OnLine Forum - Discussion

Go For The Quality Award!
Reorganization: Confusion, Inefficency & Demoralization?
Health Care Industry: Unique Requirements?
ISO 9000: Expense or Investment?
Lean Production: No Longer A Competitive Advantage?
World Class: Another Buzzword?

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Go For The Quality Award!

There is a proliferation of Quality Awards these days - a trend started by the Malcolm Baldrige National Quality Award (MBNQA). The first winners got quite a lot of publicity and became “household names.” Other companies wanted the same publicity and spent time and money to compete for the award. However, soon at least one of these winners were in Chapter 11 for poor financial performance. Others had product recalls - rather disappointing for an award winning company! Yet, most of the states now have Quality Awards of their own - California has two!

This produces a rather confusing picture. Are the State Quality Awards less rigorous than MBNQA or has the MBNQA lost its charisma? What benefits are companies achieving if they have to spend so much on ‘award’ programs that they have to file for Chapter 11? Do they have to work their employees to the bone to win? What does it do to employee morale if they do not win after all that effort? Here are some views from participants: award applicants, winners and examiners.

Skip Zeiler, Director of Operations, KippGroup, Ontario, CA

There is a great deal of evidence that winning a state or national quality award is beneficial to a company. There have been several published articles showing that return on investmentin past Malcolm Baldrige winners yields many times the profit of investment in the S&P 500 as a whole. Yet a quality award is not a guarantee of success, although the criteria in 1995 require a direct correlation of business success with financial success.

What is important is the journey, and for organizations in California (not just businesses), you get both the journey and the award. I have served for two years on the Board of Examiners of the California Council for Quality and Service, sponsor of the California Quality Awards. My company, The KippGroup, is also an applicant for award consideration in 1995.

Our company has benefited just from preparation of our application, as it forced a thorough review of our strategic planning, our human resoource practices, our challenge to our people, our ability to listen to them, and the real satisfaction of our customers. I have personally benefited as an examiner by my individual growth and understanding of the process of creating real quality that is not available any other way.

Gloria Diaz, Manager , Office of Total Quality, Arizona Department of Econ. Security, Phoenix, AZ

The value of applying for any quality award is almost entirely dependent on the motivation of the organization applying. Those organizations that seem to gain the greatest benefit are those that apply for the sole purpose of evaluating their systems. When an organization like this actually becomes an award recipient, the award is often secondary and may be considered “icing on the cake.”

Many state-level awards emulate the MBQNA so closely that the rigor of the application process is nearly the same. Those organizations that become entirely focused on “winning” the award, whether a state-level award or the Baldrige, could conceivably drain their financial and human resources in an attempt to secure their prize. Such organizations probably derive the least benefit from the process and the award.

CEOs who go through the award application process in order to evaluate and discover improvement opportunities, probably do not expend the same level of energy in preparing an application and getting ready as those who merely pursue “bragging rights.” They are also more apt to convey a positive message to their employees (win or not),. It is for these organizations that the award process must continue to be offered.

Denzil Verardo, Ph.D., Deputy Director, California Dept. of Parks & Recreation, Sacramento, CA

The California Department of Parks and Recreation was a recipient of the 1994 Eureka Award in the “government” category. The award is administered by the California Council for Quality and Service. Perhaps the single most important factor in our decision to apply for the Eureka Award was the belief of Departmental Director Donald Murphy that California State Parks should be and could be competitive when measured against criteria familiar to private enterprise. Government should be run like a business when it comes to financial responsibility, process improvement and customer service. While the MBQNA is not open to government competition, the Eureka Award using the MBQNA criteria is.

The rigorous application process enabled data to be collected and synthesized and was valuable in our process improvement and “reinventing government” efforts, hence the application process served a role much greater than merely seeking an award. Since our effort centered around documenting what we actually do, employee effort working on the application process itself was kept to a minimum. Notification that we had been selected a winner in the government category, the only state agency selected, confirmed to executive staff that we were on the correct path and served as a morale builder to employees since it showed that they were indeed part of a government organization committed to continuous improvement.

The examiner feedback report generated after the Eureka application process was complete, was invaluable in confirming our strengths by documenting areas for improvement which serve as a planning tool to assist us in determining where to place emphasis to realize the greatest improvement. We have applied once again in 1995 for the Eureka Award because, successful or not, the application process serves to not only document our efforts but also to help improve them.

