T

NC TEXAS NAMEPLATE COMPANY

“COMMITTED TO STAR QUALITY”

Texas Nameplate Company

PO Box 150499, Dallas, Texas 75315-0499

1998 Malcolm Baldrige National Quality Award ceremony acceptance speech

by Dale Crownover, President and CEO, Texas Nameplate Co. February 4, 1999
“Mr. President, Mr. Secretary, members of the Baldrige family, staff and examiners, fellow
Baldrige Award winners, family and friends, ladies and gentleman: On behalf of all of us
at Texas Nameplate Company, I thank you for the recognition and honour you bestow on
us today with this grand award. It marks a breakthrough we have sought for many years.
We will treasure it forever. We will also treasure the story of why we entered this
competition and what we plan to do next.

“The story begins before we took up the quest for the Malcolm Baldrige award. Our
company was looking for an answer to a basic question: How could we take it to the next
level? When I proposed that we enter this competition as part of our answer, I came face
to face with my critics. Many had never heard of the award. Most had never heard of the
National Institute of Standards and Technology. Moreover, I was under close scrutiny by
the chairman of our board of directors and two key shareholders. Our chairman founded
Texas Nameplate over 50 years ago, so he knew where we were coming from. The two
shareholders, on the other hand, seemed more concerned with the next 50 years, where
we were going.

“I'm sure many small business leaders will appreciate the position I was in. They will
appreciate how much pressure I felt along the way. They will understand why I am so
thrilled to have our chairman and these two shareholders partake in our great joy today.
For you see, the chairman of our board is my father, Roy Crownover, and the two key
shareholders are my two sons, Ryan and Dan. Like most small business presidents, I know
I couldn't have done it without my own founding father. Likewise, I know I wouldn't have
done it without my children's future being uppermost in my mind. I explained to my family
and our employees that competing for the Baldrige award is a journey where we had to
focus on the basics of our business.

“We began our journey with a full appreciation of the contributions of our employees, and
then concentrated on fine-tuning those. This is a practice, I believe, that can drive all
small businesses in America to succeed. I know I would not be here today without their
help. I thank them from the bottom of my heart. Then, using the Baldrige criteria as the
basis for conducting our business plan, we discovered first how to really satisfy customers
and employees alike. We instituted numerous programs that helped us reach near
perfection in customer and employee satisfaction levels.

“We are especially proud of one program. Our financial gain-sharing program... where
we share with our employees the money saved from defect-free work... produces results
second to none. Last year alone we were able to share an additional $240,000 or 10.78%
of net earnings among our employees for their defect-free work.

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“Using the Baldrige criteria, we also became more conscious of the impact of our work
on the environment. We currently exceed EPA requirements for wastewater by over 12
times. And, I am happy to announce today that we are on the brink of eliminating
hazardous waste altogether, not just reducing it.

“Using the Baldrige criteria, we have achieved a fair profit while at the same time
controlling our growth. We have learned that simply growing bigger is not necessarily
growing better.

“And, finally, using the Baldrige criteria, we have learned how to optimise our internal
processes. We happily share the benefit of these processes with the neighbourhood
school we have adopted. This has been especially rewarding for our employees because,
with the exception of two of us, our employees are not college-trained. The two of us only
recently received our degrees. I am proud to be one of those ‘late-bloomers,’ as my
caring mother, Bernyce Crownover, always says.

“I hope Mr President that you and the Congress appreciate the significance of what the
NIST has done by conducting this Malcolm Baldrige award competition. You all open the
door of opportunity for small businesses around the country to join in the competition and
strengthen America in the process.

“I've heard it said that there are only two differences between the competition that led to
the building of the Titanic, from the pages of modern history, and the Ark, from the pages
of the Old Testament. We all know the first and obvious difference: The Titanic sank and
the losses of human life were enormous. By contrast, the Ark saved human kind and all
the animal kingdom. The second difference is less well known. The Titanic was built by
professionals, driven by a spirit of overarching greed. The Ark was built by Noah and his
family of amateurs, driven by their desire to fulfill God's will. The people of Texas
Nameplate, a small band of 66 employees I am privileged to lead, are descendants of
Noah. We come in all the colours of the rainbow. To us this award symbolises our desire,
determination, and commitment to help America weather any storm.

“During the next year we intend to hold or doors wide open to help as many small
businesses as we can reach. Whether it is in person, through books, or over the Internet,
our people will be sending my loving and very supportive wife, Julie, and me out across
the country to tell the story of why, they too, should take their company and their
employees to the next level.”

