Strategic Organizational Management in Moog Controls, Philippines


Strategic operations management could not be illustrated in a simple form for Moog Controls since it involves the entire organization in its planning, execution and improvements. On the other hand, it can be simply described as paving the way for the organization to reach its future state based on its current status. Strategy involves the senior management team planning for the organization’s competitive advantage, balancing and forecasting the consequences of these strategic decisions and finally looking into the long-term implications of such decisions. (Brown et al. 2005) The strategic areas that are encompassed within operations management include scheduling, quality management, process technology and inventory management.

Bill Moog has always known that the work environment played an important role in any company’s success. He has observed the manufacturing environments of other industries and noticed that employees worked better when they were treated with trust and respect. These modest ideas rested the base for what would ultimately become part of Moog’s much-acclaimed work environment and culture. (About Moog 2010) It could safely be said, therefore that the strategy involved in improving Moog Controls Philippines revolves around its human resources, from proper selection, training, developing and maintaining them, keeping them involved in achieving the whole organization’s goals.

HUMAN RESOURCE MANAGEMENT

The human resources function in Moog has evolved from being a business function in the organization – administrative personnel maintenance tasks, to a business partner that catered to learning and development of employees, and finally as a strategic partner whose roles include talent management, performance management, competency management and succession planning. (Bhatia 2008) In the Philippines, a country that currently encourages its labor force to work abroad, selecting and hiring competent employees is difficult, simply because the salaries being offered here are a lot smaller than other countries. (Macaraig 2010 & Torio 2010) On the other hand, doing business in the Philippines is relatively easy, considering that the business norms that the Filipinos value are the following: courtesy, social events, grooming and hygiene, dining, religion and superstition, equal opportunities, savings, and word of honor and integrity. (Andres 1997) These are the basis of most multinational companies in hiring, training, motivating and retaining their current workforce.

Moog’s culture and philosophy revolves around trust – an employee can trust that everyone he works with is competent. Moog Controls operates in teams, creating a democratic environment and job titles are overlooked. Employees are developed, recognized and rewarded for their efforts, making them proud of their output. Moog Controls, Philippines has accepted the concept of Hamel and Prahalad (1994) that the human resources must be linked to the organization’s core competencies, being “a bundle of skills and technologies rather than a single discrete skill or technology,” – and skills come from human means. Consequently, in 2005, Moog Controls, Philippines has been the recipient of the Personnel Managers Association of the Philippines (PMAP) Outstanding Program of the Year Award in their demonstration of the Filipino worker at his best, and the risk that the company has taken in trusting its employees. (Mosqueda 2005)

Performance management

A performance management system is a process that involves identifying, measuring, encouraging, evaluating, improving and rewarding employee performance. It is basically an employee appraisal system that (a) improves the employee performance by making them realize and utilize their full potential in carrying out their tasks; (b) provides information to employees and managers in making work-related decisions. (Purposes of Performance Management System 2010) From the feedback mechanisms, development concerns, documentation, diagnoses of organizational problems, diagnoses of organizational problems and employment decisions, the following employee necessities have been realized: Competitive salaries and benefits, work-life balance, educational assistance through academe and trainings in other facilities, attractive retirement benefits, stock investment options, comprehensive health programs, recreational activities, employee exchange programs, and trainings in other facilities (Moog 2010).

PROCESS MANAGEMENT

Just In Time (JIT)

JIT is fully dependent on an integrated and strategic approach linking customer requirements with supplier capabilities and excellence in internal operations. In Japan, JIT has grown into a total management system from marketing to delivery. It has presented Japanese companies with a sturdy competitive advantage over their Western rival (Harrison 1992). Moog has adopted this lean production, Japanese manufacturing approach developed by the Toyota Motor Company whose main principle is focused on the removal of all waste from the operations environment. The produced amount fills in the exact number required when it is needed.
The major forms of waste or contributors or sources of waste that have been identified are: overproduction, waiting, transportation, the process itself, stock on hand, motion, defective and goods (Brown et al. 2005) Consequently, with the use of JIT, Moog Controls has also included the use of the kanban system or the “card” system of communicating to, from and within operating departments, signalling to trigger an action. (Kanban System 2010)

JIT has addressed the challenges of Moog with holding inventory, such as, storage costs, loss or stagnancy of capital, obsoleting of stocks, revolving capital for the organization has increased, and losses to deterioration, theft or damage was minimized greatly. Understanding the risks and the magnitude of accountability when managing the risks involved in the JIT system has further motivated the employees to comply and exceed quality standards that have been put in place.

