Join the World Class
|Above: Members of the Boeing Airlift and Tanker Program celebrate winning an AQP award last year. At left is Clarke American Checks' 2003 Baldrige award.|
On November 26, 2003, Commerce Secretary Donald Evans announced the seven recipients of the prestigious Malcolm Baldrige National Quality Award. It was the highest number of Baldrige winners since the program began in 1988. Among them was Medrad, a Pittsburgh, PA-based medical-device maker. The company won in the manufacturing category. Recognizing the win, company president and CEO John P. Friel said the honor "belongs to the employees of Medrad, who have built a world-class company with an exciting future."
The term "world class" is heard often today, but what does it mean? Simply put, it means "people all over the world accept your product," says Dale Crownover, CEO of Dallas-based Texas Nameplate, and a 1998 Baldrige recipient. And while most would agree that the process of getting to that level means shaping one's operation to meet universal, high-level business standards, it also means obtaining impartial recognition for the effort.
One of the best - and most rigorous - ways to get that recognition in this country is to win a Baldrige. The Malcolm Baldrige National Quality Improvement Act of 1987, and the award that it authorized, was enacted by Congress to promote "American competition and leadership of the United States in product and process quality." Since 1988, 58 organizations have received the Baldrige Award, which was named for Malcolm Baldrige, the 26th Secretary of Commerce who served from 1981 until his death in a rodeo accident in 1987.
Managed by the National Institute of Standards and Technology (NIST), the Baldrige stresses strategic planning for quality and quality improvement programs, improved management understanding of the factory floor, worker involvement in quality, and greater emphasis on statistical process control. Recognizing even 16 years ago that poor-quality products were costing American business and industry "as much as 20% of sales revenues," the Quality Improvement Act noted that "improved quality of goods and services goes hand in hand with improved productivity, lower costs and increased profitability." It also publicly recognized that "our Nation's productivity growth has improved less than our competitors' over the last two decades."
While the Baldrige is probably the best-known business excellence award, its parameters were not created exclusively for manufacturers. Excellence in manufacturing is one of five categories it includes (service, small business, education and health-care are others), all of which focus on the same key business issues: leadership; strategic planning; customer and market focus; measurement, analysis, and knowledge management; human-resource focus; and process management.
Manufacturers looking for more specific recognition can pursue a host of local and state awards, as well as national awards such as the Shingo Prize for Excellence in Manufacturing, the Association for Quality and Participation's (AQP) Team Excellence Award, the North American Mainten-ance Excellence (NAME) award and others. They can also pursue internationally recognized ISO certification, though not all ISO standards apply to manufacturing, either.
Why put in the time and effort - which can be significant - and turn your operation upside down to join the world class? Let's find out.
Clarke American Checks, Inc., recipients of the 2001 Baldrige award in the manufacturing sector, recognized some 20 years ago that it needed to make changes to keep pace with foreign competition. "We determined in 1985 that in order to survive, we needed to differentiate ourselves," says Joe Mengele vice president for the San Antonio, TX-based check-printing company. In the 1990s, it adopted the Baldrige framework because, according to Mengele, "It was the best criteria for running our business."
One reason the Baldrige is revered as a timely measure of a company's abilities is that criteria for each of its seven categories is updated yearly. And the selection process is recognized worldwide as among the toughest to be found. The three-step judging process includes an independent review when each individual judge evaluates the applicant; a consensus review in which a group of examiners agree on the score; and a site visit to the applicant's facility. At Clarke, pursuit of the Baldrige won the approval of the entire executive team, and the company applied with enthusiasm. Two attempts in the early 1990s, however, did not get the company as far as the site review.
"When we got our feedback, I think we were in denial," says Mengele. But thanks to that feedback, he says, the company was able to introduce its first true quality model in 1995. After many subsequent internal assessments and benchmarking trips, the company applied for and won the Texas State Quality Award in 2001. That same year, they went on to win the Baldrige.
As a result of the Baldrige process, the company strengthened its leadership role and its commitment to ongoing continuous improvement. More than 100 employees have since been trained as Baldrige examiners. The company was also able to boost accuracy rates and service levels through automation and innovation. Customers, suppliers and partners now attend company-sponsored workshops and conferences to learn more about the company's Baldrige-inspired quality journey.
As a Baldrige winner, "Our expected performance is not like the other guy's," says Tillotson. "We have to be better because we are used as an example. The expectations are high in both the business place and internally."
The Shingo Prize for Excellence in Manufacturing, named for industrial engineer Shigeo Shingo, was established in 1988, and evaluates lean manufacturing practices. It is open to manufacturers operating in the U.S., Canada and Mexico. In 2001, the Baxter Healthcare North Cove facility in Marion, NC, won the Shingo, the culmination of a process that began in 1994.
