52.Modern Management techniques Every business enterprise attempts to survival and grow.

But survival and growth are becoming increasingly difficult a global economy characeterised by cut-throat competition, increasing costs, growing customer expectations, expanding power of labour, fast changing technology etc., Business leaders and academic leaders are continuously discovering ne management techniques and practices to meet this challenge. Some of the contemporary techniques of management which have become popular are described in this chapter. 52.1 Benchmarking Any organisation which aims at grand success in a competitive world can learn a lot from the management practice of excellent corporations. Such practices serve as the benchmarks. Benchmarking is a continuous search for and application of significantly better practices that lead to superior competitive performance. It is much more than simply copying. Accounting to Robert C. Camp. Benchmarking is the search for industrys best practices that lead to superior performance. It is the practice of measuring and comparing key aspects of an organisation with those in other organisations, to establish measures of relative performance and discover areas for improvement. Sarah Cook has defined benchmarking as a process of identifying, understanding and adopting outstanding practices from within the same organisation or from other organisations to help improve performance. In other words benchmarking is a systematic and continuous process of measuring and comparing an organizations business processes against those of leading organisations anywhere in the world to gain information which will help the organisation take action to improve its performance. It is a systematic way to identifying the superior products, services, processes and practices that can be adapted to an organisation to reduce cost, improve quality, cut inventory and provide greater satisfaction to customers. In the words or David Kearns of Xerox Corporation. Benchmarking is the continuous process of measuring products, services, and practices against the toughest competitions or those companies recongnised as industry leaders. These definitions reveal the following characteristics of benchmarking: (i) Continuous Process. Benchmarking is an ongoing process because industry practices keep on changing. Practices must be continuously monitored to ensure that the best of them are identified. Measuring . Benchmarking involves measurement and comparison of practices across organisations. It is not just a study of competition but a process of determining the effectiveness of industry leaders by measuring their results. Comprehensive. Benchmarking can be applied to all aspects of business-products, services, processes and practices. It reveals not only the best practices. It reveals not only the best practices but also how these are used.

(ii)

(iii)

(iv) (v) (vi)

Leading Organisations. Benchmarking is not restricted to direct product competitors but covers the excellent organisations across a wide spectrum of functioning. Self-examination. Benchmarking is a process of introspection and search for best management practices. Goal-oriented. Benchmarking is a purposeful exercise. The Japanese word. DantotuStriving to be the best of the best sums up the essence of benchmarking. Benchmarking is not limitations. It is adoption of best practices form whatever sources these be found. Goal-setting, employee motivation for improved performance and external orientation are the main objectives are the main objectives of benchmarking. Advantages of Benchmarking (i) Benchmarking involves performance comparisons with the best in the industry. It enables an organisation to incorporate creatively the best practices from any industry. It helps an organisation to more adequately meet the requirements of the end user or the final customer. It provides stimulation and motivation to the professional experts whose creativity is necessary for identifying and implementing the benchmarks. Working outside the organisation and the industry can lead to break -through thinking and technological breakthrough. It helps in establishing quality goals and true measures of productivity It helps in attaining a competitive edge. It facilitates change. People tend to be more receptive to new ideas when these ideas originate outside the organisation. The interactions of professional with benchmarking facilitate future professional growth. It permits them to broaden their background and experience. It makes them more useful to the organisation in future assignments. Pitfalls of Benchmarking Majority of the benchmarking efforts fail due to: (i) (ii) (iii) (iv) (v) (vi) Lack of focus and priority Lack of commitment on the part of management Failure to consider customer requirements Incompetent leadership Lack of proper planning Not involving the staff in the programme

(ii) (iii) (iv) (v) (vi) (vii) (viii)

(vii) (viii)

Conflicting objectives of the organisation and those of benchmarking partners Lack of adequate resources and facilities. Steps of Benchmarking Process

1. Planning Phase. This involves identifying what is to be benchmarked, e.g. inventory management, production technology, quality systems, distribution system, financial management, human resource development, etc. In this step identify subject (product or process) to be benchmarked. Set up a team with a leader. Identify measures important to the customer and to the business to be benchmarked. Identify a benchmarking team to pilot the activity within the organisation. Clearly define processes and current measures to be benchmarking. (a) To whom or what will we compare: Identify the word class or leading edge companies that have similar product or process. These are business to business, direct product competitors. These are certainly prime candidates to benchmark. But they are not enough. Benchmarking must be conducted against leadership companies and business functions regardless of where they exist. Only in this fashion, superiority will be ensured. The whole idea behind the benchmarking is comparison. Compare the use of ones assets vis-avis competitors . After the bet competitor is identified, its products, equipments as well as image could be benchmarked. Modi Xerox made its first attempt at benchmarking when the Cannon colour copier was launched. The marketing team was posed with the challenge of not only entering the same product areas but also garnering higher market share. Within six months Modi Xerox has achieved its goal. According to B.K. Modi. What was considered impossible was rendered feasible because we had a competitor who has shown the way at a benchmark. All we had to do was to find the way of doing the same thing better and faster. In addition, benchmarking can be extended to other companies that set standard in functional activity. For instance says R. Shekhar , Executive Director, Xerox Quality Service (XQS). The Xerox distribution division decided to benchmarking its operations against those of IBM and Kodak, who compete with it directly. But it also benchmarked some functions against L.L. Bean, the catalogue sales company known for effective quality products. So think of competitor in the broad sense for the purpose of benchmarking. (b) How will the data be collected? There is no one single way to conduct benchmarking investigations. There is a process. There are indefinite variety of ways to obtain required data. Most data are readily and publicly available. For this purpose, certain level of inquisitiveness and ingenuity is required. But a combination of methods that best meets the study needs will most often be productive. Limited methods of data collection may

include primary and secondary data sources, opinion surveys, examination and dismantling, trial purchasing , telephone enquiries, analysis of annual reports and other published sources of data. Following trade journals or trade association contacts and using consultants, services are also well-recognized sources of benchmarking data. One major problem that generally arises in benchmarking the best, is the unwillingness on the part of the competitor to provide detailed information. But as the data need becomes specific so the approach to gather it. Establishing a personal repport with respondents, is the best tested out technique for collecting data by Indian consultancy firms like Tata Consultancy. II . Analysis Phase. The analysis phase must involve a careful understanding of current process practices as well as those of benchmarking partners. The analysis phase encompasses two steps: (a) determine current performance gap, and (b) project future performance levels. These two steps are explained as follows: Phase steps Planning 1. Identity what is to be benchmarked 2.. 3.. Analysis 4.. 5.. 6. Identity best competitor Determine data collection method and collect data Determine current performance GAP Project future performance levels Communicate benchmark findings and gain acceptance Integration 7. Establish functional goals Acceptance of Analysis

