Leading the charge to cut costs

November 06, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

EASTON -- With his involvement with scoreboards and team colors, you could mistake Raymond J. Johnson for a coach.

Instead, he is the manager of Black & Decker Corp.'s Easton plant -- the front line of the Towson-based manufacturer's drive to cut costs and tighten its cash flow.

After years of beefing up its product development and marketing effort, the power tool and appliance maker has turned its attention to manufacturing processes as a way to boost profits and conserve cash to pay off its $2.6 billion debt.

These efforts are evident from the moment you step into the cavernous 200,000-square-foot Easton plant, which produces professional power tools and outdoor and automotive equipment. Off to one side is a jumble of assembly line equipment waiting to be shifted to another part of the plant.

"We're in the process -- in fact we started a month ago -- of moving three-quarters of our plant," Mr. Johnson said. "And the purpose of that is to improve material flow and to reduce inventories. It won't be completed until December."

But the push to increase efficiency did not just start last month. In the last year, $10 million has been cut from the plant's costs, and in the last two years, output -- measured in hundreds of millions of dollars -- has been doubled.

Mr. Johnson, who has been head of plant operations for three years, is the epitome of a modern manager, talking frequently of "ergonomics" and always referring to the 1,100 workers at the Easton plant as "associates." He is also intent on keeping track of how well the plant is doing.

In the front of the factory is a scoreboard listing the plant's five main standards -- quality, service level, inventory control, productivity and safety. It is divided into months, showing whether the plant is meeting specific numerical goals, or is making progress.

Team work and competition also are fostered among different segments of the nonunion plant -- various divisions paint their equipment with their team color.

"We're trying to drive the responsibility down to the associates and put them in charge of their quality, their productivity," Mr. Johnson said. A key weapon in the push for more efficiency is a new process called "flexible assembly," in which workers sit around a circular conveyor belt that pushes trays of parts to assemble off to their work stations.

Instead of performing one task in 30 seconds, the workers do a series in a minute and a half or two minutes, then shove the tray back onto the conveyor. They are able to work at their own pace -- within certain daily production requirements -- and a digital counter tracks how many trays they handle.

"Now we can effectively rate the associates and they like that," Mr. Johnson said.

The plant has only one such line, which has made outdoor products for the last year. But next year, three power tool lines will be converted to the new system, Mr. Johnson said.

A major improvement has been in inventory control. Eight years ago, stocks of raw materials occupied 30 percent to 40 percent of the plant, tying up cash. Now only 18,000 square feet, or 9 percent of the plant, is used.

The reduction was accomplished by getting more frequent shipments from vendors and responding faster to customer demand. Now the plant is spending $7.5 million in computer software and systems to launch a new effort in January called "build to order," which tries to more closely match customer demand with production and inventories.

"We're not going to even start thinking about making something until we've heard from our customer that they want it," said Thomas M. Schoewe, Black & Decker's vice president and chief financial officer.

"At that point we'll start calling on our vendor and saying, 'Hey, we need something from you so we can start building this product that our customer wants,' " he said. "So instead of sitting on a whole lot of inventory, thinking that an order might come, we're waiting until we get the order."

But "build to order" also means the company has to make the product faster so the time period from order to shipment for various products will be cut from 7 to 10 to two to three days, Mr. Schoewe said.

The Easton plant is in the forefront of changes at the 26 U.S. Black & Decker plants and about 24 foreign factories. But other plants are also experimenting with different procedures to get greater efficiency from operations.

"One of the big changes, most recently, we brought in a lot of new talent to add momentum," said Nolan D. Archibald, referring to its six manufacturing presidents -- three of whom are from General Electric Co. -- renowned for its cost-cutting practices.

fTC "We were already doing it. But we were not getting 5 percent a year in cost reduction," Mr. Archibald said. "So we upgraded the talent in our manufacturing area to get more than we were getting."

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