S&P 500 Beats Baldrige
Index for the First Time
In the nine years that the
National Institute of Standards and Technology has been
running a comparative study between its Baldrige Index and
the Standard & Poor’s 500, Baldrige has always
come out on top—that is, until this year. For the
first time, the Baldrige Index has underperformed the S&P
The Baldrige Index is a fictitious stock fund made up
of publicly traded U.S. companies that received the Malcolm
Baldrige National Quality Award between 1992 and 2001. In
the past, the Baldrige Index has beaten the S&P 500
by as much as 6-to-1.
“This past year has been particularly tough for
technology stocks, which are a significant component of
the Baldrige portfolio,” says Harry Hertz, director
of NIST’s Baldrige National Quality Program.
In the latest study, NIST hypothetically invested $1,000
in each of the two whole company winners—Eastman Chemical
Co. (1993 winner) and Solectron Corp. (1991 and 1997 winner).
Another $1,000 was invested in the parent companies of 19
subsidiary winners. The same amount was placed in the S&P
500. The investments were tracked from the first business
day of the month following the announcement of Baldrige
Award recipients through Dec. 2, 2002. The two whole company
award winners underperformed the S&P 500 by about -0.71-to-1,
with a -34.19-percent return compared to a 48.02-percent
return for the S&P 500. The group of 19 subsidiary winners
underperformed the S&P 500 by about -0.53-to-1, with
a -23.74-percent return compared to a 45.16-percent return
for the S&P 500.
The publicly traded companies included in the study are
Eastman Chemical Co., Solectron Corp., 3M Dental Products
Division, Armstrong Building Products Operations, AT&T
Consumer Communication Services, AT&T Network Systems
Transmission Systems Business Unit, AT&T Universal Card
Services, Boeing Airlift and Tanker Programs, Corning Telecommunications
Products Division, Dana Commercial Credit Corp., Dana Spicer
Driveshaft Division, GTE Directories Corp., Merrill Lynch
Credit Corp., Solar Turbines Inc., STMicroelectronics Inc.—Region
Americas, Texas Instruments Inc. Defense Systems & Electronics
Group, The Ritz-Carlton Hotel Co. and Xerox Business Services.
For details, visit baldrige.nist.gov/Stock_Studies.htm.
Consumers Have a Say in Standards Development
Although the people who create
international guidelines have technical knowledge of the
standards creation process, the consumer is just as well-equipped
to evaluate the merit of those doctrines. Representatives
involved in standards creation can now access a basic reference
tool that complements these approaches and gathers all the
facts in one place.
The International Organization for Standardization’s
new brochure “The consumer and standards—Guidance
and principles for consumer participation in standards development,”
provides guidance to those representing consumer interests
in ISO’s standardization work.
The brochure makes several recommendations to ISO and
IEC members in the context of consumer representation. It
states that national-level members should:
Support ISO and IEC initiatives aimed at encouraging consumer
representation in standardization
Orchestrate consumer participation in relevant policy matters
and in the planning of standards work programs
Invite consumers to participate in all technical committees
working on standards projects of interest to them
Encourage the active participation of consumers in national
delegations to technical committees that are developing
consumer-relevant international standards
Guide consumer representatives on standards procedures and
provide them with technical briefings
Communicate the results of their work to the public
Help find solutions to finance consumer representation,
Keep in contact with the public to relay consumer opinion
Study the way other consumer committees work to improve
their own national structures, where appropriate
Coordinate all activities arising from these recommendations
within the same country
“The new brochure is a valuable aid for any consumer
representative who wishes to navigate within the standardization
system of ISO and IEC to influence the definition of requirements
and thereby help make products and services that are suited
to consumer needs,” says Dana Kissinger-Matray, secretary
of COPOLCO and ISO central secretariat.
The full text of the document is available at www.iso.org.
Minnesota Church’s Faith in Quality
When an organization sets out
to improve quality, its goals are often to increase profit,
reduce product defects or streamline its manufacturing processes.
The latest winner of the 2002 Minnesota State Quality Award
had a different goal in mind: to spread the gospel.
Bethel Lutheran Church of Rochester is the first of its
kind to receive the Minnesota State Quality Award, typically
given to businesses for showing exceptional quality and
performance excellence. In fact, it’s believed to
be the first church in the United States to win such an
Bethel’s quality journey began a couple of years
ago when Chris Zabel, the church’s administrator and
an evaluator with the Minnesota Council for Quality, observed
the benefits that quality processes can add to an organization.
He bounced the idea off of Bethel’s governing body,
which was fully supportive of the idea. Funding for the
initiative—about $6,500—came as a grant from
Thrivent Financial Services for Lutherans. Zabel prepared
the written assessment, and months later, the church got
a site visit. That was in January. In the latter part of
April, the awards were announced.
