Quality at Gillette Argentina

Case summary

BACKGROUND

 Best known for its razors and razors (Trac II, Sensor, and the newest,
premium-priced MACH3), Gillette Company was also a leader in batteries
(Duracell), dental care (Oral-B) , and in toiletries (Gillette Series), and was a
big seller of writing products (Paper Mate and Parker Pen) and electric
shavers and other small utensils (Braun).

 The company was founded in 1901 and in 1905 began operations abroad
with a sales office in London and a manufacturing site in Paris. In 1999,
Gillette's sales were $10 billion, with 60% of revenue coming from outside
the United States. Manufacturing operations were carried out in 54 facilities
distributed in 20 nations and products were marketed in more than 200
territories around the world. The company operated with 39,800 people,
almost three quarters of whom were in the United States.

 Every day, at least 1.2 billion people around the world use one or more
Gillette products. In 1998, the corporation was the world leader in 10
consumer product categories. In recent years, Gillette introduced more than
20 new products each year. That year was the fifth consecutive year in
which at least 40% of sales came from new products.

 Gillette began operations in Argentina shortly after World War I. Until 1942,
it operated as an importing and distribution company. According to a recent
company history, the Argentine subsidiary built its first manufacturing plant
that year to take advantage of a void that was created when a German razor
blade company closed its operations.

Attention is directed to quality

 In Argentina, the inspiration to focus on quality began in the late 1980s, with
Carlos Rotundo, then director of manufacturing and logistics, becoming
 interested in the idea of using cross-functional teams to achieve greater
efficiency.

 Rotundo moved quickly to interface with sales. As he conceived it: “the most
important result [of this effort] was a different way of working with sales. We
take your side by saying: 'ask for anything you want or need and we will do it
for you.'”

 As trade barriers were torn down with the potential to increase competition
and impact Gillette's market shares, they realized that to survive and
succeed within this new environment, they could not continue to run
businesses in the way they did in the past. For this reason, they turned to
total quality management. Michael Sharp, human resources director for
Latin America, researched a number of total quality management
consultants and narrowed the choice to Organizational Dynamics Inc. (ODI),
a Massachusetts-based consulting and training company.

 In 1990 they agreed to form teams to continue the work that Rotundo began
in his department. “We started by creating a customer survey with sales
people. “We then chose 10 of the consumer reviews and assigned one to
each team to work on.”
Taking quality seriously

 Organizational Dynamics Inc. (ODI) developed the quality initiative for

Gillette which was based on a customer-based approach, total participation,
systematic support of effort, measurement of results and continuous
improvement.

 Quality action teams (QATs) received specialized training in a four-phase

problem-solving process, called FADE.

The phases were the following:

1. Focus ( F ocus ): development of a problem statement.

2. Analysis (Analyze ) : Using data to understand the magnitude of a

problem.

3. Development ( D evelop ): determination of a solution and an

implementation plan.

4. Execution (Execute ) : implementation of the plan and measurement

of its impact.

 In 1993, ODI sent consultants to Buenos Aires to train Argentine directors,

administrators, and 20 other people who would become trainers for the rest
of the organization. Jorge Micozzi (president of the company) immediately
accepted total quality management; He explained it this way: “Shortly after
we launched the total quality management program in Argentina, I
concluded that the recommendations, solutions and results coming from the
principles of working in cross-functional teams were better, more enriching
and more creative than any others. When people from different disciplines
come together to improve a process or reason, much better results are
obtained. We needed to optimize our decisions and processes because I
could see that, as our Argentine market opened, more competition would
come from the United States and Europe. To compete and to maintain our
 market share, we had to perform better, faster, and with which we could
work more easily.”

 Micozzi and his directors became the quality council.

Gillette Argentina, a new approach to total quality management

 Victor Walker investigated complaints about time and the quality contract,
found that people considered it too bureaucratic and unnecessary, and
extensively researched the quality movement.

 He became convinced that the action team approach would be more

effective in the Argentine company. This was not only due to the enrichment
of ideas that he thought came from the teams, but because he thought it
would serve as an integration tool within the company, “[…] the elimination
of the usual departmental barriers or attitudes of selfishness” .

