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F G Wilson — Lean Manufacturing and SAP Re-implementation

F G Wilson, a wholly-owned subsidiary of the US Caterpillar group, is one of Europe's largest manufacturers of diesel generators. The company manufactures a very wide range of generators on a configure-to-order or design-to-order basis. MML provided learning and coaching support for the implementation of Lean techniques together with a re-implementation of the SAP ERP package.

The original aim of the project was to re-implement SAP to resolve problems with the original implementation, which had been done by a major consulting firm. MML's initial review clearly demonstrated a big opportunity to improve performance, in terms of lead times, on-time delivery, costs and flexibility. However, it was equally clear that delivering these improvements would require F G Wilson to implement radically new processes, both in the offices and on the shop floor. They needed to combine Lean techniques in material supply and on the shop floor with the sophisticated product configuration, order management and planning capabilities of SAP. As a result, the scope of the project was expanded to re-engineer the order fulfilment process, including materials handling and physical, shop-floor activities, with the aim of delivering the performance improvements that MML had identified.

However, this was only going to succeed if the company's own people understood and owned the project. Our goal, therefore, was to transfer knowledge and skills to F G Wilson's people so that they could implement the new ways of working for themselves and continue to develop them into the future. This approach had the further benefit that the project could be undertaken in a much shorter time scale and with a far more modest consulting budget than would otherwise have been possible.

We supported F G Wilson through this project by:

  • delivering a range of tailored education courses to people at all levels, from board to shop floor, including education about the concepts and principles underlying the project along with detailed training in practical techniques;
  • working with the board to develop a high-level process specification that set out operating principles, policies and objectives for the new ways of working, combining Lean with ERP;
  • helping the senior team to define a set of performance measures that would enable them to assess the effectiveness of the new processes and their impact on the bottom line;
  • training and facilitating the task teams that mapped the existing processes and undertook a detailed gap analysis against the requirements set out in the high-level specification;
  • supporting the teams designing the new order fulfilment process, producing process maps that were not only used as a basis for implementation but subsequently became the heart of the company's ISO9000 documentation
  • helping the teams to choose the most suitable working methods and to re-configure SAP to support them;
  • providing advice, support and quality assurance for process testing and cut-over planning.
The combination of education and a structured design process enabled the project team to define radical changes to the business processes quickly and with confidence. The policies and objectives defined in the high level specification enabled them to select the most appropriate tools for each task. The resulting detailed design employed a mix of ERP and Lean techniques, including:

  • second level ATP, allowing reliable delivery dates to be calculated and quoted at order entry;
  • Lean pull systems to control the line and materials flow;
  • different classes of stock controlled by MRP, back-flushed re-order point or kanban respectively;
  • lineside stock for commonly used items, with others picked and kitted;
  • master scheduling to smooth the total load and project material requirements;
  • mixed-model sequencing to balance the line and maintain a smooth flow.
Working as part of an integrated, tripartite team that included F G Wilson's SAP partner, we helped them to select the specific functionality in SAP that would best support the newly designed process. Selected configuration options were evaluated individually for suitability before being put through a series of formally structured off-line tests of the complete process.

Particular attention was paid to testing exceptions to ensure the new process was robust. Testing the integrated process also proved vital, as it uncovered issues that had not been found in separate functional tests so that they could be resolved without affecting the process when it went live.

In parallel with this work on process testing, we provided support to the project team as they implemented supporting changes ahead of the go-live for the new processes. This included:

  • conducting a detailed analysis of historical demand information, iin order to select the most suitable methods for controlling different items;
  • advising on changes to the layout and operation of the production assembly line;
  • implementing new stock control procedures based on control-group techniques, to improve the accuracy of floor stock;
  • introducing problem solving techniques for issue resolution;
  • re-balancing kanban-controlled stocks and revising the control processes;
  • establishing data models and structures for a model to evaluation Sales and Operations Planning options.
Our objective, to transfer skills to the F G Wilson team, was successfully achieved. We completed our work a few days before the final go-live. F G Wilson's own people managed a problem free cut-over unaided just seven months after the start of our initial review.

Measurable business improvements realised within the first six months of operating the new processes included:

  • reducing the build lead time from 15 days to 2 days, taking £0.75m out of WIP;
  • improving inventory accuracy from 34% to 96%;
  • raising customer service levels from 36% to 98%.
In addition to these hard, measurable results, less easily quantified benefits included:

  • avoiding the cost of developing a stand alone WIP tracking system — proposed when assembly lead times were three weeks;
  • giving customers a reliable delivery date at order entry and not having to keep revising it;
  • much stringer improvement capabilities within the company.
The pilot was implementation run on one of the six production lines. Following the initial implementation, the in-house team successfully rolled the programme out across all the remaining production lines, largely unaided. MML simply provided tailored courses covering the principles and practices being adopted, as each business unit was addressed. The highly successful process model has also been exported to other subsidiaries within the group, in Germany, Eastern Europe and South America.

Subsequently, the site achieved “Class A” accreditation. It was the first site in Caterpillar to achieve this and may have been the first SAP site in Europe to become accredited. F G Wilson's project manager commented that the work done during the re-implementation project, particularly the education, laid much of the foundation for the cultural change that enabled them reach this goal before other subsidiaries.