Reengineering at ORNL: Where Are We Going?

Examining our Processes
Revision of Human Resources Practices
Improving Research Support Services
Work Smart Standards
Science and Technology Partnerships
Waste Management
Engineering Design and Construction

Jim Roberto (left) and Jim Stiegler (right) have led ORNL’s reengineering efforts.

It’s 1999 at ORNL. You sit at your desktop computer and quickly access all the financial and human resource data you need to manage your project. You look out the window and watch the new construction under way. You’re pleased that your brother, also an employee at the Lab, no longer complains about not having the transportation, tools, or supplies he needs to do his job in research support services. Reengineering of the ORNL organization, you decide, has been a good thing.

On January 1, 1996, Oak Ridge National Laboratory began operating under a new corporation, Lockheed Martin Energy Research Corporation (LMER). This was a watershed event for the Laboratory because it provided the opportunity for us to choose on our own how best to operate our organization. As part of this new corporate arrangement, LMER established several stand-alone activities, such as the Legal Department and the Human Resources (HR) Division, which had previously been provided by our sister company, Lockheed Martin Energy Systems (LMES).

Early in February 1996, ORNL senior management decided to engage an outside consulting company to examine the Laboratory and make suggestions for improving the numerous processes we use to perform our mission. We wanted to be better able to compete for scarce federal research funds, so our goal was to improve our research productivity while cutting costs through reengineering—fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance. Ernst &Young LLP was ultimately selected based upon several evaluation factors, but most importantly on their deliberate approach to reengineering.

Reengineering will enable ORNL
employees to perform their jobs
better at a lower cost.

In late spring, senior management formed the Reengineering Steering Committee under the leadership of Jim Roberto to consider the results of the work of Ernst & Young and the contract transition teams that had functioned prior to January 1, 1996. This committee’s major accomplishments were:

Examining our Processes

During the fall and winter of 1996, Jim Stiegler assumed leadership of the reengineering effort, and new teams were formed to examine various processes. The Environment, Safety, and Health team is rewriting our environmental, safety, health, and quality (ESH&Q) procedures to ensure that they are “necessary and sufficient”that is, that their intended functions meet various governmental agencies’ ESH&Q expectations in an affordable, timely way. The Science and Technology Partnerships team is examining ways to (1) improve ORNL’s relationships with outside organizations, (2) make it easier for guest researchers to start work here, and (3) expedite the formation of partnerships with industry, academia, and other federal laboratories to help ORNL compete more effectively for research funds. To help cut the overhead of research divisions, the Waste Management team is looking at ways to manage newly generated wastes as efficiently as possible and to reduce waste management costs by 50% over a five-year period.

The Engineering Design and Construction team is examining ways to simplify design and construction to attract federal funds so we can construct needed new facilities or maintain existing ones. The HR team is developing a new competency-based performance management and job evaluation system that will simplify the processes and transfer responsibility and accountability to line managers. HR has hired Towers Perrin, one of the top international HR consulting firms, to help lead development of these new systems.

The Finance and Business Management team, in concert with LMES, recommended the implementation of a commercial, off-the-shelf, enterprise information system to replace a number of our existing finance, project management, acquisition, and HR systems. This new system is a product of Systems, Applications and Products (SAP), an international company based in Germany. SAP R/3 is a highly integrated information system that will eliminate the need to maintain and update multiple databases. Installation of SAP R/3 also meets one of our goals in reengineering our fundamental business processes: introducing recognized “best business practices.” Over the long term, it will reduce the costs of maintaining multiple nonintegrated business systems. SAP, whose products are installed in more than 7000 companies, leads the global market in enterprise information systems. We have established with LMES a joint project team to implement the SAP system. Jim Ball is directing the project, Becky Verastegui serves as technical director, Mike McNeely is the business management director, and Richard Green is the change management director. The system will be available for service in fiscal year 1999. Ernst & Young is serving as our implementation partner and will play a major role in this endeavor.

Revision of Human Resources Practices

We have embarked upon a major revision of most of our HR practices. Employees will see significant changes in compensation and performance management, training and employee development, the workplace, and information systems.

