IW Best Plants Profile - 2000

Different By Design Wireless-equipment maker breaks down communication barriers. ByDavid DrickhamerLucent Technologies Inc., Product Realization Center, Wireless Networks Group, Mount Olive, N.J.At a glance

• Product-development cycle time reduced over 50% from 1996-99.
• Material cost reduced 43%.
• Assembly productivity increased nearly 150%.
• Manufacturing inventory reduced 70%.
• Recipient of 2000 Shingo Prize for Excellence in Manufacturing and 1999 New Jersey Governor's Gold Award for Performance Excellence.

When it was established in 1994, the Lucent Technologies Product Realization Center (PRC) in Mount Olive, N.J., was supposed to be different. The product-development cycle at the company, then part of AT&T Corp., was too long, communication was slow, and costs were too high. The solution: co-locate manufacturing and development. By eliminating physical distance, Lucent reasoned, ideas would flow more quickly and more cost-competitive products would move to market faster. It was a simple enough concept, but the critical ingredient needed to make the relationship work is the right plant culture. Culture became a focus, recalls Jim Preston, operations director, following some research on high-performing companies. They discovered that successful organizations, while dissimilar in many ways, have a clear vision of what culture is right for them. "It's an engineered act," says Preston. "It's not just random or haphazard. The CEOs of those companies know what culture they want, and they deliberately drive to attain that culture." The layout of the 252,000-sq-ft facility is the most visible element of the PRC culture. The central production area, where teams of skilled technicians assemble and test second-generation Flexent Modcells (base stations for wireless communication systems), flows seamlessly into the support departments around the perimeter. There are no walls and no individual offices, only cubicles. For a manufacturing operation it's extra-ordinarily quiet. The floor is covered with electrostatic-discharge-dissipating carpet. Sound-dampening baffles hang from the ceiling. A number of conference rooms allow space for meetings and private conversation. The goal is to eliminate any barriers that would hinder communication. Back in 1994, after the facility had been set up, air-powered screwdrivers were removed because the noise they created was too disruptive. Members from the various departments don't share office areas. They are spread out across the facility, which encourages people from different functional areas to exchange ideas and information. In general, there's a low tolerance for bureaucracy or any failure to communicate at Mount Olive. To this end, many people are outfitted with text-based pagers and two-way radios. "If we uncover a problem we like to get to it [in] as real time as we can because that allows us to see the problem firsthand and determine if it's something that we might be seeing in other cells," says Linda Diffley, senior manager, manufacturing operations and engineering. "The worst thing is [when] someone sets something aside... hoping that somebody pays attention to it later." Part of Lucent's Wireless Networks Group, Mount Olive developed and produced code division multiple access (CDMA) minicells from 1996 to 1999. CDMA is one of four primary wireless communication standards. The current CDMA product line, the Flexent Modcell, has been in production since October 1999. Available in PCS (1.9 gigahertz) and cellular (850 MHz) versions, the new product can carry the same number of calls in one-third the space of the previous model and is designed to be easily upgraded to third-generation wireless systems. The 1,015-lb Flexent Modcell cabinets roll across the carpet on wheeled dollies. Each unit, custom built to various licensing, network configuration, and installation specifications, consists of more than 100 interconnected subassemblies that include receivers, amplifiers, filters, and signal/message processors. Traveling with each unit, a pale blue three-ring binder contains the work order and step-by-step instructions needed to build each product. Of the 16 self-directed work teams on site, 11 PODs -- short for Production On Demand teams -- currently assemble and test some 50 Flexent Modcells per day. The other work teams are dedicated to circuit-pack manufacture, shipping and receiving, material flow, and mechanical assembly. With an average size of eight technicians, these teams handle most supervisory functions. They schedule their work, shift coverage, and vacations; measure product quality and track quality metrics; monitor and update team skills; and interview, select, and mentor new team members. The process technicians all have two-year technical degrees or 10 years of relevant experience. The products manufactured in Mount Olive are eventually transferred to other production sites. When the facility's minicell line for the South American market was moved there last year, technicians from Brazil spent several weeks working in New Jersey to learn how to build and test the product. People from Mount Olive later traveled to South America to train and certify assembly and test associates. During the product-development process, experienced technicians