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					Texas Stamper
       with Harvard
              Tool                                  Adoption of the Balanced Scorecard,
                                                         a management tool developed at
                             Harvard Business School, has steered ITD Precision toward
                            success in financial, quality, operational and cultural realms.

                                                                                                                 BY WALI ALAM

                                                                                   TD Prec i s i on , a family - own ed

                                                                                 I m etal-stamping com p a ny estab-
                                                                                   l i s h ed in 1946, has plants in Ho u s-
                                                                                 ton and Ha rl i n gen, TX, and employs
                                                                                 80 peop l e . Th o u gh a propon ent of a
                                                                                 Tex a s - s tyle “wh a tever- i t - t a ke s” atti-
                                                                                 tu de , ITD has su cce s s f u lly employed
                                                                                 m a n a gem ent tech n i ques and pri n c i-
                                                                                 pals developed at the Ha rva rd Bu s i-
                                                                                 ness Sch oo l . This approach to man-
                                                                                 a gem ent is em bodied in the Ba l a n ced
                                                                                 S corec a rd , wh i ch has been imple-
                                                                                 m en ted by such large companies as
                                                                                 Mobil, Cigna and Wells Fa r go. Devel-
                                                                                 oped by Robert Kaplan and David
                                                                                 Norton of the Balanced Scorecard
                                                                                 Co ll a bora tive (www. b s co l . com) in
                                                                                 associati on with Harva rd , the Score-
                                                                                 c a rd has been the cri tical manage-
                                                                                 m ent tool used to effectively steer
                                                                                 ITD Prec i s i ontoward success in finan-
                                                                                 cial, quality, opera ti onal and cultu ra l
 An ITD Precision official reviews ITD Scoreboard results with employees.
 The Scoreboard, updated monthly, keeps all company personnel apprised
     on Balanced Score c a rd progress in four facets of company business:
                  financial, quality, operations, and learning and gro w t h .   Wali Alam is president of Quality Insti-
                                                                                 tu te of Am erica, Hou s to n , TX. Tel. 281-
                                                                                 335-7979; www.qi-a.com.

                         Reprinted from the July 2005 Issue of MetalForming Magazine
Management Tool

This chart provides a graph-
ical representation of parts                                          Total Output
p roduced at ITD Precision                            Tons Received, Processed, Removed, Shipped
and is used as part of the
company’s Balanced Score-
                                                             Three-Month Running Average
c a rd management tool.             3,800


