Quality is the key to turn around at SACO Defense

At Saco Defense, lack of quality had created a crisis. When the government shut, it down because it wasn’t meting quality standards, Saco fought back with a TQM program that has restored quality, increased production, and decreased costs. Based in Saco, Mine, the 78 year old defense company was unable to adhere to the US Navy’s quality standards. Although Saco’s weapons worked well, the government questioned the company’s quality practices and policies. For example, if an employee discovered a defective bolt near the completion of an assembly process, the operator would replace the bolt but not document the problem. The presence of one defective bolt might mean that others from the same supplier or batch were also bad but were going undetected. Without follow up the underlying materials problem would not be identified and resolved.

To solve these problems Saco Defense went through an organizational transformation. The key elements were: (1) empowering employees by giving them the responsibility and accountability for their performance, including the authority to halt production to correct problems; (2) firming work cells, that is, small businesses within the company that manage their own production with limited supervision, and (3) reducing the workforce from 760 to about 450 employees and eliminating several layers of management. In addition ongoing improvement projects at the company range from reducing cycle time and product cost to implementing programs for skills integration Productivity has increased turnover is down, and the company plans to expand its international business.

To cope with change: Change is an inevitable part of any organization’s environment. Markets shift. Competitors – often from around the world offer new products and services that capture the public imagination. New materials and technologies emerge. Government regulations are enacted or amended. The control function aids managers in responding to the resulting threats or opportunities, by helping mangers detect changes that are affecting their organization’s products and services.

To create faster Cycles: It is one thing to recognize a customer demand for improved design, quality or delivery time and another to speed up the cycles involved in creating and then delivering these products and services to customers. In fact, Steingraber projected that speed would be the standard of the 1990s, especially the speed which orders are filled. Today’s customers expect not only speed, but customized products and services. At Toyota’s Tokyo Design Center, they have learned that universal mass production is not enough. In the twenty first century, you personalize things, more reflective of individual needs. The winners predicts Fortune’s Alex Taylor III, will be the companies that most successfully target narrow customer niches with specific models.

To add value: Speedy cycle times are one way to gain a competitive edge. Adding value is another way, advocated by the Japanese management expert Kenichi Ohmae. Trying to match a competitor’s every move can be both expensive and counterproductive. Ohmae cautions. Instead an organizations main objective should be to ‘add value’ to its product or service so that customers will buy it in preference to competitor’s offering. Most often, this added value takes the form of above average quality, achieved through exacting control procedures. Former Chrysler Chairman Lee Iacocca has expressed frustration that the same automobile, made on the same assembly line, is perceived to have higher quality when it wears a Mitsubishi name plate than when it wears a Chrysler name plate. Chrysler in turn has tried to add value by increasing quality and offering additional safety features. Deere has added value through technological enhancements.