Case - Equipto, Inc. Equipto, Inc., a division of a Fortune 500 corporation, is located in the Midwest. The Industrial Motor Division (IMD) makes motor units that are part of the installation package for large-scale industrial systems. The company has two major competitors in the United States and several smaller competitors abroad. Although its market share has shown a slight decrease, Equipto remains second in U.S. market share and first worldwide. Three years earlier, management had foreseen the need for adoption of a TQ philosophy. With much fanfare at the corporate level, the new TQ program, called \"Quality or Else,\" was rolled out. It soon became known by its initials QOE. Initial skepticism surfaced within various divisions about whether such a program would help to arrest the progress of Equipto's competitors, especially a rapidly growing Japanese firm that had recently announced plans to build a plant in the United States. However, an enthusiastic middle-level production manager, Bob Green, who had a great deal of creativity as well as credibility, was soon appointed as division director of TQ. He had a vision of TQ that was people-driven, but he had little knowledge of the details of statistical process control (SPC), as his degree was in liberal arts. Also at his level was a division director of quality assurance, Harry Rule, who was steeped in traditional SPC techniques and had many years of quality control experience in the company. Managers and staff alike viewed Rule as a statistical genius. Although he talked a good game about embracing TQ, empowerment, teamwork, listening to the voice of the customer, and other such rhetoric, he acted somewhat condescendingly toward anyone who wasn't his equal in SPC. After initial planning by Green, Rule, and an outside consultant, the QOE program was rolled out with three days of top management training -- led by the outside consulting firm -- in TQ philosophy and techniques at the corporate level. All corporate and divisional top managers (the CEO, corporate VPs, divisional presidents and VPs, and a few selected staff people) were included in the executive training session. This TQ training was cascaded down through the divisions, so that every employee received two to five days of training. Much of the training was conducted in-house by facilitators at each plant in every division. Divisions could choose the depth of training in SPC techniques and were encouraged to hire local consultants to help them in this phase of the development. After the \"up-front\" training, Equipto, Inc. groups were started so that employees could begin to practice their newly learned skills. These activities pretty much consumed the first year of the process. During the second year, the company began to see some results. Employee skepticism, which had been a major problem in the rank-and-file unionized workforce, began to subside due to three factors: 1. Recognition of teams and team members who had accomplished some significant results. One project that was completed after a nine-month study showed paper savings of $100,000. 2. The enthusiasm of Bob Green, Division Director of TQ. He went around to all the plants in the division to beat the drum for quality about every three or four months. 3. Emphasis on the human relations aspects of quality, with little being said about SPC, standards, or quantitative analysis of the production processes. However, middle managers in the divisions had been given little training in how to handle an \"empowered\" workforce, so they felt somewhat resentful of the process and were left out of team activities. Equipto and its IMD were in trouble at the beginning of the new fiscal year. Although the Equipto, Inc. teams had been going strong for over a year, and they had about 20 percent of the hourly workforce involved, nothing tangible seemed to happen. Apparently, a cyclical downturn was under way, and the company was scrambling for any business that it could get. Middle managers and line supervisors felt pressure to deliver immediate results. The pressure extended up and down the line. Green and Rule at corporate headquarters began to question each other's commitment to TQ, which led to speculation about the outbreak of a major turf war. Green was certain that more training of middle managers could help to turn the corner on quality. Rule was equally certain that more emphasis on SPC was needed at every level in the division. The IMD had been the most successful division in implementing TQ of any in Equipto. Half the IMD's people in the plants were on a team, and a white-collar accounting department team was just being formed. Estimated savings during the first full year of team operation were $200,000 (including the project that had saved $100,000). Since only about $40,000 in direct out-of-pocket costs had been spent on TQ program development, everyone felt that TQ gave a pretty good return. At the middle of the year, top management announced that the company had sustained its largest quarterly loss in history. Division managers were told to pare expenses by 15 percent. Bob Green resigned to accept a job with another firm, and Harry Rule was named Corporate VP for quality with all phases of TQ and quality assurance under his direction. The divisions were given no specific directives on TQ programs or projects, but many thought that the changes might spell the death of the employee-focused quality program. Others decided to just wait and see. Still others began polishing up their resumes. Discussion Questions 1. Discuss the way in which the TQ program was launched. Could it have been done differently, and perhaps better? 2. What are the pros and cons of up-front training (training before any projects are begun) versus just-in-time training (training which is done concurrently with development of projects)? Do you think that some momentum might have been lost because employees were trained before they were sent out to work on projects? 3. When and in what form should SPC be introduced to employees at the operating levels in the firm? Was it time for Equipto to do so, or past time? 4. Is it possible for TQ to be a success, and the company to be unprofitable, or worse? What has happened in the recent history of Baldrige Award winners along that line? 5. What should the company do about its TQ process now? Scrap the program, keep the same emphasis, or change to a SPC focus? Why