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This article: The Lean transformation of Philips Lighting
Source: Business-improvement.eu
Lean: Value adding organization
Assembly line for light fittings, Philips LightingSeeing is believing, and believing is copying
The Lean transformation of Philips Lighting
By Dr Jaap van Ede, editor-in-chief business-improvement.eu, 15-02-20171. This article is also available in Dutch


Enforcing a Lean transformation does not work. Instead, you should show the benefits! This is the conviction of Bart Evers, production manager and Lean deployment leader at Philips Lighting in the Netherlands. ‘Seeing is believing, and believing is copying’, he says. Evers tells how his team leaders started to connect their production steps smoothly to one another, all by themselves, after he had given them the experience of close coöperation.

Next, Evers demonstrated the importance of standardization, by showing how Leader Standard Work makes his own work more effective. Nearly his complete, openly visible, agenda now consists of timeslots. Not cycle times yet, but it comes close. In addition, Evers records strictly when he adds value for the company. Being a manager, useful activities are coaching, support and the improvement of processes.

Thanks to the Lean transformation, Philips Winterswijk can assemble lighting fixtures make-to-order via a 'normal' Lean production line. When a product only changes a little bit, the assemblers can read and understand the new work instructions within one cycle time.

The delivery reliability, formerly one of the biggest problems, increased enormously. When an order is delivered late, this is rarely due to the production anymore. But the most important result are the satisfied customers!

The factory of Philips Lighting, in the city of Winterswijk in the Netherlands, makes LED lighting fixtures. These are elegant and tailored light boxes, usually to be mounted in ceilings, for example for the illumination of offices.

‘Our production model is mainly make-to-order. We design a lighting system according to the customer's wishes, and then we manufacture it’, says production manager Bart Evers. ‘To illuminate an office we usually produce several hundred pieces, but also single-piece production occurs. We do not produce large numbers of standard products, this is done by a factory in Poland.’

Besides the LED lighting solutions, a little amount of fluorescent tube products is still made in the factory in Winterswijk. ‘But frankly said, the necessary machinery for that blocks the path to create an optimal production layout.’

In the framework of Lean manufacturing, you want to create a continuous flow of semi-finished products across the shop floor, from raw materials to finished products. This results in little intermediate stock, a short throughput time, and a high delivery reliability.

Lean assembly line for lighting fixtures at Philips Lighting in Winterswijk
Lean assembly line for lighting fixtures at Philips Lighting in Winterswijk


Assembly lines
Evers shows me the assembly lines, where the light fixtures are put together. ‘The takt time is about one minute. So, each assembly line delivers one product every minute. The maximum number of assembly steps is six, so the throughput time is six minutes or less.’

Each assembly line can produce a certain group of products. When a product changeover takes place,
the assemblers switch to new work instructions in a standardized way. Note however, that this is customer-specific production. So, at least a part of the changed work instructions is completely new! The time needed to read and understand those instructions almost completely determines the changeover time. When a product is (almost) entirely new, reading the instructions and gradually starting up until the normal production rate is reached, takes about two hours.

However, sometimes the work instructions only change a little bit.
In that case experienced assemblers need only one minute (one takt), for a changeover. The next takt they continue their work like nothing was changed, be it that they assemble a slightly different product.

In that case the production rhytm, for one assembly worker, is as follows (each task takes one minute):
..., assemble product 1, assemble product 1, read work instructions product 2, assemble product 2, assemble product 2 ...

In my experience, such a Lean assembly-to-order line is unique. More about how Philips Winterswijk accomplished this later!

Parts

The order of the lighting fixtures to assemble, the assembly schedule, determines the planning of all other production activities in the plant. The production of parts must start (much) earlier, to make it possible that these timely arrive at the assembly line. A logistic worker rides the parts on trolleys to the assembly line. Materials for the product that is currently assembled should always be available, as well as parts for the subsequent product.

‘To make sure that there is sufficient time for replenishment, we alternate small and large production runs. If you would plan two single piece orders after each other, you would have only one minute - the takt time - to bring the new parts to the assembly line!’

The LED boards are purchased. The production of the parts for the housings starts with sheets of steel, with a thickness of 0.6 or 0.8 mm. The production of those parts roughly encompasses the steps: laser cutting or punching, bending, spot welding and powder coating. All those steps are not always needed. To finish each step, one day is reserved. Therefore the throughput time in the whole factory, from sheets of steel to finished lighting products, is several days.

Starting from the assembly schedule, the ERP system (SAP) calculates backwards, to determine when each production step should start, to have the parts needed for assembly ready on time. ‘Between the production steps there is a demarcated space for a buffer of semi-finished materials. When a buffer is full, the production step before it will stop producing.’

Late
The operators can adjust the production sequence a little. For example, to form a batch of one color for painting. ‘However, they granted themselves far too much freedom. As a result, parts regularly arrived late at the assembly lines. Other parts, not needed yet, then piled up there. As a result, our delivery reliability was poor.’