Bob Barringer, Quality Assurance Manager, Exar Corporation, San Jose, CA

Quality awards are great. Companies are so enamored of quality awards that sometimes in trying to win an award they lose their main objective: profit. Taken to the extreme, the Wallace Company, a pipe and valve manufacturer, won the MBNQA and then proceeded to file for Chapter 11 within two years . Needless to say this reflected badly both upon Wallace’s management and the administrators of the MBNQA. Consultants also love quality awards and are more than happy to help a company, for a heady fee, achieve high scores against the Baldrige criteria. Unfortunately, questionable ethics by some consultants helped to tarnish the MBNQA. Recent major changes to the MBNQA have been adopted in an attempt to restore the prestige afforded a national quality award. Examine the 1995 award criteria and you find that the word “quality” within the text has been replaced with “performance” to reflect the emphasis that a successful customer driven company should have above average financial results to show for their efforts. MBNQA is now a business model that stresses a balance between the main elements of customer satisfaction, supplier relations, operational performance, quality and financial results.

My recommendation is that companies take a hard look at the present criteria and see if a MBNQA application shouldn’t appear on the company’s quality roadmap. Since the majority of the states have adopted MB into their state quality awards and most states have them, it makes sense to apply for a state award before applying at the national level. It is important to note that winning an award should not be the main focus of the effort needed to complete a MBNQA application. The real payback is the feedback the company receives from the critique of their application from the award examiners. Also a less than award winning score should be taken as a challenge to improve on the categories identified as needing work.

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Reorganization: Confusion, Inefficiency & Demoralization?

At the ASQC meeting in October, we discussed the future of Quality. Quite a few sentiments were offered, and these are best expressed by this quote from Gaius Petronius, author of “Satyricon”, where the hero was forced to commit suicide by Nero: “We trained very hard, but it seemed that every time we were beginning to form into teams we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing, and a wonderful method it can be for creating the illusion of progress, while producing confusion, inefficiency and demoralization.”

Is there any truth to these sentiments? Are we simply trying to hide our incompetence at dealing with issues or do we genuinely believe that reorganization, by one name or another, is truly the answer? What are your thoughts about these sentiments?

Rodger Mohme, Director, Technology Development, Apple Computer Inc., Cupertino, CA

Organizing the resources of the business is a fundamental tenet of management. If done appropriately and correctly, it leads to a healthy, growing, and productive environment. Yet it can also be the cause for a great deal of negative emotion from the people being organized - the worst outcome being a demoralized workforce.

In developing any organizational design the strategic objectives of the business, constancy of purpose, and the role of ourselves as social by nature have to be taken into account. Any design will be a 'best fit', with tradeoffs being made to optimally balance the needs of the business with the needs of the individual.

Change is a fact of life, yet is something that most of us resist strongly. In particular, we are currently in the midst of huge technical change on a global scale. We all know about ever-decreasing product development cycle times and the ever-increasing search for productivity improvement - this is part of
working for a for-profit business in a highly competitive market, and, for the most part it's healthy and benefits everyone. Except that it requires constant change.

Organizational change is part and parcel of successfully navigating through a rapidly changing market & business climate. It is the complex interaction between employees, suppliers, and customers that has the ability to create lasting, sustainable value. If creating a fluid and flexible workforce aligned to corporate strategy is a goal, so must be creating a business strategy that survives longer than the product development cycle time as well as understanding the nature of relationships and teams in creating value and improving productivity.

Trust and confidence in the leadership of the business go a long way in helping to defuse anxiety generated by organizational change. Tools available are:
• constant communication,
• soliciting ideas for improvement from all areas & levels of the business,
• demonstrating through observable action constancy of purpose,
• valuing innovation, R&D, education & training, maintenance, and
• constant improvement of quality, customer satisfaction.

Coleen Kasperek., QIP Coordinator, Holsum Bakery, Phoenix, AZ

Reorganization, when well planned and implemented can enhance the structure of any organization. However, before embarking on this major effort, ask and thoroughly answer two fundamental questions, “What is our business?” and “What processes support that business?’ These should be clearly understood. Then, and only then, should reorganization be evaluated as one method for achieving the business objectives.

Unfortunately, in most cases, reorganization is done to solve a poorly understood problem, to demonstrate that management is doing something to improve, or even as a “last resort” because management doesn’t have any better ideas for dealing with the issues. A major theme seems to be that reorganization is being done to save money. Any employee can tell us where the company can save money without reorganizing. It seems that whatever is done must be different from what was done the last time or be the latest “movement” in the business world.

