IW Best Plants Profile - 2000

Opening The Door To Success Access-control-equipment manufacturer emphasizes employee involvement and supplier relationships. By Tom Mudd PAC International Ltd., Stockport, England At a glance

  • 92% improvement in first-pass yield over last five years for major component.
  • 95.7% of purchased materials no longer requiring incoming inspection.
  • 90.6% reduction in manufacturing cycle time in last five years.
  • 80% reduction in leadtime in last five years.
  • Certified UK Investor in People since 1994.
One of the chief skills workers at PAC International Ltd. need to master these days is creativity in parking. Outside the company's facilities in the Manchester suburb of Stockport on a given day there are two free parking spaces, both of them for visitors. PAC's employees have to fend for themselves, which often means parking anywhere there is room for another car. That's one of the problems you run into when you grow as fast as PAC has. Ten years ago, the then-struggling manufacturer took a 25-year lease on a 20,000-sq-ft building in an industrial park, but the place is now just too small for what has become a booming business. "Inevitably, we'll have to move," says PAC's managing director, Michael Price, who explains that the company's latest short-term solution to the space crunch is to move its training department to other offices nearby. Acquired by Blick PLC Group in 1996, PAC manufactures electronic access-control systems for the global market. The company rebounded from a 1992 downturn in business by undertaking a complete review of its operations, reducing leadtime and time to market, adopting cellular manufacturing techniques, and creating a small-business feel with the use of factories within a factory, says Price. The company's operations manager, John Hood, says he discovered that PAC had a "friendly, family atmosphere" when he signed on earlier this year, a sentiment that's repeated during conversations with people from all over the organization. "We've gotten to the stage where we feel there's a PAC culture," agrees Price, who explains that people who don't buy into that culture are "sort of naturally repelled." But those who stay tend to stay a long time. Over half the staff has been at PAC for over five years, says company Chairperson Vanda Murray. Currently, the manufacturing staff consists of six empowered teams, each of which has a maintenance person and a materials person. The former takes care of preventive maintenance, while the latter ensures that supplies are ordered when necessary by use of a "faxban" system. Using that system, the materials leader on each team makes a daily visual check of supplies that are stored in bins within the team work area. If there are empty slots, a fax is sent to the supplier, who will replenish that particular item by the following morning. For most of the manufacturing process the teams are creating generic product. Only during the final, preshipment stage is the equipment customized. There is so much attention to detail during the customization, in fact, that the instruction sheets printed in customer languages include two in English-one for the domestic market and another for the U.S., which accounts for 25% of the company's sales. "We realize that there's a difference between the two," chuckles Hood. The process of changing PAC from its pre-1992 approach, says Murray, started with the organizing of teams made up of people with open minds who would be most amenable to change. "We wanted to make early wins so that we could get buy-in from the rest of the people," she explains. "That's important, because it starts to spread." That's still the approach used when change is required. By now, though, PAC's managers have refined it enough to know that success in its own right is sometimes not enough for people. Now, when the company makes a breakthrough, PAC throws a party. Over time, say PAC managers, an attitude of goodwill and cooperation has developed. They say they have worked hard to foster an atmosphere of respect from the top down. The result, they say, is a culture in which there is little finger-pointing. One of the company's near-term goals is, obviously, to increase sales and profits, continuing with the improvement since 1992. In that year, recalls Murray, PAC was at the break-even point with US$4.44 million in sales. Sales are now around $17.74 million per year, and profits have soared. A challenge the company will have to face is maintaining that small-organization feel even as PAC continues to grow. But Price believes the use of small teams will allow a certain level of collegiality to remain even if the number of people working there does increase dramatically to keep up with demand. A more immediate challenge, though, is supplies. Because the company uses microchips in its access cards and controllers, it finds itself forced to compete with far larger consumers of chips, especially in recent months when demand for chips has outstripped supply across the globe. Says Murray, "We've been calling in some favors recently." True enough, says Alan Dandy, PAC's materials manager, but the company's ability to get enough chips also has to do with how it gets along with the people who make them. PAC, he says, "has a very close relationship with our suppliers. The core suppliers have been with PAC for many years." Moreover, the company has been working hard to increase its partnership with suppliers, and even invites them to the annual company picnic. Suppliers get to feel like part of the team, says Dandy. "There is an enthusiasm within the business when people work together," he explains. "That's bottom to top, top to bottom, crossways, every way. We treat each other with respect." Dandy, like just about everyone else at the company, gushes about the atmosphere within PAC. "If you could actually bottle the enthusiasm," he says, "you could make a fortune." Such an atmosphere is particularly striking to people who have arrived at PAC after an experience at a more pressure-laden company, as Dandy did. A pressure-cooker atmosphere isn't conducive to continuous improvement, say PAC executives. Instead, the company aims to "make it OK for people to take decisions," says Murray. Although manufacturing is PAC's core competency, the company offers training to its end users and has a 24-hour support staff on-site to deal with any problems that may arise. Sales are handled by distributors, some of which come from within the Blick Group. New products also are developed in-house. The product-development team has been a part of the improvement of PAC over the last five years, cutting in half the development time of the EasyKey Manager, one of PAC's staple products. "We're all the time reviewing what we do," explains Murray, "and how we do it."
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PAC International Ltd., maker of electronic access controls. By
Tom Mudd Benchmarking contact: Margaret Kelsall, [email protected], +44 161 406 3404. Benchmarking Field Trips PAC sends employees from all levels on benchmarking tours to plants in other manufacturing sectors. Communication All production workers get twice-yearly assessments in which they meet with managers to discuss how far they've come and where they'd like to go. That sort of communication, says Michael Price, is an essential factor in the company's continued improvement, but also it helps to maintain the small-business feel so often mentioned by PAC employees. "We always try to match our business needs to people's objectives and their career needs," he explains. Recognition And Rewards To nurture a collegial atmosphere all employees are encouraged to submit commendations of their peers and even their bosses. Based on those commendations one person per month receives a gift certificate or other reward. The equal-opportunity approach to rewards also applies to PAC's profit-sharing plan, under which 5% of company profits are distributed to employees, with all workers getting an identical slice. Training Cross-training is emphasized, with all employees able to see which competencies they have mastered by taking a quick peek at the skills matrix that is posted within each team's working area. At this stage 70% of workers are competent in multiple skills, but that number is rising. That training includes the use of automatic testing equipment, which is employed to assess the functionality of a percentage of the products, important to a company that offers a lifetime warranty on its finished goods. Additionally, each new employee receives an in-depth introduction to every facet of the operation. Supplier Relations Despite heavy competition for parts from the booming mobile telephone industry, PAC has been able to maintain the flow of the microchips that are at the heart of the company's key cards and access controllers. Despite being a small company, PAC has formally certified 90% of its key suppliers, reduced leadtime on key materials by 25%, and reduced the number of suppliers from 90 three years ago to 57 today. Supplier loyalty is developed by the inclusion of key suppliers in annual activities. Continuous Improvement PAC instituted a total quality management program in 1992 and has been intent on not letting the program stagnate. To keep the continuous-improvement culture thriving, the company refreshes its cross-functional quality improvement team.
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