Autoliv: Giving Power to the People - Lean Enterprise Institute

It’s no coincidence that the woman in charge of Autoliv’s continuous improvement effort at the company’s Airbag Assembly plant in Ogden, Utah, previously was responsible for inspecting every finished part. After all, as a Tier 1 automotive supplier and the world’s leading manufacturer of automotive safety products, Autoliv must continually find new ways to improve its processes and products to keep a beat or two ahead of the competition.

“We have 135 production lines, and each team member on the lines is expected to do three kaizens per month,” says Marie Turner, Autoliv Production System (APS) and lean consulting manager at the Ogden plant, about 30 miles north of Salt Lake City.

Autoliv’s approach – harvesting the best ideas from its employees, and then leveraging those gains across the entire company to improve quality, increase productivity (measured as labor minutes per unit) and “Save More Lives” – clearly has paid off for the Sweden-based company, which had sales of $8.8 billion in 2013. The Ogden plant won the Shingo Prize for Operational Excellence in 2009 and 2003, and the facility continues to rack up improvements after 18 years on the lean journey.

“We’ve had a 10% productivity gain at this plant so far this year,” says Thomas Hartman, senior director, Autoliv Americas. “This plant competes with companies in China and Mexico, and the only way to succeed is by playing offense. We defy the law of diminishing returns by teaching our people lean techniques and leveraging their ideas. It’s our cultural commitment to achieving zero defects that enables our quality to improve and our costs to go down every year,” Hartman adds. (Read an interview with Hartman as part of LEI’s continuing Lean Leadership series.)

Generate and Share Ideas

Since initiating its lean journey in 1995, Autoliv’s two biggest airbag plants, both in Utah, have achieved impressive productivity gains (units produced per person) every year except the recession year of 2009, when the US auto industry reached its lowest point in over 30 years. The Utah operations, comprising five plants with 4,000 employees, are but one piece of a much larger pie that includes 56,000 employees at 80 facilities in 29 countries. Headquartered in Stockholm, Sweden, Autoliv is the world’s largest maker of automotive safety products, with 38% of the global market.

However, size is no guarantee of success when it comes to putting lean into practice. The challenge of “feeding the engine of continuous improvement,” as Hartman puts it, is easier said than done. Autoliv has succeeded at this challenge by institutionalizing its continuous improvement activities so that associates (workers) know their ideas are not only welcomed, but expected on a regular basis as a part of the job. “We foster an environment that helps people to develop their ideas, and then we have process specialists implement those changes, either during the workday or on weekends,” Hartman explains.

Autoliv is unusual in both its systemically-based problem-solving techniques as well as the way the company shares best practices with all sites and all disciplines globally. It is just as common to share breakthrough methods in Product Development or Finance as it is to share them in the manufacturing operations.

The history of how the Utah operations initially came to embrace lean ideas is essential to understanding just how deep the commitment to continuous improvement runs at one of Utah’s biggest employers.

Once a division of Morton International, which included Morton Salt and Morton-Thiokol, a rocket maker, the US-based operations were initially built using what Hartman refers to as a “cost-plus mentality carried over from the rocket business.” But when Morton Automotive Safety Products merged with Autoliv, it quickly became evident that the company would have to make some major changes to compete in the cost-conscious global automotive market. “It was clear we had to either radically change our way of doing things, or go out of business,” Hartman recalls.

In the first few years, the company’s initial efforts of adopting lean practices were helping, but the rate of improvement did not meet the challenge. “We were providing side air bag inflators to Toyota, but we were not up to Toyota’s standards by any means, so they sent us a teacher, Takashi Harada, to help us improve,” Hartman says. “What he really taught us – the Holy Grail – was the culture of continuous improvement.”

How APS Was Different

Autoliv’s own brand of TPS, called the Autoliv Production System or APS, differed initially from TPS due to Autoliv’s necessity to focus on Employee Involvement. In the early years this continuous improvement culture was not natural for us; like most of the automotive world, we were very management-driven. Many years later, Hartman points out. “Continuous Improvement is no longer what we do; it’s who we are.”

