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CASES Case 1-1 FedEx: Managing Quality Day and Night FedEx Homepage: www.fedex.com As darkness falls across America and most businesses weapons that FedEx uses in pursuit of its goals is its are locking up for the evening, one company is gearing total commitment to quality management. up for a long night's work. FedEx, the world leader in the overnight package delivery market, delivers more Quality management at FedEx encompasses all of than 7.6 million packages per business day. Most of us its operations. Although the company is the know FedEx as the overnight delivery company with acknowledged leader in the air freight industry, a white delivery vans, courteous drivers, and the distinc- formal Quality Improvement Process (QIP) plays tive purple-and-orange FedEx logo. But behind what an integral role in all of the company's activities. the casual observer sees is a very complex company At the heart of the QIP program is the philosophy with the capacity to deliver millions of packages to mil that quality must be a part of the way that FedEx does lions of addresses around the globe overnight. Through business, not part of the time, but all of the time. As a out the course of virtually every day and night, FedEx result, themes such as "Do it right the first time." "Make mobilizes its army of 280,000 employees, 80,000 vans the first time you do it the only time anyone has to." and and trucks, and 684 planes to get the job done. "Q = P(quality productivity) are important parts of For FedEx. getting the job done means managing the FedEx culture. To reinforce these themes, the com- quality 24 hours a day, with a watchful eye on customer pany teaches its employees the 1-10-100 rule. Accord expectations. The company's goals are simple: 100% ing to the rule, if a problem is caught and fixed as soon customer satisfaction, 100% on-time deliveries, and as it occurs, it costs a certain amount of time and money 100% accurate information available on every shipment to correct. If a mistake is caught later in a different to every location around the world. Although these department or location, it may cost 10 times that much sound like far-fetched goals, the company goes to great to repair. And if a mistake is caught by a customer, it lengths to try to make them a reality. One of the principal may cost 100 times as much to fix. Chapter I bittering Perspectes de Qualy 23 A number of substantive strategies have been The company also reaches out to its employees in implemented by FedEx to support its quality efforts umber of substantive ways. To do this, the company Quality action teams (QAT) design work processes adopted its People Service Profit (PSP) philosophy, to support new product and service offerings. A set of which articulates the view that when people are placed service quality indicators (SOD) has been established first service and profit follow. An aggressive training to determine the main areas of cours perception program competitive wapes and benefits profit sharing of service. Through careful tracking of these indica bonuses, and a state-of-the-art employee price pro tors, the company generates a weekly summary of cess are all clements of the PSP philosophy, Employee how well it is meeting its customer satisfaction tar recognition also plays an important role in the compa pets. An SQI team works through problems revealed ny quality pursuit For example, each quarter FedEx by the indicators. For example, if problems were division select the best quality success story, which is being created by confusion in FedEx labeling Instruc entered in a company-wide competition Presentations took the team would work on improving the clarity are made by the finalists before the company CEO of the instructions. Some of the company's tactics to executive vice president, and other top managers. The ensure total quality are extraordinary. For example. wward for being a finalist is a gold quality pin for each every night FedEx launches an empty airliner from member of the team and the opportunity to be inter Portland, Oregon, bound for Memphis. The jet fol- viewed on the company's internal television network lows a course that brings it close to several FedExter The quality efforts practiced by FedEx have paid minal airports. The purpose of the jet is to swoop off. The company has achieved a remarkable 99.75 dows and pick up FedEx packages if any of the com- on-time delivery level. The list of awards the company pany's regularly scheduled airplanes is experiencing has won are too sumerous to publish The most mechanical difficulty impressive at the Malcolm Boldrige Award the Along with a focus on its external customers AT&T Top Performer Award, the Quality Carrier of FedEx's appeach to quality also imelves strengthening the Year Award presented by Merck Pharmaceuticals the bonds between its internal customers or employees and the Company of the Year Distinguished Service To reinforce this notion, the company as all its Awand presented by the National Alliance of Bu employees to ask the following three questions when nesses. Will FedEx's pursuit of quality end here! they interface with a coworker Asked if winning the Malcole Baldrige Awardni 1. What do you need for me? fies that FedEx has achieved the ultimate level of qual 2. What do you do with what I give you? ity, CEO Fred Smith said. Receipt of the award is 1. Are there any gaps between what I ghe you and simply car license to practice. Apparently, the quest what you need? for improved quality at FedEx will contine day and night Discussion Questions 1. What is FodEx' common language of quality Is it important for a company to establish a com mon language of quality? If so, why? 2. There are several different perspectives of quality. including the operations perspective, the strategic perspective, the marketing perspective, the financial perspective, the HR penpective, and the woms perspective. Which of these perspectives are being emphasized by FedEx? Why? 3. Is FedEx level of emphasis on quality appropri we? Why or why not? Case 1-2 Granite Rock Company: Achieving Quality through Employees Granite Rock Homepage: www.grantero.com Granite Rock, a Califomia-based mining and contra realting decline in customer satisfaction was inevitar tion company was founded in 1900, but is journey ble and responded to this classement by deciding it toward improved quality did not start until many needed to become more customer focused. At Granite decades later. The managers Granite Rock know that Rock this meant not only tearning more about the 24 Part. Understanding Quality Concepts customer but also providing its employees the training employee, which is more than 10 times the average for and skills necessary to properly implement the compathe mining and construction industries ny's new philosophy An equally important step in quipping its employ. At first this focus on HR management was ees to contribute to the firm's efforts was establishing an emphasized through employee training. As explained atmosphere of trust between management and the rank by CEO Bruce Woolpert, you can't have employees and-file employees. That effort has been pursued in a out telling customers "yes" unless everyone else in the number of ways, and the trust developed throughout the company knows how to follow up on yes. As a company has resulted in the effective implementation of result, an aggressive training program was imple employee empowerment and teamwork. In addition, the mented involving on-the-job training and classroom company has done away with its conventional perfor time for the majority of the firm's employees. A pro- mance appraisal system (feeling that it was ineffective) gram called IPDP (Individual Personal Development and has incorporated performance appraisal into each Plan) was created to help each employee take respon employee's IPDP. As part of this plan, at least once a sibility for his or her own training program. As the year, each employee meets with his or her supervisor to program gained momentum, remarkable things started discuss job responsibilities, review accomplishments. to happen. One employee indicated that he wanted to assess skills, and set skill and career development goals learn to read better. As a result of that request, the Although the IPDP is not mandatory for the company's company initiated a reading program that has helped a unionized workers, overall participation stands at 83% number of Granite Rock's employees improve their Because the IPDP approach to training and appraisal reading skills. As part of the company's effort to prepares employees to assume greater responsibilities roduce process variability and increase product reli- Granite Rock promotes heavily from within ability, many employees were trained in statistical pro- Granite Rock, having won the Malcolm Baldrige cess control root cause analysis, and other Award and one of Fortune magazine's best 100 compa quality-minded competencies. Today, Granite Rock nies to work for in aggressively pursuing its quality in spends up to $1.600 per year for training of each tiatives, with the cooperation of its 700 employees