All Posts Tagged With: "manufacturing"
Benefit-to-Cost Ratio for Baldrige: 820-to-1
A new study of the net social value of the Baldrige Performance Excellence Program concludes that the program “creates great value for the U.S. economy.”
Economists Albert N. Link from the University of North Carolina and John T. Scott from Dartmouth College published their evaluation of 45 Baldrige Award applicants on December 16, 2011. The report is available here (pdf). The Baldrige program asked the 274 organizations that submitted applications from 2007 to 2010 to participate in the study and 45 accepted the invitation. Link and Scott used a counterfactual evaluation method to determine the benefit-to-cost ratio, asking what the private sector would have had to invest to achieve the same level of benefits through the Baldrige program. Benefits were realized in three areas:
- Savings to the applicants in investment costs to achieve the same level of benefits from their performance excellence strategies as they realized from the Baldrige program
- Gains by consumers in greater satisfaction from higher quality products and services
- Gains to the economy from saving scarce resources because the Baldrige Criteria were available
As I understand it, the counterfactual evaluation case made by the study is that organizations that integrate Baldrige increase demand because they offer higher quality products and services and they…
19Jan2012 | Steve George | 0 comments | ContinuedHow Can We Promote Baldrige?
The Baldrige program announced that 69 organizations have applied for the 2011 Malcolm Baldrige National Quality Award. The number is down from last year, primarily because of a significant drop in healthcare applicants (54 in 2010, 40 in 2011). The number of education applicants doubled from 7 to 14 while the number of small business applicants dropped from 7 to 2. A total of five businesses larger than 500 employees applied for the Award in both years; only seven businesses, large and small, applied for the 2011 Award.
As the chart shows, the dearth of business applicants is a long-term trend. The Baldrige program can survive by appealing to healthcare and government agencies, both of which are under pressure to get their acts together, but its roots are in business. For the first 13 years of the Baldrige program, only businesses could apply for and win the Award. It wasn’t until 2001 that three educational institutions won it and the first healthcare winner received the Award in 2002.
While a few businesses, especially at the state level, show interest in the Baldrige model, it is almost invisible on the national business stage.
How do we change that? How can we make Baldrige relevant…
15Jun2011 | Steve George | 4 comments | Continued6 Reasons to Revive US Manufacturing
The impetus for the Baldrige program in the late 1980s was improving manufacturing in the United States. The original criteria reflected a manufacturing mindset that has evolved to fit all types of organizations, but it wasn’t until the third year of the Baldrige Award that a service company, FedEx, won the Award.
Despite its origin in manufacturing, the Award has little appeal for manufacturers today. Only a few manufacturers apply for the Baldrige Award each year while 54 healthcare organizations submitted applications in 2010. Last year, only three manufacturers, among 83 total applicants, applied for the Award, although some of the seven small business applicants may have been manufacturers.
Reviving Baldrige in manufacturing can help revive manufacturing in the U.S. Why is manufacturing so important? Jon Rynn lists six reasons it is central to the economy in an article in new deal 2.0:
- Manufacturing has been the path to development. “From the rise of England in the 19th century, to the rise of the U.S., Germany, Japan and the USSR in the 20th, to the newly industrializing countries like Korea, Taiwan, and now China, manufacturing has been the key to prosperity.”
- Manufacturing is the foundation of global “Great Power.” “About 80% of the world’s production of factory…
Another Warning Sign for U.S. Manufacturing
Two articles over the weekend in the local Star Tribune offered insights into a systems perspective of manufacturing in the United States. It’s common knowledge that manufacturing jobs, which tend to be well-paying jobs, have been dwindling because of productivity gains and outsourcing, shrinking from nearly 20 million jobs in 1979 to less than 12 million in 2010. While the Federal Reserve estimated that the value of U.S. manufacturing output was about $3.7 trillion in 2008, the U.S. trade deficit has grown dramatically since then to $500 billion in 2010.
