Malcolm
Baldrige National Quality Award 1998 Recipient
Boeing Airlift and Tanker Programs
Boeing Airlift and Tanker (A&T) Programs designs, develops, and produces
the C-17 Globemaster 111 airlifter. Capable of carrying a 170,000-pound
load, these aircraft are used by the U.S. Air Force, the company's primary
customer, to transport large, heavy cargo to sites around the world. A&T
is the dominant supplier in the military market for heavy-lift aircraft,
and it is the sole U.S. competitor in the emerging global commercial market.
A&T also supplies parts and services for transport aircraft and in-flight
refueling tankers. Sales in 1997 exceeded $2 billion.
A&T is part of the Aircraft and Missile Systems Group, the St. Louis-based
segment of The Boeing Company. In addition to building the C-17 Globemaster
111, A&T is responsible for aerial tanker aircraft and other U.S. Air
Force and U.S. Navy airlift programs, including the Seattle-based C-32
and C-40 aircraft programs. A&T employs over 8,700 people at its headquarters
in Long Beach, CA, and facilities in Macon, GA; Seattle, WA; and St. Louis,
MO. A&T also has personnel assigned to customer support facilities at
Air Force bases in South Carolina, Texas, and Oklahoma. Seven unions represent
55 percent of A&T's workforce.
In addition to other awards, A&T received the California Governor's Golden
State Quality Award for management in 1996, and its Macon facility received
the Georgia Governor's Employer of the Year Award in 1998.
Quality Response
A&T is in the midst of fulfilling the largest contract ever
awarded by the U.S. government-a $14.2 billion agreement to deliver 80
C-17s to the Air Force. Signed in 1996, the contract affirmed a major
turnaround in the company's performance and its ability to make and deliver
the world's most advanced airlifter on time and within budget. Since 1995,
A&T has maintained an on-time delivery record of 100 percent. A few years
earlier, the Defense Department had threatened to cancel the C-17 program.
Technical problems, cost overruns, and late deliveries vexed the complex
concurrent development and production effort.
A&T's customer demanded immediate improvements. The organization, then
a unit of the McDonnell Douglas Corp., responded with a complete overhaul
of its business, aiming to become "process-focused and customer-driven."
It initiated partnerships with customers, unions, and suppliers. It replaced
manager-controlled teams with empowered teams that now function like small
businesses motivated by common, systematically developed goals. A&T directly
involved its 7,000 Air Force customers and suppliers in planning and decision
making at all organizational levels.
In 1993, A&T began to work more closely with its customer to use Customer
Performance Assessment Report (CPAR) ratings as valuable feedback to identify
areas for improvement. The CPAR is the Air Force's primary tool for rating
contractor performance. Since 1993, A&T has received "satisfactory" or
"exceptional" ratings in all CPAR categories.
Interconnected Processes
Interdependence and integration characterize A&T's organizational structure
and its approaches to performance improvement. A high-level "enterprise
process model" defines the entire business as eight interconnected process
"families." These major groupings range from enterprise leadership and
new business development to production and post-delivery product support.
Each family encompasses up to 10 major processes, which, in turn, are
made up of several tiers of supporting subprocesses.
The result is a coherent framework for process management. The model provides
a direct line-of-sight from A&T-wide initiatives to the work plans and
goals of teams and workers. It also helps to identify apparent operational
dependencies that link subsets of process families. A&T manages these
cross-cutting relationships as "mega-processes" that typically extend
to suppliers and customers.
David Spong, A&T vice president and general manager, heads the Leadership
Team that sets the organization's strategic direction using its 10-step
Integrated Planning Process. A key responsibility is defining the requirements
and expectations of A&T's customers, workers, suppliers, shareholders,
and the local community. Beyond analyses of A&T's diverse collection of
data, executives draw on information gathered during their many direct
contacts with these major stakeholders. Leadership Team members spend
up to half their time communicating with Air Force customers. Interactions
include daily phone calls and "stand-up" (to ensure brevity) meetings,
videoconferencing meetings, weekly reviews, and formal program evaluations.
