How Ed Dolanski and team have guided Raytheon Aircraft's remarkable turnaround into a company focused on customer service.

It's taken a few years, but the results are in and they show that Raytheon Aircraft's customer service system is finally delivering top-notch results and creating happy owners and operators. How did Raytheon Aircraft's service get so bad and what did it take to get back on the improvement track?

By Matt Thurber, Editor

One day a few months ago, Ed Dolanski walked out of his office at the Raytheon RAPID parts warehouse in Grapevine, Texas and, as is his habit, took a stroll through the racks of parts, visiting with the employees, enquiring as to how things were going, and basically taking the temperature of the facility's activities, which are vital for the support of the nearly 40,000 Beech and Hawker airplanes plying the skies of the world.

Dolanski has a restless mind and is relentlessly curious. A newcomer to aviation but already almost an instrument-rated Bonanza pilot, Dolanski hails from management jobs at Wal-Mart and Magne Tek, where he learned not only how to run a supply chain but the critical elements of customer service and how to motivate employees to do their best. Not long after Raytheon Aircraft chairman and CEO Jim Schuster took over the helm, he asked Dolanski if he would be interested in a turnaround challenge. Dolanski and Schuster had done wonders changing the business climate and financial picture at Magne Tek, and Dolanski not only enjoyed working with Schuster but couldn't resist another big challenge.

A funny thing happened on the way to Wichita in 2001, however, and it won't be a surprise to anyone already in the aviation business; Dolanski fell in love with aviation. As much fun as it was helping Wal-Mart grow into a retail behemoth and Magne Tek become solidly healthy, neither was as compelling as the opportunity to learn about aviation and change the corporate culture at Raytheon Aircraft. With just a few hundred hours under his belt, Dolanski is still wide-eyed with wonder about flying and intensely fascinated by the aviation industry.

Which is why, on that fateful hot summer day as Dolanski prowled the RAPID warehouse aisles, he couldn't help wondering how much all those parts cost. Stopping at a bin, Dolanski picked up what appeared to be a simple item, it was a pitot tube cover for a Hawker 400XP, basically a piece of some kind of material sewn together to fit snugly over the probe with a "Remove Before Flight" flag hanging down. Dolanski figured that the cover could not possibly cost more than $20 or maybe $30.

To satisfy his curiosity, Dolanski called Jana Larson back in the office section, she is the team lead, E-business marketing for the Customer Support Division, and asked for--you guessed it--a price check. Larson looked up the price Raytheon Aircraft paid to the supplier and told Dolanski that the wholesale price was...$536!

Dolanski almost choked and asked for confirmation. And he asked for the number of pitot tube covers that had been sold during the past year, which turned out to be...hundreds, which brings up another issue, the bafflement over who would spend more than $500 on a puny gold-plated pitot tube cover when anyone can buy a decent equivalent at Sporty's for less than $15?

The gears started grinding in Dolanski's head, and that trip to the warehouse begat more such perambulations, but with the added twist that he randomly plucked parts from bins--making sure that Larson adjusted inventory levels each time--and brought them back into her office for further investigation.

Now, a normal person would have dropped the parts on Larson's desk and asked her to do some research. Not Dolanski. He had the parts taped to a long wall and had special tags attached to each part, with a fold-down cover that hides the wholesale price on each tag. When a visitor is shown into the room--not many people get to see this as it was a top-secret project for a while--they are asked to look over some of the parts and Guess this Price!!! It is a great game, and only someone intimately familiar with Beech/Hawker parts would have a fighting chance of accurately identifying the prices hidden underneath each tag.

The $536 pitot tube cover is number one in the lineup. Next is something that looks like a hydraulic check valve. Want that? Fork over more than $10,000.

One of the champions on this wall-of-parts-shame is a little pin that goes into a nose gear, something that can't possibly cost that much to manufacture. Guess how much: $1,677.01 (wholesale).

If the red lights and steam didn't erupt over Dolanski's head when he found that egregious example of--what?--unutterably ignorant pricing, the pressure certainly built to dangerous levels. "I've had it with the way this industry prices things," he said baldly. "I'm going to be a renegade about this." And, as will be discussed later in this article, Dolanski and team are doing more about the parts pricing problem.

Changing course

To make the Dolanski price check process easier, Sam Carter, global distribution manager at the RAPID warehouse, ginned up a customized bar code gun that Dolanski can take with him on his rounds, saving Larson from having to look up prices (and listen to Dolanski's sighs of disbelief when she responds with yet another outrageous amount).

What Dolanksi and his team--he'll never take credit for anything because it is a team effort--are doing is much more than adjusting prices on a few expensive parts. Dolanski, with Schuster's backing, has forced a giant ship to change course. Usually, there is an important reason to turn a ship; either to make sure it arrives at its destination or to avoid running into rocks.

That Raytheon Aircraft was headed in the wrong direction is not in contention, and indeed, Dolanksi publicly admitted this, not only in interviews but also in splashy full-page advertisements that ran in prominent aviation magazines.

