Assembly Plant of the Year: Supply Chain Efficiency Is Key to Success
The 2005 Assembly Plant of the Year owes some of its success to an efficient supply chain system. The Xerox Worldwide Production Systems Manufacturing Plant (Webster, NY) has focused its efforts on improving just in time delivery and reducing time to market. Over the past 3 years, the plant has achieved a 22 percent decrease in days of total inventory.
Raw materials and components are either moved directly to point of use as received, or warehoused for subsequent replenishment. Kitting of materials, vendor pack or kanban are used for line replenishment. Vendor managed inventory is used for packaging material and hardware. Finished goods and products are packaged for final customer shipments.
Because of Lean Six Sigma, the plant has achieved some dramatic improvements in material cost reduction, notes Joao Borges, vice president of worldwide production systems manufacturing. He says cost reductions are done in two ways: parts cost and assembly labor and overhead cost reductions.
"For parts cost, we use one process that we call PCE (product cost engineering) - best of breed that establishes cost targets for each one of the components of the machines," Borges points out. "Together with our suppliers, we drive the reductions. This is an extremely disciplined process and we establish cost reduction targets. Everyone in the chain--design, purchasing and manufacturing--is committed to it."
Approximately 40 percent of the parts used to assembly the iGen3 110 digital production press are delivered in small lots on a just-in-time basis vs. 50 percent for the Nuvera machine.
"On all modules that we buy [from suppliers] we use special transportation fixtures that [serve as] the kanban signal for suppliers to send more material," explains Borges. "We have an open purchase order and shipments are released when carts are returned to suppliers. Although we are improving a lot, there is always room for improvement on inventory management."