Cessna Aircraft Company Chairman, President and CEO Jack Pelton reports that the company made remarkable gains and significant achievements in 2005.
Pelton attributes the year's success to "a world class Cessna team, award winning customer support, a broad product line that is responsive to the marketplace, emerging global markets, and implementation of lean manufacturing processes."
During the year, Cessna delivered 249 Citation jets, 822 single engine pistons, and 86 Caravan single-engine turboprops; won FAA certification for two new jets -- the CJ1+ and CJ2+; and built its order book up to 788 jets and 1,198 single engine aircraft with a total value of $6.3 billion. The company also achieved significant refinement of its processes through implementation of the Textron Six Sigma Lean program, resulting in a more efficient, leaner company.
Pelton said, "We are most proud of the strides we have made with our customers through our 'Taking Care of Customers is Taking Care of Business' initiative, which was demonstrated when both Professional Pilot Magazine and Aviation International News named Cessna top in its class for customer support."
Also during 2005 the company received type certification for the Garmin G1000-equipped Skyhawk; delivered the 6,000th single engine piston airplane since the restart of production in 1996; and unveiled the Encore+ at the National Business Aviation Association annual convention.
"As good as 2005 was, we expect 2006 to be even better," Pelton said.
Based on unit sales, Cessna is the world's largest manufacturer of general aviation aircraft. Since the company was originally established in 1927, more than 186,000 Cessna airplanes have been delivered to nearly every country in the world. The global fleet of more than 4,500 Citations is the largest fleet of business jets in the world. Find more information about Cessna Aircraft Company. Cessna Aircraft
Watch yield and uptime in a 'continuous' process
Bangkok Post
This week's article is the final one in our series on what types of continuous improvement initiatives your manufacturing company should consider. We have suggested that, in order to choose the right improvement theme, you need to consider the nature of manufacturing process types used in your organisation.
The most appropriate improvement theme should focus on improving the critical aspect of each process type. In our previous articles, we have covered the first four process types, which are "project", "one-off", "batch", and "line". The last process we are going to discuss is the "continuous" process.
Companies with continuous process generally offer a narrow range of products in markets where product change and the rate of new product introductions are comparatively low. The company will sell products rather than capability, and large customer orders will be won principally on price. Examples are the processes of petrochemical refineries, steel or paper making, sugar producing, electricity utilities and beer brewing.
In a price-sensitive market, the key manufacturing target will be low-cost production. To help keep costs low, the process will be highly dedicated, where the cost structure is based on high production volumes and a need to achieve high plant utilisation. The fixed nature of capacity creates restrictions when increases or decreases in output are required, with the decision based upon whether or not to add capacity and/or build a new facility on the one hand, or how often to run the plant, known as campaigning, on the other.
The high-volume nature of these businesses lends itself to a centralised, bureaucratic organisational style. Manufacturing performance is measured against budgets while variance analysis is essential and investment proposals are centrally monitored. The production manager must understand the process and product technology, with the ability to co-ordinate the high level of specialist support for manufacturing.
The high plant investment and high volume output offer the opportunity to keep raw material inventory or a planned usage basis, with a built-in buffer to cover uncertainties. Work-in-process will be relatively low with inventory of finished goods high. This is due to the need to maintain output levels at all times against fluctuating sales patterns. In many cases, however, finished goods are held in the distribution system or in retail outlets.
Process investment is high, direct labour costs are small, and the highest cost is usually in materials. Site/plant overheads will be high in order to support the process and handle the high output levels involved.
Companies or business units with a continuous process should focus their improvement effort on two things that cost them the most: raw material yield efficiency and machine uptime. There is no common theme that focuses specifically on improving the yield efficiency of raw materials due to differences in yield characteristics.
Many companies, however, successfully apply statistical tools, as a part of a Six Sigma initiative, to improve yield efficiency. We have talked about Six Sigma in one of our previous articles.
To improve machine uptime, there are a few improvement themes. The best-known one is Total Productive Maintenance or TPM. TPM was developed by the Japanese Institute of Plant Maintenance (JIPM) to involve both production and maintenance people in increasing Overall Equipment Effectiveness or OEE.
