Hoshin Kanri

Hoshin Kanri Short Bros Belfast Success story

Posted by David Hutchins on 18 October 2015 | 0 Comments

Read an internal report on this exemplary programme

Learning from the Shorts Example

Short Bros, Belfast

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Short Bros manufacture aircraft and military products in the Belfast area of Northern Ireland, and at the start of the project employed around 8,800 people.

The project began in 1987. At that time, Shorts were owned by the British Government and their financial losses were the equivalent to 30% Sales Revenue! Margaret Thatcher, the then Prime Minister told them ‘Either you improve the companies performance and find a buyer or we will close you down’. Soon after that Roy McNaulty (now Sir Roy McNaulty) the Chief Executive invited David Hutchins to meet him at their London Offices.

As a consequence, we were commissioned to assist them to meet the challenge of performance Improvement to unprecedented levels.

In the first 12 months of our involvement, the economic improvements just outweighed the costs but it meant that the programme was self funding from the beginning and a significant part of the training had been carried out. This included ‘train the trainers’ as we planned to make Shorts independent of the need for continued external support as soon as reasonably possible. (this has always been a priority with DHI).

In the second year, the net benefits were a few £100 000 and the bulk of the training using our services had been completed
In the third year, the company achieved a net saving of more than £15M and by the following year an accrued saving of £45M. At this point, the company went into net profit for the first time in 15 years and one year ahead of their target.

Subsequently, they achieved their other goal which was to be privatised and were sold to Bombardier.

The essence of management thinking at Short Bros is best described by the managing director, Roy McNulty, in the first copy of Shorts’ in-house publication _ Changing Times _ (March 1991).

At around the time that Shorts began to introduce Total Quality, the company was struggling with the problems of privatization and were looking for a buyer. There can be no doubt that this would tend to focus the mind, and it is interesting that in both this and in the Japanese examples initial moves to introduce Total Quality were sparked by a competitive challenge of some kind.

Eighteen months later we boldly stated that, under the ownership of Bombardier, we were together ‘en route to a new future’. Much has happened since then which is already shaping this future. The Company has been reorganised and recently this has been fine-tuned. We have launched several new projects with enormous potential and expanded others to unprecedented levels of production. Visitors to the Company are amazed at the physical changes – the progressive modernisation of our facilities is certainly in harmony with a Company that is moving forward.

One initiative that started a couple of years before privatisation was Total Quality. As the initial debate progressed, it became clear that while Total Quality introduces some new tools and techniques, _ it is fundamentally a concept that is about realising the potential of our people. _

Last November, at the Company Prize giving, Raymond Royer, President and Chief Operating Officer of Bombardier, stated that the only thing that differentiates Shorts as a Company from our global competitors is our people. The quality, and therefore the effectiveness, of any Company is a direct reflection of the quality and effectiveness of its people. Total Quality can be viewed as a way of releasing the untapped potential of our total workforce, a tool which will give us the competitive advantage to make us world leaders.

We demonstrated our belief in the importance of Total Quality for achieving profitability (and therefore a secure future for us all) by making it an Executive Agenda item for 1990/91. That is to say the Management Committee singled out Total Quality as one of the three areas that demanded top priority as we strive to improve our business performance. It should be clearly understood by _ everyone _ that Total Quality is fundamental to the turnaround of Shorts.

We _ must not _ make the mistake of some British industries (e.g. the motorcycle industry) of believing that our current performance and levels of improvement are good enough. We face new demands and expectations in today’s competitive market place. If we are to keep ahead of emerging competition from countries like Korea, Brazil, Japan, etc., we must strive to _ continuously improve everything _ we do.

We should be in no doubt if we do not continuously improve and achieve ever higher levels of performance _ someone else will. _ If we cannot meet our customers’ ever rising expectations _ someone else will. _ If we cannot bid for work at a competitive price _ someone else will. _

When he visited Shorts, Dr Deming, the well-known quality ‘guru’, was quizzed on whether he saw Total Quality as an important option and he responded. ‘You do not have to do this, _ survival is not compulsory!’ _

Since the Total Quality Programme was launched, over 8000 employees have attended at least one half-day awareness session. The overriding message from those who developed this training was that _ the vast majority of people in Shorts are keen to contribute to the turnaround. _ This puts a considerable responsibility on Management to allow and encourage people to use their skills and experience to improve every aspect of our business.

