Aerospace supplier shores up failing facility and more than doubles operating income in year one of three-year plan

Strategic Intent

To create an organization with consistent and reliable processes, management behaviors and decision-making that accelerates operating income to 25% within three years

Situation

$3 billion global supplier of aerospace systems and components, serving a broad spectrum of the aviation industry worldwide
64 operating locations that design, engineer and manufacture aerospace systems
Key U.S. facility with significant growth potential has both declining customer service and poor financial performance (O.I. only 7%)
Internal corporate efforts have failed in this facility
President/COO has keen urgency around the change process

Issues and Barriers

Degenerating state of costs, customer service and quality that is jeopardizing future orders and new business growth opportunities
On-time customer product delivery less than 50%
Attitudinal and behavioral issues, lack of skills/training, communications breakdowns and poor process controls, all contribute to the dysfunctional nature of this facility
Consistent reactive fire-fighting is the plant management’s style

Key Implementations

Translated and aligned SMART goals across all organizational levels
Developed and implemented a comprehensive, proactive System for Managing (SFM) that is focused on production scheduling and capacity planning
Established goal achievement review process linked to new SFM
Enhanced sales process to drive business plan realization

Results

Cost of Quality Reduced by 51%

Financial results are an overall annualized improvement of $4.1 million, which is translated to an operating income ratio of 16%, up from the prior year’s level of 7%, a big year-one step toward the three-year O.I. goal of 25%
Shop floor productivity improved by 48%, contributing $1.8 million to the new O.I. level
Cost of quality due to scrap, rework and product defects was reduced by 51%, from 8.9% to 4.3%, of sales, another significant income contributor
Reduced past-due backlog hours by 25%, from 16,500 hours to 12,200 hours, improving revenue flow and customer satisfaction

Client Perspective

Things are moving in the right direction in [plant location].
— President & COO

I can attest to the change in behaviors in [plant location].
— Division President