TEAM-BASED ORGANIZATION REDESIGN AT CMCO*

RAY DYCK, DESIGN PRACTITIONER, TORONTO, CANADA

SO WHY WOULD A PROFITABLE AND SEEMINGLY healthy company put itself through the trauma of a redesign? Growth and a sustainable competitive advantage seemed like two pretty good reasons for CMCO to take change to heart. Not a bad business decision for this international company, which has instituted multi-skilled, self-regulating manufacturing work teams, along with numerous modifications to support systems and practices. Significant improvements have been realized in productivity, costs, quality, cycle time, equipment utilization, and employee satisfaction. CMCO has proven to itself and others that even companies that appear to be highly effective need to be constantly on the lookout for opportunities to significantly improve performance. The key ingredient is visionary leadership with the capability to articulate the vision and mobilize the workforce. Merely improving the way in which things are now done is insufficient. A new model, based upon explicitly different values and principles, needs to be developed.

CMCO’s BEGINNINGS

CMCO, a stand-along subsidiary of PARENTCO* in the 1990’s, provided a broad range of services, including design, prototyping, assembly , testing, product assurance, supply chain management, world-wide distribution and after-sales service with annual sales in excess of $3B. Customers included industry leading original equipment manufacturers (OEMs), primarily in the computer and communication sectors. Since mid-1996, CMCO had grown from an organization with 2500 employees in 2 facilities to one of over 15000 employees with 26 manufacturing and design sites across North and South America, Europe and Asia.

In the mid 1990’s, stimulated by the realization that significant changes would be the way to grow and sustain competitive advantage, an organizational redesign strategy was initiated at the main facility. It was

--------------------------------------------------------------------------------------------------* Fictitious Names

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essential to reduce costs, accelerate the rate of new product introduction, and generally increase response capability in addressed any issues encountered in day-to-day activities, at every level, which impeded goal attainment. In addition there was a need to increase manufacturing capacity on their main site, with no available real estate to expand.

After considerable exploration to select a change process, CMCO elected to follow a socio-technical systems (STS) design model. This approach was chosen because it explicitly acknowledged that the objectives could not be achieved through technological improvements alone. It was concluded that to succeed, it would be necessary to focus equally on non-technical elements to establish a more competent, high-performance, high-commitment work environment. Furthermore, STS was: purpose-oriented … revolving around a new set of Values and the business mission (see chart below), based upon a proven methodology, and highly participative. <Interesting note: STS was introduced to senior management by a university summer student who took an STS course as part her Engineering curriculum>

THE IMPLEMENTATION STRUCTURE

It is important to understand the context in which this effort was initiated and conducted. At the time of commencement, since CMCO was in a very healthy and profitable state, it was difficult for many to appreciate the need for change. In addition, there were many competing priorities which

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WHAT ARE WE TRYING TO ACCOMPLISH ?

- Economic Agencies

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- Collections of Individuals- Mini-Societies- Transforming Agencies

BusinessMission

Values/Principles

took attention away from this undertaking. Most significantly, CMCO was in the process of being spun off from being a subsidiary company of PARENTCO. This necessitated a need to focus on establishing an independent business, expanding the customer base, and rapidly developing a more global presence.

It is common in large organizations to sequentially roll out a redesign, starting in one or two areas and working through the remainder as earlier ones get underway. This approach is generally followed because of insufficient experienced resources to facilitate a larger process and to allow some learning to take place in a smaller portion prior to expanding the scope.

At CMCO however, because of a sense of need, it was decided to tackle the entire site system at once (the site had 2300 employees at the time). The following structure was established for this purpose:

A Steering Committee, with 80% of the senior managers representing all functions. They met twice per month to guide the process. Its role was to designate business objectives and boundaries, participate in priority setting, provide resources and approve recommendations.

A Central Design Team, comprised of people representing all areas , met for 8 hours per week for the purpose of ensuring consistency and dissemination of learning across the site(s). Site-wide initiatives were coordinated by this team.