In October 1996, ORNL’s Compensation Office, which is part of the HR organization, introduced an enhanced pay for performance program, an accelerated growth-to-midpoint program, a focal date salary increase program, and a new variable pay program. Also, a revised and simplified performance appraisal form will be introduced this year to simplify the appraisal process. A new competency-based performance management system will be developed and piloted for introduction in 1998. In addition, ground work for the development of a new job evaluation system is just beginning under the leadership of Fred Shull, ORNL’s compensation director. We expect to pilot that new system in 1998, with full implementation in the fall of 1999, if all goes well.

The HR organization will use the SAP HR module as our HR information system. As a result, ORNL will have a single system that integrates all of our business and HR information requirements.

We will overhaul employee development
activities, especially in leadership.

Many employees recently have spent most of their “classroom” time satisfying training requirements to ensure that the Laboratory is in compliance with environmental, health, and other regulations. We have separated employee development from compliance training. HR personnel will renew their focus on overhauling employee development activities to improve career skills, especially in the area of leadership. Compliance training will be implemented through the Operations, Environment, Safety and Health Directorate.

Improving Research Support Services

The reengineering team that has been studying research support services rendered by ORNL’s Plant and Equipment (P&E) Division focused on removing barriers to productivity and creating long-term cultural change. Six subteams were established and are co-chaired by P&E management and union representatives. The six subteams are Strategic Investment (Carpenter Shop); Strategic Investment (Field Sheet Metal Shop); Transportation; Materials Acquisition, Control, and Delivery; Customer Relations; and Heating, Ventilation, and Air Conditioning (HVAC) Work Group.

The team found that the high costs of the services are linked only partially to the hourly rate. We have room to bring these service costs down and intend to do so. The major source of the costs, however, comes from inefficiencies in our work practices because of insufficient planning and coordination. Our workers, who are dispersed over several sites, cannot always get to a work site because they lack transportation. Others can’t do the job requested because either needed supplies are unavailable or workers’ tools are antiquated (the average age of our tools is 38 years, and our oldest piece of equipment is a 1906 rolling mill). Our goals include procuring newer tools and improving job coordination to ensure that workers have needed transportation and that parts are always available so that workers can make needed repairs or installations.

The carpenter shop team has completed on schedule and under budget all work necessary to reopen the 7009 Carpenter Shop. This shop had been shut down since the early 1980s because of asbestos contamination.

The field sheet metal shop team has located and procured a used power shear that will be installed in Building 3044. The availability of the shear will substantially reduce travel time for personnel at the west end of the Lab who need sheet metal work. The team is now studying how best to organize field sheet metal work to optimize service to our customers.

The transportation team has focused on identifying ways to better meet the transportation needs of the P&E Division without adding costs. Improved, staggered shifts for the taxi service have been implemented to increase the availability of transportation to craft workers at the beginning of the work shift and during lunch when usage peaks. Division vehicles have been redistributed for more effective support, and a small rental pool of vehicles has been made available to meet short-term needs. The team has implemented a west-end transport service team consisting of four truck drivers who will have access to an assortment of vehicles.

To ensure a reliable source of needed supplies, the materials team opened a pilot bench stock area and acquired Building 3023 from the Instrumentation and Controls Division to house the operation. To stock the area, the team acquired most of the equipment and material from the Oak Ridge K-25 Site at no cost. Computing and telecommunications equipment was later installed, and material clerks were hired to run the operation.

The customer service team is continuing to identify better ways to achieve and measure customer satisfaction. Plans are being made to provide customer service training to division staff.

The HVAC team has recommended a reorganization of the HVAC work group that should provide more focused and cost-effective support for customers.

Cultural change activities are beginning to gain momentum. Our consultants from the University of Alabama at Huntsville and the Saturn car company continue to provide us state-of-the-art advice on tapping the strength of an effective union-management partnership to achieve customer enthusiasm. As joint teams experience this strength through successful completion of projects, support for cultural change grows.

Work Smart Standards

The Necessary and Sufficient process has been used to develop “Work Smart standards” for ORNL. Using these standards as ESH&Q requirements for all work at ORNL, we expect to improve ORNL’s ESH&Q performance while reducing costs and other impacts on research. All ESH&Q functions and tasks have been evaluated against the approved Work Smart standards by a team led by Doug Craig, director of ORNL’s Metals and Ceramics Division, and Frank Kornegay of the Central Management Offices. From this effort, four key areas were identified in which significant improvements could be made. As a result, our goals are to maintain our set of Work Smart standards; communicate expectations and requirements to staff, guests, and subcontractors; provide meaningful, cost-effective compliance training; and provide assurance that operations are in compliance with work smart standards. We continue to make improvements in these areas.

