Todd Brassard highlights the evolution of Calumet’s importance to the industry
Nolan Johnson from i-Connect007 talked with Todd Brassard, VP/COO at Calumet Electronics this month for the May 2021 edition of PCB007 Magazine. They start by discussing the definition of operational excellence, followed by its key components. Then Todd shares a helpful book and AS standard that have become the foundation for Calumet’s operational excellence.
Nolan Johnson: Todd, how do you become operationally excellent?
Todd Brassard: Before a company can define how to become operationally excellent, they must define what operational excellence means to them.
Johnson: There’s the reaction response which suggests that it’s maximizing gross margin, right?
Brassard: Undoubtedly. A mentor once told me, “A company must make enough money to pay the bills today and have enough left over to invest in the future.” We have learned that operational excellence is a journey much more than an end unto itself.
Johnson: How has Calumet’s operational excellence evolved over time?
Brassard: I was a contractor for Calumet for five years before joining the company. I remember the telecoms boom when there was so much work the halls were lined with A-frames. I also remember the telecoms crash which I now know cut the company’s business by 60% over a very short 18 months. Then offshoring took hold in the U.S. and operational excellence meant just keeping the doors open.
Between 2003 and 2013, Calumet’s CEO Steve Vairo pulled off the seemingly impossible by keeping the company alive, growing, and investing while the PCB industry in the United States contracted by 80%. At this point, operational excellence was defined by the company’s ability to keep investing in the future while the U.S. industry continued to wither. Over this period, Steve continued to build and refine Calumet’s equipment set, improving capability and capacity, which would prove to yield dividends in later years as things picked up.
In 2013, with continued uncertainty about the future of the domestic electronics industry, Steve led a deep dive into better understanding the U.S. market, where Calumet fit in that market and where the company needed to go, and how to organize the company to tap into the talent and skills of people to meet upcoming challenges.
At this point, I was given the opportunity to serve the company as its chief operating officer. The company also created new positions and made strategic hires, bringing on Mike Kadlec as VP of corporate development, Dr. Meredith LaBeau as director of process engineering, and Heather Store as director of human resources. We also contracted with the Upper Peninsula Marketing Department, which has been instrumental in everything from market analysis to rebranding the company, from political advocacy to improving the look and functionality of our hallways.
The goal at this time was straight forward— Calumet had to become very good at the work that was safe from offshoring and not going to leave the country.
The period from 2013 to 2018 was all about discovering and defining operational excellence. We learned and continue to learn about what it means to have a company that is engaging in the right activities to move the company forward, albeit slowly, over time. One of the most important lessons we learned is that, in addition to an excellent equipment set, a company needs excellent people. We say, “The right people, in the right seats, doing the right activities.” Much of our focus since 2013 has been building and developing teams of people that are engaged, skilled, and passionate about success and moving the company forward.
Johnson: What are some of the factors that contribute to operational excellence?
Brassard: Do not underestimate the power of reducing strategic thinking to writing. It’s easy to believe that having strategy in your head is the same as having strategy on paper; it’s not, because people cannot read minds. The process of writing a strategic plan helps to crystalize thoughts and organize ideas into executable activities. The process can be time-consuming and frustrating but also clarifying and rewarding. Most importantly, a well-written strategic plan can be disseminated within an organization and to field partners, suppliers, and even customers.
Having everyone within the company on the same page is a powerful driver of forward progress. Without a clearly communicated strategic plan it’s difficult for the teams within a company to differentiate between important tasks and activities vs. distractions and noise that will not advance the position of the company. You must get the plan out of the mind, onto paper, and communicated within the organization. A well-understood corporate strategy enables operational excellence by aligning people, reducing overhead, speeding up activities, and eliminating feedback cycles. With everyone working to the same script, a CEO knows that everyone is mostly working on the right tasks and employees do not necessarily have to run to their bosses asking what to work on or if they are engaged in the right activities.
For example, Calumet generates around 40 quotes and ships about 60 orders per day. With clear objectives and strategy, the sales team can work to shape business slowly over time to better position the company for the future. Also, within this flow of transactional business are gems of opportunity that our sales associates must be able to identify, respond to, or redirect to specialists within the company. Our strategic plan communicates the industry sectors where the company seeks to grow through clearly defined objectives, strategies, and tactics. This enables our sales associates to use their talent, skills, and experience to great effect to identify important opportunities and take the right actions, because they clearly understand the company’s goals and strategies.