A Resources Team, consisting of 9 members, was formed to act as facilitators and internal consultants. This group received extensive training in STS design methodology and consultation skills, and was periodically aided by external experienced people.

21 Design Teams, made up of 5-15 representatives from the function being redesigned, such as the Power Manufacturing Business Unit, Finance, Process Engineering, Maintenance, Facilities, etc… These teams were established to identify the areas for change, based on evaluation of compliance with CMCO’s Values (which they also helped develop). These fell into 2 categories: unit-specific and site-wide.

Numerous Study Teams were formed to complete detailed analyses of the initiatives identified by the Design Teams, and to develop recommendations and implementation strategies for redesign.

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After the Steering Committee was formed, the following Design Model was followed.

THE DESIGN MODEL

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STS Structure for Change

SteeringCommittee

Central DesignTeam

ResourceTeam

DesignTeam

DesignTeam

DesignTeam

DesignTeam

...

Study TeamStudy Team

Study Team

Study Team

Study TeamStudy TeamStudy Team

Study Team

Study Team

SpecificInitiatives

Twenty Awareness Heightening sessions were held with employees – each session 8 hours in duration. These sessions were vital in helping instill the case for change. Of 2300 total employees, nearly 1000 volunteered to get involved in the process on either Design or Study Teams! A subsequent session was then held for each functional area, attended by all the volunteers for that function. They were given training in giving/receiving feedback and then proceeded to select their Design Team from amongst themselves, after agreeing on what representation meant to them. A ground-breaking event which signalled the company was serious about doing things differently. In this manner all 21 Design Teams were selected. Volunteers not selected became candidates for Study Teams in the future.

The first task of the Design Teams was to help develop the Company’s Values. A well defined process was followed that was highly participative and took about 6 months elapsed time, culminating in a 3-day meeting between the Central Design Team and the Steering Committee. Each statement was thoroughly debated, resulting in a high level of shared understanding for the resulting final Values Statement. This became the nucleus of the entire redesign.

Each Design Team then began to Identify & Prioritize Opportunities. This started with a scan of each area, mapping out the process flow, identifying key variances and gaps to the Values, and generally highlighting competitive gaps and business opportunities. At this point a Visioning Session was convened, as outlined below.

KEY ELEMENTS OF A VISIONING SESSION

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STEERINGCOMMITTEE

ManagementAwarenessHeightening

SteeringCommitteeFormation

EmployeeAwarenessHeightening

VolunteerProcess

DESIGNTEAMS

DesignTeamFormation

Values Statement - Vision - Norms

Endorsedby SeniorManagement

Identify andPrioritizeOpportunities

STUDYTEAMS

Study TeamFormation

Analyze andRecommendAlternatives

SeekEndorsement

Implement - Monitor - Evaluate

ContinuousRedesignvia CDB’s

Start off with:

A senior management presentation outlining required organizational capabilities and compelling business reaons;

A review of current processes and inherent shortcomings;

Forming 2 groups: each identifies the required characteristics of an organization that would satisfy the mandated capabilities.

Next, in a plenary session, merge the two visions:

Referring to the merged vision, identify initiatives that must be fulfilled to achieve the desired state;

Form a small group for each identified initiative to create an action plan including:

o Expected outcomes;

o Resources required to fully develop the initiative;

o List of dependencies for the initiative to be successful;

o Timeline for completion.

Form Study Teams to complete the design and establish an implementation, monitoring and follow-up process.

These sessions took one to three days, depending on the complexity of the area being redesigned and were attended by 20 to 35 people of various disciplines. Through a number or tightly facilitated plenary and small group exercises, the ‘objective’ redesign questions, based on data collected during the scan , were addressed – such as:

What are the conditions which must exist to reduce

o Manufacturing Cycle Time from 5 days to 8 hours?

o Defects by a factor of 3, and

o Maintenance response time from 30 to 5 minutes?

