Continuous Improvement Case Study
R. P. (Joe) Racine, Gopher Bearing Co., Inc.
Several years ago, we realized that there was no consistency in how
we were handling basic processes. Everybody did something
different; we had very few processes that were written down. We
made money, but as we grew, the errors were killing us.
So [company president and CEO] Suzette [Racine] and I realized we
needed to do something.
We identified a handful of processes that were done five different
ways by five different people. We had a meeting with each
department: Office staff, inside sales, outside sales, receiving, and so
on.
We started each meeting by documenting what we were doing and then
had roundtable discussions to decide what we thought was the correct
way. We went back and forth, adding steps we’d missed,
taking out unnecessary steps, making improvements. We did that for
every major process.
And here’s the scary part: Once we started digging, we found
twenty to twenty-five problems we didn’t know existed.
We were very fortunate to have other PTDA members who had very
successful quality programs and were willing to share their experiences
with us. We looked at their quality manuals and realized
everything we were missing. We didn’t even have a mission
statement.
Since then, we’ve created a quality manual; everyone has their
own copy and the master copy sits on my desk. If there’s a
question on how to do anything, anyone can refer to it. It’s
so complete, I literally could take a person off the street and put him
in front of one of our computer terminals and the procedure would walk
him through how to process an order, from booting up all the way to
entering the order.
We have three branches and 30 employees and all of them work off the
same manual. It’s not something that sits on a shelf and
gathers dust; it truly is a critical part of how we do
business.
At first it was difficult because everyone was so used to doing it
their own way.
Having to refer to the manual slowed them down a bit. Maybe it
used to take them a minute to enter an order; when we introduced the new
process, it might take two or three minutes since they had to look up
the correct way to do it. But within a month or so, it took less
than a minute and everyone was doing it the same—they
couldn’t even remember how they used to do it.
Many people seem to think of quality systems as a big company thing,
but we’re small in the scheme of things and we’ve seen
tremendous returns. We have experienced savings on total operating
costs of over 5 percent and reduced our internal error rate by over 90
percent.
We’ve dramatically reduced errors by adding in checks and
balances to eliminate problems in receiving, phone orders, you name
it. Now, 99 percent of our returns are due to customer errors, not
ours.
Anything that’s processed through the computer goes back to the
originator and checked. The originator sends it to the warehouse,
the warehouse people pull the order. Someone else checks the
stockman’s work to make sure he pulled the right stuff. The
packer checks it as it goes into the box. In the end, there are
four checks before it leaves the building and each one is
documented.
Before, one person would grab the paperwork, pack the order and ship
it without even looking at it. They assumed everything was fine,
but our return rate was through the roof. When you think that
every return costs about twice what it costs to bill it, fewer returns
add up to big savings.
The checks and balances for materials we receive from the
manufacturer are as stringent as those for product going out to
customers. We’ve got a much better handle on purchasing and
receiving.
We used to have situations where the computer would show we had five
of something in inventory but there were only two on the shelf.
Now, we have a process that allows us to track every item from check-in
at receiving until it goes back out the door.
Incoming product is put in the correct spot in the warehouse every
time. It’s double checked before it goes into
inventory. People are human and errors still happen, but now when
something was put away in the wrong spot, we can find the missing piece
in minutes and correct the error.
Quality systems have to be part of a commitment to continuous
improvement. When we first started, we’d meet with every
department every 30 days; now that we’ve got an established
process, it’s every 60 to 90 days. We get together and go
through the relevant parts of the manual page by page, asking if
there’s anything we could or should change. Some processes
have been revised six, seven or eight times.
Our quality manual also is an invaluable resource for training new
hires, helping us get new people up to speed quickly. We
don’t have to do as much training. There are always
questions and exceptions, but for the standard, the manual lays out
exactly what to do.
Our customers win too. Most of our larger customers do some
type of report on our performance on a regular basis, and we’re
consistently in the 99th percent quartile. We’re very
pleased with that, and I credit it to our quality processes.
Bottom Line
A commitment to quality and to continuous improvement has benefited
our company by ensuring consistency, streamlining processes and reducing
errors. Whether you’re a $1 million niche player or a $100
million behemoth, these systems really pay off in increased profits.
Joe Racine is COO of Gopher Bearing Co., Inc., an independent
distributor headquartered in Saint Paul, Minn. Contact him at
bearingjoe@gopherbearing.com.
MORE
Continuous Improvement Overview
Continuous Improvement System Elements
Developing a Quality Manual
Additional Resources
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