Road to Improvement: The Linamar Corvex Story
by Daniel Pittao
During the latter part of 2004, Corvex, a growing Canadian automotive supplier located in Guelph, Ontario, was stereotyped as a plant that had fallen out of control. It was experiencing many quality problems with its main customer, DaimlerChrysler. Corvex operated seven days a week, 24 hours a day under constant production interruptions and manufactured wall-to-wall product inventory—most of which was not immediately required by its customers.
As a division of Linamar Corp., it was easy to get benchmark data on Corvex: It ranked at the bottom of 35 plants. Linamar facilities have a results-based bonus system where employees earn bonuses based on operational performance; Corvex, needless to say, earned very little reward under the program.
“Our rejection rate and defective parts per million were very high,” says Dave Ballah, quality supervisor for Corvex. “We were placed on controlled shipping by our customer for multiple finished assemblies. Internally, our scrap rate was very high, and much money was lost due to poor quality. Basically, our systems were out of control.”
In the spring of 2005, Linamar made significant management changes by bringing in determined leaders, most notably Andy Brock, the division general manager, and Frank Cavaliere, the production manager.
Working closely with DaimlerChrysler’s management team, Corvex agreed to implement a supplier development project using QAAT, aimed at identifying and working on critical systemic weaknesses. At the start of the project, Corvex had 64 quality disruptions in one month throughout a number of DaimlerChrysler assembly plants. These rejections translated to 9,000 defective parts per million (PPM). Corvex’s competition typically operated with less than one disruption per month and posted 50 defective PPM or fewer.
The QAAT/Corvex team project began with full support from Corvex executives and representatives from each of their manufacturing departments. After a two-week system assessment, the following critical systemic weaknesses were identified and tabled in a letter of commitment:
• Material flow
• Process documentation
• Layered process audits (LPAs)
• Process control
For each element the Corvex/DaimlerChrysler team developed a detailed improvement plan. During the implementation phase, Corvex’s management quickly learned that engaging and empowering the correct people with the correct skill sets to follow the QAAT methodologies and Linamar’s lean production system (LPS) produced almost immediate improvements in their operation, especially with LPAs, which are a simple method to engage management in a structured dialogue with people on the factory floor.
During an LPA, different layers of management take a specifically designed checklist down to the floor and audit how the people on the floor are following the designed process. It allows management to see if the factory has an effective operating plan and if it’s being followed. Audits are generally performed by people who can help close the gaps and fix problems. This exercise became a major improvement tool when used by the Corvex management team.
LPAs were combined with tools from the QAAT toolbox. During the improvement phase, the Corvex team rewrote the set of audit questions, making the audit more relevant and likely to uncover issues. The team revamped its tracking log and focused on quickly fixing problems discovered by the audit. Significantly, it became a management priority to go out onto the floor, discuss issues with operators and truly become engaged in running the business. “At first we did whatever it would take to send good parts out the door,” recalls Lucio Porcellato, engineering supervisor. “Now we have an improved, stable process that significantly reduces internal scrap and customer rejections.”
It took about five months to realize the benefits from the team’s concerted efforts. At first, improvement showed up as minor changes in the orderliness of the plant. Then fewer behind-schedule conditions occurred, followed by a reduction in internal scrap and a significant reduction in customer complaints. The QAAT system was so effective on the DaimlerChrysler products that the Corvex team implemented the system on another customer product line.
One year later, Corvex’s position had shifted from 35th to first place (based on the first six months of 2006) within Linamar Corp. The supplier has improved quality performance to a single digit for nonconforming tickets and dramatically reduced defective PPM to 36—a very respectable improvement within DaimlerChrysler’s powertrain supplier group.
DaimlerChrysler applauds the efforts and commitment of Corvex employees for their achievement and believes that when a customer group closely aligns with a supplier’s management team, nothing’s impossible.
Daniel Pittao is a senior manager of QAAT. He has more than 25 years of experience in automotive quality.
Andy Brock, general manager of Linamar’s Corvex Division in Guelph, Ontario, and Ken Devorak, director of quality at Metaldyne’s chassis operation in New Castle, Indiana, sat in offices 500 miles apart worrying about the same issue. Their plants weren’t delivering the quality their customer, DaimlerChrysler, demanded. Before they knew it, they each had four DaimlerChrysler quality experts waiting in their lobbies. For most managers, this would not be the start of a good day.
However, Brock and Devorak saw things differently. They knew DaimlerChrysler was disappointed with their performance, and a lot of work was needed to improve it.
