MM89-375

World-Class Manufacturing:
A Structured Approach
author

<
w.

C. SEAN BATTLES
Executive Consultant
Deere and Company
Deere Technical Services
Moline, Illinois

abstract
This paper discusses how John Deere realized 20 - 500/o productivity improvements in
manufacturing worldwide. The presentation outlines four key principles (JIT, TQC, CIM
and Employee Involvement) in Deeres manufacturing strategy and how they have been
implemented. Also, highlighted is the planning process and project management behind
these strategies.

conference
1989 SME INTERNATIONAL CONFERENCE AND EXPOSITION
May 1-4, 1989
Detroit, Michigan

index terms
CIM
Industrial Management
Just-In-Time
Management

1989
Society

of Manufacturing
Engineers
Dearborn, Michigan 48121

l
l

One SME Drive l P.O. Box 930

Phone (313) 271-l 500

SM E TECHNICA

L PA PERS

This Technical
Paper may not be reproduced in whole or in part in any
form including
machine-readable
abstract, wlthout
permission from the
Society of Manufacturing
Engineers. By publishing this paper, SME does
not provide an endorsement of products or services which may be discussed in
the papers contents.

MM89-375

INTRODUCJION
The challenge of strong international and domestic competition caused John Deere to re-evaluate what is required to remain a viable long-term manufacturer. This presentation describes
why change was required, what changes were made, and how John Deere has benefited from
those changes.
First, the following is the definition and characteristics of a World-Class Competitor that is
used within John Deere:

WORLD
1. SATISFYING
2. GENERATlNG

CLASS COMPETlTOR

CUSTOMERS

EXPECTATlON

AN ADEQUATE

3. BEING COMPETITIVE

PROFIT

WITH ANYONE

FUNCTION
l
QUALITY
+ PRICE
l
SERVICES
l
RESPONSIVENESS
- DELIVERY
- CHANGE

OF PERCEIVED

IN THE WORLD ON:

VALUE

MM89-375-2

CHARACTERISTICS

OF A WORLD CLASS MANUFACTURING

BUSINESS
6

A.
B.
C.
D.

CLOSE TO THE CUSTOMER AND MARKET - FOCUSED

GLOBALLY COMPETlTlVE
INCREASING PROFlTABlLlTY
TREND
CONTINOUS IMPROVEMENT
PROCESS
* SIMPLIFICATION
OF THE PRODUCT DESIGN AND MANUFACTURING
* INTEGRATION OF TECHNOLOGY
E. PROACTIVE SENSE OF URGENCY AND FLEETNESS OF FOOT
F. STRUCTURED TO ESTABLISH OWNERSHIP, PRIDE AND COMMITMENT
G. INTEGRATED MARKETING, DESIGN, MANUFACTURING
81 FINANCIAL
* STRATEGIES AND OBJECTIVES
* TEAM FOCUSED FOR PRODUCT SUCCESS

To understand why change was necessary required a critical evaluation of the way traditional
manufacturing was performed.

TIUDlTIONALMANUFACTUlUNG
Material flow in the traditional manufacturing environment can be illustrated as follows:

MM89-375-3

. .i

Raw material is received into a queue such as a steel storage area. Production control requisitions the material to a work center 15 to 30 days later. The work center runs jobs in large
batches and sends the parts to work-in-process inventory. Fifteen to thirty days later the
parts are requisitioned to another work center for the next operation. This process continues
until the part reaches final assembly months later.
Consequently, traditional manufacturing is characterized by:
Large Lot Production
High Inventory Levels
Functional Departments
Large Material Queues
High Material Handling Costs
Long Lead Times
Priorities Set by Expediting
TlUDlTIONAL

QUALITY

Similarly, quality control in the traditional manufacturing environment can be illustrated by:
PRODUCE A DEFECT
v
INSPECT THE PARTS
I
FIND THE DEFECT
t
SClL4P THE DEFECT
OR WORSE
REWORK THE DEFECT
Thus, traditional quality costs consist of inspection, inspection supervision, scrap, rework,
line delays, expediting, overproduction, and warranty: the cost of quality that gets beyond the
factory door and the customer finds.
North American manufacturing has had to undergo paradigm shifts in thinking.
digms of the past dictated:

The para-

. Run large lots of material to balance set up costs,

. Product design has nothing to do with the cost of manufacture.
2

. . Quality improvement adds cost.

