Smiths Group, based in Durban, South Africa, credits its commitment to Lean for its recent impressive growth as a supplier to original equipment manufacturers (OEMs) in the competitive automotive industry. The company supplies automotive plastic, air conditioning, and engine cooling components to OEMs in South Africa and exports to various OEMs in Europe and the U.S. It operates with a Lean process called total industrial engineering (TIE), based on the Toyota Production System. Smiths credits its Oracle's JD Edwards EnterpriseOne-based system, first introduced in 1998, with providing the flexibility and the features to enable it to succeed.
According to Wolfgang Ropertz, operations director for Smiths Manufacturing and IT director for Smiths Group, JD Edwards enabled the company to implement a just-in-time manufacturing system. One key component of the system is streamlined inventory management. For example, the system can receive orders via electronic data interchange (EDIs), a built-in feature of JD Edwards EnterpriseOne automated ordering.
Smiths Group used JD Edwards to achieve Lean manufacturing objectives without requiring extensive customization. In May 2006, the company upgraded from JD Edwards EnterpriseOne EX B7.333 update 7 to version 8.10. Future plans call for Smiths to add JD Edwards EnterpriseOne Payroll and JD Edwards EnterpriseOne HR modules to update outdated standalone systems.
In the fiercely competitive automotive industry, where Lean was pioneered, original equipment manufacturers (OEMs) and their suppliers face a do-or-die imperative to eliminate waste, reduce costs, and increase speed and efficiency at every step in the manufacturing process. For Durban, South Africa-based Smiths Group, the Lean imperative fueled a dramatic growth spurt. With six plants in South Africa's largest port city, Smiths Group supplies automotive plastic, air conditioning, and engine cooling components to all OEMs in South Africa and exports to several OEMs in Europe and the U.S. Smiths is the largest supplier for Toyota in South Africa, and counts DaimlerChrysler, Ford, Fiat, Toyota, GM, Nissan, BMW, Visteon, Volkswagen, Bergstrom (Lotus), Land Rover, and AVA Italia and AVA Benelux BV among its customers.
Recent growth has been dramatic: Fixed assets grew from R[rand]170 million in 2003 to slightly more than R400 million in 2005, and employee count doubled from 750 in 2000 to 1,519 today. Although Smiths' shift to Lean didn't gain traction until 2002, the foundation for it was laid in 1998 with a decision to upgrade its legacy systems with JD Edwards EnterpriseOne. Facing a number of business objectives—to align and centralize legacy applications; integrate production facilities for full business-process visibility; enhance manufacturing capability without increasing costs; and integrate manufacturing, distribution and finance systems—Smiths explored several options. Flexibility, notes Wolfgang Ropertz, operations director for Smiths Manufacturing and IT director for Smiths Group, was a key driver in its choice. "Cost, obviously, was also a factor," he adds. "Some choices were a lot more expensive than JD Edwards, almost prohibitive. There were others that were cheaper but didn't have as many features as JD Edwards. It was a middle-of-the-road option for us, cost-wise, but it gave us all the specifications and flexibility we needed."