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https://online.wsj.com/article/SB10001424052702303877604577382260173554658.html
3M Begins Untangling Its 'Hairballs'
Making Plastic Hooks Is Harder Than It Seems; Streamlining a Four-State 1,300-Mile Supply Chain
By James R. Hagerty
May 16, 2012 7 20 pm ET
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ST. PAUL, Minn.— 3M Co.
's Command picture-hanging hooks, made
of plastic and strips of sticky foam, don't look complicated. Until a couple of years
ago, however, the Command production process meandered more than 1,300
miles through four factories in four states.
3M's recently retired chief executive officer, George Buckley, branded such
convoluted production trails as "hairballs." The 110-year-old conglomerate is still
trying to untangle them to wring costs out of one of the world's most complex
manufacturing enterprises.
In a time of slow economic growth, most companies can't excite investors with
soaring sales. In this year's first quarter, 3M sales edged up 2.4%. That makes costcutting all the more urgent.
"Hairball," the sort of colorful term favored by Mr. Buckley, isn't a word 3M
manufacturing executives relish. Even though Mr. Buckley stepped down in
February, the fight against this scourge continues under his successor, Inge
Thulin.
The man in charge of untangling, John Woodworth, 3M's senior vice president in
charge of supply-chain operations, characterizes the situation this way. "We had
long supply chains," he acknowledges. "It was and continues to be an issue."
Every company tries to streamline
manufacturing and supplier networks, of
course. But few have a task as daunting as Mr. Woodworth's. He estimates that 3M
makes 65,000 products, ranging from Scotch tape to film for solar-energy panels,
dental braces and dog chews. They are produced in 214 plants in 41 countries. Mr.
Woodworth, an electrical engineer and 38-year veteran of 3M, figures he has been
inside half of those plants.
3M's long-term plan is to have fewer, larger, more efficient plants, and spread
them out around the world. More production will be done in what 3M calls "super
hubs," plants capable of making scores of products for a region of the world. 3M
now has 10 hubs, including six in the U.S. and one each in Singapore, Japan,
Germany and Poland. It plans at least six more, all outside the U.S.
3M has been expanding its overseas sales aggressively for decades and gets nearly
two-thirds of its sales outside the U.S. But less than half of its production is
outside the U.S. To improve that balance, 3M is building more plants in Asia, Latin
America and other fast-growing markets. By putting production closer to
customers, 3M can cut shipping costs, reduce currency risks and customize
products to suit regional tastes. It also can eliminate hairballs.
One of the prime hairball untanglers is Jim Welsh, a vice president responsible for
manufacturing and working with suppliers. He leads a committee of supply-chain
executives, currently focused on 18 "high-impact" opportunities to improve
efficiency in making major products, including respiratory face masks,
stethoscopes and reflective material for highway signs.
The goal is to reduce cycle times—the period needed to go from ordering raw
materials to delivering finished goods—by 25%.
Before the war on hairballs, the production process for Command hooks began at
a 3M plant in Springfield, Mo., which made the adhesives. Those adhesives were
shipped about 550 miles to a 3M plant in Hartford City, Ind., where they were
applied to polyethylene foam.
The foam was shipped 600 miles to a contractor's plant near Minneapolis, where
the product was imprinted with the 3M logo and sliced into needed sizes. Then the
product was trucked about 200 miles to central Wisconsin, where another
contractor bundled adhesive foam with plastic hooks and put the product into
blister packaging.
About two years ago, 3M consolidated these steps at its plant in Hutchinson,
Minn., one of the super hubs, where Scotch tape, Nexcare bandages, furnace filters
and other items are made.
That plant creates finished Command products for the Americas while sending
giant rolls of unfinished sticky foam to Singapore and Poland, where they are
tailored for Asian and European markets. The cycle time for making Command
has dropped to 35 days from 100, Mr. Welsh says.
3M's Littmann stethoscopes used to be made in steps involving 14 outside
contractors and three 3M plants. Now all processes are being brought into a plant
in Columbia, Mo. The cycle time will fall to 50 days from 165, Mr. Welsh promises.
Hairballs mean more inventory costs because at each geographically separate
production stage a buffer stock of unfinished items is kept to cope with any
disruptions in the flow from another plant. Holding that inventory is expensive in
terms of space and cash sunk into materials waiting to become merchandise.
Why did 3M let some processes get so complicated? Part of it, says Mr. Welsh, is
the company's risk-averse culture. An old saying at 3M is "make a little, sell a
little." In other words, don't buy a lot of new machinery and set up plants until a
product has proved itself in the market.
So 3M product developers would look around for available machines and
expertise even if it was hundreds of miles away. That meant 3M could keep
machinery running round the clock more often, gaining efficiency. But it also
meant more costs for shipping and longer production cycles. Now 3M's goal is to
ramp up production much faster when it has a hit product and avoid "disjointed
supply chains," Mr. Welsh says.
He doesn't use the term "hairball" but says that Mr. Buckley's crusade against
them has proved "a great opportunity for us."
Write to James R. Hagerty at bob.hagerty@wsj.com
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