CHARLOTTE, N.C.—Now that Continental General Tire has achieved ISO 9001 quality certification in all of its plants, the tire maker is turning its sights toward improving the quality of its customer service. ``We are still not happy at all with the way we service customers,'' said President Bernd Frangenberg. ``We have to improve our service to the dealers.''
Mr. Frangenberg talked about CGT's corporate-wide quality efforts in a recent interview at the firm's Charlotte headquarters. He also touched on how the company has overcome a huge loss of business to Sam's Club.
In a move to improve customer service, Mr. Frangenberg announced a reorganization Oct. 1 of the company's commercial and retail divisions, breaking them into smaller business units—two in the passenger tire segment and two in the commercial area.
The new business units are designed to move the company away from a ``functional'' mode of operation to one that consists of ``process-oriented'' teams, Mr. Frangenberg said.
In essence, CGT will define the goals and responsibilities of the process teams, then train the employees ``for things that cut across the various functions'' to do what is best for the company overall.
Employees will be empowered and their pay will be based on CGT's profit performance.
Mr. Frangenberg will lead the replacement passenger and light truck tire unit himself.
This is a key area for CGT. ``It's no question, the replacement market is one of the most important jobs for CGT,'' Mr. Frangenberg said. ``That's where we had the biggest problems in the past, where we had the biggest setbacks and where the most work is still to be done.''
The other business units and their leaders are: original equipment, passenger and light truck unit, headed by James Rippy, senior vice president of manufacturing operations; medium radial truck unit, led by Tom Reese, executive vice president, commercial tire division;
and off-the-road tires, headed by Wayne Mitchell, senior director off-road tire operations.
Mr. Frangenberg said he believes these process-oriented teams, which become operational Jan. 1, will propel CGT to the next level of efficiency and profits.
CGT's ongoing quality efforts, Mr. Frangenberg said, will result in further employee reductions, although there are no fixed plans for this and no set number of layoffs the company wants to reach.
CGT's efforts at improving customer service are an extension of the ISO 9001 quality effort, which ties together all elements of the company beyond the classical quality control mentality.
``We are the first tire company in the U.S. to get it (ISO 9001 certification) not only in the plants, but also its commercial units, purchasing, R & D, sales and marketing,'' he said. ``It's the most comprehensive quality certification you can get.''
CGT has made tremendous progress in product quality, overcoming the problems of a few years ago, Mr. Frangenberg said.
An example of this can be seen in CGT's return and adjustment (R & A) costs, which have declined dramatically over the past few years to a level Mr. Frangenberg called ``world class.''
``I think dealers dealing with us have realized that,'' he said.
The quality efforts, combined with better technology, have allowed CGT to bring tires to market quicker with improved uniformity and wear, he added.
To keep improving, Mr. Frangenberg has made quality objectives part of his business plan. He wants CGT to achieve an even more strenuous quality certification, QS 9000, by the end of 1997.
He also wants to reduce the R & A rate another 10 percent next year and improve customer satisfaction in areas such as fill rates, back orders and delivery rates by 20 percent.
Asked about the company's greatest accomplishment in 1996, Mr. Frangenberg pointed to CGT's compensating for a huge loss of business at Sam's Club, the U.S.'s largest warehouse club chain.
In 1995, Sam's unexpectedly reduced its tire purchases from CGT by 2 million units; the tire maker will lose another 2.5 million units worth of business from Sam's this year, Mr. Frangenberg said.
``That, on an annual basis, is something like 4.5 million tires...,'' the CGT president said. ``Can you imagine what that means for a company like ours? It's half a factory.''
Yet CGT was able to survive that blow by increasing sales in the replacement and OE markets, thereby reducing its dependency on a single customer.
Sam's, which still ``is a very valuable customer to us,'' now accounts for less than 20 percent of CGT's replacement business, down from a level Mr. Frangenberg called ``dangerously high.''
As for profitability, CGT expects ``for the first time a profit we can at least speak about'' in 1996, Mr. Frangenberg said. And while it's not yet at a level he considers satisfactory, ``it's a sign of all the hard work that's been done,'' he said.