     While con su l ting with 3,400
ITD and its convers i on
f rom ISO 9002:1994 to
ISO 9001:2000, Bi ll Tof te, 3,000
ITD vice pre s i dent and
quality-management rep- 2,800
re s en t a tive, told me that
the latest ISO requ i re- 2,600
m ents cre a ted more of a
“m a n a gem ent sys tem” 2,400
than stri ct ly a “qu a l i ty
m a n a gem ent sys tem .” 2,200
Si mu l t a n eo u s ly, he also
d i s covered the Ba l a n ce  d
S corec a rd, a sys tem that
para ll els several el em en t s
of ISO 9001. What Tof te
u l ti m a tely wanted was a single man-          al obj ectives (Plan), exec utes ad m i n-                 Hays , GM of I T D’s Ha rlingen , TX,
agem ent sys tem that em bed ded the              i s tra tive and manu f actu ring activities               plant. “ In the end it is our peop l e
el em ents of ISO 9001. Success at ITD            (Do), then periodically compares                           who make the difference. No proce s s-
has proven that ISO 9001 and the                  performance to targets (Ch eck), then,                     es work com p l etely indepen dent of
Ba l a n ced Scorec a rd are com p l em en-       wh ere perform a n ce is lack i n g, initi-                o t h ers . It is a joint ef fort . E ach
tary sys tem s .                                  a tes corrective acti on (Act ) . In the                   month, several con ti nu o u s - i m prove-
                                                  same way the com p a ny inspect s                          m ent meeti n gs are held in both ITD
What’s the Balanced                               metal stampings, officials period i-                       plants, both intra and inter- depart-
Scorecard?                                        cally ch eck company perform a n ce                        mental. With our Scoreboa rd, we can
    Most quality-management sys-                  to see if it is “o ut of to l era n ce ,” t h en           s ee if the improvem ent initiative s
tems requ i re establ i s h m ent of qu a l-      determine initiatives or other changes                     a re working.”
i ty obj ectives, measurem ents and tar-          to get back on track .                                          At ITD, here is how the four facet s
gets for those obj ective s , a n d                                                                          a re approached.
corre s ponding corrective acti on s              Features Four Facets                                            Financial—Like all metal stam-
wh ere qu a l i ty obj ectives are not met.           The Ba l a n ced Scorecard in place at                 pers, to ITD, financial health is the
Similarly, the Balanced Scorecard                 ITD focuses on four facets of com-                         ulti m a te obj ective . Profitability, l i q-
h elps a company establ i s h a broad             p a ny bu s i n e s s : f i n a n c i a l , qu a l i ty,   uidity and growth are highligh ted in
s et of obj ective s , measurem en t s , t a r-   opera ti ons, and learning and growth.                     the ITD Scorec a rd .
gets and initi a tives in various areas,          The ITD Scoreboa rd , u p d a ted                               “In the past, we avoi ded discussing
helping “balance” a ll of the important           m on t h ly, keeps all com p a ny pers on-                 profit with plant and of f i ce person-
f actors leading to su ccess. Where per-          n el apprised on Scorec a rd progre s s                    n el , yet in today’s environ m ent all
formance is lacking, initiatives or               within these facet s .                                     em p l oyees must understand that
o t h er corrective acti ons are imple-               Ad m i n i s tra tive pers on n el can view            tu rning a profit is an absolute nece s-
m en ted .                                        the ITD Scoreboard and see how                             sity,” says Mi ke Tof te, ITD pre s i den t .
    The Ba l a n ce Scorec a rd sys tem           their particular departm ent is per-                       “At regularly held Scoreboa rd meet-
forms the PDCA (Plan, Do, Check ,                 forming.                                                   i n gs , profit is at the foref ron t , and
Act) proce s s - i m provem ent cycle for             “Th ro u gh the ITD Scoreboa rd , a ll                 em p l oyees learn what role they play
ITD’s en ti re business. Upper man-               of our employees have become aware                         in its attainmen t .”
a gement establishes certain finan-               of h ow their activi ties affect overall                        ITD measu res net profit per part
cial, qu a l i ty, opera ti onal and cultu r-     com p a ny perform a n ce ,” s ays Sco t t                 shipped , which, since January 2003,

