Case Study on World class manufacturing : Schneider Electric

About the Company:

Schneider Electric is recognized as a world leader in the manufacture of electrical distribution and high-tech automation and control products. They provide comprehensive customer solutions including software, networking and a full suite of services. They offer over 100 years of manufacturing experience and infrastructure to deliver customized manufacturing services for low and medium volume products.

As the Global Specialist in Energy Management™ and market leader in industrial automation and software. Schneider Electric enables people to experience and transform efficiency where they live and work; from home to enterprise, across the grid and the city. 

Focused on making energy safe, reliable, efficient, productive and green, the Group brings a world where innovative individuals use collaborative solutions to make the most of their energy, while using less of the common planet. Our market leading software and services enable our customers to monitor, control and automate their products and processes. 

Schneider Electric delivers efficient solutions that optimise energy performance while

conserving resources; across the global energy chain, enabling people to experience and

transform efficiency at home, at work, across the grid and the city. 

From smart devices through to big data, Schneider Electric provides its customers with

services, systems and technology to: 

• Reduce energy consumed 

• Reduce cost per kWh 

• Reduce CO2 footprints 

• Reduce operating expenditures 

• Realise measurable efficiency 

• Produce energy locally across the grid 

Beyond business solutions, they cover all the aspects of sustainable

development: society, governance and environment. 

SE strategy:

Capturing the megatrends. Leverage the world’s new energy challenges. Build two complementary business models: Products and Solutions. Leverage the opportunity from new economies. Invest in profitable and responsible growth while driving efficiency.

Systems and Tools in Schneider Electric

SAP ERP system Electronic manufacturing process documentation system Problem-solving knowledge base Bar code material tracking system All processes and procedures revision controlled ISO 14001 and 9001 certifications , Climate/humidity control

Group-wide innovation programs: Next -Gen control systems. Cyber-security. Large scale real time analytics. Sensor Technologies

SE competitive strengths: Technological leadership in energy management. A global and balanced presence with a strong ability to adapt to local needs. Multiple channels of access to a broad and diffuse user base.

MANUFACTURING EXCELLENCE in Schneider Electric:

Schneider Electric manufactures industrial electrical panel boards for commercial

applications, and it is the largest employer in Peru, Indiana, a manufacturing town that has

witnessed the recent closings of five companies. While a few of Schneider’s 570 employees

are the third and fourth generation to work in this plant, every single employee understands

that the livelihoods of many people in Peru now depend on Schneider. This driven

workforce, a testament to positive lean thinking and lean principles, is committed to the

continuing success of both Schneider Electric and Peru, success sustained by Lean

operations and manufacturing excellence. Schneider Electric’s panel boards are big metal

boxes that house many breakers; 60% of these panel boards are made-to-order, with the

remaining 40% of production going to a warehouse. Contractors call their orders in for

specific numbers and types of breakers to be shipped directly to their job sites, be it a

grocery store, hospital, department store, or other large venue. Over 1,800 panel boards are

manufactured per day in two side-by-side facilities. When the company started to lose

market share in the early 2000s, operations went into crisis mode. Schneider experienced a

reduction in salaried workforce, suffered with low morale, and struggled to maintain

productivity levels. Schneider, a union facility, had not always enjoyed a cordial

relationship with its workforce.

Schneider Electric MES Solutions scale to bring visibility and operations performance enhancements to the enterprise.

The movement to manufacturing excellence began in 2003 with an edict issued by the new

vice president of operations, and the subsequent replacement of the manufacturing manager,

the plant manager, and the engineering manager - all at the same time. Today, Schneider has

a manufacturing process in place that is so robust that any of these top managers could be

pulled out and Lean would not miss a beat. The company culture is now one of change with

all employees are on one or more change teams.

The company has learned how important communication,

education, and training are in order to effect change, and to further ownership and

involvement. Engineers, material analysts, and supervisors sit together so that they are

working together as a team as ideas and issues come in, to discuss potential barriers to

hitting their goals. Schneider has Lean and Six Sigma teams. Ideas from the shop floor are

encouraged – no one knows the task better than the person who has done it for 30 years;

solving a problem is an important and valuable contribution, but involvement in the process

is just as important. Learn to say “we” and “our” instead of “I” and “my”. The Peru facility

stumbled in a few places early on in its Lean journey. It was a small group that formed the

original team in 2002 – they were the only ones who had the books and the training from a

consulting firm. The team had a vision, but no real plan for implementation. While

management was supportive, they were not educated in Lean. And the shop floor was wary

of the unknown. Lean has many terms, acronyms, and tools and the original team

encountered resistance not only from the shop floor, but from supervisors and engineers too.

