Old Dog, New Tricks: How Measurement Turned a Company Around

Management

In the mid-1990s one of the oldest names in the
water/wastewater business was in turmoil. Faced with a move to a new location, a
new outsourced manufacturing process, two union formation attempts, poor
documentation, missed orders and generally unhappy customers, USFilter Wallace
& Tiernan Products was on its last breath.

"We had to sink, to rise," said Joseph Millen,
executive vice president of the municipal equipment group for USFilter and the
man whose task it was to turn around the situation.

Background

Wallace & Tiernan Products began in 1913 with the
invention of the world's first chlorinator by Charles Wallace and Martin Tiernan.
It was the first practical and effective means for the controlled feeding of
chlorine gas to sterilize drinking water. It was a major advancement in the
field of public health. During World War I the company produced more than 4,000
mobile units for the military.

Over the years, the company has developed dry chemical
feeders for granular and powdered materials for many industries. It also has
developed small diaphragm pumps for feeding liquid sodium hypochlorite for the
disinfection needs of swimming pools and small water supplies. Today, the range
of products includes equipment for liquid, dry and gas feeding.

In 1996 USFilter acquired Wallace & Tiernan from North
West Water (a United Kingdom water utility). A continued series of problems and
circumstances put the company on the brink of extinction.

"In early 1997 there was some talk of closing down.
However, the brand still had value," Millen said.

The problems were numerous. After being purchased, the company
moved to Vineland, N.J., from Bellville, N.J. With the move came the loss of
many experienced employees in the component manufacturing process. Therefore,
the company decided to outsource most of the parts process at the new plant.

The hope was to find suppliers to manufacture the parts up
to the standards necessary based on the company's drawings and documentation.
However, Wallace & Tiernan could not qualify suppliers fast enough and the
documentation they provided to produce the parts was not good enough. The end
result was missed orders, late orders, unhappy customers and a built-up
backlog.

"Fortunately, through all this, there never was a
degradation of the equipment," Millen said.

With some of the orders more than two years late, something
had to be done. Millen was brought in to help fix the problems. Trained as a
mechanical engineer with a Masters in environmental engineering, Millen is a
strong proponent of goals and process measurement. Everything is measured.

Recovery

The first step was to address the backlog issue. Every
single order was analyzed and prioritized by date. A metric was set up for date
discipline in the backlog. Only if an order dealt directly with the public's
health or a safety violation was the date log superceded for order fulfillment.
(For a description of metrics, see the sidebar on the next page.)

Of course, the customers had to be contacted and advised of
order progress. Distributors and representatives were crucial to this process.
These people needed to calm the customer as well as validate their need in real
terms.

"These people were the glue to the operation. They had
the closest contact with the customer," Millen said.

At the beginning of the recovery, Millen would field five to
eight hostile calls from customers a day. Therefore, Millen would meet with his
managers and review the backlog status everyday.

"Our action steps were based on priority due to the use
of metrics," Millen said. "We measured change, progress and
improvements."

For example, they not only measured how late they were on
the orders, but they had a metric with a weighted value of time late.
Therefore, these measurements had concrete numbers for comparison.

While measurements were important for success, people also
were vital. "We had to make employees and suppliers aware of the problems,
show them how they fit in to the solution, make them personally accountable for
their actions and emphasize how we win as a whole team," Millen said.

In the beginning, it was a tenuous worker situation. There
were two attempts at organizing unions. These efforts defocused some of the
energy of employees and management of the task at hand.

It took more than two months just to reverse the backlog
trend. It took four months to get all the metrics in place. It wasn't until
more than six months into the change that the company knew where they were and
if progress was being made. They were then able to target goals for the
upcoming months and put actions in place.

For example, from the initial product metric results the company
knew that parts were out of standard. It took them awhile to find out if the
drawings were accurate, if the supplier was at fault or if something else was
wrong. Part of the problem was the company lost institutional knowledge and
expertise in the move.

"Measurement is good, but you need to measure the right
things," Millen said.

Millen estimates that they currently have between 200 and
250 metrics. Management is keen on explaining to employees and customers what
they are measuring along with how it will help them succeed. They are plastered
all over the plant. Millen often can be seen carrying around his binder
containing the metrics.

"Businesses lose efficiency by not doing the
fundamentals well," Millen said. "You can't achieve excellence
without good fundamentals. Tracking these processes is a good start."

Commitment

Wallace & Tiernan also had the unique situation where
they could harvest the expertise of other USFilter companies for advice.
Experts in operations, material management and finance all came in and offered
corrective measures at the start of the process.

"It was a true advantage to have these people come in.
Senior management [at USFilter] was committed to correct problems and have us
succeed," Millen said.

Of course, there also were many long hours from Vineland
staff put in, especially in the beginning. To their credit, faulty material
never rose.

After the corrective measures took hold, it was time to look
at the processes and procedures in place. Every element was analyzed and refined.
For example, with regard to the inventory process, questions asked included the
following.

-                Was
the count accurate?

-                Was
the material in the right place?

-                Was
the stock correct?

-                Does
the part resemble the drawings?

The goal was improvement and increased efficiency. Within
nine months of the changes, the company doubled their throughput. They
determined what automation was necessary by first gaining efficiency through
their understanding of the business process.

Even today, Millen meets monthly with his management team on
the metrics. "By sharing data, everyone has a piece in the success or
failure of the operation. Analyzing the data leads to actions needed."

New Goals

Millen is constantly resetting his goal-lines. "If you don't,
somebody will pass you by," Millen said. "Never be content with past
results."

Five years from rock bottom, the company finally is now able
to look outward instead of inward. The goal is an increased level of
profitability. Customers are demanding higher quality at lower prices. The
company feels it has the processes and people in place to meet these demands.
They feel they know where to start when looking for the answers.

"This turnaround did not occur because of one person or
process. USFilter nurtured it and made it successful. It was a true team effort
with the help from good senior management," Millen said.

Wallace & Tiernan has become a benchmark for other
USFilter companies. While not the most profitable, the company has laid the
groundwork on how to use metrics and strategies to foster growth.

Bill Swichtenberg is Editorial Director of WEM.

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