that will enable my supervisors to redirect resources to recover from MPP incidents, and to proactively manage their areas.” Marty queried, “Brad when we walked through earlier, it looked like operators were scheduling their own areas – how does that work?” Brad responded, “We let them do some of that because with no system support we rely on their knowledge of how to sequence the production orders to minimize changeovers. They can only select from existing production orders. Sure it gets abused some. Operators know the tough parts to run and try to leave them on the bottom of the stack for someone else, but that’s when a supervisor will generally step in.” “What about when they run more parts than are on a production order?” Marty pressed. “You just got here this morning?” Brad asked rhetorically. “Let’s take any one of the standard pins as an example,” Brad continued. “Say that an implement uses twelve of a certain standard pin and that we are scheduled to build ten of those implements this month. MRP* finds twenty pins in stock so it creates a production order for the remaining one-hundred pins, 120-20=100. This would be pretty straightforward except – one, we probably don’t have the twenty pins in stock, you cannot believe any inventory amount; two, it’s as likely as not that there will be an ‘emergency order’ and we will have to break-into the schedule and build yet one extra implement that requires those pins; and three, even if the inventory is correct and we have the pins in stock, and whether or not we need any extra pins this month, we will need more of these pins next month, so why next month go through another set-up that takes at least as long as the production time - when, in an extra hour or so, we could run three months worth of pins and be done?” [*editor’s note - Material Requirements Planning, part of the ERP system] Again, Marty and Phil thanked Brad for sharing his insights, and our group proceeded to the Office area. As they walked toward the Office area, out of earshot, Phil commented to Marty and the group, “I don’t see why they have to tie-up a five axis machine to make straight pins.” Marty quipped, “I don’t see why they tie-up any resources to make standard pins. If they are so behind, why don’t they go outside and buy the pins?”


Office Area At the entrance to the Office area we each took out our earplugs and carefully wiped our feet on the mat provided for that purpose. Directly across from the entranceway, freshly painted on the wall was, “Profit in a business comes from repeat customers.” – W. Edwards Deming . “Over there is where Planning and Procurement sits,” Phil said pointing to a corridor of offices and cubicles. Phil turned to walk toward the South Plant, and saw a man in his late twenties or early thirties standing in the hallway. “Here’s Jeff,” Phil said to us while giving Jeff a wave of recognition. “I called in while I was driving back, and they said you were looking for me, so I stopped by. I go right past this place on the way to the house so it’s easy to stop,” Jeff said by way of a greeting. Phil and Jeff talked fishing for a minute or two. Phil explained that he had stopped earlier to introduce us to Jeff and that there had been nothing pressing, then Phil turned to us and said, “Do any of you have any questions for Jeff before he goes off to fillet fish?” Marty, who seemed to have questions for everyone said, “One quick non trout question – We saw welders standing around apparently waiting for parts, does that happen often?” “Yeah, it happens a lot,” Jeff replied, “and it happens for a lot of reasons. The biggest reason in my mind is stealing component parts. North Plant is always stealing component parts. You know that North Plant is on Kanban and the rest of us are on MRP?” We all looked quizzically so Jeff continued, “Yeah, North is on Kanban so we have no direct visibility to their requirements. Theoretically it should be smooth as silk – they have a constant demand so that their kanban lot size never changes, their ‘planner’, I put ‘planner’ in quotes because kanban really doesn’t use a planner per se, enters their requirements into the MRP so that the system allocates their components and debits the inventory. This way the rest of us aren’t counting on using those pieces – Simple, right?” Jeff continued, “Man plans and the Gods smile. Unfortunately, reality sets in. Sheet steel used on blades is late or backordered and North Plant moves to making something else, which uses different, not yet accounted for, components. Component parts have defects, so, North Plant draws additional, unaccounted for, components. There is an unscheduled ‘emergency order’ for an unusual blade configuration, so, North Plant draws components that aren’t yet entered into the system.” Jeff continued,” Sure these components get withdrawn from the system’s inventory, but sometimes that happens as much as a week later. By that time someone from another area, read WELDING, may have already gone to withdraw the parts North just used, noted the inventory deficit, had the inventory ‘corrected’, so, now when the ‘planner’ at North finally gets around to making North’s entries, the inventory gets more screwed-up not better. “ “Also, recognize we have no visibility to what they have sitting in their kanban flow racks. We could be dying for some component over here that they have sitting unused because they aren’t getting a ‘demand signal’.” “North Plant’s kanban system in my mind is the main reason we run out of parts in welding – But, I could be wrong,” Jeff sarcastically offered. Jeff continued, “We also experience rejects, warped components that can’t be hammered flat enough to fit together. If there is no back-up inventory welders have to wait until the component parts for another production order can be pulled.”


