10 October 2011

Parker Hannifin: Factory of the Year 2011 and Best Household & General Products Plant

Meet the Parker Hannifin Manufacturing team at Birtley- otherwise known as Britain's Best Factory

"All you need is the plan, the road map – and the courage to press on to your destination."

So said that great US broadcaster and motivator, Earl Nightingale – and he could have been speaking about this plant.

For years it has systematically and thoughtfully assembled the building blocks of lean success; no part of its business has escaped scrutiny. The majority of companies claim to have the vision.

But, unlike so many, this plant knows exactly how that translates into firm goals, and the actions it has to take to reach them. No Big Bang, no grandiose claims or false optimism – instead, a steady record of solid achievements that have taken it step by step from good to great.

This year's Best Factory is Parker Hannifin Manufacturing's Domnick Hunter process filtration plant in Birtley, Tyne and Wear.

Birtley's business is filtration solutions; its products are used to keep microbes away from your yoghurt, filter contact lens solution, help prevent the spread of infection in hospitals, remove yeast and bacteria from sparkling wine and help beer taste like it's intended.

It serves sectors as diverse as pharmaceuticals, healthcare, food and beverage and microelectronics, and numbers major players like Abbott Laboratories, Diageo and Nestlé among its customers.

Originally established in the 1960s as Domnick Hunter, it grew through acquisition until it was acquired itself in 2005 by Parker Hannifin, whose motion and control business employs 50,000 people serving 500,000 customers in 50 countries.

Unlike many global players grown by acquisition, Parker does not force square pegs into round holes; it has a reputation of fostering entrepreneurship in its subsidiaries.

It has developed a clear strategy that provides the bedrock for building on each business's strength and individuality while ensuring it is aligned with corporate values and objectives. Called – unsurprisingly – 'Win', it focuses on three primary goals: customer service, financial performance and profitable growth.

It provides a set of clear strategies for meeting those goals through things like quality and on-time delivery, value added services, innovative products, strategic procurement and – vitally – lean operation. The foundation for achieving them all is the development of empowered employees at every level.

More of this anon – it is the single most compelling reason for Birtley's success. All sites conform to the same balanced scorecard, reporting on a monthly basis. It is a disciplined and consistent framework that has influenced every aspect of the corporation.

It obviously works: Parker Hannifin has just reported a record year with over 23% growth in sales. And even more to the point – so has Birtley. It has grown its sales by more than five times its target, productivity has increased by over 11%, it has reduced inventory by 10% over two years (having already been chipping away at it since 2005) and customer service levels stand at 94.2%.

Operations manager David Coatsworth believes the Win strategy was transformational: "We would be in an entirely different place without it."

Take the goal of customer service: it translates into action at so many levels. For example, it prompted the building of a road map for increasing differentiation in its new products. The division also remapped its core markets to address customer requirements more directly.

And the focus on bringing more value to the customer actually changed its nature: "We used to have a lot of engineers. Now we have a lot of micro-biologists and chemists because that's our market," says Mike Brailsford, divisional general manager.

Cheap doesn't win in this market: going the extra mile does. Take just one example: an insulin manufacturer with production issues for this life-saving hormone. A competitor said: "Here are our products, try a few."

Birtley sent scientists in, and then produced a fully validated solution within five months. It subsequently became part of its core range. Parker is committed to working with customers to understand what's driving their business.

By taking this fully on board, Birtley adds value to its products while also spotting early opportunities to improve them and to drive down costs. It even has a team that will write end-users' own standard operating procedures for cleaning its filtration systems.

Pharmaceuticals and biopharmaceuticals make up a large percentage of its customer base. So it has invested heavily in clean room manufacturing as well as in laboratories and support teams. A lot of its equipment has been custom-built, especially in test areas, supporting innovation and competitive edge.

It even works to GMP (good manufacturing practice) standards itself, providing customers with pre-validated filtration systems and partnering them in developing their own process validation strategies.

Four pharma and three drinks companies brought senior management teams to the plant to examine its success in marrying GMP to lean processes like single piece flow – a challenge which much of this sector still maintains is impossible. "It can be done," says Coatsworth, "but you have to take your head off and put it back differently."

It is, however, in its adoption of lean that Birtley really stands shoulder to shoulder with the best. It had already laid the foundations before it joined Parker Hannifin when new products, long runs and a major hike in inventory levels left it bursting at the seams.

Operations manager David Coatsworth recalls pointing out they either needed a bigger factory, or a high rise or to go lean. This early experience explains why the plant was so keen to accelerate its lean adoption. "We don't do lean to get rid of people," exclaims Coatsworth. "It's all about improving processes and making opportunities for growth."

Parker operates an unambiguous assessment of its plants' lean journeys although each is free to move at its own pace. The scale runs from absence of lean (level 0) to approaching world class (level 5).

Birtley started redesigning its own processes in 2008, moving to cell-based manufacturing. It introduced the concept of value streams which act as mini-business units, each with their own targets and plans for achieving them.

They unite mainstream production with traditionally separate functions like QA laboratories, which also report to a value stream manager. Maintenance technicians, too, work in the cells as part of the team. Planners work within the shopfloor team to decide product flow, pull materials, fill the heijunka box and deploy operators. Assembly and packing happens entirely within the cell.

By 2009, two of its three manufacturing value streams had reached level 3 on the lean journey assessment (results becoming visible) and by the start of 2010 were at level 4 (results at most levels). It is exceptionally rapid progress.

The focus is now on one which started later but will benefit from the experience already gained. The whole process is tightly monitored through clear, visual management and weekly team reviews which set priorities for constant improvement activity.

A weekly summary is issued for the entire business, broken down into value streams, giving a profit and loss account for each, scrap figures and total utilised hours. Birtley also uses kamishibai boards as a visual control to ensure that quality checks are performed and standards are maintained.

The boards are audited weekly and it is a powerful aid in keeping everyone in tune with the factory's performance.

None of this could have happened without what is probably Birtley's greatest strength: its high performance work teams (HPWTs). Birtley's credo is clear: it looks to create an environment where everyone can work semi-autonomously, with the responsibility and authority to make decisions for their teams and their jobs, and who actively seek to play their part in the drive for greater productivity and efficiency.

Like everything else at Birtley, the HPWT programme has been handled systematically and considerately, with a steering committee setting clear goals and regular measures for achieving them. It has taken an enormous training effort in everything from basic culture and behaviours to new problem-solving techniques.

Team leaders have had to develop a whole new range of coaching and mentoring skills to foster the culture of engagement and active participation that is evident across the entire plant. Value stream teams now actually write their own charters, deciding on the behaviours they value in themselves and their colleagues.

The results have been dramatic – a project on the pleating process upped productivity by 32% and improved downtime by a mighty 54%. Walking round Birtley is a real pleasure.

People don't just look you in the eyes – they almost grab you by the lapels to show you what they are doing. It is the surest sign of the success of a remarkable plant and a worthy winner.

Annie Gregory

Supporting Information

Companies
Parker Hannifin Manufacturing Ltd

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