The Macon, Ga., Boeing team pursues process optimization for all the best reasons -- improving customer value to enhance a future for the bottom line.
Boeing, Macon, Ga.
At a Glance
- Total square feet: 322,179
- Start-up: 1988
- Achievements: Boeing Macon earned the 1998 Malcolm Baldrige National Quality Award Winner and the 2003 Georgia Oglethorpe Award. The site achieved no lost time accidents from 1992 to 1999, overall factory efficiency increased 54% in the last five years and the cost of rework and repair has improved 89%.
- Benchmarking Contact: Tina Wohlford, 478/784-4063, tina.r.wohlford@Boeing.com
Boeing customers fare better than any car buyer. A case in point: the C-17 Globemaster. The average selling price of that military jet transport has fallen about 40% since the first deliveries in the early 1990s. As a major sub-assembly provider, the Boeing team at Macon has played a big role in building quality while delivering ever-increasing value both to aircraft buyers and the Boeing parent.
Average C-17 cost for the first 40 airplanes (maiden flight: Sept. 15, 1991) was $255 million. The average cost for the next 80 deliveries declined to $198 million. The current cost for the next 60 units is $154 million. (If only automakers could match that percentage drop!)
Meanwhile, at the end of July the Boeing Co. reported that military sales helped the company top estimates for the second quarter of the current fiscal year. Second-quarter net income totaled $607 million, primarily due to higher military sales. Boeing also raised 2005 forecasts for earnings and aircraft deliveries as the industry recovers. Team Macon is a continuing example of how the company is using process efficiencies to strengthen both customer and shareholder value. (The Boeing C-17 assembly site at Long Beach, Calif., won IW's Best Plants Award in 2002.)
The Macon site became part of Boeing in 1997 with the merger of its original parent, McDonnell Douglas. In its first year of post-merger operation, work transfer to the site from other Boeing locations resulted in actual hour savings of 24%. That helped establish the site's reputation as one of the most successful and progressive aerospace sub-assembly providers within the company.
Macon's lean initiatives continue to pay off. Over the past five years overall factory efficiency increased 54% while the cost of rework and repair has dropped 89%.
Site leader Obie Jones is quick to attribute Macon's uniqueness: "It's the people -- all of us!" Normally when that claim is made, the reference is to the people building product on the plant floor. "Here that attribute applies to the entire Boeing population at Macon," he insists.
Empowering employee performance via teams is a long-standing tradition at Macon. "We started the facility from day one [in 1988] with the idea of optimizing the benefits that a team-based environment would give us. Once we hired the first couple of teams, they immediately became part of the hiring process." Jones' position as site leader evolved from being part of the original team sent from the company's Long Beach operations, then part of McDonnell Douglas, to establish the Macon facilities.
In the early days, the hiring group was mainly comprised of people that would become their peers once they came on-board. Today, participants in the hiring process routinely include representatives from human resources, process management and the work team, says Jones. The team hiring philosophy is routinely applied throughout the organization. "Even at the senior manager level, the selection committee includes production associates."
Team building is the basis of process optimization at Macon. "We recognize that the experts are really the people intimately involved with the process. Problems and opportunities can only be handled with their input," adds Jones.
But while team building is key to facilitating process optimization, the greatest benefits are not departmental, Jones insists. He says team building gives Macon its single biggest competitive advantage. "Consider that the workforce here is so efficient that they can take a new package of work from an incumbent site and in the first year beat the actual hours by over 24%." That percentage reduction is an aggregate average across all of the work transfers involving seven components within Boeing.
By labeling team building as Macon's greatest competitive edge, Jones isn't ignoring Macon's automation investments. These include two $7 million integrated panel assembly centers capable of precision drilling and installing more than 20 fasteners per minute.
"But ultimately in terms of differentiators, even with patent protection, there isn't anything in the hardware that we have that is as unique as the 'soft' skills resident in our people. Anybody can buy the equipment," he says.
Other innovative factors contributing to Macon's competitiveness include process-based management (PBM) which uses interaction between the process owner and the process customer to define, manage and improve processes. "As a result we have recorded gains that include having the lowest cost of rework and repair in The Boeing Co. over the past five years," says Jones. He says the total cost of quality, as a percentage of sales, is at an industry low of 0.29%. As a result the 'wrap' rate, the composite of everything that is charged to the customer, is among the lowest at Boeing.
Jones rates Macon's benchmarking process and PBM as among the site's most innovative practices. More than 25 internal benchmarking studies were conducted last year. Access to that data is facilitated by a manufacturing council that links plant sites within Boeing's Integrated Defense System organization.
As a member of the manufacturing council, Jones shares responsibility for the review, development and implementation of common processes, procedures and best practices. "Process action teams help with implementation."
The council's operating responsibility is to assure that enterprise objectives are not jeopardized by departmental process optimization. "My council presence assures, for example, that a Macon process initiative will not sub-optimize a corporate objective being pursued by another part of the company." It's important to recognize that optimizing segments of a process doesn't necessarily optimize the whole, Jones adds.
Macon's growing achievements dramatize how critical team empowerment is to team success. "In fact, our greatest success ever -- measured in terms of cost, quality and delivery improvements -- occurred when we discovered how we were unintentionally limiting the potential of our teams," says Jones. "The discovery happened eight or nine years ago when finance issued a revised budget. This time we didn't stipulate the necessary new performance levels to the team -- we let them tell us what they could do and they came back to us offering performance improvements far in excess of what we might have proposed. In addition, they said the enhanced performance had always been possible, but this was the first time they were empowered to demonstrate it."
Jones still remembers how a team member's response: "You always told us what number we had to reach. Now we're delivering what we're capable of doing." Jones says the incident put the wisdom of management into new perspective. "It's difficult to surpass the collective wisdom of a team working together."
That incident reinforces the Macon philosophy on leadership. It's employee involvement where everybody exercises responsibility, accountability and authority down to the lowest level, says Jim Brennan, director of operations. "Once we identify the strategy, it is the team's decision on how to get there." An annual employee survey is now used to help management identify, facilitate and broaden opportunities for employee empowerment.
The team strategy also empowers management. As site leader (a title roughly equivalent to plant manager), Jones says his time is spent setting direction and marketing the site. By direction setting, Jones is referring to establishing (and coordinating) best practices to maximize corporate objectives. Spreading knowledge about the customer is also a priority. He routinely schedules customer strategy sessions with Macon team members. "Ultimately the mission is to empower teams to optimize what is in our customer's best interest."