CASE

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 1960's, 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 technology, the company engineered an all-plastic tractor called Data Motion, which replaced costly metal versions. By the late 1970's, business was booming, and Data Motion had become the world-wide industry leader.

In the 1980's, 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 savings 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 1990's, Seitz continued its steady growth. By 1999, Seitz was shipping products to 29 countries, and customers including Xerox, Hewlett Packard, Danon, U.S. Tsubaki, and many 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: Answer this question

1. Seitz's list of several hundred business-to-business customers continues to grow. Managers would like to know whether the average dollar amount of sales per transaction 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 $450. 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.

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