From the view point of frontline employees, reorganization is just another way to eliminate jobs (at the bottom), make people work harder with longer hours, or another demonstration that management “doesn’t know what they’re doing!” One example had people reapply for their jobs with the result that many were not qualified to continue in their current positions. What does this say about how the company was run in the first place?

Poorly executed reorganization leads to low morale and low productivity. Employees see through the facade. Why should anyone think that people who got us in this mess in the first place can get us out by “reorganizing”? Let’s clearly define what we are trying to achieve and get as many people involved in the change as possible. Let’s clean up what we are doing now and promote reorganization as only one step on the journey to improved business results.

Lynda Winterberg, RN, BSN, MBA, Healthcare Consultant, Redwood City, CA

It is difficult to find a healthcare provider that has not gone through the transition and upheaval of reorganization. Such transition requires each of us to learn to do business in a different manner, to learn and embrace flexibility, and to learn how to work more collaboratively. There is added value for many organizations undergoing reorganization; if we recognize value added as the price of the listed stock or the bottom line on the balance sheet. The reality is that today’s healthcare providers must maintain financial viability to stay in the marketplace or else be gobbled up by a “Columbia/HCA” type giant. For most healthcare organizations which engage in reorganization, restructuring or reengineering, it is not undertaken for the purpose of hiding incompetencies. It is usually a concerted effort to increase organizational longevity and competitiveness in the marketplace.

Most healthcare systems or providers have gone through incredible changes over the past few years and continue to change to meet the demands of the managed care environment. Although those changes have increased the cost effectiveness of care delivered and thus improved organizational competitiveness, we need to be increasingly cautious of the significant changes we are imposing on the healthcare delivery systems. Many organizations have established quality improvement programs which probably include clinical pathways or guidelines. These programs are showing increasing signs of stress due to the significant changes in organizations. It is thus evident that restructuring or reorganization is necessary if providers are to continue service in a fiercely competitive environment. Yes, it can lead to confusion, demoralization and inefficiencies unless we are able to keep our eye on the goal of increased quality, improved effectiveness and decreased costs. It will be a challenge for all as we maneuver through the upheavals of reorganizing.

Catherine E. Adams, Ph.D., R.D., Director, Quality Systems, Campbell Soup Company, Camden, NJ

To reorganize or not to reorganize . . . Is that the question? Let me propose another question . . . Do we expect that the automatic reaction to reorganization is confusion, inefficiency and demoralization? As a self-confessed agent of change, I can suggest we’ve seen reorganization work more often than not creating a work environment which is more accepting of positive change.

It is human nature to avoid change. Only in an environment of relative discomfort is change more generally acceptable. There are two schools of thought. One school suggests that people are more creative and innovative when their roles are clearly defined and their paths familiar. The other side declares that people are more creative and innovative when they have few preconceived notions of expectations and are forced to think “out of the box” because the box has been removed. I advocate the latter school of thought. Further, with some basic organizational building blocks in place, such as those from Quality Systems, reorganization should not necessarily result in confusion or inefficiency. This “organized” reorganization does not create demoralization and the result -- positive or negative -- is the responsibility of management.
I will not equivocate that the act of reorganization causes some degree of stress and unrest within an organization. However, good management does not make the decision to reorganize lightly. Reorganization should be part of a long-term and short-term strategic plan, intended to open the window of opportunity for reengineering for improved results.

As clearly as it is human nature to reject change, it is human nature to desire the comfort brought by the familiar. Remember the scientific principle: a body in motion seeks always to be a body at rest. I propose another theorem: a body in crisis tends to be far more energetic and innovative in an effort to end its personal stress. In this sense, I use the word “crisis” in its literal sense, which sometimes is overshadowed by the term’s more popular connotation. Crisis is defined as an “opportunity, a turning point.” The challenge to management is to turn towards improved business results through a controlled and managed change process. Improved results will not occur if reorganization is uncontrolled and the change process results in confusion, inefficiency or demoralization. “Management” needs to take their name literally and manage for positive change. With privilege, comes the mantle of responsibility.

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Health Care Industry: Unique Requirements?

