Toyota Kata – Case Study

Contents

Cloyes Company Background

Continuous Improvement Journey

Why Kata?

Kata Implementation

Kata Results

Future Plans

Lessons Learned

2

MESH NAPERVILLE IL

CLOYES GEAR OEM Sales/Engineering

Royal Oak, MI

CLOYES GEAR PARIS AR

CLOYES GEAR SUBIACO AR

FT. SMITH FT. SMITH AR

OEM PM PRODUCTS

OEM KITTING

CLOYES MEXICO AGU. MEXICO

DISTRIBUTION CENTER

ROLLER, TRANSMISSION & IT CHAIN

OEM SUPPORT DISTRIBUTION CENTER

MANUFACTURING HEADQUARTERS

FORT SMITH, ARKANSAS

OEM MACHINED PRODUCTS

Company Structure A) ROYAL OAK MI – ENGINEERING & SALES

B) NAPERVILLE IL – AFTERMARKET CHAIN

C) PARIS AR – MACHINING

C) SUBIACO AR – POWDERED METAL

C) FT. SMITH AR – HEADQUARTERS &

DISTRIBUTION

D) AGUASCALIENTES MEX - DISTRIBUTION

C

A B

D

900+

employees

90+ Years Of Automotive Cam Drives Key Events

• 1921 Founded by Raymond T. Cloyes, Cleveland, Ohio

• 1963 Establishes manufacturing in Paris, Arkansas

• 1982 Cloyes established OE sales office in Detroit, MI

• 1989 1st PM press delivered to Subiaco, Arkansas

• 1994 Cloyes receives its first OE Timing Drive System – L850

• 1999 Subiaco becomes dedicated PM facility

• 2003 Begin the supply of VVT components

• 2004 Dedicated Kitting Facility in Fort Smith, Arkansas

• 2006 Majority ownership acquired by KPS

• 2007 Established an Asian based sales/sourcing office

in Seoul, Korea

• 2010 Added sales representation in Europe (Germany) and Japan.

• 2010 Merged with HHI

• 2014 HHI merge with Metaldyne and Grede to form MPG – Public Company

Advanced Machining and Assembly

Aluminum Die Casting

Forging and Related Machining

Iron Casting and Related Machining

Powder Metal and Related Machining

Administrative/Sales/Engineering

Warehouse

Premier Asset Base Positions MPG for Global Growth

Highly Valuable Global Manufacturing Footprint

U.S.

Mexico

Brazil

England

Spain

France

Czech Republic

Germany

China

India

South Korea

61 locations

Ability to meet anticipated growth by adding select equipment

Combined manufacturing, technical and commercial footprint across four continents

Serves customers’ global Powertrain manufacturing needs

Geographic Footprint Advantages

Luxembourg

Japan

Powdered Metal Subiaco, Arkansas

177,000 sq. ft. facility

~420 Employees

Sales

2013 - $51.0 million 2014 - $53.8 million 2015 - $54.9 million

Products – Focused High Volume Automotive

Transfer case components VVT components Timing drive components Water pump sprockets Balance shaft sprockets Compressor valve plates

7

Continuous Improvement Background

CI Journey – Skills Development

• Six-Sigma Green Belt/Black Belt Training: • 2009 – 2016 3 MBB / 12 Black Belts / 24 GBs

• CI projects, Kaizens, Self-direct teams, Go-dos • 100+ Lean driven activities per year

• Leadership & Mentor training • John Maxwell, 21 irrefutable laws

Six Sigma Training is used to identify key employee skills for leadership or technical development & succession planning. It is considered a pre-requisite for advancement.

Pursue

ExcellenceSustain &

ImproveApply &

DeployDevelop,

Stabilize & TrainAssess

ROAD MAP TO EXCELLENCE

Passion for

Excellence Vision Focused

Commitment to values

Meet or exceed budgeted EBITDA

Book Paris full

First to Market - Aftermarket

Leverage our Technology

Leverage MPG buying power

Expand/Improve automation deployment

Continuous Improvement

Expand Kata-all OEM locations

EBITDA & improvement gains

Leverage personal goals

Develop CI Leaders

Expand KPIs

Finalize Plex Phase 2

Deploy 6-sigma bench

Meet Launch Expectations

Improve Cadence

Reduce/Manage risk

Expand/Improve Measurement Expertise

Robust PFMEAs

Employee Engagement

Crucial Conversations 1&2

Under One Roof

Leadership Development

Operator involvement

Mentoring

Succession planning

10

Employee Engagement – Before Kata

11

Cloyes Vision/Strategy Aligned personal Goals Quarterly Exec. planning & review meetings. Monthly Employee meetings Organizational Deployment

KPI at Mfg. Plants. KPI Product/Leadership teams.