“If there are a number of ‘waiting for parts’ occurrences, why don’t you have back-up production orders ready-to-go, already staged on the floor?” Marty asked. “Two reasons – First, there’s no room for staging. You’ve walked through South Welding, you’ve seen how tight it is. Second, we are struggling to get components out of Fab in a timely manner as it is. I don’t think they could fill back-up production orders. They can’t keep-up with existing production orders – But, I may be wrong,” Jeff responded. “One quick parting question?” Marty asked. Jeff nodded, so Marty continued, “In Weld, is everyone a welder? I mean, are there such people as set-up, or fixturers?” Jeff replied, “Welders are responsible for what they weld, so they have to do their own set-up and fixturing. Otherwise, whenever there are rejects it becomes a blame game. So the short answer to your question is, yes, everyone in weld is a welder. Everyone does their own set-up and then does their own welding.” With thanks to Jeff the group moved on. Everyone looked in when Phil pointed out Jerry’s office. Hanging above Jerry’s desk in an old inexpensive frame was a saying “A bad system will defeat a good person every time.” – Deming. The Office area portion of the tour continued with Phil pointing out the Executive offices, the office lunch room, which copier to use, the office supply room, and the main Conference room. Within minutes we were back at our South A ‘war room’.

Gene Arrives

On entering our office space we found Arnold and Gene plugging in their laptops, and having a general conversation with Boyd’s group, which finished their tour before us. Gene almost immediately went to the front of the room, and started drawing vertical lines on the large freestanding whiteboard. “My flight was delayed, so I’m going to get started as my time here is short – I’ve got an early flight back in the morning, so I am not going to be able to share dinner with you folks as I will have to stay in Denver tonight,” Gene said as he created three columns on the whiteboard. “While I was waiting for everyone I was looking out on the shop floor. Is it unfair for me to say, or are these people totally lacking in ‘sense of urgency’. Here they are, as behind as any place I’ve ever been, and it seems as if there is no hustle whatsoever out there. Not a lot going on, and some real percentage of the people out there are standing around talking.” Gene commented not expecting an answer. Focusing back on the whiteboard, Gene continued, “To borrow from Donald Rumsfeld, we have ‘Known Knowns’,” Gene said as he labeled the first column on the left. “And here we have ‘Known Unknowns’, and in this third column we have ‘Unknown Unknowns’,’ Gene continued. “Boyd, you and Phil have been here for almost a week now, and the rest of you have been here for over ten minutes … and we started with great intel - supplied by me – so we should know some things. Let’s start by getting down what we know – the Known Knowns. OK?” Gene asked. Marty piped up, “Gene, I think this is a worthwhile exercise, and absolutely the right place to start. One comment, more of an observation, before we get going.” Gene nodded assent and Marty continued, “They seem to be adrift on an ocean of problems, with a cargo hold full of answers, but I don’t think they have two drops of solutions to drink.”


