Managing for Quality and Performance Excellence 10th Edition by James Evans ,William Lindsay

Exercise 38

Branch-Smith, Inc., is a fourth-generation family business founded by Aaron Smith in 1910. This discussion characterizes the company and its strategic planning processes at the time it received the Baldrige Award in 2002. While the company has evolved and changed significantly, this example serves as a comprehensive case study of how performance excellence is integrated into the strategic planning process. It is historically accurate but may not reflect current practices.
The Branch-Smith Printing Division in Ft. Worth, Texas, has only 70 full-time employees and specializes in creating multipage, bound materials with services ranging from design to mailing for specialty customers. The company produces publications, magazines, catalogs, directories, and books, as well as some general commercial printing, typically in quantities generally less than 20,000. It offers a complete array of turnkey services to customers, including design, image scanning, electronic and conventional prepress work, printing, binding, and mailing/delivery.
Within the Printing Division, the context of the business is set through their Vision Statement: "Market Leading Business Results through an Expert Team providing Turnkey Solutions to Customer Partners." This vision expresses the desire to produce strong and sustainable results through balanced performance improvement. It creates success for long-term customers and rewards for their employees who bring solutions to bear on our opportunities. The mission is stated as: " The mission of the Branch-Smith Printing Division is to provide expert solutions for publishers." This purpose guides Branch-Smith Printing in meeting customers' needs on its own terms. Publishers work with them because Branch-Smith focuses on serving publishers' niche requirements for printing as well as offering the vertically integrated value-added services that result in lower costs, reduced cycle times, and on-time delivery. An important component of the solution is easy accessibility for the customer, and timely and appropriate information. It is also expressed in its Quality Policy, which states: "Branch-Smith Printing will seek to continuously improve results for all stakeholders through the application of its Innovating Excellence Process."
The printing industry is very competitive with numerous companies seeking market share. Branch-Smith Printing stands out among competitors based on its approach for identifying and serving a specific niche, focusing on development of long-term relationships, partnering with suppliers, and involvement in standard defining industry associations. To ensure a competitive position, it focuses on serving a select market niche that most other printers have difficulty serving well. Many competitors focus on attracting jobs with greater quantity outputs because of the limitations of their equipment. They charge much higher prices for the shorter runs, thus giving Branch-Smith an advantage in this market. Its equipment and technologies are directed to cost-effectively serve this niche through sheet-fed press versus the popular web printing. This technology allows for faster changeovers from one type of print to another and process automation offers cost savings.
Although Branch-Smith is a small family business, they engage in a formal planning process annually with monthly updates during management reviews. The process is built around a continuous learning cycle that begins with lessons learned from previous years to determine and implement improvements. The strategic planning process (SPP) is a key tool the company uses to visualize the ideal future and create strategies and plans to achieve it, and to incorporate improvement opportunities into prioritized action plans. Strategic planning occurs formally each year with updates and tracking conducted monthly during management reviews. Ongoing updates throughout the year allow the company to correct direction or to proactively respond to risks and opportunities.
Figure 11.14 represents the full strategic planning, deployment, and review process. A month prior to strategic planning, assignments are made to PLT members to research information needed for strategic decision making. The assignment list includes 28 specific areas for understanding organizational and supplier/partner capabilities, market conditions, stakeholder input and requirements, competitive information, industry issues, and risks. Branch-Smith gathers information through a customer survey, lost revenues, and complaints to identify customer needs and their importance, trends and directions of the printing industry, and market requirements from industry association networking. Involvement in professional associations provides industry knowledge and benchmarks concerning customer needs and competitor actions, including emerging tools and competitors. Trade magazines and discussions with key suppliers provide additional input about customer needs, competitor directions, and supplier capabilities. Trends and directions in technology and other environmental changes are also identified through involvement with trade associations and external benchmarking groups, and through general understanding of the business climate gained through newspapers, journals, and periodicals.
FIGURE 11.14 Branch-Smith Strategic Planning Process

