CAREL’s Lean Product Development Journey

CAREL, an Italian HVAC-R company (heating, ventilation, air conditioning and refrigeration) started its Lean Product Development Journey back in 2009 with the reorganization and introduction of new compact teams.

The Lean Analytics Association (LAA) team carried out an interview and Gemba Walk at their facilities to document their lean product development best practices and discover how the application of lean thinking in the product development process is impacting their business. The lessons learned and challenges, that CAREL faced through the years of implementing and applying lean product development, were also identified.

 

CAREL is one of the world’s leaders in control solutions for air- conditioning, refrigeration, heating, and systems for humidification and evaporative cooling. CAREL prides itself as the company with a mission is to bring energy savings and reduce the impact of machinery and systems on the environment.

In 2007-2009, during the global economic crisis many companies were facing the challenge to remain competitive, but CAREL kept growing. This growth meant that leadership was required to find a solution, effective and flexible enough, to support that growth. They found the answer in the Lean Product Development approach.

CAREL launched the Lean Product Development initiative in 2009 and has come a long way since. Supplementary to supporting the company’s growth, the goal of the initiative was to reduce the new product delivery times, for which purpose, CAREL partnered with an external consulting company. Later, CAREL built a strong relationship with two Italian universities to support their lean product development journey, ensuring they stay ahead of the competition by employing state-of-the-art methods and tools.

 

Through its journey, CAREL established best practices in several aspects of Lean Product Development. These practices were identified and structured according to the four building blocks of the Lean Innovation Model. Below are just some of the best practices identified and described in the CAREL chapter of the Lean Product Development Best Practices Book.

1) STRATEGY AND PERFORMANCE

One of the methods CAREL introduced right from the beginning of its lean journey is the visual project planning and management. For that, R&D teams use one physical board per project to lay out the project plan, and this board serves as a weekly meeting point for the project team, a monthly progress meeting point with higher management, and a live document which is used by team individuals to track themselves, their tasks and their team’s progress.

2) SKILLED PEOPLE AND COLLABORATION

CAREL invests heavily in the continuous training of its employees, especially of R&D teams which are so effective they count on average only between 4 to 5 people. Each employee has a personal training program and is encouraged to increase at least one competence per project.

3)  EFFICIENT PRODUCT DEVELOPMENT PROCESS AND KNOWLEDGE BASED ENVIRONMENT

CAREL is one of the few organizations which initiated the implementation of Set-Based Concurrent Engineering at an early stage of the lean journey and has already successfully completed two pilot projects.

4)  CONTINUOUS IMPROVEMENT AND CHANGE

One of the highlights of CAREL’s best practices is its well-established and maintained continuous improvement program that encourages employees to spend 20% of their time on the continuous improvement activities for their specializations. This approach resulted in three-hour savings in cycle times for every hour invested in continuous improvement.

Consolidated best practices as identified in CAREL, structured around the Lean Innovation Model.

The combined lean product development efforts have greatly impact CAREL’s business.

Impact in Product Development:

1. Average development time has been reduced
2. Project delays reduced from 40% being delayed to 15%
3. Increased the amount of knowledge generated and reused
4. Improved quality and reliability of product

Impact in Operations:

1. Production value/FTE increased by 20%
2. Inventory turnover/stock rotation increased by 44%
3. Average production batch decreased by 67%
4. Service level increased by 9%

 

The Lean Analytics Association interview and Gemba-Walk at CAREL in Italy