Achieving Excellence through People, Technology, and Teamwork

JOSEPH C. HIGH

Consolidated Diesel Company began in 1978 as a joint venture between Case IH and Cummins Engine Company for the design, development, and manufacture of two new series of diesel engines in the 48-to 250-horsepower range. Consolidated Diesel Company (CDC) was formed in October 1980, the fifth largest industrial investment made in the state of North Carolina at that time. The company's mission is to be a world-class producer of diesel engines, kits, and components of the highest quality and the lowest cost delivered on time to meet all customers' expectations.

THE ENVIRONMENT, THE FACILITY, AND THE OBJECTIVES

The CDC facility is located in Whitakers, North Carolina, a small rural community about 10 miles north of Rocky Mount, 60 miles east of Raleigh, and 130 miles south of Richmond, Virginia. The entire region east of Raleigh is in transition from an agricultural to an industrial economy. The physical structure encompasses 1.1 million square feet and is located on 250 acres. The building was designed to reinforce many of the operating concepts that are important to the functioning of the facility. A local newspaper story described the building as "a conflict of cultures."

Upon entering the front door, one is immediately connected with the operating technology. Skylights are strategically placed in areas where there is a high concentration of people activity to



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People and Technology in the Workplace Achieving Excellence through People, Technology, and Teamwork JOSEPH C. HIGH Consolidated Diesel Company began in 1978 as a joint venture between Case IH and Cummins Engine Company for the design, development, and manufacture of two new series of diesel engines in the 48-to 250-horsepower range. Consolidated Diesel Company (CDC) was formed in October 1980, the fifth largest industrial investment made in the state of North Carolina at that time. The company's mission is to be a world-class producer of diesel engines, kits, and components of the highest quality and the lowest cost delivered on time to meet all customers' expectations. THE ENVIRONMENT, THE FACILITY, AND THE OBJECTIVES The CDC facility is located in Whitakers, North Carolina, a small rural community about 10 miles north of Rocky Mount, 60 miles east of Raleigh, and 130 miles south of Richmond, Virginia. The entire region east of Raleigh is in transition from an agricultural to an industrial economy. The physical structure encompasses 1.1 million square feet and is located on 250 acres. The building was designed to reinforce many of the operating concepts that are important to the functioning of the facility. A local newspaper story described the building as "a conflict of cultures." Upon entering the front door, one is immediately connected with the operating technology. Skylights are strategically placed in areas where there is a high concentration of people activity to

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People and Technology in the Workplace connect employees with the outside elements. Complementing the skylights are vertical light-walls that diffuse the sunlight as well as provide acoustical protection. Color is used throughout the facility not only to brighten the work environment but also to play a functional role. Major operating areas are identified by a unique color coding. Extending through the center of the building is a main support corridor, which houses facilities necessary for the effective functioning of the company. Housed within the main corridor are a hospitality room for customer and other VIP visits and an elaborately equipped quality laboratory containing one of the few scanning electron microscopes in an industrial lab. The lab has the capability to perform metallurgical testing, fine measurements, gauge calibration, and chemical analysis. A cafeteria, medical center, computer room, and mechanical room complete the main support corridor facilities. Partitions and the absence of doors between office cubicles throughout the facility promote an open atmosphere. In the production areas, the extensive use of glass continues the theme of accessibility and connection with the product and the technology. The support corridor also serves to separate the two operating environments—machining and assembly/test—to maintain clean assembly conditions. The entire assembly section of the new building is fully air-conditioned. A new concept in task cooling and lighting of areas with high concentrations of people activity in the machining portion of the building serves to reduce both the capital costs and the operating costs of maintaining a comfortable working environment for all employees. All engines manufactured at CDC are shipped to Case IH or Cummins Engine Company. Case is the second largest construction equipment manufacturer and the third largest agricultural tractor manufacturer in North America. Engines produced at CDC are used in such machinery as new Magnum tractors, agricultural loaders, cable-layers, crawler loaders and dozers, compaction equipment, forklifts, horizontal boring units, hydraulic excavators, industrial cranes, loaders/backhoes, logging equipment, mining and quarry equipment, skid steer loaders, trenchers, and wheel loaders. Cummins sells the engines to a broad range of customers for a variety of uses, including the U.S. military 5-ton tactical truck. The engines are also used in recreational vehicles, school buses, fire pumps, generator sets, industrial and construction applica-

