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Southco Manufacturing, Raising the latch

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Manufacturing in Action, Source : The Manufacturer
Published : February 2006

Thanks to ambitious investment and creative management, Southco Manufacturing is growing at a spectacular rate, as Sarah Bower discovered in conversation with European supply chain manager, Mike Keen, and colleagues

Worcester-based Southco produces engineered access hardware solutions – ‘latching systems’ to you and me – for a variety of applications, including telecoms, enclosures, rail, marine and automotive. From cabin door locks on a boat to car headrest controlled torque hinge systems, Southco can offer a value proposal second to none. The company is able to respond successfully to such wide ranging requirements due to the breadth and quality of its relationship with its customers. As Brett Griffiths, automotive value stream manager, explained: “We have a real connectivity with our customer. We work with our customer to design the part into their programme. From the design concept we can do a rapid prototype and once they’re happy with that, then we can quote for the job right from design all the way through to delivery. It’s a question of really understanding what the customer requirements are and knowing what our boundaries are.” Current developments in the automotive sector include an electronic glovebox latch with inbuilt solenoid. The company is working specifically with key leading OEMs on this. “Our focus is to go more for value for the customer added by moving to the electronic latch rather than the mechanical,” added Griffiths.

The strategy sounds simple, but several different strands of corporate activity have to be co-ordinated to put it into action. As Mike Keen said: “Southco has been active on the acquisition front over the past three or four years, trying to acquire new technologies, new bolt-on niche products to be able to offer more of a ‘one-stop shop service’ based on the needs of our customers.” This is what happened with the acquisition of Farnham-based speciality fastener manufacturer Dzus at the end of 2004 which followed the integration of marine specialist Mobella of Sweden, alongside other acquisitions outside of Europe. The company is truly global, employing 2200 people in 22 different countries in Europe, America and Asia. Eighteen months ago an automotive design and engineering centre was opened in Stuttgart, “deliberately and strategically positioned right at the heart of the European automotive market,” and three months ago the company opened its first injection moulding facility in China, near Shanghai, which is Southco’s seventh facility in the region.

“We try to manufacture as close as possible to the point of consumption,” said Keen, but nevertheless, Southco’s diversity means that efficient supply chain management is a major issue. “A key competence of Southco is its ability to link its customer and its operations through efficient supply chain management. The key to this is ensuring continual focus on the lean transition we’re on,” Keen told me, proud to add that the UK is leading the organisation globally in lean implementation. Southco began its lean journey three years ago, and 18 months ago made the transition to a value stream structure. “Lean is not a quick fix,” commented Keen, “but our transition to a value stream structure has been an integral and fundamental part of it.” The commitment of the value stream managers is unwavering. “For the future of any manufacturing facility value streams are the way to go,” said Paul Hemming, value stream manager for catalogue products. “A value stream is effectively a lean business unit.”

As Griffiths explained, the value streams have been designed to involve as many of Southco’s people as possible. Said Keen: “It isn’t a clichè to say that our people are our best asset.” A shopfloor based value stream tracking centre shows the transition between current and future state value stream maps in a series of five information display boxes. This data is reviewed on a weekly basis. “We really do track and analyse data deeply,” said Griffiths, “so every single cost that is put into the value stream, whether it’s an extra person, or additional inventory and packaging, is highlighted within the box score meeting. That way, everyone understands the way the value stream is going against each of the five key measures.”

Value stream mapping has been used extensively across the Worcester facility. Continuous improvement teams implement change programmes over two to three month periods so that all the site’s 175 employees have the opportunity to become involved “in the most business critical areas,” as Keen put it. “The three primary change mechanisms are just do it, continuous improvement and kaizen. We’re imparting change at all levels,” he added. As these teams are not management led, comprehensive training has been required to give staff the skills they need, such as facilitation and presentation. There is also an internally managed ‘lean champion’ course, supported by an external, US-based consultancy, resulting in the identification of a growing number of lean champions “positioned around the business in key areas.” In addition, all Southco’s senior managers have received leadership skills training.

A third strand in Southco’s success, in addition to acquisitions and the implementation of lean is capital investment. The company invested over

£1 million in new injection moulding equipment in 2005 and plans to increase this further in 2006 as part of the overall establishment of an injection moulding centre of excellence in Worcester. As Griffiths said: “Our sales growth has been fantastic. We’ve got some major programmes coming into the business and to be able to cope with that growth you’ve got to have the equipment on site to deliver those parts.”

Southco has doubled the value of its business over the past five years and plans to double again by 2010. Despite the current economic downturn, Keen is confident this can be achieved because of the diversity of Southco’s markets and the company’s strong customer relationships. “We are really strong with regards to our sales and engineering interface, and in many markets we enjoy a communications link direct with our customer’s customer. We understand what the OEMs want, how to deal with the challenges of global customers and different channels to market and basically meet what the market requires in terms of value.”

He is not complacent, however. “We’ve got a lot of work to do using the lean tools to improve productivity,” he said. “Our greatest challenge will be to meet our operational and supply chain goals, to keep pace with the front end of our business. At the moment our front end pipeline is so full that the back end needs to make significant and rapid improvements in productivity, supply performance, and overall cost base.” Identifying the problem is half the battle, and Southco has the tools in place to successfully triumph in the second half.