Continuous Improvement: The Need for Speed

Carrier Charlotte focuses on supply chain management, process capability and workforce engagement to triumph in the “war on cost.”

Earlier this month, MH&L’s sister publication, IndustryWeek, honored 10 plants for their productivity gains, supply chain proficiency, workforce management practices and continuous improvement programs. The following case study details how one of those operations, Carrier Charlotte, achieved the prestigious Best Plants award.

“Relentless” is a word Mark Goodman uses frequently when he talks about Carrier’s Charlotte, N.C., Chiller Operations. The plant manager applies the adjective to the facility’s quest to achieve “world-class quality,” safety excellence and other operational objectives, but his intensity increases when the topic is the plant’s “relentless war on cost.”

“We have a little bit of a chip on our shoulder because the operation was unprofitable and had so many issues for so long,” Goodman says. “We’re just relentless about putting that in the past and about driving value for our customers, creating a safe working environment and taking cost out.”

Considering the facility’s past, the intensity is understandable. In the mid 2000s, the plant was struggling with key metrics such as on-time delivery, quality, employee satisfaction and environmental health and safety compliance, and facing serious cost issues. “If you go back to 2005, this facility was hemorrhaging money,” Goodman says.

Fast-forward to 2011. The Charlotte facility, which makes chillers for the commercial heating, ventilation and air conditioning industry, has made dramatic strides in every operational area and on every key metric, highlighted by a 241% increase in plantlevel profitability, a 56% reduction in the customer reject rate over the past three years and a 99% on-time delivery rate.

Carrier Charlotte in 2009 launched nine new products, all of which were introduced at a minimum of 20% lower manufacturing cost than their predecessors. For a new refrigerant product line, the plant leveraged lean-at-launch principles and design-formanufacturability guidelines to consolidate three assembly lines into one—freeing up 15,000 square feet of floor space.

Due to improvements in efficiency and productivity, the plant has been able to accommodate the new product line without adding a second shift. “That was a huge victory for the facility,” Goodman says, “and part of the driver” of the plant’s improvement in profitability.

In its all-out effort to achieve operational excellence—and win the war on cost—the plant has leaned heavily on the “Speed” formula. Rooted in continuous-improvement concepts, the formula emphasizes three operational strategies: supplier reliability; capability, reliability and repeatability of processes; and an engaged, highly skilled work force. Among the ways that Carrier Charlotte has implemented the formula:

● The facility builds collaborative relationships with its supply chain, seeking long-term agreements with suppliers in a push to establish quality, delivery and cost-reduction targets and favorable payment terms. Every top-tier supplier receives a monthly scorecard highlighting their quality and delivery performance. A team of supply quality engineers helps suppliers cut costs and boost efficiency in their own operations by conducting component- teardown analysis, training and kaizen events at Carrier Charlotte and at suppliers’ facilities.

● The facility ensures process capability and repeatability— no easy task when more than 75% of sales are built to customer order—through strategies such as standard work instructions, material presentation and value-stream mapping.

● Carrier Charlotte fosters employee engagement through monthly plant-wide meetings, employee focus groups and crossfunctional plant-improvement teams that meet monthly with plant leadership to discuss improvement projects and opportunities. Improvement suggestions submitted by employees in 2009 generated $3.6 million in cost savings.

“If we need to spend money, we spend it. But out first choice is always to use creativity over capital,” Goodman says. “And it’s amazing when you get a couple hundred people focused on that, the power that can bring to the table.”


Josh Cable is senior editor of MH&L’s sister publication, IndustryWeek. Learn more about the Best Plants program at www.iwbestplants.com.

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