Swedwood Group
Swedwood Group is Swedish group of furniture manufacturers, which is part of IKEA corporation. Within Swedwood Group Management Systems worked in these plants so far: Swedwood Slovakia, s.r.o., závod Jasná in Závažná Porube, Swedwood Poland, Sp. Z o.o., plant Goleniów, Swedwood Romania, S.R.L., závod Siret. We also cooperated on formulation of uniform conception for measurement and evaluation of production efficiency with management of Solid Wood Division.
Characteristics:
Swedwood Group is one of the world's biggest furniture manufacturers, with 32 plants in 10 countries employing 8500 people. Plant Swedwood Jasná is manufacturing furniture from spruce wood. It supplies all of its production exclusively to IKEA.
Task:
Strategy of Swedwood group is given by IKEA philosophy, where emphasis is laid on quality, price and supplier reliability, which is assessed by speediness (Average delivery time) and by measurement of On time deliveries. Main financial measures are profitability (EBITDA) and return on capital (ROCE), which management achieves by decrease of working capital, increase of throughput and more effective usage of capacities.
Plant Swedwood Jasná was established on the base of former state owned plant in 1993. In the first phase massive reconstruction and modernization of manufacturing capacities was carried out. This process was finished in 1998. Together with development of manufacturing capacities manufactured volume was increased, new people were hired and quality control, information and administrative support systems were radically improved. After successful period of steep growth (revenue increased from approx. 250 mil. Sk in 1995 to 750 mil. Sk in 1998), management started to focus on better use of productive capacity of personnel and manufacturing system. Analysis revealed that there exists considerable potential for improvement of organization's systems and operational control.
Project TEAMWORK, which began in fall 1998, was based on the assumption that only way to further increase manufacturing capacity is to: organize work better, improve process efficiencies, develop management and foremen skills, improve control systems and overall increase of employee motivation linked with corporate culture reinforcement.
Method:
Based on the analysis of calculation of potential reserves in plant performance, management approved the following operational and financial goals for 1999-2000:
- increase of manufactured volume by 20%
- improve efficiency of use of bottleneck machines and assembly lines (OEE) to 85%
- increase OTD to 98%
- shorten Lead time by 25%
- reduce defect rate by 30%
- decrease level of working capital by 25%
- increase ROCE by 15%
In the next phase the goals for functional departments were formulated in direct linkage to organization's goals with use of Policy/Objective Matrix. Accomplishing of goals in main Balanced Scorecard categories is regularly reviewed and connected to system of evaluation and appraisal of managers and employees. If it is necessary to achieve goal, project is defined. Projects defined by management are focused on two main categories: (1) creation of new control system or (2) improvement of results of particular performance measure. Examples of these projects are: Creation of system of operational reporting, Increase of material yield and measurement of FPY (First Pass Yield), Change of organizational structure, New appraisal system etc.
Except aforementioned definition of priorities and goals from above, the system for collecting employee suggestion was created. The system of so called Blue cards enables all workers to make suggestion to improve technical and organizational issues. Blue cards are regularly reviewed by group of managers. Accepted suggestions are carried out as a project. For projects focused on improvement of operational measures long-term teams are created. Projects solved by these teams are: 5S system (Industrial Housekeeping), Increase of usage efficiency of critical assembly lines (OEE), Shortening of machine and lines set up times, Carrying out of TPM system (Maintenance).
Intensive training was a integral part of TEAMWORK program. Managers and foremen passed training focused on modern methods of management and control. Training of foremen and operators was focused directly on carried out changes to be able to work accordingly to new operational systems.
Results/Recommendations:
The goals for 2000 were accomplished as follows:
Manufactured volume | Goal: | 1998: | 2000: |
---|---|---|---|
increase 20% | 750 mil. Sk | 1,100 mil. Sk | |
Reality: | more 45% increase without major investment | ||
Number of employees |
Goal:
|
1998:
|
2000:
|
minimal increase | 330 employees | 380 employees | |
Reality: | 15% employee increase by 45% manufactured volume increase | ||
Lead times |
Goal:
|
1998:
|
2000:
|
shorten by 25% | 7-8 days | 3-4 days | |
Reality: | Average Lead time shortening by 50% |
Except above mentioned gains the indirect gains are very important as well. Above all management style improvement and overall employee motivation increase.
Cooperation of Swedwood Jasná and Management Systems is currently focused on goal actualization, definition of new projects and continuous training on project support.