Manufacturing

Case Study:

Lean manufacturing leads to growth

19 February 2010

Haldex deployed Avanade’s Lean Automotive solution, leveraging the power of Microsoft Dynamics AX, to optimise manufacturing business processes.

Haldex is a global supplier of proprietary products for trucks, cars, and industrial vehicles. The automotive parts supplier has four major business areas, each operating independently: commercial vehicle brake systems, hydraulic systems, traction systems, and high-precision steel springs used in combustion engines. It caters to increasing demand for technology solutions that increase safety, reduce environmental impact, and enhance vehicle dynamics.

With production and sales operations in North America, South America, Europe, and Asia, Haldex saw both threat and opportunity as a result of increasing globalisation. Although the company faced increasing competition from low-cost overseas manufacturers, it also has an opportunity to grow in rapidly expanding economies in South America and Asia.

Microsoft Dynamics AX helps us implement lean principles - we’ve been able to reduce our inventory by one-third while improving our manufacturing productivity 30 per cent.

Donovan Dean, Haldex Increasing productivity and lowering costs were key concerns for Haldex, but so was improving responsiveness to customer demands. “At the same time foreign competition was driving lower costs, domestic competitors challenged us to become more responsive to our customers, and we found ourselves pinched in the middle of these two forces,” says Donovan Dean, IT Director at Haldex. “We needed to respond quickly to customers’ changing needs while improving costs across the board.”

Haldex’s strategy for meeting these challenges is encapsulated in “The Haldex Way,” a framework for continuous improvement applied to each of the company’s four divisions. Lean manufacturing principles are a core element of the continuous improvement strategy and they replace traditional scheduling systems with flow-and-pull techniques that produce exactly what is needed without waste.

“Coming out of a period of growth-through-acquisition, we had a number of unconnected IT systems that did not support the changes we wanted to implement,” says Dean “Specifically, we wanted production leveling and tighter integration with customers and suppliers. We also wanted electronic kanban throughout the supply chain and support for direct delivery of demand to a production cell.”

In all, Haldex needed to replace 11 different enterprise resource planning, order-management, manufacturing, and financial systems around the world. Many of these systems did not connect across business units. This lack of connectivity limited information and material flow between operations, and as a result, Haldex struggled with lengthy lead times, high buffer inventories, and a need to drive greater productivity in its manufacturing operations.

To make matters more complicated, these systems used aging technology and were difficult to change. To solve these problems, Haldex needed an integrated business management solution that accommodated its diverse operations and supported lean manufacturing practices.

A selection team from the company decided on Microsoft Dynamics AX, extended with the Lean Enterprise Management modules from Avanade. “We put together a series of functional tests and then had the vendors come in and explain how their package would handle those requirements,” says Dean “Microsoft Dynamics AX proved the best solution for us because of how it combines comprehensive capability, flexibility, ease-of-use, and low total cost.

The complete solution enables Haldex to move from a traditional manufacturing resource planning production scheme to one where demand triggers new production. Specifically, Haldex takes advantage of the lean ordering, kanban management, event management, and collaborative commerce functions of Microsoft Dynamics AX extended with the Lean Enterprise Management package. Haldex uses these functions to signal when Haldex factories and suppliers need to provide new production and material resources.

“One of our objectives was to increase the efficiency of the supply chain internally,” says Dean. “For example, we have several plants in North America that produce brake parts, and we have regional service centers where our customers’ trucks are actually fitted with these brakes. Now, with our Microsoft Dynamics AX solution, our entire supply chain is linked so that we are manufacturing replacement parts in our plants as brake shoes are being installed. Instead of us manufacturing according to estimated demand, we are manufacturing to meet actual demand—there is a pull from the point-of-sale to the manufacturing facility.”

Haldex will use Microsoft Dynamics AX to support its finance, customer service, administrative, distribution, and manufacturing operations worldwide. “Microsoft Dynamics AX is robust enough to meet the needs of our larger operations, but it also works well for our smaller distribution and production facilities,” says Dean.

Microsoft Dynamics AX plays a critical supporting role in Haldex’s strategic transformation initiative, “The Haldex Way.” Firstly, Microsoft Dynamics AX, with the Lean Enterprise Management extensions from Avanade, allows the company to adopt lean manufacturing practices that dramatically improve responsiveness, reduce waste, and improve productivity. Secondly, because Microsoft Dynamics AX is flexible and easy to configure, it allows Haldex to make ongoing process improvements and adapt to specific division needs.

Microsoft Dynamics AX provides real-time, integrated information flow throughout Haldex’s extended supply chain. Haldex uses the Lean Enterprise Management modules to harness this information and respond quickly to customer demand. Since implementing the Microsoft Dynamics AX solution, Haldex has cut its lead times in half.

Supply chain automation is a standard tactic for reducing waste and improving efficiency, but Haldex goes a step further with its move to lean manufacturing. Microsoft Dynamics AX with the Lean Enterprise Management package supports lean manufacturing principles so that Haldex can identify and eliminate waste in its operations.

“Eliminating waste is a core aspect of The Haldex Way strategy,” says Dean “Microsoft Dynamics AX helps us implement lean principles - we’ve been able to reduce our inventory by one-third while improving our manufacturing productivity 30 per cent."

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