Statistics provided evidence of the problems at Raytheon Aircraft, and these focus on the customer support side of the business, which is Dolanski's purview. He has delivered these statistics so many times in so many forums, to aircraft owners, operators, the aviation and non-aviation media, and internally at Raytheon that to him the numbers must sound like a broken record. What the numbers were is evidence of a company that wasn't necessarily broken, but it wasn't entirely healthy, either. Dolanski was originally hired to help with Raytheon Aircraft's transition to a new SAP software system, but later in 2001 he took over as vice president customer support operations.

Some of the statistics include a parts availability fill rate of just 54 percent in 2002, now up to more than 94 percent; warranty claims processing down to an average of seven days, down from 26; and warranty claim backlog down to a little more than 1,000, down from 3,960 in January 2002.

"We already knew customers were upset," Dolanski related. "M&O sessions [maintenance & operations] were not fun; they were on the verge of hostile. I was the fifth vice president in five years. It was a heck of a challenge."

One of the first challenges that Dolanksi had was trying to figure out why the customer support office was in Andover, Kansas, seven miles away from Raytheon Aircraft headquarters at Beech Field in Wichita. "There was no direct customer contact," he said.

One sign that customers were not getting what they needed was that once a new airplane was delivered, it did not get input into the Raytheon warranty system until 90 days after delivery. "It wasn't because employees didn't care," Dolanski said, "it was because they had no systems. They cared, because they hung in there."

Another sign of systems breakdown occurred when Dolanski was visiting the customer support offices. A phone call came in, was picked up by a support specialist, then, to Dolanski's amazement, the person who answered the phone stood up and yelled, "Who's working with Mr. Brown?"

The only customer contact that was taking place was when Raytheon employees traveled to shows like the NBAA Convention for M&O sessions, but the trouble with those contact opportunities was that they were increasingly unpleasant encounters.

"We were not doing well and things were getting worse," Dolanski said.

The biggest problem was not the people who tried day after day to take care of Raytheon Aircraft customers, but, said Dolanski, "It was the leadership." The people running the company were, after all, responsible for the corporate culture that existed, one that was focused more on feeding the needs of the airplane production lines and not the needs of the aftermarket where the customers interface with the product. The big question Dolanski asked himself back then was, "Are they going to buy into this new culture and get results? One person did understand that, and she is still here," he said, referring to Caroll Shivers, who was then director of warranty.

One of Jim Schuster's first moves as CEO was to kick the executives out of the nice window-festooned corporate offices at Beech Field and move the people who deal with customers into those offices, a move Dolanski wholly supported. "We got them in an environment that was conducive to customer support," he recalled. The fancy executive dining room was converted to a strategic war room.

Next Dolanski went to Schuster and asked for $600,000 to improve the warranty system. Warranties used to take a minimum of 128 steps to complete, but after Dolanski's team applied some modern Six Sigma techniques and the $600,000 to the process, the number of steps was reduced to 28. "We spent three months on it working with the customers and the ASCs [Raytheon Aircraft Service Centers]. Another $2 million was spent on upgrading the customer call-in system, and now every call, e-mail, fax, letter, or other communication is not only dealt with in a much more efficient manner but tracked to help the customer support operation understand how well it is serving the customers.

One of the guys

To demonstrate that he was deadly serious about changing the way things were done at Raytheon Aircraft, Dolanski attended an early Customer Support all-hands meeting wearing a skirt. He had bet his top managerss that they wouldn't meet certain goals and lost. Needless to say, the rank-and-file heartily approved Dolanski's outfit, signaling their appreciation of a boss that can yuck it up in an effort to prove a point, that he's just as willing to change as they need to be.

In 2002, Schuster backed Dolanski up in another important fashion by effecting a huge change that upended the traditional Raytheon Aircraft applecart. What Schuster did was send a memo that clearly refocused the company on the end-user, the customer who owns or operates a Beech or Hawker airplane. The memo said that henceforth, AOG [aircraft-on-ground] customers take priority over the production line. That means, if a customer needs a new flap, a wheel, a hydraulic pump, even an engine, that part gets taken from the production line and is sent to the customer (who obviously does pay for the unit). Recently, a King Air 350 customer needed a new wing, and Dolanski didn't throw up any roadblocks when one of his team members liberated the wing from the King Air production line. Neither did managers on the production line, who wholeheartedly pitched in to help. "It was a major culture shift," Dolanski said.

Part of that cultural shift included installing color-coded AOG LED light boards outside manufacturing, engineering, and executive offices and in the customer support organization. The lights reflect the status of AOG aircraft and track their current downtime in terms of days, hour, and minutes. Red indicates that no solution is pending. Yellow means a solution has been created, but not yet implemented. Green means the aircraft is good to go. In the past year or so, AOG aircraft times have dropped dramatically, to 10 hours from 14 days.

