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Profiles in Quality
FORM Magazine, July 1990
How Distributors and Manufacturers Design and Implement Quality Programs.
By Katherine Leupold
The Forms Management Company, a Wichita, Kan., distributorship, wants to become the Federal Express of the business forms industry. The company wants to deliver a quality product quickly, even if it costs a little more, according to Retha Petruzates, CFC, corporate sales and marketing manager.
The company began a quality program last summer based on creating strategic alliances with its manufacturers and refining internal procedures. Toward that end, Forms Management held a vendor conference in May titled, "You Can't Find a Better Partner than ME" (standing for margin excellence), and invited several of its top manufacturers. A speaker from Wichita State University spoke about the 1990s approach to quality, another spoke on quality service, a member of a large client company talked about the advantages of partnering with Forms Management and Paula Steward, CFC, international president of Business Forms Management Association (BFMA), told Forms Management's manufacturers what buyers of printing expect from vendors. After the conference, Forms Management began selecting vendors with which it will pursue strategic alliances.
The Forms Management Company is following a trend that dominated American business from the late 1970s through the 1980s. Quality became the business buzzword and management directive for U.S. companies trying to compete with foreign competition. Quality guru Philip B. Crosby popularized the concept in his books Quality is Free and Quality Without Tears. In 1987, Congress established the Malcolm Baldrige National Quality Award commemorating the late Secretary of Commerce. Quality programs have since penetrated many major industries, and companies proudly tout their on-time delivery and trouble-free service.
Faced with a competitive marketplace and growing pressure from end users, business forms distributors and manufacturers also have adopted a variety of quality programs ranging from evaluating a vendor or distributor's performance to seeking increased input from customers.
Changing Customer Demands
Today's customers are more demanding than ever, says Petruzates. Clients no longer accept forms with poor ink coverage, happy to use them after receiving a discount. Boxes of stock paper containing 10-15 crumpled sheets are no longer satisfactory either. "A usable form is not an issue anymore," says Petruzates. This is a major reason why the company developed its quality program.By the end of this summer, the firm will sign partnering agreements with about 10 manufacturers to gain long-term relationships such as it has with its clients. Forms Management currently signs 3-year contracts with its major clients. Once it has selected partners, Forms Management will meet with them quarterly to discuss trouble spots as recorded on a 2-part form listing vendors' mistakes.
Sophisticated record-keeping and new technologies have contributed to heightened quality awareness, according to Dr. Michael E. Workman of Texas A&M University, who will speak on quality at NBFA's 1990 Annual Meeting in San Francisco.
Workman's speech on distributor-manufacturer teamwork at last year's Annual Meeting helped convince Ed Griffin to design a quality program. Griffin, president of Informa Business Systems Inc. in Flint, Mich., had been searching for a solution to increased competition, increasing costs and eroding margins. At the same time, the company was not sufficiently training new employees and was dissatisfied with product quality from manufacturers.
Last fall, Griffin and a handful of other distributors arranged a private meeting with Workman in Chicago. "After that, I realized it is truly important to do things right the first time," he says. "That way, we can buy higher and even make more money," says Griffin. "A lot of people view quality as the ultimate output. If a good quality form is produced, everyone thinks the system is OK." But, if quality and efficiency are not built into every phase of an operation, distributors and manufacturers may spend valuable time and money unnecessarily.
Setting Standards
Crosby says 99 percent right=100 percent wrong. Others with quality programs repeat slogans such as "Quality is a race you are running without a finish line," in part to motivate employees. But true believers know quality means more than slogans and posters. "It is an actual, measurable thing," says Griffin.Deciding what procedures to measure and how to measure them is one of the toughest things about designing a quality program. Griffin changed his yardsticks three times during the first six months of the program he implemented last November. The Forms Management Company currently tracks returns to the warehouse and rerun costs as a percentage of cost of sales for sales reps. The company hopes to have all its measurement methods in place by Jan. 1, 1991. "If you don't know where you are today, you don't know how you are doing," says Petruzates. She says her company, which also sells office supplies, has always had items returned to its warehouse, but now it will know how many and why.
Crosby defines quality simply as conformance to standards. In Quality Without Tears, he estimates that product companies spend 20 percent or more of their sales dollars doing things wrong and doing them over. Service companies spend 35 percent. But many managers do not know the price of nonconformance and even deny it is a problem, creating an obstacle to improvement.
