Case Study: Establishing Manufacturing Facilities in Emerging Markets
Among the most satisfying of projects are those that unfold so effectively, they become the manual for future work. That was the case for a project involving leading transmission manufacturer GETRAG (acquired by MAGNA) and our project and portfolio management team. We have worked together since 2001 to deliver GETRAG’s most complex programs.
GETRAG is the largest independent supplier of passenger car transmissions worldwide. It delivers those transmissions to every major automotive manufacturer globally, from Ford to Ferrari. It maintains 24 locations globally, in Europe, North America, and Asia, employing about 13,000 people who produced 3.5 million transmissions in 2011. Sales that year reached €3 billion.
The company was experiencing rapid growth in emerging markets and required new facilities to support the expansion of business. However, at the same time GETRAG wanted to ensure best-in-class manufacturing strategies to achieve operational excellence in those new plants.
Executive Vice President of Manufacturing John McDonald had worked with Pcubed Managing Consultant Naveed Choudry before. This time McDonald called Choudry in and said he wanted to launch a new product (Dual Clutch Transmission (DCT)) and transfer one of his production lines from an existing plant in Germany to a new site in Kechnec, a small town led by an entrepreneurial mayor in the Slovak Republic.
Recalls Choudry, “When John invited me to help him on this project, it was starting from nothing more than an empty field. The statement brief was, “18 months we’ve got to be operational.” There was no fluctuation on that. When Choudry visited the site, he realized this project would be a challenge of everything he had gleaned from a 15-year career in program management.
His response to McDonald: “We can do this.”
That started the clock ticking down.
The plant would be designed to employ 750 people to manufacture dual clutch transmissions and timing gears used by motorcycle manufacturers. McDonald wanted to embed lean manufacturing and make sure the operations used the latest technology.
But just as important, McDonald wanted development of the Kechnec site to serve as a blueprint for new additional sites that were already part of GETRAG’s manufacturing business plan. Eventually, this project would help formulate the approach for setting up similar facilities in Sterling Heights in Michigan, Irapuato in Mexico.
The project had half a dozen stakeholders, including engineering centers in Cologne and Untergruppenbach, a production site in Neuenstein, and others from Ford, GETRAG, and Kechnec. Pcubed’s role was to form a program management office (PMO) to provide a robust platform to work with all of those stakeholders.
As Choudry recounts, the number of potential challenges – typical for any complex project – was prolific.
- The team of participants was global, which called for great care in management and coordination.
- Stakeholders were busy. How would the PMO be assured of getting decisions made?
- The scope was huge; there was a new building, a new product line, new customers, and the newness of working in a region of the world nobody on the team had worked in before.
- That in turn put business stress on the program itself, sparked by the possibility that plans may have been overambitious or unsubstantiated.
- The program managers would need to focus on scope and achievability to prevent undisciplined change control.
- There were potential cultural challenges brought on by a lack of understanding in local practices and disciplines.
- There were cost constraints; the PMO would need to seek out new ways to achieve the same results with fewer resources.
- To ensure that stakeholders had visibility into how the program was performing against the timeline, the PMO had to develop a way to manage complex delivery plans and link them for accurate reporting.
- There was the prospect of overload – too many projects and too few resources.
- Likewise, resource constraints could have meant a lack of capacity or a lack of the right skills.
- Because the program involved non-business-as-usual activities, participants may have felt a lack of confidence or capability to achieve the goals.
- And any heavy emphasis on process and planning could end up stifling innovation, which would be counter-productive to one of McDonald’s major aims for the new plant.
Working as a Team
The PMO took a “one-team approach” with an emphasis on being clear, honest, and direct through multiple forms of communication:
“It’s so easy for the design team to turn around and say, ‘I’m not going to be able to deliver on time, and the manufacturing team is holding me up because they haven’t done a feasibility,’” says Choudry. “It’s about getting those people together and making sure they understand we’re all in this together, and we have to operate to make sure we hit those targets.”
He adds that it was important to define clear and simple roles and responsibilities that participants agreed to. This would end up minimizing misunderstandings about who would do what.
Stakeholder Management and Scope Control
An important step to manage scope was defining the program charter. Says Choudry, it was important to lay out the specifics of key deliverables and goals and objectives for each function – quality, HR, design, manufacturing. That included knowing how they would be organized, how they would operate, and what their budget was. “As soon as you deviate from that scope, you’ve got an argument to go back to the stakeholders and say, ‘I need more resources, more time, more budget, because my scope has changed.’” explains Choudry. “Our stakeholders are always going to ask for more. If we define what those requirements are upfront, then we actually work to those requirements.”
