Harvesting Operational Efficiency

at AGCO

Michael J. Bradford

Introductions – Industry

Challenges & Direction

Mike Bradford, Sr. Business Experience Consultant,

Delmia-Apriso

Mike.Bradford@3ds.com

Industry Challenges – Industrial Equipment

Shifting market dynamics − Pressure from customers

Product innovation − Faster time-to-market

Distributed manufacturing − Global supply chains

Increasing regulation − Cost of compliance

New market opportunities − New competitors

Profitability − Shareholder demands

Industry Challenges – What About You?

What’s Your Industry?

Do These Challenges Apply?

What Other Challenges Do You Face?

CASE STUDY: Transformation at

AGCO

Who is AGCO?

Worlds 2nd Largest Farm Equipment Mfg.

Largest manufacturer in the world focused solely on

Agricultural Equipment

Currently #262 on Fortune 500

Established in 1990

Branded heritage reaching back to the mid-1800s

Brands include:

AGCO Hesston

6 Manufacturing Plants Covering 345 Acres

State of the Art Paint Facility Recently Added

Vertically integrated

− 11 Final Assembly Lines

− Raw Steel Finished Combines, Balers, etc.

Over 1,500 Employees, USW Union

Products Sold in > 140 Countries

Largest AGCO Manufacturing Facility in North America

AGCO Hesston

AGCO Hesston

AGCO Hesston Project Drivers

Synchronous Manufacturing

− Part Management / WIP & Stores Inventory

− Pull Material to Assembly Process

− Sequential Manufacturing on Assembly Lines

− Task Based System – What to do When

− Relieve Inventory at time of Consumption

− Kitting – Reduce Line Side Inventory

− Flatten BOM

Eliminate Paper – No More Work Order Packets

Time & Labor – No More eBay!

In Their Own Words

To view the complete Video, go to:

http://www.apriso.com/library/video/agco_hesston_success_story_en.php

Note: Name & e-mail address are required to view the video

AGCO Hesston Project Timeline

2007-2009 – Infrastructure Upgrade

− Web-based Application

− Better Throughput

September 2008 – Project Kickoff

February 2009 – Project Start (after blueprint / design)

September 2009 – Go-Live

December 2009 – System Shutdown /

Reconfiguration

January 2010 – System Restart

2010-2012 – Stabilization, Enhancements

3 Simultaneous Transformations

Business Transformation

− Re-engineering manufacturing process in place for decades

Cultural Transformation

− Required collective acceptance of change to shop-floor job

responsibilities around a disciplined, repeatable, paperless process

Technology Transformation

− Distributed use of technology across entire manufacturing shop

floor

− Replace data entry gathering from small group of clerks located in

central dispatch office

AGCO Hesston – Measurable Areas of Success

Inventory

− High-rise Storage Area reduced by ~40%

− Line Side Inventory reduced by ~80%

− Inventory Accuracy increased by ~10%

Quality

− First Time Right increased by 400% for Combines (missing parts

originally represented 90% of Defect Rate)

− Scrap / Rework Cost reduced by ~15%

Labor

− Material Handling FTE Hours reduce by ~20%

− Overtime reduced by >85% in Mtl. Handling, nearly 20% plant-wide

Unplanned Savings

− Safety Metrics improved by ~10%

How Did They Do It?

3 Focus Areas

Move from Push to Pull for Materials

Move to “Paperless” Manufacturing

Manufacturing Process Changes with Technology as the

Catalyst

Move From Push to Pull

The Primary Focus – The Move from Push to Pull

Line-side materials limited

− Re-supply based on material levels and employee call-outs

− NOT “water-spider” (even thought it appears so); resupply based

on system-driven tasks generated by above activities

− Shortage report based on real-time inventory also key

Kitting implemented

− Initially 2-4 Assemblies / Kit

− Now single Assembly / Kit

− Based partially on locked Sequence and partially on Trigger-points

in assembly line

Move From Push to Pull

BEFORE AFTER

….

Move From Push to Pull

Primary Benefits of the move from Push to Pull:

30-40% Inventory Reductions

20% Lower Material Handling costs

Key Component in 400% improvement in First Time Right

(combine line)

Secondary Benefits of the move from Push to Pull:

Key Component in reduction of Overtime (85% in Materials,

nearly 20% plant-wide)

Increased “Value Added” (production) space

The Biggest Surprise – Improved Safety Metrics by 10%

Paperless Manufacturing

The Problems with Paper:

Large, Complex Equipment with Multiple Options

− As many as 5,000 components

− Variants for Color, AC, Radio, Interior…

Result Was Complexity on the Floor

− Large Shop Packets – 50-500 pages

− 2 full-time staff to print and organize packets

− Operators spent significant time looking for information

− Lost / damaged pages caused issues

− Wrong / Missing components drove First Time Right and Quality

issues

Manual reporting of all activities

Paperless Manufacturing

The Paperless Solution:

No More Packets – A Single BC Label

− Serial of Finished Item identifies Components and Variants

− Scan at each station for required information and for validation

All Necessary Details Available On-line

− Operators have information at their fingertips

− Information is always current

Production Reporting On-line

− Operators scan in

− Completion of Tasks drives Automated Production Reporting

− The ability to clock on to and report multiple jobs saves significant

time reporting labor

Paperless Manufacturing

Primary Benefits of the move to Paperless:

Significant impact on Quality improvements

− First Time Right increased by 400% for Combines

− Scrap / Rework Cost reduced by ~15%

Key Component in reduction of Overtime (85% in Material

Handling, nearly 20% plant-wide)

Direct reduction in non-value added labor and paper costs

Manufacturing Process Change

Technology as a Catalyst for SOME Change

− Forces re-evaluation

− Enables some new processes

− Provides better access to data and new views of data

Fixed Sequence (Technology Independent)

Kitting

Flexibility to Support Current & Changing Processes

− AGCO Processes, not Vendor Processes

− New Product Lines

− New, Automated Paint Plant Assembly Process Changes

Lessons Learned

Develop a Good Plan!!!

− Understand Your Business

• Document Current Processes

• Document Ad-Hoc Processes

• Drive Deeper Into the Work Force in the Development Stage

− System Readiness

• Test, Test, Test, … !!!

• User Acceptance Testing

• High Volume Stress Testing

• Test Interfaces

• Train, Train, Train, … Users and IT / Support

− Establish Support Center

Great Flexibility CAN Result in Great Complexity!

− Understand Your Needs – Keep It Simple!

What about YOUR company?

Goals, Concerns, Challenges…

Operational Efficiency at Your Company

What Projects are you working on?

What are your Goals / Targets?

Is there Hidden Potential?

What Tools / Approaches are you using?

What are your Concerns / Potential Challenges?

Wrap up / Q&A

Harvesting Operational Efficiency

at AGCO

Michael J. Bradford

Thank You!!!