Once a company has a written strategic plan it can more easily and safely secure or develop resources with confidence because the plan is steadfast and resilient against tempting but off-mission distractions. Resources take many forms: from human talent to capital equipment to political advocacy or tapping into your local high school’s robotics program.
Over the prior decade Calumet has made significant strides with capability and capacity. For example, over the past eight years, Calumet has grown from having four process engineers to having a department of 15 process engineers and technicians. This growth of technical talent didn’t happen overnight but was a result of our strategy to rapidly increase Calumet’s capability to meet the needs of that part of the domestic circuit board industry that was less likely to be offshored. But it wasn’t until we reduced our strategy to writing that the tactic of developing a dedicated R&D/product realization team was identified as an imperative to take on the most challenging engineering and manufacturing projects and product types. Simultaneously, our written plan identified and solidified the importance of developing more and deeper relationships with our customers, especially those seeking to partner with manufacturers in early design stages of very com plex technologies, all within the context of establishing long term agreements to improve the visibility and resiliency of future revenues.
Johnson: I’m hearing that it starts with knowing where you want to go.
Brassard: Even before knowing where you want to go, you need to understand why you’re in business. Before we defined company objectives, strategies, and tactics, we dedicated a page to listing what is important to our business. We later titled the section, “What’s Important and Desired Outcomes,” understanding that these two categories were similar but not exactly the same thing. The former made statements about growth and sustainability where the latter addressed topics like the importance of the company having a positive impact on the surrounding community. Once we identified what was important to the company and what outcomes were desired from our efforts, we established just seven top-level corporate objectives. We kept the list short knowing we had limited resources and that we must focus on what was most important, but also understanding that we could change the objectives later.
Johnson: So, the idea is to know what it is you want to do. And that starts with defining your purpose, your mission?
Brassard: This seems obvious, but in the daily hustle of keeping your customers happy, it’s easy to drift off mission or lose focus on the big picture. Understanding what’s important, where you fit in the market, where you are strong, where you are weak, and who are your stakeholders are important considerations at any point in the journey of a small business. Your list of stakeholders likely goes beyond the owners, employees, and customers extending to your suppliers, local contractors, the high school down the road, and the person who plows your parking lots in the winter.
What’s interesting is that the latest Revision D of the AS9100 standard now identifies risks associated with the lack of a sound business plan or contextual awareness of where a business fits into the industry, supply chain, and even local community. The new standard requires companies to define the context of the organization, identify outside factors that cannot be controlled, inside factors that may or may not be controllable, and identify the interested parties or stakeholders in how the company operates. Because Calumet had a written plan that addressed these topics, the company passed the first Revision D audit with relative ease and zero nonconformances.
Johnson: So, it all starts with a very clear vision of who you are, what you stand for, what you’re trying to accomplish. Still, it seems like it’s too early for implementation. It sounds like it’s time for making plans.
Brassard: You do eventually get to the point where you have identified what’s important and high-level company objectives. Time to implement, right? If writing a strategic plan was a challenging undertaking, implementing that plan can feel nearly impossible.
Inside companies we find many different leadership styles. Two of the styles I’d like to talk about can loosely be lumped into the categories of intuitive and methodical. The intuitive leaders demonstrate a knack for perceiving opportunities and finding pathways forward, provided they have a clear understanding of the company goals and access to the most current information. The methodical leaders succeed by breaking down the high-level objectives into increasingly granular executable tasks that can be delegated within an organization. Where the intuitive is satisfied when they sense forward progress and that things are going well, the meticulous want S.M.A.R.T. goals, quantitative measures of progress, periodic reporting, and course adjustments. Of course, it’s not this black and white, with many people occupying the space between these extremes. Hopefully, your organization allows for the full spectrum.
