HP’s ASM facility sets the standard in excellence

The Hewlett-Packard America’s Software Manufacturing facility on Cotton Road in Nashua is so good, it has more awards than perhaps any 10 businesses in the area combined.

It was selected as one of Industry Week’s 10 Best Plants in America in 2000, and it won the Granite State Quality Award in 2002. The Association for Manufacturing Excellence recently held its annual worldwide conference in Boston, and the ASM plant was a tour site, where participants from all over the world got to see excellent manufacturing in action. The plant was given a perfect score on the assessment feedback, and there is doubt that has ever happened before.

These folks aren’t just good, they’re great. Despite all the recognition, awards and consistent delivery of outstanding business results, they were recently asked to develop alternative delivery strategies, including outsourcing and offshoring potential. I can’t think of too many organizations that wouldn’t throw in the towel after a request like that. ASM responded by developing a plan to “outsource to themselves.”

That’s right, the long journey to excellence, which began in the ‘80s when it was a Digital Equipment Corp. plant, survived takeovers by Compaq and then HP. “The work will teach us” is its motto. They’ve learned a lot, and they’re learning again.

Employees at ASM reproduce software media, not just for HP, but for a number of other companies. Years ago, as part of Digital, they went looking for other companies that needed software media reproduction and fulfillment, and today, they produce more for clients outside HP than they do for HP itself.

Do you have any departments that could produce things for other companies? It’s a great way to spread the overhead and make money as well.

Earning respect

According to Bob DiGregorio, director of ASM, the basic premise is: “The most appreciable assets in our organization are the thinking, knowledge and skills of our people. Operating results are driven by the quality of people’s thinking.”

Putting these people and their thinking to work on outsourcing enabled them to develop a concept they call VXS (Value Xcelerated Services).

“VXS moves ASM from a fixed to a variable on-demand, lean-operating model,” said DiGregorio.

ASM has a fairly substantial Just-In-Time workforce used to satisfy peak demands. Years ago, executives at the plant noticed that many of these workers weren’t interested in full-time jobs, so they developed a program called “Q-flex” to optimize and manage part-time efforts for both the workers and the company. Q-flex even includes some professional jobs, and – you guessed it — ASM shares its Q-flex resources with other HP divisions on an as-needed basis.

Low-cost flexibility is key to surviving in today’s competitive environment, especially when you’re competing with offshore operations.

High tech thrives on acronyms. VXS is based on PODs (Product, People and/or Production on Demand). A POD is “a convergence point for orders, material, people, tools and equipment on an as required, on-demand basis.” It can be at ASM or a supplier site. Under VXS, PODs are created to do the work and disbanded when completed.

ASM ships 3,800 different products composed of 82,000 parts. Few products are revised as often as software, so there’s very little finished goods inventory – it’s an expensive liability. On-demand is the theme today, and virtually everything ships same day/next day – and 99.7 percent of shipments are on time.

Quality is especially important, and ASM’s outgoing quality is 754 parts per million – otherwise known as a defect rate of 0.0754 percent.

To top it all off, ASM took on new business while losing 30 percent of its workforce, many of them key players, after HP offered an early retirement program and instituted a subsequent layoff.

ASM’s reputation and a wall full of awards and plaques will not keep the Nashua facility open or the employees working. They have to earn their right to stay in business by performing every day.

Of course, you could say all those awards made no difference, but I beg to differ. Competing for the awards dramatically enhanced their competitiveness. Each was an exercise in reviewing business and finding ways to improve it.

Manufacturing manager Bob Dufresne, who heads up improvement efforts, says, “The introspection these activities cause forces you to learn a lot about your business and how to improve it.”

What keeps ASM in business today is not the great processes developed, it’s the rate at which it can improve the already great processes, and make them even better.

The jury is still out on VXS, but I think it will take ASM to the next level. Once that’s reached the search begins for a means to the reach next level after that. It’s how we stay employed nowadays.

So what about you and your organization? Are you just waiting for a request for an outsourcing plan, as if it’s inevitable? It doesn’t have to be. Why not proactively measure the rate of improvement in your industry, as ASM does, and start pacing yourself to lead the charge? It may take a while to get there, but isn’t it better to attempt something great and fail than to attempt nothing at all and succeed?

Because so few try anymore, it’s not that hard to get into the winner’s circle. Staying there is tougher, but with a little practice you just might make it.

Ronald J. Bourque is a consultant and speaker from Windham. He has had engagements throughout the United States and in 12 countries in Europe and Asia. He can be reached at 898-1871; fax, 894-6539; e-mail, bourq@att.net.