Each team member on the plant floor is expected to do three kaizens per month. That’s a lot of kaizens at a plant that has 1,500 associates. But it’s not only the plant floor associates that have APS on their minds – the supervisors, managers and all support functions are constantly coming up with new ideas, but often at the broader process level.

Injection Molding Process

A couple of processes offer examples. In one, injection molding is required to make the plastic airbag covers. One type of airbag cover is found in the center of the steering wheel and features the emblem of that car company. This part of the airbag manufacturing process was outsourced until recently. “We were able to bring this work inside by learning injection molding,” says Mark Bunker, molding manager. Since then, Autoliv expanded by acquiring Delphi’s Automotive safety unit, bumping the North American cover production from 1 million to 4 million per year.

But simply learning a process wasn’t enough for Autoliv. Associates quickly identified the source of high scrap levels as something called a “short shot” – i.e., an out-of-spec instance when not enough plastic is delivered to the mold. The solution was to adopt a specialized software package to help control the press and tooling, so that the system gives the operator feedback indicating when there is a “short shot. Armed with this feedback, associates were able to refine the process, eliminating short shots and cutting scrap from 8% to 2%. Now this process improvement has been shared with other plastic injection molding sites within Autoliv worldwide.

Paint Process Savings

In a similar manner, the painting of the airbag covers also was outsourced, to a supplier in Grand Rapids, MI. Painting an airbag cover is a very special process that creates a leather-like feel to the finished airbag cover. While outsourced, whenever a quality issue occurred (which happened frequently), there would be a quantity of parts in transit that had suspect quality. The problem solving was also difficult because problems were found days after the parts were produced and the problem solving trail was now cold – a situation that could be avoided if Autoliv performed its own painting. There was also the additional freight cost and double-handling caused by shipping the covers from Michigan to Utah. As a result, Autoliv installed a paint line which it connected in a “just-in-time” process between the injection molding and the airbag assembly plant next door. This eliminated the freight and extra handling costs, reduced inventory and, most importantly, assured a higher quality cover being delivered to the airbag assembly operations.

Because the airbag manufacturing equipment is a key element of the process that helps to assure optimal quality and productivity, there is continual challenge to drive down the invested cost and lead-time to produce this equipment. “We were experiencing depreciation costs that were too high and lead-times that were too long, so in 2006 we decided to design and build our own equipment,” Hartman says. “The machinery we build is more reliable and repeatable, lower cost and available with a much shorter lead-time.” As a result, the company cut its equipment depreciation costs by more than half over a four-year period.

By designing equipment in a standard manner and thereafter being able to reuse equipment, Autoliv engineers invested less than $10,000 to replace a $160,000 machine. This machinery is designed and fabricated by company’s machine design group, housed within the Ogden campus.

Focus on Abnormalities

“Abnormal” is a hot-button word here. “We really focus on what’s abnormal”, Hartman says. “Our abnormality escalation meetings start at 5 a.m. The purpose is for the team to understand the current condition so that information relating to abnormalities can be escalated to management who immediately provide support to resolve those abnormalities.”

Autoliv’s associates are trained to observe the APS principle of jidoka. For Autoliv, Jidoka is the right and responsibility of each associate to stop the line in case of a quality issue. Pointing to an associate on the line during a recent tour of the airbag plant, Autonomous Manufacturing Group supervisor Lucy Bond said, “She and her people have the power to shut down their line whenever they see something abnormal.”

Eliminating defects is the bread and butter of APS. When an associate discovers a part with a defect, “they are required to take that part and scan its barcode and then scan a scrap code,” says Craig Standing, process quality engineering manager for the company’s inflatable curtain airbag lines. Scrap is tracked in a “visual Pareto” rack, and twice daily a quality engineer looks at the defective parts to see where a defect may be recurring that requires engineering support to help identify the root cause and fix it. Each associate on the floor is continuously aware of their highest scrap issue, Bond says.