Introduction of the rule that deviating from the production sequence is not allowed when parts have priority, did not help. ‘In part this is a cultural problem, but above all it is caused by a lack of insight. Insight in the consequences of a delay for subsequent production steps.’

Can it not simply be made compulsory to observe the production planning? ‘No, that does not work. When people have worked in a certain way for years, they will not change their behavior until they understand the benefits themselves. Therefore, you should give them the experience of a better approach. Make them understand why it is neccessary to make the production Lean. You cannot enforce that.’

Bart Evers (Philips Lighting): People will change their ways of working only when the see the benefitsBart Evers (Philips Lighting): ‘People will change their ways of working only when the see the benefits. Let them experience those benefits, or lead by example’


Team leaders
Until 2012 there were four production team leaders, each heading as many as 60 people. ‘That didn't turn out well, so that management layer was temporarely cut out. From that moment on, there were only foremen, people who master one particular technique best. At that time I was production manager. One of my first actions was to promote the foremen to new team leaders, be it with one important difference: I wanted one team leader per 12 workers or less. Within the Lean philosophy, that is the maximum amount of people which can function well as a group.’

Delivery reliability
Next, Evers selected one performance indicator to initiate a Lean transformation. This was the delivery reliability. Then, by taking small steps and by applying daily management, he started to motivate the team leaders to do things differently themselves.

‘Every day we have a short production meeting, in a part of the plant with improvement boards. We started to focus on small quality issues. For example two lighting fixtures with problems, in a batch of one hunderd products. By ensuring together that these problems were corrected quickly, we could still deliver the complete production order on time.’

These actions increased the delivery reliability already a bit. However, a side effect was much more important. The team leaders had to work together, to solve the quality problems quickly. That created a bond. In addition, they started to understand the relationship between their production activities and the steps before and after them in the production chain.

‘As a result, they began to consider these dependences, when they wanted to adapt their planning. Other production departments were consulted by them more frequently. Eventually, they even started to apply Lean tools such as 5S, entirely on their own initiative. Nice to observe.’

Leadership training
What also helped: all team leaders recieved a leadership training. ‘One example: they practised with performance interviews. Next, they had such a conversation in reality with one one of their team members, while a coach was present.’

Via a module "self-awareness", the participants of the leadership training got insight in their personal strengths and weaknesses. ‘I also participated. It teaches you why you do things in a certain way. That could be related to negative experiences in the distant past. Once you understand why you display certain behavior or not, you are able to change this if that is better. You can stay closer to yourself, and communicate better. Being a leader, making good contact is crucial.’

Standard work
As described earlier, customized products are now also put together on Lean assembly lines. To make this possible, the introduction of standard work was even more important than it usually is during a Lean transformation. ‘Again, a cultural change was required. A year or six ago, we had no fixed work instructions here at all.’

To stress the importance of standardization, Evans took the same approach as when he wanted to make the production planning Lean. He demonstrated the benefits, hoping that others would follow.

Time slots
Lots of things Evers does as a manager are repetitive. These things can be standardized, and after that continuously improved. In Lean terminology, this is called leader standard work.

Evers' agenda now resembles the time slots at an airport. Even the comparison with cycle times forced itself upon me!

In addition, Evers records which things he does add value or not, to identify improvement opportunities. And perhaps most important: his agenda is visible on the intranet for everyone, including personal improvement goals such as "building bridges instead of focusing on differences."

Evers gives an example, to clarify the benefits of standardization: ‘Every Tuesday I have to mail a list of the limited employable operators to employment agency Randstad, think of people who are recovering from an illness. I started to do this at a fixed time, and made sure that I am not disturbed at that moment. The team leaders became familiar with that, and started to send me their information timely. All in all this saves me a lot of time. I don't have to send reminders to the team leaders anymore, and Randstad does not have raise the alarm because I forget to send them the list.’

Leader standard work: the agenda of Bart Evers has time slots
Leader standard work: the agenda of Bart Evers has time slots


Observer
Another example are the production meetings. ‘Every meeting consists of a number of fixed time slots, of five minutes each. When someone proposes a topic, it is assigned to such a time slot. In addition, there are fixed roles during the meeting. We have for example a president, a timekeeper and an observer. The last person judges which parts of the session add value, and which parts do not. That way, we added a Plan-Do-Check-Act cycle, with the aim to continuously improve our meetings.’

A manager has customers: the operators, the assemblers and the team leaders. A manager can create value for those customers by coaching and supporting them, by giving direction, or by contributing to process improvement. Everything else a manager does is in Lean terminology waste!

Benchmark for Leader Standard Work
The far-reaching application of leader standard work within Philips Lighting Winterswijk, was noticed during Lean audits by Philips. Managers from other Philips Lighting sites now visit the factory in Winterswijk to learn from this. Philips Lighting is being split off from Philips. However, also managers from Philips still visit Winterswijk, because this production site is seen as a benchmark for leader standard work.


‘The team leaders participate in the production meetings’, Evans continues. ‘That way, they see the benefits of standardization. We used to have a meeting of two hours each week. Now we only gather once every two weeks, and that meeting only takes one hour.’

