Reference no: EM132074643

Ames Rubber Corporation: Realizing Multiple Benefits through Improved Quality

Ames Rubber, headquartered in Hamburg, New Jersey, produces rubber rollers for office machines and specialized parts for the assembly of front-wheel-drive vehicles. The company was founded in 1949, has annual sales of $45 million to $50 million, and employs 445 people at three New Jersey sites. At first glance, Ames Rubber appears to be a typical small- to medium-sized manufacturing firm. However, the company has some truly extraordinary aspects that make it deserving of a second look, particularly in the area of quality. Unlike other companies that have used quality as part of a turnaround strategy, Ames Rubber has been successful throughout its corporate life. During its early history, the company flourished by providing component parts to the high-growth copier and printer industries. In the early 1980s, the global environment changed, and even though the company had achieved benchmark status in the copier industry, its customers were demanding products that met more stringent quality requirements at a lower cost. This challenge was exacerbated by the emergence of increased competition from foreign competitors. It was clear to the managers at Ames that "business as usual" was no longer sufficient to satisfy their customers' needs. The company conducted an internal review of its operations. At this point, the company was unsure of how to improve its product quality in a cost effective manner. The review indicated that Ames was expending considerable effort to meet the quality, cost, and delivery requirements of its customers with no coherent quality plan in place to guide its efforts or anticipate customer requirements. As a result of this analysis, Ames decided to focus on the effectiveness of its manufacturing operations and quality efforts. Remembering that Xerox had launched a program called Leadership through Quality, Ames' CEO Joe Marvel put his entire management team through Xerox's supplier training program. Using Xerox as its benchmark, Ames announced that it was embarking on a new quality program entitled Excellence through Quality. The program was designed to achieve one common goal-the satisfaction of both internal and external customers. Since it was introduced, the Excellence through Quality program has been effectively embraced by the entire Ames Rubber organization. The program involved the following key initiatives:

• Involvement groups. Everyone at Ames is a member of an involvement group, which meets a minimum of once a month. Involvement groups use team processes to improve product quality.
• Cost of quality and reject tracking. Reject tracking and cost of quality collection systems were established.
• Yield improvement teams. The company isolates the processes causing the greatest problems ("Pareto thinking").
• Strategy review/operations review. Strategy review and operations review meetings were established to review short- and long-term progress toward quality objectives.
• Extensive training. The company provides its employees extensive training in such areas as statistical quality control, communication skills, leadership skills, and quality management.

Cultural changes also were made to facilitate the Excellence through Quality program. All Ames's employees are called "teammates" to promote an egalitarian philosophy. Safety committees, made up of rank and-file employees, were set up to ensure safety throughout the company's facilities. To demonstrate his personal commitment to satisfying internal and external customers, CEO Marvel redesigned the company's organization chart, with external customers on the top, the firm's employees in the middle, and himself at the bottom. Ames Rubber has found that the benefits of its Excellence through Quality program have transcended its original objectives. At a minimum, the company has become more disciplined, knows its customers and employees better, and produces a better product than it has at any time in its history. In addition, according to the company's application summary for the Malcolm Baldrige award, an emphasis on quality has produced the following benefits:

• Cultural change is happening, and it is being measured.
• Employee involvement groups are flourishing.
• Morale is at an all-time high because of involvement, improved communication, and improved recognition.
• A system for total quality and beyond is in place.
• The company has reorganized and decentralized.
• Prioritization of effort has become routine.
• Rejected products have been reduced by more than 50%.
• Financial results have improved.

The legacy of Ames Rubber Corporation and its experience with quality is twofold. First, regardless of how successful a company is, environmental change may result in pressures to improve quality. This includes a strong emphasis on employees as a conduit for change. As a result, maintaining a quality-minded culture is a prudent business practice. Second, there are multiple potential benefits to remaining attentive to quality issues that transcend improved operations management.

Questions

1. In developing its Excellence through Quality program, Ames initially benchmarked against Xerox. Is benchmarking against another company's quality program a good idea? What are the potential hazards and benefits involved?

2. Discuss the manner in which Ames implemented its Excellence through Quality program. Did the company place its emphasis in the right areas? Explain your answer.

3. Discuss the benefits that Ames Rubber achieved from its quality program. Are these benefits more encompassing than you would have expected? Why or why not?