Cummins operates three plants San Luis Potosi, Mexico, which produce and ship products daily to distribution centers in the United States. These plants produce systems such as reconditioned engines, alternators, and filtration and exhaust systems.
Two of the three plants were looking for ways to reduce the high costs of trucking the products, so Rebecca Barnett, a Black Belt at Cummins, began a year-long project to discover new ways to improve the performance of the company’s transportation system. The project was part of Barnett’s professional MBA project through the University of Tennessee’s College of Business Administration.
To begin, Barnett assembled a team with members from both plants and held face-to-face team meetings in the United States and Mexico. The team mapped the shipping processes used by the plants and engaged in joint problem-solving exercises.
The team found that Cummins’ filtration plant shipped trailers of lightweight air filters for truck engines – a product so light that it can be picked up with two fingers. Meanwhile, the nearby engine plant shipped trailers of re-conditioned engines that weigh 3,000 to 5,000 pounds each. Each facility had its own set of tractor-trailer trucks to ship their respective products.
They also discovered that when the engines were loaded from the engine plant in truck trailers, the area in the trailers above the engines was going unused. Seeing an opportunity, Barnett’s team created a plan to ship both filters and reconditioned engines in the same trailers without incurring excessive weight or putting the high-value engines at risk.
Under the new arrangement, crossbars were installed on the trailers to hold pallets of filters above the space taken up by the engines. Once the heavy engines were loaded on the floor of the trailer, the trailers were hauled to the filtration plant and the filters were loaded atop the engines, safely and securely.
By co-loading its trailers with engines from one plant and filters from another, Cummins achieved $500,000 in annual savings. “The key to cross-business-unit project success is for each business to have a financial stake and share in the savings,” Barnett said. “In this case, the two business units shared the $500,000 savings equally.”
The project has also delivered significant environmental benefits. For each trailer the Cummins plants do not ship, the company’s carbon footprint is reduced by 2.59 metric tons of carbon dioxide. To date, the project has resulted up to two fewer trailer shipments per day from the Mexican facilities.
Through other process improvements associated with this endeavor, the team also reduced days in transit from San Luis Potosi to U.S. distribution centers from a range of five to 13 days to an average of 4.8 days. The team also implemented a satellite tracking program for each load to protect the high-value reconditioned engines. The team has since identified 12 spin-off projects that are currently being implemented.
Barnett’s cross-business-unit project has been used as a model throughout Cummins Inc., and she has presented the project to senior leadership in all business units.