(FORTUNE Magazine) – When it comes to executing management concepts like speed, mass customization, learning organizations, and supplier relations, some companies have the right stuff. Chrysler, for instance, has saved billions by getting its huge and far-flung network of vendors to work as a team. Applying state-of-the-art computer design technology, Andersen Windows can now give customers anything they want, whether it's a 20-foot-high Gothic window or a 20-inch screen. Fast-growing credit card issuer MBNA relies on a 15-point measurement system to provide lightning-quick service. The nod goes to Chevron when it comes to knowledge management, a practice that involves breaking down barriers to sharing information within an organization.

What all four of these companies have in common is that they're known as management meccas, places where people come to learn how the best do it. Scores of companies--big names like Boeing and AT&T--have sent out teams to tour the facilities of these best practitioners, chat with their executives, basically figure out how they do what they do. Typically, there's no charge for benchmarking visits. The idea is to foster a free exchange of information--it's the business-world equivalent of doctors' sharing their findings with the medical community at large. Of course, this enlightened attitude doesn't generally extend to competitors. But they have their own sneaky ways of finding out about a company's practices--one flew over a rival's new factory, snapping spy pictures.

Not surprisingly, all this attention has become something of a distraction. It's at the point now where these companies are starting to turn away benchmarkers. Andersen Windows, for example, will agree to only mutually beneficial arrangements, in which the benchmarker can provide useful information in return.

Even so, all four of these companies allowed FORTUNE to soak up their secrets. So here, then, is a unique opportunity to get a whirlwind benchmarking session with four masters. Learning about their best practices may give you ideas that can be applied to your own company. But beware. Seeing the ways in which your own company fails to stack up may be a bit off-putting. That's no reason to despair, though. As Robert Hiebeler, partner in charge of Arthur Andersen's global best-practices group, says, "The goal of identifying best practices is to disturb yourself in a positive way."

ANDERSEN WINDOWS

Legend has it that when Hans Jacob Andersen arrived in the U.S. from Denmark in 1870, the first English phrase he learned was: "All together, boys." He set out for the timber-rich Midwest, where he opened a retail lumberyard, but soon moved into window-frame making. In 1904 he set up an assembly line in his factory, beating Henry Ford to the mass-production punch by nine years. All together, boys. Today Andersen Windows, of Bayport, Minnesota, has grown into a $1 billion private company. What's helped its rapid growth is something called mass customization--the use of mass-production techniques to assemble items uniquely tailored to the demands of individual customers.

As recently as 1980, Andersen was essentially a mass producer, making a range of standard windows in large batches. "But the market kept asking for more and more unique things," says Mike Tremblay, manager of business systems at Andersen. "People didn't want their windows to look like their neighbor's windows, or anyone else's in the world for that matter."

Andersen did its best to keep up with the custom options the market demanded. It rolled out various embellishments, like hardware and muntins that could make a window look prairie-style, Gothic-style, you name it. When homeowners or contractors visited a retailer, however, they were left to make sense of a mind-boggling array of choices laid out in an ever-thickening set of catalogues. Calculating a price quote for windows could take several hours, and it could be 15 pages long. In the case of something truly complicated--an arched window, say--a working knowledge of trigonometry was necessary.

The net effect of all this complexity was a growing error rate that threatened to damage the company's sterling reputation. From 1985 to 1991 the number of different products offered by Andersen grew from 28,000 to 86,000. By 1991, 20% of truckloads of Andersen windows contained at least one order discrepancy, double the number in 1985. "When our accuracy numbers suffered," says Tremblay, "it brought a sense of urgency."

Andersen responded in the early Nineties by selling its retailers and distributors what is essentially an interactive, computerized version of its catalogue. Using this tool, a salesperson can help customers add, change, and strip away features until they've designed a window they're pleased with. It's akin to playing with building blocks. The computer automatically checks the window specs for structural soundness, and then generates a price quote.

