For LAI International, the creation of a roadmap to Manufacturing 4.0 started with putting customers at the center of the company’s thinking. A motto grew out of this orientation: accept no defect, make no defect, pass on no defect.

The thinking is much more than a motto, however. It has translated into a series of cultural, organizational, and technological changes at the 38-year old contract manufacturer of precision-engineered parts that is now serving as a role model for other manufacturers starting their own journeys to the data-driven era of M4.0.

Today’s LAI, which serves the aerospace and defense, energy, industrial, and medical markets, was on display last week as members of the Manufacturing Leadership Council toured the company’s 75,000-square foot factory in Scarborough, Maine, near Portland. The theme of the event was: “Building a Roadmap to Manufacturing 4.0”.

ML Council members watched the operation of LAI’s milling center, where components for jet engine fan blades are made; were shown the Vision Board, which consolidates safety, quality, delivery and other information for plant floor workers in one place; and heard about the company’s approach to machine data flow and integration. Council members also engaged in a 90-minute question and answer session with LAI’s leadership team and provided insights on their own M4.0-related activities.

In explaining how they devised a roadmap to M4.0, LAI’s leadership team said its customer-centric approach started with the development of a strategic plan with clear business and operational objectives. Chief among these were shifting focus from being a job shop serving the industrial gas turbine market to becoming a full-bore production manufacturer, with a target of 80% of the business in the aerospace and defense market.

To achieve these goals, LAI had to become a data-driven manufacturer with real-time response systems, had to develop a deep commitment to continuous improvement, and had to be able to rapidly implement change on the factory floor. Moreover, the company’s four largely autonomous factories in the U.S. had to start working together, which resulted in LAI implementing a cross-functional team organizational structure.

All of this required significant cultural change at LAI, and the buy-in of all company associates (LAI does not use the term employee). With the arrival of Patrick (P.J.) Gruetzmacher as president and CEO in 2012, every LAI associate was expected to have a performance discussion and a growth plan in place. A mentoring program, with the goal of promoting from within, was established. Gruetzmacher also holds open, roundtable meetings with associates on a regular basis.

In June, LAI won four Manufacturing Leadership Awards, including one in the category of Customer Value Leadership for its Advanced Product Development Model. Gruetzmacher won an award in the category of Visionary Leadership.

One of the results of the changes in LAI’s culture was the creation of what LAI calls “Integrated Product Teams” that enable the all-important connection to customers as well as a set of informational tools which LAI collectively calls its LAI Business System.

The results of these changes have been impressive. LAI increased its production throughput from two parts per day on one line and now drops 10 parts a day on six lines for a total of 60 per day. On the quality front, deviations were the norm but now 97% of a part’s 1,065 inspection points clear inspection. Greater automation on the factory floor has led to less human interaction with machines, which, in turn, has lowered LAI’s insurance costs. And on the financial front, LAI’s return on invested capital has increased each year for the past five years.

Looking forward, LAI wants to start introducing industrial robots on its factory floors, and it has committed to associates that when it does so, no jobs will be lost as a result. The company also wants to get better at analyzing and using the data that is generated from its equipment and processes, a subject which provoked a number of questions from ML Council members during the Q&A.

LAI leadership acknowledged that it needs to get better at analyzing the data that is being generated today and that future requirements, as data volumes grow, will become even more complicated. LAI is currently developing data analysis algorithms to ensure its no defect policy. And it is supplementing its analytical talent pool through a relationship with the University of New Hampshire.

Data storage is also a key consideration. Today, LAI stores its data internally on servers, which are costly pieces of equipment. But LAI leadership said it is not yet comfortable with the level of security and recovery available in cloud environments. Moreover, as an aerospace and defense manufacturer, any contracts for data storage that LAI would enter into would have to require that data is stored in the U.S.

LAI’s comments on the state of data analysis at the company were echoed by other ML Council members during the roundtable portion of the event. One large automotive manufacturer, for example, said that it has 700 analytical engineers working on trying to figure out what to do with all of its data.

As manufacturers become increasingly connected and data-intensive, concerns about security will inevitably rise. Even today, though, the level of cyber-insecurity is significant. LAI said that cyber-attacks on the company are attempted every day, with CEO Gruetzmacher’s e-mail the most frequent target. And one Council member, from a large software provider, said his company suffers 30 million hits per day, a number that drew gasps from Council members.

But the march to M4.0 will continue nonetheless, with companies such as LAI focused on the benefits of greater customer satisfaction, quality and efficiency that lie ahead. The roadmap to that better future, as was underscored by the tour and discussion at LAI, will require a deft orchestration of cultural, organizational, and technological change that every manufacturer, regardless of size, will have to undertake.