Shared values yield results

In the mid-1990s, Scania began adopting a completely new approach to truck and bus production. Among the positive results are healthier employees, better productivity and vehicles with fewer faults.

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Scania in Zwolle Photo: Scania

Zwolle, the Netherlands: Group leader Ronnie Koster (fourth from left) emphasises the importance of listening to his team. He heads a 15-person team responsible for custom-painting trucks.

Ta-daa! The curtain rises, the music thunders, and a new Scania model is launched. When the smoke clears, automotive journalists, haulage company owners, drivers and dealers walk around to take in all that is represented by the gleaming new vehicle: the latest in technology, design, comfort and safety as well as reduced engine emissions and improved operating economy.

The spotlight is on the vehicle itself, but equal attention could be devoted to the way it was assembled. This is because a revolution has taken place at Scania’s production units over the past 15 years.

In the late 1980s, Scania and other Swedish manufacturers were having major problems recruiting people to work in their factories. At Scania’s chassis workshop in Södertälje, short-term absenteeism was 25 percent. One of every four workshop employees was away from work. Two of every three production workers quit within 12 months, and employee turnover each year was between 60 and 80 percent.

Dedicated employees

To solve this huge problem, various experiments were undertaken. Some vehicle manufacturers introduced “team assembly” operations. The idea was to make employees more dedicated to their jobs and willing to stay by giving them a broader range of tasks. But neither productivity nor quality improved − quite the contrary. No one was made happier by having to insert more bolts than before. Production managers also ran campaigns. They launched quality campaigns, and when this became too expensive, they launched cost campaigns. It was campaign-based leadership without a long-term perspective. And the problems persisted.

In the early 1990s, when Scania had exhausted traditional production and management methods, it sent a team to the Toyota car company in Japan to study what was behind that company’s high productivity and quality.

Scania engineers returned with important new knowledge that they had not been able to glean from the literature on Japanese car production methods. As it turned out, the success of the Japanese was primarily a matter of management and people rather than industrial robots. Toyota’s leadership system was based on a few clear basic values shared by all employees. The company also worked with a set of principles that the employees knew and understood. 

Creating shared values

“The key to success lies in creating shared values and a common direction that management must ensure are understood, accepted and followed by everyone,” says Per Hallberg, Head of Production and Procurement at Scania.

Scania thus began working in Södertälje to create what was missing from its production units: shared values accepted by everyone.

To explain these values, Hallberg shows a page with a drawing of a house. Its foundation, floor, walls and roof are filled with key phrases. Today this Scania House and its contents are very familiar to the company’s 10,000 production employees and their managers. They are on display virtually everywhere that production is under way – as well as in Scania’s more elegant venues.

Focus on the customers

Inside one of the foundation stones on which the Scania House rests are the words Respect for the individual. Two others are labelled Customer first and Elimination of waste.

Customer first means customers are always the focus of Scania’s work and decision making. Respect for the individual means that employees feel respected by their managers and fellow employees and can exert an influence. Everyone has a chance to undergo professional development based on his or her individual talents. “Elimination of waste” means that Scania improves its competitiveness by getting rid of waste in the form of over-production, waiting time and unnecessary work operations.

Elimination of waste means that everyone must aim at phasing out activities that add no customer value,” Hallberg says. “For example, a great deal of effort at many workplaces and businesses goes towards internal matters that don’t benefit customers at all.”

“We love deviations”

One of the key principles is Standardised working method. Following a standard means that it is easy to discover quickly if there is any deviation. Thus Scania has coined the internal slogan “We love deviations.” Employees are encouraged to tell about problems that occur, so they can be corrected quickly and are not repeated. “Thank you for telling us when something goes wrong,” managers tell production employees. “That way we can do something about the problem.”

The difference between management that penalises people when things go wrong and management that encourages employees to clarify problems is like night and day.

Visitors are often surprised at how clearly and openly deviations are highlighted at Scania production units. Large displays and small bulletin boards spell out clearly what has failed to meet agreed production standards, something that especially amazes visitors from the United States. Across the Atlantic, factories usually do the opposite, only highlighting what works.

“All employees are encouraged to participate in the improvement task,” Hallberg says. “Engineers and experts mustn’t have a monopoly on improvement measures. The role of managers is to encourage employees to make sug­gestions. It is a source of strength that everyone can shine by making suggestions for improvements, which used to be a management privilege.”

Scania’s production

  • Scania products are sold in some 100 countries. Production takes place at the company’s own plants in Sweden, the Netherlands, France, Brazil, Argentina, Poland and Russia.
  • During 2007, Scania built a record 78,300 vehicles (67,000 the year before). By late 2009, the company will be able to produce 100,000 vehicles per year.
  • In all, Scania has about 35,000 employees, including 11,800 production employees.
  • Outstanding fuel economy – V8-engines are always working well within their enormous capability, ensuring the best fuel economy even in hilly terrains.