When Griffin organized his program, he needed to decide what non-conformance meant for his company. Does it occur when a sales rep sends an incomplete request for a quote to a manufacturer? Yes. Does it occur when a sales rep sends an incorrect request for a quote to Griffin's sales service department to check? No. Griffin's program measures the quality of output of each sales rep, the warehouse, accounting and sales service departments and the firm's forms management operations. The forms management division commits a mistake, for example, when it does not produce reports on time. Shipping mistakes occur when an incorrect amount is shipped.
Detecting Errors
At the heart of every quality program lies the detection and reporting of mistakes. After detection, steps can be taken to prevent future errors. At Informa, every employee has a supply of "oops slips." When a job or service does not conform to standards, the person detecting the mistake fills out an oops slip—even to report a mistake by Griffin or his partner. "There are no sacred cows," says Griffin, adding that employees have been reluctant to fill out oops slips. "No one wants to come down on anyone else," he says. But no one would be fired because of a high number of oops slips. If an employee receives several oops slips about one problem and fails to correct it after receiving assistance, Griffin would consider taking action. But, he says, he would do the same without a quality program.Informa devoted a sales service employee to the quality program full-time to inspect purchase orders, review incoming products from plants and coordinate oops slips. She also maintains records on a personal computer using Lotus 1-2-3, and generates weekly reports that calculate the number of mistakes made against the appropriate measuring device.
Making the Grade
Employees at Informa aren't the only ones who receive oops slips. Informa sends its manufacturers oops slips when it pays invoices. "Our quality is only as good as the manufacturers behind us," says Griffin. He has been surprised that only a few manufacturers have called to ask about the program and assumes others are uninterested in his input. Ultimately, he will use the number of mistakes measured against the number of orders to whittle his base of manufacturers. Although Informa's clients do not fill out oops slips, they regularly review the firm's performance on a customer survey. It asks several questions including those about whether its billing process is clear, whether telephone responsiveness is adequate, whether the forms designed met the client's needs and whether the clients would recommend Informa to others.DBF Enterprises in Cleveland also tracks its manufacturers' performance using a "Zero Defects" form. The form allows DBF to give its vendors a "0," "+" or "-" rating based on their performance in several areas, including delivery, billing and shipping. If everything runs smoothly, the manufacturer receives a "0" rating signifying zero defects. Manufacturers receive a "-" rating when they don't meet DBF's expectations. If a manufacturer must call DBF to ask about any phase of the order, the manufacturer receives a "+" because DBF should have sent clearer instructions.
Points are totaled at the bottom of the form, and one part is sent to each manufacturer once a month. Some manufacturers have thanked DBF for alerting them to problems and promised to change their methods. Peg Morgan, corporate secretary of the firm, also uses the forms to determine if doing business with some manufacturers is cost-effective. "Someone might have a lower price, but if there are enough defects, it isn't worth it," she says.
The grading system is a "black and white" method for tracking problems, says Morgan. "This way, we don't say 'it seems to me we had this problem before.'" She says it's worth the extra time to evaluate vendors and is drawing up a 14-inch form that will recap manufacturers' performance during a 12-month period.
Sales service uses a checklist to ensure accurate orders are sent to manufacturers. "We've always felt we should send orders that don't have questions," says Morgan. "We probably take a little longer to complete orders, but we don't expect vendors to make decisions for us." During weekly staff meetings, employees feret out activities that waste time and try to find ways to prevent mistakes from recurring. DBF's profit sharing program rewards efficiency, thus encouraging employees to find ways to save time.
Pressing Quality Programs into Action
Jim Griffith, president of Continuous Forms Inc., a Detroit manufacturer, and former associate vice president of NBFA, uses his quality program to help him evaluate his suppliers as well as distributors. He once sent shipping rolls that were 1/16-inch off the correct size back to a paper merchant, who complained that "Everyone else uses them this way." Griffith's quality program also detected one distributor's orders that constantly lacked specific shipping requirements. Griffith called the distributor, who fixed the problem.Griffith's program, which he enacted about six years ago, encompasses the work of everyone in his plants too. Employees have a stash of defect identification ships on which to record mistakes by fellow employees, customers and vendors. Each department keeps a weekly log summarizing the slips it receives, and meetings are held to discuss the most common mistakes. Customer complaints also are treated as defects.
