OM in the News: Honeywell and the Seven Deadly Wastes

Managers at the 1,000 worker Honeywell factory in St. Charles, Illinois wear credit-card-size badges warning colleagues of the “seven deadly wastes,” reports The Wall Street Journal (June 30, 2013). The list of costly problems to avoid is a reminder of past problems at the plant, which makes smoke and carbon-monoxide detectors. The plant pumps out 4 million devices a year, and its efficiency gains in recent years have been achieved with a workforce that has been cut in half—illustrating the shop-floor improvements that academics have dubbed a U.S. manufacturing renaissance.

The St. Charles facility had often produced too much, anticipating demand that didn’t materialize. Overproduction and excess inventory are 2 of the 7 deadly wastes. “You couldn’t see the plant floor because there was so much inventory stacked up,” says the director of manufacturing.

Honeywell bet that St. Charles and its other US plants could be transformed into more efficient operations when other U.S. companies were fleeing for low-cost locations overseas. St. Charles assembly lines were replaced with 7 production cells where teams could build different detectors simultaneously. More of the production systems were automated to detect worker errors. The overhaul also solicited ideas for improvement from employees, a reason for maintaining the U.S. workforce. “We’re paying for people’s brains and their hands. If I just wanted hands, I could find them cheaper elsewhere,” says one exec.

St. Charles’ defect rate has fallen 80% under the improvement plan. Automation allowed one worker from each of the work cells to be reassigned. The plant now can start production of any product in the catalog within 3 minutes. Orders typically are filled within 4 days, down from 10 days. Meanwhile, the time needed to develop new detectors has shrunk to about 18 months from 3 years, as the company uses its newfound efficiency to match products from rivals.

Discussion questions:

1. Describe the “seven deadly wastes”. (See the first page of chapter 16 in the text).

2. What changes did Honeywell make to improve productivity?