+ 46 of 481 CASES Case 1-1 FedEx: Managing Quality Day and Night FedEx Homepage: www.fedex.com As darkness falls across America and most businesses does business, not part of the time, but all the time. are locking up for the evening, one company is gearing As a result, themes such as "Do it right the first time," up for a long night's work. FedEx, the world leader in "Make the first time you do it the only time anyone has the overnight package delivery market, delivers more to," and "Q = P" (quality = productivity) are important than 7.6 million packages per business day. Most of us parts of the FedEx culture. To reinforce these themes, know FedEx as the overnight delivery company with the company teaches its employees the 1-10-100 rule. white delivery vans, courteous drivers, and the distinc According to the rule, if a problem is caught and fixed tive purple-and-orange FedEx logo. But behind what the as soon as it occurs, it costs a certain amount of time casual observer sees is a very complex company with and money to correct. If a mistake is caught later in a the capacity to deliver millions of packages to millions different department or location, it may cost 10 times of addresses around the globe overnight. Throughout the that much to repair. And if a mistake is caught by a cus- course of virtually every day and night, FedEx mobilizes tomer, it may cost 100 times as much to fix. its army of 165,000 employees, 47.500 vans and trucks, A number of substantive strategies have been im- and 647 planes to get the job done. plemented by FedEx to support its quality efforts. Quality For FedEx, getting the job done means managing action teams (QATs) design work processes to support quality 24 hours per day, with a watchful eye on customer new product and service offerings. A set of service qual- expectations. The company's goals are simple: 100% cus- ity indicators (SQIs) has been established to determine the tomer satisfaction, 100% on-time deliveries, and 100% main areas of customers' perception of service. Through accurate information available on every shipment to every careful tracking of these indicators, the company generates location around the world. Although these sound like far- a weekly summary of how well it is meeting its customer fetched goals, the company goes to great lengths to try to satisfaction targets. An SQI team works through problems make them a reality. One of the principal weapons that revealed by the indicators. For example, if problems were FedEx uses in pursuit of its goals is its total commitment being created by confusion in FedEx labeling instructions, to quality management. the team would work on improving the clarity of the in- Quality management at FedEx encompasses all its structions. Some of the company's tactics to ensure total operations. Although the company is the acknowl quality are extraordinary. For example, every night FedEx edged leader in the air freight industry, a formal launches an empty airliner from Portland, Oregon, bound Quality Improvement Process (QIP) plays an inte- for Memphis. The jet follows a course that brings it close gral role in all the company's activities. to several FedEx terminal airports. The purpose of the jet is to swoop down and pick up FedEx packages if any of At the heart of the QIP program is the philoso- the company's regularly scheduled airplanes is experienc phy that quality must be a part of the way that FedEx ing mechanical difficulty. 10www.fedex.com. (continued) O hp SCJH-W10-SURIer mountain blue ridge X Foster, S Thomas - Managing qu X + Foster,%205%20Thomas%20-%20Managing%20quality_%20integrating%20the%20supply%20chain-Pearson%20 technicalops... Mail - technicalops... Mail - technicalops... Sign in to your IRC... login-img Contro loud + 47 of 481 ) 10 46 Part 1 . Understanding Quality Concepts Along with a focus on its external customers, success story, which is entered in a company-wide FedEx's approach to quality also involves strengthening competition. Presentations are made by the finalists be- the bonds between its internal customers, or employees. fore the company's CEO, executive vice president, and To reinforce this notion, the company asks all its em- other top managers. The award for being a finalist is a ployees to ask the following three questions when they gold quality pin for each member of the team and the interface with a co-worker: opportunity to be interviewed on the company's inter- 1. What do you need from me? nal television network. 2. What do you do with what I give you? The quality efforts practiced by FedEx have paid 3. Are there any gaps between what I give you and off. The company has achieved a remarkable 99.7% what you need? on-time delivery level. The list of awards the company has won are too numerous to publish. The most impres- The company also reaches out to its employ- sive are the Malcolm Baldrige award; the AT&T Top ees in a number of substantive ways. To do this, the Performer award: the Quality Carrier of the Year award, company adopted its People-Service-Profit (PSP) phi- presented by Merck Pharmaceuticals; and the Company losophy, which articulates the view that when people of the Year Distinguished Service award, presented by are placed first, service and profit follow. An aggres- the National Alliance of Businesses. Will FedEx's pur- sive training program, competitive wages and benefits, suit of quality end here? Asked if winning the Malcolm profit sharing, bonuses, and a state-of-the-art employee Baldrige award signifies that FedEx has achieved grievance process are all elements of the PSP philoso- the ultimate level of quality, CEO Fred Smith said, phy. Employee recognition also plays an important "Receipt of the award is simply our license to practice." role in the company's quality pursuits. For example, Apparently, the quest for improved quality at FedEx each quarter FedEx divisions select their best quality will continue, day and night. Discussion Questions 1. What is FedEx's "common language" of quality? Is perspective, the HR perspective, and the systems it important for a company to establish a "common perspective, Which of these perspectives are being language" of quality? If so, why? emphasized by FedEx? Why? 2. There are several different perspectives of quality, 3. Is FedEx's level of emphasis on quality appropriate? including the operations perspective, the strategic Why or why not? perspective, the marketing perspective, the financial Case 1-2 Graniterock Company: Achieving Quality through Employees Graniterock Homepage: www.graniterock.com Graniterock, a California-based mining and construct involving on-the-job training and classroom time for ion company. was founded in 1900. but its journey to- a majority of the firm's employees. A program called