"We wanted to be more focused on what plants need to do to be successful," says John Martino, quality manager for business excellence at Baxter. "We went for the Shingo because we wanted to see how we stacked up."
Shingo criteria focuses on manufacturing quality, productivity, and process improvement. Baxter looked at how its plant was operating, the tools that were used (especially lean techniques), and results. To address areas where improvement was needed, the company created a Quality Operating System (QOS). This focused on training and certifying employees, ownership and bringing predictability into the processes, based on Six Sigma principles. When they felt it was time to compare their efforts to Shingo criteria, management formed a 40-member team, which it broke into groups dedicated to specific points. The written application process began in mid-June 2001 and by mid-September 2001 the application was submitted. When Baxter later received a visit from a Shingo site team, "the whole plant became involved," says Martino.
"I remember an examiner spending what must have been three hours with one maintenance mechanic out on the floor," says Martino. "He went through TPM, asking him about what was being done on a particular piece of equipment, how suggestions were processed and how improvement was initiated."
Martino says his plant won "because when the judges came in, they looked at our process and saw the criteria being deployed and implemented throughout the organization. It's also how you match up against other groups and other industries as a whole," he says.
In addition to winning the Shingo, Baxter is ISO certified and in the last two years has sent teams to compete for the AQP (Association for Quality and Participation) Team Excellence Award. Initiated in 1985 under the auspices of the American Society for Quality (ASQ), the AQP award recognizes an organization's team-based improvement efforts. Baxter pursued this because "we wanted to get ownership at the employee level," says Martino. "And applying them against AQP criteria helps us gauge our effectiveness." Consisting of maintenance mechanics, operators, supervisors and technicians, the Baxter teams have been selected as national finalists for 2003.
No award winner can deny that the boost to internal pride and the abundant external praise are among the benefits of winning a major award. Martin Swarbrick, vice president and director of business excellence at the Motorola Commercial, Government & Industrial Solutions Sector (CGISS) claims that upon winning the 2002 Baldrige, the Schaumburg, IL-based company held "over 34 conferences worldwide, with 8,000 to 10,000 people in attendance." Requests for them to tell their story came from state and local organizations across the U.S., as well as organizations in Sweden, India and China. TNC's Crownover has become a similar "Baldrige ambassador."
CGISS applied for the Baldrige in 2001, having adopted the framework in 1999. Not necessarily looking to follow in the footsteps of parent company Motorola, Inc., a 1998 Baldrige recipient, CGISS used the Baldrige criteria "as a way to assess our business," says Swarbrick. "It was non-prescriptive. We didn't apply with the idea of winning. Our road map set out using the framework to improve business."
The 2001 application failed to rate a site visit because business strategies were not communicated properly, says Swarbrick. After paying close attention to this area, the company reapplied and won in 2002. It's this type of give and take that helps the best companies find the extra effort needed to reach true world-class status. For organizations like the Boeing Airlift and Tanker Programs, Long Beach, CA, a 1998 Baldrige recipient, winning an award is one of many aspects in a long, and sometimes arduous quality journey.
"Here at the Airlift and Tanker Programs we have a quality journey plan," says Katherine Tran, project lead for the group's award applications. "We are continually evaluating our commitment to quality. It involves Baldrige efforts, Team Excellence and other accolades outside of the company."
According to Tran, the unit has applied for the AQP award to both show off and improve its systems. The initial application for the award requires production of a video about a company's team processes. Final competition requires a live team presentation on a given topic to a panel of judges, followed by questions and answers. "This is a huge deal for the employees," says Tran. "Our employees write the video script because they're the ones who know the story. We go through many retakes before we get it just right."
After applying for the AQP four years in a row, the Boeing Airlift and Tanker Programs won two state-level gold medals, moving them to the national competition. Two other Boeing teams were also at the national level, and the company's competitors came away with a silver and bronze medal last year. The unit keeps applying because "it promotes and validates our team-based culture," says Tran. "It's a process improvement tool for us."
No company knows better than Medrad, Inc., what it's like to repeatedly apply for a big award, not be selected, then finally win. The 2003 Baldrige recipient in the manufacturing category, applied five times. They made their first application in 1996. They reapplied in 1999 and every year thereafter until finally winning last year. They won after their fourth site visit, chosen among nine other applicants.
A U.S. affiliate of Germany-based Schering AG, Medrad makes medical imaging devices for doctors to see into the human body. The Baldrige criteria, championed by then-CEO Tom Whit-mer, was adopted in the mid-1990s to emphasize what the company believed was its "tremendous culture of quality," says Rose Almon-Martin, director of the Medrad performance excellence center.