Anyone in the health care industry will tell you that the dynamics of the industry are totally unique - especially when it comes to quality improvement, operations or reengineering. They might agree that there are some tools they could borrow from manufacturing or service industries, but no one outside the industry can make much of an impact in their continuous quality improvement (CQI) efforts. Talk about ISO 9000 and we are most likely to get a blank look.

Process consultants will most likely differ in their views stating that from the process standpoint there is a lot the health care industry could learn from the manufacturing and service industries as they embark on their CQI or reengineering initiatives. After all, the manufacturing and service industries thought the same way before they learned their lessons. . . usually the hard way!

How do you feel about this dichotomy of views? Is there any truth to them? Is there a common link or are they totally unique?

Mark Strom, MD, Associate, PIVOT Management Consultants, Upland, CA

Until now, the healthcare industry has been an isolated, privileged sector of the economy. However, recent legislative and industry restructuring has removed this isolation, and now, in spite of resistance by both physicians and hospitals, dramatic change has occurred. New dynamics have been imposed, and those that are quick to respond will flourish. Those slow to respond will in time fail. This should provide dramatic data to convince skeptics that change is in order.

Prior to my formal business degree, I have to admit that I believed in isolation and privilege. The two years that I spent at UCLA changed my view of the world. The same rules, mores and traditions that have governed business in this country must now govern the healthcare industry also. A simplistic example of this is the use of traditional CQI and reengineering methodology in healthcare. It works! Those who use it will flourish. Those resistant will fail. There has been too much waste and inefficiency in healthcare, particularly in the face of recent cost-cutting efforts, to allow it to recreate the wheel. Health care industry players can no longer be pompous, and they must recognize that the industrial sector has developed strategies that work. The customer/client/patient must be kept happy. It is time to join the team!

Brenda Kuhn, RN, MBA, Director of Operations. White Memorial Medical Center. Los Angeles, CA

Experience with quality improvement efforts in the service and manufacturing industries has been beneficial to the healthcare industry and has contributed to both better patient outcomes as well as more efficient processes.

The health care industry has many of the same processes that are seen in other service and manufacturing industries. A hospital admitting process can be compared with the registration and check-in at hotels. Granted, there are pieces of the process that may be unique to health care (ie. insurance verification) but the underlying process is the same. In many of these situations, hospital processes fall far behind the standards set up in other service industries.

Health care also has the opportunity to use quality tools to improve not only business processes but also clinical care. These tools have proven to be effective in identifying best practices in medical care thus enhancing patient outcomes. By teaching patients to use quality tools, we also impact outcomes.

As a health care organization, we have seen incredible results with our CQI process so I must argue for the value of learning from our friends in the manufacturing and service industries.

Bernard H. Stulberg, MD, President , Cleveland Center for Joint Reconstruction, Cleveland, OH

Of course, the dynamics of the health care industry are unique. But that does not mean that we cannot borrow from the best practices followed in other industries. Take ISO 9000 standards for quality management systems, for example. When given the opportunity to focus on our team’s primary mission - to put the patient first, we examined various approaches and became interested in ISO 9000 when we learned of the success that some manufacturing companies had derived from registration.

We wanted to reduce the cost of patient care, improve the quality of the outcome of the intervention and increase the level of customer satisfaction related to arthritis surgical care. We set out to do this by putting our patients first, organizing and behaving properly and assembling the appropriate team of health care professionals under one program umbrella.

We are the first health care practice in the United States and the first orthopedic practice in the world to achieve ISO 9001 certification. Receiving certification was the culmination of our efforts to standardize and foster routine assessment and improvement in a physician driven, patient-focused manner. Had we been closed to the idea of borrowing from other industries, including assistance from an outside consultant, we would not have been able to achieve the results we have since we began work on our quality management system.

The achievement of ISO 9001 confirms to us that the same rules of behavior that govern business worldwide can be applied to the delivery of high-quality health care.

We might be unique, but we don’t have to reinvent the wheel. We have no hesitation in adopting best practices from other industries.

Ruth Blackwell, RN, BSN, MBA, Vice President, Quality Management, Osteopathic Medical Center of Texas, Fort Worth, TX

When attempting to improve quality in health care, we frequently hear that our industry is different from the manufacturing and service industries. Health care is truly unique in many areas. However, there are many ideas and technologies that can be borrowed from other industries that can vastly improve our daily processes.