“Our first reaction was, ‘Oh no!’” says Brock. “We have enough problems on our hands. We don’t have time to babysit, and we for sure don’t need a set of so-called ‘experts’ giving us additional work to make our already difficult task worse.” After working with the automaker’s quality assurance and audit team (QAAT), though, he changed his mind.
Devorak had a similar reaction. “I was skeptical at first, but I was pleasantly surprised,” he admits. “The QAAT specialists had a structured approach that helped us align our organization, improve our process and monitor our progress. As a result we now have more robust systems, and we’re way ahead of where we would be without the QAAT process.”
In the simplest terms, automakers want perfect parts from their supply chain. Every part must be made right every day at the lowest competitive cost. That’s no easy task. A typical car has 3,500 individual parts, and each assembly plant makes about 1,000 cars per day. Do the math: The supply chain must produce 3.5 million parts correctly every day for every plant everywhere.
To accomplish this goal, suppliers must have well-defined quality approaches with verified implementation and maintenance support for these systems. They also must be able to monitor quality records (both internal and external) to verify the effectiveness of the system and have continuous improvement programs in place to promote robust operational controls that target zero defects measured in parts per million (PPM).
Structurally, DaimlerChrysler’s suppliers are supported by three primary groups: advanced, current and supplier development. The advanced group handles the planning aspects and is supported by organizations such as the Society of Automotive Engineers and the Automotive Industry Action Group. The current group, which targets assembly and power train, handles day-to-day problems ranging from minor blemishes to complex analysis and untangling warranty issues. These DaimlerChrysler specialists go from issue to issue and solve specific problems, but lack the time to study and drive more substantial improvements.
In early 2005, DaimlerChrysler focused on supplier development by including QAAT in its supplier quality effort. The team consists of experienced engineers specifically trained to identify supplier processes that cause quality problems and/or yard holds. QAAT helps suppliers strengthen their systems and improve outgoing quality.
The QAAT development process begins with DaimlerChrysler experts selecting and prioritizing suppliers that need help based on the magnitude of past problems. QAAT holds a meeting with a senior executive from the selected supplier, as well as quality executives and a representative from the plant.
During the meeting, the DaimlerChrysler team explains the process—what the supplier should expect from QAAT, and what DaimlerChrysler expects from the supplier. Roles and responsibilities are defined, and a date is set to begin the program at the plant.
The plant-level kickoff begins with the QAAT people showing up in the lobby ready to work. The first step is introducing the team. QAAT participants include:
• A senior manager who participates in the assessment and becomes familiar with plant staff and operations
• A project leader who participates in the assessment and then remains on site for the improvement phase (usually three to five months)
• A lead assessor who specializes in the assessment phase to help standardize the assessment and record findings
• A support specialist who expedites the assessment process and provides additional input
The assessment is designed to be completed in two weeks and includes plant representatives in every aspect of fact gathering. There are no secrets. Open exchange of information is the goal.
The standardized assessment is focused in three areas:
• Control focus —a thorough investigation of the process failure mode and effects analysis (PFMEA), control plans and floor operation to determine accuracy and linkages
• Issue focus —three-legged, 5-Whys analysis of major quality issues to understand root cause capabilities and train participants in this method
• System focus tool —an analysis of 12 major areas, such as work instructions, job setup and training to understand the plant’s quality systems
Once the assessment is completed, the QAAT members and plant representatives agree upon the critical issues and the systemic weaknesses that must be improved. These are then documented in a commitment letter that identifies the systemic weaknesses, how the improvement results will be measured and the target date to reach these goals. The letter also identifies other supplier facilities for read-across, i.e., sharing successful methodologies with other plants. This is the primary responsibility of the supplier’s senior executive.
The improvement phase begins as soon as the assessment is completed and the suppler signs the commitment letter.
The QAAT project leader remains on site and begins working with the supplier to create improvement teams and work plans. This person is experienced in these areas, which expedites the improvement phase and adds a resource to the supplier organization.
Biweekly progress reports and face-to-face meetings help monitor the improvement process. The meetings occur at both the supplier facility and DaimlerChrysler.
When DaimlerChrysler and the supplier agree that they’ve successfully completed the improvement phase, the supplier moves into the sustain phase. This is a 60- to 90-day period after the QAAT project leader has left the facility and the supplier is expected to maintain the improvement. The biweekly reports and monthly meetings continue during this phase.