Source: Branch-Smith Printing, Strategic Planning Process. Courtesy of David Branch, President.
One important source of information for strategic planning regarding human resource needs and capability is an annual employee survey. Human resource and operational capabilities are identified through review of aggregate measures of performance and productivity, which are enhanced with feedback from scheduled ISO audits that identify processes in need of improvement. Primary inputs on process efficiency and capability come from in-process productivity measures, revenue lost due to complaints, and other measures, which include spoilage cost, frequency, and reason. These measures are recorded daily through electronic, shop-floor data collection. Strategic partnerships with key suppliers help to gather information about availability of materials and supplier growth plans to help determine their capability to meet Branch-Smith's changing needs. Finally, part of the annual operational review involves understanding suppliers' current financial position and trends in profitability and utilization, which is compared to external economic conditions to identify areas of potential risk and opportunity over the short- and longer-term.
The formal planning activity is conducted during the fall of each year by the Print Leadership Team (PLT) through a series of meetings on and off site. Step 1 of Figure 11.14 ensures that lessons learned and improvement cycles are built into the SPP. The PLT analyzes the effectiveness of the overall planning and deployment process to determine and implement improvements. The effectiveness of the leadership system is also evaluated and areas for improvement for the coming year are determined. These improvements are documented as potential actions for the strategic plan. In Step 2, the company reviews its vision, mission, and values to ensure they still reflect the current environment. Next, management reviews and revises objectives, which are intended to communicate to employees and all stakeholders what the company expects to accomplish in the next three to five years.
In Step 3, the company conducts an operational review to analyze the results of the organization's key performance measures for the prior year. They then review and incorporate information into the plan from annual Baldrige-based self-evaluation or from external review feedback. This analysis provides an understanding of key strengths and weaknesses for the SWOT (strengths, weaknesses, opportunities, and threats) analysis in Step 5. Step 4 involves a business analysis to evaluate the external environment to forecast changing trends and gain market requirements. PLT members bring forward defined inputs, including literature and studies for scanning the environment and identifying new opportunities for products, services, competitive advantage, marketing, and technology approaches. From the review of this information, the PLT develops a list of potential opportunities and threats for each environmental element. In Step 5, a SWOT analysis is conducted based upon the issues identified in Steps 1, 3, and 4. SWOT elements are used to identify and prioritize key areas to address.
Based upon the SWOT review, the PLT develops short- and longer-term strategies and actions to move the company toward its vision and objectives. They add in action plans that are still in process from the prior year to allow them to also be prioritized, set appropriate measures and goals for objectives and strategies, and sort and prioritize the action plans. Action plans are assigned to PLT members to develop (or update) steps, timelines, resources, costs, and measures of success. These plans are then entered into the Quality Improvement Database (QID) for review and tracking. A final balancing meeting is held to review the plan as a whole and make needed adjustments to timing of plans and financial and human resource requirements to balance the plan to resource constraints. In Step 6, the company creates documents and methods to support deployment of the plan.
Results of strategic planning are first communicated to employees through a deployment meeting. Leaders, with their departmental teams or other appropriate members, then discuss the plans during follow-up sessions. Teams and individuals update goals and mission statements for their departments that support the division plans, thus aligning actions, measures, and goals throughout the organization. Other stakeholders receive a variety of communications to detail our plans and strategies for informational and planning purposes. For example, a supplier appreciation luncheon is held to provide a more direct opportunity to present plans to key supplier partners and receive feedback on plans and needs. In Step 7, financial resource requirements to accomplish the action plans are rationalized into short- and longer-term budget projections. Then, in Step 8, ongoing tracking of action plans is conducted through monthly management review of overall progress to plans and key measures. Throughout the year as needed, the strategic plan is updated with new or modified action plans to reflect the changes to the environment.
Branch-Smith' s current objectives are "1) To continuously improve business results through a process improvement focus, partnership with our suppliers, and strong financial performance. 2) To become the partner of choice for our customers through: a targeted marketing plan, excellent execution to customer requirements, and relationship development. To become the partner of choice, our value package must be continually improved. 3) To become the employer of choice through: a caring, involved culture; continually improving training systems; providing growth opportunities; and industry leading compensation, benefits, and reward and recognition systems. We extend the same quality environment to coworkers as we extend to customers." How do these objectives address the strategic challenges cited in the case? What types of activities might the company deploy to achieve these objectives?
Source: Branch-Smith Printing, Strategic Planning Process. Courtesy of David Branch, President. This excerpt is reprinted with the understanding that the material herein included is historically accurate but is not in practice today.