Some examples of these shared experiences relate to seemingly unrelated tasks. We have a team that is exploring ways to provide centralized scheduling of tests and procedures. This team contacted people in the travel industry and found out how their process works for scheduling airfare, hotels, rental cars, etc. from one central location. The ideas generated from these discussions led to the use of a computer program that can access rules for scheduling procedures similar to those rules that travel agents follow when “booking” a trip.

For years, manufacturing and service industries have made widespread use of bar codes to streamline tasks. Recently, health care facilities have begun to use bar codes to do tasks such as chart tracking, inventory control, billing, etc. Our facility will be using bar codes to identify patients for order processing. By supplying a simplified way of automating data entry, we hope to reduce variation & mistakes, and to improve timeliness of certain tasks.

Critical pathways are perhaps the best illustrations of effective sharing of ideas from the business world and health care. The originator of this idea was the manufacturing industry in an effort to find the best and quickest route on the assembly line. health care has taken this concept and used the ideas to design “Clinical Paths” (or Practice Guidelines or Critical Pathways) to reduce variation of care and to improve outcomes. While we must look for ways to meet out individual patient’s needs, there is a lot to be learned from other industries!

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ISO 9000: Expense or Investment?

Companies worldwide are pursuing registration of their quality system to ISO 9000 standards. Some are being driven by their customer requirements, others by competition, and others because they view the quality system as a foundation to their total quality effort. By the same token, some view ISO 9000 as the price of doing business while others contend that it is a solid business management system. Some would even compare it to the Baldrige criteria. It is becoming so prevalent, that we even know of two medical facilities in the United Stated that have attained registration to ISO 9000!

Thus we see two somewhat conflicting sides to the equation: expense or investment!

If you have gone or plan to go through with ISO 9000 registration, how do you feel about it? Why did/will you pursue it? If you are not pursuing it or do not plan to, why not? What is your opinion: is ISO 9000 an expense or an investment, and why?

Leonard Speers, Chief Executive Officer, American Legion Hospital (ALH), Crowley, LA

The health care industry in the United States is highly competitive. In order to meet competitive pressures, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) accreditation has been pursued by many as a means of demonstrating that the organization exceeds minimum standards promulgated by State and Federal governments.

Rejecting the status quo, at ALH, an acute care hospital, we elected to terminate our relationship with the JCAHO in 1993, after being continuously accredited for 33 years. I feel that there is widespread dissatisfaction with the JCAHO; it has become overly prescriptive and bureaucratic. We decided to seek an alternative mechanism to both assure that quality care is provided to our patients and to demonstrate such quality to the public and other external entities. In this pursuit for optimal performance, we became aware of ISO 9000 certification.

To learn more about the process, our employees enrolled in a course on ISO 9000. Our main goal was to find a means of measuring our own high quality standards against those of a recognized and widely-accepted certifying organization. After detailed investigation, we determined that the ISO 9000 standards were consistent with our future goals.

The hospital’s operations had to be adjusted to comply with the standards. One of the most tedious tasks was to adapt the hospital’s document and data control system to be compatible with the ISO 9000 program. ALH maintains detailed records on all aspects of hospital operations and patient care; however, our record keeping had to be streamlined and merged into one system. The extremely intensive review of the many and varied processes required significant effort.
The hospital used consultant help, but we achieved a higher level of cooperation between departments and their respective supervisors and staff members. The registrar audit was the most objective and comprehensive in our history.

We now see a heightened effort by our employees to focus on the proper performance of procedures and our operations are more efficient. ISO 9000 is certainly an investment.

Gary Hengeveld, Director of Operations, Inland Technologies, Inc., Fontana, CA

When Inland Technologies was founded, our business plan included determining the degree of quality needed to support our markets. ISO 9001 certification fit our needs to a “T”.

This is not to say that such a quality standard is suitable for all injection molding and tooling fabrication facilities. Quite the contrary, before a company makes the conscious commitment to obtain ISO certification, consideration must be given to the cost, including capital investment, and disruption to ongoing business during the process. Other costs that add to operating expenses include: registrar fee, manhours dedicated to accomplishing the goal, documentation preparation to ensure compliance, educating associates and ensuring implementation. Maintaining service and quality levels in your day to day business during implementation also becomes tricky, at best.

So, is ISO certification worth the effort? In our case, ISO 9001 was a necessity to compete in our market and accomplish our long-term goals, . It is also safe to say that most successful corporations that are not certified to ISO 9000, adhere to the general guidelines specified by ISO. Make sure it fits your business plan before you begin the certification process. ISO might not be for everyone.

