Six Sigma helps Crown Equipment save nearly $1.5 million

Jeanne Chircop, American Society for Quality
Tags: six sigma, lean manufacturing

With a corporate commitment to helping customers lower costs and maximize productivity, it’s no surprise that Crown Equipment Corporation is itself dedicated to lean manufacturing and Total Quality Management. Continuous improvement has been intrinsic to the company’s philosophy since its founding in 1945, as management has periodically adjusted product offerings and services to meet changing customer needs.

Yet even with decades of success that has made the Ohio-based manufacturer the world’s top-selling producer of electric lift trucks, the company still recently found ways to use Six Sigma strategies to improve processes, reduce scrap and gas usage, and fine-tune operations. The company now has 18 certified Six Sigma green belts and 15 black belts in its North American manufacturing facilities striving to lead the corporation toward even further improvement.

The little company that could
Crown Equipment Corporation began as a one-product, one-room operation in the small, rural community of New Bremen, Ohio. Started just after World War II by the late Carl H. Dicke and Allen A. Dicke, the company manufactured temperature controls for coal-burning furnaces. By 1949, the enterprising brothers followed changing technology trends and switched to producing antenna rotators – devices used to enhance television reception. Even after diversifying into electronic components manufacturing in 1951 and then adding lift trucks in 1957, Crown Equipment continued as a leading manufacturer of antenna rotators until late 2001, by which time changing technologies had rendered them virtually obsolete.

Still privately owned and managed by descendents of the original founders, Crown’s full product line includes:

The company’s electric lift trucks are used throughout the world for transporting materials and goods in warehouses, distribution centers and manufacturing environments.

Still headquartered in the same, though renovated and expanded, offices in New Bremen, Crown is now a multinational corporation with regional headquarters in Munich, Germany, and Sydney, Australia. The company has 11 manufacturing facilities in seven U.S. locations and also has strong international manufacturing capabilities, building lift trucks in Sydney, Australia; Roding, Germany; Queretaro, Mexico (two plants); and Suzhou, China. Crown also owns branch sales and service center operations in Australia, Belgium, England, Germany, Korea, Malaysia, the Netherlands, New Zealand, Singapore and more than 40 locations in the United States. In addition to the company-owned branches, a network of independent U.S. and international Crown dealers operates in nearly 100 cities.

Despite this diversification and global spread, Crown designs and manufactures 85 percent of its lift truck components. The company also assembles its own products and provides maintenance services to customers. Such vertical integration creates a strong competitive advantage, according to Mark DeGrandchamp, Crown’s director of quality and Lean Six Sigma.

“We know our products better,” he says, “because we design and build our own motors, cylinders, electronic assemblies, wire harnesses and masts (the part that lifts the pallet).”

This intimate product knowledge significantly reduces client downtime due to maintenance, repair and parts replacement.

Crown’s multidisciplinary teams also have the ability to quickly adjust concepts during the design stages and provide supporting tools that lead to increased productivity, operator comfort, safety and better fleet management.

“We have one of the lowest life-cycle costs in the industry,” DeGrandchamp says, claiming customers are willing to invest in the quality of Crown trucks and service because they feel it will benefit them with cost avoidance in the long term.

Flexible enough to change
Crown’s impressive history of growth stems from its leaders’ keen awareness of changing technology and market trends combined with a corporate culture that has embraced flexibility and challenge. A continuous focus on effectively satisfying changing customer needs is a hallmark of Total Quality Management.

The company’s commitment to using formal quality tools and strategies dates to the mid-1990s. Traditionally engaging conventional production-line manufacturing, Crown management became interested in the concept of “focused factory” manufacturing in 1996 as a way to increase productivity and competitiveness. Focused factory strategies enable plants to focus on limited, specific tasks. Utilizing a “cellular” model, this manufacturing approach arranges production facilities and floor labor into work cells, or multi-skilled teams, that manufacture complete products or complex components rather than single parts. Cellular manufacturing is an integral part of lean manufacturing, as it drastically reduces waste and duplication of effort. Properly trained teams can manage processes, defects, scheduling, equipment maintenance and other manufacturing issues more efficiently, and thus reduce waste of all kinds.

Crown’s focused factory initiatives paved the way toward a formal commitment to lean manufacturing in 1999. A pilot project in the company’s New Knoxville, Ohio, motor plant brought such significant benefits that the company has since applied lean strategies to every process in every one of its facilities.

Six Sigma: A winning strategy
The newest component of Crown’s quality management program is Six Sigma. While lean is the systematized corporate effort, company managers apply Six Sigma to certain projects as needed and as resources are available.

“When you’re in a lean system,” explains Jeff Caudill, Crown’s main manufacturing leader for the New Bremen campus, “it may be that you have a problem that requires a more powerful problem-solving tool, and Six Sigma provides that tool.”

In general terms, Six Sigma enables a company to address specific areas targeted for improvement by providing:

Six Sigma supports lean manufacturing by reducing variation and waste. Data-driven strategies focus on defect prevention, with no more than 3.4 defects allowed per million opportunities.

Some quality experts refer to Six Sigma as a philosophy, while others consider it a methodology. The American Society for Quality (ASQ) identifies four basic themes common to Six Sigma:

Every Six Sigma project needs organizational support, and targeted Six Sigma training enables professionals at every level of a company to assist with implementation. At the organizational level, specially trained “champions” and “executives” set the direction for selecting and deploying projects. At the project level, those professionals actually conducting projects and implementing improvements are “green belts” or “black belts,” depending on the level of training they have received.

