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Check Against Delivery.Embargoed until 2:15 PM, 5 November 2010
Global Production –Mastering complexity as a competitive edge
by Thomas BauernhanslFreudenberg GmbH, Heidelberg, Germany
Session 8, Workshop 8.1: „Organization in Production“Our Common Future, Essen, November 5th, 2010
Our Common Future, Hannover/Essen, 2-6 November 2010 (www.ourcommonfuture.de)
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Our common future
Global Production- Mastering complexity as a competitive edgeDr. Thomas Bauernhansl
Essen, 05. November 2010
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Drivers of complexity for a component supplier
Introduction of Freudenberg Sealing Technologies
How to handle complexity in global production
Summary
Agenda
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Freudenberg Group (1/2)
Worldwide diversified family-run conglomerat
Turnover segmentation of business areasBrief description of Freudenberg
Family businessfounded 160 years ago
Diversified product portfolio anddecentralised organizsation
Global acting enterprisemore than 170 sites
Value orientated corporate culturestrong company principles
Turnover 2009: 4,2 bn EUR32.000 employees
50%
20%
15%
15%
Sealing- and Vibration-Control
Specialities and others
Nonwovens
Householdproducts
4,2 bnEUR
1 Introduction of Freudenberg Sealing Technologies
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Freudenberg Group (2/2)
Production and Sales in more than 50 countries.Mainly in Europe.
ProductionSalesProduction and Sales
1 Introduction of Freudenberg Sealing Technologies
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Product portfolio Freudenberg Sealing Technologies
Dynamic Sealings(Simmerring®, Valve stem seals)
Hydraulics and Pneumatics Hydro Storage
Liquid silicon products Special Sealing ProductsVibration control
Weltweit größtes ProduktspektrumWorldwide leadership of product portfolio
Static Sealing(frame gaskets, O-Ring)
1 Introduction of Freudenberg Sealing Technologies
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Status quo Freudenberg Sealing Technologies
Business model Complexity Organization
Development, production andsales of sealing and vibrationcontrol technology
Purposely focussing oncomponents instead ofmodules/systems
Leadership or strong leader inalmost every market segment
Positioning as expert intechnology
More than 300.000 products
More than 2.000 differentElastomer compounds
Added value > 65%
40 production sites worldwide
6 sales areas serve more than37 market segments
Up to to five intercompany salesprocesses
Strong decentralised organization
Operations (productdevelopment, product marketing,production, customer service) inso called „Leadcenters“ –product-categorized operationsfully responsible for their profitand loss
Market-segment-orientated,encompassing all productcategories sales
Complex business with deep added value, strong decentralizationand variety of customer groups
1 Introduction of Freudenberg Sealing Technologies
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Drivers of complexity of a component supplier
Introduction Freudenberg Sealing Technologies
How to handle complexity in global production
Summary
Agenda
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Drivers of complexity in global production
Complexity in the sense of variety and rate of change will dramaticallyinfluence our ability to achieve profits in production
2 Drivers of complexity for a component supplier
New markets
New customers
Changing product portfolio
BRIC
Sustainability
Availability of talents
Flexibility
Resilience
Existing mess
Production
Structure Organization Technology
People
page: 10
Example Freudenberg Simmerring®:Strategy of Total Cost Leadership leads to variety of innovative products
Levitex® Gas-lubricated Face
Seal
Energy SavingSimmerring®
(ESS®)
Sealing Modulewith Sensory
Function
Simmerring®
with leathersealing lip
Simmerring®
with elastomericsealing lip and
spring
Simmerring®
with PTFEsealing lip
BlueSealTM
Innovation (application, use, additional use)
2 Drivers of complexity in a global production
New innovations will widen product portfolio andneed for new production set ups will occur
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Ramp up of new processes will bind key resources in the productionand will add additional complexity
Previous stamping process new FST-process
Wide metal sheet
Rings being blanked out
Laser weldingLaser cutting
Station 1 Station 2
narrow metal sheet
waste
2 Drivers of complexity in a global production
Example Freudenberg SUL Technology:Need for sustainable technologies leads to variety of innovative processes
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Economies of scale and complexity highly influence the freedom in global footprint designEc
onom
ies
of s
cale
Complexity
AutomaticProduction
Low Cost CountryProduction
Skill orientatedProduction
Target: Use economies of scale and reduce complexity
2 Drivers of complexity for a component supplier
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Example: Valve stem seals – benefit of standardisation and automation
Due to our highy specialized and automatized production we are able to producein western europe. This enables full freedom in global footprint design.
