SEITZ CORPORATION: PRODUCING QUALITY GEAR-DRIVEN AND LINEAR-MOTION PRODUCTS The Seitz Corporation, a QS 9000 certified organization based in Torrington, Connecticut, is a leading designer and manufacturer of thermoplastic motion control systems and components and an industry leader in plastics and gear trains. Founded in 1949 by the late Karl F. Seitz, the company began as a small tool-making business and grew slowly. In the late 1960s, the company expanded its services to include custom injection molding. As their customer base grew to include leading printer manufacturers, Seitz developed and patented a proprietary line of perforated- form handling tractors. Utilizing its injection-molding technol- ogy, the company engineered an all-plastic tractor called Data Motion, which replaced costly metal versions. By the late 1970s, business was booming, and Data Motion had become the world- wide industry leader. In the 1980s, foreign competition entered the business equipment market, and many of Seitz's customers relocated or closed shop. The ripple effect hit Seitz as sales declined and profits eroded. Employment at the company dropped from a high of 313 in 1985 to only 125 in 1987. Drastic changes had to be made at Seitz. To meet the challenge in 1987, Seitz made a crucial decision to change the way it did business. The company implemented a formal five-year plan with measurable goals called "World- Class Excellence Through Total Quality." Senior managers devoted many hours to improving employee training and involvement. New concepts were explored and integrated into the business plan. Teams and programs were put into place to immediately correct deficiencies in Seitz's systems that were revealed in customer satisfaction surveys. All employees from machine operators to accountants were taught that quality means understanding customers' needs and fulfilling them correctly the first time. Once the program started, thousands of dollars in cost sav- ings and two new products generating almost $1 million in sales resulted. Annual sales grew from $10.8 million in 1987 to $19 million in 1990. Seitz's customer base expanded from 312 in 1987 to 550 at the end of 1990. In the decade of the 1990s, Seitz continued its steady growth. By 1999, Seitz was shipping products to 28 countries, and customers included Xerox, Hewlett Packard, Canon, U.S. Tsubaki, and many more worldwide. By 1998, sales topped the $30 million mark. In January 2000, the company established the Seitz Motion Control Systems Co., Ltd., in Changzhou, China, about 150 miles northwest of Shanghai, to provide product and tooling design engineering, sourcing and supply chain management services, and contract manufacturing. The Seitz Corporation headquarters is located in Torrington, Connecticut in an 80,000 square foot facility with over 150 associates, 50 molding machines ranging in size from 35 tons to 770 tons, an in-house tooling department, and a corporate staff. While the primary core competency of the Seitz Corporation is rotary and linear motion control, making them an industry leader in plastics and gear trains, Seitz offers a full range of product design and tooling services. Discussion 1. Seitz's list of several hundred business-to-business cus- tomers continues to grow. Managers would like to know whether the average dollar amount of sales per transac- tion per customer has changed from last year to this year. Suppose company accountants sampled 20 customers randomly from last year's records and determined that the mean sales per customer was $2,300, with a standard deviation of $500. They sampled 25 customers randomly from this year's files and determined that the mean sales per customer for this sample was $2,450, with a standard deviation of $540. Analyze these data and summarize your findings for managers. Explain how this information can be used by decision makers. Assume that sales per customer are normally distributed. 2. One common approach to measuring a company's quality is through the use of customer satisfaction surveys. Suppose in a random sample, Seitz's customers are asked whether the plastic tractor produced by Seitz has out- standing quality (Yes or No). Assume Seitz produces these tractors at two different plant locations and that the tractor customers can be divided according to where their trac- tors were manufactured. Suppose a random sample of 45 customers who bought tractors made at plant 1 results in 18 saying the tractors have excellent quality and a ran- dom sample of 51 customers who bought tractors made at plant 2 results in 12 saying the tractors have excellent quality. Use a confidence interval to express the estimated difference in population proportions of excellent ratings between the two groups of customers. Does it seem to matter which plant produces the tractors in terms of the quality rating received from customers? What would you report from these data? 3. Suppose the customer satisfaction survey included a question on the overall quality of Seitz measured on a scale from 0 to 10 where higher numbers indicate greater quality. Company managers monitor the figures from year to year to help determine whether Seitz is improving customers' perceptions of its quality. Suppose random samples of the responses from 2008 customers and 2009 customers are taken and analyzed on this question, and the following Minitab analysis of the data results. Help managers interpret this analysis so that comparisons can be made between 2008 and 2009. Discuss the samples, the statistics, and the conclusions. Two-Sample T-Test and CI: 2008, 2009 Two-sample T for 2008 vs 2009 N Mean StDev SE Mean 2008 75 6.466 93 6.604 0.352 0.398 0.041 0.041 2009 Difference mu (2008) mu (2009) Estimate for difference: -0.1376 95% CI for difference: (-0.2535, -0.0217) T-Test of difference = 0 (vs not = 0): T-Value = -2.34 P-Value = 0.020 DF = 166 Both use Pooled StDev = 0.3782 4. Suppose Seitz produces pulleys that are specified to be 50 millimeters (mm) in diameter. A large batch of pulleys is made in week 1 and another is made in week 5. Quality control people want to determine whether there is a differ- ence in the variance of the diameters of the two batches. Assume that a sample of six pulleys from the week 1 batch results in the following diameter measurements (in mm): 51, 50, 48, 50, 49, 51. Assume that a sample of seven pulleys from the week 5 batch results in the following diameter measurements (in mm): 50, 48, 48, 51, 52, 50, 52. Conduct a test to determine whether the variance in diameters dif- fers between these two populations. Why would the quality control people be interested in such a test? What results of this test would you relate to them? What about the means of these two batches? Analyze these data in terms of the means and report on the results. Assume that pulley diam- eters are normally distributed in the population. Source: Adapted from "Seitz Corporation," Strengthening America's Compet- itiveness: Resource Management Insights for Small Business Success," published and the U.S. Chamber of Commerce in association with the Blue Chip Enterprise Initiative, 1991. Case update based on Seitz Corporation, http:// www.seitzcorp.com/about.htm by Warner Books on behalf of Connecticut Mutual Life Insurance Company