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BKV’s Purchasing organization was weak and all technical and commercial negotiations were conducted by Engineering. Engineering and R&D management believed the new supplier needed to be within 50 kilometers of BKV. Manufacturing team insisted on following current documented ISO 9000 protocols. Technical documentation of the impacted products was limited and inaccurate and much of the necessary information resided in a single key person employed by the sole-source supplier; hence, other companies affected by the plant closure were bidding competitively for this key resource for their affected product lines.
Culture change was warranted immediately. Established that new supplier could be located anywhere in the world, as long as they met both short- and long-term criteria. Collaborated with Purchasing to develop new methodology to identify, prescreen, and qualify new suppliers with criteria not found in existing BKV ISO 9000 protocols in order to shorten lead-time for startup of new supply chain. Identified method by which short-term needs could be addressed by a new business venture that included the key resource person as a principal. Established strategy to qualify long-term suppliers that met new product development, technology, and commercial capability criteria.
Successfully trained Purchasing to handle all commercial negotiations. Within three months, Engineering and R&D managers were “coaxed” to resign their positions. For the short-term solution, the newly created company (with key resource as a principal) was located in same city as BKV’s facility. Company was formed and various commercial agreements were negotiated and completed within six months.
Identified and qualified two new long-term suppliers, one in the former East Germany and another near the Hungarian border. These two suppliers met new temporary criteria of operational excellence, product leadership, and customer intimacy, in addition to newly established commercial requirements. Suppliers demonstrated capability to provide replacement product via first article samples within eight months that worked the first time, which also met all commercial requirements (including significant cost reductions, while maintaining quality performance), eliminating need for a sole-source supplier going forward. Corporate culture continues to evolve and at least 200 jobs were saved.
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Project manager for high-visibility, $10 million project for a new process (next-generation equipment) resigned immediately after the beginning of the new year. There was no successor within the project team, and equipment validation and testing for acceptance at CKD was scheduled to begin immediately in Japan. Arriving in Japan in early January, discovered that equipment validation and testing was at least three months behind schedule. Late delivery of this new process threatened both the planned capacity required for the balance of the year and the planned cost reductions (and margins) in fourth quarter.
Project did not have a contingency plan for late delivery of equipment and there was inadequate time scheduled for training of three shifts of personnel. Several critical process improvements on this high-speed equipment did not scale up from the Engineering prototype bench. The contract left huge gaps in protocol for equipment acceptance at the U.S. factory site, due to U.S. Engineering responsibility for certain process improvements that did not work on this new equipment.
Initiated contingency plans to train all three shifts of hourly personnel in Japan, concurrent with the equipment validation and testing. Arranged for other R&D personnel to visit Japan during the critical acceptance phase; accepted many recommendations from the supplier in Japan despite objections from U.S. Process Engineering group. While equipment acceptance in Japan was minimized to a six-week delay, U.S. factory acceptance was initiated on time; however, personally refused to accept the equipment since test results were not acceptable to turn over the equipment to ultimate customer, the manufacturing plant. Requested that factory acceptance test be completed with the desired (not contractual) results required. Successfully ran acceptance test the following day (this time with Japanese high-level contract manager onsite) with new test criteria.
All personnel were trained concurrent with equipment validation testing in Japan during four-month period. With assistance of U.S. R&D personnel and recommendations from Japanese supplier, realized most of the anticipated process improvements, the remaining major change was subsequently completed successfully in the U.S. with U.S. contract designers.
All production, quality, and unit cost requirements were met in the fourth quarter as originally planned, effectively overcoming the six-month potential shortfall. It also highlighted the need to keep the end user (in this case, the U.S. factory) requirements in mind in order to properly execute a technology transfer in a timely manner.
As project manager onsite for high-visibility, $15 million production equipment project for a new product and process technology, part of the technology transfer included new safety protocols for using this complex equipment. Among other performance criteria required for factory acceptance, this was a critical aspect (in fact, a “showstopper”) that was essential to the success of the technology transfer. While manufacturing had a strong safety program in place, especially with explosive chemicals, no experience whatsoever existed on the highly toxic gases or the type of safety monitoring and handling required for this new product.