Because the TPM concept has been around for decades, some companies have considered more recent maintenance-related improvement themes such as Business Centred Maintenance or BCM. BCM addresses all systems and activities needed to ensure maximum equipment availability and performance at an optimum cost by an asset care maintenance strategy.
A main focus is the prevention of equipment failures through an effective preventive maintenance programme and the analysis of the current failures to prevent re-occurrence. Inherent equipment availability, reliability and maintainability are also improved through phased maintenance prevention for new equipment and reliability modelling.
With this, we conclude our series. As we said at the outset, business success hinges on improvement from one year to the next, so approaches must be chosen carefully. However, since improvement initiatives are numerous, executives often have difficulty selecting the "right" one. We trust that our commentary has proved useful to you.
By Eric Miscoll, PhD
Jan 11, 2006
Looking over the research TFI conducted in 2005, a handful of issues standout as key points-of-focus for the electronics industry in 2006.
ENVIRONMENTAL COMPLIANCE:
Environmental compliance has been compared to Y2K, but in this case the implications are real, not imagined. The deadline for RoHS compliance is July 1, 2006. Yet, based on studies conducted with both our Quarterly Forum members and individual clients, we know that many companies are unprepared. Why? Perhaps it's because the industry as a whole - with notable exceptions - has approached compliance on legislation such as RoHS, WEEE, and EuP in a piecemeal fashion. Thus resulting in a series of disjointed, start-and-stop activities that have failed to create momentum and leverage synergies within their organizations.
And while 2006 will be a landmark year for environmental legislation, which is good news, the bad news is that TFI expects regulators to find and make an example of some violator soon after deadlines are past. Becoming this poster-child should be every executive's worst nightmare and motivation to get their organization into compliance. TFI has volumes of research available on best practices and strategic planning to help our clients stay ahead of the global legislative curve. If you need help, get it now.
INNOVATION OF PRODUCTS AND BUSINESS MODELS:
Standing still in business is a recipe for failure. To succeed, companies need to be open to change in product lines, business models, and supplier networks. Thinking ahead of the competition is not only the first step but a step in the right direction.
Alternative business models: Whether you adopt a virtual model leveraging strengths and assets from around the globe, like TFI's team of industry experts, or adopt a fresh approach to an old challenge - such as the successful joint venture (called NUMMI) between GM & Toyota who profitably manufacturer cars in the Silicon Valley of California by applying Lean Manufacturing principle - opportunities abound.
The challenge is to be open to the possibilities and skeptical of the status-quo. Remember, a competitive strategy based around industry benchmarking versus innovation might bring you to market parity, but it will never accelerate you into the lead. There are no silver medals in business; coming in second-place just makes you first loser.
Technological solutions: Opportunity for the application of new technological solutions in business doesn't always knock. Sometimes it makes the high-speed "rushing" sound of a FAX connection or the staccato beeping noise of a Blackberry. In the case of Dell Computers it was "you've got mail".
By perfecting and integrating web-based online sales solutions for PCs, Dell propelled themselves to a market leadership position, while their competitors missed the mark and spent the rest of the window of opportunity playing catch-up. Or consider the contrary case of Gateway Computers (remember them?) who decided to go backwards in approach rather than forward and built a brick and mortar retail network, that they have since closed-down and written-off.
ADDRESSING RISK:
Risk is part and parcel of doing business in this industry. If you are risk averse, go work for the post office (oops, there is risk there too!). If you are in business you need to assess and manage risk. Risk comes in many guises, but two that we feel are especially noteworthy are China and high energy costs. Both have the potential of creating serious headaches for the electronics industry in the next few years.
China: Given the shift to China for both cost-savings and market opportunities, it is time (or past time) to take a serious look at the level of risk that has been imbedded in a large percentage of the outsourcing solutions being executed today. We see risk arising from:
The still relatively low-level, but escalating geo-political tensions between China and most of their Western trading partners,
The inevitability of future fluctuations in the Yuan and the rate of inflation in China,
The general lack of transparency of potential impacts like the bird-flu, infrastructural/resource issues, civil unrest, etc., and
Last but by no means least, the high level of supply-compression in most outsourcing solutions being applied within this geography.
