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Manufacturing Metamorphosis

“Manufacturing Metamorphosis”

The recent recession may not have officially started until March 2001, but Air Power Systems Company Inc. (APSCO) felt some early fallout.

A manufacturer of pneumatic controls for the trucking industry, the Tulsa-based company saw sales slipping in 2000. By 2002, annual revenues had dropped to $3.2 million, down 20% from $3.9 million in 1999.

That made CEO and FastTrac graduate Larry Mocha stop and take stock.

APSCO had persevered through tough times before. Mocha’s father founded the company in 1964 and steered it through a number of reversals, including the oil bust of the early ’80s, when sales plummeted dramatically. Mocha came on board in 1970 and learned a lot about resilience.

So Mocha didn’t focus on survival. Instead, he focused on seeing what opportunities this downturn offered for growth.

With that in mind, Mocha began to re-engineer APSCO, making continual improvement the company’s new foundation and ISO certification a cornerstone for future growth. “When this is over, we’ll be a different company,” Mocha says.

Issued by the International Organization for Standardization, ISO 9001: 2000 is a standard that helps companies establish a quality management program. Mocha had not pursued ISO certification previously, concerned about potential high costs and bureaucracy.

Yet in 2002, Mocha aggressively researched ISO requirements and decided to take the plunge. Along with three APSCO managers, Mocha signed up for ISO classes and began to identify and document the company’s processes and procedures.

Currently the company is preparing for a first round of external audits to ensure ISO compliance and is on schedule to complete certification by the first quarter of 2004.

One of Mocha’s greatest fears was that ISO might dull APSCO’s razor-sharp responsiveness — a company hallmark reflected by inventory turning 10-12 times a year. To Mocha’s surprise, ISO has only strengthened the company’s agility by:

  • Reducing potential for errors. APSCO uses a computer-aided design (CAD) system to design products to constantly changing customer specifications. APSCO is now implementing a control system to ensure that the most current specifications are available to its machine shop. “This may sound small,” says Mocha, “but responsiveness is only a plus if the product is accurately made.”
  • Tightening the organization. Preparing for ISO certification has helped APSCO streamline its processes and become more efficient.
  • Improving vendor relationships. Vendors get more attention and more communication now. After all, if a supplier is late with a part, that slows down production for APSCO. “We want vendors who are willing to partner with us,” Mocha says. “You can’t be lean without help from your suppliers.”
  • Increasing productivity. The company is producing more for customers but using the same number of workers, which lowers costs.

What are the results so far? Sales are increasing, and Mocha hopes to end 2003 with more than $3.5 million in revenues — a 10% increase. More important, profits are improving dramatically.

“Even though the economy is getting better, we need to strive for continual improvement,” Mocha says. “The world is different now than it was in 1999; companies need to learn to do more with less.”

Your FastTrac Take-Away: CEOs must assume a leadership role in ISO efforts so that employees throughout the organization become excited. Although he tapped a quality manager to supervise ISO efforts, Mocha stays involved and tracks all timelines and meetings. “If something didn’t happen when it was supposed to, I immediately followed up to find out why,” he says. “That sets a certain tone.”