When Reckitt Benckiser's household factory in Sinfin Lane, Derby won a commendation in the 2001 awards, the judges were impressed with progress in bringing a traditionally organised, low-skill, high-cost site up to high modern standards. 'HQ told us: 'We need you'' - Derby produces aerosols and other liquid products for the whole of Europe - ''but we can't afford you',' recalls Andre Croatto, the now-retired site director.
He'd arrived at Derby on 1 January 2000, the day the Anglo-Dutch merger that formed Reckitt Benckiser took effect.
It soon became apparent that if the two-plant site could not get costs down quickly, a hard-nosed head office would be scrutinising alternatives with beady eyes. However, by 2001, the basics had been completed: fixed costs had been brought under control and overheads slashed by removing management duplication and running the lines more efficiently. But equally important, the foundations had been put in place for longer-term improvements since then.
The key to the site's progress, says Croatto, has been concentrating on line efficiencies.
Although Derby had had plenty of investment under Reckitt & Colman in the late '90s, OEE (overall equipment efficiency) wasn't even being measured.
Not surprisingly, the first results were a wake-up call. Levering efficiency upward has been partly a matter of increasing volumes and decreasing changeovers by, for example, harmonising products for sale in different national markets.
But it has been much the result of altering the focus of the entire people-management system: working patterns, processes and organisation. 'Getting OEE up to 65% is a matter of solving one-off problems. After that, it depends on anticipation and flexibility,' says Croatto.
That meant upgrading from a low-skill, overtime-based regime to one where small teams take responsibility not just for quality and yield but also for constantly improving working methods. A change of this kind is never easy to make. Heavy investment in training and development did a great deal to persuade the trade unions that the company was looking to the long term, and the changes were anchored to a pay system that rewards people directly for the skills they acquire and use.
With confidence in line efficiencies growing, the site is now looking at annualised hours as another opportunity for win-win, putting in place a further incentive to keep the lines running smoothly. The aim: what might be called 'intelligent manufacturing', getting ever closer to a position where the factory matches 'one product made to one product sold'.
The site operates with little finished stock, aerosol and liquid lines being fed directly into the despatch department and on to waiting transport.
There are still improvements to be made. But since 2001 Derby has justified its joint award as most improved plant with substantial further progress in productivity and quality. Labour productivity has doubled since 2000, while transfer prices - the cost of goods to the centre - continue to decline. Derby is closing in on its aim of making itself essential to the group because of its cost performance rather than despite. That's a worthy epitaph for Croatto, who returned to France in September, and a far cry from January '00. 'What am I proudest of? That we have a future,' he says. 'It is remarkable what everyone has achieved. At first, I thought they were going to pay me to close the plant down.'
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