Many employees have already demonstrated what can be done as they have tackled problems through the Total Quality programme and achieved levels of performance previously not thought possible.

This newsletter is an example of continuous improvement of the Total Quality Programme. At a series of Management Seminars in August 1990, the general message emerging was that of a lack of communication of Total Quality in Shorts. It is our intention to use the pages of this newsletter to keep you updated on Shorts and our journey towards becoming the industry leader in each sector of our business through Quality, productivity, innovation and satisfied customers.

‘Quality is never an accident,’ John Ruskin said, ‘it is always the result of intelligent effort.’ We must make planning for Quality an integral part of the way we do business.

ROY McNULTY Managing _ Director _ (from ‘Firmly en route through Total Quality’, Changing _ Times 1, _ March 1991)

The Total Quality programme was launched in 1987 and, is probably still one of, if not _ the _ best in the United Kingdom. The reason for their success is their obvious commitment and resolve to succeed. Total Quality at Shorts was initiated by the board of directors, who had decided to practise what they were about to preach, by forming themselves into a Quality Council to steer the overall programme. Quality Circles were then formed in the Aircraft Division and in the Military Products Division, each led by one member of the higher level council (Figure 4.2). The object of this was to ‘back link’ each of the two lower-level councils to the Board Council, the latter thereby providing an umbrella and vehicle for cross-fertilization in the programme as it cascaded down through the organization.

At each major function, such as R & D, Operations, etc., further Quality Councils were formed. The object of this was to ensure a sense of local ownership, while at the same time ensuring that the problem selection process was as parochial as possible. These councils also ‘back linked’ upwards.

Training

Training at Shorts is provided through a ‘Total Quality Centre’ which, it is claimed, has embarked on the largest schedule of training ever known at Shorts, educating all company employees in the basics of Total Quality. New employees are also made aware of Total Quality at induction with follow-up sessions after six months.

The company-wide Total Quality programme has the objective of reducing the cost of poor quality on a project by project basis by £45 million. In 1990/1 some 220 projects saved £6 million and in 1991/2 they were on track towards saving over £7.5 million through 300+ projects. Over 350 project team leaders have been trained in all the techniques of quality improvement. The initial efforts of Shorts also won the coveted National Training Awards in 1989.

The staffing of the Total Quality Centre in Shorts was novel. Managers were taken off the line to work in the centre on a full-time basis for approximately 18 months. Then they returned to line duties. Having run the centre and conducted the training for that period, it is believed that managers became totally committed to the concept. Ultimately, all managers had this experience.

The role of the centre was to:

Coordinate all Total Quality activities throughout the company and interact at all levels with the Total Quality structure. Support the Quality Council in developing the Total Quality strategy.

Support the Divisional Councils and Functional Quality Teams. Ensure that the project by project approach is effective (including maintenance of computerized records of all Total Quality projects). Develop Total Quality with the company’s supplier base.

Expand the use of Statistical Process Control in the company. Develop Total Quality in conjunction with the Ulster Business School.

Organize Team Leader Training Courses in response to demand. Publicize achievements in Total Quality.

Role of the company Quality Council

  • To determine how Total Quality could best be used to enhance business performance.
  • To provide visible leadership in the drive to make Total Quality a way of life.

  • To review Total Quality company-wide and ensure activities are effective.

  • To agree overall policy and education for Total Quality.

Role of the divisional Quality Council

  • To lead and control Total Quality activities within each division.
  • To define and publicize Total Quality policies and objectives.
  • To determine priorities for Total Quality projects.
  • To allocate human and financial resources to nominated projects.
  • To set the measurement criteria for project evaluation.
  • To provide overall support and encouragement for Total Quality activities.

Role of the functional Quality teams

  • To lead and control Total Quality activities within each area. To provide support and guidance for Total Quality activities. To publicize Total Quality activities in their own areas.
  • To ensure the project team leader is fully briefed and trained. To monitor project progress.
  • To ensure that project commencement and completion forms are filled in and returned to the Total Quality Centre.
  • To implement fully the remedies and ensure that the gains are held.