Granite Rock: A case study in quality
Strategic Value / Side Story
Granite Rock: A case study in quality
The Malcolm Baldrige National Quality Award is given annually for outstanding documented quality in both product and process. In 1992, Granite Rock Company, Watsonville, Calif., won the award. Here is a brief example of how.
Granite Rock Company, a producer of construction materials including aggregates, concrete, asphaltic concrete and road emulsions, as well as being a distributor of brick, stone and concrete block, is expanding the terms of competition to include high quality and speedy service. This from a company that is vying for customers in a commodity industry that typically buys from the lowest-bid supplier.
The strategy is working. Since 1980, the company has increased its market share significantly. Productivity also has increased, with revenue earned per employee rising to about 30 percent above the national industry average.
Most of the improvements were realized since 1985, when Granite Rock started its Total Quality Program. The program stresses satisfying two types of customers: the contractor who normally makes the purchasing decisions and the end customer who ultimately pays for the buildings made with Granite Rock materials.
By emphasizing the hidden costs associated with slow service and substandard construction materials, such as rework and premature deterioration, the company is convincing a growing number of contractors of the value of using their high-quality materials and unmatched service. To spread its quality message, Granite Rock sponsors seminars for contractors, developers, architects and suppliers.
As a result of its investments in computer-controlled processing equipment and widespread use of statistical process control, Granite Rock can assure customers that its materials exceed specifications. Also customers can be confident that the materials will arrive when they need them. Granite Rock's record for delivering concrete on time, a key determinant of customer satisfaction, has risen from less than 70 percent in 1988 to over 95 percent in 2002. That record tops the on-time delivery average of a prominent national company that Granite Rock benchmarked to improve its process.
Nine complementing corporate objectives, distilled from analyses of customers' requirements, are the cornerstone of Granite Rock's quality program. During the annual integrated business and
quality planning process, senior executives systematically evaluate company-gathered data and develop measurable "baseline goals" to help the company advance toward each objective.
Charts for each product line help executives assess Granite Rock's performance relative to competitors on key product and service attributes, ranked according to customer priorities.
After annual improvement targets are set, the executive committee expects branches and divisions to develop their own implementation plans. A variety of cross-functional teams help align improvement efforts across the entire organization foster coordination. Cross-functional team members include managers, salaried professional and technical workers, and hourly union employees. Teams carry out quality improvement projects as well as many day-to-day activities and operations.
In 1987, the company introduced the Individual Professional Development Plan, a voluntary program in which approximately 95 percent of Granite Rock people now participate. At least once a year, workers meet with supervisors to define their job responsibilities, review accomplishments, assess their skills, and set skill- and career-development goals.
Granite Rock encourages all employees to continue learning and sponsors a series of classes and speakers on technical topics. Granite Rock employees average approximately 40 hours of training at an average cost of nearly $2,000 per employee, three times more than the mining-industry average and 13 times more than the construction-industry average.
As part of Granite Rock's effort to reduce process variability and increase product reliability, many employees are trained in statistical process control, root-cause analysis, and other quality-assurance and problem-solving methods. This workforce capability helps the company exploit the advantages afforded by investments in computer-controlled processing equipment.
Granite Rock also uses an annual survey that allows buyers to match up the company with its competitors. Every three to five years, more detailed surveys are conducted. Customer complaints are handled through product/service discrepancy reports that require analysis of the problem and identification of the root cause. Ultimate customer satisfaction is assured through a system where customers can choose not to pay for a product or service that doesn't meet expectations. Dissatisfaction is rare, however. Costs incurred in resolving complaints are equivalent to 0.2 percent of sales, as compared with the industry average of two percent.
Category: Case study