Creating a quality culture.

Experts view quality as a major issue for U.S. firms in world trade and agree that organizational change is vital.

W. Edwards Deming once wrote that "Survival is not compulsory." What the renowned quality expert was referring to was that being in business does not carry the privilege of staying in business.

By not recognizing and meeting the needs of your customers and the marketplace, your survival as an organization is in jeopardy. As a manager, owner or operator, the decision is yours.

No issue plays a more important role in business survival today than quality in product and service. It's a message that has been driven home to U.S. manufacturing over and over during the last decade. And while many had to learn the hard way, it appears that the quality message has gotten through to American manufacturers.

This was the message at the AFS Foundry Executive Management Conference held last September in Colorado Springs, Colorado.

In his welcoming remarks, AFS President Ray Witt, founder and president of CMI International, said world-class business survivors have the capacity to see and act on the constant need for change in product, management skills and manufacturing technologies.

Journey toward Quality

Richard Buetow, senior vice president and director of quality at Motorola, Inc., Schaumburg, Illinois, delivered the Peter E. Rentschler Memorial Lecture at the annual conference.

"There is only one way for a company to sustain high quality and that is to institutionalize it," he said. "Live it every day as if your life depended on it--and not only on the production line. Make quality work in accounting, accounts receivable, shipping, work standards, materials handling.

"Make it part of everything that comes in and goes out of your plant, everything that affects customer satisfaction."

His words left no doubt about the depth and effectiveness of Motorola's commitment to quality.

Buetow is a veteran of 34 years with Motorola, whose sales in 1991 were $11.34 billion. Motorola is ranked 14th among U.S. companies in export sales and enjoys a worldwide reputation worldwide for the integrity of its products and services.

"In 1981, we set a goal that called for a tenfold improvement in quality in five years," Buetow said. "But subsequent benchmarking investigations proved that a much greater improvement was required. Six years later, the company set a new two-year goal to improve quality and service by a factor of 10 and be at least 100 times better by 1991. Our ultimate goal was to reach Six Sigma in 1992, which translates to three to four defects per million parts.

"Our ultimate corporate goal is zero defects. To put our current Six Sigma in perspective, Four Sigma is the average for the best companies in the world, and the airline industry's flight fatality rate is 6.3 Sigma or 0.43 ppm."

Lead, Teach, Audit

Motorola's methodology for quality improvement demanded a total quality measuring system, a way to assess product/service improvements and the establishment of reach-out goals. Six steps tracked the Sigma process gains:

* identify the work you do (product);

* identify for whom you work (customer);

* what do you need for your work, from whom do you get it (supplier);

* map the process (defects per unit of work equal one Sigma);

* make the process mistake-proof, eliminate delays;

* establish quality, cycle time measurement, improvement goals.

An intensive period of benchmarking was undertaken to help establish realistic goals, which were identified by auditing various manufacturing and support systems that paralleled Motorola's developing quality targets.

An education/training component provided 40 hours a year of training for all employees, including the company's CEO and president.

Cumulative savings from 1987-91 exceeded $2.2 billion, and earned Motorola an international reputation for quality and a substantially increased market share.

Benchmarking

Al Ware, Partners in Performance, recounted the remarkable Xerox experience with benchmarking that helped rescue the company. He said the giant in the copier field owned 90% of the market in the 1960s, but saw its commanding position whittled down to 17% within a decade. Xerox people were shocked and angry about the costly slide.

The result was a company/union partnership that attacked the problem with a strong quality focus based on an extensive benchmarking program. Several aspects of the Xerox operations stood out in relation to the company's strongest competitor.

For instance, Xerox's direct and indirect labor costs were twice as much and production supplies exceeded 9%. Assembly line rejects were 10 times greater than that of Xerox's principal competitor, lead time was twice as long and, worst of all, defects per 100 machines were a grim seven times more.

Xerox's unit manufacturing cost was equal to its competitors' selling price. Even with an 8% predicted growth, Xerox found that it would need 17% to stay even with its competitors.

Incredibly, it took Xerox seven years to respond but the company finally adopted a program of Leadership Through Quality (LTQ).

