Autoliv is a world-class example of lean manufacturing. This Fortune 500 company makes automotive safety components such as seat belts, airbags, and steering wheels, and has over 80 plants in more than 32 countries. Revenues in 2007 topped $6.7 billion. Autoliv’s lean manufacturing environment is called the Autoliv Production System (APS) and is based on the principles of lean manufacturing pioneered by Toyota, one of the world’s largest automobile manufacturers, and embodied in its Toyota Production System (TPS).

At the heart of Autoliv is a system that focuses on continuous improvement. Based on the “House of Toyota,” Autoliv’s Ogden, Utah, airbag module plant puts the concepts embodied in the house to work every day. The only difference between the Toyota house and the one at Autoliv is that the company has added a third pillar to its house to represent employee involvement in all processes because a culture of involvement, while the norm in Japan, is not always found in the United States.

Autoliv started its lean journey back in 1995. At that time, the Ogden plant was at manufacturing capacity with 22 work cells. Company managers acknowledge that, back then, Autoliv was “broken” and in need of significant and immediate change if it was to survive. This meant that everyone—from senior management to employees and suppliers—needed to be onboard with rebuilding the company. It was not that the company could not fulfill the needs of its automaker customers; however, with increasing demand for both reliable and cost-effective component supplies, pressure to change became obvious. Recognizing the value of Toyota’s approach, senior management made the commitment to embark on its own journey to bring the transformative culture of lean manufacturing to Autoliv.

In 1998, sensei Takashi Harada arrived from Japan to spend 3 years teaching top company managers the principles, techniques, and culture of the lean system. This helped managers create an environment in which continuous improvement could be fostered and revered as an essential activity for long-term success. Because the environment was changing, it made it difficult at first for suppliers to meet Autoliv’s constantly changing and unstable processes. It also made problems visible and forced the company to address and resolve the problems instead of finding ways to work around them as had been done in the past. Daily audits, monthly training, and more in-depth education programs were created to help focus attention on where changes needed to be made. Workers and management were organized into teams that were held accountable for common goals and tasked with working toward common success.

By 2004, the lean culture was integrated into the company, and it now hosts regular visits by other corporations who want to learn from Autoliv’s journey and experiences. Compared to 1995, the space required for a typical work cell has been reduced by 88.5 percent, while the number of cells has grown over 400 percent. This has allowed Autoliv to dramatically increase its production capacity with minimal investment.

Lean concepts play out every day in each plant. For example, everyone gathers at the start of the workday for preshift stretching and a brief meeting—this is part of the employee involvement pillar in the APS House. Then, workers head to one of 104 work cells on the plant floor. Heijunka Room team members deliver heijunka cards to each cell to communicate the work to be done in that cell. Lot sizes may vary with each card delivered to the cell. Everything the workers need to make the lot is in the cell and regularly replenished through the Kanban card system. Every 24 minutes, another heijunka card comes to the cell to signal workers what they will build next. This is part of the JIT pillar in the house.

Since a culture of continuous improvement requires employees at every level to be responsible for quality, a worker may identify an “abnormal condition” during work execution that slows down the work of the cell, or stops it altogether. This is embodied in the right pillar of the Toyota house—jidoka, which Autoliv interprets as “stop and fix.” This is a rare occurrence, however, since both Autoliv and its suppliers are expected to deliver defect-free products. When a supplier is new or has experienced quality issues, the supplier pays for inspection in Autoliv’s receiving dock area until Autoliv is certain the supplier can meet quality expectations for all future deliveries. In this manner, workers in the cells know they can trust the integrity of the raw materials arriving through the Kanban system into their cells for assembly. Jidoka may also come into play when a machine does not operate properly or an employee notices a process that has deviated from the standard. When workers “stop and fix” a problem at the point of its creation, they save the company from added cost as well as lost confidence in the eyes of the customer.

To help focus worker efforts daily, Autoliv has a blue “communication wall” that everyone sees as they head to their worksite. The wall contains the company’s “policy deployment,” which consists of company-wide goals for customer satisfaction, shareholder/financial performance, and safety and quality. The policy deployment begins with the company-wide goals, which then flow down to the plant level through the plant manager’s goals, strategies, and actions for the facility. These linked activities ensure that Autoliv achieves its goals. By communicating this information—and more—in a visual manner, the central pillar of the APS House is supported. Other visual communication and management methods are in place as well. For example, each cell has an overhead banner that states how that cell is doing each month in the areas of safety, quality, employee involvement, cost, and delivery. These all tie into the policy deployment shown on the communication wall.

Another visual communication method is to use a “rail” for the management of the heijunka cards in each cell. The rail has color-coded sections. As each card is delivered, it slides down a color-coded railing to the team. At the end nearest the cell, the rail is green, indicating that any cards that fall into this area can be completed within normal working hours. The middle of the rail is yellow, indicating overtime for the cell that day. The end is red, meaning weekend overtime is required to bring work processes back into harmony with customer demand. As a heijunka card slides down the rail, it stops when it hits the end or stacks up behind another card. If the cell is not performing at the required pace to meet customer demand, the cards will stack up on the rail and provide a very visual cue that the cell is not meeting expectations. This provides an opportunity for cell team members as well as management to implement immediate countermeasures to prevent required overtime if the situation is not remedied.

All aisles and walkways surrounding cells are to be clear of materials, debris, or other items. If anything appears in those areas, everyone can quickly see the abnormality. As team members work together to complete their day’s work, the results of their efforts are displayed boldly on each cell’s “communi-cube.” This four-sided rotating display visually tells the story of the cell’s productivity, quality, and 5S performance. The cube also contains a special section for the management of kaizen suggestions for the team itself. These kaizens enable the team to continuously improve the work environment as well as drive the achievement of team results.

Autoliv’s lean journey embodied in the Autoliv Production System has led to numerous awards and achievement of its policy deployment goals. Product defects have been dramatically reduced, inventory levels are lower, and inventory turnover is approaching world-class levels of 50. Employee turnover is close to 5 percent and remains well below that of other manufacturers in the industry. Yet the destination has not been reached. The company continues its emphasis on driving systemic improvement to avoid complacency and loss of competitive advantage. Best practices from sources beyond each immediate area of the organization are studied and integrated. And finding ways to engage and reward Autoliv’s workforce in a maturing market is critical. Kaizen suggestions in the most recent year at the Ogden plant totaled 74,000, or nearly 60 per employee, indicating the culture of continuous improvement in Autoliv’s APS House is alive and well.