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Research Paper on Digital Equipment, Scotland: The VLSI Story
Any business operating in the modern global business environment faces strong internal and external (competitive) pressure. The external pressure challenges improvement of quality, innovation and flexibility to meet the customers’ needs and exceed the rivals. Additionally, growing companies (especially those who had a success story from a small firm to a large-scale enterprise) are facing constant need for improvement of organizational processes and structures. This enables to improve the performance of the company’s human resources and minimize production costs.
Most manufacturing companies have troubles reorganizing the business and the management is often reluctant to do so. This vision of conformity to the tradition is can be explained easily, but is also sometimes hampers the company’s development.
The challenge of change has become a reality for the VLSI assembly business at Digital Equipment Corporation’s plant in Scotland. The VLSI business, grown from a small-scale test facility, now handles one of the largest European semiconductors cleanroom facilities. And although VLSI is doing really well – with constant increase in production volumes – both the management and the employees feel there are certain points that need to be improved.
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Let us now take a look at the company’s organizational structure and production processes to have a clearer idea of the possible improvements.
The VLSI assembly business at Digital Equipment Corporation’s plant near Ayr in Scotland assembles and tests semiconductors in a facility that has one of the largest cleanrooms in Europe. It employs around 470 people (in both units: assembly and test), and operates 24 hours (a three-shift system). The operators work under supervisors’ control (the correlation is one first-line supervisor for 16 operators). The production process includes the design, fabrication, assembly and testing. The latter two are done at Ayr. The process is quite delicate and requires operators’ responsibility and conscientiousness. The assembling and testing results are crucial for the final product’s functionality, and thus, attracts attention to the human resources management and employees’ satisfaction of needs. Their requirements and requests might provide hints on the ways of the company’s performance improvement that might in the course of time become the cornerstone of the company’s success.
According to the information obtained from both the management and the employees, the work at VLSI is organized in a manner traditional for semiconductor plants – there is a lot of hierarchical decision-making and lack of communication to the operators and no feedback. VLSI obviously has an autocratic model of organization, with managerial orientation on authority and decision-making. The management is uncertain whether the change is needed – actually, the management views are divided. Those having a traditional view to management insist the plant owes success to the existing organization structure and changing it might be even harmful for the company. Their main argument is that the company has a technically complex business and thus needs the existing complex organization structure to keep up with a large number of products and changes.
On the other hand, there are those, who see the opportunity of improvement in developing a new, more effective organizational structure. The traditional one, in their opinion, limits the possibilities within the organization. Most assemblers are unskilled and not involved in decision-making at all. This brings additional complexity to the production process and limits the company’s flexibility.
The latter, in fact, is one of the core incentives to bring the new organizational structure into force – the company needs to be able to handle small batches of specialized and varied product to meet the customer’s demands.
The market situation and the type of manufacturing operation VLSI deals with, also demand concentration on the ability to handle increasing product complexity, reducing wastage rate and the optimization of manufacturing cycle.
All the challenges mentioned above, are hard to handle, taking into consideration the existing organizational hierarchy – the manufacturing units definitely need more skills and decision-making opportunities.
The existing problems mentioned by the employees are also worth paying attention to. Although there are no real troubles yet, there are drawbacks that may cost the company more that the management expects. These are the undervalued business opportunities that certainly are worth developing.
Among the drawbacks of the existing hierarchical structure mentioned by the VLSI employees are mainly the lack of proper communication and feedback, and a lot of hierarchical decision-making (“too much management input”). Another serious matter is the fact that the employees believe that training and scope for individual development are worse than they should be. Moreover, there is a general feeling that the production operators, given proper training, could do a lot of regular and preventive maintenance of the production line. And this is a very strong opportunity for improvement, taking into consideration the specifics of the production process and the critical importance of each operator’s valid performance (the optical inspection and manual placing of the lids, etc.).
The quality and flexibility of the manufacturing process depends upon the operator’s skills, knowledge and responsibility. It is really important, thus, to pay attention to the improvement of production process and human resources management.
The management’s comment on the necessity of change in the organization structure and principles of working methods is clearly conservative – they agree they might improve a bit the existing structure but there is no need to change whole system which has proved to be effective and successful so far.