LTQ had two basic elements: competitive benchmarking and employee involvement. It was a strategy for cultural change because Xerox empowered its people to meet customer requirements, achieve business priorities and establish a continuous improvement process.

Senior management served as a willing role model in a scenario that mandated all Xerox employees learn, use, teach and inspect every aspect of the manufacturing process.

Benchmarking let the company recognize superior performance, identify what needed to change and illuminate targets to achieve world-class performance.

Ware said Xerox's successful experience was basic but innovative management that used top-down development and implementation, senior management involvement, a union/management partnership, the integration of work processes, patience and discipline.

Paradigm Power

Wayne Burkan, Alternate Visions, Inc., addressed the same attributes of flexibility and innovation that marked Motorola's rise, in terms of the organizational paradigm. Paradigms are a set of rules and regulations defining an organization's boundaries and actions to foster change.

The ability to affect change is a function of the paradigm that interprets operational response to market stress, according to Burkan.

"The paradigm is a filter through which we view our competitive world," he said. "It colors how we understand and react to all kinds of stimuli impinging on us. It is this dichotomy of change that shapes our reactions to a new paradigm. Change that enhances the prevailing paradigm is readily accepted and supported, but change that challenges the paradigm is fought with great vigor because it destroys the old investment."

The old paradigm holds that "I'll believe it when I see it," or even more regressively, "I'll see it when I believe it," Burkan added. The new paradigm accepts ideas that can replace old ones that are still successful. Change isn't a process of discarding the old paradigm because it is old; rather, it is a guard against the assumption that a particular model is the only or best model. This stifles innovation and promotes stagnation.

Organizational demoralization and frustration are not the result of corporate stress, Burkan said, but the recognition that old rules are not up to new challenges. The person who shifts paradigms is usually the outsider whose new idea is almost always rejected initially.

Trends are initiated by shifts in paradigms but trends are slow to implement. Anticipation and quick response fuel success; simply matching trends smothers innovation.

Burkan listed two types of change: trend and paradigm. Trend changes reduce turbulence by following accepted norms for change. Paradigm change stops trends, creates radical change and sparks the most dramatic kind of innovation and redirection.

The reaction to change is to, first, keep the old paradigm, but change the customer. This is contrary to productive change, which calls for keeping the customer but changing the paradigm to produce changes more suited to customer satisfaction.

Change is difficult, but Burkan told his listeners to promote and accept change, and identify and eradicate impediments that support old paradigms.

He emphasized that understanding the paradigm for change is to understand its influence as a first step in gaining control of shifting circumstances. Burkan advises managers to be open to new ideas that redefine operational strategies.

Burkan suggests seeking information outside one's field (benchmarking), understand personal and corporate paradigms and their obsolescence, and avoid the paralysis that stems from inaction.

World-Class Performance

"World class may be an overused classification, but don't miss its intent. It has much broader implications than simply meeting customer specifications. Meeting world-class standards means high quality, low cost and quick response to market expectations.

"Constantly changing standards compare to running a race without a finish line, where every cost is an impediment and quick action hinges on the ability to shift quickly product mix, volume and technology application. Like a three-legged stool, each leg is essential to remaining upright."

That was the assessment of Dave Garwood, R.D. Garwood, Inc., whose views on total quality management (TOM) are that its efforts too often are misplaced. He believes quality awareness is the key issue for any company seeking world-class distinction.

A common flaw in quality drives is to confuse activities, training classes and publicity slogans with getting results, Garwood said. He departs from old-line management techniques that strive to reduce the worker force rather than concentrate on eliminating work.

Managers who spend endless hours solving a million $20 problems have shackled themselves to insurmountable burdens, Garwood said. They take the classical QC approach that starts with solutions and not with problems--get a computer, order software, become disappointed, buy new software and a larger computer, get discouraged and finally get a new job.

Garwood said American businesses are trapped by what he calls the "silo effect." He described silos as organizational pyramids that encourage business as usual--the old organizational paradigm that stacks authority and responsibility into departmental silos.

