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McLaughlin Body Company
John Deere
February 21, 2005
Company History
McLaughlin Body CompanyCorporate Office
East Moline Operations1400 5th Street(250,000 square feet / 23,225 square meters)
Rock Island Operations350-44th Street(450,000 sq. ft. / 32,516 sq. meters)
Most Valuable Resource
Dedicated employees at McLaughlin Body Co. 235 Hourly 83 Salaried
Renewed relationship with U.A.W 1414 Newly signed 6 year contract Lessons learned on both sides from a 4 week
work stoppage
Committed to being the premier supplier of cabs and attachments by providing products and services of the highest quality and value to our customers.
Our Vision
Our Mission
Our mission is to be the Quality, Service, Technology and Value leader in our industry. The focus on leading in all these areas will allow McLaughlin to exceed our customer’s expectations and mutually prosper.
Our ValuesThe integration of our people and processes to provide products of high value and high quality.
The continual support of our community by providing valued jobs and participating in charitable activities.
Continuous improvement through employee development, training and education.
Our Mission / Value Statement
McLaughlin Body Company is a supplier of cabs, bodies and attachments to the ag, construction, industrial, military, mining, municipal and truck markets Expertise in
Design and development Program management Prototyping ROPS certification Fabrication Weld Paint Assembly Delivery JIT to line set
Competencies
Fabrication Capabilities
Various lasers including a Mazak FMS (Flexible Manufacturing System) featuring (2) 4000 watt lasers
2500 watt Mazak multi-axis laser with sheet loader
CNC controlled press brakes nearly eliminate setup
5” OD capacity CNC controlled roll bender for complex sweeps
Straight side and double action draw presses to 1000 tons – bed sizes up to 144” X 90” and 56” shut height
Robotic Welding
13 Existing robotic weld stations ABB Panasonic Fanuc
9 integrated weld positioners 3 flexible cells Continued dedication to
expansion of automation
Paint Capabilities
Current dual paint systems handle parts of any size Current E-coat Cab line
8 stage zinc phosphate pretreatment with non-chrome seal 8th generation low cure cathodic epoxy e-coat material
Minimal shrink / edge pull Reduced VOCs and improved performance
Acrylic top coat 6’ X 8’ X 6’ part size 2000# capacity
Large line 5 stage iron phosphate pretreatment Polyester top coat over thermally cured spray primer 10’ X 10’ X 50’ part size 10,000# capacity
All new cab line will be operational in April of 2005
MBC Customers
Quality
Quality Delivery
Customer A 5.1σ 6.0σ
Customer B 6.0σ 6.0σ
Customer C 4.8σ 6.0σ
Customer D 6.0σ 6.0σ
Customer E 98%
All Others 99% (MBC, VOC Report Ratings)
Customer Quality Metrics
Supplier of the Year Award
Deere & Company, North American Ag Division, 2004 Supplier of the Year Award
Customer Quality Status Reports (VOC) Internal quality rating system Quality Engineers communicate with customers and report to
the McLaughlin organization on a weekly basis.
NetMeeting or WebEx Capabilities Provides the opportunity for the design, process, manufacturing
and quality engineers plus supply management to work as a team on cost reduction, corrective and preventive activities from multiple remote locations.
Caterpillar Connect / Deere Supplier Collaboration Customer specific web based access to specs, drawings,
quality performance reports and other communication information.
Electronic posting of PPAP documentation
Customer Communications Tools
Two local certified laboratories for chemical and physical testing of metals.
Chemical supplier performs periodic system audits of cleaning and phosphating processes
Paint supplier performs monthly analysis of E-coat bath.