On the last, we are particularly concerned about the shocking number of risk mitigation plans we see that are shaped around a second source (or recovery source) being another Chinese company. Which despite being in a different part of China, draws from and/or depends on an overlapping source of component supply, common human/infrastructural resource pool, and sources most of their liquidity from the same well. That type of strategy is not risk mitigation, but rather risk escalation.
High Cost of Energy: At the advent of nuclear energy, 40-50 years ago, the forecast was that electricity would be too cheap to meter. Well, that didn't happen. Today the forecast is that energy prices will slowly fall to pre-crisis levels - another improbability. The fact is we are paying more for energy than we did this time last year, and it is reasonable to assume that we will be paying more for energy next year.
With the electronics industry's love of geographically remote supply solutions (as a primary means of remaining cost-competitive) coupled to the inevitabilities of the expanding global marketplace and the escalating cost of discovery and conversion of new sources of energy supply ~ we have not seen the last of this issue.
Plus, as higher energy costs translate into higher costs across the entire supply chain, companies must revisit and recalculate their true total cost of ownership. You've heard us say it before, and you'll hear us continuing to say it in 2006.
PLANNING FOR GROWTH:
Businesses are beginning to make their come-back from the economic town-turn post Y2K, and need to shift both emotionally and operationally from focusing on minimizing down-side to maximizing the up-side. This includes doing things like:
Preserving your best and brightest people (as they'll be the first to be stolen by savvy competitors),
Re-visiting your asset allocation models, business process, and operational procedures, and
Updating your product offerings and re-aligning your outsourcing strategy.
As you plan for growth, remember it's the bottom-line that counts. In recent years it's been (primarily) the smaller contract manufacturers who have managed to remain profitable. Maybe in 2006 this will change, as the time seems right for the larger CMs to once again crack the nut on profitability. We'll see.
RECONNECTING WITH CUSTOMERS:
Customer relationships are always important. But in these times of increased competition and price pressure it is absolutely critical to stay connected with your customers and to anticipate their needs.
We've reported many times that our OEM clients regularly tell us their contract manufacturers are not hearing and responding to their needs. We've also reported that when this breakdown occurs OEMs regularly go out and start looking elsewhere. A true shame, as most OEMs also report they would prefer to stay with their existing CMs and make the relationship work. Something I'm sure the CMs would prefer as well.
The key of course is for the CM (who after all is the provider of the service) to re-tool their relationship skills-not just at the program manager level but throughout their entire organizations (including the executives)-and begin effectively managing both customer communications and expectations. The fact is that it simply costs less to maintain a current customer than to find a new customer.
So that's our top-5 list of things to consider in the New Year and we look forward to doing our part to help our clients meet theses challenges.
Have a safe and prosperous 2006 and keep in touch!
Lean Thinking has been all about eliminating waste in the production of products or services – until now. Recent studies using the metrics of customer value now reveal that many value-adding activities extend beyond production and reside in the distribution of those products and services.
State College, PA (PRWEB) January 14, 2006 -- Lean Thinking has been all about eliminating waste in the production of products or services – until now. Recent studies using the metrics of customer value now reveal that many value-adding activities extend beyond production and reside in the distribution of those products and services. Based on research across both manufacturing and services industries, a new publication from ASQ’s Quality Press, Value-Driven Channel Strategy: Extending the Lean Approach, reveals that Lean initiatives take on a much more strategic quality when extended into channels of distribution, and when driven by the voice of the customer. Nominated for the prestigious Shingo Prize for Excellence in Manufacturing, Value-Driven Channel Strategy extends the tools of Lean beyond the supply chain and into the demand chain.
Authors Reidenbach and Goeke challenge the conventional wisdom of Lean Thinking, and argue that it can and should be much more than a tactical cost-cutting tool. According to Reidenbach, “The leading proponents of Lean Thinking, including Womack and others at the Lean Enterprise Institute, have long argued that Lean initiatives should be driven by the ‘precise definition of value.’ The recent availability of sophisticated metrics to understand market definitions and perceptions of value makes that concept an empirical reality.” Moreover, adds Goeke, “Research now shows that much of that value resides in the demand chain, which should be the focus of future Lean activities at many companies.”
