Celestica lean operations

Lean improves efficiencies and customer satisfaction in Monterrey

One of Celestica's strategies for managing the downturn in the technology industry and the resulting customer demand for lower costs was to transfer high-volume manufacturing from North America to lower cost geographies. The operating model for North America would be largely high-mix, low-volume (HMLV) manufacturing and system assembly. At Celestica's Monterrey, Mexico facility, this new operating model meant the site would have to become more efficient and flexible in order to successfully accommodate new product volumes and complexity and deliver value to customers.

Product transfers into Monterrey resulted in a rapid increase in customers and product mix. Faced with a highly competitive end-market environment, Celestica's customers required rapid turnaround of their highly complex, high-quality products. Accustomed to high volume, Surface Mount Technology (SMT) manufacturing, the site struggled with quick-turn style of low-volume manufacturing - the result was waste from overproduction and diminished quality. A dramatic and immediate change in operational performance was required. In order to achieve an optimum level of customer satisfaction, the site needed to eliminate waste by:

- managing frequent line change-overs typical of low-volume production;
- streamlining line change-over processes to reduce set-up times;
- improving production efficiency; and
- improving output quality.

Eliminating the Waste

A "Lean Team" with five core members was formed. Leveraging Celestica's best practices in world class manufacturing (WCM) and Six Sigma, as well as concepts from Celestica's existing "Lean Tool Kit", the site's "Lean Team" collaborated with corporate facilitators to formalize and optimize the site's transformation to Lean.

The team utilized a variety of tools and principles from the Celestica Business System (CBS) roadmap. The CBS serves as the basis for Celestica's ongoing efforts to simplify internal processes and reduce operational inefficiencies through the elimination of non-value-added activities in order to achieve a level of optimal performance.

"Kaizen blitzes" were used to uncover waste and process variation. Six Sigma methodologies were applied where necessary to eliminate the variation and implement process improvements. Simultaneously, the team focused on re-architecting the work environment. The team used value stream mapping, Takt time (the pace of production necessary to meet customer demand), and process time data to balance the flow of work, establish buffer requirements, and develop resource requirements. Knowing the process capabilities and steps required to build each product, the Lean Team and work center operators brainstormed to re-design work center layouts.

Setting for Lean

In Lean environments, cellular workstations have been demonstrated to reduce material handling, improve communication between operators, and facilitate single piece, continuous flow manufacturing. In Monterrey, the team:
- Changed the line configuration to bring activities closer together and reduce the number of steps/distance each line member had to make/travel.
- Brought materials replenishment systems line-side and stocked/placed them according to product so that they were easily distinguished and accessible.
- Utilized the efficient cell configuration and line-side parts libraries to reduce line set-up time.

The success of Lean can also be seen in its trickle-down effects. In Monterrey, the reduction in line set-up time made switching from one product to another simpler and quicker, and eliminated the "temptation" for overproduction, one of the primary sources of waste. It also supported the quick-turn efficiency required for the new HMLV operating model.

Pull system manufacturing, a methodology that helps control materials usage by reducing overproduction, was also instituted. Pull system manufacturing ensures that nothing is done by the upstream supplier process until the downstream customer, be it internal or external, signals the need. Signals are based on actual orders, rather than forecasts. "Kanban" process tools, a colour-coded card system that signals parts or production status, support continuous flow manufacturing and product sequencing. In Monterrey, it also helped balance the production load across diverse products and multiple test sets to minimize work in process (WIP) inventory and maximize productivity.

Recognizing that Lean success is directly proportional to employee commitment and capability, the Monterrey team instituted cross-training for employees. The workforce flexibility helped with production load balancing and to minimize the effects of production bottlenecks. Employees were also empowered with authorization for line stop/escalation powers to help reduce defects. Ongoing Six Sigma projects helped to decrease process variation and improve output quality.

Visual management system (VMS) boards were used to display metrics and information on production and workplace organization. The easily visible VMS boards ensured all employees could see data on parts availability, product sequencing, 5S compliance rates, etc.

And finally, ownership and program support by Celestica's corporate, region, and site leadership teams ensured the success of the Lean transformation.

Lean Results

Monterrey's Lean transformation results continue to be impressive. The site continues to achieve across-the-board increases in customer satisfaction.

The following metrics are representative of improvements that have taken place within all customer-focused teams at the site:
- Line Set-up Time 48 %
- Lead Time 71 %
- Distance Traveled 29 %
- Equipment Utilization 33 %
- Space Utilization 34 %
- Consumables Consumption 25 %
- Scrap Reduction 66 %

In just one year, Celestica's Lean transformation in Monterrey improved efficiencies and significantly increased customer satisfaction through increased responsiveness, execution excellence, predictability and cost-efficiency.