Rewards/Recognition Crucial Conversations & Accountability

Employee mentoring In-house Lean & 6-Sigma Training Problem solving Professional development University collaboration

How Do We Improve Improvement Execution & Speed?

• Concerns:

• CI Culture & engagement strongest in Executive Group to middle management.

• Operators want more CI involvement, but can’t get it on a consistent basis.

• Many hours/$ invested in Frontline Supervision training with minimal results in effectiveness beyond the basics (OJT, shop rules, “doing what we are directed to do to improve” , etc.).

• Threats: • Sustaining improvements

• Lose employee confidence/trust---morale erodes.

• Performance and KPIs ‘hit the lid”

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From our Frontline Supervision – I don’t know how…….?

• From Supervisors: • No time, Too much firefighting, Working OT to make shipment. I’m lucky if I get all

my parts.

• Can’t get help, Maintenance is too busy, Takes too much time.

• When I try, I can’t get people to do what’s needed, I don’t know how to start,

• I’m exceeding my KPI’s, my line runs great—over 100% most of the time.

• We need: • Simple method we can understand.

• Managers engaged in a different role with supervision.

• Frequent practice

• “lift the lid” on expectations/challenging performance

13

Kata Deployment 2015

Acknowledgements

15

http://www-personal.umich.edu/~mrother/Homepage.html

Vision Next

Target Condition

Current Condition Obstacles Challenge

CONNECTING STRATEGY & EXECUTION

By Mike Rother 16

Execution Strategy

Leaders establish the organizationʼs strategic concept (the “rallying point” or overall direction)

Managers develop people by coached practice of the Improvement Kata in the direction of the challenge

The role of Challenge in an organization

1 week – 3 months

Successive T/Cs to achieve the

Challenge

Distant

Often General “Principles”

1-3 years

Concrete Hard Metrics

Iterate Toward the Target

Condition T C

C C

Establish the Next Target

Condition Target

Condition

Grasp the Current

Condition

Understand the

Direction

Coach Learner

Kata Structure

LEARNER

© Mike Rother / Improvement Kata Handbook Direction 17

COACH

These are specific PRACTICE ROUTINES to acquire / develop the SCIENTIFIC pattern of

thinking and acting

The COACHING KATA is a practice routine for learning

how to teach the Improvement Kata pattern

The practice routines in this are used to learn the SCIENTIFIC thinking pattern of the Improvement Kata through application practice.

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CLOYES SUBIACO KATA DEPLOYMENT DEC NOV OCT SEP AUG JUN MAY APR MAR JUL

- VSM - BUZZ - BOOT CAMP #1

- #1 IK/CK - #2 IK/CK - KATA OF KATA CLOYES AG MEMBERS

TEACH 3 SUBJECTS IN BUZZ / BOOT CAMP #2

CLOYES AG MEMBERS TEACH ADDITIONAL

SUBJECTS IN BUZZ / BOOT CAMP #3

CLOYES AG MEMBERS TEACH ALLSUBJECTS IN BUZZ / BOOT

CAMP #4

TOTAL IK / CK: - #1 - #2

- VSM - BUZZ - BOOT CAMP #2

- #3 IK/CK - #4 IK/CK

TOTAL IK / CK: - #1 - #2 - #3 - #4

- VSM - BUZZ - BOOT CAMP #3

- #5 IK/CK - #6 IK/CK

TOTAL IK / CK: - #1 - #2 - #3 - #4 - #5 - #6

- VSM - BUZZ - BOOT CAMP #4

- #7 IK/CK - #8 IK/CK

TOTAL IK / CK: - #1 - #2 - #3 - #4 - #5 - #6 - #7 - #8 - #9

9 KATA DELPOYED IN 9 MONTHS

Team Structure

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Advance Group:

John Brandt VP Quality/CI

Ronnie Adkison Dir HR

Brad Nelms Dir Engineering

Randy Blaschke Plant Mgr.

Glen Inman Plant Quality Mgr.