The company's first application, however, only made it to consensus review, the second step. Nonetheless, it provided valuable feedback that helped the company eventually get the win, says Almon-Martin. "People might say you are doing great and you might feel like you're doing great," she says, "but how do you really know? You throw yourself up against an external standard."
For that reason, Medrad and other world-class companies typically apply for many awards. Medrad, for example, was ranked 13th in the large company category of the 100 Best Places to Work in Pennsylvania by The Great Place to Work Institute. Medical Imaging magazine ranked Medrad number two in the top 20 diagnostic imaging companies. And CEO John Friel has been recognized by Training magazine in its "CEOs Who Get It" competition, and was named 2003 CEO of the Year by the Pittsburgh Technology Council.
"Fundamentally, applying for the Baldrige involves everyone," says Almon-Martin. "It's about your systems, your people and your approach to your business. To even get to the point where you are thinking of applying, you need a tremendous employee base."
At Medrad, mobilizing the 1,194 employees at it Pennsylvania division to prepare for the Baldrige application was not difficult, says Almon-Martin. A logistics team and six other teams were formed consisting of five to 10 people who knew the systems in each category and could write the application.
"Our people are highly motivated," says Almon-Martin, "and they're always looking for a way to do things better. That is one reason why the award made so much sense for us. Everyone has to be involved in doing their best and never being satisfied. When the examiners come in, they talk to everybody."
Every company that applies for an award seeking world-class recognition faces different obstacles. Convin-cing the employees at Texas Nameplate Co. (TNC) to adopt Baldrige criteria required persuasion, says CEO Crownover. A maker of etched metal nameplates located in South Dallas, TX, TNC won the 1998 Baldrige in the small-business category, after two failed attempts. "For anyone who has won the Baldrige, it takes the CEO to aggressively pursue it all the time," says Crownover. "You can't let up."
Crownover decided to adopt the Baldrige criteria in the early 1990s, after taking control of the family business and its numerous quality problems (see IMPO's Best Practices profile of TNC in the May 2001 issue). He enlisted the plant manager, sales manager, accounting department, supervisors and other managers to spread the word that the company was going to adopt Baldrige criteria, but put it in terms everyone could understand.
"The approach we took with the operators and workers on the factory floor was, How would you like to make more money? How would you like to be more secure in your job?" says Crownover.
When worker suspicion gave way to cooperation, Crownover introduced company training in areas such as statistical process control, total quality management and ISO. "We didn't have a lot of financial resources, so we did a lot of it ourselves," says Crownover. "We did use some consultants but not many. And I read a lot of books."
Transforming his company from a quality pariah to Baldrige winner took three to four years, says Crownover. "It takes about a year to get people motivated," he says, and another two to three years to get to a point where a win is possible. Not every applicant can win, of course, but those who do usually remember the moment. When Crownover won, and was called by the Secretary of Commerce, for example, he placed the call on the company's PA system. Medrad CEO John Friel timed his company's Baldrige announcement to coincide with a scheduled quality meeting. Emotions run high. "It was like winning a Super Bowl," says Clarke's Mengele. "My personal reaction was tears of joy. You work so hard, then you look at the results. To see and hear the responses from your people is the most rewarding experience. It brought a tear to my eye."
And once a Baldrige recipient, always a Baldrige recipient. The Baldrige logo printed on a winner's business card, product or stationery can be used forever, attesting to the accepted fact that the company is world class. Winners of other awards have similar experiences. "When we go out or if companies come in to benchmark us, we always talk about our quality journey," says Boeing's Tran. "The Team Excellence award always comes up."
Financial gains are another benefit. Working to meet Baldrige criteria, for example, Medrad doubled its revenue from $123 million in 1997 to $254 million in 2002. Manufacturing capacity expanded three times, and average annual revenue growth has been 15% since 1998.
Data posted on the Baldrige Web site (www.quality.nist.gov) confirms that Medrad's success mirrors that of other Baldrige winners: they outperform competitors. To measure Baldrige recipient performance, the NIST created an index to compare with the S&P 500. With the single exception of 2003, Baldrige winners have consistently outperformed it.
"You always know a Baldrige recipient," says Crownover. "It's a different level. You go into a winning facility and you can tell: They're clean, they're organized. You can tell there's a system in place. Everything has a process. And once you win, all your stakeholders, including your employees feel like you're the best at what you do."
Baldrige examiners have a phrase, says Medrad's Almon-Martin. "It's 'How do you know?' They ask, 'How do you know your customer approaches are working? How do you know your employee approaches are working? How do you know this process is working? How do you know you're doing the right thing? They look for your systems and measures that guide your focus for improvements. This is the ultimate 'How do you know?'"
If you want to know if your organization is world-class, apply for a state award, then the Baldrige or another national award. Test your processes, validate them. Then let everyone know.