Storage Technology Ltd.: IW Best Plants Profile 2005
Storage Technology Ltd., Ponce, Puerto Rico
Employees: 463, non-union
Total square footage: 152,872
Primary products: Tape drives, virtual storage systems, automated tape libraries and disk storage systems
Start-up: 1979
Achievements: In 2004 StorageTek de Puerto Rico improved first-pass yield by 27%, improved field reliability for all products by 59%, increased its overall employee satisfaction index to 83% (the best results in the company) and improved on-time delivery by 20%. President and Director Tom Despres was named 2004 Manufacturer of the Year for the southern region by the Puerto Rico Manufacturing Association and this year was named Manufacturer of the Year for the island.
It was New Year's Eve 2004, and Cindy Despres wondered why her husband was crying. He had just hung up the phone. What could be wrong?
As Tom Despres tells it, what was going on at the StorageTek plant in Ponce, Puerto Rico, that he manages was so shocking that it brought him to tears.
It was a little after 6 p.m., and Despres had called the plant, which produces digital information storage systems, to make sure his staff was shutting everything down and heading home. Normally they would be working a second shift, but Despres ordered the plant to combine two shifts into one that day and close early so that everyone could be home before the celebratory-but-dangerous gunfire that accompanies the New Year celebration on the island got started. What stunned him was that his employees said no, they wouldn't be stopping just yet. An order for 13 of the company's larger storage systems had come from a coveted customer earlier that day, and the plant had 11 ready to ship. Two more to go before anyone was leaving.
Despres knew about the order, which, if fulfilled that day, would mean millions in sales to the customer the next year. But he had already told his boss there was no way they could do it. He didn't want employees driving home just as bullets started flying.
The StorageTek employees, however, had a different idea. Maybe Despres was willing to turn down the request, but they weren't.
"I couldn't believe it," the native West Virginian says of that night. "I just couldn't believe it."
In many ways, it was the shining moment of his career in manufacturing, which includes stints with a telecommunications equipment-maker in Mexico and with an electronics contract manufacturer in the United States. Since taking the job of president and director of the Puerto Rican plant in 2002, Despres had been on a mission to prove the 463 employees at the 158,872-square-foot plant could out-maneuver their lower-paid brethren in China when it came to cost savings, quality, speed and efficiency. The CEO of the company was considering moving production overseas, but he gave Despres and his plant a chance to prove themselves, and prove themselves they did.
In 2004 alone, the plant used process improvement methods to decrease costs by $2.5 million. In the prior three years, parent company Storage Technology (Bermuda) Ltd. had experienced a 180-degree turnaround under the direction of Roy Perry, a corporate vice president of global supply chain formerly with Dell. When Despres came on board to further implement Perry's vision at the company's largest plant, the employees of StorageTek Puerto Rico fully embraced total quality management, theory of constraints, Toyota Production System, Six Sigma and agile manufacturing. The emphasis was on training, technology and results, and Perry challenged the plant to improve performance by 20% annually. In many areas, the plant has exceeded this goal.
Using value-stream mapping and kaizen events, for instance, StorageTek (the brand name for Storage Technology products) employees reconfigured the production floor in 2004 to reduce cycle times on the plant's various products by an average of 20%. This involved -- among other things -- separating high-volume and high-mix products, using conveyors instead of carts in some areas, and moving from batch to linear flow for value-added tape products. (The plant manufactures tapes on which digital information is stored, various sizes of booth-type structures in which the tapes are stored, and the robots, hardware and controls that customers use to retrieve a tape and access the stored information.) The floor improvements allowed the plant to increase volume in one area by 33% using the same number of employees. In the value-added tape area, improvements allowed for a doubling of volume in half the space.
These achievements dovetail with one of the plant's overriding goals, to be the preferred production site for $2.2 billion StorageTek, which has additional production in Colorado, Minnesota and France. Since 1995, the value of production at the Ponce plant has increased from 24% to 90% of the company total. The space reductions in the value-added tape area, for instance, led to the plant assuming tape production for the whole company.
The production floor is bright and clean, with ample signs and signals, statistic-laden bulletin boards, and overhead monitors with ongoing updates on orders, work-in-process and performance-to-goals ratios. About 15% of the employees have been with the plant since its founding 25 years ago, and, according to Despres, the workforce is unlike any he has worked with before.
While many manufacturers struggle with employee acceptance of process improvements, the Ponce workforce has embraced them. This was apparent during an IndustryWeek validation visit in July, when, as part of competition, a group of employees wrote and performed an emotional skit about using value-stream mapping to decrease waste. These employees meet regularly to further their ongoing improvement methods, which are meticulously tracked and reported by Process Manager Carlos Garcia. The fervor is everywhere, not just on the plant floor. For instance, while attempting to access computer files as part of a presentation to IndustryWeek, Garcia, Strategic Quality Manager Jose Sampoll and Materials Group Manager Osvaldo Cruz first debated the most efficient method to wade through the Windows filing system to get to the files. The give-and-take was good natured, but each man made sure his ideas were heard. Additionally, when Despres arrived at the plant as its new captain, his first dilemma was that the employees were striking over a corporate decision they disagreed with. He was able to resolve the conflict, but what struck him as most unusual is that the employees are not unionized.
Despres has been so moved by his experience at the Ponce plant that he is writing a book about the employees and their passion for betterment. "Employee loyalty is the key to our success," he says.
That success must continue in order for the plant to stay competitive. Growth in 2005 is at 24%, so Ponce is striving to increase capacity while improving by 20% first-pass yield, product reliability and on-time delivery. In addition, StorageTek, like many other manufacturers, is increasing its post-sales service offerings, and Ponce is part of that.
It appears the passionate people are once again up for the challenge. The plant receives strong marks for customer satisfaction because of improvements in on-time delivery and quality. Behind these improvements is a process that begins at a vendor-managed inventory hub about a mile from the plant, where 70% of purchased material is consolidated. It ends with either direct shipment to customers or "finished-goods supermarkets" in Puerto Rico, the Netherlands and Wisconsin. (The finished-goods markets help meet significant demand fluctuations at the end of each quarter.) Signals within the supply chain flow via ERP signals linked to a proprietary software program known as WorldChain.
If one customer's testimony is any indication, the system definitely works. Sun Microsystems, StorageTek's No. 1 OEM customer, finished acquiring the company for $4.1 billion in September. In its Best Plants application, which was completed before the Sun announcement, StorageTek reports "dramatic improvement in the Sun scorecard in the areas of quality and delivery through Q204."