In-house testing: Dry film paint thickness Zinc phosphate pre-treatment coating weights Specular gloss of topcoat paints Cross hatch paint adhesion, ASTM B117 salt fog accelerated corrosion resistance GM9540P cyclic accelerated corrosion resistance Ultra phonic leak testing Ultra sonic weld evaluation Surface hardness of metals (Rb)
Materials Testing
CQTS Completed Checklist
CQTS Component Pareto Analysis
New reports automatically sent via internal e-mail to specific employees
Focus on Direct & Root Causal factors, Mistake Proofing and other Prevention Activities
Complete sort capability by date range, originator or report status
Completed reports are electronically transmitted to the customer
Corrective & preventive action
Cost Containments
A specific formula is applied that both MBC and our customer know and understand
Separate markups for purchased content vs. manufactured content
Departmental overhead rates are applied for press room, weld, trim, and paint
Changes are processed at variable cost only
Pricing Methodology
Cost Benchmarking Initiatives
John Deere Steel
Cat Logistics
MRO Supplies
Cost Containment Analysis
McLaughlin Enterprise
McLaughlin Body Company Cab Manufacturer
Bee Line Company Laser Alignment
McLaughlin Motors Auto Dealership
SE National Bank Banking
MBC Financial Leasing
Major investments in equipment
Info Systems Initiatives
Continuous improvement initiatives
Monthly cost reduction meetings
Consolidation efforts
MBC Working to reduce costs?
Operations Consolidation
Rock Island facility has been selected as the primary manufacturing facility Operations centered around world-class paint
system Integration of all weld, paint and assembly
operations Streamlined material flow between processes Integrated fabrication of components Operational in 4-6 months
New system capabilities
System will be isolated in separate, pressurized building Provide superior pretreatment
15 Stage immersion pretreatment with Zinc Phosphate Alkaline / Acid / Alkaline w/reverse polarity cleaning
stages for best in class laser oxide and weld smut removal Include powder coat in addition to e-coat and wet
spray top coat capabilities 8th Generation improved performance e-coat Low-E powder for reduced VOC emissions and reduce
energy consumption
Consolidation Goals
Increased competitiveness Reduce waste associated with non-value
added activities Reduce overhead by establishing multi-
functional focus teams Accelerate throughput and reduced
inventories Improve quality through streamlined
processes and direct communication between functional groups
Consolidation Goals
Improved communication Integration of product support personnel Electronic data collection and online access
to process instructions and drawings Open layout without “departmental” barriers Committed team focused with clear mission
for the future
Consolidation Goals
Establish positive image within QCIC complex
Segregation and distinction of MBC Exterior revitalization New visitor center and product showroom Clean and comfortable work areas for all
employees Renewed emphasis on housekeeping
What are the results?
Material burden reduced 20%
Paint costs reduced 5%
Laser costs reduced 17%
Improved quality and capabilities
Freight costs reduced 19%
Representative Price History – 1
PRICE WITH INFLATION
ACTUAL PRICE
ACTUAL LESS IMPROVEMENTS
Base Price
5%
15%
5%
15%
25%
35%
45%
Representative Price History – 2
Inflation Price
Actual Price
Base Price
7.5%
2.5%
2.5%
7.5%
12.5%
17.5%
22.55%
12.5%
Forecasting Customer forecast and order requirements
Delivery PPM scores In the past 12 months, of the 8092 trimmed and sequenced
cabs produced, 100% were delivered on time
Sequencing of delivered cabs to machine line set Releases for fully trimmed cabs with a wide variety of options
are received into the planning system via EDI Electronic configuration of models and options (EDI data / web
portal) Unique BOMs generated for each cab serial number Build card system for assembly instructions
Inventory Controls
Order Process – Trimmed Cab
Order Received
EDI
MBC Create Work Order
with Sequence #
Build TicketSoftware and
Test
Download
Daily Shipments to
Customer
• Sequence #• Options
Required• 30 Day Ship
Notice• 7 Day Firm
Notice
• Details Optional Equipment
• Creates Sub-Ass’y Reports
• Reviews Inventory Requirements
• Software Downloaded
• Test Requirements
• Sub-Assembly Test Documented
• Daily Shipments by Customer Ass’y Sequence
• Invoiced
• Software Program Review Available Options for Acceptance
Supplier Forecasting Requirements Quarterly forecasting meeting with suppliers to review our
