Case 3-2 Wainwright Industries: An Entirely New Philoso! phy of Business Based on Customer Satisfaction and Quality Related Web page: wainwrightindustries.com In the early 1980s, Wainwright Industries, a manufac- turer of stamped and machine parts, was facing noth- ing less than a crisis. Increased competition, along with intensified customer scrutiny, was forcing Wainwright to either improve quality or lose its competitive stat- ure, In the face of this challenge, the employees of the company, led by CEO Arthur D. Wainwright, decided to make radical changes. It was clear that business as usual with a few minor improvements would not save the company. What Wainwright needed was an entire new philosophy of doing business based on quality and total customer satisfaction. To determine how to achieve this objective, Wainwright used the criteria for the Malcolm Baldrige award as a road map. Drawing input from all levels of the company, the top management team led the process by setting goals, developing implementation strate- gies, and establishing key quality standards. Initially, the company emphasized three principles: employee empowerment, customer satisfaction, and continuous improvement. As a creative way of demonstrating the importance of working together, the company adopted the duck as its mascot, based on the fact that ducks fly in formation as a means of supporting one another in flight, In addition, whenever a duck falls out of forma- tion, it suddenly feels the drag and resistance of trying to fly alone and quickly returns to the flock. Wainwright used this analogy to support the concepts of teamwork and employee empowerment, which were integral parts of the company’s quality improvement efforts. ‘Along its journey toward improved quality, a num- ber of specific initiatives were implemented. Lean man- ufacturing, statistical process control, computer-aided design, cross-training, profit sharing, and quality-minded manufacturing initiatives were put in place. Special em- phasis was placed on training and benchmarking. Since it initiated its quality program, the company has spent up to 7% of its annual payroll on training. To demon- strate its resolve in this area, the company has made training an important criterion for employee advance- ment. Wainwright has benchmarked against a number of companies, including firms in the textiles, chemical, and electronics industries. For instance, after studying Milliken & Company, a previous Baldrige award winner, Wainwright implemented an employee suggestion pro- ‘gram that has been very effective. Along with the changes mentioned previously, Wainwright also has changed its culture to make it (continued)80 Part 1 + Understanding Quality Concepts more egalitarian and quality minded. The employees ‘at Wainwright (including the CEO) now all wear the same uniform, eat in the same cafeteria, and park in the same parking lot. Office walls have literally been torn down and replaced with glass, based on the premise that if the managers can watch the frontline employees work, the frontline employees should be able to watch the managers work, too. As a result of these changes, the managers of the company have become coaches and facilitators rather than supervisors and disciplinar- ans. This important change has helped facilitate the teamwork atmosphere that is supportive of high quality and total customer satisfaction. The results of the company’s continuous improve- ‘ment efforts are linked to five strategic indicators: safety, internal customer satisfaction, external customer satis- faction, design quality, and business performance. The status of each of these criteria is tracked by “mission control,” a room set aside to document the company’s Discussion Questions 1. In its pursuit of improved quality, Wainwright emphasized two sets of initiatives: one based on improvements in its manufacturing operations (eg. just-in-time manufacturing, computer-aided design) and the other based on human resource ‘management (e.g., employee empowerment, profit sharing). Why was it necessary for Wainwright to emphasize both of these sets of initiatives? How are they related? efforts. In mission control, each customer's satisfaction is documented with a plaque, a current monthly satis- faction rating, and a red or green flag that indicates the customer's status relative to objectives. ‘As a result of these initiatives, Wainwright has met the challenge. It has not only survived but has also emerged as an industry leader. The company has earned the status of preferred supplier to a growing number of quality-conscious customers and has re- ceived special recognition from General Motors, Ford, and IBM-Rochester. The goal of Six Sigma quality is being pursued. Perhaps most important, in the last decade, overall customer satisfaction has increased from 84% to 95%, and the company’s market share, revenues, and profits are at record levels. Ironically, the company was one of the recipients of the Malcolm Baldrige award, the very award against which the company benchmarked in its early days of quality improvement, 2. What is an egalitarian culture? How does the de- velopment of an egalitarian culture help a company like Wainwright Industries become more quality minded? 3. Although quality is important for every product or service, it may be particularly important for the precision auto parts industry. Do you agree with this statement? Why or why not?