Richard Westerfield describes how this company plans to be the number one player in its field by 2010 by increasing operational efficiencies.

Many companies strive to be the number one player in their service area or region. Some have made North America their primary target, but few have the courage or capability to aim for top placement globally—and Yokogawa Corporation of America is one of them.

According to Richard Westerfield, VP of manufacturing and distribution at Yokogawa Corporation of America, Tokyo, Japan-based Yokogawa Electric Corporation wants to be the number one supplier of industrial automation solutions in the world by 2010. To achieve that goal, the success of Yokogawa Corporation of America is imperative.

Since 1915, Yokogawa Electric Corporation has been developing businesses based on measurement, control, and information technologies. The company’s US division was established in 1957 as a supplier of testing, measurement, field instrumentation, process control, and information products and has since expanded its capabilities to serve the oil and gas, liquefied natural gas, refining, chemical, power, pharmaceutical, food and beverage, pulp and paper, iron and steel, and other industries.

Richard Westerfield

To get the ball rolling on the 2010 initiative, Yokogawa Electric is currently implementing a global SAP system that will tie all 17,860 employees working in dozens of subsidiary and affiliate companies in 31 countries together. Currently, the divisions operate on separate systems, making communication and information processing difficult.

“Once we implement SAP, hopefully by 2009, we’ll be able to track inventory, orders, and customers on a global basis. At the same time, the parent company will see a total financial picture in a couple of clicks rather than painstakingly collecting information from the individual companies,” said Westerfield.

The company has also invested in a facility in Sugarland, Texas to expand its industrial automation sector. Currently, more than 300 employees work at the facility, which has the capacity to allow the company to double its headcount and revenue over the next three years. In the near future, Yokagawa Corporation of America will open another large facility in Calgary, Canada, and it has plans to expand into Mexico.

Employee empowerment
To reach number one status, Yokogawa Corporation of America is constantly tweaking its operations. According to Westerfield, the company has been practicing lean techniques since 1985 in the pursuit of small, incremental savings. “We are not looking to overhaul our operations. We are looking for a five-second reduction in cycle time or a 1% decrease in material waste because small changes over time add up to big savings,” he said.

For example, on the manufacturing lines, employees use a simple kanban card system to signal each other when they need replacement parts. “An assembly group will work solely on that kanban card to replace a set of parts by the time an operator down the line needs them. Nothing is entered into a computer system to make it happen—employees communicate within their own group or production lines—and no one oversees them because their work is driven purely by customer demand,” said Westerfield.

“In addition, all our parts are purchased based on the kanban card, and the person who receives the card has the authority to place an order with the vendor.” In a traditional environment, he explained, a requisition would go to an employee in the purchasing department. But many times, requisitions can float around for a while before getting processed. “We empower our employees on the production lines to satisfy their own requirements. They don’t have to wait for another department to react.”

Think outside the box
Yokogawa Corporation of America has also instituted junkens (Japanese for process improvement team). Once a problem is identified on a particular production line, a manager assembles a team of individuals from within that work group who know the ins and outs of the process, as well as individuals from other work groups who can approach the problem with fresh eyes. First, the team documents current processes and then begins testing various solutions.

In a recent example, the company used a junken to improve throughput in the shipping department. Westerfield explained that Yokagawa Corporation of America has several thousand clients, and each one determines the type and size of the box a product will be shipped in, the packing materials used, even the mode of shipping (UPS, FedEx, USPS, Roadway, etc.). On any given day, between 400 and 600 boxes leave the facility, each one different.

Traditionally, each person in the shipping department would complete the packaging process from beginning to end, but a junken determined that breaking the process down would improve efficiency. Today, one person looks at the packing label to determine the type and size of box required. The second person in the line puts the packaging materials and product in the box, while the third person seals the box. The last person in the line routes the box and applies the shipping label.

“Each person in the process inspects the previous person’s job. We started this about eight months ago, and it has been successful. We experienced some resistance from employees at first, but once we got it going, they saw how much more efficiently their department ran, and shipping errors have been greatly reduced. Our pass-through rate is greater than 98%.”

Rewards, not restrictions
To facilitate it’s lean efforts, Yokogawa Corporation of America has a secret weapon: long-term employees. Westerfield is proudto say that many employees have been with the company more than 10 years, and the biggest driver behind their longevity hasbeen an innovative profit-sharing program. He explained that employees on the production lines monitor their cost-per-unit on a daily basis to ensure it stays at or below the target the company has set for them. Any profit is divided among employees on a quarterly basis.

“This has been a primary motivator for our work force to make continuous improvements and keep the bottom line strong, especially in light of the exodus to China.”

Westerfield also pointed out a management style based on rewards rather than discipline has contributed to the company’s loyal employee base. “We discourage micromanagement because it diminishes creativity and energy levels. We manage our company by establishing a good business plan, setting defined milestones, and letting people do their jobs,” he said.