The system requires a Macintosh computer, an Oracle database, and some proprietary software. The whole package can be had for about $4,000. Currently 650 of them are installed at various distributors and retailers around the country. David Steele, president of the Window Gallery, which has three locations in the Southeast, reports that he can now do a customer's window specs five times faster. Sales of Andersen products at his stores have nearly tripled in the past five years. "It's a terrific tool," he says. "It does things that would drive me crazy when I used to have to do them by hand."

Of course, if the new project was to work, Andersen had to link the showroom with the factory. The retailer's computer transmits each order to a company database. Each window is then assigned a unique "license plate number," which can be tracked in real time, using bar-code technology, from the assembly line through to the warehouse. This helps ensure that what the customer orders is what gets built and ultimately what gets shipped. The new system has ended errors as Andersen knew them: Last year the company offered a whopping 188,000 different products, yet fewer than one in 200 van loads contained an order discrepancy.

The next frontier in mass customization for Andersen is what is termed batch-of-one manufacturing, which would dramatically reduce the company's inventory of finished window parts. Currently Andersen makes its custom windows using some standard parts, like sashes and muntins, which it must keep in stock. But with batch-of-one, everything is entirely made to order.

The perfect venue for this technique is the window-replacement market. When it comes time to replace windows, homeowners often can't determine who had made them. Most have to settle for a rough approximation of the originals, made by one of the legions of vinyl window makers, many of them fly-by-night.

Lured by a market estimated at roughly $15 billion a year in the U.S. alone, and confident that it can trounce the fly-by-nights, Andersen has just started a pilot program it calls "renewal." A key to the program is Fibrex, a new, patented composite of wood and vinyl. It's tougher than vinyl and doesn't age like wood. The advantage, when it comes to mass-customization, is that Fibrex can easily be cut to match almost any old window.

Andersen's pilot Fibrex plant is in suburban St. Paul. Everything is made to order; practically no inventory is kept on hand--all that's in the warehouse is raw Fibrex and some hardware. Only a month is required between receiving an order and installing a finished custom window.

In the near future, when a customer's old window is removed, the wood will be ground up to make more Fibrex. Hence renewal. The company hopes to take the program national within five years. And after that, who knows? "You can't go and get all enamored of where you've been," says Tremblay. "We're on a journey toward purer and purer mass customization."

CHRYSLER

Chrysler doesn't exactly make cars from scratch. Fully two-thirds of the components the company uses in manufacturing--everything from lug nuts to wiper blades--come from outside sources. All told, Chrysler purchases 60,000 different items from 1,140 different suppliers, arrayed in an awesomely complicated chain. And no one manages that chain more efficiently than the carmaker--so much so that AT&T and Harley Davidson as well as the Department of Energy have been out to Chrysler's Auburn Hills, Michigan, facilities to see how the company does it.

It's surprising that an automaker has achieved best-practitioner status in supply-chain management. Traditionally the industry has made a practice of jerking its supply chains, often encouraging wild bidding wars. Jose Ignacio Lopez de Arriortua, GM's notorious former purchasing head, even canceled supply contracts outright.

But Chrysler has seen advantage in forming less adversarial relations with its vendors. The company shares most of its 150 major suppliers with Ford and GM. Since it hasn't as much purchasing clout as the two Detroit giants, Chrysler figures the only way to get an edge with suppliers, sappy as it sounds, is to be easier to work with.

One thing the company does is to involve suppliers earlier in the car design process, soliciting their ideas on cost savings and technological innovation. As a consequence, Chrysler often finds out about new materials, parts, and other technologies before the other automakers. "When it comes to new technology, Chrysler winds up getting a peek under the tent early," says Richard Schultz, director of worldwide automotive products for Alcoa. "None of the other car companies we work with are as accessible or willing to take advice from suppliers."