 The steering committee, made up of managers from all functional areas and
coached by Walker, identified the appropriate cross-functional teams and
sponsors to work on top consumer priorities.

 Walker's role was to monitor the teams' progress, teach workshops on

problem-solving and statistical analysis, and inspire everyone.

Overcoming quality challenges

 Once the quality action teams were working, the steering committee turned
its attention to the first problems endemic to most total quality management
programs: obtaining full administrative support, increasing participation ,
executing goals with a sense of urgency and sustaining momentum.

 Micozzi, whom Walker described as a fan of total quality management,

became deeply involved in gaining the support of his entire operating
committee. Walker stated “total quality management cannot be imposed by
the top; “You have to be patient and get people’s collaboration through
persuasion and with specific data about the benefits of total quality
management.”
 Micozzi's influence was very beneficial. The quality council developed a
united force for cultural change. In the words of one executive: “[…]the
systematic support that the quality council showed toward the total
management of quality in the company was certainly a support point in the
development of this work culture.” “Many appreciated the transcendent role
that the steering committee played as a support point for Argentina's
success.”

 Not everyone was very happy to do it.

 Micozzi described the efforts he had to make behind the scenes to persuade
his executives to provide full support to the quality program:

 At the beginning of the program, we noticed that the smallest

participation in our quality action teams was from the sales
department. We felt this was inconsistent with our quality program's
primary purpose of customer satisfaction. To ensure the teams could
achieve that, it was necessary to have sales people on the team;
Therefore, I had a conversation with the sales manager and told him
this. His response was: you can't take people out of their areas to
participate in teams . My answer was : “it is necessary to do so when
the goal is an improvement in customer satisfaction.

 After nine months of such conversations, the results were surprising.

Currently, 80% of Gillette's sales force participates in quality action teams.

 People liked working on quality action teams because they learned about
the entire company and, through experiences, gained a global perspective.
He stated that, in 1998, “[…]people enjoyed being part of total quality
management because they could see that their ideas were respected and
even implemented.”

 To increase the likelihood of successful execution of the team's goals, new

steps were created in the process. First, it was agreed that the steering
 committee would set annual objectives for the total quality management
program.

 “Víctor has a very special attitude; He supports and helps all the people in
the organization with all related issues. Participate a lot; When a team has
problems, he collaborates and helps them. He has a very strong character,
he is a very good analyst and transmits real commitments, not just
theoretical ones; but something real.”

 To sustain the momentum that the total quality management program

developed at Gillette Argentina, Walker initiated two new aspects of the
effort in 1994 and 1995. The first was the inclusion of measures of
participation in total quality management in the annual performance
evaluation. Walker and others felt that the numerous calls at the end of the
year to determine, "How many teams did I serve this year?" showed the
depth of commitment the staff felt to the program.

 The second was the creation of a special recognition program called quality
stars. The steering committee created a recognition called the Quality Star
that would be awarded annually to four employees from different parts of the
company who had contributed the most that year to total quality
management in Argentina. These stars formed a group that met to suggest
how to improve and deepen the total quality management program.

Results of total quality management

 According to Carlos Rotundo, total quality management programs generated

benefits for the company that were both tangible and intangible. “Our most
important results,” he argued, “were: first, the understanding among the
areas that these changes could only be made with the participation of
people, and second, the creation of a climate of teamwork. We do not work
with orders, but with general consensus, we listen to the problems of others
and work together to solve problems.”
 Another primary outcome of total quality management was a change in
culture that emphasized everyone's focus on customer satisfaction.
Furthermore, he considered that culture had become a real situation of
delegation of authority in which people were truly trusted and, therefore,
believed in their own decisions. In a very significant way, he considered that
the culture had changed in another aspect: “[…]that people had developed
the habit of working to eliminate the source of their problems.”