Drs. Reidenbach and Goeke provide a template for quantifying the voice of the market, and an 8-step process for using the market’s precise definition of value to enhance the organization’s value-delivery capacity from the point of production to the point of consumption. Marketing executives find the book useful because “it demonstrates a structured approach for defining and weighting the drivers of true value.” Quality professionals like the fact that “The connection of drivers of value and value mapping promote a focused, prioritized way of working on potential improvements that mean something to the customer!” The book includes numerous examples of how Lean Thinking is made more strategic when driven by value and extended into the distribution system.
Market Value Solutions (MVS) is a company specializing in the measurement and management of customer value. MVS has developed a unique and powerful process for driving Lean and Six Sigma initiatives with the voice of the market, releasing the strategic power of both quality tools.
Kimball Electronics has a five-year plan to reach $1 billion in revenue.
James Carbone
Purchasing January 12, 2006
Kimball Electronics has a five-year plan to reach $1 billion in revenue and believes strategic sourcing and tapping into its suppliers' expertise will help it achieve that goal.
The electronics manufacturing services (EMS) provider, based in Jasper, Ind., had $430 million in revenue in fiscal 2005. By increasing business with existing OEM customers, adding new customers and making selective acquisitions, Kimball expects to grow its sales to the $1 billion mark by 2010.
Strategic sourcing will be important in achieving that goal because Kimball needs suppliers to help satisfy customers and gain more of their business and to win business from other OEMs.
At the same time, Kimball is actively looking to consolidate its supplier base so it can work more closely with fewer suppliers to tap into their business and technological expertise.
Besides increasing revenue, Kimball is also looking to improve efficiency and profitability. Since it spends about $300 million for production materials, any materials cost savings it can achieve by better leveraging its purchases can go right to the company's bottom line.
"Our goal is to manage every penny of every dollar that we spend with our suppliers, be they raw material suppliers, freight suppliers, or indirect," says Everett Tucker, director of global supply chain management for Kimball. "We want to touch every penny."
To help manage its spend, Kimball recently completed deployment on an SAP ERP system at all of its facilities, a process that took five years. Kimball has six facilities, four in North America, one in Thailand and one in Poland.
"The SAP system has afforded us a lot of visibility and access to information that we didn't have before," says Tucker. "We were on at least three different materials resource planning (MRP) systems. Access to information and the ability to analyze the information was limited, at best," he says.
So much data Moving to SAP has enabled Kimball to collect more information about its spend with suppliers.
"Now we are a lot more efficient at collecting and aggregating spend information by supplier, by commodity, by customer, by product," says Tucker. The information gathered is used in negotiations because Kimball can show a supplier what its total spend is with the supplier and how much it spends for certain commodities.
"SAP is a spend analysis tool that is obviously important in the negotiation process, and in benchmarking. We can evaluate our pricing picture and our supplier's pricing," he says.
Tucker says Kimball has reduced the cost of materials 3-4% by using SAP and is improving its leverage with suppliers.
SAP has proven to be a useful tool to Kimball's commodity teams and materials council. Kimball has commodity teams for electronics, mechanicals, and printed circuit boards and sub-teams within those groups. Sub-teams could include semiconductors, passives, connectors and specific types of boards.
Commodity teams, comprised of buyers and supplier quality engineers, use the information from SAP to recommend sourcing strategies, including which suppliers to use.
Kimball's materials council, made up of the materials managers of each business unit, makes the final decisions about sourcing strategies, including supplier selection.
Cutting suppliers A key initiative for commodity teams and material council is supplier consolidation. It can be difficult for an EMS provider to reduce its supplier base because it may have to take on the suppliers on its customer's approved vendor list.
Often an EMS provider has to show its OEM customer a clear advantage of using its own supplier rather than the one the OEM's list.
"We have made some progress influencing the sourcing decision that our customers make," says Tucker. "There are a growing number of examples of where we participated in the customer design and development and made recommendations about suppliers. The customer allowed us to make sourcing decisions on their behalf."
Tucker says Kimball will continue to work to reduce its base of 1,500 suppliers and consolidate more spend with fewer suppliers. Right now, he says, about 75% of Kimball's spend is with 50 suppliers. In the future that percentage will rise.
As the company cuts its number of suppliers, it will work to become a better customer to the ones who are left. Doing so will help Kimball leverage its status with those suppliers to get better prices and service, and to get access to their technical expertise.
