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IBM
Change Order Management
VISION undertook work for IBM just before Lou Gershner’s
enormously successful change program and before it had
shifted its focus to services. At that time IBM was earning
$27 billion in annual revenues. It was a high-tech manufacturing
company experiencing the pressures that are common
today throughout high-tech and other manufacturing industries.
Strategic Situation
In the current manufacturing climate,
consistently fast cycle times
in managing change orders and
new product orders provide a company
with a competitive advantage
enabling both pricing and new
product flexibility. Slow changeorder
cycle times can put a company
out of a business. Before VISION’s
intervention, IBM’s key
electric card assembly and testing
plant, which assembled 5,000 component
boards a day, each with up
to 700 separate components, had
already cut the change-order and
new-product cycle times from 28 to
14 days. This time reduction met the
industry benchmark.
Senior Management's Declaration
Concerned both with costs and
speed, IBM’s Senior Management
declared that the change-order processes
in the board assembly plants
should be able to run in a single day.
VISION was invited to diagnose the
engineering change management
process and make recommendations
for alterations.
VISION's Engagement Strategy : Combined IBM-VISION Team and Management Process Redesign
VISION formed an interdisciplinary
team, including five VISION-trained IBM
operations analysts, and conducted a 10-
week diagnosis. The team’s focus was to
identify the core management process
and the core culture change required to
meet a one-day change-order process.
The team then had 3.5 months to pilot
intensively the new process so that the
IBM team could take over the remaining
roll out.
VISION's Intervention
VISION began training the five IBM operations
analysts and continued the
training as part of the 10-week diagnosis
phase. During that period, the IBM-VISION
team discovered that the management
processes had been fashioned to
follow the basic input/output manufacturing
processes, which left a huge gulf
in culture and understanding between
the development engineers and the process
engineers.
The team redesigned the critical process,
and eliminated the source of many
of the delays caused by poor communication
and mis-understandings between
the development and process
departments. The new process ended
awkward handoffs and included negotiating
commitments and reaching mutual
agreements. These agreements
would concern new designs, production
methodologies, or root-cause
analyses. The integration of the development
engineers into the manufacturing
process shifted the culture of the
assembly plant from a quality-for-the-sake-
of-quality culture to an innovation-based
culture. That change included
involving plant engineers in what were
previously strictly development processes
and development engineers into
the plant processes. This critically important
shift had all engineers working
in the same culture, so that they asked
for and made commitments that were
focused towards a common purpose,
which was well-understood and accomplished
quickly.
Results : Devil's Live In The Details
The average cycle time dropped from 14 days
to 7 days, and could be run, on demand, in a
single day. Management estimated that
each day saved was worth $800,000. The
commitment-based management process
design was extended to all remaining
plant processes to create a single plant
culture. IBM has been recognised for its
leadership in this key manufacturing
competence.
IBM purchased a license to use commitment-
based management internally, and
even with all the changes Lou Gershner
has installed, IBM has continued to use
commitment-based management as one
of its basic process-design tools.
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