All required ESH&Q training has been evaluated against our approved Work Smart standards. We anticipate significant savings in training costs as we incorporate better methods to deliver the material (on the World Wide Web, for example); grant requests for exemptions, allowing some training to be given by subject matter experts rather than training staff; and hire the most cost-effective contractor to provide the required training.

All Laboratory-level ESH&Q procedures are currently being reviewed. Each requirement is being evaluated against our work smart standards. Our goal is to significantly reduce the number and complexity of the procedures, while enhancing the usefulness and flexibility of the documents.

Roles and responsibilities of organizations and individuals that best ensure compliance with requirements are being determined. Enhanced self-assessment programs will help research and support organizations find and fix problems in the most cost-effective manner, using experience from successful organizations. Some organizational changes may be recommended to ORNL senior management.

ORNL will continue to be a world-class
research institution because we recognize
the need to ensure high quality in our
research and the ease and effectiveness
of our partnerships.

Science and Technology Partnerships

ORNL will continue to be a world-class research institution because we recognize the need to ensure high quality in our research and the ease and effectiveness of our partnerships. ORNL researchers collaborate with researchers from industry, academia, and other federal laboratories through user agreements, cooperative R&D agreements, work-for-others agreements, licenses, and a variety of other agreements. Through these mechanisms, guest researchers work at the Laboratory or our researchers do research at other laboratories.

Having an agreement in place before performing collaborative research is necessary in order to establish intellectual property rights and to address liability issues. It is important, however, that establishing the agreement does not consume so much time and effort that it hampers collaborative research. The current process for establishing partnership agreements and for getting guests and users into ORNL does just that. Depending on the nature of the agreement, as many as five or six offices are involved in the current process. When guest researchers arrive at ORNL, it can take hours or even days before they can get beyond the red tape and begin research.

A Science and Technology Partnerships reengineering team is evaluating the entire process. The team is led by Ron Bradley of the Metals and Ceramics Division and made up of representatives of the Office of Technology Transfer, the Office of Science and Technology Partnerships, R&D divisions at ORNL and the Y-12 Plant, the Oak Ridge Centers for Manufacturing Technology, and DOE’s Oak Ridge Operations. The goal is to design a new process that will be significantly more efficient, cost-effective, and user-friendly than the current process. Successful reengineering of this process will have many positive benefits as partnerships with industry, academia, and other federal laboratories become increasingly important in the competition for research funds.

Waste Management

The responsibility for managing our active waste processes was returned to the Laboratory in January 1997. The new management and integration contractor will manage our legacy wastes. We recently established a Waste Management reengineering team under the leadership of Tim Myrick (manager of Environmental Management Programs at ORNL) to examine how best to deal with our current processes of waste generation. The core team has subteams concerned with pollution prevention (including material recycle), waste characterization, waste certification and verification, hazardous and mixed waste streams, communications, reporting and records, disposal end points, and waste treatment and storage processes. Process mapping and benchmarking activities are under way.

Engineering Design and Construction

An Engineering Design and Construction (ED&C) team led by L. E. McNeese has been working on reengineering ED&C processes at ORNL. The team has examined selected past, present, and expected ED&C projects at ORNL to identify potential barriers to implementation of efficient ED&C processes. Information is being gathered to verify that the identified potential barriers are real and important. Approaches for eliminating the important verified barriers that do not result from laws or regulations will be developed and recommended. Final recommendations will be made by mid-1997.

Reengineering involves starting over,
challenging assumptions about how
we should do business, and
restructuring the organization
around processes rather
than structures.

Reengineering is not downsizing, automation, reorganization, or total quality management (remember “quality circles” and “empowerment,” concepts that are more narrowly focused than reengineering?). Reengineering involves starting over, challenging assumptions about how we should do business, and restructuring the organization around processes rather than structures. It is designed to take work out of the system. If we do our reengineering right, by 1999 we will be more productive at a lower cost, making us better able to compete for hard-to-get research funds. As a new company, Lockheed Martin Energy Research will be doing more with less.

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