Even the coaching sessions of Evers with his employees now follow a standardized pattern. ‘When you give each other direct feedback, assesment interviews aren't needed any more. Therefore, those assesments increasingly become shorter.’

Experiment
Besides the introduction of standard work, there is another thing important when you want to become Lean. You have to dare to experiment, and be allowed to make mistakes.

‘Before 2012, customer-specific products weren't made on our Lean assembly lines. Those lighting fixtures were put together by couples of experienced assemblers. As a result the throughput time was much longer, up to ten days. To meet the delivery time, we had to start with the production of parts, while the prototype of the corresponding lighting fixture even had not been tested yet. Sometimes corrections were necessary later. Rework, not Lean.’

Another example of Leader standard work: meetings via a fixed schedule
Another example of Leader standard work: meetings via a fixed schedule


Industrialization
Industrialization means that a product design is translated to a Lean production process. Today, custom-made lighting fixtures are designed and industrialized in the following way:

  1. A prototype is built and tested by the R&D department. Often, this prototype is sent to the customer.
  2. When this customer decides to place an order, the product is further engineered until it is production ready.
  3. From the CAD system, an assembly sequence is developed. Corresponding work instructions are made and printed.
  4. These work instructions are sent to the Lean assembly line.

As said before, when the modifications are small, the change-over time at the assembly line is only one minute (the takt time). For experienced assemblers that interval is long enough to absorb the new instructions. ‘However, those assemblers initially didn't believe that this was possible. Therefore, I decided to start a pilot, by simply assigning one of those products to a Lean assembly line.’

Learn
This was not an immediate success, Evers admits. During one of the pilots, which lasted two days, an order of 800 products was incorrectly put together. ‘We didn't notice that, until we produced item number 790. Our former plant manager will not have been happy, but never expressed his feelings. You have to learn from these kind of mistakes, and prevent that the same mistake happens again.’

Today, the Lean assembly-to-order works like a charm. In fact all customer-specific products are now assembled that way. ‘When only a small number of products needs to be assembled, we assign this to a line with relatively experienced people.’

The assembly lines are equipped in such a way, that it is possible to put together the most complex products in several steps. Steps that are not needed for a certain product, are simply skipped. ‘When we recieve orders to make a product more often, we continuously refine the corresponding work instructions. Sometimes we even physically adjust the assembly line.’

When products are assembled more often, the assembly line is gradually fine-tuned to put together those products
When products are assembled more often, the assembly line is gradually fine-tuned. At this assembly line it is possible to work on two sides, to built relatively large lighting fixtures.


Daily kaizen
Standardization, and the corresponding work instructions, is a prerequisite to built new products first time right on an assembly line with takt times. Processing steps are then connected to each other, with flow as a result. Another important aspect of Lean is to continuously increase this flow, and thereby reducing the throughput time, by improving the standardized production steps.

‘This is called daily kaizen by Toyota. You should look for improvement opportunities - kaizen - every day. The intention is that everyone improves at least one thing each month. In addition, improvement opportunities should be realized within three days, than you have a true Lean culture. To raise interest in this, I started again to apply it myself. Every thing I improve regarding my leader standard work, is visible on our intranet.’

To start the cultural change needed for daily kaizen, the aim for the improvement rate is temporarely raised to one mini-kaizen per person each week. ‘By adding daily kaizen to my daily standard work, I am reminded to do it. This approach is already copied by the production team leaders. Daily kaizen is also repeatedly brought up by me, during one-to-one coaching sessions. Especially if people have problems applying it. That way, a PDCA-circle is again created. An example of a personal daily kaizen is a "macro", I created in one of my Excel spreadsheets. Now, with one press on a button, I can clear my standard work template.’

An example of a daily kaizen in production, is the rearrangement of the materials along an assembly line. ‘By looking over the shoulders of the assemblers, you can quickly put the material containers in a logical sequence, as close to the workplace as possible. These kind of adjustments often take only a few minutes, and can be executed immediately. By demonstrating this yourself you set an example. That can be an eye opener for your employees’

Standard Work and Respect for people are the basis of Lean within Philips LightingStandard Work and Respect for people are the basis of Lean within Philips Lighting. Note the word growth in the top of their "Lean house". Growth makes it possible to combine efficiency improvement with the preservation of jobs.


Growth
The key question at the end of this article is: what is the yield of this Lean transformation? Did it raise the productivity of Philips Lighting in Winterswijk?

Lets start with the reliability of delivery, which was the biggest problem they had. ‘Last year, we didn't have any late delivery, related to problems on the factory floor. In addition, the thoughput time dropped from 4.5 to 4 days, and will be further reduced to 3,5 days in the years to come.’

But the most important thing is customer satisfaction. ‘Customers can create growth of our production volume. This is essential when you want to succeed with Lean. On one hand Lean makes your production more efficient, but on the other hand you want to preserve jobs.’


1
) The interviews for this article took place during the summer of 2016

See also: Simply Philips brings Lean and Six Sigma in balance


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