Crown initiated its Six Sigma program in 2005 with four-day “champion” training for key upper-level managers. Rather than addressing any particular challenge, the training was a natural extension of the ongoing improvement philosophy championed by company management.

Green belt training
In late 2005, all of Crown’s U.S. business unit managers were invited to submit names of potential candidates for green belt training. Managers were directed to consider candidates who were:

Each candidate was required to suggest a project that would bring improvement to the company. Members of a Six Sigma steering committee ultimately selected 12 Crown employees to participate in the company’s green belt training and certification, basing selection primarily on the potential long-term benefits of the projects.

The green belt training was conducted at company headquarters by a certified ASQ trainer. Six Sigma green belt training is typically conducted in two week-long increments one month apart. The Crown sessions were held in October and November 2005. At about the same time, a half-dozen Crown employees from the company’s Kinston, N.C., facility attended similar training conducted at North Carolina State University.

Both the ASQ and N.C. State training sessions followed similar formats. All of the green belt candidates presented basic details of their proposed projects to the group, and work began. Projects ranged from general process improvement to scrap reduction, improved machine operation and more efficient gas usage, among others.

The first week of training was devoted to strategizing how to organize resources and eliminate road blocks; the second week was devoted to creating PowerPoint presentations about each project that participants could take back to their local management to begin actual on-site implementation. At the end of the second week, participants took a four-hour 100-question exam about Six Sigma concepts and received certification upon passing.

Group participants continued to meet via teleconference every couple of weeks thereafter to ensure each of the projects remained on track. Each green belt was tasked with completion of a project within the following six months.

Black belt training
The next phase of Crown’s Six Sigma effort occurred the following year, with 15 individuals moving on to take black belt training. As in the green belt program, each participant suggested an improvement project for the group to undertake. Black belt projects focused on:

Also like the Green Belt program, participants represented varied experience levels and a range of disciplines:

Six Sigma black belts lead problem-solving projects by training and coaching project teams at their facilities. Black belts must thoroughly understand and use all aspects of the DMAIC model in accordance with Six Sigma principles. In addition, black belts must understand and use other key Six Sigma tools, such as:

Crown’s Black Belt training occurred in the New Bremen facilities during December 2006 and January 2007. Two certified ASQ trainers led the effort, which culminated with a four-hour, 150-question written exam for the 15 participants.

Million-dollar results
Every successful quality improvement program has both tangible and intangible results – concrete, measurable results (tangible), and beneficial though impossible to measure results (intangible), such as improved morale, increased loyalty, higher employee self-esteem and enhanced customer satisfaction. Crown has chosen to focus on tangible, hard savings for measuring the success of its Six Sigma efforts.

To date, Crown’s green belt efforts have resulted in hard savings of $1.2 million for the company. The company’s black belt efforts have brought $285,000 in hard savings so far, with more expected as the projects proceed further. While the time requirement for the first 12 green belts to undertake training was a whopping 2,400 hours (total for all 12), the company has calculated that it has saved a little over $500 per hour for each hour spent in training.

‘Strongest tool’
Crown’s results indicate Six Sigma is the “strongest improvement tool you can use,” according to John Daeger, quality engineering manager of the New Bremen headquarters facilities. Company managers learned one important lesson, however: Timing is everything. While the green belt training rendered an almost immediate $1.2 million in savings, the black belt effort has moved at a much slower pace because of its timing and because participants weren’t assigned to the effort full time. As the black belt candidates didn’t have the opportunity to focus on their Six Sigma projects full time, the timelines languished.

Now that demands have stabilized, Crown management is re-energizing the black belt effort. The team’s plan is to move the 15 projects from the process development stage into the implementation and control phases. Budgets have been approved to include full-time commitment to the black belt program. Full-time, dedicated positions are currently being filled for a master black belt and a black belt.

The company also has plans to train a minimum of 10 green belts each year, with the intent that the growing number of green belts will help spread training throughout all branches of the company. In the broader scope, the company is also evaluating how its Six Sigma and lean programs should work together for total ongoing quality improvement.

In the meantime, Crown has been recognized with numerous awards, including outstanding achievement in waste minimization and pollution prevention. The U.S. Environmental Protection Agency has designated Crown as a “Waste Minimization Partner,” one of only 27 in the country. The award recognizes the company’s success in substantially reducing the amount of hazardous waste involved in manufacturing by eliminating the chromium from paint formulations. Additional waste minimization occurred because of installation of a power painting operation. This equipment has reduced the generation of waste paint sludge and air emissions.

Crown has also received the Governor’s Award in Ohio for Outstanding Achievement in Pollution Prevention. One of only eight award recipients, Crown earned the nomination not only because of its actual achievements in pollution prevention, but also for serving as a role model for other industrial generators by demonstrating the feasibility of pollution prevention.

This article comes courtesy of the American Society for Quality Web site (

For more information
For more information about Crown Equipment Corporation, visit For more information about Six Sigma and other quality tools, visit the American Society for Quality Web site,

Crown Equipment at a glance

U.S. manufacturing operations
Like nearly all large manufacturers, Crown Equipment owns production facilities in several countries; however, the majority is still found stateside:

Design for X
The Six Sigma perspective views all work as processes that can be defined, measured, analyzed, improved and controlled. Processes require inputs (x) and produce outputs (y). If you control the inputs, you will control the outputs, generally expressed as y = f(x).