IW Best Plants Profile - 2000

Unstoppable Improvement Empowered employees make major differences. By John S. McClenahen Compaq's Americas' Software Manufacturing & Distribution, Nashua, N.H. At a glance

  • 99.5% on-time shipment rate.
  • 99.99% absolute inventory accuracy rate.
  • Less than 1% attrition rate.
  • 95% of production workers participate in natural, self-directed work teams.
  • Machine uptime 99.87%.
From the Everett Turnpike, a left onto Route 101 and a quick right turn at the McDonald's lead you to the Nashua facility of Americas' Software Manufacturing & Distribution, a component of Compaq Computer Corp. Aside from the U.S., New Hampshire, and Compaq flags flying out front, there's little to distinguish the facility from the rest of the look-alike industrial park. Inside the 182,000-sq-ft facility, however, the story is dramatically different. Two groups are at work there, complementing each other in a partnership that often blurs traditional functional lines. Americas' Software Manufacturing (ASM), managed by director Robert DiGregorio, focuses on software manufacturing, distribution, and support, while Software Publishing Services (SPS)/Software Acquisition Services concentrates on marketing, research, and sales. It's a place where, in DiGregorio's proud words, an "unstoppable" workforce of 350 full-time people and, on average, 75 just-in-time manufacturing part-timers is in action 24 hours a day Monday through Friday, 12 hours on Saturday, and as needed on Sunday. The empowered workforce, with 95% of the production workers and 78% of all employees participating in natural work teams, supports 1,710 products in North America, Latin America, and along the Pacific Rim. In 1999, among other activities, they produced nearly 2.3 million computer software kits with a 99.8% first-pass yield. At the ISO 9002- and ISO 14001-certified facility, Compaq-style "black belts," who stress soft skills as well as statistical analysis, and FastJIT teams, which solve a problem in a day or two and then disband, work to improve already enviable performance and to achieve production breakthroughs. Last year, through 124 continuous-improvement events, teams cut $2 million in labor, material, and other costs-nearly doubling the $1.03 million in cost savings they engineered in 1998. Typifying the experience, motivation, and passion of the workforce is manufacturing associate Gaynelle Huckaby, who vows in very certain terms that only software that's up to quality specs will ever leave components manufacturing. The facility's remarkable crew also includes security officer Everett Lemoine, whose warm welcome at this time of year takes the frosty chill out of the New Hampshire morning for employees and visitors alike. Compaq classifies the facility as a service operation. But in reality it is one of those cutting-edge operations that are continuously redefining 21st-century manufacturing. The Nashua facility produces software, prints labels and instruction booklets, assembles software kits, and packages them. It assists in new-product introductions, delivers software and licenses online, provides pre- and post-sale technical support, and maintains a worldwide electronic library. Compaq accounts for about half of the ASM's business. The other half comes from 35 outside companies that contract part of their production and distribution through SPS to ASM. The customer roster includes Allaire, Inprise (Borland), Mapics, Remedy, and Rockwell Software International. Things were quite different 10 years ago. Then, when ASM was still part of Digital Equipment Corp., order-to-shipment time was as long as two weeks; shipment on date promised was 94%; inventory turns were 4.9; and quality as measured by defects per million (DPM) was 10,100. Today shipment for off-the-shelf items is same day and next day for built-to-order; shipment on the customer's requested date is 99.5%; inventory turns are 16; and DPM a very low 460. ASM is excelling, in part, because it is a flat organization, with only two layers between the plant floor and management. It is excelling because its employees are knowledgeable, with an average of 54 hours of training annually. And it is excelling because employees are loyal, with a less-than-1% attrition rate. But the facility faces a huge management challenge. It must delight -- and that is the word managers use often -- a wide range of customers with a variety of products every day. In 1999, for example, ASM shipped more than a half million orders, compared with 292,000 in 1995, and the software publishing services business is growing at a 35% annual rate. Helping to pull things together for ASM is something it dubs "managing for results" (MFR), an approach that's a philosophy, a methodology, and an operating network. "At its core, the program clearly articulates to employees the impact that their individual activities and performance have on overall operating results while providing them the tools, information, and opportunity to make the changes required to achieve and maintain benchmarked best-in-class performance," explains DiGregorio. MFR emphasizes cooperation, not competition, among employees. It encourages employees to confront problems directly -- to go face-to-face with others throughout the plant to bring about change -- and not to paper management with complaints. For management MFR means putting employee