TQM 1: Revered by gurus, bestowed with honours, Milliken leads the way on the quality crusade. Simon Caulkin on a company that aims to delight.
Over the past couple of years, a steadily growing stream of corporate bigwigs from all over Europe have been beating a path to an unpicturesque cul-de-sac on the outskirts of Wigan. It's an unlikely place of pilgrimage. There's nothing flashy about the low, brick-built factory they have come to see. It makes contract carpeting. But, alongside the Pier and the peerless rugby football team, the Beech Hill site is Wigan's third, least-known and greatest glory: the headquarters of US industrial textile maker Milliken's European division.
To hyperbolise a bit, Milliken, winner of the prestige-laden European Quality Award for 1993, is currently judged to be the best company in Europe. Putting the European honour alongside the Baldrige Award, which it won in 1989, makes the company as a whole one of the top companies in the world. As well as garnering it approving references in the management textbooks (Milliken is a favourite of gurus such as Tom Peters and Richard Schonberger), these honours give Milliken a weighty responsibility. It has become one of the most influential standard-bearers for the worldwide quality movement.
One of the key concepts of the '80s, quality is at a crossroads, at least in the UK. There are undoubted successes but not enough to make a real difference to overall performance. 'People haven't made the link between quality, manufacturing and wealth creation,' warns Clive Jeanes, Milliken Europe's managing director and a 30-year company veteran. In particular, quality has yet to make real headway among small and medium-sized British companies. Meanwhile, desperate managers nail the term 'Total Quality' on any old improvement programme and abandon it three months later claiming it doesn't work. And the last thing people struggling to keep their heads above water want to hear about is the smug perfection of the company that gets it all right.
Take heart and visit Wigan. Milliken is not a perfect company - 'Whatever you do, don't give the impression that we think we know everything,' implores Jeanes. 'Some companies have been working at quality for 30 years. To think we could catch up in a decade would be lunacy.' Like every company embarking on the quality voyage, Milliken finds that the further it advances, the longer the road seems. Cresting the top of one problem reveals the foothills of the next. Milliken allows itself to be called a good company. But the real difference with others is not so much superior performance at any one moment - although that is measurable and great - as the corporate dynamic: unlike most companies, Milliken spends a large part of its day systematically trying to get better.
Just what is quality Milliken-style? Winning awards is one measure and important as a form of recognition, but 'If we mess up an order, it doesn't mean a thing to the customer,' notes Jeanes. Milliken's eight European plants wouldn't claim 100% performance over the range of service attributes they measure, although two factories have gone years without missing a delivery, and quality as measured by customer satisfaction surveys comes out at over 90%. Progress along these dimensions is steady and quantifiable. Trickier to calibrate is the aim to go beyond satisfaction and delight the customer, which means anticipating needs rather than just meeting them. This is the area the company is now concentrating on, using new planning methods to deploy better customer responsiveness right the way through the organisation.
Finally, Milliken is adamant that the real secret of quality is that it is a means as much as an end: the most likely route, as Jeanes says, 'to achieve improved results, deliver total customer satisfaction or even better, customer delight, thus ensuring not just survival, but sustainable profitable growth'. As a private company Milliken does not publish financials. But the European Quality Award, learning from Baldrige, rightly includes business results as one of its criteria. And the company itself is in no doubt that the pursuit of excellence is the reason that it outscores its competitors not only in customer satisfaction surveys but also in market share and in comparison of financial results. In short, quality pays.
For companies which haven't begun the journey, the road that Milliken took might appear daunting. But they should take comfort as well as inspiration from history. At the time Milliken embraced quality in 1981, it was a solid, 117-year-old company with a good reputation for quality but a deeply traditional outlook (see table above). 'It was a manufacturing-led company that pretty much sold what it made. It grew because it was good at manufacturing,' says Jeanes.
However, when chairman Roger Milliken made a fact-finding trip to Japan that year he was shaken to find several Japanese competitors turning out better products on ancient machines. Back in the US, he summoned Philip ('quality is free') Crosby to tell him why. In the resulting first phase of the quality journey, Milliken's attention was concentrated squarely on the quality of the product. Using Crosby's concept of the cost of non-conformance, Milliken halved its cost of quality in three years. The non-conformance index has since been beaten down to just 10% of the 1982 figure - to dramatic effect. According to Jeanes, those cost savings have more than paid for all the subsequent investment in quality, in education and training, in new process and all other areas of cost - leaving aside all the later savings and the profit improvements attributable to advanced use of quality.