The main goal of applying for the Minnesota State Quality
Award, says Zabel, was to learn. “We were looking
for any information they could give us on how to improve
our processes,” he says. “It was beneficial
to have an outside organization tell us where our strengths
and opportunities for improvements were.”
The improvements Bethel is reaping from the infusion of
quality are many. “Worship attendance has gone up,”
notes Zabel. “Financial support has gone up; we’re
able to give more to our local, national and global benevolences.
There’s a higher level of satisfaction from our congregation
Zabel says that Bethel may apply for the Malcolm Baldrige
National Quality Award, given the criteria could be tweaked
to better suit the needs of nonprofit organizations. Bethel
has even had offers from organizations willing to underwrite
the entire process to see Bethel go for the Baldrige Award.
Bethel’s current goal is to create a network of
churches interested in quality processes that can share
information via the Internet. When a church calls Bethel
for advice, Zabel shares its written assessment and asks
that they keep in touch and occasionally report on the status
of their quality journey. “We hope to serve as encouragement
for other churches to be on board and incorporate quality
principles into their ministry,” says Zabel. “We’re
more than willing to share what we’ve learned.”
Bethel Lutheran Church of Rochester is online at www.bethellutheran.com.
Customer Satisfaction Could Lead to More
Despite the shaky U.S. economy,
the latest American Customer Satisfaction Index indicates
that consumers are happy with several transportation, communications,
utilities and service companies.
During the first quarter of 2003, the ACSI tracked the
scores of parcel services, the U.S. Postal Service, airlines,
telecommunications companies, broadcasting organizations,
publishing/ newspapers, utilities, hotels, hospitals and
motion picture companies. Following a drop at the end of
last year, the ACSI climbed 1.2 percent in the first quarter
and now stands at 73.8 (out of 100 points).
“To the extent that customer satisfaction is the
real standard for economic growth, the first-quarter results
bode well for the economy,” says Claes Fornell, director
of the University of Michigan Business School’s National
Quality Research Center, which compiles and analyzes the
ACSI data. “The satisfied customer is more likely
to come back for more, buy more frequently and be less sensitive
to price. Actions and attitudes like that, in aggregate,
In fact, Fornell predicts that, barring any unforeseen
events, consumer spending should increase by as much as
3.8 percent in the second quarter, coming on the heels of
last quarter’s improvement in the ACSI.
Except for the U.S. Postal Service (whose score declined
1.4 points), none of the 11 industries measured by the ACSI
during the first quarter showed a decline in customer satisfaction
with the quality of their products and services. Customer
satisfaction rose for airlines, telecommunications, hotels,
hospitals, broadcasting, newspapers and motion pictures,
and remained unchanged for energy utilities, parcel delivery
and cable television.
Moreover, two-thirds of the companies whose ACSI scores
were updated this time either improved or remained the same.
Even several firms that have faced financial difficulties,
accounting issues or serious customer service problems showed
dramatic improvement in customer satisfaction.
For the second straight year, customer satisfaction with
airlines has improved and the industry’s ACSI score
of 67 is now at its highest mark since 1997. Once again,
Southwest Airlines posted the best airline company score
Top scorers in other categories included AT&T Corp.
(long-distance telecommunication), BellSouth Corp. (local
telecommunication), DirecTV Inc. (cable/satellite TV), KeySpan
(gas service), The Southern Co. (electric service), PPL
Corp. (gas and electric service) and Hyatt Corp. (hotels).
The publishing category received a score of 72.8, hospitals
earned 73 points and motion pictures topped out at 71.
For comparative scores and more of Fornell’s commentary,
Teamwork Pays Off for Award-Winning Companies
Significant contributions to
bottom-line savings and overall company quality have merited
two national companies top honors in the Association for
Quality and Participation’s National Team Excellence
The Gold Award went to Fidelity Investments’ Fidelity
Wide Processing Incoming Customer Correspondence Process
Improvement Team of Hebron, Kentucky. The team was charged
with improving service delivery to customers while increasing
production efficiencies and reducing costs. By focusing
on the end-to-end transaction process and eliminating waste
and workarounds in its transactions, the team reduced compensation
cost. Overall, service delivery increased by 31 percent,
productivity increased 33 percent, the cost per transaction
was reduced by 32 percent, and overall quality was improved
The Boeing Co. received second and third place awards,
with its Ramp Team taking home the Silver Award and its
Shim Cell Team garnering the Bronze Award.
Boeing’s Ramp Team tackled quality, schedule and
cost problems associated with its C-17 Program’s flight
ramp. The C-17 aircraft is used in operations such as hurricane
relief, peacekeeping missions and the United States’
fight against terrorism under the banner of Operation Enduring
Responsible for installing the final pieces of equipment
on aircraft built for the Air Force, the team examined its
workflow and initiated improvement projects in five key
areas: safety, people, processes, management and facilities.