Communication of Data 8. 9. 10. Maturity Develop action plans

Implement specific actions and monitor progress Recalibrate benchmarks

Leadership position attained Practices fully integrated into process

(a) Determining current performance Gap . The benchmarking process is a comparative analysis. What is desired is an understanding of internal performance on which to assess strengths and weaknesses. Are the benchmarking partners better? Why are they better? But how much? What best practices are being used now or anticipated? How can their practices be incorporated or adopted for implementation? Answers to these questions will be the dimensions of any performance gap: negative, positive or parity. The gap provides an objectives basis on which to act- to close the gap or capitalize on a positive one. (b) Project future performance levels: The gap, however, is a projection of performance and, therefore, will be one which changes as industry practices change. What is needed is not only an understanding of current practices but where performance will be in the future. The benchmarking should be a continuous process so that performance is constantly recalibrated to ensure superiority III. Integration Phase. Integration is the process of using benchmark findings to get operational targets for change. It involves careful benchmark findings are incorporated in all formal planning processes. Integration phase has two steps as discussed below.
During this phase competitive benchmarking really begins to earn its keep.

(a) Communicate benchmark findings and gain acceptance. The effectiveness of a competitors method used to achieve results provides the ground-work for reengineering strategies. The time factor is very important in the overall planning cycle. The designed action plan has to be continuous as the competitor is also updating its strategies. The first step is to gain operational and management acceptance of benchmark findings. Findings must be clearly and convincingly demonstrated as being correct and based on substantive data. Credible data can be supported by deriving data and information from several sources to support the findings. Based on the findings action plans can then be developed. Benchmark findings must be communicated to all organizational levels to obtain support, commitment and ownership. This essential step can usually be accomplished through a variety of communication approaches. The key to the process will be the conversion of benchmark findings into a statement of operational principles to what the organisation can subscribe and by which action for change will be judged . These principles place the organisation on notice that they are the rules by which the organisation will improve itself to meet customer needs and eventually to attain superiority. (b) Establish functional goals. On the basis of communicated data and acceptance of analysis we should develop the functional goals achieve them through the benchmarking process.

IV) Action Phase. After integration phase action phase starts. It has two steps as follows: (a) Implement specific action and monitor progress. After implementing the plans, one has to periodically assess and report the progress. Units usually build into their plan certain milestones which trigger the updating. (b) Recalibrate benchmarks. The updating may require the recalibration of the competitive benchmarking data. It should be sufficient to indicate what is happening as a result of your actions. Obviously, it should also reflect what your competitor is doing. These were the views of M.K. Gera, Director, All India Management Institute (AIMI). This institute is involved in conducting research alongwith it corporate members on the reengineering process. V. Maturity Phase. Maturity will be reached when best industry practices are incorporated in all business process, thus ensuring superiority. Superiority can be tested in several ways. In some instances when services are sol to external customers in addition to serving the internal customers. If the now changed process were to be made available to others, would a knowledgeable business person prefer it? That becomes a powerful confirmation of a benchmark. Maturity Phase. Maturity will be reached when best industry practices are incorporated in all business processes, thus ensuring superiority. Superiority can be tested in several ways. In some instances when services are sold to external customers in addition to serving the internal customers. If the now-changed process were to be made available to others, would a knowledgeable business persons prefer it? That becomes a powerful confirmation of a benchmark. Maturity comes when it becomes an ongoing, essential and self-initiated facet of the management process. It becomes institutionalized. When the focus on external practices becomes the responsibility of the entire organisation, benchmarking truly has achieved its objectives of ensuring superiority through incorporation of best industry practices.

Types of Benchmarking Benchmarking can be of the following kinds: 1. Internal Benchmarking. It involves comparison between different departments and units of the same company/group. Continuous efforts are made to establish sound management practices throughout the company. 2. Functional Benchmarking. Under it, similar functions performed in different types of organisations are evaluated to benchmark the best practices in each

functional area. For example, order processing, customer grievances handling practices, delivery systems, marketing logistics may be benchmarked against leading organisations. 3. Competitive Benchmarking. Business practices of leading firms in the same industry are compared. The purpose is to identify and adopt the best practices in the industry competitive benchmarking is used often for products and services whereas functional benchmarking is popular for processes. 4. Generic Benchmarking. In this type of benchmarking, core business practices are compared. Cross-functional comparisons may, for example, be used to benchmark customer service, human resource development, product development etc. Since liberalization and globalization of Indian economy, need for benchmarking has grown. Indian firms cannot survive and grow in the face of competition from multinationals without improving their management process and practices. They must not only study and adapt the best practices and techniques of leading companies in the world. Research and investigation are essential for modifying and improving the benchmarking technique to improve their performance and competitive strength. Leaders. Sail benchmarks its technology against global players. Many other firms benchmark cost levels, inventory management, and other practices.

Requirements of Successful Benchmarking According to Roger Sugden of Rand Zerox, successful benchmarking requires the following: (i) (ii) (iii) (iv) (v) (vi) (vii) Understand your own Companys processes and practices thoroughly. Select the best companies for benchmarking Focus on the best practices. Share information with the companies selected for benchmarking. However, sensitive information may be kept confidential Involve the concerned people in benchmarking. Use benchmarking regularly. Be willing to change.