Stan Rhodes., President, Auto Electric Radio, Fullerton, CA

Auto Electric Radio (AER) is located in Fullerton, California, employs over 170 individuals engaged in high technology electronics remanufacturing and repairs for General Motors, Ford Motor Company and Chrysler Corporation, as well as eighteen other manufacturers.

In August 1995, Delco Electronics announced that all Delco Remanufacturing Centers must be registered to the QS 9000/ISO 9002 standard by June 30, 1997. At about the same time, Ford Motor Company made a similar request in requiring that all Q1 Service Centers submit a Quality Manual reflecting compliance to the ISO 9002 standard. It was apparent that AER must attain ISO registration to continue to be recognized as a world class supplier.

AER began to invest major resources in the implementation of a quality system. The project initially was viewed as an expense, since registration became a requirement for doing business. Management soon recognized, however, that ISO registration would present significant benefits to the company via improved processes, a more structured approach to business planning, and an internal audit system focused on corrective and preventive actions.

AER is now implementing the written quality system which outlines accountability, consistency and - most important - continuous improvement. This will provide an opportunity to analyze and make them more efficient.

We found that ISO registration really represents an investment in AER’s future, an investment which already has strengthened and redefined the way we do business. When you’re ISO registered, potential customers see you as a first-class organization - an organization successful enough for them to invest in.

Larry Wood, Director of Quality, Air-Dry Corporation of America, Moorpark, CA

The Expense: Most companies have two types of people:
A. Controllers: they want to control, they want things their way, right or wrong, for whatever reason, and sometimes without seeing the bigger picture of what will be effected. This can be very costly.
B. Communication Experts: they will either speak with “inference” or “directly”. If they are mismatched in any sort of job requiring constant communication, direction or training, it can also be very costly.

When we start mixing human nature with processing or manufacturing without procedures there is going to be a price that has to be paid . Thus when companies sacrifice quality for dollars they end with neither.

The Investment: In a successful company, people: know what to do; know how to do it; have the means to do it; have the means to measure; know when to stop and get help.

Management can bring in a consultant who is trained to spot poor communicators and the controllers. Or they can continue, week after week of doing their best to implement and maintain the cardinal rules while the company takes on a cruise control syndrome. This causes any little problem to become a minor disaster. Alternatively, the company can decide to do a little “positive” investing in their future with ISO 9000.

Following ISO is a positive investment because it will reduce the “people problems” associated with the company. Only 15% of the problems are caused by employees (due to insufficient direction and training), the other 85% originate with management.

Obviously, ISO is a little investment that goes a long way.”

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Lean Production: No Longer A Competitive Advantage?

As companies worldwide clean up their act, adopt total quality practices and emulate Japanese “lean production” techniques, gaining a competitive edge is becoming more and more challenging. Differences in manufacturing costs and methods no longer appear to be what really matters. Lean production no longer provides a competitive edge. This is evident when we examine Toyota Corolla and Geo Prizm - two almost identical cars made by NUMMI - and find that more Corollas were purchased at a higher price!

Lean production, layoffs and new fangled buzzwords are the order of the day -and have become necessary for survival, seldom offering a competitive edge anymore. What then should we do if lean production, manufacturing costs and methods do not offer an edge over competition? Perhaps supply-chain management is the answer? Or is it design? Marketing? Distribution?

Jim Archibald, Chairman, Smith Environmental Corporation, Ontario, CA

Lean production is not necessarily the answer to lowering your costs.

By using the combination of a small production core and subcontractors you can keep better control on manufacturing costs, while maintaining a constant number of key production employees.

Smith Environmental Corporation designs, manufactures and installs Thermal Oxidation Equipment for the destruction of VOC and Toxic Fumes as required by the E.P.A. This equipment is sold to a variety of industries all over the world and is usually quite large. Installation sites for the majority of the equipment sold is 1,000 to 2,000 miles from our headquarters facility in Ontario, California. Because of the size of the equipment and the distance to the installation site, we subcontract the majority of the manufacturing to fabricating shops closer to the installation site.

We do, however, maintain a manufacturing facility in Ontario that is capable of producing 30 percent of our manufacturing requirements. We feel this provides several advantages to our customers, such as:
• The in-house capability to move quickly if time is a critical factor to the customer;
• Experienced in-house personnel that can respond to emergency service/repair requests within hours, if required;
• Local manufacturing for West Coast customers;
• Experienced manufacturing personnel to inspect the quality of the subcontractors’ work prior to shipment;
• The size of our manufacturing crew remains relatively stable, thus providing more experienced personnel.