Once the sustain phase and read-across have been completed, DaimlerChrysler’s senior managers visit the supplier facility and compliment the plant staff on its efforts and success.
Communication plays a critical role in the supplier development process, both to assess project progress and to share what’s gone right or wrong. Having the means to monitor a project gives all stakeholders the ability to understand the project status, making it easier to evaluate the project, establish and take appropriate actions, and help prioritize resource applications.
To track project progress effectively, a bimonthly reporting cycle has been established to ensure that the most current information is made available. A concise, standardized report format creates a snapshot of progress to date and forecasts upcoming activities. The report is distributed to all stakeholders at DaimlerChrysler and the supplier.
The report is organized around systemic weaknesses and highlights the metrics established by the commitment letter. This makes the data consistent and easier for both DaimlerChrysler and supplier management to evaluate. A list of significant upcoming events highlights future activities and establishes accurate expectations.
DaimlerChrysler conducts monthly management reviews for each project, often via conference calls. Periodic on-site reviews are also conducted. Seeing the results firsthand makes it easier to evaluate progress. The reviews can result in project changes or reinforce the tactics that are producing the desired result.
In addition to the monthly updates, suppliers give presentations at quarterly meetings to DaimlerChrysler-supplier senior quality managers and other suppliers in a particular commodity group. The presentations spotlight the project status, accomplishments and roadblocks. All the suppliers that present findings at these meetings can hear their peers discuss project successes and challenges, which provides additional insight and reinforces a climate of mutual benefit for all stakeholders.
To expand the theme of information exchange, DaimlerChrysler holds quarterly supplier symposiums, with a particular type of system selected as the symposium topic. Suppliers that have demonstrated particularly effective systems are invited to discuss their processes. They’re encouraged to present not only the current state of the system but also the techniques employed and challenges met to reach the existing condition. Sharing anecdotal information offers great insight into how the desired result was obtained and helps other suppliers avoid similar pitfalls. It’s easier to accept information when you’re listening to someone who’s “been there, done that” as opposed to someone simply telling you “how to.”
The second phase of the symposium uses break-out sessions to tackle questions and issues that may be part of a system implementation process. The groups then report their results to the entire audience. This portion of the symposium prompts lively and productive discussions.
The groups make presentations on subjects such as layered process audits, tiered supplier control and visual management. Suppliers that have attended the symposiums report that they’ve taken away ideas and applications that can be immediately used in their operations.
Obviously, a lot of work goes into helping suppliers improve, and the majority of the QAAT time is invested in suppliers with problems. However, every company can improve. To make better products, effective suppliers could use cost-effective methods as well. Among the more noteworthy efforts toward this end is DaimlerChrysler’s definition of basic elements needed for success, and making supplier development staff available to any supplier on a project basis.
The thousands of hours spent helping suppliers have revealed patterns and areas of common difficulty. DaimlerChrysler has documented these elements in a straightforward model titled “The Circle of Success.” It’s organized like a target with a central goal of zero customer concerns that’s supported by additional factors radiating out from the center. The initial grouping is the strategic systems divided into eight categories, which are further defined into a set of core processes within each category.
The strategic systems help suppliers focus their energy where DaimlerChrysler has experienced the most frequent problems. Typically, the strategic category often relates to staffs within the supplier organization. For example, customer protection activities most frequently fall into the quality control function, tiered supplier control is usually a purchasing responsibility, and so on. An element in the strategic system layer can often turn into measurable activities that seem to fall closely into business planning efforts.
Metaldyne: From New Plant to Benchmark Supplier
by John Casey and Ken Devorak
In March 2005, DaimlerChrysler’s QAAT arrived in New Castle, Indiana, to support Metaldyne in its efforts to improve quality at its newest and largest manufacturing facility. Metaldyne purchased the 1 million square-foot New Castle operation from DaimlerChrysler in 2004.
The team from Metaldyne and DaimlerChrysler started by identifying eight business processes that needed improvement: operational control, material control, root cause analysis, change control, tool setup, failure mode and effects analysis, layered process audits and maintenance. The QAAT objective was to evaluate these processes and define actions, timing and a structure to execute improvement.
Metaldyne’s senior management elected to attack all eight elements simultaneously while producing 70,000 components daily and supporting 14 assembly plants. This was a gutsy move and a necessary one.
“These eight quality and business improvement drivers are so deeply interconnected that addressing them individually would be counterproductive and dramatically lengthen the improvement journey,” explains Al Malizia, vice president of Metaldyne’s New Castle facility.