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People and Technology in the Workplace tions, and both light-and medium-duty trucks such as the step van. The 1989 Chrysler Dodge Ram pickup is the first pickup truck with a turbocharged, full-sized diesel engine designed by Cummins with technical support from CDC and Chrysler employees. Most recently, marine applications have been added to this list. The principal market, however, for Cummins engines still remains the U.S. on-highway truck industry, with every major truck manufacturer offering Cummins engines. Cummins' average share of the heavy-duty truck market is more than 60 percent. With a detailed partnership arrangement, and an agreement that Cummins would be the managing partner, Consolidated Diesel produced its first engine in July 1983. Originally planned to achieve an ultimate capacity of 150,000 assembled engines and 80,000 kits of blocks, heads, and rods per year, CDC is beginning to realize its projected potential. In 1987 there were nearly 600 employees manufacturing 200 engines per day. In 1988 CDC approached 900 employees producing nearly 400 engines per day. The company employed slightly more than 1,000 people to produce more than 500 engines per day in 1989 and operated at more than 600 per day in 1990 with approximately 1,100 employees. With parents who are giants in their markets, CDC was born with a tremendous challenge: to be a world-class manufacturer. With capabilities to produce engines and major components at a rate of more than 600 per day, CDC expects to offer significant cost/price reduction over the competition produce a quality product correct the first time offer a reliable and durable product make on-time delivery with minimum inventory create an environment that generates continuous improvement ELEMENTS OF A STRATEGY TO BECOME WORLD CLASS The question that had to be answered was, ''How can CDC develop and accomplish these objectives better than the competition?'' Three principles emerged from the strategy to become world class. CDC would accomplish these objectives through reliance on the best proven technology, the most motivated and best-skilled people it could find and develop, and the best-integrated system of technology, people, and teamwork it could design.

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People and Technology in the Workplace Technology The critical element of the strategy was the development of a philosophy and culture that used automated technologies in a way that promoted flexibility, teamwork, continuous learning and human development, mutual respect, self-accountability, and responsibility. The technological design of the facility includes the following elements: modern high-speed transfer lines automated assembly and test worldwide sourcing capability world-class quality systems and gauging a motivated and capable work force internally machined cylinder blocks, heads, and connecting rods and external sourcing of other components assembly, testing, painting, customizing, and shipment of completed engines installing capacity for expected requirements at the production rate of 600 per day (engines and components) installing the latest applicable technology from proven manufacturing sources providing space for future opportunities (additional components, customer application, and optional parts) CDC's machining areas are designed to operate three shifts at maturity, including scheduled preventive maintenance. All six machining lines are highly automated and have the following characteristics: automatic conveyance between machines and automated loading and unloading low labor content automatic in-process gauging Assembly and test is one function that encompasses two assembly lines: (1) testing, painting, and customizing and (2) shipping. This area, although highly automated in material handling and inventory, is one of the most labor intensive of all the activities. Eight fully automated production test cells are in place and supported by additional engineering test capability. The area contains an electrostatic paint system. The first assembly line is called the shortblock line, where all the internal components of the engine are installed. The second line is called the trim line, where all components external to the

