Centers of Excellence Help Manufacturers Stay Ahead in the Game
U.S. manufacturers like Alcoa, Greatbatch and GE have introduced 'centers of excellence' to improve competitiveness at home and around the globe.
By Jill Jusko
In August, Alliant Techsystems (ATK) opened its Aircraft Commercial Center of Excellence facility in Clearfield, Utah. The 615,000-square-foot building, dedicated to high-rate composite manufacturing, serves as the headquarters for ATK's commercial aircraft programs. ATK President and CEO Mark DeYoung has described the center as a "key component" in the company's strategy to capitalize on growing demand for more-efficient commercial aircraft.
One month later, Otis Elevator announced that it would open a new manufacturing center of excellence in Florence, S.C., in a move that will consolidate much of its North American new equipment operations and become Otis' center of excellence for the United States and Canada. The new facility will bring together manufacturing, engineering, a contract logistics center and field-support operations that are currently in four different cities. Co-locating these functions will bring down lead times, improving speed to market and the customer experience, according to Otis Elevator.
As global competition continues to heat up, U.S. manufacturers continue to implement new operational initiatives aimed at increasing productivity, driving down costs and improving quality. In this concluding article in IndustryWeek's four-part series on the competitiveness challenge facing the United States and its manufacturing community, we examine the role "centers of excellence" are playing to improve competitiveness at home and around the globe.
What is a Center of Excellence?
There is not a commonly held definition of what constitutes a center of excellence among manufacturers -- or in many industries, for that matter. On the other hand, common elements typically include a formalized structure; people and/or assets with expertise and a focus around a specific process or product; a shared business goal; and a focus on developing and sharing best practices. And among manufacturers interviewed by IW, there is another common refrain: The centers deliver value.
Aluminum producer Alcoa Inc. has some 12 centers of excellence, including its first at Alcoa's Davenport Works in Iowa that serves its Global Rolled Products business. Farther north, in Quebec, Canada, is the Pittsburgh-based manufacturer's center of excellence for its global primary metals business. Located at the Deschambault aluminum smelter, the 4-year-old center is the hub of expertise for 20 facilities around the globe. From here, the company tests and pilots new technologies. The center also serves as the central repository for sharing best practices and training, provides subject-matter expertise to support its facilities, develops measurements for each location and provides governance.
Alcoa's center of excellence for its global primary metals business helps 20 facilities, like Alcoa's Mount Holly facility, improve their competitiveness by providing a wealth of support, including subject-matter expertise.
Governance, explains Roberto Andrade, president of technology innovation and center of excellence for the primary metals business unit, means allocating limited resources across the possible opportunities that exist in the business. "We help to prioritize which of the projects would add value and create a better financial impact," he says.
Developing and deploying new technologies and driving out costs are essential to Alcoa's manufacturing competitiveness, Andrade says. "We compete in a market that is highly competitive and in which the price of aluminum fluctuates according to the volatility of the economy. So it is important that Alcoa stays ahead of the game by developing ways to identify and remove waste relentlessly," Andrade says. "In addition, our operations must be flexible to proactively respond to swings [in demand]."
The primary metals center of excellence and its team of 50 engineers, technicians and operators help the aluminum producer stay ahead of the game in ways 20 facilities operating completely independently might not. For example, one facility may have a best practice for productivity improvement, while another has a best practice in energy reduction and a third is aggressively introducing new technologies. But the knowledge isn't shared. The center of excellence, Andrade explains, presents an opportunity to consolidate the best practices and new technologies in a single location, certify they are best practices and disseminate them across the locations where they make sense.
"So the beauty of the [center of excellence] concept is to recognize those best practices on a global scale," he says.
Andrade says the No. 1 benefit presented by the center has been cost reductions in multiple areas, including energy. "I say so much about energy because the aluminum process is so much of an energy thief," he says. "Anything you save in energy means a lot to the total cost."
Additionally, the "pilot zone" -- which is where new technologies are demonstrated and tested -- has helped to speed individual facilities' acceptance of new technologies. "It's part of human nature to say ‘show me,'" Andrade says. With the pilot zone, "we can show real results" and implement changes much more quickly.
Looking ahead, Alcoa's primary metals center-of-excellence team faces a challenge and opportunity. The center will play an integral role in developing operational skills and expertise within the workforce of a fully integrated aluminum joint venture project in Saudi Arabia, where production is scheduled to begin in 2013.
Greatbatch: The Value of Common Systems
Greatbatch centers of excellence not only help plants achieve improvement, but also develop systems to sustain those improvements.
