This article is reprinted with permission from the July 2007 issue of ExecDigital.

At age 160, the New England Confectionery Co. is the oldest multiline candy company in the United States and one of the newest. Four years ago, the popular candy manufacturer embraced lean manufacturing practices, relocated its antiquated facilities, consolidated its operations, and re-emerged as a state-of-the-art production facility that is now a showroom for ultramodern processing perfection.

It was a move that turned out to be one sweet deal.

“We have a lot more capability and more capacity,” says Bill Leva, vice president of operations at NECCO. “We also have better working conditions, better work flow, less product handling, and our cycle times to the customer are better.”

In short, everything about the move paid off in spades, Leva says.

The move and the lessons that the company has learned since also provide a textbook example of how a long-standing manufacturer can make what’s old new again, and do so without sacrificing quality, slowing sales, or missing a day on the production floor.

Numerous news stories this past month have focused on concerns about the quality and safety of certain Chinese exports. In this opinion piece, Paul Midler discusses “quality fade” in China, which he defines as “the deliberate and secretive habit of widening profit margins through a reduction in the quality of materials.”

Recent media reports detailing quality problems with Chinese-made exports—pet food tainted with prohibited chemicals, toys covered with lead paint, and tires that fall apart at high speed—have understandably alarmed the American public and resulted in a number of international product recalls. But supply-chain professionals not directly affected by these recalls remain unusually calm. “Everything will be all right,” said one U.S. importer on a buying mission to China. “As the country continues to develop, the quality of its products will naturally rise.”

Story update 11/1/2010: We had the incorrect author shown for this story. The author is Bipin Roy.

 

Welcome to the information technology world of governance boards, compliance councils, Sarbanes Oxley, and audit committees that continually invent stringent rules and regulations to make the daily job of an IT manager harder than ever before. It’s scary to visualize all these new regulatory bodies chiming in to see whether you’re doing the right thing!

What is good governance?

Good governance is the ability of an organization to steer itself into the future and is influenced by complex relationships among all its stakeholders. A governance model can only be as successful as the level at which its stakeholders allow themselves to be governed.

Before the IT industry matured, the rules of the game were very different. Compared to those times, the current scenario looks like overkill. Now a software-development manager may think, “Come on! Let’s just do our jobs and get out of here. Why should I bother about all these councils and rules trying to ensure that my job is done correctly? This is my job! What does a corporate scandal somewhere have to do with my project and my team? Give me a break!”

We recently lost two great American authors, Kurt Vonnegut and David Halberstam. I liked them because they told the truth. At least their truth agreed with my truth, and it seems like the truth of a great many other people.

I first became aware of Kurt Vonnegut in my late teens, a time when I seriously began wondering what was happening to the “God is love” world I believed in during my earlier years. Vonnegut seemed to be asking the same kinds of questions I was asking, like what are we doing here, why do we treat each other so badly, and why does this God I grew up with permit so much pain and suffering? His answers frequently didn’t help much, except to know that I wasn’t the only one struggling with these issues. Maybe that’s one of the reasons his critics were frequently as loud as his admirers. It was years later that I found what I most cherish him for:

For nearly 20 years, the Baldrige Criteria for Performance Excellence have proven themselves time and again to be a path to exceptional organizational performance. Used in more than 70 countries around the world, the seven categories of the criteria are often seen as essential for excellence.

What’s so brilliant about the criteria is that they can have an immediate effect on an organization. Once you do a self-assessment and organizational profile, you know exactly what to change and improve, and that points you toward a range of methods and tools that may be applicable. It’s different for everyone. Every organization will find and follow its own path. As a living, changing document that may adapt to each organization, the criteria will endure.

While the categories have evolved over the years, how they’re viewed and the relationships among them have changed little.

A few years ago, I had the good fortune of doing some consulting with B&C Specialty Products in Hopeulikit, Georgia. B&C does light manufacturing, primarily plastic molding and assembly, and they also distribute imported products produced by companies in the Far East. They have about 150 employees and are the biggest employer by far in Hopeulikit.

B&C was a perfect place to learn about managing and quality. Every day presented a new lesson. Usually the lessons were hard-learned, and those are the ones that really stick with you. B&C was gracious enough to allow me to interview their personnel about things that came up during my time there. Here is an interesting lesson: Engage top management. It accurately depicts the pitfalls of embarking on a quality journey without the full engagement of top management. The scenario is described by the people who actually lived it.

Quality and customer focus have always been topmost strategic weapons in the arsenal of successful corporations, which nurture strategic initiatives like a gardener looks after a garden. It’s quite an imaginative thought to see the resemblance of the deployment of a quality system to the blossoming of a flower.

Each petal of this flower must be cared for and nurtured to ensure that the blooming flower gives you all the beauty of which it is capable. The first and the last petals are about culture building and the softer aspects of any change initiative. The third, fourth, and fifth petals are about the quality of the leaders, especially those heading such an initiative. The second, sixth, and seventh petals are about the overall structure, texture, and color of this initiative. As the flower blooms, these petals give us several benefits.

I recently got a call from the owner of a local manufacturing company asking my advice on whether to implement SAP.  This is a single-site, $5 million operation with one nice, big, contiguous manufacturing floor, making rather uncomplicated widgets that have a raw material lead time of a couple days and a manufacturing cycle time of a couple of hours.  The next sound he heard was the bam-bam-bam of my head banging against the wall.He obviously hadn’t read my post on the False God of the Almighty Algorithm or he could’ve guessed my opinion.

Of course, SAP is not designed for companies of that size, and the cheapest implementation I’ve heard of is in the $500,000 range.  The same can be said for almost all enterprise resource planning (ERP) systems.  Some form of system may be needed for large multisite or complex operations, but they’re often not appropriate for smaller companies, and they’re almost always overly relied upon at larger ones.

Customer relationship management (CRM) usually refers to sales activities, and CRM software is commonly purchased, and occasionally used, to track potential customers, existing customers and sales activities.

“Contract manufacturing is unquestionably a relationship business. CRM must manage the relationship bringing maximum value to both parties; CRM is and has been key to successful long-term partnerships. Customers rely on their contract manufacturer for the core of their business, and quality validation, corroboration, open communications and the supplier-customer relationship are critical for success,” says Larry Caretsky of Commence Corp.

According to ISO 9001, manufacturing companies seeking a product definition or answers to service and marketing questions must get such information from their customers. The ISO standard requires companies to establish processes for identifying customer requirements and communicating those requirements throughout their organization, as well as processes for tracking and analyzing customer satisfaction. The standard has direct application for CRM, particularly for contract manufacturers.

Customer relationship management (CRM) usually refers to sales activities, and CRM software is commonly purchased, and occasionally used, to track potential customers, existing customers and sales activities.

“Contract manufacturing is unquestionably a relationship business. CRM must manage the relationship bringing maximum value to both parties; CRM is and has been key to successful long-term partnerships. Customers rely on their contract manufacturer for the core of their business, and quality validation, corroboration, open communications and the supplier-customer relationship are critical for success,” says Larry Caretsky of Commence Corp.

According to ISO 9001, manufacturing companies seeking a product definition or answers to service and marketing questions must get such information from their customers. The ISO standard requires companies to establish processes for identifying customer requirements and communicating those requirements throughout their organization, as well as processes for tracking and analyzing customer satisfaction. The standard has direct application for CRM, particularly for contract manufacturers.