Project Results in Over Half a Million in Cost Savings | Linear Technology Corp.
Linear Technology Corporation is a Vancouver, Washington company that designs, manufactures and markets a broad line of standard high-performance analog and mixed-signal integrated circuits (IC). They have 200 employees. Applications for the company’s products include cellular telephones, networking products, notebook and desktop computers, video/multimedia, industrial instrumentation, automotive electronics, factory automation, process control, and military and space systems. Principle product categories include amplifiers, battery management, data converters, high frequency, interface, voltage regulators and voltage references.
Linear had experienced an increase in production volume but faced an uncertain period as consolidation and shifts in IC production continued. As a result of this manufacturing ramp-up, the factory had capacity issues. These capacity issues, along with work-in-progress inventory (WIP) manufacturing practices, led to an unbalanced inventory flow within the factory—resulting in wafers accumulating in certain areas. This accumulation created unexpected demand for resources on the shop floor.
The company employs approximately 24 supervisors on three shifts that schedule the operations/areas. Changes such as 5S (sort, set in order, shine, standardize, sustain) and a min/max scheduling tool had been deployed over the previous months with some success in leveling the demand. However, not all customer order commitments were being met and supervisors did not have a standard plan of action.
Responses to unexpected demand varied by operator, which tended to create bottlenecks in other operations. Overall, Linear had a high, unstable work flow. Because the company’s main metric is “moves” (which is basically a piece-rate incentive), supervisors in each area were shuffling work to maximize the “moves” they could report for their operation. This meant cherry-picking work that could be done quickly, allowing other work to stagnate.
Linear contacted Impact Washington for assistance, and they recommended a full Lean Enterprise transformation. Part of the activities were funded by a Department of Labor Energy Training Partnership Grant, which was designated to strengthen companies in the renewable energy supply chain. The Lean training and transformation project included Management Overview, Lean 101 instruction for employees, Value Stream Mapping, kaizen improvement events and Training Within Industry Job Instructions.
The company’s most concerning metrics were “stagnant lots”, meaning lots of wafers that had been sitting for 24 hours or more; and “stop-starts”, which are lots of wafers of questionable quality that require investigation by an engineer.
After a few attempts at a value stream map, the project took a block-level view and looked for major customer-supplier process relationships. Kaizen improvement events were conducted for specific processes. Linear Production Manager Eric Simmons took on a personal leadership role. Impact Washington set up tabletop simulations in the large training room. Eric and production people spent several days trying various scenarios of visual and physical controls to enforce a standard and prevent cherry picking.
Toward the end of the week, every operator was brought in to run the tabletop simulation. This ensured everyone had the same big picture of how it was supposed to work, got answers to questions, and could see the benefit of flowing the work.
The project was also successful in getting chemical ordering under control. Inspired by the chemical team, another group applied similar visual controls to repair kits. They had the same issues with a process where people had to remember, or rely on the computer status, to know what to do. The team applied visual controls to one group of these parts. It worked well, so they are working to apply it to others. One of the challenges was the involvement of multiple departments at various stages of the operation. The solution was a process flow that kept things moving, eliminating several hours of unnecessary testing. Impact Washington also led a kaizen event for all employees on the process of launching orders to simplify the work flow.
Finally, Job Instruction training was provided. There was a second- or third-level leader participating in every session. Before the week’s training was up, they were working on how to deploy the principle of job breakdown into their shop procedures. By the following Friday, they prepared a live job breakdown for a process change that needed to be taught to everyone. The company is in the process of developing a template to turn their long processes into separate training modules.
These activities had the largest effect on the company’s metrics. Stagnant lots have all but gone away. Their turns are up, inventory is down. Throughput time is steadily dropping. An auditor from Delphi (a major customer) gave them extra points and specific favorable mention to the visual controls and pull systems he saw. The company has increased morale and realized the ability to solve long-festering workflow issues.
$500,000 in cost savings
Capital investment of $100,000
Workforce training investment of $75,000