The projects resulted in benchmark-level metric improvements,
numerous quality awards and 60 additional airplane orders.
The Shim Cell Team was created to automate shims on the
C-17 program. A shim cell is an automated manufacturing
system utilizing a numerically controlled vertical milling
machine coupled with a Web-based computer network. The system
allows production floor personnel to specify and order precision
metallic fillers to be used during the process of assembling
The cross-functional team comprised members from various
departments within Boeing, including production, planning,
quality, tooling, design and information systems. The group
successfully launched an automated shim process, which reduced
cycle time and cost.
“These teams and companies represented have demonstrated
the best qualities of American business,” says Michael
Glowacki, president of AQP. “They have an energetic
determination to serve the customer and enhance stakeholder
value through insightful analysis and creative process improvements.”
Since 1985, 692 teams have participated in the competition.
To learn more, visit www.aqp.org.
Countdown to ISO 9001:2000 Transition
Technologies Inc. has begun preliminary operations in Shanghai,
China. The company is currently organizing a sales representative
office and expects its direct sales, service, support and
marketing departments to be operational by September.
“We have more than 70 product installations in some
of the largest automotive and aerospace joint venture companies
operating in China,” says Oscar Meza, director of
Asia/Pacific sales. The Chinese office is an addition to
FARO’s six other international sales centers in Japan,
the United Kingdom, Spain, France, Italy and its European
headquarters in Stuttgart, Germany. Learn more at www.faro.com.
Australia International has acquired Excel Partnership Inc.
by way of its wholly owned subsidiary, SAI Global. The acquisition
of the Connecticut-based quality management, training and
consulting company includes a boost in revenues of $16 million.
“This acquisition forms a crucial part of our expansion
plans in North America, which we will continue to grow in
the coming months,” notes Ross Wraight, group chief
executive of the SAI Group.
SAI has recently acquired KPMG’s management systems
registration businesses in Mexico, Australia and New Zealand
and established of a subsidiary, SAI Global Inc., in New
Jersey. To learn more, visit www.sai-global.com.
Gaging Systems has opened a new metrology laboratory to
provide contract programming, calibration, gages and other
related inspection services for parts manufacturers.
“In the last five years, Valenite has greatly expanded
its metrology capabilities,” says Kevin Graham, operations
manager for Valenite Gaging Systems. “We have decided
to expand the availability of our services to other parts
and equipment manufacturers in the Detroit metropolitan
area—where these kinds of metrology services are needed.”
The new metrology lab, currently equipped with two Zeiss
CMMs, is slated for accreditation to ISO/IEC 17025. For
more information about Valenite Gaging Systems, visit www.valenite.com.
plc and Metrologic Group have signed a development partnership
agreement to create a comprehensive solution for the coordinate
measuring machine scanning retrofit market. The partnership
combines Renishaw’s UCC universal CMM scanning controller
and scanning probe hardware with Metrologic’s Metrolog
II software. Existing Metrologic sales channels and a network
of Renishaw-certified retrofit companies will carry the
new retrofit packages, which are ready to be installed on
any CMM brand. For more information, visit www.metrologic.fr
America Corp. has established an integrated measuring solutions
group for manufacturers that need customized measurement
solutions in combination with fixturing/material-handling
products and processes.
“We’ve seen a paradigm shift take place in
manufacturing,” says product manager Dennis Traynor.
“We’ve seen the evolution of the manufacturing
process and the migration of quality control into that process
to the point that they’re becoming an integrated,
simultaneous activity.” For more information visit
Mitutoyo online at www.mitutoyo.com.
Zeiss Industrial Measuring Technology now offers a remote
support service for its coordinate measuring machine users.
Known as TeleService, the new Zeiss online offering provides
real-time collaboration between customers and Zeiss service
TeleService allows users to establish a live, secure Internet
link between their CMM systems and Carl Zeiss support centers
worldwide. Via this link, Zeiss service engineers can perform
instant system checks and obtain detailed system information.
For more information, visit www.zeiss.de.
Power and Associates has completed its inaugural Hospital
Service Performance Study as part of the Distinguished Hospital
Program established between J.D. Power and Associates and
Health Grades Inc., which evaluates patient satisfaction
by analyzing service-related issues. It includes a Hospital
Service Performance Index based on dignity and respect,
speed and efficiency, comfort, information and communication,
and emotional support.
In order for a hospital to be recognized by J.D. Power
and Associates for commitment to service excellence, it
must score in the top 20th percentile and exceed the national
benchmark of patient satisfaction. Learn more at www.jdpa.com.