IW Best Plants Profile - 2000

On Target Defense contractor keeps customers in sights. By David Drickhamer Alenia Marconi Systems Operations Division Broad Oak, Portsmouth, England At a glance

  • Productivity, annual value-added per employee, up 34% over last five years.
  • Rework down from 14% in 1996-97 to less than 1% today.
  • Work-in-process inventory down 30% over the last four years.
When Steve Pook talks about the microelectronics operations at Alenia Marconi Systems Broad Oak in Portsmouth, England, his face lights up and his eyes take on an intense gleam. Here white-garbed technicians attach components, ranging from 0.25 mm to 1 mm in size, to thin-film substrates using epoxy adhesives and solder technology. When the components have been affixed to the thin-film circuit, they are connected by fine gold wire 0.017 mm in diameter, or one-third the diameter of a human hair. Pook, production engineering manager, is energized by the process expertise exhibited here, skills and techniques that result in a defect rate of 0-30 ppm. A stone's throw away in the Radar Hall, Geoff Holden, business manager, Radar, playfully refers to the microelectronic components as "bags of dust." In this airy, well-lit production area cross-trained workers assemble and test large, complex systems. Before him stretches a partially assembled radar array, which when complete will consist of 40 modules sandwiched together into a structure 40 ft wide and 40 ft high. Holding this diverse product mix together is an organizational structure that focuses everyone on the needs of customers. Broad Oak is the primary manufacturing unit of the Operations Division of Alenia Marconi Systems (AMS), which is a 50-50 joint venture of Finmeccanica SpA in Italy and BAE Systems PLC (formerly British Aerospace) in England. Across the site 950 people design, manufacture, and test radar, missile systems, simulation equipment, and civil-air-traffic management systems. The operation generates annual revenues of £120 million (US$179 million), and has a two-year order backlog. A customer support unit, accounting for 40% of revenues, services a range of legacy products, some as old as 30 years. Strictly speaking, Broad Oak's immediate customers are all internal to AMS and the ultimate customers are few, each representing a considerable amount of revenue. Consequently, employees work very closely with their internal customers who interact directly with end customers. The organization supports four main product groups, plus the customer support operation. Within each unit, all shop-floor and support people are located together. Each unit has people dedicated to production control, production engineering, and quality. These in turn are supported by a central group that includes personnel, finance, shipping, site services, and test systems. "As far as we're concerned, everyone is here to support the shop floor," says Frank Howe, operations director. The leaders of the business units are customer account managers, charged with making sure their customers' requirements can be met. Customer contact is maintained through frequent on-site meetings, sophisticated satisfaction surveys, and multidisciplinary integrated project teams. In addition, each of 20 integrated product teams has a designated customer contact person, and a fair number have members of the design team and customer all working together. It hasn't always been this way. With the rapid downturn in defense markets following perestroika and the dismantling of the Soviet Union, Broad Oak faced the very real threat of closure in the early 1990s. But based on customer spending projections -- the defense moratorium couldn't last forever -- company managers foresaw a pickup in business by the middle of the decade. The challenge was to survive until then. To retain and enhance core capabilities the company successfully entered several high-volume, high-technology markets. After investing in some automated circuit-board insertion, assembly, and soldering lines, and a standalone PC-based planning system, the company began assembling motion detectors, car alarms, satellite television receivers, videophones, and flight entertainment systems. With the assistance of outside consultants and customers, but mostly through in-house engineering expertise, the plant was able to cut production costs rapidly by simplifying processes, implementing continuous-flow techniques, and adding strict process control. "We learned balanced manufacturing techniques, process control, and inventory management, allowing us to drive down waste, rework, and scrap levels," notes Howe. "It forced us to focus on productivity." When the company sold the commercial venture several years later to refocus on core defense customers, sales had jumped from around US$1.48 million per year to about US$34 million. Throughout this period the commercial and defense operations were kept separate, each with its own dedicated manufacturing space and information systems. After selling the commercial business, plant personnel worked hard to improve data integrity and get the business systems on the defense side under control. After they had established a base, they were able to apply much of the expertise they had developed to serve commercial customers, including high-volume manufacturing techniques, more effective training procedures, and supplier development methods. But it wasn't enough. Although the plant was delivering on schedule it still had many unhappy customers. "The reason was we didn't understand their requirements at all," Howe recalls. "It wasn't just about delivering hardware. They wanted responsiveness. They wanted bids to be turned around. We set up a very effective customer interface that we've built on ever since." Telling this story, plant managers emphasize that all of this -- the transition to the commercial business and back to defense, the restructuring that focused everyone on the needs of particular customers -- would have been impossible without the flexibility and eager cooperation of the workforce. This was fostered in part by an ongoing investment in training, including an on-site National Vocational Qualification program. Those who successfully complete this training receive nationally recognized NVQ skill certification. The commitment was reinforced by a change in corporate management and a new vision that emphasized people and customers, not just a single-minded focus on sales and profits. The corporate managing director at the time was willing to invest in the work environment even if it wouldn't generate an immediate business payback. In addition to technology investments the company made significant expenditures to refurbish the Radar Hall and build a new restaurant and training and career-development center. "The factory has changed quite dramatically. It's really lovely in there. Ten years ago we were left behind," notes Maree Gibbons, who works in the Radar Production Engineering Dept. Gibbons also is the senior representative of the Manufacturing Science and Finance union. "People here are very friendly and very helpful. If you have a problem with your work, there's always someone to go to." This spirit of cooperation was tested when the new epoxy-resin floor was being poured in the radar area-about half of the manufacturing space. Everyone was crammed together in the remaining space, Howe recalls. "They were dealing with conditions that were awful. But all the way through they continued to perform."