All three shifts received safety training, which included use of SCUBA-type gear, special gas-handling protocols, and highly sensitive gas monitoring in the PPB range. Rehearsed disaster scenarios wherein at least one of five personnel operating the equipment was incapacitated by toxic gas during a leaking gas cylinder change, which would require immediate gas-handling and evacuation techniques. All team members were assigned specific responsibilities, but each was cross-trained in all procedures in the event any of them became incapacitated. A special safety drill was scheduled and completed with full observation by the local fire department (who by state law was required to know location, type, and quantity of all hazardous materials), which was also videotaped and monitored by other plant safety personnel for subsequent critique and followup.
Training was well received by workforce, particularly in its thoroughness, attention to detail, and cross-training of all team members. Safety rehearsals served to reinforce the need for speed, attention to detail, and evacuation protocols should anyone be incapacitated. Local fire department was delighted to participate and expressed confidence in the team’s ability to respond to any inadvertent emergency.
$15 million project (completed on time and within budget) generated $40 million new product sales revenue in its third year of operation.
A new strategic product introduction was not going well, as evidenced by missing production targets, rising quality returns, and increasingly hostile management behavior. Asked to do a brief (one day) assessment (while on another project assignment onsite) and offer suggestions on how to address the issues.
After conversing with product and process engineers, discovered that different (and contradictory) answers were provided to the same questions, suggesting that this product launch was initiated prematurely without appropriate product and process development. Much of this was due to immense pressure from corporate management (especially Marketing and Engineering) to support key strategic objectives with this new product launch within a very narrow timeframe.
After providing project assessment, was unexpectedly assigned full responsibility for this very high-visibility project within 24 hours by corporate management team. Within one week, shut down all production for six weeks, while providing a recovery plan that would meet current annual objectives, with corporate management support.
During the six-week period, consolidated all Engineering activities to one shift, providing much-needed product and process development time, while addressing root causes of technical issues. Trained all personnel from all three shifts, concurrently on one shift, on consistent problem-solving and troubleshooting skills development. Restarted production on one shift until each shift could demonstrate independent operations. Time-phased production so new product became available quickly at a higher output level, without any quality complaints or defects in the field. Before year end, met or exceeded all new product launch objectives, including production volume, product quality, and product cost.
Company had been single-sourcing a key component for more than 25 years from a large global Japanese supplier, without which the business would not survive. Supplier had taken advantage of the situation for the previous ten years, forcing through a series of price hikes that threatened to make company non-competitive. Competition was beginning to use the high replacement cost of this key component to influence sales.
As this Japanese supplier was the world technology leader in manufacturing this key component, they had no motivation to consider requirements seriously, and also felt that no one else could challenge their cost and quality position for this key component due to significant barriers to entry.
Took on project leadership when the team quietly engaged in a long-term project with primary objective of developing and qualifying an alternate supply source for this key component that would meet or exceed quality and cost requirements and not remain hostage to current single source supplier. Developed long-term relationship with another large global Japanese supplier with the capability to provide commercial components, but not the industrial components required. Furthermore, this new supplier had a specific interest in changing their culture to compete against other formidable global companies. Collaborated with new supplier to adopt a key principle of Quality Function Deployment (QFD) wherein the supplier’s R&D Manager spent many months onsite in the U.S. company learning the key quality and cost requirements.
Both companies learned much more about the technology behind this key component, enhancing not only technical knowledge but also how to improve products for superior performance under harsh industrial environments. Concurrently, negotiated all critical requirements embodied in a new supply agreement for a long-term relationship that mutually defined quality, cost, warranty, and technical performance along with the objectives for achieving these, including failsafe provisions should they exit the business.