William Childs M.E. Manager

Leroy Ramsey Mfg. Mgr.

Brandon Brown W3 Group

Bill Kraus AR Economic Dev. Commission

Sprocket Machine Line 2

Bubba Cooper – Mfg. Mgr.

William Child – Mfg. Eng.

Glen Inman – Quality Mgr.

Line leaders – all 3 shifts

Operators

Sprocket Machine Line 1

Leroy Ramsey – Mfg. Mgr.

Kent Bauer – Mfg. Spv.

Jon Gentry – Asst. Plant Mgr.

Line Leaders – all 3 shifts

Operators

SUBIACO KATA DEPLOYMENT

21

VALUE STREAM MAPPING

BUZZ ELECTRONICS WORKSHOP

KATA BOOT CAMP

MARCH 2015 BILL KRAUS – EXTERNAL KATA COACH/INSTRUCTOR

BRANDON BROWN– EXTERNAL MASTER KATA COACH

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SUBIACO KATA IMPLEMENTATION

JOHN BRANDT – VP OF QUALITY & CI

RANDY BLASCHKE – PLANT MANAGER

RONNIE ADKISON – DIRECTOR OF HR TONY WEBSTER – CI / EMPLOYEE

DEVEL.

BRAD NELMS – DIRECTOR OF ENG.

WILLIAM CHILDS – PROCESS ENG. MGR.

GLEN INMAN – QUALITY & CI MANAGER

Advance Group

Induction Heat treat

Inline temper

Mill 1

Mill 2

Mill 3

Mill 4

autogage

Pack

debur

Machining line 2 4 variations of a Sprocket produced on this line

Face grind

CNC lathes

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SUBIACO KATA DEPLOYMENT – Line 2

MARCH 2015

Description Condition Comment

Labor Variance - $ 3,751 Not meeting std.

Scrap 2.85% Not meeting budget

Line rate 220 units / hour Won’t meet customer demand

Overtime Yes Running most Saturdays

Expedites Yes 2 so far in 2015

Condition at Start:

Sprocket Machine Line 2 Kata

Started 3/2015 and ongoing

Key Goals & Measureables

• Improve daily out put By ~ 30% to 2K in 8 • Reduce scrap to 2%. • Eliminate Saturday work • Build favorable labor variance • Build Coaching capability to proficient level

Kata Board – Line 2

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2K in 8 Line 2

Increased the line rate at induction heat treat from 240 pieces per hour to 288 pieces per hour. Induction heat treat is first operation & slowest as the initial bottleneck. • Removed redundant heat treat verification. • Took .08 seconds from heating time. • Took 1.5 seconds out of robot load/unload sequence 20% increase in rate at this operation allowed consecutive operations to be sped up. These improvements took ~ 60 days of PDCA experiments.

28 Losing Money

Results Through 2015

Improvement / Coaching KATA Line 2

Metric Improvement

Line rate per hour 220 units to 285 units

+29.5%

Scrap % 2.85% to 2.0%

Average Pieces Packed/24hr 4,123 pcs to 5969 pcs

+45%

Units/Labor Hr. 33 units to 47

+30%

Labor cost vs. bid $3,751 in red (labor loss) vs. $45,800 above

bid. Kata knowledge Beginner to Proficient

Overtime None since June 2015

Line 2

Hone

Pack

Autogage

Soft debur & Pre-heat

Induction Heat treat

Inline temper

Final deburr

Grinders

Autogage

Parts cooling zone

Sprocket Machining line 2

4 variations of parts run on the line

30

SUBIACO KATA DEPLOYMENT Sprocket Machine Line 1

MARCH 2015

Description Condition Comment

Labor Variance + $ 1,680 One of the better performing lines

Scrap 2.93% Not meeting budget

Line rate 268 units / hour Matches customer demand

Overtime Yes Running occasional Saturday

Expedites No

More Volume Opportunity Customer wants Cloyes to take on ~ 5K more parts/week

Must have another grinder & maybe a new heat treat

Condition at Start:

Sprocket Machine Line 1 Kata

• Started 3/2015 and ongoing

• Improve daily out put By ~ 25% to 8K in a day or 40 in 5! • Reduce scrap to 1%. • Work no more than 1 Saturday a month • No new capital • Get more customer business • Build coaching capability to the proficient level

Key Goals:

Now the team is focused on the start of the process. What was always one of the fastest areas has become one of the slower areas with all of the improvements made down stream. The in-line temper is the issue---how do we increase throughput without risking poor temper results? • Multiple PDCA’s –

• Max’d furnace temp alone won’t work. • Tighter load pattern not enough • Team attacked heat loss by getting more robust

exit door and setting height just a smidge higher than parts.