Change was not part of the culture. Then the new management team arrived, with a fresh

focus on 5S, ownership, involvement, and common goals: a team working together with not

always conflicting initiatives. Education, benchmarking and training were tools that helped

convince the union that Lean was the future. Placement of hourly associates on all teams let

the union know that they and their ideas would be part of the solution. Standardization and

visual management are key elements of Schneider’s success. 5S is acknowledged as a

discipline, as a behavior to drive Lean, to keep plant areas organized and clean. The entire

plant continues to be audited monthly by measurements that show care and commitment.

Identifying waste is another component – what do you see? Overcoming the hurdles of eyes

blinded by the repetitive nature of a task requires education and training.

Schneider employees have reached the point now where their lines will never

not have enough parts nor will they have too many. Water spiders deliver parts every day,

all day.

Value stream maps – current and future states - can be powerful tools once they have

been made meaningful to the organization. Schneider’s value stream map boards are located

in communication aisles and provide additional opportunities for education and training. If

an employee does not understand a process, they ask. Information flows continuously by

having the maps posted with Schneider’s key metrics (safety, service, quality, productivity).

Every associate knows the plant’s goal, and their individual target to help meet that goal.

$2M in productivity may not mean very much to a metal worker, but 85 units per hour does.

LED boards and dry erase boards keep track of prior and current goals, whether hit or

missed, and why. A repetitive miss means a barrier of some sort that needs to be analyzed

and solved. Material replenishment is a hard lesson to learn, to identify what is push and

what is pull. Schneider works with a late differentiation model since there is great variation

in its mixed model product line. Results have all been positive – growth in volume with no

corresponding growth in work force, tremendous improvement in safety numbers, on-time

shipments and labor productivity. As Schneider moves forward, it will focus on Six Sigma

and aligning projects to goals and celebrating its wins. Six Sigma reduces the variability of

all processes.

 TECHNIQUES FOR IMPROVING OPERATIONAL PERFORMANCE

Service and Quality – Meeting and exceeding customer expectations around quality, customer

service and responsiveness. Producing with minimal defects.

Scalability / Grow without Growing – Providing the operational foundation to effectively scale

and support top-line growth without large increases in headcount and cost.

Cost Effectiveness – Managing total costs to enhance customer and shareholder value, as well as

drive competitive advantage in the marketplace.

Flexibility / Responsiveness – Adapting and responding in a timely manner to changing

customer requirements and market conditions with ease and effectiveness.

Reliability – Maintaining predictable, repeatable and consistent operational performance.

Successful operational improvements are achieved by:

Building a culture around operational excellence.

Equipping and training personnel on process improvement tools and techniques.

Deploying process management technology for real-time visibility.

Establishing appropriate measures and controls to truly understand performance and focus

improvement efforts in the right areas.

WCM MODEL :

The WCM system is made up of ten technical- and ten managerial pillars, illustrated as a

temple (see below). The ten technical pillars are as follows:

1) Safety (Occupational safety)

2) Cost Deployment (Distribution of Costs)

3) Focused Improvement

4a) Autonomous Maintenance

4b) Workplace Organization

5) Professional maintenance

6) Quality Control

7) Logistics & Customer Service

8) Early equipment Management

9) People Development

10) Environment (and Energy)

And the ten managerial pillars are:

1) Management Commitment

2) Clarity of Objectives

3) Route map to WCM

4) Allocation of Highly Qualified People to Model Areas

5) Commitment of the Organization

6) Competence of Organization towards Improvement

7) Time and Budget

8) Level of Detail

9) Level of Expansion

10) Motivation of Operators

Characteristics of the World Class Manufacturing concept:

Cost Deployment is a seven-step accounting technique for assigning actual costs to each

loss and waste that happens in a factory. This way, the prioritization of which loss to attack

first can be made with economical reasoning. An additional advantage of Cost Deployment

is that all improvement work in the organization is assigned an equivalent saving potential.

This motivates further improvements, and is the best argument for convincing remaining

skeptics and cynics. To do proper Cost Deployment you need to team up persons from

accounting, finance and operations.

Another key characteristic of the WCM concept, is that change always starts with a model

area. The model areas are pilots for the implementation of the principles. For example, the

plant typically chooses the worst performing machine as a model machine for the

Autonomous Maintenance pillar. Through a dedicated project, using WCM tools and

techniques, this model machine is “brought back to basic condition” and made the best

performing machine in the plant.. A third interesting notion in WCM, is the “concept of

zero“. A manager in Brazil explained me: “You can’t discuss with zero; once you suggest

another target, you’ll get into all kinds of unfruitful discussions”. The target of WCM is zero

waste, zero defects, zero breakdowns and zero inventory. The model areas should

prove achievement of zero for several weeks before solutions are spread.