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Picture what is optimum," starts Robert Harlow, his eyes growing wide and his mouth curled in a Cheshire Cat-like grin.

"Picture what is as perfect as possible.  Zero downtime?  You name it.   Who says it's impossible?  Just think about what is optimum and do what it takes to get there."

Unlike the fictional feline from Alice in Wonderland, Harlow does not live in a world of imagination.  He is the senior vice president of global supply chain management for Tenneco Automotive, the multibillion-dollar corporation that makes ride control and emission control products under worldwide brand names Monroe and Walker.  It is one-half of Tenneco Inc.  Tenneco Packaging, makers of such products as Hefty and Baggies plastic bags, is the other half.

Harlow, his fellow decision-makers and their corporation can, and do, dream.  But unlike many peers, this group found a way to turn many of those dreams into reality.   What's reality?

Tenneco Automotive saved more than $500 million from 1996 to 1998 by eliminating waste and streamlining processes.  Its goal for 1999?  Another $100 million.

But cutting costs hasn't meant lower standards.  From plant to plant, throughput is at an all-time high.  Downtime is at an all-time low.  Rates for defects, scrap and rework have plummeted.

For the past two years, a Tenneco Automotive plant has been a finalist in Industry Week magazine's awards honoring the 10 best manufacturing facilities in the United States.   In 1997, its plant in Paragould, Ark., earned a top-10 award.

Tenneco Automotive's amazing cost-reduction and quality numbers and its national honors are the byproducts of a concept called "cost of quality."

"Cost of quality is a way of looking at costs and separating them into 'good costs' and 'bad costs,' " says Dennis Ruddy, VP of global manufacturing.  "It's where you look at scrap, rework, things that are essentially more than the minimum to produce a product and something that you need to target and eliminate."

Cost of quality is expressed in a percentage.  (What percentage of the process is "bad cost"?)  The higher the number, the more waste present in the system.

Tenneco Inc. started monitoring cost of quality in 1991.

"We benchmarked that year to determine what our cost of quality was as a percentage of revenues," says Harlow.  "Most divisions found their cost of quality somewhere between 20 and 30 percent of sales.  That's a big number.  At that time, Tenneco Inc. was a $15 billion a year company.  At 30 percent, that's $4.5 billion of waste."

In 1991, Tenneco Automotive was at 25 percent.  With more than $2 billion in revenues that year, waste was more than $500 million.

In 1998, it dipped below 7 percent.  With more than $3.2 billion in
revenues, waste was cut to less than $225 million.

How did Tenneco Automotive do it?  I traveled to Arkansas to find out.

Click on the following links and read about some of the innovations and ideas that keyed the turnaround.

Team Tenneco (includes sidebar on TA kaizen teams)
Getting the most out of suppliers
A monumental maintenance overhaul
'Coach' Breckenridge guides his team

This article appeared in the April/May 1999 issue of MRO Today magazine.   Copyright, 1999.

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