TNC in its own words

Company History  50 Years of Service
World War II brought a demand for military defence equipment such as tanks, trucks,
aeroplanes, boats, artillery, etc. All of these items required identification and information
plates that would withstand adverse conditions on land, sea, and in the air. The need for a
manufacturer of etched metal processes was born. A company involved in the photo
engraving process for the paper printing industry was recruited by the War Department to
produce etched metal nameplates for the many companies involved in the war effort.

In 1946, after the war was over, Wallace Steineger, Tom Hampton, and Roy Crownover
chartered the Texas Nameplate Company. The company grew from those three
employees to over 100 in the 1980s.

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Today, because of new equipment, new techniques, and its quality control program,
TNC's complement of 63 employees are producing more quality nameplates than ever
before  identification and information labels that are affixed to refrigerators, oil-field
equipment, high-pressure valves, trucks, computer equipment, and other products made
by its 1,000 customers. Located in Dallas, the family owned business is the smallest
company ever to receive the Malcolm Baldrige National Quality Award. In 1996, TNC
won the Texas Quality Award.

There are 1,362 manufacturers of identification labels in the USA, and about 4,000 screen
printers, but TNC is the only chemical etcher in the Dallas area.

Texas Nameplate remains a customer-oriented, family-owned business serving the

private sector. The company is committed to total quality management in order to provide
a product that meets all established requirements and exceeds the expectations of its
customers.

Nameplates  what they mean to you

Texas Nameplate Company manufactures the identification labels commonly seen on all
types of products  from refrigerators to high-pressure valves to computer equipment.
TNC’s nameplates are used for identification and to inform users of electronic and
computer equipment, oilfield equipment, valves, pressure vessels, and vehicles.

The information on nameplates may be serial numbers, model numbers, pressure limits,
vendor names, installation procedures, safety warnings, etc. This information helps
identify potentially dangerous situations to users throughout the life of the product or
provides important product information not generally
found anywhere else.

“We feel it is essential to make the best quality nameplates possible in the interest of
customer satisfaction and public safety. We also provide consulting expertise concerning
the design, durability standards, manufacturing requirements, and cost estimates of
nameplates.

“The techniques used to manufacture nameplates include screen printing, photo

engraving, and chemical etching. It is our etching process that makes our nameplates
durable, providing TNC a marketable advantage in the nameplate industry.

“Seventy-five percent of our products are chemically etched. Etching is the process of
chemically engraving information into the nameplate. These chemically etched
nameplates can withstand adverse conditions such as long-term exposure to outdoor
elements or use in a saltwater environment for offshore applications. Our nameplates are
made from common materials such as aluminium, brass, stainless steel, and vinyl.

Employees  the only asset that appreciates in value

“TNC employees represent the diversity of Dallas-Fort Worth, currently numbering 63
with an average age of 42. Thirty-five percent have been with the company for more than
10 years, and 56% for more than 5 years. TNC is a non-unionised company with 15%
exempt and 85% non-exempt employees. The company has a culturally diverse
workforce (46% Caucasian, 32% Hispanic, and 22% African American). Key company
documents are printed in Spanish and English, and translators are present at all meetings.

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One third of its 66 employees have been with TNC for more than 10 years, and more than
half have been with the company for at least five years.

“These employee demographics have been critical to our success at TNC. We

are a closely knit organisation in a comfortable atmosphere. This facilitates excellent
internal communication and a strong sense of personal ownership in the quality of our
manufactured products. Our managers have grown up with the company and have a
genuine stake in the company's profitability and continued success. This stable and
knowledgeable work force is the engine that has driven cultural change by incorporating
Statistical Process Control (SPC) and Quality Improvement Program (QIP) methods, and
providing a top-quality product, on time to the customer.

Facilities  everything is on hand

“TNC is located on one acre, one mile south of downtown Dallas. The facility consists of
a warehouse for storage of inventory; a separate hazardous waste storage building; and
the main manufacturing facility. All business processes take place within the main
manufacturing facility. The building is separated into work areas that are consistent with
the special needs of each step of the manufacturing process.

Customer Requirements  we know what is expected of us and we provide it

“TNC's strategy for achieving leadership in the nameplate industry has its foundation in
satisfying the needs of our customers. The primary requirements our customers express for
our company and our products are:
• Best value
• Quality products
• Personalised service
• Responsiveness
• Reliability
• Flexibility
• Customer focused
• Environmental responsibility

“As we continuously measure our conformance to these requirements, we learn more

about customer needs and work closely with them to improve our process and strengthen
our business relationship.