In 1989, Chrysler took a giant step forward in supplier relations when it initiated a program called Score, an acronym for "supplier cost-reduction effort." The notion is simple: Where auto companies have tended to hold down costs by squeezing suppliers' margins, Chrysler decided instead to work with its suppliers on dreaming up ideas for cost cutting. The arrangement is mutually beneficial in that the supplier can save money and Chrysler gets cheaper parts. Of course, the company doesn't want suppliers to capriciously cut corners--quality may suffer. So it asks them to submit ideas for approval first; the goal is for each supplier to identify cost-cutting opportunities equal to 5% of its annual billings to Chrysler.

The ideas can be quite small. One supplier named Sur-Flo Plastics & Engineering reduced the thickness of the splash shield (a sheet of plastic that covers the wheel well) on the 1995 minivan, for a paltry savings of $72,500. But in aggregate, Score has been a huge success. Lately, ideas have been rolling in at a rate of more than 100 a week; 16,000 have been received so far, for a total savings of $2.5 billion to Chrysler. The company estimates that suppliers have received a similar windfall from the program. It's only natural that the demand for savings winds up rolling down the chain, with suppliers in turn asking their suppliers to be more cost-conscious.

The unprecedented back-and-forth with vendors has given Chrysler an unusual grasp of the complexity of its supply chain. "In the old days we didn't even know where the bolts came from," admits Thomas Stallkamp, Chrysler's head of procurement and supply. But these days Chrysler has actually undertaken the laborious task of mapping out some of the chains. The company discovered, for instance, that even a simple-looking item like a roller lifter--a $3 engine part--required 35 separate suppliers.

Chrysler has also been rigorously pruning its family of suppliers. For example, the number of vendors that supply fasteners has been cut from 350 to 92; the goal is 42 by 1998. The total supplier base is down 36% in the past five years, and will drop another 25% by the turn of the century. Who will survive? One clue: Any supplier that fails to generate sufficient Score savings risks being out of a job.

To get those who do survive working more in sync, Chrysler assigns a particular supplier to act as a team leader. Its job is to oversee other suppliers in the design and manufacture of a component such as a seat. Time was, Chrysler workers had to assemble seats themselves, right on the line, with components from 150 vendors. Today the company buys fully assembled seats directly from suppliers such as Johnson Controls, Lear, and Magna International. This approach eliminates inventory costs for Chrysler, saving millions.

All of Chrysler's cutting-edge supply-chain management techniques come together in the Plymouth Prowler, a kind of test bed for the practice. The Prowler is a 1930s-style roadster (pricetag: around $35,000) and will be produced in a limited run of roughly 3,000 cars annually, starting in 1997. With the Prowler, many key vendors were involved from day one in the design process, and several were willing to give Chrysler dibs on their newest offerings. For example, thanks to a new, sturdier alloy developed by Alcoa, the Prowler will be the first car built in North America with an all-aluminum body. The company saved money, too, by making a supplier named the Becker Group a team leader that worked closely with both Chrysler and other suppliers in designing and assembling the car's interior. Says Chrysler's Stallkamp: "In the end this business is driven by emotions and relationships and how people feel about you."

MBNA

MBNA is truly a speed freak. The Wilmington, Delaware, credit card company has a near-religious devotion to serving its customers swiftly and then measuring how it's doing. But make no mistake. This is no fad of the moment that MBNA is caught up in. Neither has the company fallen under the sway of some swami of speed, parceling out choice bits of theory while collecting a fat retainer. Far from it. MBNA, first among its peers to make service reps available to customers 24 hours a day, way back in 1986, has been on this kick for a long time. Speed of service is vital to the highly profitable niche the company has fashioned for itself.

While many credit card issuers blanket the nation with cold calls and junk mail, MBNA focuses on an eminently desirable customer base--affinity groups. Currently the company produces Visas and MasterCards for 4,300 of them, including the National Education Association, Georgetown University, and Ringling Brothers. Custom cards with everything from the Dallas Cowboys logo to personal pet photos, in the case of a new program with Ralston Purina, are available from MBNA. Its cardholders, meanwhile, tend to have family incomes that are 20% above the national average and carry balances of roughly $3,000, vs. an industry average of $1,073. Warmed, presumably, by a sense of affinity, they're a loyal lot too. MBNA is able to retain an enviable 98% of its profitable customers.