This led to identification of a series of initiatives to be dealt with by additional Study Teams. Rather than go through the process of detailed variance analysis, a quick check was done to ensure all key variances were addressed within the initiatives cited. If not, adjustments were made.

These initiatives fell into a number of categories. Many were technical in nature, such as equipment layout and process modifications, along with one titled JOB REDESIGN. The elements covered in job redesign included identification of:

Skills, information and authorities required for rapid response;

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Necessary resources: tools, people;

Non-Value added steps in methods and procedures;

Policies and practices consistent with the Company’s Values;

Administrative and leadership functions to be transferred to work teams to support self-sufficiency;

Roles of management and support staff;

Equipment layout revisions to support the work team concept.

Social issues were also highlighted during the Visioning Sessions. These were augmented through an exercise whereby all employees were involved in listing issues of non-compliance with the Values. This approach was considered superior to using the general sociological variables of GAIL (Goal Attainment, Adaptation, Integration, Latency) as a reference, because it utilized the self-developed Values of particular significance to this organization. The social items were addressed by the Job Redesign Study Teams.

INTERIM PROGRESS CHECK

2 years into the redesign effort, over 400 employees had been involved directly in either Design Teams or Study Teams. Over 30 Study Teams had been initiated … and progress was being made. A new organization structure was implemented (Customer Focused Teams), a new approach to Operational training was introduced, a new open job posting system was established, alternate work schedules were implemented, performance management and development systems were aligned to the Values, and many support area redesigns were completed (more detail on these changes will follow). In addition, a Social Systems Design Implementation Guide (SSDIG) was developed to help implement effective, multi-skilled, self-regulated work teams..

HOWEVER, improvements in site performance (operationally and financially) were lagging senior management expectations. Specifically in Manufacturing, recommendations on changes to physical layout/equipment and to operating methods were not getting traction. Concerns were also raised about how robust and replicable the proposed solutions would be, recognizing there were over 20 manufacturing lines on the site. Executives wanted to bring in a 3rd party with a distinct change process (based upon

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Lean) to increase focus, enhance and expedite these improvements., After conducting an assessment of the STS process vs the 3rd party process, the STS Resources Team proposed to combine these two efforts as follows::

Job Redesign Study Teams (JRST’s) would work alongside new ‘Lean’ teams made up of representative employees from the business area in focus, including some JRST members. These teams would be augmented with 3rd party Lean resources and then commissioned to achieve 40% improvements in cost, cycle time, and quality while also focusing on maintaining adherence to the company’s Values. Both JRST and Lean teams would be facilitated by the Resource Team.

JRST and Lean teams would then meet regularly together to discuss recommendations and consider tradeoffs/optimization opportunities between, for example, increased automation or standardization and quality of working life. The final result would be shared recommendations that everyone could support

These final recommendations for each manufacturing area would be assigned to a dedicated implementation team (which came to be known as SWARM teams). They were charged as follows:

The SWARM Team:

Mandate: To accelerate the implementation of SSDIG and changes to cell layout and operating practices … towards the achievement of specific performance objectives (cycle time, quality, cost, workplace health) in alignment with the company’s Values

Expected Outcomes:

o Design and implement the physical cell layout

o Get the work team up and running

o Demonstrate measurable progress towards targets

Composition

o Manufacturing area for that Business Unit– all shifts

o Engineering,, Supply Chain, Maintenance Support

o Internal Consultant (Resources Team)

Implementation Approach

o Short term (approx 3 months) – get the implementation moving

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o Intensive

o Clear Accountability

A joint deliverable across all the JRST’s was an Operations 2000+ document which articulated new Operating Practices, Cell Layout Principles and Continuous Improvement programs for the site (heavily influenced by Lean and the company’s Values). The scope included the following:

Based upon this OPS 2000+ Guide, an early Manufacturing cell prototype was developed as follows:

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MFGCELL

Physical Layout

Social Systems Design

Operating Practices

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Once final recommendations were made and approved, SWARM teams were formed as above and proceeded with implementation. Below is an example of how progress was tracked – which goes beyond the 3 month ‘get the cell up and running’ mandate of the SWARM teams. Note how focus was given to implementing jointly the Operating Practices (per OPS 2000+) and the team formation/development items (per SSDIG).