In the early '80s, this progress seemed revolutionary. It took the messianic Tom Peters to point out that all the measurements Milliken was taking were internal - fine, but what did the customer think? Milliken's formal customer surveys, begun in 1985, revealed the truth of Peters' underlying message. It doesn't matter what you think; it doesn't matter what the statistics prove. The customer's perception is the only reality, and if you can't measure that, you can't satisfy the need (let alone delight). What Peters excitedly called Milliken's Revolution II (in honour of which he dedicated Thriving on Chaos to Roger Milliken) and Jeanes more sedately refers to as the second stage of the journey, was characterised by a new focus on the customer, triggering company-wide reorganisation as well as a wholesale change in attitudes. The surveys were enlightening, the results not always expected. For example, Milliken considered itself pretty hot at delivery. But customers told it that it was meeting only 77% of its own promises. Stung, the company pushed the figure into the 90s in three months - at which point began the really hard work of whittling down the last few per cent. The point was made.
In terms of customer priorities, the key discovery was that price was never, ever the most important consideration. It looms larger in recession than in boom, but product quality and on-time delivery are always in first and second place. The implication, Milliken learned, was this: if (but only if) you can beat the competition on all the other attributes, and particularly on quality and delivery, then there is leeway on price. Price is the one aspect in which Milliken ranks no more than equal with its competitors. This, of course, offers a path for differentiation. The Beech Hill carpet plant, for instance, began a guaranteed seven-day delivery service for up to 1,000 sq. ft of carpet - at a premium price. This service is still unmatched by the competition; but so large has the uptake been that Milliken is now experimenting with a 48-hour service at a yet bigger premium.
Again, guaranteed quality and delivery, often achieved through joint action teams, are increasingly netting 100% of the business of large customers running just-in-time production systems. 'Price rarely comes into the conversation,' confirms Jeanes. 'If we can give them the quality, delivery and innovation that they require, that more than makes up for an extra per cent or two on the short-term price.' By the late '80s, Milliken's firm base in increasing product quality, service and customer knowledge was the basis for Phase III of the quality journey - the period of techniques and skills. By interrogating other quality experts - Deming, Juran, Schonberger, Ishikawa, Imai, Suzaki, Taguchi and others - Milliken began learning the statistical and problem-solving techniques which knit together to make advanced, systematic quality.
As Jeanes concedes, none of these techniques - just-in-time manufacturing, statistical process control, quality function deployment (for new-product development), Deming's PDCA (plan-do-check-act) cycle, flow-charting, Pareto and fishbone analysis, to name but some - is original. But the fact that the company felt able to pick and choose from often competing quality offerings speaks volumes for its confidence in its ability to set its own terms. This is a crucial but often neglected point about quality. To endure, it must be the company's own model, assimilated and adapted to its own circumstances: Milliken quality, not Crosby's or Deming's. To emphasise this, Milliken deliberately uses its own managers rather than outside trainers to teach and interpret the new thinking as it cascades down from the top.
As a test of what it had learned so far, Milliken celebrated the winning of the Baldrige award in 1989 by delivering itself a fresh challenge: 10-4 goals, or a tenfold improvement over four years to the end of 1993 along eight dimensions: cost of non-conformance, quality, cycle and throughput time, customer lead time, customer responsiveness, total customer satisfaction and innovation. Stretch goals, the company reasoned, were more likely to stimulate breakthrough thinking than incremental improvements. Not all the targets were met, but many were - and in every case Milliken claims to have made progress that it would not have done otherwise.
Taking stock of 10-4, Milliken presently sees itself in a fourth stage of quality development. Significantly, only now does it presume to use the term 'total quality deployment'. Characteristically, the new initiative is the result of an epochal visit to Japan by 24 senior managers in 1991. During their tour, they came to realise that they needed a way of unifying the quality efforts that they were making throughout the company. 'We hadn't thought of quality driving strategy and financial planning and business development,' notes Jeanes. 'But that's what the Japanese companies were doing. The things we were proud of, they'd been routinely doing for 20 or 25 years.' The trip was a catalyst. Milliken for the first time understood that its whole management system must be driven by customer-focused total quality. So now, in methodical, Japanese-style fashion, it divides the idea of total quality management into seven component parts - quality, cost, and delivery (the top trio), followed by innovation, safety, morale and environment - each of which is pursued using a number of management systems, bound together by continuing education and quality assurance.
In practice, deploying total quality is not simple, spurring a wholesale review of how the company plans. In the past, admits Mike Sharkey, business manager for carpets, Milliken had been a relatively insular company, resolutely driven by manufacturing. Since the Japanese visit, it has been endeavouring to bring a true marketing input into the business through 'cornerstone' planning and - much more radical - deploying it right down through the organisation through 'Hoshin' planning.
