When Thiago Deiro took over as Chief Executive Officer of Volgren in April 2019, he immediately began to talk about making the production line flow more smoothly. He publicly declared that his company needed to remove waste, to concentrate on safety, quality, delivery and cost, and to eliminate “disturbances on the line”. Almost a year into the job, he has turned his rhetoric into results.
The desire to continuously improve has always been a central part of Volgren’s success, but a new company-wide transformation has taken the improvement to an entirely new level. It’s spearheaded by Deiro, based on lean manufacturing techniques and underpinned by the Marcopolo Way, standardised processes used across all of Volgren’s parent company’s business units.
While the changes will ultimately result in more value for Volgren’s customers, which Deiro considers essential, he freely admits this isn’t his topmost concern.
“Safety is our number one priority. There’s nothing more important to us than the health and safety of our employees. In the past months, we’ve updated our risk assessments and standard and operating procedures. We’ve got some action plans underway to turn our facilities into a better and safer place to work,” he explains.
“We are using the lean philosophy to improve most of our processes. We are promoting a better and safer work environment. We are getting cleaner, better organised, reducing costs and improving efficiency and quality, creating shorter lead times and setup times.”
Deiro says that one of the many advantages of the lean methodology is that it can be applied widely. In fact, Volgren is bringing lean to all departments.
“Of course, being a manufacturing company, we’ve started from the shop floor, firstly at our Dandenong facility, and then extended it to the other areas and sites in Queensland and Western Australia.”
“The manufacturing restructure started at Dandenong. We threw away what wasn’t needed, we painted all machinery, walls and floors and we re-designed the layout, which enabled us to free up a lot of space and to reduce inventory.”
Deiro says that in a single week – in fact the very first week of the Dandenong facility transformation – his team were able to remove 15 tonnes of unneeded equipment, including trolleys, ladders, easels, benches and more than 500 tools.
That cleared a massive amount of space and allowed Volgren to make what may be the biggest change that’s taken place since Deiro took over as CEO. They brought their distribution centre ‘in-house’, relocating it from an off-site location to a new warehouse within the Dandenong facility.
The previous site was only a 2.25-kilometre trip from their headquarters, however those responsible for logistics were making, on average, 11 trips per day. The costs added up and the change has brought about savings of about $108,000 per year in transport alone.
“Relocation brought us big savings in rental, transportation, packing, material stock and unnecessary movements of people,” says Deiro, also disclosing that rent for the external centre was costing in the hundreds of thousands of dollars. That expense is now gone.
The new 1722-square metre logistics area has replaced the external distribution centre and sits adjacent to the facility’s pre-assemblies area. Alongside that is Construction, which in turn sits next to Fabrication, just metres from where the chassis are stationed. The layout creates what the CEO describes as a “continuous flow construction line”.
Deiro is pleased by the gains but sees what he’s achieved so far as only the beginning of a very significant and broad-ranging transformation.
“Lean is more than a system – it’s a strategy. We are not transforming the company alone; we are transforming our people too.
“The best ideas for improving a process always come from the people who are actually doing the work. We have to train our people to see the waste in any process and then remove it. The kaizen approach of having a dedicated team working on a problem gives everyone a voice.”
Change, Deiro admits, isn’t always easy. It can be daunting, and people can initially respond negatively to it, which is something the management team acknowledges and has prepared for.
“Change always brings anxiety and uncertainties, and that’s why most people do not like it, and many are afraid of it. That’s the reason why we’ve been promoting a new culture in the workplace.
“The number one rule is to treat our people with respect, listening to them and working with them. This is part of our values, the main pillars of our culture. I’m trying to promote this human side of the business. We have to make sure that our people work in a safe and good environment, trained, motivated, committed to our success and performing at a high level.”
Deiro knows that this broader cultural shift, the one that involves how people work with one another as well as with machines and equipment, will take time. But the changes he’s implemented are already having an effect.
An example is how these measures will change the way the company can respond to tenders. In the first half of this year, Transport for New South Wales will complete its route and school buses contract tendering process, announcing its preferred suppliers. Deiro believes the early-stage transformation processes he’s implemented have made the facility better equipped to meet the needs of New South Wales operators.
“I have no doubt that Volgren is more than prepared to meet Transport for New South Wales’s panel demands and to deliver to the operators the best whole-of-life cost in the market – from acquisition to disposal.”
“When the value-adding activities are optimised, time spent for processing orders sharply drops, costs are reduced, customer services and quality improve. This all increases our company’s competitiveness. The response to customer needs are faster and more reliable and that’s where the value to our customers comes from.”