One production line, named “5 Echo,” suffered from a high scrap rate traced to a spring beneath a bolt that caused parts to fail an internal process control for torque. “The design engineer ran a test on the equipment, found the root cause and as a result, the machine that was failing parts was reset to new parameters,” Bond says. “Now that line is scrapping zero parts.”

While quality issues often require engineering support, Bond says the real key to Autoliv’s success in problem-solving is enabling the associates to identify and fix their own problems. “I try to give them the power to solve the problems themselves, so that they become their own problem solvers,” she says. And although a first-time observer of the line might wonder just how associates would be able to continually refine and improve upon their current process, Bond firmly believes there always will be plenty of room for improvement. “There are always things out there that need improvement,” she adds.

Once a flaw in a process has been discovered Autoliv engages an eight-step process for identifying root cause, providing short and long-term solutions and sharing that documented improvement with other factories making similar products.

Of course, in the automotive safety business, the ability to track and trace is essential. Thus, every airbag has a barcode which is scanned by the customer when the parts are received. The idea is that the OEM, if necessary, will be able to quickly link the airbag to a particular car’s VIN number and then will be able to trace backwards to each critical process and component lot that was involved in the manufacture of that airbag.

In one case, the customer was unable to scan the barcode on a batch of inflatable curtain airbags. When the parts were returned, Autoliv associates found that the barcode itself was the problem, with some being produced in a substandard fashion that made them unreadable to the customer. “We made a permanent change to the process so that we verified its legibility immediately after it was produced. By implementing this on 100% of our product, we were able to prevent that problem from recurring,” Standing reports.

Because Autoliv has numerous customers and a variety of airbag designs, the production operations continually focus on reducing material and equipment changeovers. “One of our workshops to reduce downtime waiting for materials resulted in the implementation of a kit system,” Bond explains. Using the kit system, we cut downtime from 45 seconds to 5 seconds.

On one line, the associate previously had to leave her workstation to manually change the air pressure required to produce a different airbag design. A kaizen team suggested speeding up the process by enabling the associate to make the pressure change via a pushbutton. In addition, automating the loading of each part into the machine saved 2 seconds of handling time per part. They may not sound like big changes for a plant that churns out millions of pieces every month and marches to the beat of a 23-second takt time, these small gains add up very quickly enabling Autoliv to stay cost-competitive.

Applying Lean in Finance

Nor is the plant floor the sole venue for Autoliv’s application of lean ideas. In finance, the team recently participated in a kaizen workshop on waste elimination. The finance group was able to slash the time required to close the monthly financial books from seven days to less than two days using only one third of the people formerly required. This enabled that financial group to absorb the Accounts Receivables and Payables for all of North America without adding one person!

Airbag manufacturing, while utilizing plenty of automation, is still very labor intensive. “The airbag assembly cells are customized with some automation, but for the most part, there are very manual processes used to get the raw components assembled into the finished product,” Bond explains.

With so much dependence on manual labor, it’s not surprising that Autoliv places a high degree of emphasis on people – training them, teaching them APS principles, and developing their skills as production associates and supervisory staff. In fact, one of the keys to Autoliv’s success is its heavy emphasis on developing people as both problem solvers and lean coaches.

The TPS “house” is supported by the two pillars: “just-in-time” and “jidoka” (built-in-quality). By contrast, when Autoliv team members are schooled in the basics of APS, they learn that there are three-pillars undergirding its “house,” consisting of just-in-time, quality first, and employee involvement. At Autoliv, that last “pillar” is undoubtedly the one most important to the company’s success at achieving continuous improvement over the long haul.

At Autoliv, new hires receive instruction on APS, as well as an understanding of the company’s business goals, especially its overarching goal of building a quality product. “When they are asked to do their first kaizen,” Bond says, “the typical response is, ‘You mean I have a say?’”