Managing stakeholders involved understanding what their needs and making sure they were engaged in the program from the very beginning through regular meetings and communications. Also, Choudry added, although all stakeholders were valued, “I didn’t need all six hands to be up.” So it was important for the PMO to understand stakeholder pressure points and prioritize who needed buy-in for each critical task or area.
Coping with Constraints, Reporting, and Functional Interfaces
To address cost and resource constraints, deal with overload, and stay on top of enterprise planning, the PMO took a number of steps. First, it structured the program to place appropriately skilled project managers alongside functional leads so the two people could act as partners. For example, “For a manufacturing lead, we made sure the project manager from the PMO actually had a good manufacturing background,” says Choudry. “It was important so they could test the plans, and they could ask the right questions.”
Second, the PMO also actively drove issue and risk management. “Issues are going to appear on a daily basis,” notes Choudry, “and we wanted to make sure that we understood how we were going to mitigate any risks we identified.”
Third, the PMO set up a structured reporting system to share information across the team and enable decision-making by facts. That reporting was kept simple with a bigger focus on visual aids and less text to help people understand status quickly. Choudry points out that that effective reporting requires honesty and sharing. So participants had to be assured that “if you are going to put a red light up there, it’s not a bad thing. It gives us the opportunity to go address it. We can go in and get back on track and get the program to work again.”
Fourth, the PMO put a lot of energy into clearly identifying functional interfaces and getting agreement on realistic milestones to prevent functional areas from working in silos. “It was making sure that everybody understood what those ‘gives’ and ‘gets’ were,” Choudry says. “If they didn’t understand those, they also wouldn’t understand the impacts and consequences they had on different functional areas.” Those interfaces were mapped out so that when one functional area had a change in timing, for instance, everybody would understand the impact throughout the program.
1. Build discipline through project charters.
2. Actively manage the integrated delivery plan.
3. Actively manage the integrated delivery plan.
4. Clearly identify resource constraints.
5. PMO provide an independent, non-biased approach.
6. Ensure a robust PM process is in place.
7. Communication and factual information is key.
8. Share the lessons and embed them for the next program.
Standardized Governance, HR, and Innovation
To drive consistency in delivery across the whole program, the PMO developed a standardized set of processes and templates. “I mapped out meetings from the bottom delivery levels all the way up to the stakeholder level,” Choudry says. “So everybody knew where they needed to be and what the purpose of each of those meetings was.” He adds that those never changed. Participants at each level were empowered to make decisions at the meetings they attended, which meant decisions could be made openly and swiftly.
Human resources played a critical role in the success of the project, as it always does in an emerging market, Choudry observes. “You’ll be surprised how difficult it is to find the talent you’re looking for. It really gives you the opportunity to get the right skill sets into the new plant.” Once a new person was hired, the plan was to bring him or her into the German factory to learn how to operate the plants and get a full picture of how the company worked. Those new hires could then take that working knowledge back to Slovakia.
In the area of innovation, the PMO had to balance the desire for innovation among the design and manufacturing engineers with the need to stay on schedule. Choudry says the tricky part was to prevent the focus on process from getting in the way of engineers bringing new ideas back to the project. The answer: “We gave them the freedom up front but also defined that point in time where there could be no more changes.”
220,000 New Transmissions a Year
Within 18 months, the new plant was up and running, right on schedule and right on budget. And, as McDonald had hoped for, the techniques used in building the Kechnec facility formed a solid plan for launching greenfield sites elsewhere.“Pcubed delivered and grew the strategic internal capabilities for my team…”
“I laid out our strategic objectives and deadlines. Pcubed helped us develop and execute a plan that got us there successfully. Equally important, we created a blueprint for how GETRAG will create lean manufacturing facilities in the future. Pcubed delivered and grew the strategic internal capabilities for my team,” says McDonald.
Achieving that level of success wouldn’t have been possible without a few crucial components.
Having a clear and concise project charter, Choudry believes, is the most important component for building discipline and ensuring that everybody understands what is being delivered. Then every plan within the program needs to be assessed daily. In the case of Kechnec, some functional plans were 400 lines long; others were 7,000 lines. All of them were maintained in an enterprise application to provide a single executive view of the plan, including its gateways and milestones.
It was also important that the PMO serve as an independent team member to prevent becoming biased toward any functional area and to maintain the “bigger picture” of what is being achieved.
“We went from the planning all the way through the greenfield site, to assessing the foundation, putting in the construction, setting up the offices, installing machines, and going through a full launch process, to having the team operate and produce 220,000 units a year,” Choudry declares. “We achieved that in 18 months. We launched successfully, and through this successful launch we were also to set up other new facilities and increase the volume of double clutch transmissions in the market. Everything can be achieved if you follow a good process and get the team to work as one unit.”
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