The Fire That Changed an Industry: A Case Study on Thriving in a Networked World
By: Amit S. Mukherjee
About 8 p.m. on March 17th 2000, a lightning bolt struck a high-voltage electricity line in New Mexico. As power fluctuated across the state, a fire broke out in a fabrication line of the Royal Philips Electronics radio frequency chip manufacturing plant in Albuquerque. Plant personnel reacted quickly and extinguished the fire within ten minutes. At first blush, it was clear that eight trays of silicon wafers on that line were destroyed. When fully processed, these would have produced chips for several thousand cell phones. A setback, no doubt, but definitely not a calamity. At a chip factory, production takes place in “clean-room” conditions. The cleanest of such facilities have no more than one speck of dust per cubic foot. Stated differently, these facilities are ten thousand times cleaner than hospital operating rooms. And therein lay the problem. Fire produces smoke and triggers sprinklers. Fire and smoke take lives, and sprinklers save them, but all—fire, smoke, and water—wreak havoc on property. As they dug deeper, plant personnel found that smoke and water had contaminated millions of chips that had been stored for shipment. Damage this extensive was definitely a calamity. Four thousand miles away, at a Nokia plant outside Helsinki, a production planner who was following a well articulated process for managing chip inflows from Philips failed to get a routine input he needed from Philips. The failure could well have been an anomaly. Even so-called Six Sigma facilities (of which, despite the hype about the term, there are very few anywhere) produce 3.4 defects per million. Nevertheless, he informed the plant’s purchasing manager, and again following an established process, they passed on word of a possible problem to Tapio Markki, the top component purchasing manager. In Albuquerque, Philips engineers and managers grappled with the...
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