Successfully developed and qualified a very competent alternate supplier in a three-year period without jeopardizing current key-component supply requirements. The onsite collaboration provided a model for new product introductions and the new supply agreement became a model for use in other sister companies of SPECTRIS. For an expenditure approaching $2 million in three years, initial quality matched that from previous supplier, unit costs were reduced 25% immediately, product life expectancy extended by >100%, and a viable warranty return policy existed, all of which allowed dramatic improvement in Sales/Marketing efforts against the competition.
Company was experiencing increasing customer complaints on a key component from a current key supplier and apparently this component had a history of recurring defects, regardless of which supplier manufactured it. However, this time the frequency and intensity of the complaints were becoming most alarming (>$30,000 monthly in warranty costs), threatening ability to meet increasing customer commitments and jeopardizing future business ($250,000 minimum each installation) with certain key customers.
In the past, this key component was treated as a commodity item made to specification. Management team believed that all suppliers had the necessary expertise required to manufacture the component, so there was no appreciation (or urgency) for certain critical supplier raw materials, manufacturing processes, and output performance required.
Created a project including Engineering and R&D and engaged the supplier at all levels. Utilizing in-house PhD Chemist for supplier development (instead of new products/processes), focused missing expertise on the problem. Thoroughly examined supplier’s manufacturing and testing process as well as raw materials and performance specifications.
Developed new collaborative approach (previously unheard of) with this key supplier for mutual advantage. Key Quality and Engineering personnel from both operations relearned key essentials required to manufacture a quality product consistently. Uncovered supplier incoming raw material deficiencies and manufacturing process deficiencies contributing to the defects. Solved the problem permanently and mutually learned essential trade secrets that reinforced a strong competitive advantage.
By helping the supplier, gained a formidable ally willing to protect both companies’ interests against future competitive threats. Laid foundation for rapid response on future mutually beneficial opportunities based on trust and long-term partnership created. This experience underscored the true value of a key supplier relationship, beneficial for both the short- and long-term, and served as a successful model for several future supplier-development projects.
Company’s current business strategy included outsourcing as much manufacturing as possible, and certain key high-value critical technology components had been sourced locally to two different existing suppliers. Key components provided by these suppliers impacted >90% of the location’s revenue; following onsite supplier evaluations, there were serious questions about future business viability (financial strength, succession plan, technical depth, quality capability, etc.).
Significant opposition existed in management team to “going backward” against the current outsourcing strategy-all previous cost savings from outsourcing had already been used. Engineering documentation of the key components was marginal and knowledge resided with limited personnel. Limited quality specifications were available, but no quality plan existed.
Prepared detailed analysis illustrating superior benefits of in-sourcing in quality, delivery and unit cost, plus cost justification to hire a sorely needed manufacturing engineer (previously eliminated in a cost-cutting exercise). Included quotations from other domestic suppliers unable to meet unit cost requirements but capable of meeting quality and technical specifications. Cost justification required corporate approval (in part because it supported and drove current local outsourcing strategy) and numerous local management reviews, including the CFO and President.
Once support was obtained locally and corporate reviewed and concurred with the analysis, secured approval from all parties to proceed with in-sourcing of this key technology component. Management team learned the validity of reviewing previously made decisions because circumstances change, assumptions may no longer be valid, and the bases for original decisions can be flawed.
Lean Manufacturing activity had stalled and required new intervention and reenergizing. An equipment repair area (for nuclear sensors, etc.) was selected for reengagement of Lean Manufacturing not only because of increased output required, but also because entire operation (including integration, testing, etc.) was incurring ~$500,000 annually in temporary/overtime labor costs, and 50% of the technician labor in this repair area was classified as temporary.
The operation (and the employees) had become used to incurring temporary/overtime costs for addressing any labor capacity problem on a regular basis. Hence, there was no real motivation from the workforce to reduce the annual expenditure in temporary/overtime labor.
