Flowserve Corp.

Perfecting improvement While lean and continuous improvement have been part of the culture for some time at Flowserve Corp., Keith Regan learns how the company is looking to extend its initiatives into supply chain and logistics. Although Flowserve Corp. celebrated its 10th anniversary only recently, the companyÔÇÖs roots reach back more than 200 years to the 1790 founding of Simpson & Thompson. TodayÔÇÖs Flowserve, based in Irving, Texas, was formed by the merger in 1997 of BW/IP and Durco International. That combination created a global enterprise with operations in over 55 countries and three main divisionsÔÇöpumps, seals, and valvesÔÇöthat serve a variety of sectors that demand fluid controls, from oil and gas refining to power generation, biopharmaceuticals, chemical processing, mining and water resources. The merger brought together companies with a variety of initiatives in place for improving the way they managed operations, manufacturing and the supporting supply chains, notes Jerry Rockstroh, the companyÔÇÖs senior vice president of supply chain and continuous improvement. A formal, corporation-wide CIP (continuous improvement program) began shortly after the merger was completed. ÔÇ£Over the years, many companies have come together resulting in a high number of initiatives in place,ÔÇØ Rockstroh says. ÔÇ£CIP became a corporate-chartered and division-focused initiative and has just continued to mature and expand from there.ÔÇØIn early 2007 Flowserve began to more aggressively roll out lean manufacturing techniques, empowering each of the three divisions to conduct the training necessary to enable kaizen events and other improvement projects to take place in a way that fit with each facility, many of which engage in vastly different types of products and processes. ÔÇ£There were already hotspots and silos of improvement, but what we wanted to do was capture the best of practices and information knowledge and to deploy an overall training and implementation program, with an eye toward cutting lead time, reducing cycle times and removing waste from processes.ÔÇØ Each division had a CIP coordinator for the lean deployment who in turn selected champions and practitioners to help carry out the lean work on the ground and empower factories to take on the process of moving through their own facilities cell by cell to make improvements. Though progress was seen early on, Flowserve resisted the temptation to create a single standard for each site to meet. ÔÇ£What we didnÔÇÖt want to do was make an academic scorecard and race to see how many kaizens we can do in the shortest amount of time, when the reality is that whatÔÇÖs important is the real benefits,ÔÇØ Rockstroh says. That benefit and even the specific goals of the program stem from FlowserveÔÇÖs focus on using tools such as the voice of the customer. Responding to the customerÔÇÖs voice may mean developing a new product or modifying or enhancing an existing one, or it may mean improving processes. Whatever the response, thereÔÇÖs likely a way that the tools of lean and six sigma can help move Flowserve closer to that goal. ÔÇ£It could be a product enhancement or a process improvement that cuts cost or lead time or improves quality,ÔÇØ Rockstroh says. To keep the lines of communication open from the customer to the highest levels in the company, Flowserve uses a program called Customer Executive Sponsorship, where each senior-level executive is responsible for one of its top customers. Flowserve is currently launching a program to improve supporting functions, including back and front office roles, such as a six sigma green belt for growth program aimed at the marketing department which is now in development. RockstrohÔÇÖs department is often customizing and enhancing the training materials, sometimes writing its own training materials in-house to ensure a good fit. For instance, one recent program focused on finance for the supply chain team where working capital is a key focus in the training. With employees trained to apply six sigma techniques and tools to develop solutions to problems, Flowserve can be more effective in securing the improvements more quickly. Flowserve is taking a similarly measured and customized approach toward introducing lean and continuous improvement to its sprawling supplier base. ÔÇ£What weÔÇÖre not doing is saying that CIP is mandatory, and this is how it has to be done,ÔÇØ says Rockstroh. ÔÇ£WeÔÇÖre saying we have specific goals as a company that flow down through the supply chain, and the suppliers need to meet those goals. If they can achieve the goals because they have their own in-house six sigma lean program, thatÔÇÖs great. If they cannot meet the goals because they donÔÇÖt have the skill sets in house, we will offer training. What we donÔÇÖt want to do is run all the suppliers through the same generic two-week class.ÔÇØ One area under the spotlight recently is logistics. ÔÇ£Strong collaboration between our freight companies and Flowserve is allowing us to look at incorporating CIP tools to replace the non value-added tactical work currently being conducted throughout the company,ÔÇØ says Rob Lewin, director, global logistics. Logistics is a major issue for any global company. Flowserve has operations in over 55 countries, sending around 400,000 shipments a year to over 1000 end-users from 250 shipping locations. It uses outside contractors for all its shipping, and when Lewin joined the company there were around 500 logistics suppliers being used. That number has now been reduced to below a hundred. ÔÇ£I wanted to have strategic partners that would help take us forward towards world class,ÔÇØ says Lewin.ÔÇ£We were using 249 different freight companies for international air and ocean freight,ÔÇØ he continues. ÔÇ£By using personal experiences, spend data, and the geographical footprint of the supplier as the first criteria, we brought that number down to ninety.ÔÇØThose ninety were then invited to an RFI, a formal request for information which covered all aspects of information technology, plus import and export compliance. As a result of that exercise the number came down to thirty nine, who were then invited to a formal request for quotation, where hard figures were discussed, and the number halved again. ÔÇ£So today we have 19 international air and ocean forwarders handling our worldwide operations,ÔÇØ says Lewin, ÔÇ£and those are our strategic partners. ItÔÇÖs a little early to give hard numbers, but we are definitely going to see cost savings. WeÔÇÖre going to see better reporting because fewer companies are involved, and it will give us the opportunity to do supplier relationship management, which today we canÔÇÖt do. Trucking in Europe is our next project.ÔÇØVisibility is also a big issue. Lewin calls it the glass pipeline. ÔÇ£ItÔÇÖs about how we can get hooked into the PO systems and the transportation systems so people have a total view of their shipment,ÔÇØ he says. ÔÇ£Visibility is key.ÔÇØ And then there is the need to write standard procedures for all global locations so that everyone follows the same process for customs brokerage, import/export, air freight or ocean freight, with the same basic fundamental rules. ÔÇ£Trying to amalgamate operations in different countries is a challenge,ÔÇØ says Lewin, with an element of understatement. The corporate organization provides back up services, but cannot know all the details pertaining to every location. ÔÇ£So we have created ÔÇÿtraffic councilsÔÇÖ with local representatives from each of my three regions (Asia, Europe and the US), so no decisions are made at corporate level without their buy-in.ÔÇØThe industry in which Flowserve operates has seen plenty of changes, due in large part to a consolidation trend that has created larger players with more resources. Improving operations is one way to remain ahead of the competition, while another is to continually innovate with new products. Flowserve is actively developing technology advancements that can reduce maintenance requirements and down time, which in turns enables customers to be more efficient. ÔÇ£There is a big emphasis at Flowserve on talent development and training,ÔÇØ Rockstroh says, adding that the company is careful to balance training so that it isnÔÇÖt simply a quest for certifications. ÔÇ£We got to the point where we felt we had a lot of training done but didnÔÇÖt have enough improvement projects in the pipeline that leveraged that training. ThatÔÇÖs where we are nowÔÇöaligning what weÔÇÖre doing with the annual and strategic goals; weÔÇÖre definitely seeing the benefits.ÔÇØ The efforts have helped Flowserve grow annual revenues from $2.5 billion in 2004 to $3.7 billion in 2007. ÔÇ£There are and always will be competitive pressures and customer expectations, and the leaders of the company see the continuous improvement program as a competitive edge.ÔÇØ  Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *   ┬áFirst published August 2008