Winning the Baldrige Award may seem to many like a one-time event that
ends with a ceremony at the White House and a little added prestige to the
select companies that win it. But 1991 Baldrige winner Solectron Corp. has
taken the process much further than mere window dressing-they've used the
Baldrige criteria to help drive their ongoing quality process.
Founded in 1977, California-based Solectron is a global supplier of premanufacturing,
manufacturing and postmanufacturing service to original equipment manufacturers
in the electronics industry. They specialize in electronics manufacturing
services, including the production of complex printed circuit boards and
other electronic assemblies for more than 120 customers. Corporate headquarters
are in Milpitas, California, and Solectron's customers include Apple Computer,
Hewlett-Packard, Honeywell, IBM and Sun Microsystems.
Intrigued by the customer-driven results focus of the Baldrige criteria,
the company found them to be a direct fit with their quality philosophy.
Solectron's strategy of forging long-term manufacturing partnerships with
customers has been reinforced by the Baldrige process even before they won
the award.
Current President and CEO Koichi Nishimura learned about the Baldrige criteria
in 1988, and thought that the criteria outlined a good way to run any company.
In early 1989, when Thomas N. Kennedy joined the company as vice president
of quality, Nishimura asked him for his views on the Baldrige criteria.
Kennedy was also impressed. The company decided to adopt the criteria-with
a goal of 100-percent compliance.
"We didn't begin implementing the criteria with the thought of winning
the award," recalls Kennedy. "But we wanted to accelerate the
compliance process by applying and getting the feedback from the Baldrige
examiners and their views on how Solectron could improve."
In September 1989, Solectron's corporate quality group and a panel of managers
completed a Baldrige Award application and submitted it to the Baldrige
Award office. Solectron did not get a site visit in 1989 but used the feedback
report to drive improvement. In 1990, Solectron updated their Baldrige application
and applied again. Once more, Solectron did not get a site visit but used
the feedback report to drive further improvement. In 1991, Solectron again
applied for the award and this time received a site visit and was one of
the three companies to win the Baldrige Award that year.
Constant feedback
While conventional wisdom says that winning the Baldrige comes with a hefty
price tag, Solectron spent less than $20,000 for the Baldrige examiners'
site visit and internal expenses. Was winning the award worth it?
"The whole process was invaluable because of all the feedback we got,"
says Rich Allen, Solectron's director of quality assurance. "It has
really turned around the company."
Each year, Solectron used the feedback from the examiners to identify areas
for improvement, placing more emphasis on such areas as benchmarking and
customer focus. They have consistently used the feedback in their planning
process, becoming more structured and disciplined in their quality process.
Nishimura supports these efforts by having each function generate an action
plan and timetable for making improvements called for in these audit reports.
He monitors progress in this effort through his quarterly site review meetings.
Since winning the Baldrige in 1991, Solectron has grown from one site in
California employing about 2,000 people, to 10 sites around the world employing
nearly 13,000 people. With sales of $2.1 billion in 1995, the company now
occupies more than 2.1 million square feet of manufacturing capacity, which
includes four sites in the United States and three each in Europe and Asia.
"We're a different company now," explains Kennedy. "We've
adopted an internal Baldrige Award process to ensure compliance of all the
new sites to the Baldrige road map. We are currently in the second cycle
of our internal award process."
They've trained the top managers at each location to be Baldrige-like examiners.
Sites submit applications, and Solectron's internal examiner corps does
the scoring, consensus review, site visits and feedback reports for each
other. Three or four managers visit a site and perform the evaluation.
Customers first and foremost
While the Baldrige criteria form the foundation of Solectron's quality system,
specific tools support the company's quest for continuous improvement. They
include the Customer Satisfaction Index, the Quality Improvement Process
and the ISO 9000 certification process. These programs are all designed
to reinforce Solectron's primary objective, which is to satisfy customer
requirements on time with zero defects. Because the company's success depends
on its customers' success, all quality processes link back to the customers,
as stated in the first Solectron Belief, "Customer First."
"We must treat customers with respect and an attitude of service,"
emphasizes Kennedy. "Contract manufacturing is a very people-intensive
process. The processes and tools need to be there, but people going the
extra mile is what it takes to get the job done in difficult times."
To better serve customers, Solectron developed its Customer Satisfaction
Index. Customers are surveyed regularly about their impression of the work
Solectron performs. They grade the company on four factors: quality, delivery,
service and communication. Each grade is assigned a numeric value (A = 100,
A- = 90, B+ = 85, B = 80, B- = 75, C = 0, D = -100) and reported by customer,
by division and by site. Each site surveys all of their customers every
week. The response rate is 85 percent to 95 percent.
"We don't believe in averages," emphasizes Nishimura. "You
are not going to be in business next year if you do. We expect the CSI score
for all of our divisions to be over 90 percent. You can't get many B's."
The company has good reason to be so hard on itself. "We are trying
to emphasize any dissatisfaction the customer may have," explains Kennedy.
