- Don't shut down. Start over – but recognize that it won't happen overnight.
- Use the full range of tools to remake your operations.
- Remember that people are at center of your transformation – and your success.
The notion that American manufacturing cannot compete in a global supply chain that stretches out to low-cost nations has become almost the common wisdom today. But we believe that this perception is wrong, and for evidence we point to our own company.
For over four decades, IEC Electronics Corp. has served as a premier provider of electronic manufacturing services to some of the most advanced technology companies in the world. But not long ago IEC's Newark, N.Y., operation was in danger of imploding. The plant struggled to remain viable as low-cost countries took over production of the motherboards that IEC once produced for personal computers. In 2005 the facility found itself in the unenviable position of starting over or shutting down. The company chose the former path and set out to diversify its product portfolio and embrace Lean manufacturing and Six Sigma processes.
But change didn't happen overnight, and it didn't happen easily. Under the leadership of our current CEO Barry Gilbert, President Jeff Schlarbaum and Executive Vice President Don Doody, we implemented Behavior Change Models to transition from the "current state" to the "desired improved state." Mark Northrup, director of advanced technical operations, instituted a Technical User Group (TUG) with subject matter experts (SMEs) to facilitate alignment with advancements in the electronics manufacturing sector. And we created Business, Quality and Environmental Roadmaps that help us envision and plot a course into the future.
We employed a full arsenal of tools to get there: Kaizen, shifting from a factory functional layout to a focused factory, an eight-stage process of creating major change, and a defined-values communication program. We adopted Lean tools like 5S and moved to a "Visual Factory" approach that reduced assembly errors, helped create assembly instructions in a more efficient manner, and supported up to date documentation on New Product Introductions (NPI).
Assembly Improvement Projects were transformed from a Current State Value Stream Map to a Future State Value Steam Map. This resulted in a 65 percent reduction in cycle time and a 45 percent reduction in process steps. Best practices improvements have been documented and shared so all other areas can incorporate new ideas for maximum benefit.
We also moved to a focused market approach, with a high-mix, low-volume model of primarily build-to-order printed circuit boards for growing industries, including medical device and aerospace and defense manufacturing. Today we have a bona fide comparative advantage by utilizing this focused manufacturing model.
As a result of these initiatives, we have reduced our in-plant defect rate 65 percent over three years; experienced a 143 percent total unit plant volume increase between 2007 and 2010; and, together with other plants, achieved a more than four-fold increase in profitability in three years. In 2010 we were given the "Best Plants" award by a leading industry magazine.
IEC has grown from a $19 million operation with 118 employees in 2005 to a $96 million company with 629 employees occupying four domestic locations today. We specialize in custom manufacturing high-reliability electronics where quality is paramount, yet we have created a "high intensity response culture" to react to our customer's ever-changing needs. We are a true extension of our customer's operation, and applying Six Sigma and Lean principles have helped us eliminate waste and lower our customer's total cost of ownership.
But we know that we cannot rest on our laurels. John P. Kotter, the Harvard business professor, has written about the dangers of complacency in all its forms: too much happy talk from senior management, low overall performance standards, a "kill the messenger of bad news" culture, and a lack of sufficient performance feedback from external sources. Today IEC Electronics does not allow for complacency in its culture. But we still recognize that our people are always at the core of our success story.
American manufacturing can compete in a low-cost world by doing what we have always done best: adapting, improvising and overcoming. At IEC, our mission statement of "Absolutely Positively Perfect and On-Time!" has served us – and our customers – well.
About the Authors: Don Doody is executive vice president and Mark Northrup is director of advanced technical operations at IEC Electronics Corp. More information at www.iec-electronics.com.