Gene looked puzzled, and Marty continued, “What I mean by that is, as you walk around here and ask questions, they talk freely about their problems, which they seem to have at every work area and with every process or lack of process. They also seem to have answers for every suggestion. They can tell you that they’ve considered the problem and that nothing they have considered will work.” “In other words, they seem to know everything that won’t work, but nothing that will work,” Marty added as a summary of his statements. “You have been on the floor here, I have not,” Gene said. “And I certainly cannot, at this point, dispute your take on things. However, importantly, what you Marty, as our Master Scheduling expert, have to keep in mind is that MCD Corporate believes that all evil here stems from Buford management’s inability to drive the Master Schedule down to the shop floor.” With Gene standing at the whiteboard and facilitating the group started to list what was known; identified, but not known; and possible issues that have yet to be looked into. At the end of the exercise Gene addressed the group. “So here is the Bad News / Good News thing for this week. Good News – I got a call from Don, the new GM, on the drive here. We are going to have the opportunity to get in to see him before he is prejudiced by the opinions of the people here at Buford. Bad News – Don is coming back early and wants us to meet with him on Wednesday, day-after-tomorrow, at 10A to give him a briefing on what we’ve found.” “Now, I shouldn’t have to explain what an opportunity this is for us. This means we need to assemble everything on this whiteboard into a PowerPoint, filling in any gaps that we can. I, unfortunately, will not be here, so Boyd will take the lead. However, I do want to run through the presentation with you before you folks show it to Don - so that means you folks need to have a PowerPoint ready to go through on WebEx with me tomorrow night.” “A couple of other points,” Gene continued. “Jerry was going to come-up here and meet with everyone - Due to time constraints, Boyd, Phil and and I will meet with Jerry in his office. Marty, we have set-up some interview time with George their Master Scheduling/Head of Planning person. Everyone else has plenty to work on. Let’s all meet back here in about ninety minutes, and do a quick last debrief before I have to jump in the car to Denver.”

The group split-up and ninety minutes later reconvened.

Recap/Wrap-up

Gene started the meeting by giving a recap of what Jerry had told him, Boyd and Phil. “’Our people on the floor are good people. They want to work. You will hear a lot of ‘10 for 10’ meaning they want to be able to give ten full hours of work for every ten hours they are here’. This is a word-for-word quote from Jerry,” Gene explained.

“I’m just going to continue to read from my notes, if no one minds. I’ll have these typed-up and emailed in the morning,” Gene said.

Gene continued, “Not enough welders and operators – lack of welders being the biggest problem. 130% annualized turnover rate. For the past 22 months, since oil shale and oil sand recovery started in the Green River Basin three hours from Buford, MCD cannot keep help. Entry level unskilled starting pay here is $10.10 an hour, in the Green River Basin it’s $28 an hour.


With overtime, an experienced welder can make $150,000 a year. Denny’s in Laramie offers $4,000 as a 6 month retention bonus to waitresses. There is no cost point where MCD could offer a retention incentive that would retain welders and make economic sense for MCD.” “Meercat management wonders why MCD Buford is ‘suddenly ‘ having issues – Before Meercat, this Buford Plant supported one product family with 2 product lines. Today there are 4 product families being supported, each with multiple product lines. Current production considerations are much more complex.” “The current ERP system is Prod-Prod from the early 1990s. Conversion to the YDNH flavor of SAP is over one year away. No system changes will be made until after they convert” “They have been tracking earned hours – Everyone knows what Earned Hours are?” Gene asked. “If your standard is 6 parts per hour and you make 5 parts per hour, you get credit for 50 minutes of work, six parts would equal one ‘earned hour’ and 9 parts would be an earned hour-and-a-half. It does not matter how much actual elapsed time you spend – except toward your base pay, for purposes of bonus, and welders get bonuses, and for planning and tracking purposes, everything is counted in earned hours,” Gene explained. “Gene continued,” Based on earned hour tracking, they have stabilized production. For the past two months they have hit their earned hour targets each week. According to Jerry that means they are now producing parts roughly equal to the Master Schedule requirement – Only they are a year behind schedule – So they are treading water without any significant prospect of getting caught-up.” “There big bottlenecks fluctuate between Fabrication and Welding. Assembly, and Kitting are actually ahead of the revised plan – the plan that takes into account that they are a year behind.” “Breaking in to the production schedule for Maintenance Parts Policy is also hurting them. I don’t know what Jerry meant by that, but perhaps when we conference call you guys can explain it to me,” Gene said. “They had hoped to get some relief by sub contracting out some of the production requirement. Unfortunately all of their contractors have been hit by the labor shortage, and, without taking additional work, the sub contractors are already behind the production numbers they promised to Buford.” “To add to the issue list, certain purchase parts are either on backorder or have extremely long lead times. There is a worldwide shortage of bearings. Right now a bearing order has a fourteen month lead time before it will be filled. They’ve got purchasing people on the phone everyday begging for bearings.” “Apparently, losing parts in their own system and physical inventory has been a problem. Jerry said that they had one location on the system for WIP, which was called – ‘WIP’. The WIP location was that 5 acre inflatable Quonset hut like building straight away from the back door of the North Plant. So when something could not be found in there – it was lost, lost.” “Jerry said that he has opened up additional locations for WIP on the system and that they are pre staging orders outside in the warehouse – so there will be less waiting-for-parts issues. However, Jerry admits that there will be issues until they can take a full physical inventory in about 6 weeks.”