Cornerstone (ie, factoring in the key influences on markets) has already improved the business plan. But Hoshin in the long term could have a more galvanic effect. Little known outside Japan, Hoshin planning aims to disaggregate business objectives down to individual level and in so doing identify the crucial areas where breakthroughs are needed to progress. Hoshin requires hard work, and Milliken is still learning the techniques. But already the judgement is that 'it gives us a weapon to capture information and react more quickly, keeping the business on course,' according to Sharkey. One obvious benefit: everyone including product and sales associates is enlisted in the plan. A less expected one, says Sharkey: 'People set themselves much more stretching targets than we would ever have done for them.' In an important sense, Hoshin closes a circle.
One of the most revealing ways of looking at Milliken's trajectory is as the liberation and mobilisation (empowerment) of the people who work in it. This, too, is not altruistic, although there are plenty who would argue that it has an important value of its own. Milliken's transformation from a traditional hierarchy in which managers managed and employees did what they were told is inseparable from the larger quality story. There are many striking measures of the distance Milliken has travelled in expanding the limits of human resource management. For example:
- Quality does not belong to managers. Prominent in Milliken plants are notices indicating that any associate can, and indeed must, stop the production line in cases of quality difficulties. For a production-line worker in a normal company, stopping the line would be a sacking offence.
- OFIs. The European contribution rate in Milliken's suggestion scheme, Opportunities for Improvement, is over 20,000 annually: 25 per person per year, 85% of which are implemented. OFIs are not huge improvements bought for money; they are countless small suggestions born out of a habit, now ingrained, of assuming that improvement is natural. Here is Helen Cheers, tele-marketing associate: 'We don't spend all our lives thinking about quality, because it is a way of life. It doesn't seem a big deal. Where you really notice the difference is when you visit another company, see something not quite right and instinctively look around for an OFI form. And you're astonished when they don't have them.'
- Education and training. Spending on education and training has trebled since 1983 - one of the few Milliken investments that does not have to demonstrate speedy financial payback. All management and, increasingly, other associates receive a minimum of 40 hours a year in the classroom. Production and other associates are encouraged to become multi-skilled. Every recruit does a Dale Carnegie course in presentation and speaking skills; junior associates regularly present at conferences and conduct factory tours. More generally, human resources are strictly the province of line management in each of the businesses to develop. Corporate HR is minimal.
- Home-grown talent. Milliken is not a whiz-kid company. Promotion is from within and recruitment local, the only exceptions being some cases of very highly specialised skills. 'No one in this company is stupid,' says Jeanes. 'Some people may not be good at passing exams, but everyone, with education, can contribute to at least seven out of 10 of our management systems (the exceptions being chiefly the new planning methods). We don't say: "We'll teach you statistics." We sell education by saying: "We'll show you how to do your job better." Everyone can and does contribute.'
- Paying for quality. Milliken long ago abandoned piece rates and crude production incentives. 'If you're looking for quality you'd better not reward quantity,' observes Jeanes. Production associates are paid for their accumulated skills, managers according to the long-term development of their career.
- Self-management. Junior management is becoming thin on the ground at Milliken. Initially in administration and now in production, it is steadily moving towards a norm of self-managed teams. Teams are already responsible for their own quality, maintenance and other targets - soon they will recruit and train their own replacements.
- Recognition. Recognition is one of the most important 'soft' elements of Milliken's systems, the mortar which cements the building blocks in place. Everywhere in the company's plants, noticeboards prominently display performance-related charts, graphs and tables, the company's statements on quality, safety and the environment, and also achievements of the day, week and month. Recognition, too, is part of the quality way of life.
This, then, is the company that won the European Quality Award in 1993 - and is now contemplating the next stage in the quality Odyssey. 'What happens beyond excellence - when it is just the entry ticket to the competition?' muses Jeanes. He believes that the next frontiers may be safety and the environment, both of which suit the preventive quality approach. Further than that, he sees Hoshin planning 'yielding glimpses of what customers need before they know it'. Intelligent anticipation of the marketplace in turn will demand much shorter new-product development cycles: a flexible learning organisation of a responsiveness still out of reach even for a Milliken.
