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News Digest

This Month in News Digest


S&P 500 Beats Baldrige Index for the First Time


Consumers Have a Say in Standards Development


Minnesota Church’s Faith in Quality Rewarded


Countdown to ISO 9001:2000 Transition


Customer Satisfaction Could Lead to More Consumer Spending


Teamwork Pays Off for Award-Winning Companies


Industry News

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 500.

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, when required

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 Rewarded

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 award.

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 and staff.”

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 Consumer Spending

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, boost spending.”

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 (75).

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, visit www.theacsi.org.

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 Competition.

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 52 percent.

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 Freedom.

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 aircraft structures.

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


FARO Begins Operations in China

FARO 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.

Standards Australia Acquires Excel Partnership

Standards 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.

Valenite Opens New Laboratory

Valenite 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.

Renishaw and Metrologic Join Forces

Renishaw 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 or www.renishaw.com.

Mitutoyo Creates Integrated Measuring Solutions Group

Mitutoyo 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.

Carl Zeiss Offers Online Remote Support Service

Carl 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 engineers.

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.

J.D. Power and Associates Delves into Hospital Performance

J.D. 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.