Engaged a consulting company to teach and implement Lean Manufacturing “on the run.” The entire repair area was analyzed and a new process developed and implemented by the end of the first week, with complete ownership of the employees in the repair area-i.e., they made all fundamental new process decisions, for not only layout and process flow, but also new required procedures.
Attained previous maximum output the first day (utilizing only 33% of original floor space) and tripled production output by the end of week two. Within four weeks, quadrupled output on a sustained basis, allowing curtailment of temporary employee use in the repair area. By year-end, the last temporary in Repair was eliminated; meanwhile, record output was achieved with less labor, allowing dramatic reduction of ~50% in repair labor cost the following year. With other Lean Manufacturing initiatives and additional Operations changes, total decrease in temporary/overtime costs reached 80% (down to $100,000) within 12 months.
Continuing Telecom demand for company product far exceeded capacity and would require adding 24 FTEs on two shifts with the existing process. Team did not wish to do so given uncertainties about the market at that time and sought an alternate solution: Lean Manufacturing. Primary objective was to increase power-supply assembly output immediately, without adding a single person, while maintaining both delivery and quality performance.
Main challenge was to continue production output at least at previous levels in order to satisfy customers. Misgivings and serious doubts existed in Sales force and parts of management team concerning whether this new approach and/or discipline would be accepted in order to be successful.
Engaged a consulting company to train the team while implementing “Lean on the Run.” First day consisted of training on the principles of Lean Manufacturing; the second day documenting and analyzing existing processes; the third day developing and critiquing an alternate process; the fourth day rearranging the work area to have the new process implemented by the fifth day for piloting.
Previous maximum output was attained on day one, and production output tripled by the end of week two; within four weeks, output had quadrupled on a sustained basis, meeting all original objectives. In addition, recovered 20% of floor space and created an employee break area adjacent to the Lean area. Reduced unit labor costs more than 50%, which was reflected in new standard costs and all shipments were on time.
“Lean on the Run” success allowed three additional blitzes to materialize as other employees realized that they, too, could achieve significant gains that would make their jobs easier (and improve job security). Developed an in-house trainer that served as facilitator for the subsequent blitzes. Hence, all three additional blitzes were quite successful in achieving similar results.
Company was threatened with the loss of a major account at a large, global Japanese company in optical media. Japanese project team was implementing a turnkey installation in the U.S. for a high-value, high-visibility end product that required key equipment. New product was demanded to replace allegedly defective product to keep production lines going 24/7 (an unplanned requirement costing $40,000). Company’s reputation was being damaged because of alleged defective product, in addition to the prospect of potentially high warranty costs exceeding $250,000.
Due to the secrecy surrounding the high-visibility end product, team was not allowed inside factory to ascertain cause of any defects. Communication was hindered, originating from customer’s Japanese engineers onsite to the U.S. via both companies’ Japanese offices. Relationship between company’s Managing Director in Japan and the customer’s Project Manager had significantly deteriorated and become adversarial.
Collaborated with internal Customer Service Manager and arranged meeting at the U.S. end customer’s site (who was the ultimate recipient of the installation after equipment acceptance testing) including the Japanese Project Manager, allowing clear and direct communication of the Project Manager’s concerns, frustrations, and requirements.
Offered to fix and/or replace any equipment in a separate, nearby facility. A photograph from the customer alleging one problem identified the real cause, indicating precisely where to look in their facility. Gained the confidence of customer’s engineers and discovered the root cause after being allowed inside their facility. As the problem was directly caused by an oversight on the customer’s part, the situation called for extreme tact and diplomacy.
This situation reinforced the need for improved direct communications between companies; in salvaging this account through a team effort between Manufacturing and Customer Service, customer was pleased with the resolution and the situation’s handling, winning additional business.
A strategic Japanese customer who manufactured optical film complained about short product life, and was threatening loss of sale opportunity for next production line worth at least $250,000 if the problem was not fixed immediately, as well as charging materials and downtime costs >$100,000 allegedly caused by short product life.