Physically Challenging Work

The work in an Autoliv cell can be physically demanding. In fact, simply observing a associate place each airbag into a machine that folds it into a tighter package, and then quickly remove it and replace it with another one – all while achieving a 23-second takt time – is almost exhausting to watch. If an associate is not capable of meeting the takt time, that person will be retrained and coached, but there are occasionally a few employees that still fail to meet the challenge. Over time, as the company adopted lean principles, a number of associates left for this reason, Bond adds.

HR Manager Jason Nelson says new hires receive one day of orientation and training, which includes basic lean concepts and APS. “When an associate employee starts working on a cell, they get their on-the-job training,” he says. “We have a four-step training process on every piece of equipment in a cell.” New associates have to achieve our top level of proficiency for every piece of equipment before they are considered trained. Once they achieve Level 1, they and 100% of their colleagues will continue to receive monthly training on APS topics chosen by plant management to optimize plant performance.

Not everybody is cut out for APS’ demanding ballet of regularly identifying and solving process problems. For instance, when Autoliv first adopted lean ideas, a few chose not to learn and perform the new dance steps.

Production lines are organized by type of Airbag, with each group of 2 to eight people assigned to manage a specific production line. In the end, the team manages its own members. “We may have seven people on a production line, and if one is not meeting Takt time causing all of them to fail as a result, the team will both coach and challenge that person,” Hartman explains. “So you see, the team, in effect, polices itself.”

On the opposite end of the spectrum, associates who show a penchant for problem-solving and continuous improvement are selected to have the opportunity to attend Autoliv’s APS University where they enjoy six to nine months of internally developed training modules and on-the-floor workshops. The “Faculty” of this university is made up of past graduates, many of whom the associates already know from their tenure at Autoliv. This further illustrates that at Autoliv “Leaders are Teachers.”

Cross-Pollinating Employees

HR chief Nelson is a big believer in Autoliv’s practice of not only sharing process improvements among plants in a region, but also rotating employees as a way to keep them challenged. “We have a constant interest in moving people around for employee development and fresh eyes approach,” Nelson says. “My personal belief is that people want to be on a winning team. If you can truly communicate how they can be part of making things better, they’ll want to be engaged.”

Two former Ogden plant employees recently transferred to the company’s Tremonton plant to gain experience there, while a production supervisor was moved to Ogden, and an engineer was also assigned to be a production supervisor. “We grow our next generation of leaders internally, and that’s one of the keys to our culture.”

“We want people to understand more than just a single plant’s operations,” Nelson explains. “Of our 11 supervisors, none have been in their current positions longer than four years. I think when people sit in the same position for a long time, they can become bored and the rate of improvement may slow down.”

Besides cross-pollination among their staff, Autoliv also makes sure to leverage process gains made at one plant across other plants within the region. “Being a global company, it would be crazy not to share best practices,” Turner says. “Once each month we present best practices to all APS managers in the region.”

Sharing best practices on a global scale is also a key goal for Autoliv as the company pursues its “one process, one product” goal. In 1P1P we eliminate wasteful diversity and standardize our best designs and processes across the Autoliv world. “We are trying to reduce waste at every level of the organization,” Hartman says of Autoliv’s global product management discipline. “We have engineers from all over the world who are diligently striving to use only our best designs.” As an example, the company has designs for 158 airbag deflectors. Today Autoliv only uses four.

In sum, resting on its laurels isn’t in the cards for Autoliv anytime soon, if ever. “We have to be very good at what we do to stay in this business,” says Hartman. “We don’t always have the lowest labor cost and we’re not always located nearest to our customers and suppliers, but we must always remain competitive on a global basis. For that reason, our team understands why we can’t be complacent.”

With people like Turner, Bond, Nelson, Hartman and their thousands of fellow Autoliv team members on the case, you can be assured that they will succeed.

About Autoliv