Web Exclusive Best Practices
Alenia Marconi Systems, manufacturer of radar systems, missiles, defense equipment. By
David Drickhamer Benchmarking Contact: Fred Attwood, Business Improvement Manager, [email protected], +44 (0) 23 92 226533 Training The Broad Oak facility has been an accredited "Investor in People" since 1997. The formal standard provides a national framework in the UK for improving business performance and competitiveness by setting and communicating business objectives and developing people to meet those objectives. The goal is to match what people can do and are motivated to do with what the organization needs them to do. The Investors in People Standard is based on four key principles:
  • Commitment--Commitment to invest in people to achieve business goals.
  • Planning--Planning how skills, individuals and teams are to be developed to achieve these goals.
  • Action--Taking action to develop and use necessary skills in a well-defined and continuing program directly tied to business objectives.
  • Evaluating--Evaluating outcomes of training and development for individuals' progress toward goals, the value achieved, and future needs.
These four key principles are broken down into 12 indicators, against which organizations wishing to be recognized as an Investor in People are assessed. Employee Charter The company's Employee Charter formally communicates what the company and employees can expect from each other:
What our People can expect of Alenia Marconi Systems
  • To be led and managed professionally and competently.
  • To be treated equitably and with respect, courtesy, and consideration.
  • To be provided with open channels of communication, listened to, and informed.
  • To be motivated and challenged to contribute to the best of your individual capability.
  • To be set stretching, yet achievable objectives and be regularly appraised of your performance.
  • To be recognized and rewarded on the basis of your skill, performance, and contribution.
  • To be given opportunities to develop to your full potential.
  • To be provided with the tools and training to do your current job efficiently and effectively.
  • To have a safe and pleasant working environment.
What Alenia Marconi Systems Expects of Our People
  • To take personal responsibility for your work, performance, and career.
  • To strive to continuously increase your level of performance.
  • To be flexible and adaptable, understanding who your customers are and always being responsive to their needs.
  • To be innovative, continuously seeking new and better ways of doing things.
  • To seek and to grasp opportunities to achieve and develop.
  • To work well with others, within and beyond your existing team.
  • To take responsibility for continually learning and re-learning so that skills are up-to-date.
  • To take pride in the company and be committed to its aims.
Customer Satisfaction Because Broad Oak has relatively few customers, internal and external, the plant had to adopt a customer satisfaction survey that wouldn't be statistically skewed by a single response. Developed in partnership with two customers, the methodology uses criteria from the National Defence Industry Council service-level agreement guidelines. The survey allows all customers to rate the various aspects of Broad Oak's products and services according to their priorities, and then rate their satisfaction against them. Top-level assessment criteria include management, delivery, technical performance, quality, cost, and communication. The form that summarizes customer feedback is linked to a requirement for comment and action development. In this way customer feedback directly stimulates improvement. Performance Reviews All employees have annual performance development reviews. The review process involves tracking past performance against objectives, identifying areas of potential improvement, setting new goals, and outlining training requirements. All manufacturing managers, as part of their personal objectives for the year, must establish three benchmark visits with best-in-class companies outside of the defense industry. Certified Training Every operator undergoes periodic competency assessments. Every job has skill-level requirements that have been clearly identified by production engineering. This allows managers to ensure that appropriate staff is assigned to each project. Currently 82% of the workforce is certified for self-inspection. These operators carry out self audits of their work area, checking relevant process control monitors. They are responsible for their own SPC charts within their area of activity. Not surprisingly, after Broad Oak introduced the certified training program, in-process defects dropped dramatically. Work Environment The company's investment in a new restaurant and training facility is a clear signal to employees, customers, and the local community of its long-term commitment. The multi-level dining facility features stylish furnishings and dramatic lighting -- investments that many firms reserve for their executive offices and boardrooms -- creating a much more relaxing and comfortable atmosphere than the traditional company cafeteria. Every Friday there are butcher and grocer stalls where people can buy fresh produce during lunch. The staff shop sells greeting cards, gifts, company merchandise, and snacks, and also offers dry cleaning, shoe repair, and film processing."
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