Griffith uses plant-wide quality indexes—factoring in defects, customer complaints, the value of credits given and other possible errors—to gauge progress. Departments also have quality targets, and employees can receive bonuses based on their department's performance compared to its targets.
Two years ago, Form Service realized its cost of reprints was increasing. Although the cost of reprints as a percentage of sales remained fairly constant, the dollar amount grew as the company did. To combat this, Form Service decided to eliminate its quality control inspectors and institute a quality program that gave everyone an incentive to detect mistakes—a day off with pay. "I can't think of anything employees would rather have—except two days off with pay," says Vince Cronin. Form Service's corporate vice president who oversees the program.
Employees at Form Service in Chicago and CP, the Form Service Catalogue Division, fill out a "Quality Holiday" form whenever they make a catch—"anything that is wrong, absent or causes an employee to lose time," according to Cronin. Catches then are assigned a value from $25 to $500, and the employee with the highest value each month wins a paid holiday. Every three months, the company pays employees 1 percent of their total catch value for that period, making everyone a winner.
Assignment of a value depends on several factors, including the value of the job, the likelihood that the catch would have been made before dollars were lost and whether the employee catching an error detects something outside his/her bailiwick. A pressman catching a spelling error, for example, would fall into this category and would get $500 credit for such a catch.
A weekly report identifies the department, employee and supervisor involved in the error. A second report gives the same information listed by the employee making the catches. A monthly report shows the accumulated value assigned to "catches" for that month. Cronin estimates the firm has saved about $150,000 in lost time and rerun costs since the program was implemented.
Katherine Leupold is assistant editor of FORM magazine.
Where to Go from Here
- Where Can I Find Help?
- Read Phil Crosby's books on quality and Tom Peters' In Search of Excellence. W. Edwards Eming, who taught the Japanese about business management after World War II, has written several books, including Out of the Crisis.
- Attend a workshop or lecture on quality. Mike Workman of Texas A&M will speak on quality on September 16 at NBFA's Annual Meeting in San Francisco. Vince Cronin of Form Service Inc. attended Crosby's Quality College in Florida to learn more about quality programs.
- Get involved with a local quality organization. Forms Management, for example, belongs to Quality United with Education for a Successful Tomorrow (QUEST), a local non-profit organization of professionals and educators who promote the application of quality programs.
- Get involved with Milwaukee, Wis.,-based American Society for Quality Control, suggests Dick Graham, director of the Center for Productivity Enhancement at Wichita State University. The association produces publications about quality and has local meetings around the country open to non-members, says Graham.
- Find out if local universities or community colleges offer information about quality programs.
- Hire a quality consultant. Graham says many consultants specialize in small businesses. Be sure to get references.
- What types of activities can I measure in a forms distributorship?
"Service companies—including distributorships—have every bit as much to measure as manufacturing firms," says Graham. Try measuring how quickly an order is placed, whether invoices are correct, whether the correct quantity is shipped and how often a client receives an invoice before its forms are shipped.
Crosby says accounting department can measure the percentage of late reports, incorrect computer input and errors in specific reports. Internally, service firms also can measure payroll errors, missed accounts payable deductions and computer downtime due to error.
- What types of activities can I measure in a manufacturing company?
Manufacturing firms can measure many of the same activities as distribution firms. They also can measure such things as cost of reruns, cost of waste in production and printing quality.
- Other Advice
"A successful quality program hinges on the mindset of manager," says Graham. "If the manager says it is OK to ship stuff that is not quite right just to meet the third quarter quota, you will not have a quality program. People do what they see the boss do."
"If someone decides to implement a quality program, he/she must be in it for the long term," says Ed Griffin of Informa Business Systems Inc. "There is no quick fix. There are a lot of hills and valleys." Peg Morgan of DBF Enterprises recently fell behind sending out "Zero Defects" forms to her firm's manufacturers. She vows to catch up. "It's worth the extra time to evaluate vendors," she says. "You just have to stay with it."
Quality from the End User's Perspective:
One Buyer's Views
Donald Dillon, a first vice president of Capitol Federal Savings & Loan Association in Topeka, Kan., has firm expectations of his vendors. The institution, where Dillon oversees purchasing, provides forms sales reps with complete specifications for every form, hoping to ensure it receives quality products at justifiable prices. It also requires references from distributors' clients who have bought a comparable product in similar quantities.A few years ago, The Forms Management Company of Wichita, Kan., showed Dillon sample forms whose design quality and appearance were superior to what his bank used. Some of Capitol Federal Savings' peers and competitors bought from the firm, and Dillon was so impressed he showed the samples to the bank's new marketing director. "Appearance is the type of thing a marketing director gets enthused about," says Dillon. The firm eventually signed a multi-year forms management contract with the company.