Business Process Re-engineering (BPR)

Michael Hammer and James Champy introduced the technique of BPR in mid- 1980s in their book Re-engineering the Corporation . Since then companies all over the world have redes igned their core business processes to gain radical improvements in performance. Hammer and Champy have defined BPR as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed. The main features of BPR are as follows: 1. Fundamental Rethinking. In BPR. An organisation must ask the most basic questions about its business and how does it operate. Why does it does what it does and why does it does the way it does? These questions force people to look at the tacit rules and assumptions that underlie the way business is audited. Re-engineering first determines what company must do, then how to do it. It takes nothing for granted. It ignores what is and concentrates on what should be. At the heart of BPR lies the notion of discontinuous thinking-identifying and abandoning the outdated rules and fundamental assumptions that underlie the current business operations. 2. Radical Redesign. It means getting to the root of things. It involves disregarding all existing structures and procedures and inventing completely new ways of accomplishing work, Reengineering is about business reinvention not business improvement, modification or enhancement. This means companies and their employees must unlearn the principles and techniques that brought them success for so long. More innovative, flexible and customerfocused organisation structures. 3. Dramatic Improvements: The main purpose of BPR is to secure quantum lead in performance rather than marginal improvements. The old ways of doing business need to be replaced by new ways due to more demanding customers, growing competition and changing environment. Three types of companies undertake re-engineering. First are the companies that which foresee trouble ahead. Third are companies in peak condition and are ambitions and aggressive. 4. Key Process. Under division of work principle, managers focus on individual tasks (e.g. receiving the order forms, picking up the goods from the warehouse, etc.,) and lose sight of the larger objective (e.g. to get goods into the hands of the customer). A business process is a collection of activities that takes one or more inputs and creates an output valuable to the customer. Re-engineering is different from both automation and restructuring or downsizing. Downsizing is doing less whereas BPR is doing more. Re-engineering focuses on business processes whereas reorganizing concentrate on organisation structure. Re-engineering differs from total quality management. BPR and TQM are complementary to the extent that they share a focus on customers are processes. Quality programmes work within the

framework of existing processes or through continuous improvement called Kaizen. The aim is to do what is already being done a little better. Re-engineering involves breakthroughs by discarding the existing processes. Objectives of BPR BPR aims at: (i) Re-designing the key business processes to improve quality and reduce cost. (ii) Flattening the organisation and encouraging teamwork. (iii) Applying a holistic approach to principles and processes of business. (iv) Training and developing human resources. (v) Improving information technology. (vi) Identifying core competencies and managing environmental changes to develop competitive strength with a clear focus on the goals to be achieved. Leading Indian companies like TELCO, TISCO, L &T, Ranbaxy, Ashok Leyland, Crompton Greaves, etc., are adopting BPR to face the challenges of liberalization and globalization.

When a company re-engineers its business processes, the following changes occurs: Business Processes Jobs and Structures Management and Measurement Systems Business processes mean the way the work gets done. Processes determine jobs and structure. The way in which work is performed determines true nature of jobs and how people who perform these jobs are grouped. The fragmented processes found in traditional firms lead to narrow specialisation and functional departments. On the other hand, integrated processes give rise to multi-dimensional jobs organized into process teams. Values and Beliefs

People who perform multi-dimensional jobs and who are organized into teams must be recruited, evaluated and compensated by means of appropriate management system. Management systems in turn shape the values and beliefs of a company, the reigning values and beliefs in an organisation must support the performance of its process design. For example, an order fulfillment process designed to operate quickly and accurately can work only when the people performing it believe in speed and accuracy. Thus, the four elements of the Business Systems Diamond are interrelated. Therefore, BPR practically changes everything. When a company re-engineers its business processes, the following types of changes take place: (i) Work units change from functional departments, to process teams, key processes are simplified and integrated. (ii) Jobs change from specialized tasks to multidimensional work. Process teams are collectively responsible for process reports. Jobs become more challenging and satisfying. (iii) People are empowered and not merely controlled. (iv) Education to improve understanding to task and training to increase skills. Constant learning is encouraged. (v) Focus of appraisal and compensation shifts from activity to results. (vi) Values change from protective to productive. (vii) Managers act as coaches and menters rather than superiors. (viii) Organisation structures change from hierarchical to flat. (ix) Checks and balances are reduced. Causes of Failure in BPR 1. 2. 3. 4. 5. 6. 7. Tying to fix a process instead of changing it. Lacking focus on business process. Ignoring everything except process redesign Setting for results Settling for minor results. Quitting too early. Placing prior constraints on the definition of the problem and the scope of the r-engineering effort. 8. Allowing existing corporate cultures and management attitudes to prevent re-engineering from getting started. 9. Trying to make re-engineering from the bottom up.

10. Assigning someone who does not understand re-engineering to lead the effort. 11. Skimping on the resources devoted to re-engineering 12. Bringing re-engineering in the middle of corporate agenda. 13. Dissipating energy across too many re-engineering efforts. 14. Attempt to re-engineer when the chief executive is two years from retirement. 15. Failure to distinguish re-engineering from other business improvement programmes. 16. Concentrating exclusively on design. 17. Trying to make re-engineering happen without making anybody happy. 18. Pulling back when people resist making re-engineering changes. 19. Dragging the effort out. Conditions for Success in BPR (i) Clarity of purpose: First of all, the strategic purpose should be clearly defined. It means understanding what business you want to be in and how you want me going to gain competitive advantage in it. (ii) Top management support. BPR must begin from the top. The leader must develop a core team of competent people from different departments and divisions to plan and implement the reengineering programme. (iii) Choice of right processes. Appropriate business processes should be chosen functional or most troublesome process; (b) process having the maximum impact on customers; and ( C) processes most susceptible to successful redesign. (iv) Customers angle. See things through the customers eyes. Discard preconcerned nations and create a vision of the re-engineered corporation. Staff can be convinced of the need for re-engineering by explaining the impact on customer satisfaction. (v) Sense of urgency. A time frame should be developed for achieving results through re-engineering. (vi) Proper climate. Environment conducive to change must be created. Involvement and participation of people are helpful in overcoming resistance to change.