When Calumet set out to reduce its strategic plan to writing, one of the first steps was to get the intuitive ideas on the whiteboard then methodically work the ideas until a hierarchical expression of objectives, strategies, and tactics emerged. The objectives were derived from what’s important, strategies were formulated to meet objectives, and tactics were developed to implement the strategies. Every level of the plan was intentionally brief, often only one or two sentences, and even vague, providing guidance but leaving a significant amount of latitude for people within the company to use their talent, skills, and insights to implement the activities as they see fit. Where the intuitive leaders felt great about having the plan out of the heads of leadership and onto paper, the methodical leaders would go on to develop methods to track and measure progress to ensure the company was in fact moving forward.
Johnson: That’s interesting. So, your team is comprised of both styles: the meticulous, methodical; and the more artistic, intuitive styles. And you’re having success working with both. Can we compare and contrast this a little bit?
Brassard: The intuitive leader is likely experiencing a good flow of information and is exposed to what is happening in the industry, monitoring changes in demand, reading news, monitoring geopolitical developments, understanding what the company is capable of accomplishing, and just processing everything, connecting dots, and drawing conclusions.
A more intuitive mind may comment, “Here’s a clear problem our customers or the industry is facing. Without too large of a commitment, we could build this product solving a problem and generate healthy revenue and margin from the endeavor. Let’s do it!”
The methodical thinkers would respond, “So you think we should get into this product type, eh? Well, let’s start with a market analysis. Where’s the data to support the idea? What’s the ROI and is this a new revenue swim lane or something close to what we are already doing?” Methodical thinkers can be sold on and even enhance intuitive reasoning, but they want a little more data and analysis to be comfortable before adding additional burden or distractions to the company. The different thinking styles can easily be in conflict. Intuitive leaders want to push forward, knowing they are right, and needing little objective evidence, at least in the short term. And a good intuitive leader is often right. Nevertheless, to be a successful organization one must be able to more objectively measure progress since everything eventually impacts the bottom line.
Over the timeframe of months and years a balance of intuitive and methodical leadership naturally forms. After all, our strategic plan calls for significant continual improvement in on-going operations while simultaneously asking the company to make leaps forward into new relationships and product types. We find ourselves on this teeter totter, slowly oscillating where we deep dive operations issues for a time. I think this is natural for a business, responding to problems and opportunities as they arise. We continue to make measurable progress because everyone is working from the same strategic playbook.
Johnson: You were implying that you’ve got some projects where you tracked the metrics very closely and you were successful. But you also have some projects where you didn’t track the data for three months or so and then as you came back, you got to see the progress over a period of time, and it was successful. My guess is a lot of organizations are going to lean strongly one way or the other and tend to be much more of an intuitive development team or a metrics driven development team, depending upon company culture. It’s interesting to find you’ve got both.
What drives this? Does this seem to be something where you fall into one method or the other based on the kind of technology or the objective you’re after? Is this a personal style based on who’s in charge? How do you get to the different styles within your organization?
Brassard: I agree that it seems to be personality driven and influenced by the type of work being done. It’s important to understand that just because an intuitive personality might be less concerned with having the strategy written down, they do indeed have the strategy in their heads; it’s just not easily communicated to others who have less experience or are new to the journey. Diving into new technologies also requires a balance of initiative and methodical thinking to make bold but careful and in-control decisions.
What was transformative for our organization was taking the intuitive knowledge of leadership and reducing it to paper. The impetus for the undertaking stemmed from the work we were doing to improve culture at the company to improve our career paths and opportunities for our employees. We felt it was important that the strategic plan get out of the boardroom and into daily operations. We needed everyone to be on the same page for the company to move faster.
If you have a plan and don’t communicate it effectively within your company, you’re not only doing your employees a disservice, but you are doing your business a disservice as well. Everyone within an organization needs to know the plan, at least in a general but meaningful sense. What’s more is the plan must be communicated in a fashion that people can get their heads around. In the last five years, we’ve made a number of strategic hires based on the individual’s interest and capability with S.M.A.R.T. goals in mind. As we have worked toward operational excellence at Calumet, our interest in metrics and measures has increased significantly. What are the right metrics and how can they be kept simple and actionable?
We literally have developed hundreds of metrics over the past decade; now we are trying to reduce the reports to just what matters most and avoid analysis paralysis.