Most TNC customers are located in Texas and nearby states. In recent years the
company’s marketing reach has expanded, primarily to serve larger customers with
nationally and globally distribute d operations. TNC nameplates now are sold in all 50
states and in nine foreign countries. Revenues totaled $4.66 million in 1997.

Competitiveness factors  stability, capability, and recognised ability

The average age of nameplate companies is about 38 years. TNC's 50 years of nameplate
production is a clear indicator of leadership in the industry.

“The demand for etched nameplates has continued to rise while the number of companies
providing that service has decreased due to the increased environmental and safety
requirements imposed by the Federal government. We identified the importance of
environmental responsibility in 1980 and invested in upgrading equipment several years
before the government imposed regulations.

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Our proactive stance has enabled us to perform at environmental safety levels 12%
higher than the government requires. This has contributed to our stability in the highly
competitive nameplate market.

“We also have a competitive advantage with an internal tool and die department that
many of our competitors do not have. This allows faster response time while eliminating
the add-on costs of subcontractor work. TNC's delivery lead time is 22% faster than the
industry average. Our on-time deliveries are higher than the industry average,
approaching 100%.

Texas Nameplate has an in-house art department and a professional staff with over 85
years combined experience, which allows for a faster response time to customers while
eliminating the add-on costs of subcontractor work.

Texas Nameplate Company is driven by a quest for 100% customer satisfaction, treating
customers, employees, suppliers, and prospects as customers. Virtually every aspect of
daily business at TNC is related to customer service, either directly or indirectly.

“Each of TNC's customer accounts has a sales person assigned to it. We are available to
our customers 24 hours a day via voice mail, e-mail, and cellular phones. TNC has toll-
free numbers for both fax and telephone. Additionally, the president makes himself
accessible at all times to customers. Call today and ask about our Partners for Success
program.

“Located on the south side of downtown Dallas, Texas Nameplate Company continues to
invest substantial amounts of money, time, and process improvement efforts to ensure that
its production processes are environmentally sound.

“TNC maintains a sophisticated water treatment process. All chemicals are handled in
isolated areas by highly trained personnel in accordance with safety procedures to
prevent accidental spillage. In line with its policy of continuous improvement, TNC is
constantly updating its environmental protection measures. Members of the have attended
our Zero Defects Day activities to show their support of our process improvement
activities.

“Our high standards and conscientious attention to environmental responsibilities have

been recognised with the Blue Thumb Award for outstanding performance in Dallas
Water Utilities’ industrial waste pre-treatment program in 1991-92, 1992-93 and 1995-96.

“TNC is also environmentally responsible concerning the packing materials used in the
shipping of products. An in-house shredder is used to create packing material for outgoing
products by shredding paper we generate as well as newspapers donated by others in the
community.

“We at Texas Nameplate Company assure delivery of materials free of any

defects, on time. If we fail to do so, we promise to supply the items free of charge.

“The delivery period begins the day we receive clear, legible specifications from you in
our office along with a detailed order form. We hope you will agree that this is an
unprecedented offer and we hope you will be eager to take advantage of this unique
opportunity.

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“The Texas Association of Business & Chambers of Commerce judges unanimously chose
TNC over all 16 other applicants as the 1997 Texas Business of the Year. The judges were
impressed with our commitment to our employees, employee education and
development, quality improvement, and community involvement.

“Arthur Andersen named TNC 1997 Best Practices for Employee Satisfaction and
Customer Satisfaction for the south west region. TNC was also named a finalist in the
International competition for Customer Satisfaction.

“In 1996, with 57 employees, Texas Nameplate Company was the first small business to
ever win the prestigious Texas Quality Award.

“We have been recognised by our customers with the following awards:
• Supplier of the Year Award 5 out of the last 6 years
• Outstanding Supplier Award - 1994
• Supplier of Choice - 1994
• Star Supplier Award - 1994
• Quality Achievement Award
• Outstanding Quality Performance Award
• Best Small Business Supplier

The Bottom Line

When you look at gross profit and compare it to the cost of Texas Nameplate’s sales over
the five years noted, you will see our gross profits grow and grow, while our cost of sales
go down and down. Moreover, you would be as pleased as we are to learn that these
figures outperform competitors and the industry average.

