SIEMENS

The scales fell from my eyes when I saw what the Siemens Production System could mean for us," says Wolfgang Machate, production director at Messgerätewerk Berlin, Germany, (MWB), a part of Siemens' Energy Automation Division. MWB manufactures digital protection devices of the SiProtec family. The devices prevent high-voltage lines and terminal equipment from being damaged in the event of excess voltage or lightning strikes.

Machate isn't the only one who suddenly saw the light. The 400 other employees at the plant are equally energized. "All of us were so used to the shortcomings in our working methods that we were blind to them," says Machate. "Now, we see things in a different light and are much better at identifying waste and potential improvements."

Machate is not referring to machine production times, nor is he alluding to the use of materials. He means, for instance, that inventories of fully assembled equipment used to collect dust in the production hall; that workers had to go long distances to pick up materials and had to waste time during functional testing; that they would repeatedly interrupt their duties to prepare for the next step in a process, sort tools, or organize records; and that after every step, the product would end up in a container where it would wait for the next worker to carry out the next step. Time was therefore wasted again and again.

Today, everything at MWB is different. The Siemens Production System (SPS) was introduced at MWB in the spring of 2008. And it amounted to the first company-wide effort to focus on lean production — a methodology that Toyota introduced to the auto industry in 1940. But although the concept has been around for a long time, the trick to its success is to implement it systematically at all times.

"Our SPS strategy is to design and carry out all processes on the basis of whether they add value," says Dr. Bernd Müssig of Corporate Supply Chain Management and Procurement (CSP). His department is the extended arm of the Global Manufacturing Board, which is the highest-level Siemens committee responsible for production and represents all of Siemens' divisions.

The Global Manufacturing Board initiated the new production system in 2005 and is responsible for its development. In the SPS, any processes that benefit the customer are viewed as adding value. "That's why we define as waste the periods in which a product is not progressing because employees are busy rearranging things, sorting or waiting. The customer shouldn't be expected to pay for rejects or for product storage," says Müssig.

Eliminating Waste. Machate remembers well when representatives of the Corporate Supply Chain Management and Procurement organization visited his plant. There was a desire for more space to expand production. It was only for this reason, in fact, that the CSP experts for plant design were originally called in. "The person from CSP wanted to show me how we could gain more room even without an annex while increasing both quality and productivity," says Machate. "At first, I didn't understand that." But the fact that MWB's parent, the Energy Automation Division, could see plenty of ways of improving its subsidiary's operations should not have come as a surprise given the fact that that Division has led its competitors for many years and can boast increasing earnings and growing market share.

And the tip to "first eliminate the waste" was therefore not understood immediately. Everyone asked themselves what it was that they could do better. The training session on "learning to see" then revealed the waste that was lurking all around.

Machate stood in the production hall inside a circle marked with chalk. For a whole hour, he simply watched. And that opened his eyes. "I was suddenly surprised to see inventories lying all around. If they hadn't been there, there would have been more space available. It also struck me that workers had to stand around and wait for things. Does that serve the customer?" says Machate, a 30-year veteran of Siemens, as he recounts his impressions.

After the training session, things moved very quickly. In just a few weeks, the workers reorganized their workstations themselves. Beforehand, they analyzed the whole production process and completely redesigned their workstations, which they simulated with cardboard models. As they did this, they changed the sequence of the process steps. The production lines at which they had formerly sat in parallel separated by large spaces were converted into U-shaped cells. And since May 2008, they have been working together in these U-shaped areas in a permanent group. With this arrangement, all the work steps are synchronized, and the required materials are ready at hand, as are tools and testing equipment.

When employees complete a shift, they can pass unfinished products to incoming colleagues so that the next step can be completed without missing a beat. Each worker passes unfinished products on to the next person in the production chain until each product is ready and packaged.

Seamless Flow. The plant has thus moved away from batch production and now concentrates on "one-piece flow" production. Whereas, previously, a typical 50-piece order went through a process and then waited for the next step, each individual piece now runs through the entire process chain without any intermediate stops. This rearrangement results in many advantages: The work area has not only been optimized for each step in the process, but has become smaller and easier to navigate. The distance between workstations is as short as possible. And re-sorting stages and needlessly subdivided steps have become a thing of the past.

"Our processes are now more synchronous and better adjusted to one another," says Machate, who points out that productivity has already risen 20 % at MWB, and that throughput time has been shortened by more than 90 %.

In the past, it took four days for a product to be produced, fully packaged and ready for transport to the warehouse. But today it takes only an hour. The number of unfinished parts has been reduced by 95 % and the reject rate by 25 %. What's more, SPS has freed up about 1,200 m² of space at the MWB plant, a savings of 30 %.

Lean production is currently experiencing a renaissance. Nevertheless, Müssig concedes, the pioneer in this field — Toyota — is still unrivaled. So far, no other technology company has succeeded in introducing a uniform, integrated production system. In fact, for most companies, "lean" means little more than an add-on program aimed at cutting costs.

But at Siemens, the objective is to make "lean" a vital part of corporate culture. The Siemens Production System should therefore not be be seen as a modular set of building blocks or ready-made concepts imposed on production centers from outside. "The principles of SPS are always the same, but the solution is different in each plant," says Müssig. "The nice thing about all of this is that it can be implemented right away. You can redesign your production the next day."

The SPS includes training sessions for all employees involved in production and for related departments, such as purchasing and development. There are also training programs designed to develop SPS specialists. "One important element is communication. We start at the very top with decision-makers. They have to believe in SPS and set an example. That's the only way they can get workers onboard," says Müssig.

By 2010, 80 % of all Siemens plants will have launched the SPS — which means there is plenty of work for Müssig's team. After all, Siemens runs approximately 300 production sites in 40 countries. At the moment, about 10 % of the company's plants are in the process of implementing the system.

But this is only the beginning of Siemens' transformation into a lean company. "The next challenge is getting leaner in other areas — in logistics, accounting and purchasing, for example" says Müssig.

Those in charge at MWB see things the same way. "We have laid the foundation for production. Next in line are order processing, the technology planning units, and our operations department," says Machate. Asked what will become of the 1,200 square meters of "extra space," he doesn't hesitate for a moment before answering: "That'll be used for new products."