Johnson: When we talk operational excellence, we start to think about the efficiencies on the manufacturing floor, our overall ability to deliver great yield, to deliver quality product that won’t fail in the field, to be able to work well with your customers, to make sure that they receive those sorts of benefits. Those are the systemic things that one thinks of right away when looking at operational excellence. So far, to get there, we’ve been discussing concepts that are more intuitive.
Brassard: One of the most significant discoveries that we have made on our journey to get better are the principles of world class manufacturing. We were first introduced to world class manufacturing at a customer supplier conference. It’s very easy to be dismissive when somebody hands you the next book to read, but we did eventually read the book and it began to change how we approached operations, especially on our manufacturing floor. Some of the ideas in the book were completely counterintuitive and we discovered we were doing a few things exactly wrong.
I see world class manufacturing as a superset of lean manufacturing where the focus is more about reducing waste than improving efficiency, although many will argue it’s the same thing. For example, we used to believe a machine on our manufacturing floor was only making money when it was running. Strict adherence to this simple axiom would have you running your machines at maximum throughput all the time, creating all kinds of problems. Instead, we’ve learned that a machine should only run when it needs to, and not a minute more. This seems a minor change in thinking but applied to 90 processes on a 100,000 square foot manufacturing floor, this minor difference changes how you operate. In this case, keeping the WIP (work-in-progress) on the floor low, resulted in improved yields, shorter feedback loops, less stress for employees, and most importantly shorter cycle-times.
An important indicator of a successful business is cycle time: the amount of time it takes between receiving an order and shipping an order. Cycle time is equal to backlog divided by throughput. For example, if you have 14,400 panels on your manufacturing floor at any given time and you complete 720 panels per day, your cycle time is 20 days. By reducing your WIP by 20% or 2,880 panels on the floor, your cycle time just dropped to 16 days. Now you’re shipping everything four days earlier than before, giving your company a competitive edge in the marketplace. The ability to maintain a low cycle time is now a standard measure of operational excellence at Calumet because everything must go right to maintain a low cycle time, from employee time and attendance to preventative maintenance on manufacturing equipment.
Johnson: And to that end you made the sacrifice on idle time? You’re willing to have more idle time if necessary?
Brassard: That’s right. Since the machines in a multi-step process run at different speeds, it makes little sense to run any machine faster than the slowest machine in that process. Doing so would just cause a pile-up of panels, increasing WIP, and increasing cycle time. You need to go slow to go fast when cycle time is the measure of performance. The goal is to reduce WIP as much as possible, with the best possible configuration being conveyorized single unit flow, reducing cycle times from weeks to days and days to hours.
Traditional lines of thinking would have you hire an employee per machine, but this only feeds into the idea that all machines must be running all the time. The world class manufacturing approach is to organize areas into “responsibility centers,” where a team of employees is responsible for a set of machines for a process. The team runs the right machines at the right time and keeps WIP low and throughput high, yielding a minimal cycle time for that process. Line enough processes up that are each minimizing their cycle time and your factory is minimizing overall cycle time. Also, processes organized in this way tend to require fewer employees and are more resilient to employee absences since people can move around to fill gaps and go where help is needed.
I mentioned this is counterintuitive. Typically, it’s the buildup of WIP in a department that creates a sense of urgency that pushes people to work faster and make mistakes. But with responsibility centers, the lack of WIP reduces pressure caused by pile-ups of work, eliminates the time to find the next job, minimizes unnecessary handling, speeds up quality feedback loops, and improves yields. We have, however, found there is such a thing as too lean or too little WIP where a department runs out of work all together. In this case, employees need to go to another department that needs help. This interdepartmental cross training is a higher order of the responsibility centers concept and is something we are continually working on at Calumet.
The book we are working from is titled World Class Manufacturing, The Lessons of Simplicity Applied, authored by Richard J. Schonberger and published in 1986.
When I first received the book, I stuffed it in my bag for the trip home, never opening it. About a year later when the customer started talking about “Chapter 9: Partners in Profit,” I became more interested, but still did not read the book cover to cover. We visited the customer, and I spent a lot of time over three days explaining to them how these concepts couldn’t apply to a PCB manufacturer. On the flight home I finally cracked the book and was horrified to discover on Page 5, “A machine shop, a sheet metal shop, a printed circuit board shop, any shop or factory that makes to order is just the same.” The book apparently did apply to a PCB manufacturer. What an embarrassing display I put on with the customer.
