KLINGER Australia has completed its first full year of steadily evolving into a continuously leaner organization. Today, the Australian gasket manufacturer boasts an ERP system that is perfectly adapted to its lean management environment. And the numerous improvements on the shop floor, in the processes and availability are paying off. The delivery in full and on time (DIFOT), one of the company’s key performance indicators, is steadily increasing towards the 95 percent mark. The main beneficiary of KLINGER Australia’s lean management journey is of course the customer.
KLINGER Australia can track the origins of its lean management journey to a single, mission-critical incident. In 2014 a fire burned down the warehouse in Western Australia. The damage was substantial. “After the initial shock, we saw this as an opportunity to add a metal plant,” remembers Ajith Gunasekera, CFO of KLINGER Australia, and adds: “This decision then forced us to take a closer look at our existing processes and systems. That was the moment we understood we needed a lean management approach, coupled with an ERP system capable of supporting it.”
Perfect availability for oil & gas customers
Adhering to the motto “No shortcuts – whatever we do, we do it properly”, KLINGER Australia set about transforming its production areas, processes and organization. “The lean management philosophy enables you to divide your activities into two main categories: Value and waste,” says Kevin Woolley, Managing Director of KLINGER Australia. He explains: “Measures that contribute to the customer’s benefit are valuable, everything else is considered wasteful.” Applying this fact means that the mindset and corresponding measures had to be implemented across all departments. On the shop floor, for example, this subsequently led to efficiency increases as a result of physically rearranging the workstation layout. “Our components now spend significantly less time ‘in transit’ between production steps. Instead they are quickly handed over from station to station,” confirms Michelle Ahola, Operations Manager at KLINGER Australia, “we have also streamlined our staging areas and moved some of our packing processes from the warehouse directly into the manufacturing area.” Said warehouse also came under close scrutiny during KLINGER Australia’s push towards lean management: “We introduced key performance indicators (KPIs) in order to monitor and hold the necessary stock in the correct quantities. Capable of seeing our inventory in this light, we focused on a single goal: Perfect availability of products for our most important customers in the oil and gas industry,” says Ms. Ahola.
Streamlined: KLINGER Australia’s shop floor has been redesigned for maximum efficiency
Standard production plannable up to 30 days in advance
Continuously aligning processes, people and systems proved to be highly effective. KLINGER Australia has, for example, managed to significantly speed up the time between receiving and invoicing orders. “Our customers are mainly engineers, plant operators and operations managers,” explains Mr. Woolley, “downtimes cost a lot of money, so our ability to provide rapid support in such a case massively benefits them.” Furthermore, standard production can now be planned up to 30 days in advance.
Delivery in full and on time steadily increasing towards 95 percent mark
One of the many key performance indicators that underlines KLINGER Australia’s road to success is the DIFOT (delivery in full and on time), which is steadily increasing towards the targeted 95 percent mark. Managing Director Kevin Woolley is especially proud of another key factor that has also seen a significant improvement: Applying KPIs enabled the Australians to identify and monitor the volume of generated waste materials as well as their respective disposal cost. “We took these figures and used them to rework how we process and cut gasket sheets,” confirms Mr. Woolley, “this has dramatically reduced our reliance on third party raw material suppliers. In addition, materials previously deemed waste or scrap can now be reintroduced into production cycle. Everybody wins – we as the manufacturer, the customer by means of positive cost effects, and the environment as a result of less waste.”
The lean management approach extends across all processes and departments
KLINGER Australia to add high-tech and automation to manufacturing process
Kevin Woolley is quick to point out that despite excellent progress, it is still early days in KLINGER Australia’s drive towards becoming the ideal lean organization: “We are going to take a closer look at new technologies to further enhance our manufacturing base. Options currently on the table include fiber laser equipment for diversified metallic cutting, outer ring fitting automation for spiral wound gaskets as well as CNC lathes and ring rolling equipment.” According to the company’s managing director, training personnel in the art of being lean will also remain a priority: “When it comes to lean management, the key to success is that everybody has to be on the same level. As a learning organization, this is a must – especially if we want to further improve our service provision to the Southeast Asian market.”