SWARM TRACKING

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Team positions:1: Print/SMT 2: SMT Load3: SMT Load & Inspection4/5: Manual Insertion6: Post-Flow & Inspection7: ICT Diag & Repair8: FCT9: MW/HMU10: Inspect/Pack11/12: FCT Diag & Repair 13: Team Trainer14: Materials & Quality15: Team Support Engineer16: Team Leader17/18/19: Allocation for leave, absence & training

OUTCOMES

The process has led to a number of organizational changes. At the manufacturing level, work teams have been established. These are groups of 15 to 40 people, working in shifts around the clock, responsible for the entire process from receipt of kitted parts to packing of final product. These teams are characterized by the personnel with high levels of multiple skills,

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capable of conducting their own inspection and repair, maintaining their equipment, and carrying out significant leadership and administrative functions (eg. Hiring, training, performance appraisals, workload/staffing plans, etc). Team development is supported through extensive technical, interpersonal and managerial training.

Other initiatives introduced at the site level to support these changes include:

Skills Transfer to Manufacturing: Responsibilities and skills have gradually been shifted from support functions, primarily engineering, supply chain management, and maintenance to improve response capability in dealing with technical and customer-related problems.

Customer-Focused Teams (CFTs): Teams have been established that include most of the functions required to support individual customers. A CFT Operations Manager leads the team, which includes a customer account manager, manufacturing personnel, process and quality engineering, and supply chain management. There are plans to add other functions to support the customer with the intent of creating a ‘no excuses’ team that will have the capability of satisfying all of the customer requirements.

Modifications to Operational Training: An enhanced training process has been introduced. This includes appointment of 10 new site sector trainers who are responsible for preparation and delivery of training material, along with continuous assessment of employees qualifications. This is supported by a more structured, planned approach to provision of training. Skills matrices have been developed, identifying skill and knowledge requirements for each individual on the manufacturing work teams, and a training plan established to achieve these objectives. An array of social skills training was also made available to all teams (eg. Communication, giving and receiving feedback, conducting effective meetings, decision making, problem solving, facilitation, conflict resolution).

Introduction of an open Job Posting process: One of the key issues identified during the social system analysis was a concern expressed by employees that they were unaware of promotional and developmental opportunities available.

Increased emphasis on housekeeping and ‘showcasing’: Appearance of facilities is of utmost importance, particularly since existing and potential customers are frequently touring. A

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Study Team established standards and put in place a monitoring mechanism with designated accountability at various locations across the site.

Improvement in Data Transfer from Customers: Converting specification data from customers into formats to permit scheduling, parts acquisition, manufacturing and shipping was a painstaking task. A system was designed to electronically process the data, with resultant significant improvement in time, effort and accuracy. This has contributed substantially to being more responsive to rapidly changing customer needs in new product introduction – a mainstay of the contract manufacturing business.

Alternative Work Schedules: A number of work schedules have evolved over the years in an effort to accommodate a large contract workforce with varying needs. This was found to be quite disruptive in a number of cases, impeding transfer of information between shifts, and balance of skills across all shifts, and often necessitating excessive overtime coverage. After review of many options, it was decided to move to a three-on/four-off, 12-hour schedule.

New Campus Recruiting process and materials

Aligning Performance Measurement and Recognition Systems with the Values

Process improvements

o Supply Chain Management (on-time-delivery), Product Costing, 7x24 IT support, Component Qualification, Consumables, Hiring, Shift Crossover, New Product Introduction, Spare Parts management, Design Exchange with Customers, Non-conforming material handling, etc.