By maintaining a high quality manufacturing facility in Ontario and an established list of qualified subcontractors, we have the best of both worlds. We can take on additional jobs without burdening our production facilities and still provide fast track, quality equipment and service.

We never considered ‘lean production’ for the sake of ‘lean production’. Our strategy of maintaining and working with a selective set of subcontractors has been our answer to maintaining a competitive edge, having control over manufacturing costs, working with a stable workforce and meeting customer needs in today’s environment.

Edward T. Fleming, President, Cal-Mold Inc. (CMI), City of Industry, CA

Ours is a labor intensive operation. While we run many machines without operators we also run mini production lines in which the plastic molding machine is central. We have an effective and active TQM program and we are also certified to ISO 9002.

I personally believe that U.S. companies will not survive without being more competitive. But how? That is the question. I think the answer lies in preventing Quality problems and taking back the reported 30% to 40% “Cost of Quality” that we average in this country. At CMI we are investing in our people and our equipment. We are using SQC for the Camsco division of Rainbird (100% quality for the past 18 months) and for some other customers. And SQC is great, it works! However, we are now begining to implement Process Control (SPC).

I believe our winning strategy is to eliminate Quality problems and produce 100% quality; to allow the person who is making the item be responsible for its quality. This means that we will have to train our people better and pay them more. I also believe that the technology now available to us will allow this to happen.

Our plastic resin costs about the same worldwide, power factors vary, but the biggest factor is Direct Labor. I think we can be competitive with the rest of the world by instilling the “Japanese work ethic” in our own people.

Thus, the definition of “lean production” is definitely changing. I define it as the ability to achieve higher productivity at lower cost. When one thinks about it, a higher quality product means a tremendous reduction in costs, improved delivery schedules and far less rework, repair and corrective action! As this allows production rates to increase, there is no need to downsize. The result is increased revenue per person and the increased production will ensure we will be able to maintain our existing staff!!

Prof. Phillip R. Rosenkrantz, P.E., Department Chair, Industrial and Manufacturing Engg Dept., Cal Poly Pomona, CA

Lean Production” never has and never will be the total solution to a company’s competitive problems. Reducing the historically large amount of inefficiency and waste in most American companies was “low hanging fruit” for those who were trying to improve the bottom line and remain competitive. Many companies obviously need to make efforts in this direction, but it is not the total answer. No matter what the price you still need to have the right product in the right place at the right time. The long range success of a company is going to be dependent on two basic things: Long-range strategy and product and process design. Lean production should be the natural result of these activities.

Strategy is important because the company needs to anticipate the market 10-20 years into the future and steer in that direction. What are the company’s core technologies and what is being done to cultivate them? What are the emerging technologies and market trends and what does that mean to the company? Good strategy is typically only going to result from good leadership.

Proper product and process design activities involve listening to the “voice of the customer”, designing and efficiently producing a quality product, and getting it to the customer in a timely manner. Looking for your customers’ unsolved problems can lead to breakthrough innovations and distinct market advantage. How you design your product and processes will determine your cost and quality level. It is directly related to your competitive advantage. Lean production can be achieved by carefully choosing your technology and designing products that are robust and can be manufactured without defects, waste or scrap.

Using re-engineering as a means to lay off middle level of managers, engineers, and scientists, to dump “expensive” expertise and improve the bottom line might show short term quarterly profits but will only help them lose their technological edge.

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World Class: Another Buzzword?

World-Class - this is a term we hear more and more of. In fact, American Express chairman, Chuck Farr, was recently quoted as saying, “. . .using world-class economics to become . . .” Of all the buzzwords we have heard, including TQM and Reengineering, World-Class Manufacturing is perhaps the only one that has not attained a negative connotation. Many factors may contribute to this status. The Baldrige National Quality Award lists criteria that helps score an organization on various areas and the annual winners are recognized worldwide. Many states have been adapting the award criteria and offering similar recognition at a local level. There are also the Industry Week’s Top ten manufacturing plants.

Are all these organizations truly ‘World-Class’? Do we really understand what we need to do to be recognized as World-Class? And if recognition is really an indicator of World-Class, how come achievement of one of the awards does not necessarily ensure achievement of the other? Is World-Class being overused? What do we really mean when we say World-Class?