Texas Nameplate Company: All You Need Is Trust

by Brad Stratton
“What if trusting your people was all it took to get quality results? And what if that trust
ran so deep that elimination of the quality control department became part of your
strategic plan? And what if you followed through on the plan, and your nonconformances
dropped by 50% the first month?

“What, exactly, is going on along South Ervay Street in Dallas? That’s where Texas
Nameplate Company can be found, and it just might be the biggest quality success story
you’ve never heard about.

“TNC makes nameplates, the small metal tags with etched lettering that get riveted to
refrigerators, computers, high-pressure valves, and military equipment. It has been
making such products since 1946, when the company was started by Roy Crownover and
two partners. The privately owned company is still overseen by members of the
Crownover family; Roy’s son Dale is the current president.

“Formal quality improvement processes don’t have a lengthy history at TNC. Like many
companies that supplied products to larger organizations in the early 1990s, quality
improvement wasn’t a home-grown idea for TNC. It was more of a do-it-or-else proposal
that came from General Dynamics-Fort Worth. TNC did it well. It has gotten better ever
since.

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Significant lost profits
“To see how far TNC has come with its quality improvement efforts, look at its non-
conforming products as a percentage of billing. When serious work started on reducing
nonconformances through statistical process control in 1992, total nonconformances
(defined as internal and external rejects) ranged from 15% to 18% of billing. It almost goes
without saying that such percentages represented significant lost profits.

“Through zero-defects training administered by Phil Crosby Associates, the Texas

Nameplate staff learned the value of doing things right the first time, as the Crosby
philosophy espouses. Improvement activities were able to drive that defect rate down to
3.7% by 1997. Considering that industry averages for defects are around 10%, Crownover
said Texas Nameplate was happy with the 3.7% rate.

“Then TNC started a gain-sharing plan that distributed bonuses equally to all employees.
Regardless of position or years with the company, all employees get the same share of the
quarterly gain-sharing pay-out. Troy Knowlton, operations manager and a 41-year
employee of TNC, said that when the non-conformance rate is less than 5%, gains start to
be shared. Results are posted daily.

“By the end of 1997, TNC employees whittled nonconformances down to 1%.

Quality department eliminated

“And in January 1998, in an attempt to further carve away at nonconformances, TNC did
away with its quality control department. In the first month following that move, which
Crownover said was part of the company’s strategic plan, non-conformances were cut in
half.

“Direction for improving quality now comes through DOIT, the daily operation innovation
team. It consists of supervisors and meets every other Monday to discuss
accomplishments and opportunities for further improvements. Supervisors are charged
with sharing information discussed at the meetings with people in their departments.

“Knowlton said it is what happens with the information once it gets into the hands of line
employees that makes the biggest difference in driving down non-conformances. ‘People
on the floor can figure out what’s happening and make adjustments the fastest.’ People on
the floor also are quick to help out when one person is having a problem, he added. They
know what’s at stake.

“Crownover shows that TNC management understands a bit about human nature when he
adds, ‘People listen to peers more than supervisors. We tried that for 45 years, and it
didn’t work. We have found the value of letting people do the work, with management
providing guidance.’

“For the five quarters that gain sharing has been in place, employees have received
$200,000. Crownover calculates that works out to $1.26 per hour for each employee.

“There are qualification requirements for employees. Anyone with more than eight hours
of unexcused time away from work for the quarter does not receive a bonus.

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“For TNC management, the bottom line of this approach is obvious. In 1993, the company
had $3 million in sales with 70 workers. In 1997, sales hit $5 million with 60 employees
[and in early 1999 sales reached $6m]. ‘People are working at higher performance
levels,’ Crownover said.

“Crownover said the gain-sharing plan was the result of careful calculation. ‘We took four
years to get our measurements in place,’ he said. ‘If you start a gain-sharing plan without
good measurements, you’re going to give away money you don’t have.’ He also said that
any such plan should be simple to understand. That’s why TNC focuses exclusively on
defects.

No defects or it’s free

TNC has a simple philosophy by which it stands: Products are shipped defect free and on
time or the order is free. Over the last five years, only four orders have been free, and
none of those has been to the company’s best customers. ’The defect-free policy is a
mind-set,’ said Crownover. ‘It’s a commitment we made to our people and our customers.
It has proven to be a worthy goal for us.’

“Bob Mantle, sales manager and a 15-year TNC employee, said, ‘We don’t lose
customers, we lose orders.’ Any customer that doesn’t purchase from TNC in a year gets
at least a phone call and perhaps a personal visit from a TNC salesperson. So far in 1998,
TNC has recovered 58 customers that had been gone longer than a year.