Total Quality Management (TQM)

W. Edward Deming, Joseph Juran and Philip Crosby have developed Total Quality Management (TQM). Total quality management is a strategic approach of providing the best to customers through continuous innovation and improvements in all products, services and processes with the involvement of everybody. It involves integrated efforts of all the groups and departments of a organisation for full customer satisfaction. Kaoru Ishi Kawa of Japan coined the term quality circle. A Quality Circle is a small group of employees in the same work area or doing similar type of work who voluntarily meet on regular basis to identify and solve work related problems so as to improve quality and productivity and to minimise cost.

Comparison between Traditional Thinking and TQM Point of Comparison 1.. Definition on quality Traditional Thinking TQM

2.. Understanding of Customers 3.. Problem-solving

4.. Improvement focus 5..Errors

Products meet specifications. Focus Products fit for use by On post production inspection. Customer Focus on Building quality into work process. Ambiguous understanding of Systematic approach to seek, customer requirements Understand and satisfy internal And external customers. Unstructured problemParticipative and discipline Solving and decisionproblem-solving and decision Making of individual -making based on hard facts. Mangers or specialists. Technological breakthroughs Gradual but continuous such as automation. Improvement of each function . A certain margin of error, No tolerance for errors. Do it right Waste and rework is tolerable the first time and every time.

Source: Coopers & Lybrad, Quality in Government A Summary of Federal Executives, Arington, 1989. Philip Crosby For Crosby quality means that a product should conform to the requirements that the company has established on the basis of customers needs. He believed that the prime responsibility for poor quality lies with management not with the workers. Management sets the tone for quality initiatives from the top. In his best selling book Quality is Free (1979), Crosby focuses on Zero defect through a system of prevention. Zero defect does not mean that people never make mistakes but that companies should not begin with allowances or sub -standard targets with mistakes as an in-built expectation.

In his 1984 book Quality Without Tears , Crosby developed the idea of a quality vaccination serum, which would be made up of the following ingredients: Integrity for the chief executive officer, all managers, and all employees. Systems for measuring conformance and educating all employees and suppliers so that quality, corrective action, and defect prevention become routine. Communications that enable problems to be identified, progress to be conveyed and achievement to be recognized. Operation organized in such a way that procedures, products and systems are proven before they are implemented and are then continually examined. Policies that are clear, unambiguous, and establish the primacy of quality throughout the organisation. The Eternally Successful Organisation (1988) presented a broader approach to improvements. In its Crosby identified five characteristics essential for an organisation to be successful: People routinely do things right first time Change is anticipated and used to best advantage Growth is consistent and profitable New products and services appear when needed. Everyone is happy to work there. The Fourteen Steps 1. Management Commitment. The need for quality improvement must be recongnised and accepted by management who then draw up a quality improvement programme with an emphasis on the need for defect prevention. Quality improvement equates to profit improvement. A quality policy is needed which states that, each individual is expected to perform exactly like the requirement or cause the requirement to be officially changed to what we and the customer really need. 2. The Quality Improvement Team. Representative from each department or function should be brought together to form a quality improvement team. Its members should be people who have sufficient authority to commit the area they represent to action. 3. Quality Measurement. The status of quality should be determined throughout the company. This means establishing and recording quality measures for each area of activity in order to show where improvement is possible and where corrective action is necessary. Crosby advocated delegation of this task to the people who actually do the job, thus setting the stage for defect prevention on the job, where it really counts. 4. Cost of Quality Evaluation. The cost of quality is not an absolute performance measurement, but an indication of where the action necessary to correct a defect will result in greater profitability. 5. Quality Awareness. This involves making employees aware of the cost of the company of defects, through training and information, and the provision of visible evidence of the results of an concern for quality improvement. Crosby stresses that this sharing process is a key step in the progress of an organization towards quality.

6. Corrective Action. Discussion of problems will result in the finding of solutions and also bring to light other elements that are in need or improvement. People need to see that problems are regularly being resolved. Corrective action should then become a habit. 7. Establishing an ad hoc committee for the Zero Defects Programme. Zero defects is not a motivations programmes; Its purpose is to communicate and instill the nation that everyone should do things right first time. 8. Supervisor Training: All mangers should undergo formal training on the Fourteen Steps before they are implemented. Managers should understand each of the Fourteen Steps well enough to be able to explain them to their people. 9. Zero Defects Day. It is important that the commitment to zero defects as the performance standard of the company makes an impact, and that everyone gets the same message in the same way. Zero defects day, when supervisors explain the programme to their people, should make a lasting impression as a new attitude day. 10. Goal Setting. All supervisors ask their people to establish specific, measurable goals that they can strive for. Usually, these comprise 30-60, and 90- day goals. 11. Error- cause Removal. Employees are asked to describe, on simple, one page form, any problems that prevent them from carrying out error-free work. Problems should be acknowledged and begin to be addressed within 24 hours by the functions or unit to which the memorandum is directed. This constitutes a key step in building up trust, as it will make people begin to grow more confident that their problems will be attended to and deal with. 12. Recognition. It is important to recognize those who meet their goals or perform outstanding acts with a prize or award, although this should not be in financial form. The act of recognition itself is what is important. 13. Quality Councils. The quality professionals and team leaders should meet regularly to discuss improvements and upgrades to the quality programme. 14. Doing it over Again. During the course of a typical programme lasting from 12 to 18 months, turnover and change will dissipate much of the educational process. It is important to set up a new team of representatives and begin the programme again from the beginning ,starting with zero defects day. This starting , over again helps quality to become ingrained in the organisation.