Johnson: Right there? Explicitly?
Brassard: Yep. And I circled it in pen, thinking, “I just spent three days telling our customer the book doesn’t apply to a circuit board shop.” When I arrived at home, I sent an email immediately apologizing for my naivety, because never at any point during the visit did the customer call me out on the fact that I didn’t know what I was talking about. In response they said, “Todd, this book will make you feel like an idiot and a genius all at the same time, but it’s a tough read and it takes a while to see how to apply the knowledge to your own business.”
And it is a tough read: dry, like reading the owner’s manual for your dishwasher. But if you have problems that need solving, there are answers. Chapters 1, 2, and 6 contain enough to keep you busy for a year. Starting with simple whiteboards to facilitate communication, identifying problems at the spot where they occur, seeing trends with hand drawn Paredo charts, red lights where everyone comes running to solve a problem quickly, and responsibility centers as I discussed earlier.
Johnson: Does this extend beyond the factory floor?
Brassard: The principles of world class manufacturing can apply to many aspects of business—anywhere work in process can accumulate resulting in wasted time or energy. At this point, we have our hands full learning and implementing the concepts on our manufacturing floor.
Johnson: Obviously, Calumet is finding a lot of benefit in pursuing operational excellence. Not only are you running more efficiently, but you’re also creating career paths. And you have sales opportunities and new markets that weren’t available to you before.
Brassard: As operations improves, a company is better prepared to take on new opportunities and grow. As the products you build become more complex, success requires a greater degree of operational excellence. We are fortunate to have arrived at what we feel is a solid strategic plan, that we are making progress in offering our employees more career opportunities, and that we are learning the ways of world class manufacturing. These initiatives give Calumet a fighting chance to pay the bills today and invest in the future. They are enabling us to take on challenging designs, access new markets, and develop customers who will continue to source their electronics domestically.
The United States will never take back the bulk of the work that has moved to Asia over the past 20–30 years; that ship has sailed. Domestic manufacturers must look and plan for the future. The work that will remain in the U.S. will be challenging as OEMs strive to build the most advanced electronics systems domestically. Our plan is to pivot, build partnerships, and offer the most advanced design, layout, engineering, and manufacturing solutions to ensure the company is sustainable for the next 50 years.
Johnson: And if you take something and treat it as an obvious given, and you don’t include it in your plans and your analysis for operational excellence, you miss it.
Brassard: There is little room for complacency for domestic electronics manufacturers. The United States is out-classed by some offshore manufacturers in virtually every performance metric that matters. The viability of low-cost supply chains has been proven over the last three decades as U.S. industries have all but collapsed. The aggressive measures employed in certain overseas locations to gain technological advantage is causing some OEMs to contemplate security concerns with offshore manufacturing, but the marketplace is too massive to ignore and a strong incentive for U.S. OEMs to not work against those interests. If manufacturing circuit boards in America was ever about just keeping your head down and doing the work, to be successful in the modern age requires a plan.
Fortunately, U.S. manufacturers have not given up on U.S. manufacturing. Within the U.S. electronics supply chain are companies that are pivoting, standing up new products and services, and developing technologies that will enable state-of-the-art manufacturing that keeps up with the best Asia has to offer. We see this today like never in the past as these companies are striving and obtaining their own level of operational excellence. We are also seeing new associations, organizations, and working groups forming to take on the challenges that are holding electronics manufacturing back from achieving greatness.
Our journey to achieve operational excellence is far from over. On the contrary we feel we are just scratching the surface in becoming the company we could be when we achieve excellence in our on-going endeavors. We know that a written strategic plan that can be shared with everyone within your company is a big step in the right direction, that diverse leadership styles are necessary to find the path forward and ensure that you’re staying on track, that the sometimes-counterintuitive principles of world class manufacturing provide solutions to real-world problems, and that operational excellence is strived toward but never truly obtained. It’s a journey not a destination.
Johnson: This has been a great conversation! Thank you.
Brassard: Thank you for the opportunity to share a few thoughts.