However, the rules have changed, so John Deere had to change to remain a viable long-term
manufacturer.

MM89-375-4

INDUSTRY PARADIGM SHIFTS IN THINKING

*

THE RULES HAVE CHANGED

World-class competitors have created an epidemic of
quality, manufacturing and management reform.

THE WORLD HAS CHANGED

Value seeking customers.
Aggressive global competition.
Stronger domestic competition.

THE BUSINESS ENVIRONMENT

HAS CHANGED

The practices that enabled a company to be successful in the past

will not guarantee success in the future.
Gene Adesso of IBM stated the challenge very clearly. If youre not thinking about how to
do things twice as good, twice as fast, with half the resources, you dont have the right mental attitude to effectively challenge the global manufacturing competition.
MANUFACTURIN

G - A TOTAL PROCESS

In order to become a world-class manufacturer, manufacturing had to be considered a total

process. A process that begins and ends with the customer, as shown in Figure 1.
MANUFACTURING
. ... A TOTAL PROCESS ....

Figure 1

MM89-375-5

The key to the manufacturing process is specifically defining customer requirements, and
translating those requirements into manufacturable products. Market researchers must be
able to effectively c&nrnunicate customer requirements to product design. At this stage in
the process, product design, outside suppliers and manufacturing must function as a team in
order to provide a product that meets the customers expectation of value and is able to be
manufactured efficiently.
MANUFACTURING

EXCELLENCE

The next step in the manufacturing process shown in Figure 1 is attaining excellence in the
production operation. However, we realized that we could not substantially improve without
first changing our old ways of dobig business. We also recognized that opportunity for improvement involves risk taking. All economic activity is risky, but in this global competitiveness, defending yesterday is more risky than innovating tomorrow. If we didnt change, we
better hope that our competition doesnt either, which is highly unlikely.
To change from our traditional manufacturing approach, we focused on a two phase approach.

PHASE I

PHASE II

* STREAMLINE

* REFlNE

* SIMPLIFY

* INTEGRATE

FOCUS

* BALANCE

THRIVE

ELIMINATE,
DONT AUTOMATE

WASTE

NOT JUST SURVIVE!

The objective of Phase I was to eliminate, not automate non-value adding activities in our
operations. Then, Phase II was to selectivelv add technology that enhanced the streamlined,
simplified and focused products and manufacturing environment.

MM89-375-6

PhaseI - Simdify
Figure 2 depicts the three main principles to streamline, simplify and focus the product and
manufacturing operations. Today, just working towards these principles is not adequate.
World- class manufacturers are optimizing the synergy of these principles to achieve manufacturing excellence and meet customers expectations of value..

MANUFACTURING
EXCELLENCE
IS A GLOBAL RACE TO OPTIMIZE

JUST-IN-TIME
MANUFACTURING

Figure 2

EQUALITY
COMMITMENT

TO MEET CUSTOMERS EXPECTATION OF VALUE

MM89-375-7

TOTAL QUALITY COMMITMENT

There are no substitutes for quality and reliability.
to have:
.

Quality in the Product

Quality in the Process

Quality in the Parts

Quality in the People

In order to achieve total quality, we had

In order to achieve quality in the process, we implemented Just-In-Time manufacturing

techniques. Implementing these techniques lead us along the path to high quality in the following sequence:
PATH TO HIGH QUALITY
4
REDUCE Ymmom
MAKE s-LioT
IMPLEMENT QTCK
DESIGN FOR

QumEs
JOB CHANGE

UFACIURABILITY
MAPS

IEiSTALL GROUP TCHNOLOGY

IMPLEMENT

JUST-IN-TIME

CELLS

SYNCHRONOUS PRODUCIION

MANUFACTURING

JIT is a return to the basics of high quality and efficiency that once characterized American
manufacturing. It is a disciplined approach to improve overall quality and productivitv. It is a
manufacturing strategy that requires the involvement of &l disciplines in the organization,
and, above all, JIT is a continuous improvement process.
The ultimate objective of JlT is the creation of an uninterrupted material flow-through factory
from the time raw material is received until the finished product is shipped to the customer with zero defects.