creativity before capital. A basic operating tenet of MFR 2000, ASM's latest iteration of the process, is that employees have the ability to provide simple, low-cost solutions to problems. Bosses don't boss the MFR process. Managers aren't bosses at all, but mentors and coaches, stresses DiGregorio. What's more, such terms as pass and fail don't apply. MFR focuses instead on asking and answering three key questions: "Where do we want to be?" "Where are we now?" "Are we getting there?" If an atmosphere of trust and ownership is created, "people will rise to the occasion," emphasizes Chip Girouard, ASM's quality manager. Adds Larry Walsh, manager of fulfillment operations, "It's easy to underestimate how much people can do." The results, put in practice and documented on information boards around the nonunion Nashua facility, are there for everyone to see. For example, one black-belt-guided project streamlined, simplified, and standardized the order-change process. On-time shipment to customers rose 2.5 percentage points and labor costs were reduced by $108,000. Another black-belt activity revamped a label production process; cycle time was sliced 94% and labor and material costs were cut by $200,000. And two cost subteams evaluating freight carrier costs, business practices, and billing cut $495,200 in costs in 1999. "We choose to leverage the excellence we have achieved. We show through plantwide meetings what customers are counting on-and that we will survive only if we are the best, the cheapest, and, in each case, are continually increasing our contribution to the business," relates Pete Kinney, vice president of Compaq's World-Wide Software Manufacturing & Distribution Div. Each employee at ASM is encouraged to find ways to work smarter, not harder -- with an eye not on one number but on results that make a difference in the total facility's performance. "Because of the system, we're almost always ahead of the curve," Kinney observes.
Web Exclusive Best Practices
Compaq's America's Software Manufacturing & Distribution, maker of computer software kits. By
John S. McClenahen Benchmarking contact: Deb Corbiel, plant administration support. [email protected], 603/884-3324 Managing for Results Managing for Results (MFR) 2000, the latest iteration of Americas' Software Manufacturing's team-based, action-oriented performance-management program, seeks to align strategy, goals, and structure with continuous-improvement and problem-solving activities. MFR 2000 starts and ends with customers, whether they are other Compaq Computer Corp. units, or customers outside Compaq. MFR assumes that everyone's work can be seen as a process and that every process can be defined, measured, and continuously improved. Critical to the success of the program are the respect accorded to employees for their knowledge and creativity and the power given to teams to analyze problems, set stretch goals, make decisions, implement changes, and measure results. QFlex The operating objective of this human-resources-management program is to have the right people in the right place at the right time all of the time. Call it "just-in-time" staffing. Key to the program's success is a contingent of flexible and trained part-time workers, now numbering about 187 but likely to be expanded to about 225 by year-end. For ASM, QFlex provides a reliable, highly adaptable, and cost-efficient means of meeting ever-changing and demanding customer requirements. The workers -- some of whom are full-time firefighters, teachers, and college students -- gain industry experience and training while earning competitive pay. ASM University In the simplest terms, ASM University is an employee-development program. In grander terms, it's a tool for the creation and management of knowledge capital within the organization. Learning modules are aligned with both current and future business needs. Courses are offered at four different levels (baseline, advanced, expert, and mastery) and include such titles as Basic Math Skills, FastJIT/Kaizen Blitz, Change Management, and Manufacturing Planning & Control. At ASM, courses are developed and delivered using internal resources whenever possible and practical. ASM maintains an "e-Zone," a research and study space where PCs are available on a first-come, first-served basis. Demand-Driven Execution The people of ASM visualize the organization as a continuous flow of work toward its customers. Cross-trained employees tend to describe themselves more in terms of what they're doing than in terms of a rigidly defined function. They focus on time: faster response times for customers; time as the best measure of day-to-day performance; and on cutting time to cut waste. ASM aims to be a queueless organization. Root-Cause Analysis Problem analysis and resolution focuses on root causes, not symptoms in the MFR program. What's more, employees directly confront problems and don't defer action. People meet face-to-face across the organization to come up with the solutions they need to solve problems. You don't hear people at ASM saying, "That's not my problem." Goal Setting ASM sets simple, easy-to-understand, overarching goals. Currently there are four: to have delighted customers, to have a highly skilled and motivated workforce, to maximize shareholder returns, and to have best-in-class operations.
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