Joseph Juran Juran published his Quality Control Handbook in 1951. He popularized the Pareto Principle (80:20 rule) which states that a relatively small percentage of factors are responsible for the substantial percentage of effect. According to Jurban quality does not happen by accident and needs to be planned. Jurans formula for success is as follows: Establish specific goals to be reached. Develop plans for reaching those goals. Assign clear responsibility for meeting the goals. Base the rewards on the results achieved. In his classic book Managerial Breakthrough (1964), Juran presents his general theory of quality control, the central idea of which is improvement breakthrough. Hurban defines a breakthrough as change , a dynamic decisive movement to new h igher levels of

performance. This is different from control which means staying on covers, adherence to standard, prevention of change. Quality Planning Identify who the customers are. Determine the needs of those customers. Translate those needs into our language. Quality control Optimise the product features so as to meet our needs and customers needs Develop a process which is able to produce the product. Quality Improvement Optimise the process. Prove that the process can produce the product under operating conditions. Transfer the process to operations. Jurans road map provides a more detailed approach to the steps within the quality planning element of the trilogy. It is made up of a series of actions with corresponding outputs, and emphasizes the need for measurement throughout. In his book Jurban on Quality by Design, Jurban describes six activities in the road map: establish quality goals; identify the customer; determine customer needs; develop product features; develop process features; establish process controls; and transfer to operations. W. Edwards Deming Deming is credited with being the most influential catalyst of Japans post -war transformation. His work inspired a revolution in the old management culture. Demings fourteen points are relevant not just to quality but to management in general. These points combines two major schools of management thought- scientific management and human relations. Deming has been universally acclaimed as one of the founding fathers of Total Quality Management. Demings Fourteen Principles 1. Create consistency of purpose for the improvement of product and service so as to become competitive. 2. Adopt a new philosophy to reject mistakes. Eliminate all causes of poor quality, e.g. interior materials, poor workmanship, etc., 3. Cease dependence on mass inspection. The matter should be to do the right first time and everytime. 4. End the practice of awarding business on the price alone. Building long-term relations with suppliers is more important than the price. 5. Improve constantly and forever the system of production and service. Improvement is a continuous process rather than one-time effort. 6. Institute modern methods of training on the job. 7. Institute leadership. Mere supervision is not enough. Management should help employees achieve their full potential at job.

8. Drive our fear. Create culture of openness so that nobody is afraid of asking questions. 9. Break down business between staff. Create teamwork. 10. Eliminate slogans, exhortations and targets for the workplace, Create environment conducive to continuous improvement. 11. Eliminate numerical quotas and management by numbers. 12. Remove barriers to pride in work. 13. Institute a rigorous programme of education, retaining and self-development. 14. Take action to accomplish the transformation. Several Indian companies have adopted TQM Sundaram-Clayton has won the Deming Prize for total quality. Quality is a journey not a destination. It must be translated into a culture that arouses every employee. TQM should not be confused with ISO 9000 series which is a set of quality stands established by the International Standards Organisation (ISO). The following table summarises the differences between the two: Difference between ISO 9000 and TQM --------------------------------------------------------------------------------------------------------------------ISO 9000 TQM ---------------------------------------------------------------------------------------------------------------------------1. Note necessary customer-focused 1. Definitely customer-focused. 2. Not integrated with corporate strategy 2. Integral to company strategy 3. Technical systems and procedures focused 3. Philosophy concepts, tools and Techniques focused. 4. Employee involvement not necessary. 4. Emphasis on employee involvement and empowerment. 5. No focus on continuous improvement is ISO 5. Continuous improvement and TQM 9000. It is a decision. A never ending journey. 6. Can be departmentally focused. 6. Focus is organisation-wide, all departments, functions and levels. 7 Quality department responsible for quality 7. Everyone responsible for quality 8. More likely to preserve the status quo. 8. Involves process and culture change. 9. Three-step maxim of ISO 9000 is: (i) document 9. Customer satisfaction at an What you do, (ii) do only what you document, and economic cost are TQMs two (iii) demonstrate that you have done it, by distinguishing features. Documentary proof. 10. ISO 9000 are technical and physical systems10. TQM is a philosophy where the And standards. Approach is behavioural and human. Competitive Advantage In Economics the theory of comparative advantage suggests that every nation should specialize in producing those goods and services for which it is best suited due to environmental features. On the basis of this theory. Michael A. Porter has developed his theory on the

Competitive Advantage of Nations. His model called the Diamond of National Advantage suggests a playing field that each nation establishes and operates for its industries. Companies are established and operated within the framework of national environment. When a nations environment permits and facilitates rapid accumulation of specialized assets (both tangible and intangible), its industries gain competitive advantage. A company can gain competitive advantage through continuous innovations in the form of a new product design, a new production process, a new marketing approach, a new system of training, etc., A world class firm first creates specialized skills and then continually upgrades them. For example, large-scale operation is the competitive advantage of Reliance Industries, Bajaj Autos advantage is low cost, Sundaram Fasteners strength is total quality while. Ranbaxy Laboratory is competing on global niches. Michael Porters model consists of four main sources of competitiveness as shown in Fig. Firm Strategy Structure and Rivalry Factor Conditions Demand Conditions

1.

2.

3.

4.

Related and Supporting Industries. Factor Conditions. A countrys factors of production such as mineral deposits or skilled labour determine its competitiveness in a given industry. For example, India has a competitive advantage in computer software due to availability of skilled personnel. Firm Strategy, Structure and Rivarly. The competitive strategy, organisation structure and domestic competition of a firm influence its competitive strength. For example, Japan has become a world leader in electronics and automobiles despite poor factor conditions. Demand Conditions. The nature and size of domestic demand for an industrys products and services also determine the industrys competitiveness. For example, growing demand for milk led to White Revolution in India. Related and Supporting Industries. Internationally competitive supplier industries and other related industries enable an industry to be competitive. For example, good quality vendors have contributed to the success of Maruti Udyog. These four elements of competitive advantage are interrelated and influence one another. For example, when rivalry among competing firms is intense, there is high motivation to innovate. Rivalry also leads to the formation of related and supporting industries. One competitive industry helps to create another in a naturally reinforcing process. Thus, the components of the Diamond constitute a system. Porters model is based on the experience of multinational corporations in developed countries. It provides a good insight into the problems which companies face during cutthroat competition. It also points out the strategies which business firms can adopt to achieve success in a given environment. Just-in-Time Management