"Our objective is to find out what might be bothering a customer before
they get angry and leave. This formal tool allows them to document their
level of dissatisfaction and provide comments on the particular things they
are happy or unhappy with. And this input gets reviewed by management every
week."
In addition, a running quarterly CSI average is calculated for each customer,
by division and by site to track trends. Division management must present
corrective action plans for all unacceptable customer grades (less than
B-) to Solectron's senior management team at the weekly meeting. Most importantly,
the senior managers look for systemic problems and focus on developing systemic
solutions to these problems. The company's overall customer satisfaction
score right now is 91 percent worldwide.
"The CSI is a very effective tool for our customers-it gives them
a direct pipeline to top management," says Kennedy. "And it's
also a good tool for Solectron management to re-emphasize, week after week,
that customer service and customer satisfaction is a key responsibility
for all employees."
Forming the quality structure
For the QIP program, each functional organization at Solectron regularly
undertakes a self-examination and improvement project. A team forms to focus
on a particular aspect of the organization's process. Using tools such as
cause-and-effect diagram analysis, Pareto chart analysis and statistical
quality control measures, the team characterizes the process and examines
alternatives that may improve the efficiency, cost and/or productivity of
the process. Instead of waiting for a process to break down, a team may
choose to examine processes and programs that may be running smoothly.
Solectron's latest challenge is meeting the constant flow of differing customer
needs and schedules. Their customers are in a marketplace fast moving to
mass customization, where a customer may call in an order for 2,000 circuit
boards instead of 1,000 and expect it in the same amount of time. Multiply
that by five customers, and they've got to rapidly shift gears in order
to meet everyone's requirements on time.
"Our challenge is meeting customer requirements as they go through
"real time" change, and, if they are significant changes, we have
to scramble to meet those requirements," says Kennedy. "The big
challenge is to handle a constant mode of increasing and decreasing schedules
on a significant number of the assemblies that are being manufactured here
on a day-in, day-out basis, and get the job done."
That's where the project teams prove most valuable: Their daily meetings
and action items, as well as an ongoing exchange of information and the
regular closed-loop customer feedback process, ensure that customers' needs
are quickly met. Solectron also works with customers' product teams to help
them optimize price, availability and quality for the entire product life
cycle.
While Solectron's suppliers are essentially determined by their customers,
they work closely with suppliers to meet customers' requirements. Solectron
also uses a quality scorecard to rate suppliers on such performance standards
as quality, delivery, service and communication.
Building quality into all functions
From a product-inspection focus in the early 1980s, the company shifted
to a prevention-focused quality approach. In keeping with that approach,
they have emphasized process and continuous improvement in all areas.
"Total quality management to us means measuring and managing quality
in all functions besides the manufacturing function, which had been the
traditional beginnings of our quality program," says Kennedy. "In
the 1950s through the 1970s, we were always focused on customer satisfaction
and the manufacturing part of the operations. But now we are emphasizing
TQM in all operations."
The company has an internal customer satisfaction index whereby the support
organizations ask the manufacturing operations for their level of satisfaction
with the quality of delivery, communication and service. Management asks
several organizations to present their reports every two months.
Solectron also seeks ISO 9000 certification for all manufacturing locations.
Certification and compliance has helped the company drive process standardization
among its divisions and sites around the world.
Baldrige bound-again
In keeping with Solectron's strong Baldrige focus, they will apply for the
Baldrige again in 1997, the first year they qualify to reapply.
"We will apply in 1997 because we want to perpetuate that focus on
Baldrige compliance worldwide," says Kennedy. "Our objective,
the site visit, provides a real evaluation of our systems as opposed to
how you view yourself and write it in an application. The big value is moving
the discipline up a notch-getting everybody 100-percent involved and having
employees see managers implement the quality processes in an even more disciplined
fashion."
In addition to winning the Baldrige, Solectron has received more than 90
quality and service awards from their customers. Also, their California
subsidiary won the first California Governor's Golden State Quality Award
in 1994, their Penang facility won the 1996 Malaysian Quality Management
Excellence Award, and their North Carolina subsidiary won the 1996 North
Carolina Quality Leadership Award. Kennedy says the biggest advantage in
winning such awards is that customers expect Solectron to live up to the
expectations of the awards. It keeps the pressure on Solectron to make as
few mistakes as possible.
While winning the Baldrige probably didn't directly help Solectron win business,
it did give them the reputation of being focused on customer satisfaction
and quality, according to Kennedy. He also thinks that the fact that a contract
manufacturing company won the Baldrige helped the industry as a whole. The
company has been asked why they are applying again-if they lose, what will
their customers think?
"Customers will know that at least we tried and that we are still trying
to improve," says Kennedy. "If we don't make it in 1997, we'll
try again in 1998 and 1999-whatever it takes. It is our objective to continuously
improve, and one way of benchmarking our status is by getting a world-class
assessment like a Baldrige site visit."
Whether they win again or not, Solectron will undoubtedly come away from
the next Baldrige experience a wiser and more well-rounded company.