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People and Technology in the Workplace engine are added. On the assembly lines, a waist-high, nonsynchronous conveyor moves the engines through a series of manual and automatic workstations. At each station, a video terminal that is part of the assembly information management system displays a "bill of materials" to the assembly operator and virtually eliminates paper on the shop floor. This display tells the operator the serial number of the engine coming through and necessary parts to be assembled on the engine. It also tracks inventory, production, and proliferated parts options. The assembly, testing, and painting process is designed to operate two shifts at maturity, including preventive maintenance. CDC's purchasing department was critical to the company's cost-reduction objective, since material is a major cost element of the engine. CDC integrated purchasing into the strategy with concentrated attention in the following areas: minimizing the number of suppliers sourcing from anywhere in the world creating a partnership between CDC and supplier expecting delivery on time, 100 percent to specification involving supplier top management and using their technical support and cost-reduction ideas using supplier quality engineering CDC is committed to a "total quality" approach in everything it does, and automation is the single greatest factor allowing CDC to move into levels of quality to compete worldwide. CDC's quality control uses a modified version of statistical process control with emphasis on prevention. The approach is built on automatic in-process gauging, work with Dr. Val Feigenbaum of General Systems Company, Inc., on total quality methods, statistical process control on critical characteristics, error proofing, and equipment capability and process control. CDC manufactures three basic components: cylinder blocks, cylinder heads, and connecting rods for both four-cylinder and six-cylinder diesel engines with 32 basic configurations. These components are machined and assembled into engines that are then tested, painted, and fitted with accessories. Component machining is performed on state-of-the-art high-speed, automated transfer lines. In-process gauging, automatic tool compensation, industrial robots, and computerized machine maintenance monitors are featured in the machinery. A state-of-the-art material-handling system based on an electri-

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People and Technology in the Workplace fied overhead monorail is used throughout the facility to transport components from machining to assembly, as well as to convey engines within the assembly and test process. This system eliminates a significant amount of fork truck activity. Once castings are loaded onto the block and head lines, they are not handled again until they are loaded onto a shipping skid as part of a finished engine. An automatic, computer-controlled test system tests the performance of each engine. This testing can determine the probable cause and suggested repair for any performance deficiency. After paint application, finished engines are discharged onto automatic sort lines for appropriate sequencing before being placed on skids for shipping preparation. People If a company is to compete successfully, it must generally look at three areas to improve its competitive edge—the product, the technology, and the people. CDC has explored two of those areas. Cummins, the managing partner, already had a product that was respected in the market, and the facility was built around proven technology. So when CDC considered what would give the company a competitive edge, it had to concentrate on its people. What the company found was a southern agrarian and light manufacturing community that had never seen anything similar to CDC's manufacturing equipment or managing style. That concentration on people became a dilemma: "How does a highly technical diesel engine operation in an agrarian community with little or no technical skills and knowledge of heavy manufacturing become world-class?" CDC had to pay particular attention to how it recruited, organized, trained, and developed people to assume responsibility. The company needed people who not only had the technical skills needed to perform specific functions, but would also participate in leading the organization toward fulfilling its mission. CDC made a conscious decision early on for selective recruiting and training of its work force. As a result, 25 percent of CDC employees during that period had four-year college degrees. The company sought to create an environment in which employees are stakeholders and have an opportunity to approach self-actualization through a high degree of participation in the decision-making processes. The CDC work system was based on high standards and com-

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People and Technology in the Workplace mitment to a technician-driven work environment consisting of dedicated people who would be constantly focused on improving their capabilities. The company's human resources strategy was designed to place heavy emphasis on the selection process for capability and skills center around significant investment in in-house and developmental training deemphasize organizational structure and titles emphasize communication allow people in the decision-making process, including pay and disciplinary action create flexibility in employees' willingness and ability to handle different tasks be contingent upon working in teams hold individuals and teams accountable be structurally flat recognize and capitalize on the benefits of a culturally diverse work force get everyone involved in developing approaches to work emphasize that all work and all people are valuable to the company provide similar benefits for all employees As part of the strategy it was decided that all nonexempt employees would be called technicians and would be salaried. They would work in teams and be supported by individuals called resources, who are highly skilled in their areas of expertise. The role of the resource, in theory, was to provide and transfer both managerial and technical skills to members of the team. They would act as facilitators for the group and as liaisons between teams. CDC was interested in an organization strong in participatory management using teams and management as resources and facilitators. The strategy was to pass on technical skills so that at some point, technicians would perform all technical and management functions. Although the basic framework remains, the social and technical systems continue to undergo evolutionary changes in response to changes in the diesel engine business and the nationwide crisis in work force preparedness and local and social economic issues. CDC's first direct action to deal with the low skills of the available labor force is in recruiting. Because the skills are lacking, the company concentrates on identifying people who demon-