“’We don’t get into price wars,’ said Mantle. ‘We talk about on-time delivery, cycle
times, and having product on their dock defect free.’

“Customers are classified by dollar volume and repeat business. Customers classified as A
and B are TNC’s largest and steadiest buyers and account for 73% of sales. Among these
A and B customers are TNC’s Partners for Success: customers that have made a long-term
commitment to purchase specified numbers of nameplates from TNC over a set period in
return for cost savings. Of the company’s top 50 customers … 40% are valve
manufacturers, 35% have been customers for 30 years or longer.

Staying on top of cycle times

“For most orders handled by TNC, 10 days is the standard cycle time goal. Customers
sometimes ask for a quicker turnaround. If such speed is possible, TNC does it – and
doesn’t charge an expediting fee.

“Even though its competitors are a few days slower (TNC anonymously purchases
products from competitors to learn the exact lengths of their cycle times. Bob Mantle says
‘you can’t buy equivalent products nearly as quickly or as well made.’ TNC’s mystery
shopper programme has a dedicated off-site contractor who seeks quotes, purchases from
competitors, makes complaints about product quality and so on to test the capabilities of
key competitors), TNC wants to get faster. It knows it must first measure its own cycle
times more precisely, which it is doing by switching the units measured from days to
hours. Kenny Howard, customer service manager and a 12-year TNC employee, said if a
job is finished at 8:30 in the morning, it isn’t accurate to count the work as taking a full
day. So the conversion is under way.

“Crownover said days are the standard measurement in the nameplate industry, so it will
report cycle times in both days and hours to customers to avoid confusion.

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“TNC is considering linking some of its gain-sharing payments to cycle time, but
Crownover said the company wants to make sure it first knows and understands its true
cycle time in hours. “We are very patient with our measurements,” Crownover said.

“To make the necessary adjustments to stay on schedule, TNC has seven multipurpose
employees. ‘These people can go from process to process to fill in so an area can produce
additional product,’ said Howard.

“This type of training and job shifting improves morale by reducing boredom, according to
Crownover. ‘Some people like the same environment every day and others like to move
around. Knowing what people like improves employee satisfaction.’

Finding the right employees

Ask Crownover what TNC looks for when filling a company vacancy and you won’t
receive an answer that is overly focused on classroom education. ‘People need to have
desire, determination, and commitment, not a college degree,’ he said. ‘You don’t need
college graduates or PhDs to understand the Baldrige criteria.’

GTE, TI, and TNC?

Texas Nameplate Company lore includes the time in 1996 when officials from Pohang
Iron & Steel, a $10b Korean corporation and the world’s second largest steel maker,
included the then $3 million TNC on a benchmarking tour of the United States. (early
1999, annual revenue about $6m)

Company President Dale Crownover is modest about the event, saying that TNC wasn’t
the only reason the Koreans came to Dallas. Two Malcolm Baldrige National Quality
Award winners based in Dallas, GTE and Texas Instruments Defence, were already on
Pohang’s planned tour. TNC was added to the agenda when the university professor who
was organising the tour became intrigued by stories he had heard about TNC.

What did the Koreans learn from their visit to TNC? Crownover believes it was the
understanding that ‘we really did perform the total quality management theory and that
we live this [no defects or it’s free] concept. I think they were impressed by our
commitment.’

TNC didn’t come away from the experience empty-handed. ‘The main thing we got out of
this was the excitement of knowing that this Baldrige process has international
recognition,’ said Crownover. ‘They also gave us the idea to pursue the international
market more than we have in the past. Since we are ISO 9002 certified, we have
included in our strategic plan more emphasis on global markets.’ Considering TNC
already has customers in all 50 states, the international goal is not out of reach –
especially when one considers how far quality has carried this company.

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TNC’s Seven Key Business Drivers
In 1998, Texas Nameplate Company focused on seven areas that it believed would lead
to improved processes, products, and services. Many company ideals and philosophies
are reflected by these seven points.