“Incidentally, the new signage we are seeing all over, the slogans – they are the remnants of YDNH’s Corporate training effort. Everyone had to attend training for ninety minutes per day for six weeks on ‘teambuilding’, ‘team participation’, and ‘Lean - 5S’. it’s like the joke – ‘I spent a million dollars for training, and all I have to show for it are these signs’,” Gene added sarcastically, as he finished reporting on their meeting with Jerry. “One last thing,” Gene said. “Before we came here I mentioned that there had been a consultant working with Jerry. Jerry gave me his PowerPoint slides. There are only two that worth looking at and I’ve printed them out, and distributed them to each of you for your review.”[editor’s note – see Appendix I] Marty walked to the whiteboard, and started to recap his meeting with the Planning Director, George, “The MPS is planned in weekly buckets on a rolling eighteen month cycle, which they regenerate twice a week. The first regen is a trial regen. The second regeneration is the one they use for planning purposes. They spend their entire week , every week, regenerating the MPS.” Marty continued, “MCD Buford has no forecast and no S&OP process. MCD Corporate has a meeting every other month where they roll-up sales orders with sales management gives pluses and minuses to the existing eighteen month schedule. George takes that input from MCD Corporate and then does a major regeneration of the MPS. Once complete, George goes through the new schedule in a preset bi-monthly meeting with all department heads.” “As FYI- Kanban at the North Plant is a YDNH Corporate edict, which, according to George, cannot be changed.” Marty started to step away from the whiteboard and stopped, “I know this is day one, but, since we are pressed for time, here’s what I think – I think their problem is not with pushing the Master Production Schedule down to the floor. I think their problem is they have the MPS too connected to the floor.” “This should be good. Go on Marty explain what you mean,” Gene said loudly. “The MPS is about the businesses commitments. It’s about how the business is going to address demand and fulfill its commitments to its dealers and its customers. The MPS doesn’t know and should not take into account all of the contingencies that affect floor scheduling – operators on vacation, machine breakdowns, equipment maintenance, holidays, etc.” “So why are they trying to connect the two?” Marty asked rhetorically. “Because they haven’t built a process to support floor scheduling – instead they kept using the MPS to plan and schedule - ‘This had worked all the many years’, according to them – but that was in a different external environment, and under a different business model.” “That PowerPoint plan from the other consultant won’t work either,” Marty commented. “Sure leveling has its place, but you can’t level yourself out of a 12 month backlog – not without losing a bunch of business” “What they need to do is stop scheduling the MPS for eighteen months at a time in one week buckets and go to scheduling 12 months at a time in one month buckets. Regen the MPS twice a month instead of twice a week, and use the time savings to develop Production Planning, and Production Scheduling.”