Inside A&T, executives meet with employees in roundtable discussions,
focus groups, and a variety of other venues. In addition, senior executives
lead quality awareness sessions with A&T suppliers, who number more than
600 and account for two-thirds of the cost of the C-17.
These and other face-to-face interactions sharpen the Leadership Team's
understanding of more than 30 formal assessments of factors ranging from
customer requirements to market risks to the regulatory environment. Cross-comparisons
also are performed during the integrated planning process. For example,
results of customer, workforce, and supplier surveys are correlated to
help the team uncover high-leverage opportunities for improvement.
The planning process yields short- and long-term objectives for increasing
customer satisfaction, improving processes, and strengthening market position.
A&T also identifies deficiencies, formulates strategies to close these
performance gaps, and develops implementation plans. These outputs are
organized into an annually updated 10-year operating plan.
Process-Based Management
To help it "perform to plan," A&T has developed a seven-step approach
for defining, managing, stabilizing, and improving processes. This process-based
management, or PBM, methodology also is used to set performance metrics
that are indicators of efficiency and the chief drivers of customer satisfaction:
quality, timeliness, and cycle time.
PBM is the principal tool of A&T's more than 100 Integrated Product Teams
(IPTs) and the even larger number of functional and self-directed work
teams that support the IPTs. Made up of engineering, work-team, customer,
and supplier representatives, IPTs oversee the design, production, and
delivery of the C-17's more than 125,000 parts and supporting services.
Inclusion of work-team members ensures a systematic approach to process
design and clear communication of the most important elements of the product
to be manufactured or assembled. Customer participation helps to maintain
the focus on priority requirements for quality and performance.
Using the PBM approach, IPTs have become adept at zeroing in on process
improvement opportunities. One team, for example, developed a dry sealant
to pre-coat the 1.4 million fasteners used to assemble a C-17. The innovation
stemmed from the IPT's desire to replace a "wet" sealant that was difficult
to apply and cost more to dispose of than to buy. The innovation reduced
rework, improved airframe quality, reduced structural fatigue, and enabled
mechanics to work "faster, cleaner, and better."
IPTs manage their own resources and are responsible for meeting all quality,
technical, schedule, and cost requirements. High performance work teams,
which are part of the IPTs, go through four stages of training and development
to foster shared commitment, impart technical skills, and teach team-based
decisionmaking methods. As teams move from one stage to the next, their
autonomy and responsibility increase. The facilitator measures team-based
competencies and behaviors, task performance, and results-in short, the
team's readiness to become full "owner" of a product, service, or process.
In partnership with its unions, A&T has created a seamless environment
that enables union and non-union workers alike to participate and contribute.
Production job classifications have been reduced to 10 and the number
of duties in a category has been increased considerably. Two-thirds of
factory employees are in the same classification, and 90 percent of engineers
occupy a single job family.
Results
A&T's share of the U.S. military airlift market is 84 percent, almost
eight times larger than its nearest competitor. The company credits its
team structure with a better than 60 percent improvement in productivity,
measured as revenue generated per employee. Productivity has increased
from $200,000 per employee in 1994 to a projected $327,000 in 1998. For
three of the last four years, A&T's productivity levels have topped those
of its best competitor.
Partnering with suppliers also has paid off. Rejection rates have dropped
from 0.9 percent in 1994 to 0.08 percent during 1998, and supplier on-time
delivery has jumped to 99.8 percent, up from 75.9 percent. With its PBM
methodology, A&T has improved the performance of its 50 major processes.
From 1994 to 1998, performance on key quality measures has improved by
50 percent. Over the same span, A&T cut cycle time by more than 80 percent.
Since 1992, time spent on rework and repair of the C-17 has been reduced
by 54 percent, a solid indicator of quality gains. Mean time between corrective
maintenance has increased eightfold since 1993; the C-17's current level
of performance is nearly four times better than that of the next best
competitor's aircraft.
Trends in key measures of financial performance parallel gains in quality
and operational performance. A&T's return on net assets was nearly seven
times better than the next best competitor in 1997. Net asset turnover
has improved by a factor of seven since 1994, while return on sales has
improved nearly threefold.
Baldrige Website comments:
baldrige@nist.gov
Date created:
08/27/2001
Last updated: 11/29/2011
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