In deciding which suppliers to keep or to award more business, Kimball is using scorecards rating suppliers on cost, quality, delivery, services and technological advancement. Essentially, the company looks at total cost of ownership and supplier commitment.
"We expect suppliers to be as committed as we are to our customer's success," Tucker says. "We have to get a total package of value from our suppliers that meet or exceed our customer's expectations."
He says Kimball tries to solve problems for a customer even if the problems are not related to business with Kimball. "We want suppliers who have the same type of attitude."
Suppliers holding out Tucker says Kimball needs to work more closely with its suppliers. He believes they have a lot more to offer.
"Although we have made improvements in supply chain execution, suppliers continue to be the most underutilized asset that we have," he says. "There is value yet to be gained from our suppliers."
For instance, Kimball is embarking on a "Lean Sigma" initiative where it plans to identify waste in its processes and eliminate it by employing Lean methodology. In addition, it expects to improve its quality by using Six Sigma principles.
Tucker says suppliers can provide critical input about how Kimball can take cost out and improve quality. "They can tell us what are some of the poor practices that we are imposing on them that make the cost of doing business with us higher," says Tucker. "What is impeding their ability to provide low total cost of ownership? How can we identify and reduce waste and eliminate errors in our processes? How do we get rid of inventory that is not value added?" Suppliers can provide input on all of these issues, he says.
Air Force News C. Todd Lopez January 09, 2006
WASHINGTON - The Air Force used the best parts of several civilian efficiency programs to develop an Air Force-unique process-improvement program called "Smart Operations 21," Secretary of the Air Force Michael W. Wynne said.
The program will take the Air Force forward in a journey of self-improvement, the secretary said at a conference at Andrews Air Force Base, Md. The process will help improve the Air Force’s product-development process.
"The name came from a convocation of the senior operators in the field who thought we could continue our journey into higher quality and better performance by using a term that would relate to airfield operations, intelligence, surveillance and reconnaissance operations, unmanned aerial vehicle operations or cyberspace operations," he said.
"So Air Force Smart Operations 21 is the ideal project name for this journey we are embarking on," he said.
The program is based on both Lean and Six Sigma business process improvement tools. These tools were developed chiefly in the private sector to focus on increasing value to customers, save time and money, reduce waste and improve quality.
A process is made lean by re-engineering it to eliminate steps that add no value to the end product or by combining process steps to save time. For instance, moving tools and supplies closer to a work area to reduce the number of footsteps workers must take to complete their jobs.
It is also about minimizing "batch and queue" processes. In manufacturing, a raw material may need to pass through several workstations before it becomes a final product. The initial workstation may drill a single hole or make a single cut in a batch of several thousand pieces of raw material.
The semi-finished parts then go into a queue, waiting for the next step in the process. Once the part is cut or drilled, it loses its value as raw material, but has gained no value as a final product. So, it becomes a financial liability. A leaner process would attempt to move each part through the system in one pass, if possible, to eliminate warehousing of unfinished parts.
Six Sigma deals primarily with quality control and tolerances. If one step in a manufacturing process requires a board be "cut to eight feet," an employee might spend too much time lining up raw material at a cutting station to ensure the goal is met. Six Sigma has manufacturer ask customers to be clearer about what is truly needed. If a deviation of a half-inch is acceptable to the customer, then the worker will be able to cut more boards in less time. That produces less reject boards that end up in a scrap bin. The process saves money for both the manufacturer and the customer.
Six Sigma has users look at many areas of a process to determine what a customer truly needs, and to then make determinations about when and where it is appropriate to spend more money to achieve higher levels of perfection.
Secretary Wynne said the Air Force will use Smart Operations 21 to increase the efficiency of the processes it uses to develop its own products.
In some places, Air Force people already have that mindset, he said. For years, air logistics centers have improved their workflow by employing some of the tools that make up Smart Operations 21, said Maj. Gen. Kevin J. Sullivan. He is the commander of the Ogden Air Logistics Center at Hill Air Force Base, Utah.
At the conference, General Sullivan said the Ogden center has processes in place to save time and money, and to give customers what they really want -- faster turnaround on their aircraft.
The general said things are moving away from a traditional batch and queue process for aircraft repair. Optimizing workflow has helped the center decrease the time it takes to get an airplane back in the air.