A clue as to the impact of this trend can be found in a PwC study released today (“Study: U.S. med-tech industry losing edge,” Janet Moore, Star Tribune, January 17, 2011). The study showed that:
- China, India, and Brazil will make the strongest gains in developing next-generation, lifesaving products over the next decade.
- The U.S. position will erode in five areas that support med-tech innovation: (1) availability of financial incentives; (2) havens for innovation such as universities; (3) a supportive regulatory system; (4) a pool of patients demanding the best treatments; and (5) a supportive investment community.
“The key finding is that the U.S. is declining when compared with other countries across the globe. And we’re…
18Jan2011 | Steve George | 1 comment | ContinuedManaging Complexity with Baldrige
IDC Manufacturing Insights conducted a worldwide study of more than 700 small and medium-sized manufacturers across four sectors in eight countries. The white paper summarizing the study findings is available from IDC Manufacturing Insights here.
The study found that “for European and North American manufacturers, achieving operational excellence has become more complex” and “the pressure to reduce costs and improve productivity as ever top priorities.”
The concern about complexity is addressed in the newest version of the Baldrige Criteria. Some Baldrige experts have taken issue with the complexity of the Criteria. The 2011-2012 Criteria booklet states that “the Baldrige Criteria are complex because achieving organizational sustainability in a global economy is complex…While the Criteria require complex thinking, they also provide the path to clear identification of an organization’s relevant issues and strategic advantages, followed by identification of key data, and then analyses for decision making. Handling complexity requires agility and the ability to execute with a sufficient degree of simplicity.”
This defense of complexity and the issues organizations must address aligns with the findings of the IDC Manufacturing Insights study: The survey showed that discrete manufacturers “know they need skilled people resources, agile and adaptable processes, and available and relevant information.” As the…
11Jan2011 | Steve George | 0 comments | ContinuedMEDRAD: Win with Your People
“We fight with our products, but we win with our people.”
The quote from Jeff Owoc, senior VP of Operations for MEDRAD, captures a competitive advantage of this two-time Baldrige Award winner, which is featured in “Continuous Improvement Sets Stage for Success” (Adrienne Selko, IndustryWeek, December 22, 2010).
MEDRAD sandwiched its Baldrige Award victories in 2003 and 2010 around recognition as an IW Best Plant in 2007. I worked with MEDRAD on the applications for these awards and saw firsthand how the alignment of its people with its goals and strategies along with its culture of involvement and empowerment drive continuous improvement and market leadership.
MEDRAD manufactures medical devices for diagnosing and treating diseases including fluid injection systems for radiology and cardiology and equipment for visualization procedures such as magnetic resonance imaging and computed tomography. When I started working with the company it was independent but is now part of Bayer HealthCare, yet it has maintained its commitment to continuous improvement throughout.
It is the market leader in the U.S. and Europe for most of its products. In many cases, it has more than twice the market share of its leading competitor. Its revenues have grown from $120 million in 1997 to $625 million in…
22Dec2010 | Steve George | 0 comments | ContinuedThe New Pro-Business Mentality
There are a lot of politicians hitting the airwaves with their “pro-business” mantra that usually includes reducing regulations, eliminating the minimum wage, and cutting corporate taxes. But, as Seth Godin so eloquently points out, what may have been pro-business in the past has little to do with what is best for business in the 21st century. (“What does ‘pro-business’ mean?” Seth Godin’s Blog, October 13, 2010)
That old-school pro-business mindset is more like pro-factory, but factories in the U.S. business world represent a fraction of all the business that’s being done, especially since so many factory jobs have been sent overseas. “It turns out that factory thinking is part of a race to the bottom,” writes Godin, “to be the cheapest, the easiest place to pollute, the workforce that will take what it can get.”
Godin offers a new set of pro-business strategies that sound like a much better fit for business today:
- “Investing in training the workforce to solve interesting problems so they can work at just about any job.
- Maintaining infrastructure, safety, and civil rights so we can create a community where talented people and the entrepreneurs who hire them (two groups that can live wherever they choose) would choose to live there.
- Rewarding and…