As a consequence of this redesign effort, considerable performance improvements have been realized. As a typical example, in the business unit where these changes were initially implemented:

Productivity has doubled, with the consequent increase of manufacturing capacity without additional labor requirements or capital expenditure.

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Manufacturing cycle times have been reduced 8-fold, with resultant substantial decreases in work-in-process inventory.

Quality, as measured by defects per unit, has improved by a factor of 2.

40% of Controllable Costs have been saved

Significant inventory savings realized

The physical factory layout also changed as follows:

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Defects per Unit (DPU)

0.080.130.180.230.280.33 DPU Target

DPU Actual

WIP / Line

0500

1000150020002500

WIP - Line TargetWIP - Line Actual

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AIS

LEP

AC

K

SR T

PPAAREA

SUNFVM

L3 FT

MANUALASSEMBLY

INSPECT/REPAIR

ICT

RACKS/NCM/MISCEL ITEMS

LASER W ELD

LAZER

W ELDER

GSMC O N C EPT R ON IC S

M V2C U3000

LDR

GSMC O N C EPT R ON IC S

M V2C U3000

C O N C EPT R O N IC S

M V2C U3000GSM

WAVE

W ASH

LIN E 21

W A V E /W A S H

LIN E 23 LIN E 22

OFFICESTECHROOM

KITTING

MECHROOM

MECHROOM

OFFICES

FALCON

GSMC O N C EPT R ON IC S

M V2C U3000

LDR

MPAC O N C EPT R ON IC S

M V2C MPM

LIN E 18LIN E 19

TAPING

IC T

LAZERW ELDE

R

SRT SM ART C S Z

CSZ

FVM

SUNFVM

COVEREDTEST

ICT TEST RF TESTHP TEST

AUTO RPR

UNCOVEREDTEST CONN-

ATTACHNETW ORK

HUBS

STR ESS T EST /SU N IC T /SU N F T /SU N FA /D EBU G

PH ASE 3

BEFORE FACTORY REDESIGN

AFTER FACTORY REDESIGN

AIS

LE

RM

A A

RE

A

4' 6

"

4' 0

"4' 0

"HANDREPAIR

5' 0

"

5' 0

"

SRT4' 2/7"

C S Z

C S Z

PPAAREA

PACK

SRT

CSZ45X54 SABRE TEST

7' 0

"

4' 0" 5' 0"

SUNFIRE TEST

ICT

7' 0

"6' 4

5/7

"

5' 0

"5' 0

"

CSZ

6' 0

"

4' 0"

SUNFIRE FA

SABRE FA

5' 0

"

4' 0"

EXPANSION

4' 0"

ICT DEBUG

ASSEMBLYAREA

5' 0

"

IC T

GCART

GCAR

T

3' 0"

BENCH48X30

PANTHERTEST/FA

BALINORDICA

SUPERMARKET

P U LS A R TE S T

P U LS A R FA GSMCO NCEPTRONICS

MV2C U3000

LDR

GSM CONCEPTRONICS

MV2CU3000

CONCEPTRONICS

MV2CU3000 GSM

WAVE

W ASH

LINE 21

W AVE/W ASH

LINE 23

LINE 22

OFFICESTECHROOM

KITTING

MECHROOM

MECHROOM

STRESSTEST

FA

FA

FA

PH ASE 3(U nder C onstruction)

Such improvements were seen across every business unit and support area. In addition, surveys have revealed a substantial increase in employee satisfaction related to the areas where the redesign has focused. Comments include: “I’ve waited 27 years for this sort of thing”, “What I like about the STS process is that the change has been driven by the employees – those responsible for execution as opposed to management dictating how it’s going to be”.

The challenge for CMCO is now to institutionalize the changes implemented at the site, and to diffuse the experience and learning from this application to a multitude of new acquisitions with diverse needs and cultures. CMCO is sharing its lessons learned throughout the entire company: that merely improving the way in which things are done is insufficient. A new model, based on new Values, needs to be developed.

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