When it did, Capitol Federal Savings established several quality and delivery requirements. If a manufacturer does not print an order to match Dillon's requirements, The Forms Management Company "strongly suggests" that he reject the order. If a delivery date can't be met, Dillon works with his distributor to determine whether the late delivery will create problems. "We made them fully aware of our expectations and they contracted to fill them," he says. The firm has succeeded in pleasing Dillon, he says, because they "came to us with a (forms management) program that wasn't flawed and had the capabilities to do everything proposed."
Prior to entering the contract, Dillon says he rejected forms because they did not meet alignment specifications outlined by the bank and thus failed to work in its equipment. More commonly, he rejected forms of poor printing quality. "It's my position that vendors should have quality control programs that prevent unacceptable forms from being delivered," he says. Mistakes can happen, Dillon admits, but says, in the past, a firm's ability to get repeat business hinged on assuring him that problems would not recur. "Sometimes, someone would say they think a problem had been corrected but they couldn't be sure," says Dillon. "They told me, 'But we'd be willing to try it again.'" Dillon replied that he was not; he expects a guarantee that an error has been detected and a problem solved.
How Moore Runs Its Quality Program
"Quality gurus occasionally make quality seem like rocket science," says John Popoli, manager of quality management for Moore's U.S. Business Forms & Systems Division in Glenview, Ill. "But quality programs are nothing more than very well-ordered common sense."Moore's common sense approach to quality means satisfying its customers. The firm's quality program, begun in 1988, incorporates statistical control methods, quality seminars for all employees, awards, and compensation for executives tied to quality objectives. But the primary focus of the firm's quality program, according to Popoli, is determining what customers want and finding out whether the company meets their expectations.
Moore establishes performance criteria with its customers and then measures success. Some clients might stress the importance of on-time delivery; others who are image-conscious may be more sensitive to the printing quality. A customer who asks Moore to design a mailing to increase receivables may know what percentage of recipients need to respond in a certain period to do so.
"You must use some meaningful representation to prove to yourself and your customer that you are meeting expectations," says Popoli. "The ultimate test of customer satisfaction is whether you get referrals and retain the client's business." Moore constantly compares its baseline—where it is today—against targets set by customers, says Popoli, and employees meet with clients regularly to discuss requirements and past performance. Moore also uses the same procedures for employees who do not have direct contact with end users. A computer programmer, for example, sets goals with "customers"—users within the company.
All of the employees in Moore's U.S. operations participate in "The Quality Advantage," an ongoing training process that helps them understand how their jobs contribute to customer satisfaction. Every formal meeting begins with a discussion of quality, and articles on the quality process appear in the firm's publications. This month, the firm will sponsor a Quality Week for about 400 employees with speakers, training programs and presentation of the SAM (Success at Moore) award.
The SAM award was designed to encourage a team approach to quality improvement. Any group of employees from a cross-section of departments can use techniques learned at Moore's seminars to detect a problem and find a solution that is then used throughout the company. Members of the printing department at a Moore plant won the first year when they devised a system for reducing waste when setting up a printing press. A team from another plant also received recognition when it recommended ways to improve shipping accuracy at its plant from 99.7 percent to 100 percent. The Business Forms & Systems Division's "Advantage Project" focuses on making technological improvements in sales and manufacturing, such as the simplification and automation of the forms pricing system.
Moore hands out a supplier-excellence award to paper mills that meet its quality requirements and has been selected for such awards by many of its clients, according to the company. Moore's Business Forms & Systems Division, which supplies Texas Instruments with 75,000 cartons of forms products every year recently won TI's supplier Excellence Award for the seventh consecutive year.
A key objective of Moore's five-year plan is to vie for the Malcolm Baldrige National Quality Award in 1994. Moore is a supplier to three of the companies that have previously won the award, Motorola, Xerox and Milliken. Every employee has been asked to make a personal commitment to obtaining the goal.
Popli says he has an open attitude about sharing Moore's experience with others in the industry. "I am willing to tell people about the mistakes we made (in implementing our program)," he says. "It helps elevate the entire industry."