EMS: Satcom: Focused on the job

Source: Exec Digital Canada

Date :3/31/2008 5:41:08 AM

Exec learns more about product-focused EMS Satcom, a leading provider of ?satellite-based communications systems Written by Megan Santosus and produced by Rich Gentile

Ten years ago, EMS Satcom Inc. was essentially in the project business. As a provider of satellite-based communication products for military, corporate, government, aviation and aeronautics customers, the Ottawa, Ontario-based company ran its operations according to a project-based approach. “We manufactured everything ourselves from machine tools to cabling to card assemblies,” says Joanne Walker, vice president of operations. Rather than making a line of products, the company worked on various projects that resulted in project deliverables.

While the distinction may seem abstract, the difference between being project-focused and product-focused had some very real repercussions. Most significantly, EMS Satcom relied on about 200 suppliers due to the vast number of parts required when working from project-to-project. “When we did everything in-house, we had to use a lot of suppliers,” Walker says.

About eight years ago, EMS Satcom began to shift its strategy to one that is centered on products. By focusing on its core strengths—namely its engineering—the company could increase its nimbleness and innovation.

Today EMS Satcom’s operations revolve primarily around the design, engineering and integration of its various antennas, data terminals, cabin networking equipment and other satellite-based communication technologies. EMS Satcom products are used for a variety of communication applications such as search and rescue operations, cockpit voice and data communications, in-flight entertainment and communications, and fleet tracking and messaging.

As part of the shift, EMS Satcom adopted lean manufacturing principles and pared down its supplier base considerably - there are 18 suppliers today that represent 80 percent of the production supply chain spend. Yet even as the number of suppliers dwindled, their importance to EMS Satcom has increased: The company relies on suppliers to manufacture its components and do upwards of 95 percent of its board stuffing - the process of placing resistors, capacitors and other components on printed circuit boards. EMS Satcom handles the final integration and testing of circuit boards.

To improve its working relationships with its suppliers, EMS Satcom uses a monthly scorecard that rates suppliers’ performance based on quality, on time delivery and subjective criteria like ease of doing business. Any scorecards that reveal poor ratings go right to the president of the supplier.

Recently, in an effort to enhance the sense of partnership with suppliers, EMS Satcom hosted a one-day conference with supplier representatives. “Our suppliers typically supply a piece of a product or a subassembly,” Walker says. “While they know their component goes into an antenna or a data box, they often don’t really know how the end product is used.”

During the conference, suppliers received briefings describing EMS Satcom products in action. The conference also provided suppliers with a roadmap for future products. “We let our suppliers know that the bar is being raised,” Walker says. “In the future, they will have to be on time, cheaper and more flexible.”

In addition to suppliers, EMS Satcom partners with Rockwell Collins, Honeywell and Thales to provide products to aircraft manufacturers, Airbus and Boeing. (EMS Satcom also develops products that its partners brand). According to Ron Halka, the director of business process improvement and quality, bringing EMS Satcom’s processes up to the manufacturers’ safety standards has taken significant effort.

One of the challenges is that the Airbus and Boeing have their own stringent requirements. “It’s a balancing act for us to find the synergies internally that can satisfy both standards,” he says. The company has ISO and AS9100 certifications for quality, and two Six Sigma black belts—experts in quality management and process improvement methodologies. (Halka is one of the employees who has the black belt designation.)

As a manufacturer of sophisticated communications systems, Halka says that EMS Satcom has to be committed to continuous process improvement. Process action teams or PATs are teams of employees that are charged with recommending improvement ideas to senior management.

Once management gives an idea a green light, it becomes a formal process improvement project complete with dedicated employees and a timeframe for completion. At any given time, Halka says about 40 such process improvement efforts are underway; EMS Satcom has established the goal of completing 12 such improvement projects every year.

The PATs also serve to foster an entrepreneurial, can-do attitude among the employees, something that Walker says is a differentiator for EMS Satcom. “The aeronautical industry is regulated and highly controlled, and we try to balance that with being very flexible,” Walker says.

An entrepreneurial spirit encourages flexibility, which leads to faster time-to-market. According to Halka, EMS Satcom enjoys a two-year head start in terms of getting products to market over competitors.

Being out front in the market is indicative of EMS Satcom’s strategy of leading customers with products rather than following customer needs. “It’s the vision of senior management to think of products that people don’t even know they want,” Walker says. A recent case in point: The company’s eNfusion HSD line of voice and high-speed data broadband terminals. The terminals provide a variety of aircraft with broadband Internet, voice, Ethernet and high speed capabilities.

In order to lead customers, EMS Satcom invests heavily in research and development (R&D). In 2006 (the most recent year financials are available), the company spent 14 percent of its $75 million in annual revenue on R&D initiatives. Walker says that about 65 percent of the company’s 330 employees work in engineering - another indication of its commitment to continuous product development.

An emerging market for the company is its Blue Force Tracking products - ruggedized data terminals with GPS-based tracking and data capabilities. Currently, NATO forces in the Middle East are using the terminals for real-time communications and location tracking.

Ultimately, Walker says, EMS Satcom is very driven by its employees who have a sense of ownership about the company. Employees are encouraged to participate in extracurricular events like blood drives and charity races. Such participation “gets everyone feeling like they belong to a community,” Walker says, adding that that’s important given the amount of time employees spend on the job. “We work hard and it’s important to be involved in the community.”