thad@btr.btr.com (06/12/91)
The following item was found on page 8C of the Tuesday, June 11, 1991, issue
of the San Jose (CA) Mercury News' BUSINESS section.
This is both a hardware-related and general-interest article; I believe you'll
find it interesting, too.
`` HOW COMMODORE SEMI CHANGED ITS COURSE
{Knight-Ridder News Service}
NORRISTOWN, Pa. -- Commodore Semiconductor Group doesn't reveal its profits
to the public. It has no shareholders who might sell off the stock if its
earnings declined. And it has a leg up in the marketplace because it sells
most of the computer chips it makes to its parent, Commodore Business Machines
Inc.
All in all, the company has less incentive to hustle than most American
manufacturers.
But hustle it has. Commodore is only one of a handful of U. S. Companies
practicing the manufacturing methods that allowed Japan to rise from an
economic also-ran to a global power.
In the last two years, it has adopted the principles popularized in Japan
by management guru W. Edwards Deming.
The Deming method calls for constant striving to improve the quality of a
company's operations and products.
A key corollary is that hunches and eyeballing are poor tools for improving
quality. Only data -- on defect rates, production delays and dozens of other
variables -- can show what changes matter most.
"The further I get into total quality management, the more I realize it's
common-sense management," said Daniel J. Koloski, vice president and general
manager of Commodore Semiconductor. "The problem is that in America, `common-
sense management' is an oxymoron," or contradiction in terms.
To be sure, Commodore Semiconductor didn't get everything right the first time.
But now the facts speak for themselves:
* Raw-material inventory is down 60 percent, and annual inventory carrying
costs have been reduced by $60,000 to $80,000.
* A $100,000 capital expenditure for a quality-control center was scratched.
* The time required to produce a prototype of the most sophisticated computer
chip was reduced to seven days from 25.
* Defects that would interfere with long-term reliability of the company's
chips were cut by 75 percent.
* The incidence of accidents required to be reported to the Occupational
Safety and Health Administration, formerly about average for the semicon-
ductor business, is now one-seventh of that average, or about one every
three months.
Those results have made Koloski not just a Deming convert but a Deming
proselytizer.
Deming, an American, took his ideas to Japan after World War II when America
turned a deaf ear to them. Although other systems of quality management are
used both here and in Japan, Deming's is the best known in the United States.
Even for those who do want to learn, change doesn't come easily. Koloski and
Commodore Semiconductor have been at the job for three years. "Only now are
we starting to feel we've got a handle on what it takes," Koloski said.
He began reading about Deming methods in 1986, when he was promoted to head
the company. He was seeking a way to increase his contact with the workers
and operations.
He soon became convinced that Deming could do a lot more than that for
Commodore Semiconductor. "I began to see how much we could improve, how we
could have less scrap rate, less rework, less production time and better
reliability," he said.
In his initial excitement, Koloski misjudged the amount of time and talk
required for the company's 240 other employees to understand how the Deming
method works and why the company was adopting it.
The result was confusion about what was going on and why. The solution was
to develop first a statement of the company's goals.
"But we made a mistake there, too, in that we didn't show each employee how
his job supported those goals," Koloski said. To correct that, the corporate
"mission statement" is being supplemented by statements of how to measure the
contribution of each job to corporate goals.
Despite some stumbles, the overall record has been one of success.
One of Commodore Semiconductor's first steps was to eliminate four of its
five suppliers of silicon wafers. With only one supplier, the variation in
the quality of raw materials was significantly less, which meant fewer defects
in the finished chips.
In return, the chosen supplier agreed to make more frequent deliveries, which
allowed Commodore Semiconductor to reduce the numbers of wafers in inventory.
Koloski preaches the Deming gospel at every opportunity. One of those
occasions came a few years ago when he was buying a Jeep. Most dealers told
him that delivery would take six weeks; Koloski put in his order with the
only dealer who offered three-week delivery.
But in the end, that dealer stalled for three additional weeks and was unable
to deliver the Jeep any sooner than his competitors. Because of the delay,
Koloski refused to take the vehicle, explaining that quality service begins
with making promises you can keep.
Unfortunately, he says, "I don't think they understood the message."
''
* end of article *
Thad Floryan [ thad@btr.com (OR) {decwrl, mips, fernwood}!btr!thad ]