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How're We Doing?

One company's use of an annual report card from customers to measure competitive performance.

Granite Rock Co.'s annual report card from customers, and what's done with the grades

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Granite Rock Co., of Watsonville, Calif., is a 100-year-old family-owned company with operations in a dozen locations between San Francisco and Monterey. The company quarries granite and produces concrete, asphalt, sand, and gravel. It also buys and resells such materials as brick, cinder block, and drywall, as well as masonry tools. With 1990 sales of $90 million, it is one of the smaller construction-materials companies around. But it is an industry leader, attracting a steady stream of international visitors interested in learning more about what it does.

Granite Rock's fame is based largely on its reputation as the high-end producer in an industry that all but defines the term commodity business. Construction-materials companies habitually compete on price. Customers are conditioned to seize the low bid, assuming -- wrongly -- that if you've seen one load of stone, you've seen them all. But Granite Rock has always opted to turn out high-quality rock and back it up with high-quality customer service. On average, Granite Rock customers pay up to 6% more than they would be charged by the competition. "Our competitors tend to see price as the main wedge," says Wes Clark, division general manager of the company's three northern concrete plants. "We are not low price, but we are high value."

But charging a premium and touting itself as providing the best value in a commodity-based business puts an obvious burden on Granite Rock. It must work hard to prove to customers that its products and services are worth the extra cost -- which means making sure that employees strive to provide the kind of value customers are willing to pay for. How can the company accomplish this? First, it must understand clearly how its customers define quality and service. Second, it must regularly monitor customers' opinions about Granite Rock's performance relative to that of its competitors. Third, it must communicate all this information to its work force.

Granite Rock handles the first step of the process in the traditional manner. Every three or four years, each division conducts an extensive survey of its customers, probing their wants and needs as they relate to each of the company's product lines. Among other things, the survey asks customers to rank the most important factors in choosing a supplier. Clark's division conducted such a survey in 1987. Another is being done this spring.

It is in the second and third steps that Granite Rock breaks new ground. To compare its own performance with that of its competitors, every year the company conducts an opinion survey that amounts to an annual report card from the customers. All customers receive a short survey form on which they are asked to grade their top three suppliers in terms of product quality and customer service.

Granite Rock then combines the long-survey data on customer priorities with the short-survey data on competitive performance to produce graphs that are posted on bulletin boards around the company. The graphs show employees at each plant how they measure up in the eyes of their customers.

The key word here is measure. "We have a strong belief that if something is worth doing, it's probably worth measuring," says Dave Franceschi of Granite Rock's quality-planning and -management department. The annual report card, in fact, is just one of about 40 different ways Granite Rock tracks its various operations. Is all the paper shuffling and number plotting really worth it? Franceschi thinks so. "This is a way for us to sound an alarm if something's not right," he says.

"We believe that you don't stress a negative -- you chart it," adds Wes Clark. "Our people are competitive. They will look at that negative and want to do something about it."

(continued)

Ready Mix Concrete
Opinion Survey

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Please write in the names of the three suppliers you use most often for concrete. Then evaluate each company's performance using this scale:

A = The Best

B = Above Average

C = Average, Same As Their Competition

D = Needs Improvement

F = Terrible

N = No Opinion

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Overall Product Quality:
Concrete Workability

Concrete Pumpability

Concrete Consistency

Concrete Slump Continuity

Concrete Strength

Concrete Finishability

Concrete Set Time

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Overall Customer Service:
Dependable, On Time Delivery

Salesperson Product Knowledge

Driver Courtesy and Skill

Dispatcher Eager to Help

Ordering Convenience

Responsive to Special Needs

Resolves Mistakes Quickly

Price

Billing Accuracy

Credit Terms

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The Annual Report Card
Once a year, each of Granite Rock's 12 plants sends out forms like the one above to all its customers. The specific questions vary slightly from plant to plant, each of which is responsible for a different product, but the format is the same. Some divisions use color-coded survey forms to distinguish between types of contractors. (Blue forms go to landscapers. Masons receive orange forms.) All the completed forms are addressed to the divisional headquarters, where the results are compiled and forwarded to the rest of the division.

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The Grading System
The form asks the customer to grade its top three suppliers -- one of which is presumably Granite Rock -- on their performance in terms of product quality and customer service. Although there are six grades in the scale, the company bases its charts on the total number of A's and B's a supplier gets in a given category. "A C is neutral," says Wes Clark. "If they give you a C, they feel there's no difference between you and everybody else. If they give you a D or an F, they are just punishing you." But A's and B's amount to fairly uniform positive votes, he reasons. An A is for a job well done. A B is a similar response from a tougher grader.

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