1. Plowing ahead
An approach based on Lean Daily Management System and a
transformation stemming from a model area where experiments were
carried out on material flow led an Italian manufacturer of combine-
harvesters to become one of the leanest organizations in the Veneto region.
Words: Roberto Priolo; Interviewee: Marco Mirandola, APS Manager, AGCO Breganze
It’s just after 5am, and Laverda’s combine-harvester production facility is
warming up in preparation for another day. Along the line, an operator reaches
his working station, but right before starting his shift he notices that his machine
won’t start.
He immediately tells his Coordinator, who wishfully thinks that the reason for a
machine not starting is sometimes very simple. After having checked all the
possible causes for the breakage, he concludes he is not able to fix the problem
himself, and decides to call maintenance. But the intervention of the
maintenance team, however prompt, is not enough to restart the faulty piece of
equipment.
At this stage, when everything has been tried, there is nothing else to do but
bringing the problem to the attention of the Team Leader at the 7.30 meeting,
during which the Coordinator explains what the issue is and what has been done
to try to solve it.
The issue is analyzed again, as the Team Leaders of maintenance and production
continue the discussion, until a new countermeasure is identified.
The team leader calls the electrician, but he can’t solve the problem either.
More reflection follows and the problem is then brought to the attention of the
Area Manager at the following meeting (it’s now 8.30am). The Team Leader
explains all that was done trying to address the problem and, based on his input
and suggestions, the Manager decides to call the supplier and to order a new
part.
During his meeting with the Operations Director (which happens daily, between
9 and 9.30am, at the end of the combine-harvester production line), the Area
Manager says that there is a machine that is not working, that the root cause has
been identified (a faulty part), that a new part has been ordered and that the
problem is being dealt with.
This system of tiered meetings is one of the elements of Lean Daily Management
System, the first technique Laverda implements whenever it starts to expand its
improvement efforts to a new area or process. Today, LDMS is in place
throughout the Breganze facility, including some of the offices.

2. Mirandola, APS Manager at the plant, says: “The idea is that nobody knows a
machine better than the operator working with it, and that same person will be
best placed to know how to solve a problem the machine experiences. That’s why
problems are talked out at the gemba. Root cause analysis has to happen closer
to where the action is, which makes operators responsible for their work. It’s not
about knowing the solution, but understanding the problem.”
LDMS allows us to manage the flow of information within the organization in a
standard way.
READ a brief history of Laverda
Just over 140 years ago, Pietro Laverda set up a workshop in San Giorgio di
Perlena, a small village in Italy’s Veneto region, manufacturing farming
equipment and wine machinery to support the local agricultural firms.
Mr Laverda couldn’t have imagined that a few decades later his small business,
which moved to nearby Breganze in 1905, would produce the first Italian self-
propelled combine-harvester and that a century and a half down the line it would
become part of one of the largest agricultural equipment providers in the world.
As it’s often the case with successful organizations, good results come from two
important elements: innovative products and forward-looking leadership that
knows what the customer wants. Laverda has benefited from both these aspects.
Mr Laverda was not just a fine mechanic, but also a businessman who was well
aware of the importance of understanding customer needs: as early as 1890 he
published a product catalogue, something of a pioneering marketing move.
After Mr Laverda’s death, his nephews, Pietro Jr and Giovanni Battista, inherited
the business and, it seems, their grandfather’s entrepreneurial spirit. This marked
the beginning of a phase characterized by innovation and extraordinary
technological breakthroughs that made Laverda a major organization in Italy’s
agricultural industry.
In 1934 and 1938 respectively, Laverda produced the first Italian drawn mower
and the first Italian reaper-binder. In 1956, the M60 was launched, the first Italian-
made self-propelled combine-harvester. With this machine Laverda started its
expansion in the Italian market and abroad (similar machines had been present in
other countries for decades, but Italian agriculture did not start its modernization
process until after World War II).
The organization developed a compact, light, and easy to handle machine that
perfectly suited the needs of the customers, agricultural businesses working on
small lots. The product was an instant success, and forced Laverda to invest in a
production line and in a metal sheet working department.
The M60, the first self-propelled combine, in 1956 and the M100 AL, the first self-
leveling combine, in 1971 determined the expansion of Laverda into the Italian
market and beyond.