Just-in-time (JIT) system is also known as zero inventory and stockless system. The term Stockless production captures the essence of JIT. But JIT is more than this. It is a streamlined plant configuration that raises productivity, as a production line balancing approach, as a quality and set up control tool and as an employee involvement and motivational mechanism. It suggests, produces and delivers finished products just-in0time to be sold, sub assemblies just-in-time to go into sub-assembled into finished products, fabricated parts justin-time to go into sub-assemblies, and purchased materials just-intime to be transformed into fabricated parts. It involves hand-to mouth operations just-intime to be transformed into fabricated parts. It involves hand-to mouth operations with production and delivery quantities approaching one single unit. JIT is an operational control technique and its basic objectives is to improve return on investment through cost reduction, quality improvement, waste, reduction and inventory control. JIT is a wider term than KANBAN which is a Japanese inventory replenishment system developed at Toyota Motor Co. KANBAN is indeed one device for moving toward JIT production. JIT is more useful to repetitive industries such as automobiles, electronics, machinery, appliances, etc., though some of its techniques can be applied to job lot production. In JIT workers are charged with the responsibility of producing quality parts justin0time to support the next production process. The main techniques employed in JIT are as under: (i) Visual control (ANDON) (ii) Mistake proofing (POKEYONE) (iii) Processing/Stopping for defects (JI DOKA) (iv) Production Rule (Demand Pull) (v) KANBAN (vi) Total productive Maintenance (TPM) (vii) Batch size reduction (viii) Group Technology Layout (ix) Supplier/ Vendor Development (x) Scientific Factory and Machine Design (xi) Balanced work scheduling (xii) Multifunction workforce and housekeeping (xiii) Reduction in set-up time. The main advantages of JIT system are as follows: 1. Reduced investment in inventory and lower working capital needs 2. Elimination of wastage of materials, parts and finished products. 3. Elimination of wastage of materials, parts and finished products 4. Reduction in lead time 5. Reduction of cost 6. Improvement in productivity and quality 7. Employee involvement and skill development. 8. Lower inventory costs. Several companies in India such as TISCO, TELCO,. Hero Honda, Eicher, Tractors, Maruti Udyog, Escorts and others have successfully applied the JIT system.

Six Sigma Concept of six sigma Six sigma is concept coined by Motorola Corporation to describe improvement initiatives which express process capability in parts per million. A process with a sigma level of six generates a maximum defect probability of 3.4 parts per million. In 1987 Motorola set a goal to achieve Six Sigma quality by 1992. The objective in driving of this performance was to reduced variation to such a degree that Six sigmas or six standard deviations of variation-could be squeezed within the limits defined by their customers specifications. For many products, services and processes that meant a huge and valuable degree of improvement. Sigma levels of performance are also often expressed in Defects per Million Opportunities or DPMO, as shown in the table below. DPMO simply indicates how many errors would show up if an activity were to be repeated a million times. By factoring in opportunities for defects in calculation. Motorala made it possible to compare performance across different processes. Simplified sigma conversion Table If Your yield is.. Your DPMO is Your sigma is. 30.9% 6,90,000.0 1.0 69.2% 3,08,537.0 2.0 93..3% 66,807.0 3.0 99.4% 6,210.0 4.0 99.98% 320.0 5.0 99.9997% 3.4 6.0 The lower-case letter sigma in the Greek alphabet(s) is a symbol used in statistical notation to represent the standard deviation of a population. Standard deviation is an indicator of the amount of variation or inconsistency in any group of items or in any process. For example, when you buy an idly at an Udipi restaurant that is nice and hot one day, and lukewarm the next day, that is variation. Or if you nu three shirts of the same size and one is too large, that is also variation. In fact, there are infinite examples of variation because everything varies to some degree. Variation is a part of life. Another example: When your flight arrives at an airport, you never know if it will be five minutes or 20 before your luggage gets to the baggage claim section. Simply stated, six sigma is a set of tools that a company adopts and adapts to achieve breakthrough results or dramatic improvements in its profits. These tools bring down costs and weed our inefficiencies in production or in the deployment of resources. The ultimate aim is to help a company re-tool and re0create itself so that problems and defects do not arise at all. Six sigma defines what is the achievable optimum in quality in the drive towards perfection: 3: defects per million parts, products or events. The core assumption is that if a company can reduce the standard deviation-degree of variance from the mean or average product-fewer products or services will be faulty. Variance here mean variance as perceived by the customer and not as assumed by a manufacturer or service provider.

Thus, Six Sigma is a robust and rigorous system that uses statistical tools to identify and reduce quality defects based on what the customer perceives as quality. It is a data-driven method to reduce defects and waste in manufacturing, service delivery and other business activities. In statistics, the lower case Greek letter sigma is used to represent variation around the mean figure. Six Sigma works by not only measuring variability but also by giving companies a tool to measure process capacity. This means a company can, through systematic application of statistical tools, measure its processes and analyse them to reduce variations in output. There is an emphasis on measuring processes and documenting them so that the process is eventually recreated to meet Six Sigma specifications leading to improvement in customer satisfaction and bottomline of the company. Key Concepts of Six Sigma Critical to Quality. Attributes most important to the customer. Defect. Failure to deliver what the customer wants. Process Capability. What you process can deliver. Variation. What the customer sees and feels Stable Operations. Ensuring consistent, predictable processes to improve what the customer sees and feels. Design for Six Sigma. Designing to meet customer needs and process capability. Significance of Six Sigma When a company adopts Sig sigma, it is forced to break its functions into simple and measurable processes. Each process is tracked for problems which are recognized and defined and then eliminated. If used intelligently Six Sigma can enhance results, dramatically by targeting improvements through breakthrough projects. No other system gives an integrated approach to what a company must do in order to satisfy the customer. If focuses on both topline and bollomline. The Six sigma methodology provides a complete structured framework implementation approach. Under Six sigma quality becomes a tangible and measurable product. It is applicable to all processes. Six Sigma identifies the root of the problem and the proceeds to remove it completely from the system. Six Sigma is the system that combines science, technology, quality and profitability. One company was running into a huge attrition problem with its new managers leaving after a few months of training. The company was losing millions a lot of time on the recruitment process. It went through three HR managers (as it was believed that the manager was unable to spot the right talent) before a black belt was assigned to the project. It was found that all new recruits left just before a particular stage of their training. For some, this came within two months of their joining, and for some after three months. But they all left just before they had to do a stint at the clean-room that was a mandatory part of the schedule. The company the redesigned its interview process and gave all interviewees a tour of the clean room before hiring them. Once they knew what they were getting into, they did not leave after they were hired. Six Sigma does not just lead to increase in revenues or decline in losses. It changes the way a company works by pulling it into the cycle of culture change. First, it change the behaviour of the