Now we have a shot at 8,500/day! ~ 52 PDCAs conducted to get to improved condition

33

Results Through 2015

Improvement / Coaching KATA Machining Line 2

Metric Improvement Line rate per hour 268 units to 379 units (26%)

Scrap % 2.93% to 0.5%

Average pieces Packed/24hr 5,400pcs to 7,792 pcs

Efficiency 105.7% to 147.3% (39.3%)

Kata Knowledge Novice to Proficient

Overtime No OT since 8/2015

Fill open Capacity Sales is negotiating to add 4K/week for 2016

which w/b $1 million more sales annually.

Line 2

Transformational Thinking & Behavior

• Line 1 before Kata challenge of 40K in 5: • To increase output significantly we must:

• “have another grinder”, “spend more capital”, “ AG won’t keep up” “more space”, “already over 100%”, “tooth width relief” “scrap improvement from press.”

• Line 2 before Kata challenge of 2K in 8: • To increase output significantly we will need “A new/bigger heat treat machine”, “more capital”,

“rearrange line”, new deburr unit.

• Comments after: “love kata, simpler, doesn’t take too much time, fun, never would have believed we could hit these numbers, happened faster than I thought, my people have more pride, we’re a closer

team”

Kata enables us to move “beyond our current threshold of knowledge and establish a new threshold.”

14

9

Line 1

Line 6

Line 5

Line 2

Line 3 Line 4

Kata lines 1 & 2 continue to Improve & perform at a high rate.

SUBIACO KATA’S PRESENT DAY – FEB 2016

All Kata Lines started in 2015 performing at a high rate!

$0 = the 100% attainment to standard – was raised for 2016 To reflect 2015 improvements

Line 1

Challenge Vision

Target Condition

Target Condition

Target Condition

Next Target

Condition

Next Target

Condition

Next Target

Condition

AN OVERALL CHALLENGE HELPS TO ALIGN AND CONNECT INDIVIDUAL IMPROVEMENT EFFORTS

The overall challenge is used to help ensure that process-level improvement efforts have a focus and fit together

A challenge typically pertains to more than one process in the organization or value stream.

Line 2

Line 3

Whatʼs the direction in which processes should be improved? What is the overarching breakthrough challenge that each process should help achieve?

© Mike Rother / Improvement Kata Handbook

Direction

36

Line 4

Target Condition

Next Target

Condition COACH

Current / Target Conditions-2016

Current

• 9 Katas deployed at Subiaco Plant

• 2 Katas deployed at Paris Plant.

• 2 Expert Coaches

• 7 Proficient Coaches

• 12 Competent Coaches

• 14 Advanced Beginner

Future-EOY 2016 • 18 or more Katas deployed at Subiaco

Plant.

• 6 or more katas deployed at Paris Plant.

• Kata rolled out at Kitting Plant—4 or more

• 5 Expert coaches

• 14 Proficient Coaches

• 30 Competent Coaches

• Get trained in TWI & begin on Kata lines

• USE KATA for Organizational/Department improvement

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Some Lesson’s Learned 1. What would you do differently

1. Do the Buzz Workshop or simulation training over 2 days instead of 1.

2. Have new coaches participate in active Kata’s for 2 – 4 weeks prior to Buzz and Bootcamp.

3. Establish the “fully implemented Kata” vision earlier.

4. Include more operators in the Buzz workshops.

2. What would you do more of? 1. Get more Kata awareness and understanding on the back shifts earlier.

2. More training on elements of a good or true PDCA & more practice.

3. More training on establishing target conditions.

4. More in-depth Coach training

3. What 3 things do you like best about Kata? 1. It’ the true spirit of continually improving through daily, rapid PDCAs.

2. We get more ideas and input from our operators .

3. It’s Developmental—it’s a methodology that develops the learners ability to problem solve and not just to get results.

4. It allows a meaningful dialogue and relationship to develop between manager (coach) & supervisor (learner).

5. Its transferrable: It structured in a manner that it can be passed throughout an entire organization while staying consistent from line to line.

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Thank You