The engineering department is a silo with a vice president at the top and the newest engineer at the bottom. Sales, manufacturing, purchasing and finance are silos erected for administrative convenience. People are dropped into specific silos and develop a strong vertical, departmental allegiance that obscures the organization's purpose--to serve the customer.

American businesses are not operating competitively because of the silo paradigm, Garwood said. Many companies persist in the old ways--taking physical inventories, multiple sourcing raw materials, time clocks, traditional supervision, hot production lists, final inspections and purchase orders.

These contrast with new manufacturing capabilities that require no physical inventory, single materials sourcing, a salaried work force, work to schedule, quality at source and paperless ordering.

Garwood advocates dropping the silo organization chart and focusing on streamlining the more efficient horizontal organization. The solution, he said, starts by zeroing in on specific results by targeting low-risk problems that are small enough to be tackled by small teams of specialists.

Their results can be measured quickly because the problems can be solved without a lot of management participation or approval. This gets rid of the funnel approach in which "work in" exceeds the capacity to get "work out."

Garwood said that when you hire a person, you get hands plus a brain that can be cross-trained at several jobs and reassigned to other tasks.

ISO 9000 Experience

Thomas Sturiale, Neles-Jamesbury, Inc., said his company's recent ISO 9000 certification was one of the most important steps in securing a place for the firm's products in the European Common Market.

With eight factories in six countries, Neles-Jamesbury is assured as a recognized supplier of ball and butterfly valves in a market that will become more difficult to enter for non-ISO certified American exporters, Sturiale said.

His company obtained ISO 9000 certification upon the request of overseas customers and after new inquiries specified ISO certification. After Neles-Jamesbury began the ISO process in 1991, it started reviewing and documenting quality assurance and related manufacturing processes. The company also selected a certification agency to act as its verification mediator/auditor.

By 1992, the company was ready to begin the post-documentation part of the process and sustained a five-day audit that discovered 15 noncompliance points requiring clarification. After a two-day final audit several months later, Neles-Jamesbury received a verbal ISO 9001 certification.

The effort necessary for certification was four to five man months in 1991 and 11-12 man months in 1992. Several audit discrepancies are still subject to an ongoing review process before final certification is approved.

Noting that ISO assessors are tough and thorough, Garwood gave several tips to those contemplating ISO certification. A key concern is documenting every company operation.

"Write what you do and do what you write," he said. "Carefully document what you do--not what you would like to do--and don't overcomplicate your documentation. Keep detailed procedures at the local level, and review old procedures for accuracy and relevance."

ISO in Brief

Trevor Law, TEC, Ltd., Birmingham, England, a consultant in interpreting requirements for ISO 9000 certification, said there is a surging interest among U.S. foundries in ISO certification. This is a result of the competition they face in the rapidly expanding world marketplace for metal castings, he said.

"The goal of ISO 9000 is to promote good management control practices for the mutual benefit of both supplier and customer," Law said. "Many European and almost all British foundries are actively pursuing this standard because it is concerned with the assurance of a given standard of quality on a consistent basis."

Involvement: A Part of a Quality Culture

Institutionalizing a quality culture in any organization takes in a wide variety of activities, including those that take us out of our own daily environment. Involvement in issues affecting an organization demonstrates a commitment to being proactive and interest beyond the day-to-day routine.

This was Diana Waterman's message to executives attending this year's AFS Foundry Executive Management Conference. Waterman, a partner in Waterman and Assoc., Washington, D.C., represents AFS in the nation's capital on a variety of issues.

"Smart businessmen don't ignore threats to or opportunities for their organizations," she told foundry managers. "They take involvement to the next level. They know they can't afford not to know or not to care about pressing issues that affect their businesses. Our job is to bring a sense of reality to legislation."

Waterman pointed out the positive effects that AFS has brought to legislative efforts in Washington. "AFS has elevated the visibility of the foundry industry, educated metalcasters about the legislative process, and promoted grass root activities that have resulted in common sense laws and regulations," she said.

"Much of the industry's future lies in our involvement in governmental affairs. You need to make it your business."