1. Employee satisfaction. By fulfilling employees’ desires and expectations of the work

environment, benefits, co-workers, and management, we can satisfy and retain the
most important key to our success: our employees. These desires and expectations
include job security, equal and fair compensation, respect, and appreciation for
meeting requirements identified in the job description.
2. Fair profit. Fair profit can be described as the reasonable margin of money received
in excess of costs that supports the requirements of the six other key business drivers.
To remain fair, the profit must be acceptable to the customer while providing fair
compensation to the company’s employees and allowing ongoing investment into the
company’s future, thereby providing financial stability and growth.
3. Environmental consciousness. We address all areas in our manufacturing process that
could pose a threat to the air we breathe, the water we drink, and the land that we
depend on for food. We continuously look for ways to improve our manufacturing
process to reduce or eliminate by-products that could threaten any of these areas.
4. Controlled growth. By establishing our short- and long-term requirements through our
strategic planning process, we anticipate additional equipment needs, new business
opportunities, and continued growth, while maintaining a fair profit for our
stakeholders. Through the management of our information and data collection, we
enable control of our growth and processes. Controlled growth keeps us focused on
continually improving the quality of our products and services without jeopardizing
our current market and customer requirements. We evaluate our current capabilities
to determine where we are, decide where we want to be at a future point, and
execute a systematic plan that will get us there.

This is Texas Nameplate’s “planned effort to grow, but not to grow too big nor too fast.
It helps us measure the quality and proportions of our growth internally and in our
market … we have all learned that if we do not respect what we have at Texas
Nameplate, we will surely risk losing it. We respect what we are capable of doing,
individually and as a team. We also respect what we are not yet capable of doing
before we try to take the company to the next level,” writes CEO Crownover in his
book, Taking it to the next level.

5. Customer satisfaction. We attain and maintain a loyal customer base by exceeding

our customers’ requirements in providing personal service and producing defect-free
products on time. We use this key business driver as a barometer that gauges our
future success based on our ability to satisfy customer requirements today, thereby
proving a tool to continuously provide excellent service to both our internal and
external customers.

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6. Process organization. This is the systematic design and deployment of work processes
following well-developed procedures using qualified people. Continuous
improvement is part of the process optimization achieved by evaluating the results of
our processes against expectations and measures established during strategic
planning. Process optimization allows us to produce the very best product we can in
the shortest cycle time while anticipating and proactively addressing outside
influences that may affect our processes.

7. External interface. This key business driver will carry us forward to new levels of
excellence. The early days of our journey were primarily inwardly focused, looking
inside the organization to improve ourselves. As we mature, we begin looking
outward to get new ideas and input into our organization, with the mutual benefit of
improving those social and business communities in which we live and work and the
supplier base upon which we depend.

Source: Seven Key Business Drivers, Texas Nameplate Company 1998

The smallest company ever

The words Texas and big are often synonymous. Texas Nameplate Company takes pride
in being the smallest company ever to win the Texas Quality Award.

When TNC earned the honor in 1996, it had 10 fewer employees than its current total of
65. Management was so pleased by the accomplishment that it shut down the business,
rented two buses, and took the whole staff to Austin to accept the award.

The company has other results worth noting:

• At a time when the size of the nameplate industry has remained constant, TNC has
gone from holding a 2.7% share of the market to a 5.1% share.
• It was recognized as the 1997 Texas Business of the Year in the private sector by the
Texas Association of Business and Chambers of Commerce.
• Consulting giant Arthur Andersen recognized TNC with the 1997 Best Practices
Award for Employee Satisfaction, Customer Satisfaction for the south west region. It
was a finalist in Arthur Andersen’s international competition for customer satisfaction.

The company is sharing what it has learned along its quality journey by hosting monthly
seminars, which started in mid-1998. The first two sessions were held in the company’s
training room, which has a capacity of 60 people. Both sessions were full. Future sessions
were scheduled through October and might be held at a nearby hotel if interest grows.

Star quality
TNC has honed the raw attributes inherent to its small size  from streamlined
communications and rapid decision-making to shared goals and accessible leaders into
competitive advantages. The result is a closely knit organisation that is finely tuned to the
requirements of its customers.

TNC aims to create a continuous learning environment that enables empowered teams of
workers to take charge of processes and to deliver products and services with ‘star
quality.’

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“Closely knit” also characterizes TNC’s external relationships. Long-term partnerships
with customers and suppliers are the rule. Sixty two percent of customers have been
purchasing TNC nameplates for 10 or more. Of TNC’s 140 suppliers, nearly two-thirds
have been shipping materials to TNC for more than a decade. Sustained relationships
with quality-minded suppliers have enabled TNC to nearly eliminate inspections of
incoming materials.