MM89-375-8

REDUCE INVENTORIES
Inventories served as a band-aid for many production problems. Schedule instability, absenteeism, machine downtime, parts shortages, poor quality, and inventory shrinkage were
some of the most prominent problems that we traditionally solved with inventory.
The Economic Order Quantity, or EOQ, balances inventory carrying costs and job change
costs. The Japanese have a difficult time understanding our balancing of two wastes -inventory and job change. As long as we are willing to live with high levels of inventory, we
will not be able to achieve total quality.
SMALL LOT SIZES
A key to reducing inventories was running small lot sizes, and the ideal lot sizes are the
quantities needed for assembly on a daily basis.
Small lot sizes have the following benefits:
Reduction in Inventory
Reduction in Material
Reduction in Lead Time
Quick Feedback when Problems Occur
Reduction in Inspection
Management by Sight
QUICK JOB CHANGE
Setup time has a broad influence on manufacturing operations. Viewing set up time as a variable that can be improved opened the door to a whole range of benefits. Raw, WIP, and finished goods inventories have been drastically reduced, and in some instances eliminated.
An approach tc
t
t

APPROACH TO SET-UP REDUCTION

EXTERNAL

TOTAL SET-UP TIME

I
I
INTERNAL
ADJUSTMENT

MM89-375-9

External, internal and adjustment times were analyzed. External times include retrieving the
die from storage; delivering the die to a staging conveyor adjacent to machine, and preparing
the necessary paperwork. Internal times are the actual removing of the existing die from the
machine and moving in the new die. Adjustments include setting the ram height and making/checking the first piece.
In efficient setup operations, external operations are completed while the machine is still running and the die is at the machine ready for the operator to install. Roller conveyors, bolster
guides and rollers, and paper die handling equipment minimixe internal times. Standard shut
heights eliminate ram adjustments, and standard bolster plates allow the use of standardized clamps, thus keeping adjustment times to a minimum.
Some of the lessons that weve learned about setup reduction are:
o

Reductions of 20 to 30% can be achieved by improving methods and handling

with no tooling expense.

Reductions of 40 to 50% are possible by revising tools with minimum expense.

Reductions of 80%+ may require major capital investments in machine tools, unless
the need for setup is designed out of the product.
I

DESIGN FOR MANUFACTURABILlTY

Product design usually represents a small percentage of a products total cost. However, we
now realize that a products design influences over 50% of its total manufacturing costs.
These costs are locked in during the early design stages, so if we dont get a competitive
product from design, we may never have a competitive product, no matter what we do later
on the factory floor.
Product design drives part costs, processing costs, quality costs and overhead costs. Thus,
the roots of manufacturing competitiveness lie within the product design group.
Multi-functional design teams consisting of product and manufacturing engineers, marketing,
manufacturing management and outside suppliers have been able to reduce part numbers by
30% and the number of operations by 45%. When one considers the ripple effect of such reductions, it is not difficult to see how direct overheads are affected in like magnitude. Better
still, these savings were realized without compromising function, reliability, durability, serviceability, or appearance.

MM89-375-10

CELLULAR MANUFACTURKNG

In a world-class manufacturing facility, material flows in straight lines-- not back and forth,
as though the factory is a Chinese checkerboard. In order to streamline material flow, manufacturing cells have replaced the traditional functional departments such as machining, sheet
metal and welding.
Figure 3 shows how a typical group technology cell is laid out to produce a family of complete
parts.
TURN

DEBURR

SAW
RAW
MATERIAL

FINISHED
PARTS
MILL

DRILL

WASH

Raw material enters the cell and proceeds from operation to operation without ever leaving
the cell. Since this particular cell is located next to weld and assembly, WlP inventory is
reduced to the number of parts in the container used at the weld station. Depending upon
production requirements, this cell could be operated by only one person. Scheduling, inventory and fork truck usage are practically eliminated, and quality is greatly improved. By locating GT cells, simple primary part manufacturing, welding, and sub-assembly operations next
to homogenous assembly lines, direct overhead reductions of 50%+ have been achieved.
EMPLOYEE INVOLVEMENT
Achieving overhead savings of 50%+ will not happen without the support of the people on the
shop floor. We found, however, that employee involvement is a management attitude and
that employees will participate up to the fence rows set by management. Therefore, our jobs
as managers are to widen the fence rows as much as possible.

