Optex Systems Inc.

Issue Summer 10


When you’re a company that manufactures items for soldiers in the line of duty, there is no room for mistakes. Quality and reliability are customary attributes for manufacturers that serve the military. Optex Systems Inc. knows this all too well, having spent more than two decades manufacturing vision and sighting systems and assemblies primarily for Department of Defense applications.

“Ultimately, the focus is on the warfighter, so they expect 100 percent reliability for mission success and soldier safety,” General Manager and COO Danny Schoening says. “Our manufacturing systems and procedures are focused on three simple targets: high field reliability, competitive costs and product quality.

“We strictly adhere to ISO 9001:2008, and we strive for continuous improvement through DMAIC (Define, Measure, Analyze, Improve and Control), on-the-floor team improvement and metric boards, and other Six Sigma tools,” he says. “We are strong proponents of lean and Six Sigma, but we focus on the tools which link directly to the three manufacturing themes: quality, delivery and costs. So we tend to ‘lean’ to­ward tools which reduce costs and variation.”

Vertically Integrated

Founded in 1987, Richardson, Texas-based Optex Systems produces laser-protected glass and acrylic periscopes, electronic sighting systems, howitzer sighting systems and ship binoculars with a continuous focus on identifying additional product lines and developing new features to increase the value of its existing product lines. The company is a major player in the armored vehicle market, with 10 to 15 of its products on every Abrams tank and Stryker vehicle.

“We are a vertically integrated operation which starts with the machining of raw material or castings,” Schoening explains. “These parts are then combined with other machined or purchased parts to create subassemblies which are aligned for optical or mechanical properties and then permanently fixed into the final specified proper alignment. Final assemblies are painted, cleaned, tested and ultimately shipped to the customer.”

Clean Bill of Health

Optex Systems was well equipped when the recession struck because it had already recognized some business “health” issues, according to Schoening. “Upon internal and external advice, we started an improvement process which was linked to our income statement and our balance sheet,” he says. “We improved our diet, we increased our exercise, we eliminated some bad habits, and we saw some incremental improvement.

“Fueled by this improvement, we continued the process and expanded our activities into other areas. By incrementally sticking to this plan, we’re now to the point where our ‘doctors’ are giving us a clean bill of health. There was no magic pill and there was no single activity – there was just the daily activity of continuous improvement.”

Optex Systems has performed contract manufacturing for defense companies and is now positioned to do the same for commercial products, he says. “A significant portion of the business is new production, but we have a substantial amount of business in replacement parts for military and land depots, either domestic or international,” Schoening notes. “We have ongoing investigations into other markets. We feel our U.S.-based manufacturing is extremely competitive from a cost perspective. We think there are also potential avenues for contract manufacturing in either medical or commercial products due to our core competencies in optical and mechanical assemblies.”

Large, and Yet Small

Moving forward, Schoening sees Optex Systems continuing to expand its product capabilities. “The company started as a small entity with one or two product lines, but we have continued to expand with additional products over time,” he explains. “In the past, we have been primarily manufacturing-oriented and not necessarily design- and product innovation-oriented. We have initiated an active program to identify and add more features to our product lines that are innovative and provide real value to our customers.”

For instance, Optical Systems is working on producing enhanced periscopes that would allow additional information to be given to the warfighter during combative as well as non-combative times, such as during simulation training. “We’re currently demonstrating the first units now,” Schoening says. “We’re also approaching some product line acquisitions and company acquisitions – public funding enables that.”

Optex Systems has a unique history in that it was established as a private company in the 1980s, then went public, then back to being private and now public again. The company strives to maintain the flexibility of a small company with the operational capabilities of a large corporation to meet the diverse needs of its military and corporate clientele.


Optex Systems Inc.