3. The company’s successful evolution, which made it an attractive partner for FIAT
for two decades starting in 1981 and for Argo Tractors, which relaunched the
Laverda brand starting in the year 2000, culminated in the acquisition, in 2011, of
Laverda by one of the largest agricultural equipment manufacturing groups in the
world, US-based AGCO Corporation.
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Laverda’s lean journey started in 2005, with the decision to revolutionize the
production line, moving from batches of 100 combines, all of the same model and
color, to batches of four.
The lean transformation picked up pace after agricultural machine and
equipment manufacturer AGCO acquired Laverda and moved all European
combine manufacturing operations to Breganze, making this plant as its centre
of excellence for this business area in the EMEA markets. The facility faced
increased complexity, which translated into further need for change: production
soon started to switch colors between batches. It even managed to bring the
setup time down to zero.
Marco Mirandola says: “We needed to become more flexible and eliminate
defects and downtime in the face of increased complexity coming from an extra
family of products moving to our plant. Moving to smaller batches and bringing
setup time to zero represented big obstacles, as did kanban cards and other tools
at first.”
AGCO’s contribution to Laverda’s journey also meant that more consistency was
brought to the application of lean. Laverda is a seasonal business, producing in
the first part of the year and selling until August. Production volumes drop
September to December, and that is when the majority of the lean efforts, like
kaizen weeks, took place.
AGCO introduced the APS (AGCO Production System) and established the APS
Office, with two full-time individuals - rigorously coming from within the
business - tasked with implementing continuous improvement year-round.
Mirandola is one of them (he previously worked in production), and there is
somebody like him in every AGCO plant around the world.
BENCHMARKING FACILITIES
Plants are regularly assessed by the Lean Learning Center, which uses a checklist
based on WCM. The score resulting from the assessment allows each facility to
benchmark itself against others within AGCO and understand where in the five
levels of the APS it is.
The Breganze plant aims to move to Level 3 in the next two years, which means
concentrating on lean leadership and lean office activities.

4. Mirandola explains: “It’s important to know where we are to understand where we
are going. All plants are required to reach Level 3 by the end of 2015, and Breganze
is one of the highest scoring ones, despite having started the APS implementation in
2011.”
Moving to Level 3 reflects the move from a mere understanding of processes and
tools to the more cultural aspects of a lean transformation.
LDMS IS THE KEY
To embed lean principles in employees’ DNA, Laverda puts a lot of effort into
capability development.
Learning to dig up the root cause goes through learning how to solve problems,
and that’s what education at Laverda is organized around. The aim of the
company is to fundamentally change the mindset of people, which is too often
focused on the solution, rather than the problem.
Accountability is one of the greatest benefits that Laverda has gained since it
started to use LDMS, but certainly not the only one: the speed at which
information flows across the organization has proved to be one of the most
critical factors supporting the process of transformation. Example.
Mirandola shares another example: “We recently identified the need to encourage
people to wear their safety glasses. One evening last month, the Facility Safety
Manager met with all the team leaders for 10 minutes and emphasized how
important safety glasses are for us. The following morning at 9 o’clock, the
information had already reached everybody on the floor via the team leaders. It’s
incredible how fast information travels.”
But there’s more. LDMS also allows for the gathering of very high-quality and
useful data that will increase the visibility over the state of things in the plant. An
operator will know whether machines are being produced to schedule and to the
right specifications, or whether production targets are being met thanks to visual
boards (one of the fundamental elements of LDMS) that are updated constantly.
There are six pillars on which LDMS is based: Safety, Costs, Deliveries, Quality,
People, and Continuous Improvement. According to Mirandola, the first five
pillars capture the current state of the plant, while the sixth (continuous
improvement) is the one that sets the vision for what the future might look like,
sharing the different ideas for improvement coming from operators.
“The best part of the boards is that print-outs are extremely rare. People hand-
write these sheets and go back to them all the time. They are quite weathered
pieces of paper – you wouldn’t be able to use them in a presentation, but their
value is great,” explains Mirandola.

5. Laverda has decided to establish a rule by which the Coordinator (who is a figure
between the operator and the team leader) changes every week or two, to give as
many people as possible the opportunity to self-develop.
“If you have a KPI you need to comment on in front of your colleagues, you need
to know that KPI inside out,” says Mirandola. “Education at Laverda happens in
the classroom for only an hour; the rest is all at the gemba, to test and improve
the operators’ knowledge of KPIs. If you know them, you can manage them. And
that learning happens by working on paper, reflecting, amending, reflecting
some more, and so on.”
Another way to develop people and increase quality is to invest in skills (there is
only so much that can be automated in the manufacture of combine-harvesters).
Laverda does so by means of the 3x3 system: there must be three operators able
to perform each activity and each operator must know how to perform three
activities.
When asked how LDMS changed his working day, one operator at the Breganze
plant said: “My day has changed radically. Now there is time, every day, for us to
discuss the problems we are going to face and to solve them, whenever possible,
in a standard way. And we talk about safety and potential risks.”
A MODEL TO BEGIN WITH
Material flow is critical for the company, as only 30% of components are
produced internally. In order to improve it (and therefore improve flexibility in
production), Laverda implemented the plan for every part (PFEP) method in a
pilot area, which had all the main characteristics present in the plant.
Once the problems were understood in the pilot area in January last year (half-
empty containers; a lot of materials present by the line; production areas not
optimized; excessive handling in the receiving area; and supermarket layout
unsuitable for picking activities), the project was expanded to two more areas in
the plant.
Following re-layout and rebalancing and the implementation of PFEP, Laverda
will extend the reach of its lean program to the supply chain.
Mirandola says: “We like to call our suppliers ‘partners’. Not only do we visit them,
but we often have them over here. We try to involve them in our activities, from
milk runs to PFEP. They must be aligned if we are to succeed in our undertaking to
become a lean organization.”