Danaher Corp.: Leaner MachineBy David F. Carr | Posted 2005-06-10 Print
The manufacturer's motto: maximum efficiency with minimum technology. Tom Mathis' response: a parts-tracking system to make workers more productive.
Tom Mathis had the job of taking a "lean" organization and making it even "leaner."
As vice president of supply chain management at Danaher Sensors and Controls, a division of the $6 billion industrial conglomerate Danaher Corp., Mathis bucked corporate tradition when he proposed adding computerization to a manufacturing process known for achieving efficiency without it.
One of the first U.S. devotees of the lean manufacturing concepts pioneered by Toyota, Danaher doesn't trust the reordering of parts for its factory floor to the projections of a manufacturing resource planning (MRP) system. Instead, it uses the Japanese "kanban" method of factory floor control, in which an almost-empty parts bin triggers a just-in-time replenishment order.
"Our operations have been divorced from technology intentionally," Mathis says, because one of the first things kanban experts tell factory operators to do is "unplug the MRP system." In fact, the controls division uses an MRP system, Mapics, but more to track inventory and orders than to drive the process, on the theory that a computer projection will never be as accurate as a measure of actual consumption.
Since the 1980s, Danaher had been acquiring smaller companies and wringing more efficiency from them by applying lean techniques aimed at driving down inventory levels and speeding up manufacturing, mostly by analyzing and improving the flow of parts and products through its factories. Having achieved these gains without heavy investments in information technology, Danaher had developed a generally conservative attitude toward its adoption.
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After joining Danaher in 2002, Mathis concluded he would have to overcome that resistance if he was to achieve goals such as lowering costs by procuring more parts from overseas. Not only would distances and the lead times for parts shipments be greater, but his materials buyers would need to carve time out of their schedules to identify these new suppliers. That meant the purchasing process itself had to become leaner.
That was easier said than done, however, particularly when glitches in the new wireless inventory system derailed operations at Danaher's factory in Gurnee, Ill.the site of the first implementation.
The Gurnee plant, a one-story brick building in suburban Chicago, is relatively quiet for a factory, with production organized into cells. There, workers assemble industrial timers, temperature sensors, counters and other controls used by manufacturers of elevators, in-vitro diagnostic tools and an assortment of other products.
Traditionally, when a bin of nuts, bolts, plugs or LED displays was depleted from a factory floor cell, a worker known as a "pacer" retrieved a paper kanban card from the bin. The pacer would then deliver stacks of these cards to the factory's materials buyers, who would use the supplier, part number and quantity information printed on the card to reorder each item. That's a lot of work, given that each of the division's factories uses 30,000 to 40,000 parts.
In the electronic kanban system Mathis decided to move to, the inventory database would go online. The kanban card would provide the bar code used to look up a computerized record. Instead of the card being carried to the purchasing office, the card could stay on the shop floor and the order would be created electronically.
Mostly, Mathis hoped to free up time for his buyers so they could identify new low-cost suppliers and steer business to them.
"The feedback I got from everybody in the group was, 'I don't have time to do this. I'm already running flat out just keeping the plant running,'" Mathis says.
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