people, who them translate this into better results for the projects that they work on. That, in turn changes the corporate culture. A company must know where to enter the cycle. Precautions in using Six Sigma Some companies find it tough to apply Six Sigma because it is a rigorous, data driven method. It requires serious investment in time and training in people. A few precautions required for successful application of Six Sigma are as follows: 1. There must be top management commitment to Six Sigma so that it becomes part of the corporate culture. In India , there are companies who want a certificate saying they are Six Sigma this or ISO that. They think that Six Sigma is some kind of certification process. You spend a few lakhs, get the certificate and that is all. But Six Sigma is about achieving breakthrough results. You dont get any paper, you can frame and keep on your table. It involves committing resources to important projects that are critical to quality as defined by customers. 2. A lot depends on how a company develops and uses its people. Ideally, organisations should pick their best to train as black belts and keep them out of the mainstream for at least two years, moving across projects. Many companies make the mistake of pulling the black belts into their old functions. 3. One must select the right projects which have a high impact on the business can be attacked by Six Sigma tools then do it. Sometimes, it is better to work a project backwards to see if it is worth going through Six Sigma. A process must be measurable and closely aligned to business priorities. The objective is not to do projects running into hundreds, but to identify business priorities and focus. Business results wont come from getting all projects into Six Sigma. GE ( when the company was Godrej-GE) helped them prioritise their projects. In the initial years of Six Sigma, there was this belief that there would be a culture change in five years and there was a rush to push all projects through. GE threw all this out and taught us to look for mega projects and looks for an improvement in business parameters in the bottomline. 4. Six Sigma is not a very regimented quality initiative. There is a structure to executing Six Sigma processes but there are no set guidelines. It is an internal commitment to the self and the organisation to ensure defect-free work. Six Sigma does not even mean all companies have to get to level six all the time. Sometimes, a three or four sigma may work just as well and even a small improvement in sigma levels can bring in a large reward. 5. It is also useful to know that Six Sigma works in tandem with other quality programmes like TQM and Balanced Score Card. Just as a surgeon uses different tools for different parts of his operation, difference tools can be used for different problems to make projects successful. 6. Six Sigma is no quick fix it takes time to penetrate and the results take time to materialize. Six Sigma is best done in phases. Some companies just overwhelm themselves. It could lead to failure if you over expect, over communicate or try and involve too many people and projects in Six Sigma. Six Sigma takes a lot of energy, commitment and resources. It is not something companies can do well when they are in the survival mode.

7. Six Sigma is a tool to improve the capacity of business processes. It is a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach to eliminate defects in every process from manufacturing to transactions, and covers the entire spectrum of products and services. 8. Six Sigma is more than quality. Every company has to figure out what Six Sigma means for it. For some, it is a problem-solving methodology while others see it as a way of managing. Each company needs to figure out where it will fit in. It does not have to be the same everywhere. Whatever level a company decides to do it, it must do it well. Not every company has to be a GE where Six Sigma becomes everything. Six Sigma is not a Fad Cost reduction, productivity improvement, and customer retention are the promises of the Six Sigma quality management system. And the way the data-driven management system has worked for leading corporations like GE, Motorola and Indias very own Wipro and Gail, the promises seem as deliverables. Mikel J. Harry, the founder of Six Sigma methodology, spoke to ET about the quality initative ahead of his trip to India for the forthcoming Indiatimes Strategy Summit. Excepts from the interview with the men known for tutoring corporate legends like Jack Welch, Jac Nassar and Larry Bossidy. How is Six Sigma different formTQM as a quality improvement tool? Unlike the philosophical and prophetic nature of TQM, Six Sigma is a repeatable management process based on the ideal of measurement. It is a goal-driven, results-oriented fact-based system of management. With a view of verify improvement, a defect or error is eliminated. It is prevented by introduction of improved or new processes or products which results into secured savings. In a way. TQM is about the business of quality whereas Six Sigma is about the quality of business. In India companies feel that Six Sigma is a high-cost fad. What are your thoughts on this mindset? Six Sigma has been around (and growing) for the past two decades. Thats a really long time for a fad, per se. In fact, there are some people who also believe that the internet is a contemporary fad, which will evaporate. How did Six Sigma fare in the initial days? In the beginning, Six Sigma was a tough sell. You realize that in 1987 we were asking the company (Motorala ) to make a 1,800 X improvement in 5 years. Then, we did not have an army of corporations who had a already experienced the benefits of Six Sigma. We only had our theories, beliefs, and faith. Perhaps our biggest discovery was that you dont have to achieve Six Sigma to beat the competition hand-down. Many times, a half-sigma gain for less) provided the market momentum necessary to capture more business. How do you think Six Sigma has bettered IT companies? Today, quality is defined as a state in which the customer and provider realize full value entitlement in every aspect of the business relationship. When it comes to transactional processes applicable in It or It enabled services such as BPO, etc. this aspect of value entitlement is predominant. This has necessitated the evolution of Six Sigma Gen-III, which is based on idea of value created. This moves the power of quality closure to the customer ( and provider). Such a shift in power is fully enabled by the concurrent focus on utility, availability and worth the key dimensions of quality required in such a business environment.

