Baldrige National Quality Award 1995 Recipient
Armstrong World Industries Building Products Operations
At Armstrong World Industries' Building Products Operations, quality is
clearly a thing of the past. But even more clearly, it is the thing in
BPO's present and future. Upholding a commitment to quality made more
than a century ago by its corporate founder, the manufacturer of acoustical
ceilings and wall panels is aligning every facet of its business with
the exhaustively researched product and service requirements of its customers.
All qualityfocused changes initiated by the Pennsylvaniabased company-from
redesigning jobs and operations at manufacturing plants to reorganizing
its sales force-are driven by thoroughly evaluated expectations of increases
in customer value. In turn, BPO's Strategic Management Process completes
the chain of cause and effect by translating customerfocused goals into
anticipated impacts on market and financial performance and shareholder
Across eight market categories in 1994, at least 97 percent of customers
gave BPO an overall rating of good or better. As it pursues increasingly
ambitious levels of customer satisfaction, BPO also is reducing operating
costs. Scrap rates, for example, have been cut by 38 percent since 1991.
Manufacturing output per employee has jumped 39 percent over the same
span, exceeding company goals.
Based at Armstrong's corporate headquarters in Lancaster,
Pa., BPO employs about 2,400 people, 85 percent of whom work at the operation's
seven manufacturing plants in six states.
From the world's largest cork company founded in the late 1800s, Armstrong
has evolved into a sixcorebusiness, publicly held corporation that makes
and markets hundreds of products for both home and commercial interiors
and industry. The world's largest manufacturer of acoustical ceilings,
BPO accounted for nearly onefourth of Armstrong's sales in 1994.
Major commercial market customers include wholesale distributors and large
subcontractors, as well as architects and others who specify the products
to be used in building projects. In the smaller, but rapidly growing residential
market, BPO ceilings are marketed through wholesalers, lumberyards, home
centers, and corporate retail accounts.
In the early
1980s, with no signs of a business crisis on the horizon, BPO's
executives chose not to leave well enough alone. First, they launched
plans to increase profitability and market share. Next, they embarked
on a quality initiative focused on improving internal processes
and operations. But quality plans and business plans did not converge
until 1990, when the highestranking person at each BPO organization
was charged with leading quality improvement efforts. BPO's Strategic
Management Process established customer satisfaction and value as
both the targets and reference points of all improvement efforts.
Since this crucial
integration, organizational change has become a nearly constant feature.
The pace of change is quickening as managers and workers become more skilled
practitioners of quality methods and set ever more ambitious business
Within BPO, overall responsibility rests with its 10member Quality Leadership
Team, composed of senior executives and headed by BPO President Henry
A. Bradshaw, who also serves on Armstrong's Corporate Business Excellence
Team. The QLT places its emphasis on leadership and fully shares its responsibility
for identifying and realizing improvement opportunities with the entire
In each of the past five years, over half of the BPO workforce has participated
on the more than 250 improvement teams operating at any given time. The
objectives of teams range from correcting specific operational problems
at one plant to improving key business processes that enhance the entire
organization. At each plant, the Quality Improvement Team, led by the
facility's top manager, monitors the progress of all team efforts and
reports on the results to the QLT. All Quality Improvement Teams are required
to develop specific action plans and set goals that will have a measurable
impact on one or more of BPO's five "key business drivers"-customer satisfaction,
sales growth, operating profit, asset management, and high performance
organization (humanresources capabilities).
Change is purposeful,
guided by information and evaluations pointing the way to improvements
that will make a major difference in customer value, employee value,
and shareholder value. Over the past few years, BPO has made substantial
investments to optimize its information gathering and analytical
capabilities. It also has stepped up its benchmarking studies, conducting
89 in 1994, or more than twice the number performed during the previous
year. The principal return on these efforts, according to the company,
has been an everimproving understanding of the dynamics of BPO's
markets, competitors' performance, and its own business results.
QLT performs factbased assessments of how well it stacks up against its
competitors in each of BPO's eight market segments. Then, the team defines
BPO's "full potential" in each segment. Drawing on this and other information,
such as the results of customer surveys, the QLT sets goals and devises
action plans so that BPO will grow to reach its full potential. Along
with organizationwide goals, each of the eight functional units develops
and deploys action plans to every BPO employee. Relevant BPO goals and
supporting process objectives are incorporated into the various incentive
plans that now cover more than 93 percent of hourly and salaried workers.
Committed to promoting a highperformance
work environment, BPO is well along in work and job redesign efforts intended
to provide workers with the skills, tools, information, flexibility, and
authority needed to respond quickly and effectively to customer requirements.
For example, pricing of ceiling jobs, once performed by headquarters,
now is performed by sales people in the field, eliminating two approval
steps and cutting turnaround time in half. The field sales force also
can approve claims of up to $5,000, accounting for about 90 percent of
At all seven manufacturing plants, employees are organized into natural
work teams or business unit teams whose individual members can perform
a variety of jobs. As of 1995, six plants pay workers for mastering new
skills and knowledge. Six plants also offer gainsharing, which links measures
of safety, customer satisfaction, process effectiveness, and other aspects
of performance areas to a portion of each employee's compensation.
BPO also has made its suppliers, distributors, and carriers full partners
in its quality improvement process. In 1985, the company established a
supplier quality management process that has entailed assessing the quality
systems of 135 suppliers. Overall, notices of nonconformance sent to
suppliers have been declining, falling 32 percent from 1992 to 1994. Over
the same span, ontime delivery has improved from 93 percent in 1992,
when the arrivaltime window for carriers was four hours, to 97.3 percent
in 1994, even though BPO had reduced the window to 30 minutes.
Twelve years into its Quality Improvement Process, BPO continues to seek,
refine, and deploy the best quality strategies and tools that it can identify.
Instead of slowing, the pace of improvement efforts appears to be quickening,
as the company challenges itself by aiming for ever higher levels of customer
value, employee value, and shareholder value.
Since 1991, BPO's "cost of quality"-the company's composite indicator
of the price it pays as a result of waste and nonconformance-has dropped
by 37 percent, contributing $16 million in additional operating profit
in 1994 alone. In 1994 overall, BPO reduced operating costs by a companyrecord
$40 million, while maintaining or increasing its share in each of its
markets. Employees shared in those accomplishments. BPO set industry safety
records-employees worked more than 3 million hours without a losttime
injury-and the company made its highestever gainsharing and incentive
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Last updated: 11/29/2011