Four centers of excellence support Clarence, N.Y.-based Greatbatch Inc., which manufactures components for medical devices, primarily, but also operates in the commercial power industry. The company has 11 plants, eight of which are in the United States, one in Mexico and two in Europe.
At Greatbatch, centers of excellence are a central resource used to provide training, mentoring, hands-on implementation and culture change. "It is not only about achieving improvement, but [also it] is focused on implementing systems to sustain these improvements," explains Bill Willick, director of Greatbatch's lean-enterprise center of excellence. The manufacturer's other centers of excellence focus on safety, supply chain, and facilities planning and development. The cores of all the centers primarily operate from the western New York headquarters.
"A center of excellence is an effective way to achieve corporatewide improvements via the use of subject-matter experts and a good way to share best practices across sites," Willick says. "So as one site discovers and learns and goes through its trials and tribulations, we can copy and paste [those learnings] into another site if applicable. There's no sense in everyone recreating the wheel, and there's a lot of value in creating common systems across sites." And like Alcoa's Andrade, Willick says the centers of excellence ensure that top initiatives get resourced properly.
The aim of Willick's lean-enterprise center of excellence is to help both the company's manufacturing processes and its business processes identify continuous-improvement opportunities, prioritize them and then facilitate the development of plans to take advantage of such opportunities. Personnel in the process areas execute the plan, but the center, comprised of six members, follows up on the execution and provides guidance as needed.
"We're big on plan, do, check, act [PDCA]," Willick says.
Manufacturing is a natural place to start a lean journey for many reasons, Willick says, and such was the case at Greatbatch. In recent years, however, the lean-enterprise center of excellence has ventured more and more into business processes, from product development to information technology to filing of expense reports.
He cites the new-hire process as one example. At one time, new employees occasionally could begin their Greatbatch careers and wait for days -- even a week or two -- to receive their computers, Willick says. A review of the process showed that about 90% of the computers required were the same, allowing the implementation of a small supermarket to meet new-hire needs without holding large quantities of inventory.
"This isn't a huge nightmare problem for the company, but if you can get into IT and start teaching them the continuous-improvement process, then you're starting to affect the culture," Willick says. "They start to see, ‘Ah I get it. This isn't so complicated after all.'"
Like the lean journey itself, Greatbatch's centers of excellence are always evolving, according to Willick. "We want what makes the most sense for our current business needs," he explains. For Greatbatch, that means the centers are moving from a centralized resource to a hybrid model as the company grows. The centers of excellence remain a resource to leverage subject-matter experts across the enterprise, but the hybrid model moves some of those resources closer to individual facilities.
The company also is contemplating implementing additional centers of excellence.
At GE Lighting, it's About Speed, Consistency
General Electric Co. has a lengthy list of centers of excellence to support its many and varied businesses. Recent examples include an October 2010 announcement that GE Homes & Business Solutions would invest more than $400 million to establish four refrigeration design and manufacturing centers of excellence in the United States. The investment could add some 500 new jobs by 2014, the company said. That same month, GE Lighting celebrated the completion of the first major milestone in an estimated $60 million investment in its Bucyrus, Ohio, lamp plant that could nearly double employment there over the next several years. The Bucyrus facility has been named GE Lighting's center of excellence for the manufacture of energy-efficient linear fluorescent lighting products.
What does that mean? As a center of excellence, the Bucyrus facility will produce the vast majority of GE's fluorescent lighting products and become a big exporter. Production has been scattered among three different facilities around the world, which has somewhat "handcuffed" GE Lighting's ability to drive speed, consistency and the sharing of best practices, according to Ron Wilson, general manager for GE Lighting's global supply chain. Consolidating production under a single rooftop is expected to improve those measures. Better asset utilization as well as the efficiencies and leverage that typically accompany increased scale and volume also are anticipated.
"Anticipated" and "expected" gains are the operative words only because the Bucyrus facility remains in the midst of being transformed. One product line has been moved to the central Ohio location from a Canadian plant. A second product line, already in Bucyrus, is being converted to produce a different product. In addition, the company has introduced some new equipment and is modifying other equipment to accommodate product destined for Europe.
"The team in Bucyrus would probably say it has been challenging," Wilson says. "It is very challenging but very rewarding." Additionally, he says, "We haven't missed a beat with customers."
While the full impact of GE Lighting's center of excellence remains down the road, that doesn't mean results aren't being measured now. "We measure the heck out of these plants," Wilson says. And while he won't reveal early goals in any detail, "overall production has exceeded initial targets," the general manager says.
Editor's Note: This article is the final installment of IndustryWeek's 2011 series on the competitiveness challenges facing the U.S. manufacturing community. The complete series is available online at www.industryweek.com/competitive.