Meggitt Fluid Controls North Hollywood

Adapting to new realities┬áMeggitt Fluid Controls North Hollywood has long been a leading supplier of highly engineered valve and control components to the aerospace and industrial markets. As those markets go through changes, the company is reacting by embarking on a continuous improvement journey, as Keith Regan reports. The North Hollywood, California, division of Meggitt Fluid Controls (MFC) began more than 50 years ago as the William R. Whittaker Company.  The specialty manufacturer provides various pneumatic, fuel, and hydraulic components to the aerospace and industrial sectors, with equipment installed on a variety of airframes and turbine engines made by customers such as Airbus, Boeing, Rolls Royce and General Electric.┬á MFC has seen plenty of changes in its half-century of history, but few times have offered the same enormous challenges and opportunities as the current reinvention of the global economy, says Eric Jensen, executive vice president of operations at the North Hollywood location. To respond to changes already taking place and to make itself more able to anticipate and respond to future changes, MFC North Hollywood has embarked on an aggressive continuous improvement journey, both on its own and with key suppliers and customers. The division began its journey utilizing aspects of lean, starting with 5S and a number of kaizen events staged in various parts of the facility. Several employees are currently wrapping up a lean and continuous improvement leadership class being done in conjunction with a local community collegeÔÇÖs professional development program.When the journey began, the company set an annual improvement target for quality and on-time delivery to close the gap between 100 percent and the present rating by one-third each year. On-time delivery has traditionally been in the low 90 percent range, ÔÇ£not where we want to be,ÔÇØ says Jensen. Equally important, cost savings are a necessary byproduct of the journey as well. Major customers are contractually requiring suppliers to find ways to drive prices down each year. Winning the support of employees so they are engaged with change can be a challenge, especially in a highly successful organization. The facility is an open union shop, with workers being members of the United Auto Workers.┬áMFC has consistently reached out to workers with open lines of communication. The general manager has open monthly meetings, and recently, other meetings have happened on the shop floor. ÔÇ£We work to keep them informed of our reality versus the reality outside these four walls,ÔÇØ Jensen says. ÔÇ£We have a very good workforce, and they understand the situation and want to be competitive and productive. People have to understand why we need to change.ÔÇØStill, with overtime shrinking and hiring frozen except in key areas, workers often need reminders of those challenges. ÔÇ£No one likes to lose their overtime, but we try to stay focused on the message that there is still opportunity out there, but that now instead of a bigger share of a growing pie, weÔÇÖre trying to get a bigger piece of a shrinking pie, and that means we have to find ways to be more competitive.ÔÇØ The early efforts are already paying dividends, with the firmÔÇÖs quality rating coming in at 98.8 percent during the first two months of 2009. MFC North Hollywood is using a range of criteria to judge its progress, using a balanced scorecard that looks at sales, quality, inventory, inventory days and numbers of turns, among other measures. Changes include visual tools used to schedule work in certain production cells. Even before the measurable results, however, workers knew the push was working. The first kaizen at the plant was held in the receiving inspection area, where a 6.75-day backlog was reduced to less than two days during the month the event was heldÔÇöand has stayed below two days ever since. In other locations, visual scheduling boards have been used to help map out how best to use resources, such as in the high-flow air test lab, where some development tests can run 24 hours a day for weeks, demanding careful planning to avoid bottlenecks. Attention is now focusing on reducing work in progress and further refining the batch-sizing process. The division specializes in design, development, testing and assemblyÔÇöit has invested heavily in its testing facility, equipment and tools to simulate a jet engine, enabling conditions such as 1,000-degree air at high flow. An in-house machine shop is dedicated to prototype development, highly complex machining and repair work, which means that purchased parts are a majority of the companyÔÇÖs cost structure. That in turn means significant opportunities for driving savings in the supply chain. While the parent company is looking for opportunities to source materials globally, including from the Far East, factors such as transportation time, oversight and quality must also be taken into account. Much of the MFC supply base remains local, Jensen notes. As with employees, MFC believes communication is the key to working successfully with suppliers. ÔÇ£They need to understand the situation weÔÇÖre in, because it will help them better understand what our needs are,ÔÇØ Jensen says. ÔÇ£If we have a major aerospace company telling us theyÔÇÖre going to pay us on a 120-day cycle, and if our suppliers expect to be paid in 30 days, we need to make sure everyone understands the challenges.ÔÇØPlanning and forecasting each monthÔÇÖs output more accurately is another goal, one that could help ensure resources are being used in the most efficient way possible. A significant part of the business is what Jensen calls ÔÇ£book and burn.ÔÇØ The company must project demand, producing parts in advance because of spare parts catalogue requirements, to support the repair and overhaul business and meet customer expectations for lead times. The challenge is that sometimes the parts sales occur several months after they were made. Rather than building to past yearsÔÇÖ sales numbers, the company has launched an effort that brings all the executives and others together in a sales inventory and operations planning meeting. ÔÇ£For example, weÔÇÖll look at how many planes are being retired and whatÔÇÖs on the horizon for new orders to get a better understanding of the size of the fleet, and then work to drive that down to the piece-part level and make judgments on what to make.ÔÇØThat information can then be taken to suppliers and agreements made to help them smooth out their own production schedules, in some cases with those suppliers agreeing to hold inventory longer and deliver it as itÔÇÖs needed. ÔÇ£If you look at history as a guide, youÔÇÖll miss the market changes,ÔÇØ says Jensen. ÔÇ£You have to have a forecast that reflects whatÔÇÖs going on now and in the future.ÔÇØ  - Editorial research by Jason Moore┬á