Edward Machin meets electronic room heating controls manufacturer, Danfoss Randall, to discover a company anything but feeling the heat of a recessionary climate.
The economic downturn, a grim reaper for so many manufacturers, is not without its good news stories. Danfoss Randall, a Bedford-based supplier of domestic and commercial heating controls, is one such tale, having effected a number of positive, company-wide, changes during the last eighteen months — becoming leaner, more efficient and productive in the process.
“There was a recognition that the company needed to change, and perhaps if it didn’t happen we wouldn’t even be here today,” says Paul Lynch, Danfoss’ production director. “Was it a learning curve at the outset? Absolutely, and we continue to discover new things about the business every day, from the boardroom on down. However, it was, and remains, vitally important that people were kept involved in the changes that were being made.” By keeping communication channels clear and open, staff were privy to the logic behind management proposals; the fact that they demonstrated it was for the benefit of the business ensured the vast majority of the company’s population soon got on board.
Very simply, the manufacturing team highlighted what the company can, and should, outsource — that which it doesn’t get any value from. In turn, Danfoss thereafter focused on those core capabilities of design, manufacture, testing and shipment of controls which have built its parent organisation, The Danfoss Group, a reputation as an industry leader in all that it does. “The ability to hold products in a part-built state and then commit to finished products at ATE (automatic test equipment) stage gives us the agility to deliver true customer satisfaction,” says Lynch. What’s more, “The fact that eighty per cent of our products made in Bedford are sold in the UK we see as a major advantage when you’re talking about response times, logistics, stock value and so on.”
Taking the biscuit…
As with many in UK manufacturing, regardless of sector, Danfoss took necessary action in 2009 to ensure productivity in all areas was maximised and overhead costs minimised.
Identifying and implementing improvements was now inherent in the team’s skills and competencies, realising an overall performance improvement in productivity (units/EFT/Hr) of 26%, with some areas delivering 42%. There was, however, still an issue of the company being out of kilter with customer requirements, needing to align these seasonal demands more closely with the available resources.
The proposal of annualised hours was presented to the staff, and after a three month consultation period it became clear that there was no better way to provide the required service levels to its customers; Danfoss implemented the new working arrangements in January of this year. Simply put, the staff work more hours in the winter high season and less in the low season summer months, while wages remain constant throughout the year. Pleasingly, says Lynch, “Our businesses’ performance — in terms of agility, response times, availability, service levels and, crucially, the bottom line — has vastly improved through 2010, and without the understanding and cooperation of all the staff at Bedford, we would not have succeeded.” Having recently won a contract to manufacture an electronic controller for The Danfoss Group, “We focused on keeping the product costs as low as possible by working in close collaboration with the R&D team to minimise the labour content wherever possible, and in doing so the company has invested a considerable amount in both design and test equipment,” he adds. Instead of operating with a single PCB assembly, for instance, they now do so in a panel of six. Lynch takes up the story: “Our guys pass a ‘biscuit’ through the production process, only breaking them out once fully assembled — thus reducing the labour content by six each time. With fully-functional test equipment at the beginning and end of the process, we are allowing operators to have in-cycle work, so they’re not simply sitting there waiting. In line with Danfoss’ culture of continually reviewing our processes, moreover, we have a responsibility to ensure that Bedford has a clear vision and roadmap to ensure it is indeed the right place to carry out this type of manufacturing. Can we be as cost-effective as the Far East? Undoubtedly. In fact, a recently undertaken competitive assessment highlights that very fact, so when we go into production in November for the first model we can continue to represent a centre of excellence for the Group.”
Danfoss’ UK arm has prior, too.
Exhibit one: the Danfoss Productivity Programme, introduced to Bedford in 2006 and representing, “A drive within the Group to promote both Lean and best manufacturing practices across our operations with a heavy emphasis on management involvement and a high level of visibility of KPI’s (Key Performance Indicators). We were especially proactive in taking it on, and soon became one of the best performing units for measurable productivity gains.” Aligned with the fact that the company focuses on solutions, rather than products alone, Danfoss now stands head and shoulders above its competitors, by not just remaining price-effective but supplying products that help reduce energy and CO2 levels. For instance, “Our technical support is first class in terms of providing a complete solution to customers — be it a commercial or domestic installation, and we do so at very competitive rates,” he says.
“Because we understand our costs to the last fraction of a penny, we know where we can give and take, while still sustaining growth in a difficult climate and delivering to our stakeholders.” “I am especially pleased that we have come through what appears to have been the worst of the recession faster than anticipated,” continues Lynch, “evidence of the fact that we took the right decisions to keep the business both buoyant and competitive.
Because Danfoss is a solutions-focused manufacturer, we are continuing to do some very good business with our major customers. They understand that we’re not simply selling a product, never to be seen again. With a current trend for de-stocking among wholesalers, too, our response times need to be that much quicker. That we can deliver product within hours or days, and whatever quantity or range our customers require, means that we’re not wanting for business.” Earlier this year, Lynch, two engineers and the Lean manager attended the Danfoss Operational Lean Leadership Program, an intensive three week course focused on becoming ever more efficient in all that the business does.
With three more colleagues set to attend in the coming months, “We are building on competencies throughout the workforce on a continuing basis,” he says. “The culture of a continuous environment of improvement is something that we are passionate about by pushing the boundaries on results and targets; that we’re doing it exceptionally well makes it all the more enjoyable.”