Lean Implementation At Siemen’s Kalwa Plant

CASE ANALYSIS

Siemen’s Introduction

• First workshop, 1955

• Started with 10 employees

• 55% subsidiary of Siemen’s AG Germany in 2009

• Factories in Kalwa, Nasik, Calcutta, Aurangabad and Goa

• Reached upto 4000 employees, 11 sales offices, 23 representatives, 300 dealers, 5 factories and e-offices

Siemen’s Introduction Contd…

• Became the second largest of Siemen’s manufacturing operations outside Germany

• Four major divisions: Industry, Energy, Healthcare and Consumer products

• Kalwa Works: Medium Voltage division, sole manufacturer

• Switchboard: second largest MV factory outside Germany

Current Operations

Engineering Cycle

Manufacturing Cycle

Marketing Team

Sales Team

Sales Order Engineering

A B

Current Operations cont...

Manufacturing Cycle

Technical Order Processing

List of electric

al Equipm

ent

BOM

Equipment Procurement

Material Planning

Execution

Need for a change

• Batch Processing dampened inefficiencies

• Errors had a ripple effect on overall manufacturing chain

• Increasing amounts of scrap

• Increased customer orders: need to utilize full capacity

• Need for improvement in labor productivity, lower inventory levels & higher throughput

Need for a change

• In October 2006 : Proposal to implement Lean systems

• In October 2007 : Gewald, Global head of lean projects arrived at Kalwa and marked the official beginning of the project.

• The lean team was set and decided to implement for Panels and VCBs units.

THE LEAN PROGRAM

Benefits of Implementation

• Increased productivity of labor

• Reduction in inventory levels and associated costs

• Improved space utilization

These Benefits promised to result in

• Higher throughput of panels

• Increased profits for the factory

Implementation Process

• Restructuring of both the Layout and the Processes

• The current process flow chart

• Brainstorming the ways & means to make process more efficient

• But changes in processes comes at its own cost

• The resentment of people working on existing process for years

CHANGES IMPLEMENTED

• Implementing Lean in the shop floor meant the supporting departments also need to adopt lean methodologies• Layout changes• Changes in support system• Changes in vendor management• Cultural changes

LAYOUT CHANGES

• 5 Assembly lines were formed

• Each line had 6 assembly workstations

• “Takt” time (time per workstation was fixed at 1 hour)

CHANGES IN THE SUPPORT SYSTEM

• Installation of dashboards at the beginning of every line

• Issues were posted by workers and shop engineers on the dash boards

• These issues were discussed on daily basis to improve the throughput and conflicts between departments and workers

• Also root cause of the problem was determined and solutions to avoid them in future were noted

• Gaps in skills were identified by skill assessment test

CHANGES IN VENDOR MANAGEMENT

• On time delivery with ensured quality.

• Vendors usually supplied materials in batches

• And with the implementation of lean they are no longer required by batch or customer order

• Challenge for both suppliers and the material planning team

• Vendors were presented with the benefits of the program

• Short term solution – Suppliers can manufacture in Bulk and the company will use Pull philosophy, i.e. to pull material when needed

CULTURAL CHANGES

• Joint prayer and exercise sessions for each assembly line at the beginning of every shift.• Instill a sense of “Team Belongingness”

• All the members were given a T-shirt imprinted with Lean logo as a uniform• sends message of “team Effort”

The Resentment

• Resentment among people from different department: blame game started

• The lean team hosted discussions for issues related to :• Structure of team

• Team activities more mechanical

• Lack of coordination between the departments

• Errors in design drawings

• Resentment existed as employees believed it is another project by management

Issues with Workers

• Bonus was linked to productivity : union wanted daily production to be five panels per day per line but management wanted eight

• Workers classified as : productive and non productive• The pace of working quickly and relaxing

was now not possible

The Redesign Project

• Another major boost for lean implementation was the Redesign Project

• Objective: Product that could reduce the variations in existing product and reduce the overall cost

• Slow phasing out of its old product and shift entirely to new product

• Product was introduced on the lean line itself. Lean line had to handle both kinds of products

Monitoring Performance

• Switchboard management continue to report KPIs to the Siemens AG on monthly basis.

• In just one year, KPI sheets showed improvements• Throughput time on shop floor reduced by

30%

• Workers productivity increased by 30%

• The lean project ended in Oct 2008 as it had intended to be a one year project.

Thank You