The path to lean success

A look at how Fagor Industrial, a Basque company belonging to the Mondragon Corporation Cooperativa, implemented lean methods in their production process.

The production process can be described as mature: the main raw material (RM), sheet steel, is transformed into around 4500 component references for final assembly in finished goods (FG) lines. Although the main added value for products from Fagor Industrial is in its own design and development of a catalogue of very up-to-date products, the company also gives great importance to integrating manufacturing in its business process due to its efficiency, experience and greater independence regarding external suppliers.

Until September 2005, the first process of shaping and cutting sheet metal was done using punching technology. Improving this process was the objective for the innovation carried out in the production plant located in the Basque country. Two important requirements, the need to yield as much RM as possible and the call for facing the variability in demand for the different components, obliges the nine punching machines to work using as many as 160 sheet metal formats. The formats thinner than 1mm comprise 80% of the total consumption, while the other 20% are between 1mm and 3mm. With reference to the type of material used, 80% of consumption is stainless steel (AISI 304 and AISI 430), 15% is galvanised and the remaining 5% is other types of metal.

As regards to the type of punching machinery, seven of the nine machines are the Trumatic 500 and Trumatic 2000 models from the German brand Trumpf, while the remaining machines come from the Salvagnini company, the S4 model. Due to the technical properties of these punching machines, they must work in the so-called single-part mode. This supposes working with large batches of part multiples, which results in both a large quantity of stock in process (WIP) as well as a continuous distortion between needs and manufacturing programmes. The excessive RM formats, on the other hand, involve the purchasing and transportation of big quantities of stock, resulting in supply and materials management problems. This system also requires a large number of format changes to be made on the punching machinery. Thus, all this leads to very rigid production which requires highly complex management and excessive lead times.

It is worth stating at this point that growth, both in demand and catalogue, forces the Fagor management to take the decision to redesign the production system looking for lean flows by means of a reduction in waste. The process was led by Aitor Murgoitio, the steel sheet area manager, and Inaki Marinelarena, the industrial manager, who employed the Value Stream Mapping (VSM) technique as the first stage of analysis and planning of the improvement project. Therefore, two maps were produced (see fig 2, over page). The initial map reflects the original situation presented above, while the future map shows the projected situation for July 2006. As these maps illustrate, the pivot of the productive system redesign lies in technological changes on the sheet metal cutting line.

New production technology

Specifically, the technological change was based on substituting the previously cited seven Trumpf punching machines by four new laser technology machines from the same German brand, in addition to the acquisition of the latest generation software. The choice for the laser cutting machines were four Trumpf TCL-3050 models, while LANTEK-EXPERT was the selected model in terms of new software aimed at carrying out Nesting programs, as well as managing the production for laser technology. The main advantage for Fagor Industrial with respect to other products rested in the ability to adapt their programming to machines from different manufacturers of sheet metal cutting and punching technologies.

The improvement that is brought about by the integration of specified software into the new laser technology rests in the possibility of creating multi-part programs, guaranteeing good use of sheet metal, which also gives the advantage of working with unitary batches of parts adjusting the production to the demand. Also, there is the opportunity of working in a kanban supply system, owing to the reduction of format changes in the machines. Finally, there is a gaining of freedom in the design process, as the dependency between the set of punches and the geometry of the part has been eliminated.

The properties of these laser machines also allow an increase in cutting capacity and therefore also in resource productivity, along with the need for less workforce due to greater automation of the process. This increase in the level of automation comes from two different angles: on one side, a new robotised system, also from Trumpf, assigned to load the sheet metal and unload the cut pieces; and on the other hand, certain maintenance tasks, as well as the adjustment of all the cutting parameters depending on the material to be processed, are now carried out automatically by the Siemens 840D control.

In the future VSM map it can also be observed that there are still two Salvagnini S4 punching machines. There are several reasons behind the decision to retain these machines. In the first place, there are operations involving inlaying and threads that are impossible to run using laser technology; added to that, for high consumption parts and specific geometrical shapes, productivity is greater with these punches because of the efficient feeding and unloading systems. Furthermore, although with some limitations, the new software aimed at punching allows us to work with multi-part mode as well.