But premium customers are very demanding. They want good service, and they want it now. MBNA continually takes stock of its performance according to 15 measures, many of them relating directly to speed. Customer address changes must be processed in one day, for instance; the telephone must be picked up within two rings; calls coming into the switchboard must be transferred to the appropriate party within 21 seconds.

Where measuring such processes has traditionally been a soft science at best among service companies, the folks at MBNA are sticklers for hard numbers. They measure everything perpetually and down to tenths of 1%. At any given moment on any given day, it's possible to get a reading that shows, for example, that employees are achieving "two-ring pickup" 98.4% of the time, 1.2% above average, but representing a full 1% falloff from the previous day. The net effect: "If you're an MBNA employee and you go to a store or restaurant and hear a phone ring more than twice, it drives you nuts," says Janine Marrone, a division head.

To track such nuttiness-provoking standards as "two-ring pickup," MBNA relies heavily on technology. Take the example of a customer wanting to increase his credit line. The company's standard is to provide an answer within half an hour for a basic customer, 15 minutes for a so-called platinum customer. As soon as a request is received, service representatives pass it along to the credit department, in the process triggering an electronic time-stamp mechanism that's part of a proprietary PC-based system. Now the clock is ticking. Managers in the credit department can access the system to see how requests are queued up and to determine the amount of time elapsed on any given one. This makes it possible, if necessary, to shift the requests around to MBNA's various credit analysts in an effort to meet deadlines and keep customers happy.

Results for the 15 standards are posted daily on roughly 60 scoreboards at MBNA facilities around the country. The company has a target rate for the 15 standards, which it just happened to raise from 98% to 98.5%. What this means: The companywide goal is for the phone to be answered within two rings 98.5% of the time, for responses to credit-line questions to be forthcoming in half an hour 98.5% of the time, and so forth. Ten years ago the standard was 90%. "We've had to keep raising the bar over time as customer expectations have risen," says Marrone.

So what keeps employees scrambling like mad, even when faced with a new 98.5% hurdle? The company is fond of telling curious visitors that a thoroughgoing concern for customers permeates the organization. Above every doorway at MBNA's headquarters are signs that read THINK OF YOURSELF AS A CUSTOMER. Employee paychecks come with the reminder BROUGHT TO YOU BY THE CUSTOMER. The company has even taken the step of placing "the customer" at the head of its organizational chart.

But incentives help too, no doubt. Every day in which the 98.5% standard is met or broken, money is thrown into a pool for nonofficers. The pool is designed so that if the company were perfect, hitting the 98.5% target every single day, each employee would get a bonus of about $1,000 at the end of the year. Fat chance of that. But if employees meet the goal, say, 75% of the time, they each get a bonus of around $750.

Of course, MBNA doesn't want to simply encourage the mindless pursuit of raw speed. Thus, all employees are also on individual incentive plans, overseen by their direct managers. These plans stress achieving quality goals over being speedy. Says Marrone: "You can be the fastest, but if you don't drive quality too, it's not worth much."

Overall, even if MBNA has a rather Orwellian corporate culture, it's hard to argue with the company's results. Since going public in 1991, total return on the common stock has climbed 602%, compared with 216% for the S&P 500. It's proof, in MBNA's case at least, that speed does not kill.

CHEVRON

Some companies are so big that they could potentially build a better mousetrap in one division, cure the common cold in another, and grasp the meaning of life in a third. Yet because of poor communication, nobody outside the various divisions would ever even know that each of these solutions existed under one roof.

That's where knowledge management comes in. This is a practice that centers on identifying and transferring best practices within a company. Chevron is a pro at knowledge management, no cakewalk for a $32 billion enterprise that operates in more than 100 countries.