Ann De Muro, Vice President, Marketing & Quality Assurance Director, Crown Worldwide Moving & Storage, San Leandro, CA

B ehavioral scientists have discovered the fundamental fact that people will believe what you do before they believe what you say. If you say you are a “World-Class” organization but implement a voice mail system that makes it impossible to speak with a live person, you have created a mechanism that keeps the customer at bay. In the customer service arena, where perception is reality, your pronouncement of “World-Class” is turned aside by your actions.

Exceeding customers’ requirements is a critical success factor for organizations as they face the 21st century. Successful organizations must be responsive to, and anticipate trends in, worldwide industry indicators. Looking forward, these indicators reveal that quality programs will be basic requirements for organizations of the 21st century. According to a 1996 survey from Quality Systems Update, there has been a four-fold increase in ISO registrations over the last three years alone.

The trend presents a view of the next business horizon, one that will build from an authentic foundation in quality. Attracting and retaining customers will demand rigor and ingenuity, not a propaganda program of quality jargon.

As organizations evolve, they will be driven towards continuous reinvention and accelerated change. The essence of that change will be the result of revisiting their definition of customer. A rigorous analysis of customer/supplier relationships will unearth critical associations extending both inward and outward to include many more stakeholders than previously addressed. And, when they arrive at an appropriate definition for customer, recognizing that it is dynamic and fluid, they will find opportunities that will have been hidden in the finite details.

Organizations must continuously study their definitions of customer in order to meet the requirements that truly will enable them to be “World-Class.”

Estrella Parker, National Director, Strategic Change, Prudential HealthCare, Roseland, NJ

Like most business management jargon, “world class” is another management buzzword that may be hitting its peak. In the last decade, we have seen many buzzwords that have lived their full lifecycle of popularity in the business world. Words such as total quality management, JIT, flexible manufacturing systems, benchmarking, activity-based costing, process improvement, reengineering, the learning organization, paradigm shift, etc. have all have been at some point the most widely-used terminology to drive organizations to their next level of performance.

I have found, however, that the concepts or methodologies that these words represent forever leave their mark in the growing knowledge-base that is developed in the business environment. While at their peak of popularity, these “buzzwords” are constantly being explored, applied, experimented with, learned from by millions of business practitioners. These practitioners “live” the essence of what these words represent until they have exhausted all the potential of the concept or methodology to further their organization’s requirements. At this point, a new concept or methodology may be developed and a new “buzzword” would be born.

The term “world class” has brought to us the notion of global competition, of integrating what we’ve learned from all the previous management buzzwords to a level of performance or excellence that implies leading-edge beyond typical boundaries implied by industry, geography, or culture. We have obviously not learned enough from what this buzzword could drive various businesses or organizations to accomplish. I certainly hope that we can exhaust its use to the point of inspiring new levels of performance unprecedented in history.

Sam Samadi, Director of Quality and Operations, Harris Corporation, Network Support Systems, Camarillo, CA

The term "World Class Manufacturing (WCM)" became increasingly popular in early 80's, after the publication of the book "World Class Manufacturing" by Schoenberger. Since then, the term has been interpreted by people and organizations to reflect the need for improvement in all aspects of the organization, a tool to motivate, a reason to re-organize and to support many other causes.

Let us examine what we have used as tools and techniques of WCM. Customer care and satisfaction programs, quality improvement tools and processes, cost reduction techniques, cellular manufacturing and application of JIT techniques, reduced inventory turns, self-directed work teams, reduced time-to-market via concurrent engineering, Kaizen, supplier partnership, and many other tools and techniques. Regardless of what we call these practices, the gravity of the need to remain competitive in today's global economy must be clear to everyone.

No organization can and will prosper and ultimately survive if it does not forge aggressive development and implementation of plans for ongoing improvement that is unwavering and fully supported by all levels of the organization. The goal for every organization should be to become inspired by what others have achieved, learning from the leaders by benchmarking, visiting, reading, and applying the tools and techniques to ensure their own place in history. The ultimate reward may not be limited to being judged as the best in Industry Week magazine, but by growing, expanding, beating the competition, entering the global economy and being able to compete with the best in every class.

Let us not get wrapped up in the buzzwords, and if we are using the appropriate or the latest terminology under the World Class umbrella, let us recognize that regardless of our current status as being a "lion or a gazelle, we'd better be running when the sun comes up"!

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