Strategic Partnerships Philosophy & Practice
We hear a lot today about Japanese inward investment in Europe but in 1909 The Dunlop Company set up a rubber factory in Japan which in 1913 produced the first Dunlop branded types and has continued to do so ever since. In 1963 the Sumitomo Group injected capital into the Japanese operation and Dunlop Japan became Sumitomo Rubber Industries.
In 1985 Sumitomo Rubber Industries took over what was left of the European tyre operations of the near bankrupt Dunlop Tyre Company, retained the right to use the name Dunlop on its products but had to change our name to SP Tyres UK Limited and that of the German operation to SP Reifenwerke. The French, German and UK companies are wholly owned subsidiaries of Sumitomo
Rubber Europe BV based in Brussels, each company having replacement market responsibility for specific countries. The three companies support most major OEMs; SP Tyres is responsible for OEMS in Scandinavia, The Netherlands and the UK. SP UK manufactures Car, Truck, Motorcycle and Motorsport Tyres on these three manufacturing sites in Birmingham, Washington, and Manchester. We have six distribution centers.
Our equity is Motorway Tyres and we have selling companies in Ireland and Scandinavia. In addition we own part of Nokia Tyres in Finland and Avon Tyres in the UK.
Three quarters of our sales are in the UK and our tyre operation has 2600 employees.
In an increasingly competitive marketplace all OEMs and their suppliers have one common aim: SURVIVAL. As excellent levels of quality and vehicle reliability are becoming the norm, what features will differentiate one company's producers from another? I believe these are - Time to market - Service - Price
and it is how these factors are addressed that will determine whether or nor survival is achieved.
In short, in order to survive, OEMs needs to be on the path towards becoming world class companies which are characterized by having
- A motivated, multiskilled workforce
- Manufacturing flexibility
- High degree of responsiveness and above a
- Commitment to Total Quality
However, OEMs cannot become world class operations unless they deal with suppliers who share the same objectives and hence the change in the way inn which some OEMs are now beginning to assess their suppliers
We have seen therefore a move away from the traditional almost adversarial customer supplier relationship where the customer or end user is not part of the equation, to a more enlightened partnership approach where by working together both supplier and
OEMs focus on the needs and expectations of the end user - the final customer.
In short OEMs will only develop the partnership approach with those suppliers who are willing and able to match their own aspirations in regard to, for example, development time, cost, and quality.
The challenge for SP Tyres therefore was how to set about introducing a fundamental change to the way in which we operated and set off down the path of becoming a world class enterprise.
In early 1988 it became obvious that customer needs and expectations were beginning to change and change rapidly.
SP Tyres Approach
We needed a catalyst for change to meet these new challenges and we chose to adopt the philosophy of Total Quality as a kind of strategic focus that we might begin to understand how we could:
- Improve teamwork
- Improve communication
- Cascade training
- Promote ownership
- Develop our employees potential
- Improve relationships with both our customers and our suppliers.
The key elements of Total Quality are:
and the relationship between them.
We therefore set up a series of teams to develop strategies for managing quality (including training in understanding the concept of TQ and in problem solving)
- For monitoring our performance
- For understanding, measuring, and improving relationships with customers, employees and suppliers and for reflecting these changes in our business plan.
This approach was, I suppose at the macro level. By early 1990 it became apparent that in three key areas
- developing improved teamwork,
- development of employees
- and the ownership issue
we were not moving as fast as we felt we should and so a new initiative was sought to bring the TQ approach to a micro level.
We examined two possible approaches:
That which is results-focused, which is cost driven and spasmodic; and that which is people-focused, which is process driven and can develop into a way of life. Looking at the cost driven/results focused option the
Advantages are that the approach is:
- It is highly visible
- It gets quick results
- And it fits the Management By Objective style
Disadvantages are that:
- The results are not sustainable
- It is seen as a management fad where the company benefits but the workers can be alienated and
- It is seen as separate from the normal; routine
- It also attracts a macho management style
Turning to the process driven/people focused approach we identified the following advantages: Our experience showed that using this approach results were sustainable because the process changes, and improvement becomes a way of life. Involvement promotes ownership and the whole process becomes self generating in a non-threatening environment. The disadvantages are: Clearly this approach takes longer and results are therefore less immediately visible - as a consequence it does create management opposition because of the lack of hard objectives. However, we decided to adopt the People focused/process driven route and to use Kaizen - continuous improvement - as the focus.
We structured ourselves accordingly to create this focus on Kaizen. The board is the Project Management Team. Steering committees exist in all areas of the business and trained co-ordinators are the catalyst for change giving help and support, where required.