Key business drivers

Company President and CEO Crownover and his 7 top managers make up the Business
Excellence Leadership Team. This team aligns the focus and direction of all employees
with the company's vision to ‘become the recognized supplier of commercial nameplates
in the United States.’ Each senior leader acts as a champion for one or more of the
company's seven key business drivers (KBDs): customer satisfaction, employee
satisfaction, process optimization, environmental consciousness, controlled growth, fair
profit, and external interface (the quality and effectiveness of TNC’s interactions with
suppliers and the community).

The seven KBDs form the nucleus of the company's participatory strategic planning
process. At the start, workers are invited to submit proposals for new initiatives, which are
evaluated for cost feasibility  and their potential to contribute to company coals set for
each KBD

The resulting strategic plan is captured in a comprehensive, easy-to-scan grid that

integrates goals, action plans, targeted outcomes, and indicators. For each action plan,
currently totaling 96  priorities, assigned leaders, and three year goals are displayed.
Progress is reviewed monthly by all employees. Results of an employee survey were
impetus for the review. Responses indicated that workers wanted regular updates to give
them deeper insight into production results and management activities.

Teams, naturally
Primary responsibility for accomplishing company coals rests with work teams  so
much so that the company disbanded its quality control department in 199S. And
because teaming has become so ingrained into its culture, TNC no longer needs formal
procedures for rotating employee participation.

Processes and jobs are designed to allow flexibility so that employees can respond
quickly to customer requirements and changing business needs. Customer-contact
employees are empowered to resolve customer complaints without consulting
management. Similarly, production workers are responsible for tailoring processes to
optimize contributions to company goals and to meet team-set standards. To help workers
identify opportunities for improvement, each process is mapped in a flow chart, which
includes requirements, metrics, and cause-and-effect diagrams.

To foster continuous learning, TNC uses a variety of training methods, complemented by

tuition reimbursement and other ‘back-to-school’ incentives. The average employee
receives 75 hours of training in their first two years. Much of it is delivered on a ‘just-in-
time’ basis. About one in 10 workers is a multi-purpose employee, trained in three or
more jobs, allowing them to be moved to any area of the company that needs assistance
to meet fluctuating customer and market demands.

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Profit-sharing and gain-sharing incentives, along with higher-than-industry-average pay
scales, serve to reinforce the workforce’s commitment to quality and foster company
loyalty.

In TNC's 1997 employee survey, employee satisfaction rates ranged from 72% to almost
88% in the five areas that employees say are most important: fair pay, job content
satisfaction, recognition, fairness/respect, and career development. A comparable
national average shows rates of 50 to 57% on these same areas.

Technology also is a key strategic thrust. A new computer-aided design system enables
electronic transfer of artwork for nameplates, helping to reduce cycle time, and a
recently installed local area network provides workers with immediate access to process
and business-related information, including profiles of all TNC customers. Upgraded
capabilities for electronic data interchange make it easier for customers to request quotes
and transmit purchase orders.

100% customer loyalty

To maintain its strong customer focus, TNC uses a wide range of listening and learning
strategies to capture information from former, current, and potential customers. For
example, through its Customer Site visit program, a team of TNC employees visits
customer facilities to identify opportunities for improving products and services. The
results of these visits are shared with everyone at TNC.

In all customer contacts, workers and managers are instructed to ask, ‘What else could
we be doing for you?’ In addition, a quick-response survey card accompanies each TNC
shipment, and an annual survey provides 70 different indicators of customer satisfaction.

In 1996, the company implemented a controlled growth strategy designed to deliver

maximum benefits to both TNC and its customers. The focus shifted from the acquisition of
more new customers to obtaining more of its current customers' business. TNC is pursuing
sole-supplier alliances with its 50 largest customers, offering them a combination of
innovative services that result in lower prices and faster turn-around. A new product
consignment sales agreement and the company's Partners for Success program allow
TNC to offer customers flexible product delivery arrangements and enable TNC to project
its business volume with these customers, and thus, manage its workload, inventories, and
suppliers more efficiently.

Results
TNC is making good on its pledge to delight its customers. An independent, third-party
survey shows TNC's customers consistently give the company an excellent rating (5 to 6
on a scale of 6) in 12 key business areas, including quality product, reliable performance,
on-time delivery, and overall satisfaction.
• Complaints per order shipped down from 0.86% to 0.28% (industry average, 3.29%)
• On-time delivery is consistently around 98%
• Quote response time is 5 hours (industry average of 8 hours, some competitors are as
high as 48 hours).