MM89-375-11

Empioyie
involvement is the key element for continuous improvement. We must be willing
to share more information about our businesses if we want to earn the trust of our people.
For only with that trust will they accept the responsibility and ownership necessary to effect
change.
Ultimately people will make up the competitive difference or be the competitive edge, When
you stop and think about it, ail of these concepts and technology is available to every company. Every company has access to the same books and videos on the concepts, can hire the
same consultants and can buy and install the new technology. Therefore, what will separate
one company from its competition, is how its people apply the concepts and technology.
Our people am our links to manufacturing excellence, but only if we constantly remind ourselves that:
OPENNESS AND HONESTY LEAD TO TRUST
TRUST LEADS TO COMMUNICATION
COMMUNICATION
LEADS TO INVOLVEMENT
INVOLVEMENT LEADS TO OWNERSHIP
OWNERSHIP LEADS TO PRIDE
PRIDE LEADS TO COMMITMENT
COMMITMENT LEADS TO QUALITY
QUALITY LEADS TO:
- lower cost
mincreased market share
- growth
- profitability

Phase II - SelectivelvIntemate Technolow

Now lets focus on technology integration. Technology is both a strategic and economic issue. Therefore selective application is important. Again the key elements of Phase II are:

* REFINE
* SELECTIVELY INTEGRATE
* BALANCE
THRIVE
NOT JUST SURVIVE!
Refine: Continue to look for opportunities to streamline, simplify and focus.
should always be considered an enhancement to, not a substitute for the basics.

Technology

Integrate: The application of technology has proven to be an expensive process. Therefore it

is important to recognize where in the evolution cycle we are regarding the technology learning curve.

MM89-375-12

NEW TECHNOLOGY

LEARNING

CURVE

STAiTJJP
COST

JNDUhTRY
PILOT

INDUkRY
DEVELOPING

FhST
APPLICATION
INA
COMPANY

FIRST
APPLICATION
AT A GlVEN
FAmORY

HOULD BE CONSIDERED A PILOT

AND DIFFICULTY TREATED
-i
ACCORDINGLY

2nd, 3rd 4th

APPLICATION
AT A GIVEN
FACTORY

CURRENT
TECHNOLOGY

Figure 4
Figure 4 depicts the expected learning curve costs associated with the technology evolution.
Recognizing the learning curve cost for a given technology is important to effectively select
technology applications.
World-class manufacturers recognize that computer tools should be applied to directly enhance the basic activity essential to their businesses. Computer tools are now available to
enhance every business activity.
Balance: Maintaining a balance between technology integration and issues such as reliabilty,
flexibility, ease of use, training requirements and cost-benefit timing is a difficult yet essential
element. There are no easy answers on determining that balance. The answer is dependent
on a particular products and operations competitive environment.

MM8i-375-13

IMPLEMENTING

THE NEW MANUFACIURING

STRATEGY

To effectively and rapidly implement,the new manufacturing strategy, John Deere used the
evolution process shown in Figure 6.
EDUCATION
- WHEN KNOWLEWE

PROQRAM
CAN BE APPUED

1
AWARENESS
OF NEED

Figure 6

- ASSESSMENT
OF CURRENT

IJJQN

ClM/
Fifz[i

* PILOT

FACTORY-WIDE
IMPLEMENTATION

PROJECT

.
Each factory in John Deere has incorporated this evolution to improve its competitiveness,
productivity, quality and profitabilitly. Two elements of the process that have allowed John
Deere factories to rapidly implement positive change have been the Master Plan and the
Pilot Project.

CONCLUSION
By implementing this manufacturing strategy to simplify and focus our operations, and
selectively integrate technology, the following goals have been acheived.

ANNUAL OPERATING COSTS

.. . MATERIAL
.. . MATERIAL HANDLING
.. . DIRECT LABOR
.. . JOB CHANGE/OCCURRENCE
.. . INSPECTION
.. . SCRAP
... WARRANTY
.. . SALARY STAFF
OTHER
.. . LEAD TlMES
.. . LOT SIZES
.. . INVENTORY
...BREAKEVEN POINT
...CAPACITY INCREASE

60
;
+40

MM89-375-14

ABOUT THE AUTHOR

Sean Battles is an Executive Consultant in Strategic Manufacturing Planning for Deere Tech
Services, a subsidiary of Deere & Company. During the past 8 years, Sean has consulted
Deeres factory management on JIT and CIM. Prior to this period, he served in various
engineering and management positions at Deere & Company and at John Deere factories.
Before joining John Deere in 1975, he worked 8 years foi General Motors. Sean has a BSME
from Iowa State University and an MBA from Central Michigan University.
He is active in APICS and SME professional societies.