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People and Technology in the Workplace strate a willingness to learn and take on responsibility. It looks for people who are assertive and display leadership qualities or potential and for people who are cooperative yet inquisitive. The organization CDC envisions and the technologies it employs not only require more technical and team participation skills than the local work force is accustomed to or prepared for, but also require critical thinking skills. CDC's approach to work requires that the work force have problem-solving capabilities. Workers are expected to apply statistical process control methods, communicate effectively, and adapt to change. In essence, the company looks for people who exhibit flexibility and an ability to reason and can develop work habits around team methods. The application is structured with subjective questions to convey how the applicants think and feel about work in general and about themselves. It is designed to reflect whether the person seeks continuous improvement in skill, personal, and career development. The interview exercise is structured to give an idea of how candidates handle confrontation and conflict. Deductions are made based on the qualities CDC wants its employees to possess. Interviews are done by teams, and the selection of an applicant is derived from a consensus of the members. There is no standard or programmed testing to measure aptitude or specific skills. CDC has had to recruit outside the local community and out of state to fill such critical positions as those of electricians, tool-makers, cutter grinders, machine operators, and engineers in all disciplines. Consequently, the company has had to reconsider its recruiting technique and incentives; for example, it now offers relocation assistance and temporary housing for the candidates recruited from out of town for the highly skilled positions. It also offers monetary incentives to employees who identify skilled candidates who are successful in the selection process. Within 30 days of employment and placement, new hires, rehires, and transfers must complete a work plan/performance review. During a four-month assimilation period, all new hires are evaluated by their managers or manager designees, with additional comment from a peer and a customer. A customer is defined as any person, team, or company that receives some benefit from work performed by the employee. Decisions are made at this time about continued employment or eligibility for pay increases. The construction of a training facility was necessary in the early stages because CDC's labor force had little or no experience in heavy manufacturing. From 1982 to 1987, groups of employees received more than 28 weeks of training, encompassing such di-

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People and Technology in the Workplace verse topics as company philosophy, group dynamics, conflict resolution, blueprint reading, economic theory, diesel technology, and sophisticated machining skills. Again, although the basic framework remains, the company has had to reevaluate many elements of how it assimilates employees into the work environment and has had to modify its approach. CDC found itself in a change crisis. The one-style "vanilla" engine design that was anticipated turned into 10 and now 32 designs with unlimited options as the product is customized to meet specialized applications. Production demands rose dramatically from 150 engines a day to 385 per day at the end of 1988 and more than 500 per day by the end of 1989. Production demands rose to more than 600 per day in 1990. Clearly, the company had to do some things differently. It became clear that the importance of the highly skilled "resource" people in the company organization would not diminish over time. As a matter of fact, the organizational structure was redesigned to include team managers who would provide managerial support to teams. As part of the organizational development process, these new managers are placed in a 12-month on-the-job management development program. This group of people is the primary communication link for the organization. Because production demands increased at a rate CDC was not prepared to address, the company had to discontinue its focus on rapid rotation in the technician work force and placed more emphasis on depth rather than breadth of skills. Whereas technicians once rotated through training modules acquiring proficiency to perform all the tasks in their functional areas, it became necessary to station employees to acquire specialized proficiency. An internal posting system was put in place to accommodate the transfer of employees between business and functional areas. Intrabusiness rotation is managed by the team in that area, and posting is not required. The company had to restructure its training program to support a work force in which about 50 percent had less than one year of company service. Even though CDC is a large metalworking operation, it has no need for an exaggerated number of true machinists. However, the company did need high-quality machining technicians and maintenance employees and therefore designed an 18-month program to prepare machining technicians. CDC established an apprenticeship program that is broad based enough to produce skilled technicians and narrow enough in focus to produce CDC certified maintenance personnel.