serve in a development POD, contributing what they know about assembly and testing. Designers also have hands-on involvement in prototype assembly. This cooperation eliminates the traditional handoff between development and production, in which the development team creates specifications and "throws them over the wall" to manufacturing. In fact, the engineering team who developed the initial product concept also is responsible for manufacturing, and even for resolving installation issues. They have end-to-end accountability. This development model yields highly manufacturable designs in a shortened time span, reports Manny Niknam, technical director, product realization. "Continuous DFM [design for manufacture] is not a theory. It's not a checklist," says Niknam. "You touch it, you feel it, you know if it's going to go together or if it's going to be a nightmare. You go back and you fix it because you're going to go through this [problem] again." The PRC engineering team and one test and assembly POD are currently supporting development of a third-generation wideband CDMA product for NTT DoCoMo, Japan's dominant cellular carrier. The project is being spearheaded by Lucent's wideband fundamental research group, which was relocated to a building next door to the PRC a couple of years ago to further accelerate the development cycle and eliminate traditional project handoffs. Interestingly, the open culture that had been so successful didn't work for the new group. Its members required some private offices for frequent conference calls with their customer in Japan, and distraction-free zones for software developers, as well as an alternative compensation system with bonuses linked to an aggressive development schedule. Attempting to resolve the conflict between the two groups, managers realized that the culture that had worked so well for one team and one project, which they had zealously cultivated over the years, wasn't suitable for all projects. As a result, Mount Olive's working principles, which are posted throughout the site, were carefully revised to accommodate these different approaches. Throughout it all, communication has been key. "Free and open communication has been a cornerstone of our success," Preston notes. "Without free and open communication, you've got problems." Web Exclusive Best Practices Lucent Technologies' Product Realization Center, maker of wirless communication equipment. By David Drickhamer Benchmarking contact: Jim Spichiger, quality coach, [email protected], 973/426-7031. Web-Based Vendor-Managed Inventory To aid communication with suppliers, the materials management department in Mount Olive established a Web-based vendor-managed inventory (VMI) program that provides suppliers complete access to current information about demand, current orders, and available quantities. Because the facility's supply base includes small mom-and-pop operations in addition to huge multinationals, the system had to be simple and easy to use. During the design of the program, recalls Doug Luttrell, supply-line technologist, Lucent brought the suppliers in and asked them, "If we could show you something, what would you like to see?" The materials-management department incorporated many of these suggestions, and allowed the suppliers to evaluate beta versions of the program. Rolled out in mid-1999, 80% of the current supply base actively logs onto the system on a weekly basis. Many reportedly use it to schedule their production, either by printing out the reports daily or directly via an Internet-connected computer on the shop floor. Vendors can look at original purchase orders and original quantities, and see how many they've delivered, where specific parts are, and what lot they came in on. Different colors indicate the status of various part numbers. Green means they're okay. Yellow means they're going to run out of the part next week. Red means it's past due and requires immediate attention. The Web VMI system speeds communication and gives the Mount Olive facility a more direct link with suppliers than competitors have, notes Luttrell. Hiring The Right People At Mount Olive establishing the right culture starts with the hiring process. The facility looks for people who possess, in addition to stellar technical abilities, the right personality traits such as personal accountability, willingness to take initiative, the ability to work on a team, the ability to adapt to change, and a real passion for their work. During start-up, the plant purposely didn't hire too many people from AT&T so they wouldn't have to overcome any cultural baggage. After being screened for their technical ability, job applicants go through a two-stage interview process where they first interview with the team where they'll be expected to fit in. If the team thinks the applicant will be a match, a subsequent behavioral-event interview is conducted by Human Resources to determine if a person's personality will allow him or her to be successful in a team-based environment. One of the keys to a successful hiring process, according to business director Jim Preston, is finding people who know their passion, and whose passion is well suited to the position for which they are applying. "A lot of times you'll ask people in an interview their