 The tangible benefits to consumers of Gillette Argentina's quality program

were very clear in 1998. That year the company conducted another
customer audit to verify that its total quality management program had the
business benefits it intended. Conducted by Research International, a U.S.-
based consulting firm, the survey solicited the opinions of Argentina's
leading wholesalers and retailers when comparing Gillette to major
competitors in each product line; for example, Colgate, Unilever, Bic and
Eveready.

 The survey revealed that Gillette had moved from 6.5 on a 10-point
satisfaction scale in 1991 to 8.0 in 1994 and to the level of best dealer in
1998. In a specific measure of customer satisfaction of great importance to
the large retailers that were Gillette's largest customers, the order
completion rate went from 85% in 1994 to 97% in 1998.

 Likewise, Gillette Argentina obtained significant financial benefits, annual

sales grew by 19% in the years between 1993 and 1998, and the average
growth in profits during this same period was 22%.

 Inventory turns were from 4.8 to 8.7, and operating expenses during that
period decreased 40%. Finally, the return on assets increased by 60% in the
same period. Walker estimated that the increase in profitability directly
attributable to total quality management had been $17.8 million between
1993 and April 2000, plus all non-monetarily quantified benefits, especially
those related to external customers and improvements to internal
processes.
CONCLUSION

 The enduring elements of total quality management are the focus on

customer satisfaction, both internal and external, and the elimination of
barriers between departments. The success of the company depends on
total customer satisfaction, regardless of whether it is Walmart or the feather
assembly area.

 The basic elements of total quality management, such as graphical

representation of business processes, continuous improvement, open-
mindedness toward change, and the ability to work as a team, are still
critical to success. The ability to work as a team is more important than
ever.

 Currently in Latin America, things are changing rapidly due to the

introduction of major retailers from the United States and Europe such as
Carrefour, Promodes, Ahold and Walmart to the retail market; The
technology used for the point of sale is as sophisticated as any other in the
world. The top four clients represent 80% of the industry. Therefore, there is
still a huge opportunity for companies to put the customer first.

 Jorge Micozzi said “without teamwork and without concentration on the

client, one is destined to fail, now or as happened in 1993, when total quality
management was implemented for the first time in Argentina.” To increase
market share elsewhere on the continent and to preserve it in Argentina, he
believed that quality principles should be the way the company worked.
Furthermore, he was convinced that Argentina's quality programs should be
exported to the rest of Latin America. His only real question was how to do
it.
Analysis questions
1. What principles and practices have allowed quality to flourish at
Gillette Argentina over the years?
• Focus on customer satisfaction.
• Formation of cross-functional quality action teams to achieve greater
efficiency.
• Conduct a survey to find out what consumers thought of them, and then
10 of the criticisms they expressed were selected and assigned to each
team to work on.
• Specialized training for quality action teams in a four-phase problem-
solving process, called FADE:
• Focus: development of a problem statement.
• Analysis (Analyze): using data to understand the magnitude of a
problem.
• Development (Develop): determination of a solution and an
implementation plan.
• Execution (Execute): implementation of the plan and measurement of its
impact.
• Training in seven basic quality tools
1. verification sheets
2. control charts
 3. fishbone diagrams
4. histograms
5. Pareto charts
6. run graphs
7. scatter plots
• Training by ODI (Organizational Dynamics Inc.) consultants to directors,
administrators and 20 other people who would become the instructors of
the rest of the organization.
• Creation of a quality council.
• Creation of a program to measure staff participation and annual
recognition of staff who had contributed the most to total quality
management.
2. How can management ensure that quality performance in Argentina
continues to be high in the future?
• Assign a person who, within their functions, has the responsibility of
preserving and improving the total management of quality in the area.
• Training for personnel under your responsibility.
• That the council continue to exist and meet weekly, where the indicators
or reports of the progress or difficulties that have arisen can be seen.
3. How should quality practices and principles be exported to the rest of
Latin America?

• Hold “Open House” at Gillette Argentina so they can appreciate their

results.

• A manual should be prepared, written by Jorge Micozzi and Victor

Walker, explaining how the process of planning and implementing total
quality management was in Gillette Argentina.

• That the manual also explain how the quality action teams solved the
problems that arose in their areas.

• That they have personalized training from Gillette Argentina staff.