In the early 1980s Hewlett-Packard Company (HP), a respected manufacturer of computers and peripherals, learned there was still room for improvement. HP's "teacher" was its Japanese subsidiary, Yokogawas-Hewlett-Packard Limited, which staged a dramatic turnaround by applying total quality control methods and won the prestigious Deming Prize in 1982.
The following year, CEO John Young called for a decade-long, company-wide objective of reducing the in-service failure rate of HP products by a factor of 10.
Among the units based at HP's 1990 Best Plants award-winning Roseville facility are the Networked Computer Manufacturing Operation (NCMO), which builds multi-user computer systems, including the HP 3000 and HP 9000 series; and Roseville Personal Computer Operations (RPCO), which makes HP's high-volume line of PCs and display terminals.
By 1990, both the 3000 and 9000 lines met the 10x goal. On the PC side, terminals were 30 times more reliable than they were at the beginning of the 1980s.
In addition to using problem-solving teams to achieve continuous improvements, Roseville has adopted a hoshin strategy. (Hoshin is the Japanese term for a breakthrough advance.) A structured planning technique focuses the entire organization on a limited number of breakthrough targets.
In the NCMO unit, one hoshin effort dealt with "cost-of-complexity" issues, building on a pioneering effort in activity-based costing (ABC) launched in 1985. "ABC accounting, directly allocating costs to a product, has a lot of implications in terms of better pricing decisions and make-or-buy decisions," says Chris Barmeir, NCMO controller. "But our focus has been on giving the right kind of messages back to our lab designers.