All this goes to show that process innovation has led to the company undergoing a complete change to achieve a Lean flow, also affecting the RM suppliers in an attempt to complete a better integration in the whole supply chain.

Step by Step

The project that was developed to transform the production was carefully controlled and managed at every stage by Murgoitio and Marinelarena. The first phase (from September 2005 to November 2005) consisted of the acquisition and adjustment of the new laser machinery along with deploying the new software and the whole associated information system. As far as operator and technician training in new laser technology and new programming software is concerned, such training was developed in two areas: firstly the technician from Trumpf responsible for assembly and commissioning of new machines gave a three-day course to four operators and six maintenance technicians; secondly these six technicians took part in a more advanced four-day course at the supplier’s headquarters in Stuttgart. Having reached this point, it should be mentioned that, due to the increase in productivity and automation brought about by the new resources, part of the personnel were relocated to other posts related to sheet metal, such as bending and pressing; thus, training requirements were minimal and adaptation fast.

The second phase (from November to December 2005) was based on the definition and assignation of part families to laser or punching technologies: high consumption parts and those with special operations would be manufactured by the punching machines, while the remainder of parts by laser technology. With this in mind the Information System’s database was programmed accordingly.

There then followed the process to standardise the raw material formats as well as the introduction of the Kanban supply system (from November 2005 to January 2006). It should be mentioned at this stage that it still took some time for the stock of eliminated formats to be consumed, as this was quite a complex process.

Added to the previous phase, fixed multi-part programs for the punching machines were created with the new software (January-March 2006). This task was easier to apply thanks to the help provided by the operators, who suggested appropriate parts combinations.

Finally, changes in production scheduling determined the last stage of the project (March-June 2006). This was done in two ways; first by reducing periods and deadlines from weekly to a daily basis, and then by conducting WIP cleaning. The main problem occurred in attempts to reduce machine preparations in the processes after cutting and before assembly; for this reason, part families were created which require common tools and operations in these processes.

Brilliant results

As a result of the transformation process, by July 2006 a flexible and efficient production system had been implemented that delivered spectacular performance. By reducing the number of sheet metal formats from 160 to 40 (75%) and changing the average supply period from seven to three days, Fagor managed to reduce the average RM stock by 37.5%.

The laser technology, along with the new pieces of programming software, allowed the company to increase the RM exploitation from 72% to over 80%. Taking into account the upward trend of the RM price and a greater consumption planned by Fagor for the years to come, the importance of these achievements has an even greater impact.

One important impact was the reduction of workforce from 21 to 12 operators owing to greater automation in the cutting process. The workers were relocated to other areas due to needs produced by the growth. This fact, along with a 14% greater capacity in cutting process (despite the reduction of equipment) led to an 80% increase in productivity.

The reduction of sheet metal formats has also derived on increasing the punching machine’s capacity by an extra 10%, owing to the reduction in the number of changeovers required. All this went to a WIP reduction from seven to two days average consumption, which helped to achieve a reduction of approximately nine days in the Lead Time from dock to dock.

The information previously described is referred to the quantitative improvements, the qualitative ones included a simplification of supply and production management, full availability of needed RM stocks in the factory and the integration of machinery programming tasks into operators self management, providing a greater satisfaction from both, operators and technicians.

These improvements have led to a cultural change. A wheel of continuous improvement which will be reflected in the subsequent projects that are previewed on the short term; for instance, the lead time reduction must be reflected in a FG warehouse requirements’ cutback. Similarly, a gradual optimisation in the software employment should revert in a better RM and WIP yielding.

To sum up briefly, this experience has shown the path followed by a company to introduce and integrate efficiently an important technological innovation in the sheet metal cutting process; this project has been the basis for redesigning the whole productive system based on the guidelines provided by the Lean Production methodology. The improvements obtained have been impressive and have motivated the executive team to continue along this way, both in terms of continuous improvement of the system and in the future adoption of innovations in the pursuit of the increasingly necessary competitivity in this type of industry.

Ibon Serrano is a lecturer in Mondragon University, Spain, Aitor Laca is a process engineer in Fagor Industrial and Rodolfo de Castro PhD, is a professor in the University of Girona focused on lean thinking in production and operations management and in supply chain management.


*Please note: This aticle first appeard in the December/January 2006/07 edition of Manufacturing Engineer magazine.

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