Since 1995, the number of orders shipped has increased 16%, while TNC raised its on-
time delivery record to 98%, up from 95%.
• Metal nameplate market share almost doubled over 4 years

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One of TNC's key business drivers is environmental consciousness. The company already
exceeds regulatory requirements, and it is working toward eliminating all hazardous
waste from its chemical etching process. Notable improvements since 1994 include a
14% reduction in chemical waste generated and a 30% reduction in emissions of volatile
organic compounds.
• And water quality discharge from the plant has improved over 10 fold, now more than
30 times better than the EPA limit

In key areas of financial performance, TNC has made significant gains. Gross profit as a
percentage of sales increased from 50.5% in 1994 to 59% in 1998. Net profit (measured
as a percent of net sales) more than doubled during the same time period.
• Gross profits up from 49% to 59% since 1993, cost of sales down from 50% to 40%

TNC has reduced its non-conformances (defects) from 3.65% to about 1% of billings in the
last four years. This is attributed to the company's process improvements and gain-sharing
program, which rewards employees for reducing non-conformances. Through this
program, over $145,000 was distributed to employees in one year as profit savings, which
equates to a $1.26 per hour raise for each employee. Nationally, its share of the
nameplate market has grown from almost 3% in 1994 to 5% in 1997.
• Total non-conformances down from 3.65% to 1.25%
• Employee turnover improved from 45% to 8% while total average compensation per
production employee has gone up over 33%

Visit notes
By Malcolm Macpherson
I was a member of a New Zealand tour party which visited Texas Nameplate Company’s
Dallas, Texas, plant in March 1999. The team was hosted by sales manager Bob Mantle,
customer service manager Kenny Howard, and human resources advocate Sula Reilly.

Items
• Recruitment
Vacant positions are advertised internally first, then to family and friends. Teams are
offered the option of absorbing vacant positions without replacement, and when they
do they share the redundant income among the team.

• Benefits
TNC pays 100% of hospital and dental insurance, allows 2.5 hours per year leave for
a physical examination, pays for staff called to jury duty, have an employee of the
month, and recognise employee’s birthdays … there are lots of social events  often
with catered BBQs  the team does a lot of partying. Employees really feel a part of
the company.

• Employee satisfaction surveys

Have been run since 1994, for the first two years done internally, since then done by
third-party organisation. First 360 degree survey, conducted by a third-party, done this
year … issues raised include communication, compensation issues (not being aware
of the benefits), language issues (30% Spanish-speaking) and so on

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• Customer site visits
‘The president and people from the production areas go visit customers, so that line
workers know about their customers.’ Employees ask three quality questions that
apply to their departments  essentially, ‘how can we do better for you?’ The visiting
team also leave a questionnaire with each customer. Back home, line people tell the
whole company what they discovered.

• Purity of purpose
TNC is ‘not interested in large low volume margin orders, jobs of about 100,000 are
where the best profit are.’ TNC makes more money from small to medium orders
delivered locally. Average job size is 7 plates, about 500 pieces. “Outsourcing can
get you in a lot of trouble,” says Bob Mantle, and TNC doesn’t take jobs that fail to
match its minimum margin threshold, “We never take jobs worth less than 4% profit.”

• Warranty
It’s defect-free, on your dock on time, or you don’t pay us (which, incidentally, has
only happened three times since the policy was implemented) … every customer is
surveyed, with the importance of their responses rated by the customers themselves
… TNC is the only nameplate company that has an expediting team  and there are
no extra charges for expediting an order … and the only company that doesn’t have
estimators - everyone with customer contact has the authority to do business with
those customers.

• Extra items, kept in stock, are sent free on request if they exist. If, say, a custom orders
100 items, and 150 is the minimum manufacturing number, TNC will give the
customer the extra 50 at no charge.

Bibliography
Bryant, Hattie, Small Business 2000, videotape program No. 313.
For Texas Nameplate, Quality Values Make the Difference, Supervisor’s Guide to Quality
& Excellence, Feb. 9, 1998.
Using the Texas Quality Award to Drive World-Class Performance, The Quality Line
(ASQ Dallas Section newsletter), April 1997.
Using the Texas Quality Award to Drive World-Class Performance, videotape
presentation made by Dale Crownover to Hogan & Associates, Inc., Dallas, TX, Dec. 12,
1996.
Vega, Melanie, Texas Nameplate Builds Business on Employee Loyalty, Dallas Business
Journal, May 9-15, 1997.

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