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Vol 26 - No 06 - July/August 2000 Factory visit to Krone (UK) Technique on 20th April 2000 I'll bet very few of you have heard of Krone, but you all know their products - the little wall plug that your phone connects to. This is only a part of the extensive product range that provides innovative connectivity solutions... Krone employs over 300 people in the bright and cheerful factory in Cheltenham where they have been for over 20 years. The company was, until very recently, a wholly owned subsidiary of Krone, a German group, but is now part of American giant, Gentek. Krone (UK) turns over about £34m, of which 25% is exported. (Krone Group t/o £0.56bn) Over the past few years there has been a huge amount of change at Krone. Initiatives as far back as 1991 started with TQM, then included supplier developments and partnerships, problem solving teams, cellular manufacturing, Kanbans, world class manufacturing etc.etc.etc. But they gave very little return for their efforts! But what drove them to change anyway? The real wake up call came when competition, particularly from the Far East, started offering products at near to Krone's technical levels, but at much lower cost. Remember that many of the products were industry-standards that were under Krone's patents. Krone held a dominant market position, giving rise to a "fat cat attitude" that was bound to be a recipe for disaster when the patents inevitably expired. As we have all seen, telecoms technology is constantly changing, especially with such major technology innovations such as fibre optics and wireless protocols as well as more competition between the telecom providers. 1995 brought about a change in approach to improved competitiveness. A parallel set of initiatives were started, going from chaos (with innocence) through control (and increasing awareness) to simplification of processes (to bring in understanding of the issues and tools) to arrive at automation where possible (attaining competence for the people involved everywhere). The objective was to break out of the slow, just-good-enough improvement of performance by achieving a step-change to get significantly ahead of any real or potential competitors. The focus for this effort was (and is) FCO - Fulfilment of Customer Order. This is focussed on both internal and external customers in the supply chain. Key drivers are: Cost reduction Lead time reduction Customer service improvement Flexibility and responsiveness Cultural change The major change was towards a type of "super cell". Out went the organisation of powerful, centralised functions like quality, stock control and stores. In came Quality Co-ordinators and Materials Co-ordinators, embedded in the production cells. Ownership of key support activities was transferred in, like materials replenishment, production planning, new product introduction and change, customer order management, training and production methods and routings. Backing this up is a company culture of open learning. There is no bonus scheme and no reward for improvement ideas. This is seen as an accountability issue that is backed up by profit-related pay - "We're all in it together." And the job of the cell leaders has changed - they now spend 50-70% of their time developing individuals and the team. FCO measures are seen all over the factory. The people we spoke to in the cells could readily quote the measures. They were all extremely positive about the way things are now going, even though several of them have had major shifts to their roles. Indeed one of them was taken out of her supervisory job and moved back to the shopfloor after she had the mandatory assessment. This shows the flavour of the hard-edged but sympathetic approach taken by Krone to implement the changes. Some of the key measures over the last 10 years (this year's targets)are: Sales up from £18 to £34 Customer deliver performance from 25% to 98% Supplier delivery performance from 50% to 98% Production overheads as proportion of sales from over 12% to less than 6% Stock turns from 4 to 15! One of the biggest lessons learned has been to not underestimate the amount of support required to get the basic changes done, and then to keep the support going as people venture into unknown territory. Roles have changed across the board. For instance, engineers are now freed up to develop the next generation of products instead of nurse-maiding current product problems. The keys to success have been primarily around success at the cell level. Teams of the right people have been created with high levels of trust stemming from shared aims. Change is now a way of life, but there is a visible commitment to improving. Barriers between people and departments have come down and the right people do the job that is needed, such as doing their own drawings and methods developments. Communication is not just given lip service, it is a real two-way thing. Have they arrived at where they want to be? No chance! But they have come a long way. There is still lots to be done, only part of which is technological, like bar coding and e-Commerce. Integration of more tasks and functions will continue with the aim of keeping well ahead of the competition. And this will be done primarily by involvement of the people. Many thanks to Nick Rose, Master Scheduler (who is now South West branch President), Dave Walker, Assembly Manager, and Gaye Doig, Supply Chain Development Manager for their time, generosity and openness. 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