estimated requirements for the next six months
Expedited Freight From MBC suppliers Unscheduled customer volume increases Customer controller supplier late shipments Customer expedites cab shipments
Supplier Quality Rating Reviewed with supplier on quarterly basis
Supplier Communication
Development
Engineering Support
Current group consists of 5 Manufacturing Engineers, 4 Industrial Engineers, 4 Quality Engineers, 3 Design Engineers, 2 Tooling Engineers and 1 Weld Engineer
This group can manage any product introduction from a complete design from the ground up to a straight forward transfer
Average Quotation Lead Time 1 week turn on Engineering Changes 3 to 4 weeks Cab
Product Development Process
Contract Feasibility
Review
Design and
Develop
Prototype Validate
PilotRelease Launch
• X-functional• Capacities• Capabilities• Competencies• Strategy
• Assign Team• Develop
Project Plan• INPUT review
• Proto build• Confidentiality• Mfg validation• Tooling build• Tooling
validation
• OUTPUT review
• Key features ID• IMS
development• Preliminary
process docs (routings / process instructions)
• Control plans
• Facility prep• Training• Product
approval• FAI / Capability
Studies• Product design• Supplier
selection• Design reviews
• DFMA/ FMEA reviews
• Tooling Design• Process Plan
•Provide acceptable quotation•Establish target price
Engineering Support
Project Management Projects are tracked through production
start up with detailed Gantt chart Responsibilities defined and communicated Key milestone reviews scheduled Critical path tracked and managed
Summaries and updates are circulated to entire internal and external project team on predetermined intervals
Engineering Support
Project Management Tooling and product cost budgets are carefully
tracked using development tracking summary Products broken down by functional group such as
frame, glass, door, etc Costs tracked and monitored against initial frozen
budgets Immediate visibility to budget creep Miscellaneous items such as hardware budgeted
initially as a “kit” and tracked as defined
Design Capabilities
(7) Seats of Pro-Engineer (Maintain use of previous versions to support customer needs)
Pro-Process for Assemblies (used by IE)
Pro-Intralink (Data Management software)
Pro-Mechanica 2001 (for FEA analysis)
Ability to import IGES, STEP, DXF models
Flexible and will adapt to customer needs
Tooling design in can be done in Pro/E concurrent with product development Speed launch time, simplify changes Create permanent revision controlled
record of tools
Design Capabilities - Tooling
Linear FEA capabilities using Pro/Mechanica Analysis for potential hot spots Frame / joint optimization
Design Capabilities - FEA
Product Expertise
ROPS expertise with active members on both construction and Ag ROPS subcommittees. Bill Johnson – Advance Engineering Manager,
Current vice chair of SAE Operator Protection Technical Committee - OPTC
Active member of OPTC SC4 - Protective Structures
Active member of ASAE PM-23-2-2 Agricultural ROPS subcommittee
Change Process
Request for Change
Identify Impact
Authorization
Implement
• Customer request
• Internal Change
• New parts• ISIRs• Process Instructions• Training
• Unit cost impact• Tooling• Obsolescence
• Customer approval
• Internal approval
Standard time = 1 Week(~300 Changes in 2004)
Implementation Specificlead time requirement
Management
Retain current customer base through superior customers service Improve customer communications with quarterly reviews Position ourselves as a Key Supplier all Deere Division Supplier of the Year for Deere Ag Division 2004
Diversify business by obtaining new business in new markets and additional business from key customers Utilize adjacency strategies to grow key segments with valued
customers
Achieve high value status (low cost, high quality, exceptional services) Evaluate current supply base and look at offshore sources. Evaluate current supplier deliver process for inventory reduction Leverage supplier expertise and develop strategy for significant
reductions
2004 Five Year Strategic Plan
Operations consolidation Utilize lean tools and methods to sustain continuous improvements Pursue technology advancements to improve quality
Successfully address key management succession issues Identify key people and skills and develop appropriate plan
Achieve ongoing company wide commitment to strategic direction Schedule timely review, update and measurement against
strategic plan
2004 Five Year Strategic Plan
From McLaughlin Body Company
Thank You