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People and Technology in the Workplace Teamwork CDC's mission is to be a world-class producer of engines, kits, and components of the highest quality and the lowest cost, delivered on time, to meet customers' expectations. CDC will fulfill that mission through the teamwork of the company's stakeholders—customers, employees, suppliers, partners, and the community—working together to achieve excellence. CDC's customers are the reason the company is in business. To serve them with excellence means meeting their expectations better than the competition. The customers define their needs, and the company serves those needs through dedication to continuous improvement in quality, technology, delivery, and cost. There is continuous communication between Cummins, Case, and CDC to improve cost, quality, and delivery. CDC's employees are the company's greatest asset. Their individual and collective contributions are keys to CDC's success. CDC values the growth in both maturity and competency of people who view the company as a career choice. With ongoing training, CDC will develop a productive and flexible work force that shares in the rewards for CDC's success through an incentive program called Variable Pay. The company values diversity—the individual differences each person brings to the organization. All employees are expected to show respect for one another; racism, sexism, and classicism are not tolerated. It is this mutual respect and people development that have supported much of the growth in production that CDC has experienced. The company is a leader across the region in the team concept approach and participative management. CDC's managers must enable the organization to meet objectives by empowering teams to perform work, by promoting teamwork, by allowing people to develop, and providing the tools to complete work in a safe and efficient manner. They must create a positive employee relations environment that values human dignity and is free of harassment. The company's overall management approach must be preventive and proactive. Suppliers are CDC's business partners. Their primary goal is to support the company in achieving its mission, and CDC expects this commitment from each supplier. Each supplier, like CDC itself, must be dedicated to continuous improvement in quality, technology, delivery, and cost. Suppliers and customers participate in problem-solving sessions at CDC. As owners of Consolidated Diesel Company, the partners ex-

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People and Technology in the Workplace pect and will receive a fair return on their investment. The company's success relies on the support and strong working relationships between and among both partners. The community in which CDC works and lives must offer the high quality of life necessary to attract and retain an excellent work force. CDC plays a socially responsible and active role in the social and educational development of the community to achieve this goal. The company's work in the community is guided by the principle that social problem solving must be good business as well as good citizenship. CDC delivers a strong and consistent message on the need for equality and human dignity in the community as well as inside CDC. Because its employees are involved in key activities throughout the community, CDC contributes to the future direction of issues critical to quality of life. This notion of continuous improvement drives the company's community action plans such that issues of poverty, education, recreational opportunities, and issues affecting women and children, among others, receive attention as CDC strives for excellence. The company backs its human involvement with financial support and is considered a leader in efforts to help improve the educational, social, and economic conditions in the community. CONCLUSION All of the elements of CDC's strategy for excellence form a synchronized integrated system. There is physical linkage by means of hardware and information linkage by means of computers and people. All value-added and support functions, both direct and indirect relationships necessary for manufacturing the product are included. The relationship between these attributes is organized in such a way as to achieve a predetermined objective—to manufacture 600 engines a day better than the competition; to become world class. Consolidated Diesel faced many challenges during its evolution: partners with complementary but significantly different managerial styles the original intent of building a "vanilla" engine quickly changing because of the demand for many different engines major increases in production volumes a labor force with little or no experience in heavy manufacturing and unaccustomed to participatory management

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People and Technology in the Workplace a rural southern community in an economic and social transition maintaining consistency in training while faced with constant production changes Any one of these challenges might be considered a formidable intrusion on even a mature organization. For a young organization, any one of these could limit or even prevent the company from attaining its goals. CDC has been able to adapt creatively to its partners' methods of operation without adversely affecting its own style. Flexibility and managing customers' needs and specifications have allowed the company to maintain its progressive position in the marketplace. The company deliberately engaged with the community through key positions in organizations that could support CDC's internal operational needs in both the short and the long term. CDC believes it is appropriately adjusting its processes to meet the requirements of a high-volume facility without shifting significantly from its original concepts. Has the company successfully integrated people, technology, and teamwork? The evidence suggests that it has. CDC believes it is headed in the direction it envisioned.