Production director Paul Lynch talks to Gay Sutton about Danfoss Randall’s investment in a new production line, the improvements that lean manufacturing has delivered and how the company is setting its sights on Europe
There are three elements in life that the human being needs: food, shelter and warmth, and Danfoss Randall supplies one of these basic essentials – warmth. But it does this with a fairly sophisticated piece of kit. From its manufacturing site in Bedford where it employs around 200 staff, the company manufactures heating electronic room controls (ERCs) largely for the UK wholesale market, retailing to the industry through merchant outlets. Due to the essential nature of its product, the company has been fairly well insulated from the harshest effects of the recession. Although the new-build has been hit hard by the general downturn in the economy the Englishman – or woman – still needs a fully functioning heating system, regardless of the economic climate and there is a lot of needed heating refurbishment and repair work taking place in UK.
The company is part of the heating division of the Danish mechanical and electronic controls giant Danfoss Group. Having originally begun life as Randall Electronics it was acquired in 1991 and brought into the Danfoss fold where it enjoys the enviable position of being the only company in the group manufacturing ERCs. Currently around 80% of the factory’s output is sold in the UK, but the company is in the process of expanding into the European markets by making use of the already existing Danfoss sales companies and sales force around Europe. “And we are breaking into Europe, slowly but surely,” says operations director Paul Lynch.
Under the Danfoss wing, the UK manufacturing site has enjoyed a significant programme of investment and improvement, and has markedly increased its competitiveness. The first element of this evolution began three years ago with the launch of a lean manufacturing initiative called the Danfoss Productivity Program (DPP). The programme was designed to operate across all of the group’s manufacturing sites, and was supported by a team of lean specialists who were available to advise and work with any of the group’s companies.
Today, lean is embedded in the company, according to Lynch, and is running very successfully. “In fact,” he says, “we have the best DPP figures in the group in terms of rate of change and sustainability.”
Lynch joined the company a little over a year ago, and brings with him considerable knowledge and experience of lean manufacturing. “I believe one of the reasons why it was so successful here is that the company needed to do it. I think the biggest milestone was implementing it, while the change in mindset was a huge step for the people. Up until then they were just instructed to do things. If something was wrong they reported it and never heard any more about it. They certainly weren’t encouraged to become involved. Now, they are. People listen to them, listen to their views and fix the problems they’ve identified. I believe that as soon as you stop paying attention to your workforce you let them down and they switch off.”
One of the first lean building blocks to be implemented was 5S, “and it’s an ongoing process – but a tidy and organised workplace is essential,” he continues. “The most recent continuous improvement exercise has been the use of SMED (single minute exchange of die) to reduce changeover times in our automated printed circuit board assembly lines. The workforce hadn’t heard of the concept before that, so we’ve put them through familiarisation and training. And the outcomes have been good. On one machine in particular, we have reduced changeovers from one hour to less than 30 minutes.”
The lean manager at the plant comes from an industrial and production background and one of the key lean management processes he has initiated is the identification and elimination of non-value added content (waste). This approach is supported with root cause problem-solving reviews on every line once a week. “That’s a quick 10 minute review,” Lynch explains. “People will then work on the issues either by themselves or with help from the appropriate experts.”
From a group perspective, Lynch has been pushing for a widening of the DPP programme, and it seems his efforts have been effective. “In the past, the company has tended to select areas for improvement,” he says. “This inevitably results in pockets of improvement while other people feel left out. This year we’re now doing it across the board. I can understand the logic of picking the cherries, but you do have to have 100% involvement to achieve a lean plant.” And it’s only through 100% involvement that the lean programme can be maintained and sustained.
The DPP’s focus was wider than improvements to internal processes, and examined all aspects of production, assessing the feasibility of outsourcing the elements of manufacturing that were considered to be non-core processes and too costly. The equation had several layers. “If the labour content was any more than 20% then it was perceived as a risk or an opportunity to improve,” Lynch says. “But the extent of the risk depended on the service level we were providing.”
As a result of the review, the injection moulding activity has been outsourced along with some of the small component assembly work and printing that is associated with it. “And this has been very successful. We now perform case assembly here in the UK, which is a very efficient process.”
The company is still working on defining its stock levels and downstream supply chain management. “On a standard programme we can make 600 items a day, but we could get an order for 2,000 from a wholesaler. Now, the wholesalers generally want the product as soon as they order it, so we do make to stock. Our aim is to be able to turn a product round in 24 to 48 hours, and we are working on getting the wholesalers to order more frequently and with smaller quantities.”
Danfoss Randall has also made some very significant investments at the Bedford site. About one and a half years ago the company installed a new £1.5m ‘through hole’ production line (known as the PMJ) for the electronics assembly area.
“The bulk of our products are electronic controls. We currently produce around 500,000 PCB assemblies a year which begin on the surface mount line and are then finished on the PMJ. It was a huge investment that was needed to reduce the amount of manual work content on the line.” The new line is capable of processing a wide range of components and products, and also has an automatic optical inspection capability.
The production lines are, however, likely to continue evolving. This particular cell processes 120 different types of board assembly, all of which have to be planned and scheduled. “The big challenge we have now is the ongoing change in component technology – the assemblies and components are getting smaller and smaller, and we are having to manage that within the constraints of the machines.”
The site also benefits from a product validation lab which results in considerable time saving. Approved and accredited to test its products, it is also equipped with an EMC semi anechoic chamber, capable of thoroughly assessing electrical, electronic and wireless devices. “It enables us to obtain product approval within five days, whereas if we had to use one of the outside test houses we could be talking five or 10 weeks,” Lynch says. “That’s pretty unique in this industry, and certainly a huge benefit for us.”
The company is working hard to multi-skill its workforce through training and familiarisation. There is an ongoing apprenticeship scheme, and promising apprentices are sponsored through a degree. “At the moment we have two graduates in design engineering who began with us as apprentices, and we have one lad going through college who may well go on to a degree.”
The current recession has hit most manufacturers very hard, and its effects have been felt at Danfoss Randall. “We are feeling the pinch but not to the extent that most are,” Lynch says. “And the reason for that is that our product is a fairly essential piece of kit.” However, the Danfoss Randall business is cyclical, with the peak period occurring between October and February – the cold season during which most heating components are likely to need replacement. “So we are going into our quiet season now, and it will be interesting to see how that goes.”
The ongoing investment in process improvement – through lean manufacturing, a new production line and the outsourcing of non-core activities – has positioned the company well for future growth, particularly if the expansion into Europe goes as well as hoped. “Our products are high volume and give us good margins,” Lynch concludes. “We are controlling our costs extremely tightly. We are a lean organisation now, and we produce very good results. Currently our sales may be under pressure because of the recession but we have managed our costs well, worked even closer with our customers and suppliers to maintain our market share and margins, and for any company these days that is very good.”