Move-up buyers are a fickle bunch, and this blog entry focuses on a Lean Design for that group.
Delcor's Quality Journey
Phil McCafferty, president of Delcor Homes, New Hudson, Mich., is living in the future more ways than one.
Phil McCafferty, president of Delcor Homes, New Hudson, Mich., is living in the future in more ways than one.
Last fall his firm became the first home building company in the country to attain the quality assurance milestone of ISO 9000 certification-a direction some believe the industry must inevitably go. As a result, McCafferty now spends less time reacting to customer problems and more time thinking about his company’s future.
|A certain percentage of Decor’s 5000 prospects last year asked sales personnel whether the Michigan-based home builder was ISO 9000 accredited.|
Having the luxury to think about the future was one of McCafferty’s primary goals when he first began to improve the quality system at his company in 1997. It stems from Stephen Covey’s widely read "Seven Habits of Highly Effective People" that effective managers should spend their time planning and mapping success strategies.
Of the many quality systems available for implementation, McCafferty chose the ISO 9000 process for several reasons. First, a certain percentage of his target home buyers work at ISO 9000 conforming auto makers. About 2% to 3% of Delcor’s 5000 prospects last year asked sales personnel whether the company is ISO 9000 accredited.
"We’ll soon be advertising our ISO accreditation and I believe it will attract a lot more attention to us in the market," McCafferty says.
Another reason for choosing ISO 9000 over, say, the more elusive goal of Total Quality Management was because ISO requires third party audits. "I believe that the reason why ISO is growing so rapidly here and in Europe is that it unites your people," says McCafferty. "They pull together so that they can continue to be certified."
But embarking on the costly and time-consuming process has had a more overriding benefit for Delcor—significantly increased customer satisfaction. McCafferty estimates that one customer with a problem takes as much as one day of time away from several managers. Really unhappy customers who litigate their issues require even more time. So for Delcor-ranked No. 370 in PB’s most recent list of Giants-to recoup any of the $150,000 in consulting and auditing expenses related to their ISO accreditation, customers must be happier with what they buy. The numbers tell the tale. From the time they began the process of implementing ISO, the firm’s average number of correctable defects at closing dropped like a rock-from 27.4 in 1997 to 9.6 in 1998 and finally to a dramatically reduced 1.7 in 1999.
Comprehending the magnitude of Delcor’s achievement requires an understanding of what it takes to become ISO 9000 accredited. PB columnist and NAHB Research Center vp Ed Caldeira is an expert on the subject and a big fan of Delcor’s efforts.
"They have a lot to be proud of," says Caldeira. "My hat is off to Phil not only for what he has achieved, but also because he wants to provide the resources he developed for his company to NAHB to help other builders."
Caldeira’s point is that being first isn’t always the easiest way to do something and that is certainly the case with being the first builder to conform the industry’s practices to the rigidity of this international quality standard.
ISO 9000 was first published by the Geneva-based International Organization for Standardization in 1987 and is now a legal requirement for manufacturing companies that operate in member countries of the European Community. Thirty-six countries sat on the committee that developed the standard, which traces its origins back to a quality assurance manual published jointly by the U.S. Military and NATO during the 1940s.
Other builders stand to gain substantially from following the guidelines that Delcor may eventually provide through the NAHB. According to Caldeira, ISO 9000 is a management blueprint consisting of 20 basic element—a relatively sophisticated process. Delcor’s success at translating the home building process to fit the system will make it easier for other builders who follow. (See the sidebar The 20 Elements of ISO 9000.)
Boiled down, ISO is simply: "Saying what you are going to do. Doing it. And being able to document that you did it," says Caldeira. He sees the 20 ISO 9000 elements falling into the following general steps.
- Plan what it is you are going to be executing in the field.
- Figure out what materials and equipment that will be required.
- List the kind of qualifications people should have who are going to be doing the work.
- Verify that these plans have been executed as intended and that the results meet quality standards.
- And then, if problems occur, take some action to make sure that plans are adjusted so they don’t happen again.
The ISO quality process is considered implemented within an organization once every employee (or "associate" in ISO parlance) has been trained to do his job in accordance with the stated goals of the organization. This includes not only the quality benchmarks of their core functions, but also the requirements of operating within the ISO accredited process. Documents and forms are key to the ISO process. Tight control over these documents, after they have been rigorously created, is critical. An important rule: No changes to any form or document without going through the organization’s document control committee. These documents range from task checklists to internal audit paperwork. Three main documents guide the organization:
- Quality Assurance Manual,
- Quality System Procedures Manual, and
- Quality System Work Instructions document.
In all, Delcor generated and approved the use of 200 forms and documents. If that sounds like a lot, builders should try and count all the forms they currently use, says McCafferty. "They would be stunned at how many forms they have and how many their people have made up that they don’t even know about."
Everyone in an ISO 9000 accredited organization is held to account for his or her activity by a co-worker, boss or peer. McCafferty is subject to monthly audits by the Delcor general counsel. One of McCafferty’s ISO related responsibilities is to oversee the implementation corrective measures that result from problems uncovered through quality assurance checks. His auditor is free to come in and ask to see documentation as to the resolution of those corrective actions. In another part of the company, McCafferty is responsible for auditing/coaching his sales management group.
He might request all of the documentation relating to four specific lots. If forms are not fully completed and distributed to all necessary company personnel, the audit is a failure. The major difference between internal and external audits is that if external auditors uncover a problem, the company does not get reaccredited. An internal auditor coaches and tries to find ways to make the process easier.
What would McCafferty say to another builder who fears that the auditing and paperwork might not be worth all of the trouble and effort?
"When your purchasing agent or your lawyer leave the company, are things going to be a bit messy for awhile?" McCafferty asks rhetorically. "I am not in nearly as much trouble, because whoever I hire, he or she has got an in depth procedure manual. We don’t lose as many beats as we once did."
In the area of working with trade contractors, Delcor did encounter some early resistance to the importance of using checklists. Delcor’s response to this was to add some requirements in their contracts with trade contractors.
- Each subcontractor must completely sweep and clean up after they leave a job site.
- All relevant checklists must be completed and submitted to Delcor when the job is completed.
A lot has been happening on the trade contractor level nationally to make subs, as a group, more amenable to quality assurance programs like ISO 9000. Since 1996, Caldeira’s group at the NAHB Research Center has trained and certified 75 insulation-contracting firms through a program developed using ISO 9000 as a guideline.
In fact, the Research Center already has done much of the work an ISO accreditation requires. Forms, checklists and quality manuals, similar to those required for ISO certification, are provided to those trade-contracting firms seeking NAHB certification.
Now in a partnership with HUD’s Partnership for Advancing Technology in Housing (PATH), the Research Center is piloting an ISO 9000 based certification program for framing contractors. Also participating is the Wood Truss Council of America. Major pilot project participants include K. Hovnanian Enterprises and All-tech Construction in New Jersey; Del Webb and Shuck & Sons Construction in Arizona; and Winchester Homes and Ace Carpentry in Virginia.
"Once we develop a good, functioning quality control process for some pilot framers, that becomes plug-and-play for any framer," explains Caldeira.
"And that is what we hope to do on a long term basis as we walk our way through the different trades. Eventually we’ll get a harmonized approach to quality control from all the trades that use a similar process."
The 20 Elements of ISO 9000