Truly, the VLSI history of achievement and success clearly indicates that the company’s traditional approach is useful in developing a new business. This is actually why the approach VLSI uses is considered “traditional”, but the company has already evolved into a multifunctional business which needs a new more efficient structure to deal with the changing business environment. The company has grown from a small business into a large-scale plant. The customers are becoming more selective, high wastage rates are no longer acceptable, as well as the prolonged manufacturing time.
As a consultant to the Assembly Staff Group, I would advise the management team to extend the tradition of small computer business to the VSLI organization structure and to introduce the multi-skilled self-managing teams. The teams empowered to make the decisions needed to manage work performance on a daily basis would enable flexibility needed to compete with the market rivals and reduce the manufacturing time, wastage rate and make the process more efficient.
Other goals, that are now not considered to be primary due to the employees’ general satisfaction of the work conditions, shall also be reached before the problems occur. The multi-skilled self-managing teams respond faster to technological change, are more confident and responsible, and have improved work attitudes and quality of work life.
The ‘technical operator’ training courses, suggested by one of the VLSI managers, might provide an excellent chance to improve the team’s performance and make the basic operators work as a multi-skilled team of professionals.
The company would be able to improve the organizational structure through the elimination of the engineering technicians from the production process.
The management position is that the VLSI technically complex business needs a lot of specialists to stay up-to-date with the changeable product line and process. Turning the existing operators (working on their shifts) into a team of multi-skilled professionals would bring additional benefits through the job enrichment process. The latter includes performing different tasks that require different skills, bringing more meaning into the routine work through task identity and its significance, and a certain level of autonomy, providing the operators and the business itself with a new and important quality of flexibility. The responsibility of the employees would increase the amount of communication and feedback, which is obviously insignificant at the moment.
The self-managing teams will be able to schedule work, allocate the tasks, provide training in job skills, control quality of work, etc.
Moreover, the existing organizational structure of the VLSI facility is in many ways correlated with the structure of the self-managing teams. The latter are permanent and formal elements of the organizational structure and include between 5 and 15 members (for VLSI it is a 16 operators versus 1 first-line supervisor ratio).
Certainly, an organizational change is not an easy task, especially for such a large-scale business as the Ayr Plant. But the organizational structure improvement, if performed correctly, shall be beneficial for both the employees and the management, through the satisfaction of needs for the operators and the business flexibility and performance improvement for the management. And although the employees are now accustomed to more traditional ways of working, they are definitely ready to take a challenge and learn more. The work potential available on the facility may bring additional technical and managerial strengths.
The human resources potential is one of the most beneficial advantages of any business. And the human resource stimulation through training and providing additional opportunities in decision-making brings return in the overall increase of performance quality.
The self-managed multi-skilled teams introduces on the assembly facility might solve the following problems, existing on the manufacturing level: firstly, the newly organized teams would become aware of their role in the company’s business and become responsible for the improvement of the production process. Some teams might deal with the standard orders, but others should specifically concentrate on the manufacturing of small batches of the specialized and varied products aimed at new target groups or specific customers. This would provide additional flexibility to the business.
The managerial and financial responsibility of the teams shall influence the decision-making process and improve the manufacturing time and wastage rate, as well as prevent certain types of manufacturing defects.
Certainly, the transition process would take some time and effort from both the employees and the management. It should probably be implemented in several stages. A gradual transition would include first the employees’ cross-functional training to improve their skills, knowledge and the overall understanding of business. The second stage should probably include the introduction of decision-making authorization and the first team formation for specific orders. The quality of performance should be supported via intensified feedback and communication process.
The feedback process would enable to fix the possible complications to the transition process at the moment of their emergence. The communication would provide additional highlights for the employees’ importance, the results of their performance and goal-setting. The goal-setting would become one of the most crucial means of process motivation, and getting good results is impossible without clear communication from the top to the performance level, either to the teams leader or to the whole team (depending of the internal structure of the self-managing units). The organizational structure would become flatter and thus more flexible. The existing first-line supervisors might become the team leaders if they show enough skills and knowledge to perform the necessary functions.
To conclude, it is important to emphasize the necessity of changes to the traditional organization before its existing structure starts to show serious drawbacks. For a facility like VLSI, it is really important to search for new opportunities within the existing structure through paying attention to the employees’ comments and needs. This helps to prevent the recession in the production efficiency and solve the major challenges the company is facing on the hyperactive hi-tech market from both the competitors and the customers. The organizational structure optimization through the introduction of the self-managed teams would enable the company to hold its position as one of the market leaders.
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