1. Host Company Introduction

Darlington Plant Established 1965 , Area 252,000 sq ft

Products
4,6 & 8 litre mechanical/Electronic diesel engines

PLANT CAPACITY
60,000 per annum - 2 shifts - 340 per day
Current build rate -180 per day

CUSTOMER BASE 226 in 40 countries 1700 shop orders 4900 options 7865 part numbers

SUPPLIERS 270 – 40% US , 60% UK & ROW

2. Why

• Darlington is not the lowest cost producer in the market either internally or externally & over 75% of manufacturing cost is BOF materials
• 50% of Quality issues originate in the supply base
• Materials availability 24hrs prior to lineset is only 55%
• It is the next logical phase after having improved internal plant logistics
• To ensure the UK supply base is competitive to stave off the threat of global resourcing.

Cummins Supply Chain Group Profile

• 18 month program Launched Feb 2004
• Change Agent training & Lean Accountancy
• Initial focus areas selected by suppliers – SMED/ 5S/ TPM/Kaizen/Quality
• Initial intention to gain supplier confidence and improve relationships.

4. Business Diagnostic

Financial Diagnostic to measure previous 2 years performance to identify key areas for improvement.

Documents used:

• P&L
• Balance sheet
• Management Accounts
• QAF
• Strategic business plan

QCD Diagnostic to identify current performance, and opportunities for improvement.

Lean Assessment to determine how well embedded the principles of continuous improvement are within each company, using Industry Forum Lean Assessment scorecard, and structured interviews with employees throughout the organisation

Team members explaining QCD data trials to management at Holset

5. Change Agent Training

The role of change agent within the project is vital. They are responsible for implementing and cascading the continuous improvement philosophy in their own companies. The change agents from suppliers and host undertook 3 weeks intensive training at the Cummins DEP factory on the following subjects:

The change agent has to be a teacher and motivate his team with enthusiasm and energy.

6. Steering Committee Meetings

The steering committee is used to assemble the senior management of all members of the supply chain group. Their role is twofold. Firstly, to ensure the project is progressing towards the agreed objectives, and highlight and resolve issues preventing achievement of those objectives. Secondly, to drive improvement in the partnership between supplier and customer (see initial partnership assessment scores in graph)

7. Partnership Assessment and Improvement

Five common issues captured during the one on one partnership meetings

1. Engineering change control process and procedure
2. APQP process and procedure
3. Price down vs cost down
4. Communication flow from Cummins and from the vendors
5. Performance data on delivery and quality

8. Supplier Improvement Activities

The objective for each supplier is to achieve cost-down savings that exceed the price down targets already agreed with Cummins as part of normal price negotiations. The supplier benefits from exceeding the price down target. Improvement projects are derived from the business diagnostic, so that they are in line with each companies business strategy.

Typical projects/activities conducted to date:

O.E.E. improvement on key pieces of equipment
Re-layout to eliminate waste, and improve safety
Productivity increases of both direct and indirect processes
Quality improvement through problem solving.
Waste elimination and standardisation.
Set up reduction

9. Results

Autrans: Heavy lifting eliminated, Engines out of flow eliminated, Box pick time reduced 17%, KPIs, Standard ops and training matrices introduced, further 5C and 7Waste activities conducted.

Concentric: One man and two man changeover procedures established and SWCTs produced. 45% reduction in distance travelled and changeover time. OEE improved 27% and 11%

Dyer: Darling ton rejections down from 4447 ppm to 914 ppm. Overall rejections down from 1% average to 0.25% average.
Delivery to Darlington 100% by internal measure. 37% increase in productivity.

Eaton: 30% increase in productivity, NRFT improved by 1.2% from 1.35% to 0.15%, DPPM now 227 to Darlington, Value Added per person per part doubled.

Holset: Change Agent development at a high level. Many interventions based on 5S. Quality problem solving used to address 'core balance' problem. Line balance issue highlighted but yet to be addressed due to computerised line control.

I C M: Value Added Per Person doubled, People Productivity up from 35 to 45 Parts per man hour, Delivery Schedule Achievement (overall) up from 94% to 98%, Stock Turns up from 12.4 to 14.5, NRFT down from15339 to 9898ppm.

Industrial and Tractor: 5C established with audit procedure, Standardised Work for set up time and cycle time established for Saw area. New opportunities identified in Welding and Toolroom. Delivery still erratic.

Teescraft: PPM now below 100. Delivery to Darlington 100% by internal measure. DEP measure to be confirmed. Floor Space Utilisation up b 75%. Value Added Per man hour up by 28%

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Cummins Case Study