passion and they'll tell you their hobby," Preston observes. "It's probably only about 50% of people who have really gone through the mental process, wrestling through all of their likes and dislikes in life. They understand what their real passion is. When you find somebody who understands their passion, it's a wonderful thing. These are people who lose track of time. They'll sit down at their desk in the morning and the next time they look at a clock it's eight o'clock at night. These are the people who are thinking when they're in the shower, when they're commuting. They're just consumed with passion for their work." Supplier Development By co-locating the product development team and assembly, the Lucent Product Realization Center (PRC) in Mount Olive created a continuous dialog between these two functions, cutting the feedback loop from weeks to hours. For the Flexent Modcell product, they decided to extend this co-location concept to suppliers by implementing early supplier involvement (ESI). Rather than optimizing individual components in the design phase, the team learned how to optimize the whole system. "We actually had two engineers and a CAD guy that lived in our facility, among my team," recalls Manny Niknam, technical director, product realization. "It was transparent who was who to an outsider. They were part of the team. When we developed the cabinet the information was continuously going back to their factory to do the prototype fabrication. So we actually built the prototype fairly quickly." By designing parts that were easily procured and manufacturered, models could be made as much as six times faster, Niknam reports. In many cases, design changes were made on a Monday and by the following Monday, modified model parts had arrived. For this to work well, says Niknam, the supplier representative has to be on-site all the time during initial design and prototype. In the beginning one PRC vendor only dedicated one engineer for two days a week, figuring that two days was better than none. After a couple weeks of returning after a few days to discover dramatic changes that they hadn't had any input on, the vendor committed the engineer to the project full time. Keeping Tabs On Culture "We value culture and consider it a critical element of business success. It's not just a nice thing to have. It achieves business results," states Preston. "We try to understand the culture we want and measure where we are against that." To track the cultural climate, PRC conducts three People Value Added surveys on a quarterly basis. Associates are asked if they understand how their work contributes to the organization's goals, if they feel recognized for their work, if they think the operation is making progress in reducing cycle time and customer response time, if they're getting enough support and cooperation, and generally if they're excited and satisfied by their work. Managers compare the results against previous surveys, between different departments, and against Lucent as a whole. The numbers show where there are any gaps, prompting corrective action such as focus groups, which can lead to the development of campus-wide training courses. The cultural climate also is monitored via an annual Value In People (VIP) survey conducted at the corporate level that prompts many organizational development programs. At Mount Olive there are monthly dialog sessions between associates and the vice president, and monthly town meetings are open to the entire campus. During these meetings questions from the "moose box" are answered. The anonymous question box allows employees to ask questions that haven't been addressed elsewhere, "putting the moose on the table." Outsourcing Strategy Worldwide, the Lucent organization is concentrating on high-end process manufacturing and system integration, focusing on final assembly and test operations, and outsourcing everything else possible. At the (PRC) in Mount Olive Lucent is currently moving away from mechanical assembly and circuit-pack manufacture. "If you take a look at all of the processes that are necessary to develop and manufacture product, it would be difficult for us to be truly excellent in each of those processes," observes Preston. "So we try to identify which are critical for us to be excellent in, because it alters our competitive differentiation. We will always perform those processes ourselves. For the other processes, we'll look for a vendor that has its mission in life to be excellent in that process, and then outsource it so that we've optimized across the whole value chain." A lot of the work that has been outsourced at Mount Olive has been outsourced on site. About one-third of the people on the campus are not Lucent employees. Communication Between Self-Directed Work Teams Within the Production On Demand (POD) teams at Mount Olive, planning, auditing, quality, and training are coordinated through process technicians designated as "cell points." These cell points are comprised of representatives from each team. When an issue arises, the quality cell point from one POD contacts his or her counterparts in other PODs to inform them of the problem and share related information. This system allows any production problems and solutions to be rapidly communicated across the facility.