Suspected contaminant causing the short life had been determined via independent laboratory analysis because it was difficult to understand how this could occur in the customer’s clean room environment. In addition, local technical service engineers were unable to resolve the issue (after numerous visits), in part because of limited access to the customer’s clean room environment and because it was unclear how the contaminant managed to reach the key components.
Arranged a special visit to the customer’s factory with production supervisor to coincide with their maintenance shutdown. Discovered that, while the customer operated a legitimate clean room environment, an independent air-handling system provided the opportunity for contamination. The Japanese engineers (both the customer’s and the company’s service technicians) were made aware of the subtleties required to control water vapor in a high-humidity environment. Requested and obtained permission to enter the clean room to obtain evidence that customer was not able to control condensation inside the equipment.
The onsite visit was most appreciated by all the engineers because it offered the opportunity to let the facts onsite dictate the appropriate course of action. Immediately found source of contaminant outside the clean room and discovered how it was getting inside the clean room. While the Japanese scrupulously observed most specifications, they needed additional education on the relationship between humidity, temperature, air filtration, and changes in airflow, and why it was necessary here. After disassembling equipment inside the clean room, found evidence of the contaminant on key component (and others), prompting an overhaul of their maintenance procedures.
Saved company from getting charged >$100,000 materials and downtime costs previously threatened, salvaged the account and received the $250,000 order for the next production line, solidifying the strategic relationship. All Japanese personnel were grateful for the practical education onsite, especially done in a cooperative and non-threatening manner that earned their respect.
First day of new position as Manager of Shop Operations began with crossing a picket line at 6:00 AM in order to report to work. Though this was not a surprise, discovered only after reporting that three of the six official grievances that triggered the strike originated with union employees in personal production area.
In a proverbial “baptism of fire,” quickly learned that management subscribed to practices unacceptable to the younger generation (and low seniority) of union employees in the production area, and similar sentiment had been expressed by employees in other parts of the manufacturing plant. Management team consisted primarily of very long-service personnel that embodied a strong disciplinary approach and “by-the-book” procedures, but were also (for the most part) unable to communicate well with hourly workforce and were ineffective in managing culture change required. Hence, the location had experienced two unions within a short period of time, the second of which promised more aggressiveness (and more violence) in achieving union objectives with fundamentally the same union stewards, though the new external, non-local union affiliation comprised some rather unsavory organizers.
After overcoming six-week strike (and running the production area with existing salaried employees), endeavored to systematically change the existing confrontational culture at all levels. Selected key, nonnegotiable management prerogatives, such as merit appraisals based on performance versus promotion due to seniority on the job. Targeted key union troublemakers (and other non-performing employees) that did not subscribe to the principles of the new management team, and used the existing contract against them. Created an environment of collaboration in order to accomplish business and personnel objectives (e.g., job security and fairness in disciplining employees) while addressing employee concerns. Created opportunities for employees to participate in outside activities that acknowledged their contribution to the business, despite lack of key management support for three years.
Increased opportunities for pay-for-performance through a new higher job classification that more appropriately matched the new job skills required. Permanently and legitimately removed key union and non-union troublemakers from their jobs utilizing performance standards and the existing union contract. Engaged employees in the process of determining the future success of the operation, and utilized every opportunity to point out the fairness and appropriateness of management actions. A simple activity such as an annual holiday party (previously not supported by the management team), promoted as a complete self-organized activity, went over so well that the management team agreed to support it after three very successful holiday parties, completely organized by employees.
As a result of all these actions, the existing union was kicked out by the employees themselves, and though another union was brought in to represent the employees, a professional relationship was fostered and maintained. Upon leaving the assignment, publicly recognized (during going-away speech) that these employees had demonstrated the capability and talent to determine their own destiny, personally and professionally, and that it was up to them to continue the progress the team had made together (while thanking them for the opportunity and privilege for the learning experience). Upon visiting the factory six years later, the chief union steward warmly welcomed the visit and publicly recognized the amount of progress made during personal three-year tenure.