Metaldyne’s senior management was committed to the initiative’s success and made it part of the company’s culture. Team members discussed progress daily, and formal results were analyzed during monthly and quarterly meetings. The plant conducted more than 4,000 hours of training across its employee population to communicate process changes.
It was easy to see the hard work paying off. Customer defects measured in PPM decreased from 190 in 2004 to only four in 2006. In addition, the plant achieved a 58-percent reduction in customer complaints in 2005, and an additional 60 percent in 2006.
In May 2006, after working with QAAT for one year, DaimlerChrysler recognized Metaldyne New Castle for its implementation of excellent quality and business practices. The plant
was chosen as the benchmark supplier for QAAT implementation.
During Metaldyne’s 2006 Quality Managers Conference, representatives from New Castle presented the QAAT concept and the results after its implementation. As a result of New Castle’s success, DaimlerChrysler and Metaldyne are working to implement the QAAT process at all Metaldyne facilities.
Metaldyne University, a company-sponsored, global e-training tool, developed a QAAT training course that runs as a live e-meeting followed by a recorded self-directed module. This allows quality managers from all locations to share best practices. Thanks in part to the QAAT initiative, Metaldyne New Castle was recently named runner-up for the U.S. Senate Productivity Award for the state of Indiana.
John Casey is the MSX director of QAAT and has more than 30 years of automotive experience, including key positions at AIAG.
Ken Devorak is the plant director of quality for the Metaldyne New Castle plant. He has 35 years of automotive experience.
For the core process layer, Daimler-Chrysler has formulated a set of single-page lessons that can help suppliers understand what’s needed to succeed. These lessons succinctly define the basic expectations for the element and include a graphical representation of the item as well as the details.
As an example, supplier pass-through controls is an activity where the tier-one supplier screens DaimlerChrysler from defects caused by a tier-two source. For instance, if the tier-one supplier is manufacturing the alternator for a car and they buy an attachment bracket from a tier-two supplier, the holes used by the DaimlerChrysler plant can be checked by the tier one for proper location and size. The tier one can easily perform this check by using a fixture that holds the bracket as a locating device. If the bracket won’t fit on the holding device and the tier one can’t install the bracket, DaimlerChrysler is protected from the error made at the tier- two level.
The Circle of Success and the single-
page lessons are available to all DaimlerChrysler suppliers through the company’s Web-based supplier portal, found online at https://portal.covisint.com/portal/public/tp/daimlerchrysler
Struggling suppliers generally lack the specific knowledge or expertise in certain areas, or are short on the personnel necessary to get started. To close this gap, suppliers can hire the DaimlerChrysler supplier development staff and receive assistance on various projects. This is done via workshops and specific professional service engagements.
For processes with extremely high leverage, workshops are available to accelerate implementation. They’re conducted on site and have the following simultaneous objectives:
• Help the supplier document a strategy on the workshop topic
• Solve an immediate problem that’s present in the plant
• Provide training and expertise for the supplier to be self-sufficient
These workshops are available to the entire supply chain and are performed on a fee-based, pull-system method. Suppliers interested in enriching their internal knowledge and execution can use the workshops as a tremendous stimulus for growth. Currently, professional service workshops are conducted on error-proofing, layered audits and 5S workplace organization.
All suppliers work hard to control their costs, and many don’t have large staffs with limitless expertise. Realizing this, DaimlerChrysler maintains a pool of highly skilled professionals whom suppliers can use for a few days to a few months for special engagements. This begins with the supplier defining a project scope and a set of deliverables, after which DaimlerChrysler and the supplier agree on an expert to use. A person with the appropriate skills is then dispatched to the supplier. These special engagements allow suppliers to hire the skill without taking on the full-time expenses of such a person. Suppliers get a customer-trained expert who’s interested in their success for a cost that’s well below the market price for a regular consultant.
Given that a typical vehicle is composed of 70-percent purchased parts, all the original equipment manufacturers rely on their suppliers in a huge way. DaimlerChrysler is taking action to help its suppliers win because they’re part of the foundation for quality.
John Prehn is a senior supplier quality specialist from DaimlerChrysler with expertise in exterior vehicle components.
James Hare and Kurt Vogler are Modern Engineering senior managers of QAAT, each with more than 30 years of quality experience in the automotive and aerospace industries.
John Casey is the MSX director of QAAT, with more than 30 years of automotive experience, including key positions at AIAG (board of directors, chairman of quality steering committee and other similar positions).