This responsibility is in addition to their normal job duties. Kaizen generates process oriented thinking since processes must be improved before one gets improved results. Kaizen is people oriented and harnesses their knowledge and commitment. Kaizen promotes continuous improvement for improvement's sake and is both internal; and external customer oriented.
The use of Kaizen has to date been reasonably successful with currently over 250 teams operating throughout the business. About 40% of the total workforce is currently directly involved in improvement activities, for which we pay nothing. The frame work in which Kaizen operates consists of several key elements Emphasis is placed on reducing costs at the design stage We train people to think process - to flow chart what they do and challenge it in order to identify the non value added elements of the process. That way we achieve ownership of the process and begin to examine the customer supply chain. Wherever possible we use a multi-functional approach to spread involvement and bring out latent expertise. Use of Kaizen has helped us accelerate the process of continuous improvement, through teamwork; develop our employees and promote ownership. Our next step was to understand how to become more customer focused - I'm talking here specifically about the external customer.
Starting from the premise that Customers measure quality against their expectations not our specifications we determined a list of the elements necessary to begin to achieve customer satisfaction.
- Relationships must be based on factual evidence
- Standards need to be clearly defined and capable of being objectively measured
- A need for qualitative indicators
- A need to anticipate changing customer needs and expectations
- Voice of the customer must be matched by that of the process
Next we formed multifunctional teams to address each of these needs and then for some of our OE customers we set up Account management Teams
Teams are multifunctional and in the Nissan case we don't just look at our relationship with Nissan Motors UK but also with NETC, Nissan Europe sand Nissan Motor GB. One advantage of such a mix of functions is that the idea that customers are the responsibility only of the sales functions is superceded by an understanding that everyone has a part to play in achieving customer satisfaction.
Finally we are currently restructuring our organization to reflect the need for greater customer focus. My responsibilities now include managing the process of striving for increased customer satisfaction.
The functional structure hampers process improvement and indeed can actively discourage it. The process cuts across the functions of the business and whilst we manage the functions reasonably well, up to now we have not really managed the process where it interfaces with the various functions.
This approach is not easy but if successful will ensure that the process of supply will more readily meet the customer's expectations and will highlight those areas of waste which in any company is reckoned to be about 20% of turnover. RESULTS - Increased turnover - Improved quality - Higher market share - Improved product range - Better productivity - Less waste - Motivated workforce - and PROFIT Prior to 1985 we were losing in excess of 20 million Pounds Sterling P.A. Despite the problems of the UK economy last year we achieved a best to date profit.
More specifically our waste level - I'm talking about production waste - ran last year at 42% of the 1984 level and we are on line to reduce that to 30% this year.
After plateauing between 1987 and 1989 - a big improvement coincides with the introduction of Kaizen.
Our level of training has grown significantly. Over 2700 employees will receive formal training in 1993 and the number of those involved in further education courses taken externally is growing. Almost all of our internal training is carried out by our own employees, not by outsiders or by the training department.
Turnover has increased by almost 60% since 1984 As a measure of our improved quality the level of service returns from the marketplace last year had reduced to 38% of its 1984 level. A further substantial reduction is forecast for this year.
What we recognized is that we needed to to back to basics and restate the obvious.
When we deal in generalities - we are not likely to succeed
When we deal in specifics - we are not likely to fail
When we measure - performance improves
When we measure, report, discuss and involve people and give ownership - the rate of improvement accelerates because there is understanding and commitment.
This year we will apply for accreditation to BS5750 Part 1 and to ISO9001 - a beneficial side effect of which is to compel us to write down the process.
We have already started to set up qualitative indicators to measure our performance against customer's expectations. We already bench,mark intergroup and are now beginning to look outside for best practice benchmarks, and in the future we shall use as a guide, some elements of the various criteria against which European and American quality awards are made, to improve our performance. Towards
- Exceeding customer expectations
- Becoming a world class operator and
- Towards being a truly Total Quality Company
FINALLY We are 5 years into trying to establish company-wide quality improvement.
It's hard work, we still have cynics, we still have unbelievers, we still don't get nearly enough right first time - as a result macho management still exists in some areas but we are making considerable progress
There is no short cut, there never will be when you are attempting such a fundamental mind set change It's a never ending process but we are convinced there is no alternative if we are to achieve extraordinary customer satisfaction and survive.
Authors : Bob Hampson - Nissan Europe, Chris Cartwright - Dunlop Tyres