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Harvesting Operational Efficiency
at AGCO
Michael J. Bradford
Introductions – Industry
Challenges & Direction
Industry Challenges – Industrial Equipment
Shifting market dynamics − Pressure from customers
Product innovation − Faster time-to-market
Distributed manufacturing − Global supply chains
Increasing regulation − Cost of compliance
New market opportunities − New competitors
Profitability − Shareholder demands
Industry Challenges – What About You?
What’s Your Industry?
Do These Challenges Apply?
What Other Challenges Do You Face?
CASE STUDY: Transformation at
AGCO
Who is AGCO?
Worlds 2nd Largest Farm Equipment Mfg.
Largest manufacturer in the world focused solely on
Agricultural Equipment
Currently #262 on Fortune 500
Established in 1990
Branded heritage reaching back to the mid-1800s
Brands include:
AGCO Hesston
6 Manufacturing Plants Covering 345 Acres
State of the Art Paint Facility Recently Added
Vertically integrated
− 11 Final Assembly Lines
− Raw Steel Finished Combines, Balers, etc.
Over 1,500 Employees, USW Union
Products Sold in > 140 Countries
Largest AGCO Manufacturing Facility in North America
AGCO Hesston
AGCO Hesston
AGCO Hesston Project Drivers
Synchronous Manufacturing
− Part Management / WIP & Stores Inventory
− Pull Material to Assembly Process
− Sequential Manufacturing on Assembly Lines
− Task Based System – What to do When
− Relieve Inventory at time of Consumption
− Kitting – Reduce Line Side Inventory
− Flatten BOM
Eliminate Paper – No More Work Order Packets
Time & Labor – No More eBay!
In Their Own Words
To view the complete Video, go to:
http://www.apriso.com/library/video/agco_hesston_success_story_en.php
Note: Name & e-mail address are required to view the video
AGCO Hesston Project Timeline
2007-2009 – Infrastructure Upgrade
− Web-based Application
− Better Throughput
September 2008 – Project Kickoff
February 2009 – Project Start (after blueprint / design)
September 2009 – Go-Live
December 2009 – System Shutdown /
Reconfiguration
January 2010 – System Restart
2010-2012 – Stabilization, Enhancements
3 Simultaneous Transformations
Business Transformation
− Re-engineering manufacturing process in place for decades
Cultural Transformation
− Required collective acceptance of change to shop-floor job
responsibilities around a disciplined, repeatable, paperless process
Technology Transformation
− Distributed use of technology across entire manufacturing shop
floor
− Replace data entry gathering from small group of clerks located in
central dispatch office
AGCO Hesston – Measurable Areas of Success
Inventory
− High-rise Storage Area reduced by ~40%
− Line Side Inventory reduced by ~80%
− Inventory Accuracy increased by ~10%
Quality
− First Time Right increased by 400% for Combines (missing parts
originally represented 90% of Defect Rate)
− Scrap / Rework Cost reduced by ~15%
Labor
− Material Handling FTE Hours reduce by ~20%
− Overtime reduced by >85% in Mtl. Handling, nearly 20% plant-wide
Unplanned Savings
− Safety Metrics improved by ~10%
How Did They Do It?
3 Focus Areas
Move from Push to Pull for Materials
Move to “Paperless” Manufacturing
Manufacturing Process Changes with Technology as the
Catalyst
Move From Push to Pull
The Primary Focus – The Move from Push to Pull
Line-side materials limited
− Re-supply based on material levels and employee call-outs
− NOT “water-spider” (even thought it appears so); resupply based
on system-driven tasks generated by above activities
− Shortage report based on real-time inventory also key
Kitting implemented
− Initially 2-4 Assemblies / Kit
− Now single Assembly / Kit
− Based partially on locked Sequence and partially on Trigger-points
in assembly line
Move From Push to Pull
BEFORE AFTER
….
Move From Push to Pull
Primary Benefits of the move from Push to Pull:
30-40% Inventory Reductions
20% Lower Material Handling costs
Key Component in 400% improvement in First Time Right
(combine line)
Secondary Benefits of the move from Push to Pull:
Key Component in reduction of Overtime (85% in Materials,
nearly 20% plant-wide)
Increased “Value Added” (production) space
The Biggest Surprise – Improved Safety Metrics by 10%
Paperless Manufacturing
The Problems with Paper:
Large, Complex Equipment with Multiple Options
− As many as 5,000 components
− Variants for Color, AC, Radio, Interior…
Result Was Complexity on the Floor
− Large Shop Packets – 50-500 pages
− 2 full-time staff to print and organize packets
− Operators spent significant time looking for information
− Lost / damaged pages caused issues
− Wrong / Missing components drove First Time Right and Quality
issues
Manual reporting of all activities
Paperless Manufacturing
The Paperless Solution:
No More Packets – A Single BC Label
− Serial of Finished Item identifies Components and Variants
− Scan at each station for required information and for validation
All Necessary Details Available On-line
− Operators have information at their fingertips
− Information is always current
Production Reporting On-line
− Operators scan in
− Completion of Tasks drives Automated Production Reporting
− The ability to clock on to and report multiple jobs saves significant
time reporting labor
Paperless Manufacturing
Primary Benefits of the move to Paperless:
Significant impact on Quality improvements
− First Time Right increased by 400% for Combines
− Scrap / Rework Cost reduced by ~15%
Key Component in reduction of Overtime (85% in Material
Handling, nearly 20% plant-wide)
Direct reduction in non-value added labor and paper costs
Manufacturing Process Change
Technology as a Catalyst for SOME Change
− Forces re-evaluation
− Enables some new processes
− Provides better access to data and new views of data
Fixed Sequence (Technology Independent)
Kitting
Flexibility to Support Current & Changing Processes
− AGCO Processes, not Vendor Processes
− New Product Lines
− New, Automated Paint Plant Assembly Process Changes
Lessons Learned
Develop a Good Plan!!!
− Understand Your Business
• Document Current Processes
• Document Ad-Hoc Processes
• Drive Deeper Into the Work Force in the Development Stage
− System Readiness
• Test, Test, Test, … !!!
• User Acceptance Testing
• High Volume Stress Testing
• Test Interfaces
• Train, Train, Train, … Users and IT / Support
− Establish Support Center
Great Flexibility CAN Result in Great Complexity!
− Understand Your Needs – Keep It Simple!
What about YOUR company?
Goals, Concerns, Challenges…
Operational Efficiency at Your Company
What Projects are you working on?
What are your Goals / Targets?
Is there Hidden Potential?
What Tools / Approaches are you using?
What are your Concerns / Potential Challenges?
Wrap up / Q&A
Harvesting Operational Efficiency
at AGCO
Michael J. Bradford
Thank You!!!
