Top Plant 2013: A spark of excellence
Journey toward Lean
“Our goal is to make welding the most cost-effective method to join materials together,” said Lipnevicius. “We have to constantly create increasingly more value in our products for lower cost, and we have a very good team that drives performance here.”
Quality has always been an emphasis at Lincoln Electric. However, manufacturing high-quality welding equipment has not always been as efficient as it is today. “We recognized around 1999 that we were very busy,” Seufer said. “We decided to move from a push strategy to a pull strategy. We chose to stock some of every product in our finished goods warehouse, watch what customers bought, and replenish those items. In doing so, we dramatically reduced inventories. We started putting our efforts toward what the customers were buying, not what we hoped they would buy.”
Making this switch created some unique challenges for Lincoln Electric. “Our evolution into Lean started around the year 2000,” said Seufer. “Going from a push system to a pull system was the spark that got the journey toward Lean started. But believe me, swapping more than 18 acres can’t be done overnight. It’s definitely a challenge. Lean is definitely an evolution.”
“The pull system really works,” said Lance. “Our metrics measure on-time attainment: Our products are delivered to the warehouse when we say they will. Currently, our attainment numbers are running between 96% and 99% nearly every week. That’s an enormous increase from where they used to be.”
Lincoln Electric management has supported the journey toward Lean from its introduction into the company. “Lean was driven from the very top of the organization,” Seufer said. “In the past, we were very focused on direct labor. Whatever we could do to reduce labor cost was always the issue. However, we came to realize that for every labor dollar, there are many dollars of overhead. In addtition to reducing labor, we started looking for ways to reduce overhead.”
Waste reduction is a very effective way to reduce overhead. “We’re continually looking for ways to eliminate non-value-added processes and activities, such as material handling and setup time,” said Seufer. “Setup reduction is a great example. The way we used to operate, we didn’t focus on how much time it took us to set up as long as our piecework price was low. It may have taken 2 to 6 hrs to set up a press just so that we could make parts rapidly. Then we realized that creating a setup reduction program could save us a lot of money. Today, our presses are optimized for quick changeovers. Long changeovers now might take 10 or 15 min.”
Lincoln Electric also optimized the molding presses and welding cells for quick setups. “Not only did setup reduction save us a lot of money, it also freed up a lot of capacity,” Seufer said. “When you have a machine that’s not producing for 2 to 6 hr, you might as well buy another machine.”
Focusing on scrap is a good way to identify processes that might not be in control. “We do Pareto charts on everything we make” said Seufer. “If we get too much scrap out of a certain area, we may have to run more production through that area just to get the yield we need. We used this process to identify projects for waste reduction opportunities. And in the first 4 to 5 yr of the waste reduction program, we reduced scrap by about 51%.”
WELD—an acronym for Workplace, Education, Lifestyle, Discipline—is one of the company’s horizontal safety teams. Lincoln Electric rolled out WELD in 2001 as a grassroots initiative to help improve the safety behaviors of the employees. WELD group members come from every production team. “The education element is intended to ensure that employees have the training to do their jobs,” said Bob Siktberg, EHS manager for North American operations at Lincoln Electric. “Lifestyle means keeping fit for work, eating healthy, being well rested, and stretching before doing work. The discipline—meaning self-discipline—means not taking shortcuts and risks, and not bypassing guards, for example.”
Lincoln Electric has a traditional safety committee, which is led by a machine division steering committee. While the safety committee focuses on issues such as dangerous working conditions, WELD is more of a behavior-based safety program. “For more than 10 years WELD has been one of the primary drivers in reducing our injury numbers,” Siktberg said.
“We’ve crunched the numbers,” said Lipnevicius. “Employees are most likely to get injured in the first year in the machine division. We ensure that the WELD group puts a particular focus on new employees. We rolled out a program last year that requires new employees to wear arm bands. Established employees are encouraged to make observations to help those individuals with arm bands.”
“New employees wear yellow arm bands for the first few weeks,” said Siktberg. “The WELD representatives and employee WELD members wear red arm bands. The new employees can be seen by someone driving a forklift or by supervisors. The WELD people wear the red ones because they’re the ones new employees can go to in particular.”
Lincoln Electric’s machine division places significant emphasis on near-miss reporting. “We define the phrase ‘near miss injuries’ loosely,” Siktberg said. Near misses are based on observations of conditions or situations that, unless they are dealt with, they will likely turn into accidents. For example, a water leak might turn into a slippery surface, which might turn into a slip or fall accident. Near-miss reporting is providing us with some really good chances to make corrections without there actually being a serious event.”
Near-miss reporting is a proactive approach to preventing actual incidents and another way to look at continuous improvement. “There should be many more near misses than there are actual injuries,” said Siktberg. And near-miss reporting gives us a lot of data. We have had 549 near misses to date through Sept. 30.”
Around 2009, Lincoln Electric’s machine division introduced another behavior-based observation method to enhance the WELD program. SafeTrack is a third-party program that uses a checklist on a card that employees can carry with them easily. Each team is responsible for at least two observations per person per week. “We chart the departments’ progress and we report on it quarterly,” Lipnevicius said. “We really think there is a lot of value to peer-to-peer observation. There is no discipline involved with the process and we gain a lot of good information.”
“The questions on the card are more about behaviors than about conditions,” Siktberg said. “Employees go through two days of training to become an observer. Because SafeTrack is an observation and feedback process, we’ve had very good response from it and the machine division embraces it. As of the end of October, the machine division has made 3,617 observations to date.”
“Our safety numbers are tracking well through September,” Lipnevicius said. “Our OSHA incidence rate is 2.15 and our days away, restrictions, and transfers (DART) rate is 0.72.”
“OSHA recordables include lost work days (LWD) and DART,” said Siktberg. “DART includes LWD plus any restrictions or transfers.”
“The machine division is seeing a 30% reduction in total injuries this year,” said Lipnevicius. “That’s a huge difference from last year. We know our safety programs are really having an impact. We’re seeing good traction.”
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Annual Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.