In the meantime, there is still much to be done in the here and now. As examples, Jeanes points to dramatic results emerging from current efforts to understand and slash high costs of complexity in its businesses. Inventories cut by 50% at WS and P, the West Country maker of billiard-table and tennis-ball fabrics which became part of Milliken in 1990; 'huge savings' from analysing customer requirements and working with suppliers to streamline purchasing in contract carpeting and dust control; again, working with tyre-manufacturer customers in the industrial business to co-ordinate production processes, with significant waste and cost savings. The self-assessment and visits from the inspectors for the European Quality Award have also, says Jeanes, pointed to many other potential areas for improvement, some of them in order-taking and administration. 'Perhaps,' he says, 'we are 30% or 40% along the way to where we want to be.' It would be wrong to recount the Milliken story without underlining some of its lessons, blindingly clear though they are. First: quality works - when, that is, it is carefully and consistently used as a means to the end of customer satisfaction and long-term profitable survival. It works across cultures, in Belgium, France and Denmark as much as in the UK (the one exception, interestingly, being Germany, where engineer-dominated companies are still doubting the need for it); in existing operations, in new ventures such as contract carpeting and companies brought into the fold such as WS and P.
Second: it makes nonsense of the idea that developed countries have no future in advanced manufacturing. Quality defines advanced manufacturing, not technology, and any company can embrace this kind of quality. However, third: if Milliken's experience helps to demystify quality, it also underscores that there are no short cuts to achieving it. Milliken, after all, has been working for 13 years to attain its present state, and redefining excellence has no end. Warns Jeanes: 'Customers may be delighted with something initially. But six months later they take it for granted and then they demand it. Delight is a treadmill you can't get off.' Surveying Milliken's decade-long affair with quality leaves one final thought. Quality is essentially an optimistic management and world view. Pragmatic in operation, it proves that progress is both possible and desirable. Treating people as assets - the only real assets - creates new resources and demonstrates yet again that worthwhile work and the opportunity for self-improvement are better motivators than any amount of attitudinal or salarial manipulation. It proves that hard work need not be drudgery but the opportunity to learn. It situates business in the longer term. It's somehow fitting that such a statement of fundamental managerial values should be made in Wigan. Quality in the sense that Milliken embodies it is a means of systematically obtaining unlimited results from the resources to hand. You couldn't get a better definition of management back-to-basics than that.
MAPS FOR A QUALITY VOYAGE
Old model New model
Objective Growth (sales, earnings, ROI) Total customer
satisfaction to achieve
Production Long runs, economies of scale Short runs, small lots,
Production aims Low cost, high efficiency Quick response
Inventory Just-in-case, buffer Just-in-time, zero
People Liability to be reduced where Asset to be invested in;
possible specialised for multi-skilled for
repetitive tasks; 'do what flexible tasks; 'do what
you're told'; recruit from you think'; home grown
System v. people People made to fit system, System made to fit
sub-optimisation people, optimising
Quality v. cost Trade-off; one or the other Highest quality equals
Quality Inspection, rework, allowances, Prevention, right first
management warranty time, no inspectiontime,
Structure Vertical, 'functional silos' Process, cross-
Management Hierarchical, short spans of Flat, large spans of
control, turf conscious control, 'empowering'
Suppliers Adversaries; many to play-off Long-term partners; few
against each other
Customers Short-term exploitative Long-term relationships;
relationships joint action teams
Change Resists and puts off change 'Divine discontent';
THE MAKE-UP OF MILLIKEN
PARENT: Milliken and Company, founded in 1864, headquartered in Spartanburg, US
EUROPE: First entered 1964. European division: four businesses - industrials (industrial textiles and cords for tyres and industrial uses), dust control and hygiene products, high-end contract carpets, and Winterbotham Strachan and Playne (WS and P - wool fabrics for covering tennis balls and billiards and pool tables, and casino uses)
PLANTS: Eight - Bury, Wigan and Stroud, UK; Gent, Belgium; Roisel and St Julien, France; Morke, Denmark
EMPLOYEES ('ASSOCIATES'): 1,100
SALES: 'Around $200 million'
QUALITY POLICY: 'Milliken and Co is dedicated to the continuous improvement of all products and services through the total involvement of all associates. All associates are committed to the development and strengthening of partnerships with our external and internal customers and suppliers. We will continuously strive to provide innovative better and better quality products and services to enhance our customers' continued long-term profitable growth by understanding and exceeding their requirements and anticipating their future expectations'
METHODS USED: Milliken Management System, beginning with Total Quality (quality, cost, delivery, innovation, safety, morale and environment) and having as its objective sustainable profitable growth through total customer satisfaction
CURRENT PRIORITIES: Improving systems through cornerstone and Hoshin planning, cross-functional management, war on waste, reducing costs of complexity, understanding cost and profit per order
SUMMARY OF ACHIEVEMENT: 90% reduction in costs of non-conformance; delivery performance ranging up to 99.9%; outstanding safety record; increasing associate involvement, translating into profitable growth in sales and market share.
European Quality Award 1993.