Part of the reason for the improvement in the AOG situation is not just the refocus on getting customers what they need, but also an attempt by Raytheon to prevent AOGs. A new flight critical team, composed of dedicated customer care specialists, does nothing but expedite the flow of material to keep airplanes from having to be grounded or kept on the ground when parts aren't delivered quickly enough. A new hotline (1-866-AOG-HELP) is answered by a person 24/7. AOGs used to number about 700 a month, but now they are down to 300 to 400, thanks to the flight critical teammembers who handle about 4,000 critical parts per month, proactively heading off AOGs by communicating constantly with the ASCs that are doing maintenance on customer airplanes

Christi Tannahill, who runs the customer support operation, and was recruited from another part of the company to help bring about the new cultural shift at Raytheon Aircraft, has created robust processes for handling customer issues.

When a customer service rep works with a customer, following that call the rep has to code the call as to the level of service that the customer received, either red, yellow, or green. Red calls go directly to Tannahill, while yellows are delivered to a supervisor for quick follow-up.

Before going to a Hawker operators meeting one time, Dolanski asked Tannahill to give him a report on the attendees and their color codes. At this particular meeting, there were two reds, and those operators were extremely surprised when Dolanski introduced himself and asked how he could help resolve their problems.

"I had no hand in [developing] that system whatsoever," Dolanski said. "Evenyone is empowered to find solutions, and we get them implemented based on their recommendations."

The customer support operation has grown into a tightly knit team, dedicated to making sure customers are taken care of, no matter how they contact anyone at Raytheon or what they need. "They love the products," said Drew McEwen, vice president product support, "and they like the customers. I could not tell you how proud I am of this team."

Low prices, every day

When it comes to parts prices, Dolanski is full of stories, which is not unexpected from someone new to aviation. "I've got a passion for this parts thing," he said.

On one of his earlier explorations after he came on board, Dolanski learned that Raytheon offered Hawker turbine engine oil for sale, at an astoundingly pricey $25 a quart. "It's $7 a quart at the FBO!" he said. "Why not price it as $7.25?" A financial manager, who is no longer with the company, bristled at that suggestion and pointed out that Raytheon would lose all of the profit that it makes on oil sales if it were priced that low. Dolanski then asked a simple question: How much of this oil do we sell at $25 a quart? The answer: only two cases (of 12 quarts each). "I told them to reduce the price to $7.25 so we can capture more of the market. Now we blow oil out of here."

Raytheon is also selling a ton of tires, which might seem odd at first glance. What is a major OEM doing in the tire business? This gets at the heart of Dolanski's strategy, which is to take care of as many of the customers' needs as possible so that they don't need to go elsewhere for satisfaction.

Raytheon's RAPID parts distribution system is now geared toward the end-user, the parts buyer. Anyone can check for availability on the RAPID website (www.raytheonaircraftparts.com) and anyone can access the system and then if they want, register to buy something. The prices are competitive and shipping for many items is free. RAPID teamed with Aviall to provide many of the non-Raytheon parts for RAPID customers. Now, when customers order parts, sometimes a portion of the order will come from the RAPID warehouse and the rest from Aviall's distribution center, also in the Dallas area.

To further cement the customer relationship, the customer support team added a new twist, visibility of the thousands of parts in stock at Raytheon service centers. Registered users of the raytheonaircraftparts.com site get to see what parts are at the ASCs; this feature is called the Worldwide Inventory Network system. WIN parts can't be ordered right off the parts website, but at least users can see that the parts are available and then can call the facility that owns the part to arrange the purchase. Raytheon announced a huge parts price-reduction program at the October NBAA show, emphasizing that these were not temporary reductions but permanent (every day low prices, anyone?). The effort targets more than 10,000 parts and prices are dropping as much as 50 percent on some parts.

"The price-reduction campaign," he said, "is not a one-time price reduction for obscure, low-demand parts. It is a substantial, ongoing evaluation and discounting of all parts categories, including aftermarket, proprietary, and out-of-production parts."

To achieve the reductions, people like Tony Caper, director, global distribution and his team at the RAPID warehouse are working closely with suppliers to get the best deal and to avoid embarrassing gaffes like the $536 pitot tube covers and $1,677 nose gear pin. Also being tackled is a strange tradition in aviation, two-tier pricing, where suppliers deliver parts at two different price points: one lower price for parts going to the production lines and another higher price for parts shipped to the distribution system for retail and service center sale. Dolanski would like to see this practice end and he is willing to use Raytheon's buying power to effect a change. "I'm not going to stand for it," he said. "We've got to get suppliers thinking about this, or I will find alternate sources."

The flywheel

Dolanski imagines that changing a big company's momentum is akin to getting a big flywheel to start turning fast enough that it will keep on going for a while. The customer support part of the flywheel is now up to speed, he believes, and it's time for a new thrust. So what's next for Raytheon Aircraft in the aftermarket? "The mission going forward is attacking direct operating costs," Dolanski said. "Nobody's doing that."

If Dolanski does for operating costs what he and his team have done for customer support, it won't be long before Beech and Hawker owners and operators see significant reductions in expenses. Obviously this will make them happy customers who come back for more of the products made at Beech Field.