AS 9100 Certification

AS 9100 is the quality management standard specifically written for the aerospace industry. It has long been considered by some entities, such as the Federal Aviation Administration (FAA) that the ISO 900 series of standards are inadequate in terms of ensuring quality and safety in the “high risk” aerospace industry. The existing description of AS 9100, Revision B, brings together its standard with ISO 9001: 2000 and has extra necessities regarding Regulatory Compliance and the following aerospace-sector specific requirements such as configuration management, design phase, verification, validation and testing processes, reliability, maintainability and safety, product identification, documentation and control of production process changes, production equipment, tools and numerical control machine programs, and many more. Accordingly, ISO 9001:2000 is completely incorporated within AS9100 in addressing aviation safety concerns. (AS9100 - The Standard for Aerospace 2010)

The Japanese 5-S

Moog Controls Philippines also practices the Japanese 5S method of workplace improvement. This is a housekeeping system of keeping the shared work areas organized to maintain morale and efficiency. The main point of 5S is simply putting everything in its proper storage place lessening the time used in looking for things needed, improving the work flow process instilling ownership amongst employees. (5S: Japanese concept of workplace improvement 2010) The 5S are: Seiri (Separating): This is sorting only the needed materials in the workplace and storing or discarding those that are not important. Seiton (Sorting): This catalogues tools and materials in the workplace, keeping them close to the work station they are needed in, stored in a fashion that removes extra motion. Seiso (Shine): This simply indicates that the workstation and work area should be maintained clean after every job. Seiketsu (Standardizing): This means a consistent, standardized work practice. Each employee knows exactly what his tasks or responsibilities are. Shitsuke (Sustaining): Meaning maintaining the optimized standards, and not returning back to the old ways of operating.

Six Sigma

Six sigma is a statistical problem solving methodology that helps enhance organizational operations. It ensures a quality level of 3.4 defects per million opportunities (DPMO), with a rate of improvement of 70 percent or more. It is data-driven based on the Define-Measure-Analyze-Improve-Control method undertaken to create bottom-line breakthrough change.(Statistical Six Sigma Definition 2010). The DMAIC method of six sigma is a formalized problem solving method used to improve effectiveness of the production processes. The six key principles of six sigma involve: (1) Focus on the customer (2) Identify and understand the value stream process (3) Manage, improve and smoothen the process flow (4) Remove non value-added steps and waste (5) Manage by fact and reduce variation (6) Involve and equip the people involved in the process (7) Undertake improvement activities in a systematic way.

The success of Moog’s status as a world-class manufacturer and innovator rests largely on its human resources and the programs included in HR development. As seen on Moog’s website, there are testimonies from individuals posted that emulate Moog’s performance management processes (Our People: Asia Pacific 2010), especially the benefits that they have been recipients of. What is encouraging in this scenario is that Moog as organization also benefits from the skills, knowledge and talents gained by the individual.

Processes, innovation and technological advancements have more often than not originated within the organization itself – a result of trusting its employees to “run” the company as innovation and process improvements have always been within arm’s length. The effect of caring and uplifting employee morale is not only experienced by Moog, but also by other successful companies, such as The Tata Group of India, Allen and Co, GE, and Toyota. The flattened organizational structure that promotes democracy, easy communication and the sharing of knowledge through social networks currently presents a better means of raising accountability in employees, and also finding and solving operational barriers that can lead to optimization of work. (Maqsood & Walker 2007)

Just like in any organization, any undertaking’s results can be seen through profit. Moog’s overall annual diluted earnings per share has reached an all-time high in 2009 at $2.75 – more than double its amount ten years before at $0.80, under a ten year compound growth rate of 9%. (Moog Annual Report 2009) Although the organization has been affected by the economic crisis, it still brags of $1,849M net sales and $85.1M net earnings.

These figures would not have been met if there was a weak support on the HR level, allowing uncontrollable attrition and retrenchments during the financial crisis of 2007 to 2010. The investments the organization has done in developing their manpower and knowledge base has made them resilient in such cases, being affected but not overly alarmed by such crises.

The shift in the role of human resource management, from being just administrative business solutions to strategic partners in planning, has been the root of most of Moog’s accomplishments. Strategic decisions, therefore, must take into consideration the welfare of the human resources involved. The shift to honing knowledge workers would create innovations in processes, methods and other operational procedures, enhancing not only that employee’s team performance but also the performance of the organization as a whole. Continuous improvements under the JIT, six sigma and kaizen methods of operations will take place constantly, causing technological advancements, product advancements and process improvements and cost effectiveness that can benefit the organization itself.

Process improvements and innovation is not an instant fix to any operational activity; therefore, time, technology, money and skill are required to carry these through. Skill is the most important ingredient in innovation, and skills can only be taken from the human aspect of any industry; thus the accomplishment of any strategic operations management plan or for any quality method would only be realized through human resources.

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