By Tom Wallace

Here, though, I'd like to talk about a different kind of high performance. Our topic isn't a car; it's a company — specifically ABB Industrial Systems Inc. of Columbus, Ohio. Here are their numbers:

• Zero = The company's profitability in 1991. (Actually they had lost money for four consecutive years.)
• Ten = ABB's Columbus plant won Industry Week's coveted award as one of America's "Ten Best Plants" in 1996
• Sixty = The number of months it took to get from zero to 10.

Their accomplishments include increasing revenue per employee by 212 percent, improving inventory turns by 222 percent, cutting escaping defects almost in half, decreasing costs dramatically, and virtually doubling employee satisfaction. On-time deliveries improved from 36 percent in 1991 to 98 percent year-to-date in 1997. Along the way ABB has changed how it measures delivery performance. Instead of patting themselves on the back for achieving 97 percent or 98 percent on time, they look at percentage late. They believe it's far more important to focus on the 2 percent or 3 percent of the cases where the customers did not get their product on time, and to get to the root causes of these late deliveries.

Here are some of the major steps that ABB Industrial Systems took while getting from zero to 10 in under 60 months:

• 1991 — ISO 9001 Metrics
  Design for Manufacturability
• 1992 — MRP
  Mistake Proofing
• 1993 — Just-in-Time
  Supply Management
• 1994/95 — High-Performance Work Systems (teams)
• 1996 — JIT II (supplier personnel on site)
• Escaping Defects Elimination
• The future — Six sigma quality
  Best in class at customer service

Let's double back on the 1994/95 initiative: high-performance work systems. Ken Morris, vice president of manufacturing and supply management and the prime mover for this entire journey, states that "process teams, aligned by customer rather than function, were created. The position of supervisor was eliminated, and teams integrated the roles and responsibilities of the prior managers. At this point, process owners began focusing equally on process teams, customers and suppliers. In addition, to maximizing supplier and customer contact, our concept was to let our customers drive performance."


360-degree review
An intriguing aspect of the high-performance work system is called the 360-degree review. (See Figure 1 for a simplified view of this process.) This takes the peer review approach of many team-based arrangements to a new level. "Rather than a manager conducting a traditional performance review, we have implemented a process where an employee is evaluated by peers, customers, and suppliers," says Morris.

The customers involved in the 360-degree review process include, of course, internal customers — people within the company who receive the output of the individual being reviewed. However, when practical, input from external customers — the real ones, the ones who buy the product — is included in the review process. This is a practical matter with certain customers, because ABB has partnered with a number of them and the working relationships are quite close.

In addition to priding itself on being a good supplier, ABB Industrial Systems also works hard at being a first-rate customer. One way it does this is through its "ABB as a Customer" surveys. This involves periodically querying its key suppliers and asking questions such as: How are we doing? What are we doing that's getting in your way of supplying us more effectively. How could we do things differently that would be better for you? This feedback facilitates operational changes by both parties and furthers the kind of stable, long-term, open relationship that ABB seeks with its "alliance partners" — suppliers who provide high dollar volumes of complex components and materials. Another interesting example of the supply management process at ABB is Just-in-Time II. This approach, pioneered at the Bose Corporation in Massachusetts, calls for supplier representatives to be physically on site at ABB. These supplier reps have access to much of ABB's planning and scheduling data, and are empowered to place orders upon themselves. Their roles include not only keeping ABB supplied with their company's components, but also to work with ABB Engineering on new products, and keep in close contact with ABB's manufacturing teams. There are currently six key suppliers with representatives on site; 10 other suppliers receive ABB's MRP report each week, which shows firm requirements for the next four weeks, and forecasted requirements for the following six months. A project is currently underway to give these suppliers on-line access to the MRP data, enabling them to enter purchase orders for their products.


Lessons learned
Here are several important lessons to be learned from ABB Industrial Systems' experience:

1. Achieving world-class levels of performance needn't take forever. ABB did it in less than five years.
2. The important thing is to get started. The payback starts quickly, and builds. ABB turned profitable several years into their journey and they're now an extremely strong financial performer.
3. The people at ABB Industrial Systems are bright, well educated, and hard working. But they are not supermen and superwomen, and they don't leap tall buildings in a single bound. They're folks just like you and me — raising families, working in their communities, trying to be good citizens and to build a secure future. They've also managed to achieve extraordinary results in their company.

If they can do it, why can't the rest of us? Well, perhaps it takes a certain level of pain — like losing money for four years in a row. It certainly takes an executive torchbearer like Ken Morris. It takes hard work and some long hours. But it most certainly does not take lots of new people. Almost all of the people in almost every company I've ever seen have the intelligence and the (sometimes latent) desire to excel, to play on a winning team. Winning is fun.

Copyright © 2020 by APICS — The Educational Society for Resource Management. All rights reserved.

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