                                      Reprinted from the July 2005 Issue of MetalForming Magazine
                                                   Balanced Scorecard                                   percen t a ge of net profit, ITD dis-
                                                   in Practice                                          tri butes its perform a n ce bonu s .
has risen more than 500 percen t .                      E s t a blishing depen d a ble measu re-            “I re a lly understand why profit is
     Q u a l i ty — As requ i red by ISO           m ents in the metal-stamping bu s i-                 so important to the com p a ny now,
9001, or ganizati on s , as a means of             ness was a key ch a llenge for ITD.                  and I see how I make a differen ce ,”
con ti nuous improvem ent in cus-                  Determining meaningful output units                  says Ma ria Ca rino, ITD press tech-
tomer satisfaction, must establish                 was cri tical, yet difficult because prod-           nician, com m enting on the Score-
qu a l i ty obj ectives and targets, and           uct mix and manu f actu ring met h ods               card’s benefits. “The perform a n ce
m e a su re their performance against                                     .
                                                   va ry significantly How can there be a               incentive plan is great. Wh en the
those obj ectives. ITD mon i tors its              s i n gle outp ut measurement for both a             company su cceed s , I do, too.”
PPM, on - time del ivery and custom er             400-ton press and a 45-ton press? After
satisfacti on.                                     much examination, it became app a r-                 Ties Quality, Financial,
     “The Scoreboa rd puts qu a l i ty in          ent that ITD was actu a lly a metal                  Manufacturing Goals
perspective ,” s ays Mi chael Tof te , c u s-      processor, not a manufacturer of metal                    “As quality managem ent repre-
tom er- s ervi ce manager. “Q u a l i ty ini-      s t a m p i n gs per se. As a re su l t , ‘tons of   s en t a tive , I tried to focus the com-
ti a tives that wi ll not ach i eve gre a ter      m etal processed’ is its primary outp ut             p a ny on ach i evem ent of qu a l i ty
customer satisfaction and cannot                   unit. Many of I T D’s measu rem en t s               obj ective s , but as vice pre s i dent, I
u l ti m a tely be linked to financial su c-       are six-month running avera ge s , the               k n ew that quality, as important as it
cess are not con s i dered.”                       use of which smoothes out produ ct                   is, cannot be isolated from the com-
     ITD has reduced its PPM by more               mix and accounting spikes.                           p a ny ’s financial and manu f actu ring
than 93 percent since January 2003.                     Die maintenance is another area of              goa l s ,” rec a lls Bi ll Tof te. “Af ter a short
     Opera ti ons—The level of financial           the ITD operati on that has benefited                period of s tu dy and training, I knew
health and custom er sati s f acti on a            f rom the Scorec a rd.                               that the Ba l a n cedScorec a rdwas the
company ach i eves is merely the re sult                “ Because die mainten a n ce in our             tool we needed to drive the com p a ny
of va rious manu f actu ring and                   too l room is su ch an integral part of              tow a rd con ti nuous qu a l i ty improve-
administrative proce s s e s . ITD has             our opera ti on and su ch a significant              m en t , opera ti onal excell en ce and
established objectives and related                 cost cen ter, we must measu re our                   financial health. Like most managers,
measurem ents rel a ted to tooling con-            perform a n ce in that area,” explains               we struggled with devel opm ent of a
structi on, stamping produ cti on , die            S cott Wells, vi ce pre s i dent of opera-           clear strategy. In fact, we did not
m a i n ten a n ce , e - coa ti n g, qu a l i ty   ti on s . “We finally came up with ‘ton s            have a clear idea of what a corporate
a s su ra n ce , distributi on and sch ed-         of m etal rem oved ’ as our outp ut                  stra tegy is or should be. Af ter a ti m e
uling, e ach of which has aggre s s ive            unit.”                                               we learn ed that stra tegy is simply an
targets of achievem en t .                              Responding to su ch a measu re-                 ordered set of obj ective s . The Ba l-
     Learning and Growth—Because                   ment, ITD, f rom January 2003 to                     anced Scorec a rd del ivered the ‘order’
ITD m a n a gers are manu f actu ring-             January 2005, redu ced its die-main-                 to our obj ective s .”
orien ted , it was difficult to come to            ten a n ce cost from $146 to $120 per                     Mi ke Tof te agree s .
grips with the learning and growth                 ton of metal rem oved .                                   “With the Ba l a n ced Scorec a rd, we
pers pective , and managem en t ,                       “We are sti ll looking at ef fective            n ow have a formal stra tegy, just like
through a Scoreboa rd meeti n g, re a l-           w ays to measu re our perform a n ce                 l a r ger corporations, that can be ef fec-
i zed that changes were needed. ITD                in regard to new tooling constru c-                  tively com mu n i c a ted to our em p l oy-
recen t ly has hired a training and safe-          ti on,” Wells adds.                                  ee s , custom ers and other stakeh o l d-
ty manager and has undertaken man-                                                                      ers,” he says. “The degree to wh i ch
a gemen t - training programs.                     Incentive to Succeed                                 everybody is on boa rd and pulling in
     “Our culture, training, people,                   The pinnacle fe a tu re of I T D’s               the same direction has obvi o u s ly
etc . , create the cl i m a te for opera-          S corec a rd is its perform a n ce incen-            increased. In addition, we now have
ti onal improvement,” of fers Bill Tof te .        tive plan. Obj ectives are wei ghted ,               a fra m ework in wh i ch we can analy ze
“Our manu f actu ring and ad m i n i s-            then every six months ITD’s per-                     i m portant cost decisions from equip-
trative processes determine the level              form a n ce in relation to its targets is            m ent purchases to improvem ents to
of qu a l i ty and service for our cus-            measured and an overall perform-                     our training program. Before, we
tom ers; and our custom ers purchase               a n ce percen t a ge determ i n ed . For             s pent countless hours examining the
our produ cts and ulti m a tely deter-             example, 100-percent attainment of                   pros and cons of a dec i s i on. It is not
mine our financial su ccess. It’s all a            100 percent of the targets wo u l d                  on ly simpler now, but we have more
very clear set of c a u s e - ef fect rel a-       mean 100-percent overall perform-                    confiden ce that we are making the
ti onships.”                                       ance. Using this percen t a ge and a                 right ch oi ce s .”                            MF

                                       Reprinted from the July 2005 Issue of MetalForming Magazine