By creating work cells -- where aircraft move through at a pace of one every two days -- the center eliminated having large numbers of aircraft lined up waiting for somebody to get to them to apply the next step in the process.
"What we really had going on was historic batch processing for these airplanes," General Sullivan said.
Now aircraft move quickly from cell to cell. Paying attention to individual processes optimized work within a cell. Tools and parts are made available to workers locally, so they don't have to travel to get them, he said.
"Think of your technician as a surgeon," General Sullivan said. "Give him all the tools and supplies he needs to work on the airplane so he doesn’t have to leave the airplane."
One thing the general implemented was rolling supply bins. A later improvement was the introduction of parts vending machines. They allow parts to be sold on an as-needed basis. That way, the center does not have to warehouse parts.
"We don’t pay for those parts until the worker puts in their number to get the part," he said. "Not only are we getting consumables out to the work site, but we don’t pay for that inventory."
Col. Samuel Cox, who commands the 436th Airlift Wing at Dover AFB, Del., applied similar thinking to isochronal inspections for the base’s fleet of C-5 Galaxy aircraft.
The inspection process had never really been engineered, the colonel said. Over the years, new requirements were simply tacked on to the end of the process without regard to the time needed to meet the new requirement.
If repairing one C-5 part takes 10 days, and the repair doesn't begin until the 10th day of the inspection, then the aircraft can't be back on the flightline until the 20th day, the colonel said. The isochronal inspection process was re-engineered.
"In the end we completely re-flowed the process, with the long lead items at the front end," Colonel Cox said. "The first thing that happens now is everybody in the ISO dock tears into the panels -- it’s a collective effort -- and they can identify the long lead time items."
Reducing the time it takes to fix a C-5 means it spends more time doing its job.
"We need to have those airplanes out there flying missions, not in the ISO dock," he said.
While developed mostly in the private sector, the two business process improvement tools serve as the foundation for Smart Operations 21.
Secretary Wynne said the Air Force needs a strategy to understand and optimize the basic processes around which it organizes. Smart Operations 21 will be the centerpiece of the strategy, he said.
Monday, January 09, 2006 10:21:3 IST
The card offers the fastest turn-around times for approval and cash in the market..
SBI card announced that it has crossed the two million-card customer milestone.
SBI card, a joint venture between GE Money and State Bank of India (SBI) that began in 1998, has experienced double-digit growth by combining SBI’s market presence and strength as a trusted brand with GE Money’s global expertise in technology, business processes, and international leadership in innovative financial products and services.
The size of the Indian credit cards market is estimated to be about $4 billion and is growing at 35 per cent per year. SBI card, with its rapid expansion plans, aggressive investments in large co-branded card deals and technology to enhance customer experience, aims to be the preferred credit card provider in India for consumers across all segments of society. SBI, India’s largest and most trusted bank has over 14,000 branches nationwide and 6,000 ATMs — the largest ATM network of any bank in Asia outside Japan.
Two million cards is a significant milestone and we are very pleased with our customer feedback and loyalty to SBI card’s product offerings,” said Roopam Asthana, CEO of SBI card. “We have made a commitment to understanding and addressing our customer’s dynamic financial needs. Only in this way can we continue to deliver the most innovative and differentiated products to consumer across the entrance spectrum in India.”
By leveraging GE Money’s sophisticated analytics and risk management, investing in state-of-the-art technology and utilizing GE’s six sigma/lean processes to eliminate inefficiency any waste, SBI card offers some of the fastest turn-around times for approval and cash in the market. It answers 500,000 customer service calls and processes and delivers a million cards a month.
SBI card offers tailor-made products which no one else in the market can offer, such as the LG Card, with the largest durables and electronics company in India, and the Hero Honda Card, with the world’s largest make of motorcycles, as well as the Lifestyle Card, a visa card with ‘Lifestyle’ (a part of the landmark group) - one of India’s largest premium multi branded retail store chains. For customers who wish to leverage their spending power for a good cause. SBI card offers a co-branded visa card with four leading NGOs; national association of the blind, SOS villages of India, World Wildlife Federation, and Caner Patients Aid Association.
With sizeable investments in people, technology and processes, SBI card plans to launch a number of exciting new product in 2006 to continue the momentum it has build in India.