Productivity Costs
0
1000
2000
3000
4000
5000
6000
FDS FNGP FNCB SFN CNF
[piece/ h]
60
70
80
90
100
110
120
130
140
FDS FNGP FNCB SFN CNF
[Index]
3 How to handle complexity in global production
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Drivers of complexity of a component supplier
Introduction of Freudenberg Sealing Technologies
How to handle complexity in global production
Summary
Agenda
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First step to handle complexity is decentralization based on segmentationExample: Lead Center Concept of Freudenberg
Decentralized orientation of product categories facilitates quick decisions, market affinity and specialization. FDS made loss, then succeeded partly in double-digit Return on Sales
Simmerrings
O-Rings
…
Business model until 1992 Business model up to today
Strong centralized orientation
Single plant manufactured several products
Great distance to the market/market know-how
Long and difficult decision making
Simmerrings O-Rings …
3 How to handle complexity in global production
Decentralized organization in Leadcenters (LC),headed by „Entrepreneurs“
Each LC focusses on a product group and is fullyresponsible of its business (profit and loss)
Further specialization of specific applications ofproduct categories: LC Simmerring Engine, LCSimmerring Cassettes
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Market, segments, customers
Different market requirements (automotive: transmission, engine, truck, etc), general industry (Distributors, Agriculture, Construction, etc.)
Sales channels VK (Automotive), SIMRIT (General industry), Corteco (After Market business), FPS, etc.
Article diversity (number of living products) The number of living articles in the production unit has an important influence on the organization and technology structure
Volume structure and lot sizes in production
The size of lots in production has a high impact to the technology of molding, tools but also to the whole organization of a unit
Product design simple design or complex customer specific design,
Material only rubber part or rubber + metal or + other material (PTFE, etc.)
Production technology
Production technology (IM, CM, TM, etc.) depends on product design and type of rubber compound as well as on quantities asked by customer
Production Unit I (High Volume)
Production Unit III(Low Volume)
Production Unit II (“Mixed” / Middle)
Cell A Cell B Cell C Cell D Cell A Cell B Cell C Cell DCell A Cell B Cell C Cell D
Highcomplexity
Lowcomplexity
3 How to handle complexity in global production
Main criterias for segmentation
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Criteria for Structuring a production Unit
A ) Market, segments, customers 63 customers
C ) Article diversity (number of living products) > 800 references
D ) Volume structure and lot sizes in production 30,6 Mio. pieces/year ; 38 T parts/ reference
E ) Product design Encoder, IWDR, Pump seals, Cam shaft seals
F ) Material 26 rubber and PTFE
G ) Production technology IM Mono-Mat and Bi-Mat
BusinessUnit
High Volume
BusinessUnit
Low VolumeBusiness Unit
“Mixed”
B ) Sales channels Key account automotive, Simrit, Corteco
Low complexity highcomplexity
„Old BU“ Concept
3 How to handle complexity in global production
Situation before segmentation
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A ) Market, segments, customers 18 customers
C ) Article diversity (number of living products) < 200
D ) Volume structure and lot sizes in production 29,3 Mio. Pieces / year; 147 T parts/ reference
E ) Product design IWDR, Pump seals, Cam shaft seals
F ) Material 21 rubber and PTFE
G ) Production technology IM Mono-Mat and Bi-Mat
Business Unit
High Volume
B ) Sales channels Key Account Automotive, Corteco
Low complexity high complexity
Criteria for Structuring a production Unit3 How to handle complexity in global production
Situation after segmentation
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A ) Market, segments, customers 63 customers
C ) Article diversity (number of living products) > 600 references
D ) Volume structure and lot sizes in production 1,3 Mio. pieces/year; 2,1 T parts / reference
E ) Product design Pump seals, Cam shaft seals
F ) Material 25 rubber and PTFE
G ) Production technology IM Mono-Mat and Bi-Mat
BusinessUnit
Low Volume
B ) Sales channels Key Account Automotive, Simrit, Corteco
Situation after segmentation
Low complexity highcomplexity
Criteria for Structuring a production Unit3 How to handle complexity in global production
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low volume
metal treatment
mixing
stamping
UF 2
UF 3&
PP Si
empty
metal treatment
mixing
stamping high volume
BU highvolume (2)
PP SiBU highvolume (3)
BUlow volume
stampinglow volume
Bef
ore
Segm
enta
tion
Afte
r seg
men
tatio
n
Volume of another factory
Characteristics of a small series BU Own storage facility for semi-finished goods
(springs,..)
