Page 41 - 100 Great Business Ideas: From Leading Companies Around the World (100 Great Ideas)

EATON CORPORATION USES Z7N OLLDVN I39 a3 3 AIIVAON N I 3H

PROCESS INNOVATION TO

COMPETE

Eaton Corporation manufactures gears, engine valves,
truck axles, circuit breakers, and other unglamorous
parts, largely for automobile manufacturers. It has
38,000 employees in 110 plants around the world. It
prospers through obsessive cost cutting and other actions to increase
productivity. Some of the actions it takes are classic in nature, for
example, closing less productive plants and shifting work from union
plants in the northern U.S. to nonunion plants in the southern U.S.
and Mexico. But the main program which has enabled it to make its
U.S. plants more productive is its version of continuous improvement.

Employees routinely make decisions about how to improve produc-
tivity throughout Eaton Corporation plants. They have bought into
productivity improvement efforts, and have been empowered through
teams to make the decisions necessary to enable the firm to become
more productive. Eaton has opened its books to employees to help
them make more informed decisions. And through plant wide
gainsharing programs, recognition awards, and other reward pro-
grams, Eaton has motivated employees to actively seek process inno-
vations. Esprit de corps is high. Teams with names like ferrets and
worms meet regularly to solve problems. Many alternatives are gen-
erated before final solutions are implemented.

Examples of process innovation abound. For example, by making
numerous small changes in production activities, one group of work-
ers was able to cut scrap by 50 percent. And while solving the scrap
cutting problem, these same workers learned to preheat dies before
using them, saving the company $50,000 a year in one plant alone.
Employees built two automated machines on the shop floor for $80,000
and $93,000 rather than buy them from vendors for $350,000 and
$250,000 respectively. And workers have designed effective compen-
sation programs that raise compensation as workers progress through
stages of job knowledge rather than insisting that the company pay
workers full wages to new hires before they are fully productive as
would have normally happened in a union contract situation.

Source: Thomas F. O'Boyle, "Working Together: A Manufacturer Grows Efficient by Soliciting Ideas
from Employees," Wall Street Journal, June 5, 1992, pp. Al, A4.

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