1 November 2013
The Client: Hansens Engineering (Pty) Ltd.
Description: Tier 2 supplier of high-volume machined components to global Automotive Industry.
Brief: Hansens Engineering required access to timely and accurate OEE data in an effort to restore its competiveness.
Hansens Engineering, a third generation family business, has been supplying machined components to the automotive industry since 1956. The company is located in Port Elizabeth, the traditional heart of the automotive sector in South Africa, and employs around 65 people.
Hansens Engineering is a trusted supplier of machined suspension and fluid connector components to customers located in Asia, Central and Western Europe, and North and South America. The company shipped over 10 million components in 2012. With the recent award of two major contracts, the projected volume for 2014 is approximately 22 million components.
Hansens Engineering is rightly recognized as a global leader in the supply of machined aluminium components, having received customer acknowledgment through multiple awards. A basic process flow on their manufacturing line includes Sawing, Machining, Deburring, Washing and Drying and finally, Packing.
The diagram below demonstrates a basic process flow in Hansens Engineering plant:
It wasn’t always so positive, though. A few years ago the company went through a challenging time, which nearly led to the closure of the company. So what was the problem?
The company was growing at about 50% a year. Unfortunately, the strong growth served to expose the company’s operational weaknesses, which had not been previously evident. Hansens began to realise that it did not have complete understanding and control over its manufacturing operations.
Unresolved problems on the shop floor had led to the development of process bottlenecks, which in turn had led to batching and excessive WIP. Factory throughput declined as production lead times grew to 3 times what they had been previously.
Together with delays, customers were experiencing quality concerns, resulting in expensive sorting and scrapping costs. Financial performance declined significantly as a result of the erosion of gross profit margin, testing the company’s sustainability.
The reason that Hansens was performing poorly was attributed to the fact that there was no objective measure of shop floor performance. Management did not have the ability to attend to shop floor issues when it was not clear what the significant issues actually were.
Even though the company had experienced earlier success, there had been problems that were not adequately identified and addressed. When the company started to grow rapidly, it was these unattended problems that caused the company to slide backwards. It was truly a classic case of trying to build a house on weak foundations.
The management of Hansens Engineering realized that if they were to be successful in turning the company around, their number one priority had to be access to accurate, reliable and objective production data. They needed a system that not only let them know how well they were performing, but more importantly, gave them insight into what was causing their production losses.
Hansens Engineering approached the team at Haldan Consulting to assist with their need for accurate and timely production monitoring. Haldan Consulting implemented a complete turn-key solution, including: HaldanMES, IT network installation, IT hardware supply and installation, operator and administrator training, full documentation, as well as Go Live hand holding.
Immediately upon implementing HaldanMES, the company had objective insight into their production losses. They were able to identify their biggest losses and formulate effective improvement plans with confidence.
HaldanMES provided the data in a manner that facilitated continuous improvement actions. By using a disciplined approach of attending to the biggest losses first, Hansens Engineering was able to significantly reduce their downtime losses.
Hansens Engineering's OEE statistics before implementing HaldanMES:
Hansens Engineering's OEE statistics after implementing HaldanMES:
The results were clear: In just 12 months, Hansens Engineering improved their OEE from 52.4% to 79.8% using HaldanMES. Production volumes grew from 5 million per annum to 10 million per annum without any capital expenditure. The implementation project had a ROI in excess of 400% in the first year. Hansens Engineering was able to reduce the direct labour headcount by 42%.
There were a number of factors that were critical to the success of this project: Firstly, it was the due to Senior Management's commitment and leadership. Secondly, it was critical that the project was kept simple, with small steps being made towards progress. Improvements were always communicated and acknowledged. Because the changes were good for the company, nobody resisted the changes that were being implemented. Hansens was effective in creating a culture of permanent change and continuous improvement, and they allowed others to share ideas about best practices. Lastly, dedicated resources were allocated to areas that needed them. All of these factors contributed to Hansens success in improving their business.