Customer Service with direct interface to Corteco
All office functions in the production
Full responsibility for gross margin
Basic SCM processes
Multiple qualified operator and setter
Short setup time
Basic Quality Management System (not TS16949)
Own pretreatment process for metal parts
Standard packaging (differentiation later at theCorteco storage facility)
CIPs (LPMS focused on processing time, deliveryperformance and OEE on weekly changingBottleneck Machines)
Example: New structure of a factory in France3 How to handle complexity in global production
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Value stream design makes it possible to develop a process vision per segment
Value Stream Analysis Value Stream Design
Standardized representation ofthe ACTUAL situation
Standardized representation of afuture vision
Action plan
F I F O
FSUFSU
RMWRMW
KundeKunde
Bleche ölig
Streifen
PhosphatierungPhosphatierung BeschichtungBeschichtung
ITMITM
OfenOfen
RTFRTF
QS QS
St ützringeSt ützringe
FederfertigungFederfertigung
# 49004302# 49004302
F I F O
VersandVersand
Lorsch
# Blech# Blech
2x
tägl.
2x
tägl.
..
3 How to handle complexity in global production
Sync
hron
e Pr
oduk
tion
Aus
gebi
ldet
e un
d m
otiv
iert
e M
itarb
eite
r
Proz
esss
tabi
lität
Stan
dard
s
Systematische Probleml ösung
Führen durch Pr äsenz vor Ort
Bewusstsein zur Vermeidung von Verschwendung / KVP
Customer Value First
Sync
hron
e Pr
oduk
tion
Sync
hron
e Pr
oduk
tion
Aus
gebi
ldet
e un
d m
otiv
iert
e M
itarb
eite
r
Proz
esss
tabi
lität
Proz
esss
tabi
lität
Stan
dard
sSt
anda
rds
Systematische Probleml ösung
Führen durch Pr äsenz vor Ort
Bewusstsein zur Vermeidung von Verschwendung / KVP
Customer Value First
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The LPMS should make it possible to identify potentials in daily talks and to initiateactions
Systematic problem solution: Lean Performance Management System (LPMS)
3 How to handle complexity in global productionP
rodu
ctio
n
Ana
lysi
s A
sses
smen
t
Data Collection
LPMS Action Plan
Daily Problem Solving(max. 3 shifts)
FQA(max. 2 weeks)
6 Sigma(max. 3 months)
LPMS 08:00 Meeting
LPMS 13:00Meeting
LPMS Information• Security Events• Quality Events• Production Evaluation
LPMS Information• Security Events• Quality Events• Update of Measures• Production Output
DeviationTrends
InformationDisplay
InformationDisplay
Recommended, Optional
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Technology Steering Committee
Technology Panels
Standard Technology
TMIMRubberMixing/
Preparation
Tasks of Panels:• Further Development and Standardization of Tool Concepts and Processes• Standardization of Production Machines• Support of Knowledge Transfer into FDS LCs
Technology Management• Technology Road Map / Investment Planning• FDS Technology Programs (Material and Energy Saving, Lean Machines,…)
New Trends and Innovations• General Trends• Innovations in Material, Product, Process
SpecialMaterials
Finishing/Assembly
ProcessEngineering
NewTechnologies
Stamping CM QualityControl
Technology Management Approach – Standardization in a decentralized organization3 How to handle complexity in global production
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Drivers of complexity of a component supplier
Introduction of Freudenberg Sealing Technologies
How to handle complexity in global production
Summary
Agenda
page: 25
Production structure Production organization Production technologySegmentation Customer Value First Technology Road Map
Targets: Reduction of complexity Development of scale effects Use of synergies Reduction of fixed costs
Simple structure by focused factories
Targets: Improvement of delivery
performance Productivity improvement Optimization of stock Improve customer satisfaction
High customer orientationby lean and standardizedprocesses
Targets: Reduction of complexity Reduction of material- and
energy usage Improvement OEE High flexibility
Standardization of productiontechnology by integratedtechnology panels
To handle existing and future complexity in production Freudenberg Sealing Technologies focus onthree main pillars
Syn-chronized
Production
trained / motivated
people
Process -
stability
Customer
Value First – core principles
Standard
Systematical problem solving
Leadership on Shop Floor
Awareness about waste / KAIZEN
Syn-chronized
Production
trained / motivated
people
Process -
stability
Customer
Value First – core principles
Standard
Systematical problem solving
Leadership on Shop Floor
Awareness about waste / KAIZEN
Complexity Management in Production is a ongoing process following clearmanagement principles
4 Summary
