Industry statistics

 The 2007 NGA Competitiveness Survey, based on responses from 88 members of the National Glass Association, McLean, Va., examined the operations practices and performance metrics of contract glaziers, glass manufacturers and dealers/retailers. While the operations of these groups are diverse, common strategies emerged among superior NGA performers.

Of the operations strategies and practices asked on the NGA Survey, 53 percent checked employee training programs, 49 percent checked employee teaming/empowerment, 30 percent marked benchmarking of other companies, and 30 percent indicated lean thinking/manufacturing methods. Glass manufacturers were more likely to use many practices—50 percent checked lean—and were least likely to report that "none" of the listed practices were in place-a mere 13 percent. Conversely, more than one-third of contract glazers, 37 percent, reported that none of the practices were in place.

About 1 percent of NGA members report that they've "fully achieved" operational excellence, and 59 percent have made "significant progress." Only 5 percent report they've made "no progress" toward operational excellence, and another 35 percent report having made only "some progress." Contract glazers and other glass firms were less likely to have made significant progress toward or fully achieved operational excellence.

Firms closest to achieving operational excellence were more likely to have adopted most operations strategies/practices. For example, 60 percent of these companies use employee teaming vs. 36 percent of firms that have made no progress or some progress. Twenty-one percent have adopted a formal continuous-improvement program vs. 6 percent of no progress or some progress firms. One-third of the group farthest from operational excellence failed to adopt any of the practices vs. just 15 percent of the group closest to operational excellence.

Movement toward operational excellence also impacts performance metrics. For example, NGA members closest to operational excellence report median 45 percent gross profit margin vs. median 32 percent gross margin for firms that have made no progress or some progress.

Critical to all NGA members is the ability to keep per-unit costs competitive, i.e., internal operating costs not associated with the expenses of purchased materials. Yet a whopping 77 percent of NGA members report that per-unit costs increased this past year, with 43 percent reporting these costs increased by more than 5 percent; just 12 percent red uced per-unit costs, with 11 percent reporting that costs stayed the same. Firms closest to operational excellence are only slightly better at managing per-unit costs than others: 26 percent were able to reduce or keep costs the same vs. 20 percent of other NGA members.

The challenge of rising internal costs mirrors pressures from external providers of goods-84 percent of NGA members report material costs increased in the past year-and services-94 percent report logistics/transportation costs increased. Many industries counter rising costs by looking for lower-cost, overseas alternatives, and NGA members, too, are beginning to look abroad: an average 9.9 percent of dollar volume of NGA member materials/components/ products comes from outside the United States, up from average 7.6 percent three years ago. Even so, 60 percent of NGA members report that none of their materials/components/products are sourced outside the United States.

The author is vice president of Association Services at the NGA, dwalker@glass.org.