Original Date: 08/14/2000
Revision Date: 01/18/2007

In 1992, Howmedica Osteonics radically changed its approach by implementing Team Based Cellular Manufacturing, a cellular environment that focused on product rather than process. In cellular manufacturing, product focus means customer focus. As a result, the company has developed a flatter, leaner organization through management streamlining, employee empowerment, accountability, and customer focus.

Howmedica Osteonics previously used traditional manufacturing methods which eventually lead to poor service levels, long lead times, high inventory and back orders, high product costs, and multiple levels of management. Poor communication also existed between functional departments. In 1992, Howmedica Osteonics radically changed its approach by implementing Team Based Cellular Manufacturing, a cellular environment that focused on product rather than process.

In cellular manufacturing, product focus means customer focus. The cellular approach at Howmedica Osteonics is key to Operations’ strategy, and includes management concepts and techniques common to world-class manufacturing. A cellular layout of the plant allows each cell to be managed as a single business. Two levels of management co-exist within each cell which promotes communication among Team Leaders, Team Members, and vendors. Team Members within a cell are equally empowered to ensure the cell, as a whole, will achieve its operational goals. Accountability applies to everyone and enables Howmedica Osteonics to achieve higher operational performance. Performance measurements are reported daily, weekly, and monthly using a standard set of key business driver measurements which are linked to Operations’ goals. Key measurements include quality, service level, cost, lead times, inventory dollars, and turnaround time. Total quality is built into each product via multi- skilled workers, preventive maintenance (skill blocks), and continuous improvement. High performing work teams progress through six stages of development: (1) assessment of organization and business environment, (2) introduction of cell concept and product-focused work teams, (3) education and training, (4) introduction to work simplification, (5) performance measurements, and (6) implementation of a Skill Based Pay (SBP) Program.

Since implementing Team Based Cell Manufacturing, Howmedica Osteonics achieved product cost reductions by more than 50% between 1991 and 2000. In-house inventories have also been reduced by 50% and are more in-line with customer demands. In 1993, the ratio of average units per square foot to average units per Operations employee were 5.70:1,109. By 1998, this ratio was 11.66:1,757. The cells are achieving 99% of their goals with an increase in service levels of 10% to 15% in five years. Operational improvements begin almost immediately after a performance measurement is implemented due to a higher cell team understanding of set goals and the challenges to reach those goals. Howmedica Osteonics has developed a flatter, leaner organization through management streamlining, employee empowerment, accountability, and customer focus. This approach goes beyond setting up a few customer product-focused work teams. Instead, the entire manufacturing organization consists of product-support cells.

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