Chevron's U.S. refineries have posed a particular challenge. There are six of them, and they all do roughly the same thing--refine crude oil into gasoline and other petroleum products. But they are spread out all over the map, everywhere from Pascagoula, Mississippi, to Honolulu. Getting them to share information can be quite a task.

Chevron's solution, dreamed up in 1992, was to create a new full-time job known as process master. The duty of a process master is to oversee different processes across all six refineries. There's one, for example, dedicated to staying abreast of the process for getting more gasoline out of each barrel of crude, and figuring out which techniques can be transferred from one refinery to another.

Process masters tend to be company veterans of roughly 20 years, with both operating and technical experience. In filling these positions, Chevron looks for natural leaders possessed of good communication skills. Although the process masters don't have any official authority per se, their breadth of experience generally commands respect. As with Zen masters, people tend to heed their advice.

Currently there are masters for 25 processes, and among them is Billy Williams, second-generation oilman and 18-year company veteran. He has helped transfer several innovations among the refineries, for considerable savings. His bailiwick is the company's crude units, which are like giant pressure cookers that, as an initial step in refining, separate oil into heavy and light components. Every four years or so it's time for "turnaround," when the big units must be cleaned. Removing caked-on coke from the pipes is the tough part. Typically it has to be burned out, and the furnaces must be cranked way up high, at considerable cost.

But during a turnaround in 1994, the Richmond, California, refinery tried out a new device, known as "the pig," to remove coke from the crude unit. The pig is a hard rubber cylinder with little abrasive nubs on it and can be propelled through the pipes with a jet of water. It scrapes off the coke and saves about $1 million every time a refinery needs cleaning. Thanks to the process master system, Williams and his team were able to pass the pig on down the pike to the El Segundo, California, refinery. Now Salt Lake City's new crude unit is being designed for easy pigging. Says Williams: "The big powerhouse in this whole process is communication." Chevron hopes that projects like the pig will eventually wend their way into its other operations with the promise of additional savings.

Convinced that there must be other hidden repositories of knowledge throughout the company, Chevron's corporate quality department formed a so-called best-practices discovery team in 1994. It consisted of ten quality-improvement managers and computer experts representing a cross section of the company, including oil production, chemicals, and refining.

The team uncovered numerous examples of people sharing best practices, many of which Greta Lydecker, a consultant to the corporate quality staff, calls grassroots networks. Within Chevron there turned out to be quite a few groups dedicated to discussing everything from safety to saving money. Some of the groups communicate regularly via E-mail; others use groupware such as Lotus Notes; still others hold periodic meetings, conferences, or forums. What they all had in common was that they were trying, often in very modest ways, to share knowledge.

The discovery team gave them a big boost. Last year it published a "best-practice resource map," which was distributed to 5,000 Chevron employees. It's like a bona fide foldup road map and contains brief descriptions of the various official and grassroots groups, along with directions on how to contact them. "You can think of this as a yellow pages," says Lydecker. "It helps connect people working on very diverse things across our very diverse company."

Since the map was published, new groups, such as one devoted to competitor intelligence, have formed. And everyone at Chevron has a useful new resource. Recently, when the strategic-planning department needed to develop a departmental safety procedure, it located a discussion group known as SafeNet on the best-practices map and had some new ideas within hours. Chevron wants to be in the oil business, after all, not the wheel-reinvention business.

It's one thing, of course, to read this article, get a feel for the practices of four class-act companies, and be disturbed in a positive way. The next challenge is figuring out how to apply the lessons to your own company. That can be tough. As Arun Maira, a vice president at Arthur D. Little, says, "You can't just impose a best practice. It has to be adapted to your company's own style." Yes, that's a challenge, but not an impossible one. And given the stakes, surely well worth the effort, especially if it means making it to the head of the class.

REPORTER ASSOCIATE Joyce E. Davis