| by Laura Smith
While the overall frozen baked goods industry has remained relatively flat since 1999, Bama’s sales have increased by 47 percent. Total revenue has grown from $120 million in 1999 to more than $200 million in 2004.
Bama uses short-term action plans and a balanced scorecard to assess progress toward three goals: employee satisfaction, growth opportunities and corporate citizenship. These are posted throughout the facility to allow employees to see how their units perform against the goals.
Bama’s new product ideas are implemented at a rate nearly 10 times the industry average.
As a result of several customer service initiatives, overall customer satisfaction for Bama’s national accounts increased from nearly 75 percent in 2001 to nearly 100 percent in 2004.
The Bama Co. of Tulsa, Oklahoma, is a family-owned manufacturer of frozen, ready-to-use food products for the quick-service food market. Its main products are hand-held pies, biscuits and pizza crusts. The company has experienced substantial growth in recent years, with total revenue growing from $120 million in 1999 to more than $200 million in 2004--a time period in which sales for the overall frozen baked goods industry remained flat. The company uses financial incentives to encourage employees to meet production goals and since 2001 has paid average employee bonuses of $5,000 per year. Implementing Six Sigma has saved Bama $17.3 million since 2002, increased efficiency on the frozen-dough production line from 70 percent to 84 percent and decreased changeover time from three hours to one hour. Here, Bama Black Belt Mike Frihart discusses the journey to the company’s 2004 Baldrige win.
How much did Bama know about the Baldrige Award when it started the Baldrige process?
Frihart: About all we knew about the process was that a group of people would review the application. We looked at it as an economical way to hire a group of business experts to take a look at our organization.
You use a balanced scorecard and short-term action plans to assess progress. How well do these approaches mesh with the Baldrige criteria?
Frihart: We think they mesh very well. Our short-term areas of focus/action plans (we call them "centers of gravity" or COGs) are aligned to our long-term objectives. In a recent cycle of refinement of our strategic planning process, we defined two types of COGs--tactical, which are short term, and strategic, which are longer term.
Our balanced scorecard measures are directly aligned with our five strategic outcomes: people, learning and innovation, continuous improvement, customer focus and value-added growth. The top-level scorecard (we call them "Paula’s Top Five" because they’re CEO Paula Marshall-Chapman’s key indicators of success) mirror these measures.
How important were your feedback reports?
Frihart: They were important in two ways. First, the feedback on our strengths told us that we were on the right track and needed to stay focused on good execution. They gave us validation that our thinking was on target. Second, the feedback on our opportunities for improvement (OFI) helped us prioritize areas of future focus. Our OFI were not all the same priority; they helped us identify the gaping holes as well as the cracks in the mortar. They also helped us foster the support that leads to buy-in for improvement projects that were already identified by internal groups. Once we plugged the gaping holes, it became a matter of identifying where to focus our efforts for cycles of refinement that would benefit the organization as a whole.
How did the Baldrige evaluation change your processes?
Frihart: If your processes don’t improve as a result of going through the Baldrige process, you may be too close to the situation to look at it objectively. One of the primary purposes of the process is to identify what you’re doing well and to identify areas that can be improved to help your organization be more effective. I am positive that every process we have at Bama has been improved in the past three years. Continuous improvement is part of our culture. Specific process changes include more comprehensive measurement of customer satisfaction, in-restaurant evaluation of product quality, a much more thorough approach to managing new product development, a complete change in our strategic planning methodology, more effective on-the-job training, and improvements in market analysis, the hiring process and measurement of or--ganizational performance. Our first pass at a balanced scorecard followed closely on the heels of Baldrige assessments in 1991-1992 and has been refined many times since then.
Was it difficult to get your management team and/or rank-and-file employees excited about the Baldrige process?
Frihart: It’s hard to get people excited about something they don’t understand. As our leaders became more knowledgeable about the process and the criteria, they began to realize its value. The turning point for us was having Paula Marshall-Chapman say, "We’re going to do this, and we’re going to keep doing it because it will help us be successful!"
The second most exciting phone call we’ve received in several years was from Harry Hertz, the Baldrige National Quality program director, telling us we were receiving a site visit. That got a bunch of people excited--and the rest of us really nervous. But the phone call from the Secretary of Commerce after the site visit, informing us that we had been named a 2004 Baldrige recipient, had us whooping, hollering and high-fiving.
You also have implemented Six Sigma; do you think it’s possible for an organization to "overmanage" itself?
Frihart: I don’t see the relationship between Six Sigma and "overmanaging." Six Sigma’s focus is on improving customer satisfaction as well as organizational performance in a project-oriented environment. With three major manufacturing facilities and many production lines, we have plenty of opportunities for improving both product and process performance. In the last three years, our facilities have reduced the defect rates of our products by 54-81 percent. Six Sigma has also improved many of our support processes--not at the 2-5 percent level, but at the 20-70 percent level. Prior to Six Sigma, we did not see these kinds of results because we lacked a systematic approach to making things better at breakthrough levels of improvement.
Your growth in the past five years has been incredible. Where do you see the company next year? In five years?
Frihart: Continued growth and performance improvement are certainties. Our future picture statement--our term for our long-range view of what we want to become--is to be a billion-dollar company by 2010. Bama’s approach is to pursue value-added growth with both current and new customers. We are constantly seeking new business opportunities, but we operate in a highly competitive environment. We try to differentiate ourselves from the competition by doing things better.
What advice would you give to a company just starting the Baldrige process?
Frihart: First, conduct a self-assessment. The Baldrige Web site has some useful tools. Many of the state quality award programs provide similar resources. Some state programs provide another form of assistance with tools such as questionnaires that are reviewed by an experienced examiner or a small examiner team. Second, read previous Baldrige recipients’ applications from the Baldrige Web site. Decide which of their ideas or approaches make sense for your organization. Third, attend the Quest for Excellence. You will have the opportunity to see and hear what other companies have done. If you can’t go to the Quest, attend a one-day regional Baldrige conference. If you can’t make one of those, attend a recipient’s sharing day event in the sector that makes the most sense to you. Fourth, send at least two of your key leaders through the examiner training process in a state quality award program. They will come away with a much better understanding of the criteria, have the opportunity to learn from experienced examiners and be able to provide the leadership-driven support that is essential for organizational improvement.
Have Bama’s goals changed because of its Baldrige win?
Frihart: Only one component of our future picture has changed: One of our goals was to be good enough to receive the Baldrige Award by 2010. Paula Marshall-Chapman has recently clarified her vision for us--by 2010 we are to receive our second Baldrige Award.
Laura Smith is Quality Digest’s assistant editor.