Keep On Trucking

Dennis Eagle is one of the leading providers of waste management vehicles in Europe and a market leader in the UK.

The company has an annual turnover of around £150 million, a subsidiary in France and exports its refuse collection vehicles around the world, with core markets in Ireland and Scandinavia.

A relative of the original Dennis brand, which has been in existence for over 100 years, Dennis Eagle was founded 25 years ago. It employs 600 staff at its headquarters and eight additional service centres across the country.

The Background

Dennis Eagle has the same requirements as any progressive manufacturing organisation. The company is working to exact customer orders with strict deadlines; therefore any breakdown in production can be financially devastating.

Dennis Eagle was finding that the traditional methods of procuring stocks were proving to be increasingly difficult and inadequate.

The Blackpool-based division is responsible for the production of over 900 cabs a year, with each cab requiring in excess of 1,300 components. A consistent and uncomplicated system, allowing access to components and materials, is imperative.

Up until the mid-nineties, the company relied on dozens of different suppliers from around the world to provide its small components. These included nuts, bolts, screws, grommets, clips, small plastic mouldings and a range of consumables, which were all stocked in a designated stores area adjacent to the factory floor.

Dennis Eagle was finding that the traditional methods of procuring stocks were proving to be increasingly difficult and inadequate, particularly as the company was steadily growing.

Problem Diagnosis

Back in 1995, the entire process of sourcing materials and parts, negotiating prices and ordering, checking deliveries and dealing with dozens of invoices, proved to be an administrative nightmare for Dennis Eagle.

"The purchasing team didn't have enough hours in the day to cope, we were overloaded and had to make a change," said Neil Walton, the manufacturing support manager at Dennis Eagle.

Delays in delivery were frequent, occasionally creating a halt in production, a serious condition for any manufacturing organisation.

One of the main problems with Dennis Eagle's previous system was the position of the parts, situated in a central store area. Workers, who were used to running out of components, would stockpile parts at their own workstations in an effort to make sure that production could continue. As a result, stock locations in the stores would appear empty, prompting buyers to purchase unnecessary additional stock.

Despite the obvious problems of the old system, there was a reluctance to give up the day-today control.

"We carried out an exercise of gathering materials and parts from every workstation. It was amazing, we gathered thousands of pounds worth of stock," said Neil. Furthermore, a trip to the stores would often culminate in a ‘chinwag' between colleagues, again breeding inefficiency. Despite the obvious problems of the old system, there was a reluctance to give up the day-to-day control.

Dennis Eagle needed to be convinced that by engaging Henry Halstead, serious tangible benefits would be achieved, subsequently driving down costs as well as boosting efficiency.

Solution

As part of Henry Halstead's initial research, they carried out a comprehensive audit of Dennis Eagle's existing procurement system, which revealed a number of problems, the three main issues being:

there was a very high degree of input from management and administration staff in purchasing stock and dealing with multiple suppliers;
a significant area of the factory was devoted to storage, costing Dennis Eagle money;
the company had little confidence in stock availability, prompting engineers to stockpile components at their workstations.

When Henry Halstead was invited to provide a solution to Dennis Eagle's component management problems, its objectives were clear: to shift the responsibility for management of small components to the supplier, reduce the amount of inventory in the system and gain much needed production space. Part of Halstead's approach would be to instil a culture change within the organisation.

Henry Halstead's tactics included the following:

remove all small components from stores, reducing the stores area dramatically, creating significant additional space for production;
supply all components via strategically placed two-bin Kanban stations on the shop floor enabling the operatives to feed directly from their own stock;
undertake to hold significant back-up levels of stock at Halstead's Lancashire premises;
provide initial three times weekly service visits (which have since risen to daily).

The Kanban system is entirely usage-driven in its design, automatically triggering the need for replenishment. This allows customers to work on minimal stock levels, assisting their cash flow.

The vision of having bins stocked to exact requirements, a dedicated service team, accurate bin replenishment and continuous stock replenishment was met by the senior management of Dennis Eagle with a very positive response and Henry Halstead was duly appointed.

The Kanban system is entirely usage-driven in its design, automatically triggering the need for replenishment.

The workforce at Dennis Eagle was secure with its traditional procurement system and was therefore cautious about change. Halstead, however, boasts years of experience in achieving similar briefs and was dedicated to adding Dennis Eagle to that prestigious list of satisfied customers.

The procedure of changing from an old fashioned procurement system to a totally managed supply system involves a series of processes which Halstead has developed into a fine art. Once the go-ahead is given by the customer, all the administration and set up work is carried out by Halstead, ensuring a slick transfer of old system to new with no interference to the business.

Implementation

Several months of research and planning went towards guaranteeing minimal disruption during implementation.

Henry Halstead and Dennis Eagle worked together to determine which parts would be required in each Kanban station and the usage of those parts in each area. From this information, Henry Halstead developed what is known as a Kanban master list, which details the content of each station.

A date was agreed for the Kanban system to be installed in the factory. In the meantime, Dennis Eagle slowly ran down its commitments with existing suppliers in preparation for the Halstead system to commence.

As part of its approach, Henry Halstead carried out training sessions with Dennis Eagle's engineers at their workstations to ensure they would get maximum benefit from the system.

Conclusion

The immediate success of the Kanban system at Dennis Eagle has resulted in the company very quickly adding a range of parts to its original order of traditional threaded fasteners.

Henry Halstead now supplies over 420 product lines such as plastic and rubber moulded parts, springs, clips and light bulbs, as well as a large range of additional consumables including cutting and grinding discs, drills, sealants and adhesives. The adaptable benefit of the Kanban system also allows Dennis Eagle to locate Kanban stations offsite at sub-contractors.

"The Kanban System also saves on space, because the stores have now been turned into production space. It is now making money instead of costing us money."

Peter Holroyd, the business planning manager at Dennis Eagle, says he now believes using a single supplier has unquestionably benefited the business – creating real savings in administration, time, storage space and, most importantly, cost.

"Before the Kanban System we dealt with around 50 suppliers which involved around 300 to 400 invoices a month.

"Our accounts department used to have a bundle of invoices at the end of the month an inch thick, now we just get the one. The workload for all our departments has reduced dramatically, allowing us to redeploy labour.