“The Production Plan should be day-by-day Work Center by Work Center, for a rolling four to six week period. This type of planning would account for major issues like machine moving. The would then use the Production Plan to cast a Production Schedule which would be for a rolling five days with a two day time fence.” “Production scheduling would schedule each Work Station and every Machine Operator, hour-by-hour. No production order could go inside the two day time fence unless the components were completely staged and inspected. Production Planning’s job would be to coordinate the Production Orders so that all components would be made and available to make Finished Goods.” “One more thing,” Marty said. “Everyone needs to realize that great plans should lead to good work. A bad plan can cause inefficiencies, but no plan can make-up for poor functional execution. If they are going to dig themselves out of the backlog crater they’ve created they are going to have to fix functional processes as well as their planning systems.” Gene stood up, “I agree with your last statement fully. However, I just read a book on scheduling using day-by-hour boards. A whiteboard at every workstation with three columns - Column one has their hour-by-hour requirements on it; Column two has their hour-by-hour actual production volume, which the operators fill-in each hour as they manufacture; Column three has the difference – any production that has to be made-up. All of the workstation whiteboards are then ‘synched-up’ using a central Master Board that summarizes what is happening throughout the Plant. All the Boards are then updated each hour.” “Simple, efficient, no software required, and this method will have the added bonus of involving supervisors and machine operators.” Gene said in closing.

Directions:

You are part of the SCA team. You have to configure the PowerPoint for the Wednesday Meeting with Don. This paper should be the write-up that will substantiate and support your PowerPoint. At a minimum you need to address the following “Considerations”.

Considerations:

• What are MCD Buford’s primary issues? • How should MCD Buford Schedule (whose method should they adopt, if anyone’s, and why or

why not) • How would you address their Maintenance Parts Policy (MPP ) or would you leave it alone? • What functions would you look to improve and what would you do to improve them?


Disclaimer While the Case, itself, and the activities portrayed here are based on an actual case, the names of companies, places, and individuals are either fictional or incidental. Individual and company profiles, interviews, and other facts have been condensed, composited and/or disguised to protect confidentiality and/or to facilitate the presentation of the Case. The fictionalized names are made to be real sounding, but are not meant to be indicative of any real people or companies. The locations picked are not the real locations; they were selected to be representative and plausible. The history and demographics relative to any geographical place mentioned herein are used to illustrate the Case, and are not necessarily indicative of real events past or present. The association of any feature or aspect of this Case with any individual, private company, corporation, or place name is purely coincidental. As stated, the setting for the Case has been completely changed. The Case took place in a different geography, and in a different industry. This approach has been carefully and assiduously taken for two reasons: (1) to avoid any connections or references that could possibly violate the implicit trust and/or impinge the rights of real people and real companies; (2) to focus attention to issues rather than to people, places and organizations. You are therefore counseled to not spend time looking for these companies on the Internet, rather spend the available time dissecting and solving the Case as presented.


Appendix I

PowerPoint 1 Before

PowerPoint 2 After


Appendix II

Organization List & Staffing Chart SCA

Gene • Boyd • Phil • Contractors

o Marty o Arnold

ICG Peter Sole Practitioner Allan Adams Meercat Brian, VP & President of the Meercat Construction Division - MCD Buford

• GM - Don • Director, IT - Jerry

o Manager, HR - Shelia • Director, Operations - Doug

o Manager, Planning - George o Manager, Warehouse - Mike o Manager, Procurement - Bob

• Manager, Maintenance - Fausto • Director, Engineering - Jim • Plant Manager, North - Bruce • Plant Manager, South – Bill

o 1st Shift Supervisor - Jeff • Plant Manager, Fabrication - Brad


North

South

F a b

O f f i c e s

Figure 1

Figure 2

Powder Coat (Paint) Line

A

B

B

Main Entrance

Security Desk

SCA Office Space

Conference Room

V end

V end

North

South

WIP Bldg

Parking lot

F a b

O f f i c e s

Lunch Room Visitor/Exec

Entrance

W

S

N

E

Robotic

Welding Assembly Kitting

A P A I N T

P A I N T

Appendix III

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