Methodology of Six Sigma The Six Sigma methodology is described by the acronym DMAIC-where D is define, M is measure, A is analyse, I is improve and C is Control. The first step is to defined the problem. For example, in Johnson Controls, many sittings with internal Six Sigma team pinned equipment delivery problems down to one issue: the route followed for to delivery of consignments. From the US, shipments went to Singapore, first before being trans-shipped to India, costing the company huge amounts of time and money and forcing it to employ many outside agencies in the transaction. The measure phase showed that nine per cent of the value of shipments was accounted for by the freight cost from factory to Singapore and another four per cent was accounted for by the freight cost from factory to Singapore to India. The process was analysed within the Six Sigma framework and the sigma level was found to be less than I which means a 69 per cent change of failure. To bring down time and costs involved. Singapore was taken off the route map and goods were shipped directly from Us to Mumbai. The analyse phase showed that the process was still at one sigma. In the improve phase data and analysis was used to remove the root cause of the problem. The improvement phase focuses on discovering the key variables that caused the problem. The control phase makes sure that the problems do not recur by monitoring the processes that create the product or service. Six Sigma derives its name from the lower case Greek letter used to express, variation. But in its form and application it draws heavily on the oriental martial arts- Karate. From the names that it gives its practitioners to the manner in which it tackles a companys problem. Six Sigma has much in common with Karate. The first step towards implementation of Six Sigma is building a team of professional who are trained with varying levels of proficiency in the art of Six Sigma. As in Karate, the measure of proficiency in the art of Six Sigma is denoted by the colour of ones belts. Black belts are the experts who carry projects through the prescribed framework, attacking causes for inefficiencies and problems in a systematic and logical manner. Their job is to ask questions and they peel the layers off a problem and get to its root. Black belt is a process improvement teams leader who is trained and certified in Six Sigma methodology and tools and who is responsible for successful execution of projects. He is a facilitator and change agent, like the torch bearer if Six Sigma. Black belts flit from project to project and across all functions of a company with great agility and speed. They are responsible for cultivating the culture of Six Sigma within the organisation by mentoring and training project personnel on the requisite tools and strategies. The ideal black belt is a person who in intellectually agile and disciplined and at the same time able to rethink and relearn the business. Black belts need a minimum of two years to help a company reap benefits. But they cant do it alone. Green belts support black belts in a Six Sigma project. Their role is to assist and follow the black belt while implementing the tools of Six Sigma within the confines of their project, Ideally, a process owner or a team leader in a project is a green belt. A black belt moves away after his or her involvement with a project is complete to a new challenge. But the green belt stays on to continue and constantly improve the process that he or she is associated with. The Thumb-rule is that a company must have one black belt per 100 employees and one green belt per 20 employees. The Six Sigma team has two more members: the champion and the master black belt. Champions are senior managers or executives. Typically they are the CEOs or leaders of a business

unit, Their role is the greatest in the initial stages of Six Sigma implementation. They choose the projects, recognize what the problems are and guide the team into the phase where they can control and improve the process. Says Anirudh Chakravorty , a trained black belt employed by Mirc Electronics: A champion is like a sutradhar, a guide to all of us. A champion underlines a companys commitment to Six Sigma. Since he or she occupies the high chair, the staff draw their inspiration from it, Champions defined the Six Sigma path within the process and ultimately within the organisation. The norm is that a company must have one champion per business group or manufacturing site. Mater black belts partner with the champions. Their role is critical because they coach and support the black belts, disseminate Six Sigma knowledge through the organisation and function as intermediaries whenever there is trouble is using its tools. Also, a mater black bet is part of the core deployment team that decides on the projects, people and the resources that need to be allocated to Six Sigma. They are fully dedicated to Six Sigma and a company would ideally need one master per 30 black belts. A comparison of Roles Champions Master Black Belts Black Belts Green Belts Qualifications Senior executives Chief engineers or Technical degree project Such as vice-presi technical heads or orientation heads dent or director Mastery of basic preferred. Must or proHead of a business and advanced have high growth cess unit. Must be statistical tools potential within the owners. familiar with basic required. organisation. Technical and advanced Mastery over background statistical preferred. tools necessary. Must know basic statistical tools. Four one-week Two sessions, with three three-day weeks between sessions sessions, to apply to apply training to real life training situations. On the job. One per 100 one per employees 200 employees Rs. 50 lakh to a crore on a project Rs. 15-30 of lakh on a

Training time

One week

Two one-week Training sessions

Number per Company

Approx. amount savings per project.

One per business Group or Manufacturing unit Not applicable

One per 30 black belts

Not applicable

Source: Six Sigma by Mikel Harry and Richard Schroeder and Breakthrough Management Group. Six Sigma Resources Six Sigma has inspired many books and web-sites. A look at whats available on the net and off the bookshelves. Websites www. Isixsigma.com The website answers questions and documents culture changes in companies that undertake Six Sigma. If caters to both the novice and the professional with services like directories of consultants and software vendors, archived news articles and published papers on the subject and a huge database of templates and tools. www. 6.sigma.com The site belongs to the Six Sigma Academy which, say six Sigma specialists that we spike to, is among the most respected training centres in the world today. Its credentials bear this out as the academy has trained over 11,000 black belts and overseen around 20,000 projects in companies from all over the globe. The website summarises a few case studies and offers a set of books and videotapes on the subject. www. Processmodel.com Simple and brief, the site is brisk its business. It provides a guide to the jargon and the processes that define Six Sigma. Six Sigma: The Breakthrough Management Strategy Revolutionising the Worlds Top Corporations. Written by Dr. Mikel Harry and Richard Schroeder, the books is considered to be one of the classics in Sigma literature. The writers both exMotorola, are among the original architects of Six Sigma and together run the Six Sigma Academy in the US. The book goes into the basics and then looks at the experiences of some successful companies. The power of Six Sigma: An inspiring tale of how Six Sigma is transforming the way we work. Writer Subir Chowdhury provides on introduction to the world of Six Sigma. The book way be elementary for established executors of Six Sigma but is very useful for a beginner. The Six Sigma Handbook. Thomas Pzydek, who wrote this book, is considered to be pioneer in the field and the Handbook is a guide for all Black Belts and Green Belts. The Six Sigma Way: How GE, Motorola and other top companies are honing their performance. The book has four authors-Peter Pande, Robert Neumann, Roland Cavanagh and Michael George- and is read by almost everybody for its detailed map on the deployment of Six Sigma in companies. It is recommended for its focus on how to implement process improvements under Six Sigma rather than theories on the subject. GE. GE applies Six Sigma in almost everything it does. In 1995, Jack Welch, the then CEO of GD, aimed to becoming Six Sigma company by 2000 to produce virtually defect free products, services and transactions. At that time GE had a sigma level of 3-5 (23,000 defects per mission). To achieve a sigma level of 3.4, Welch decided to invest $ 250 million in training 4,000 black belts and more than 60,000 green belts. This massive investment paid off in 1997, by adding $ 300 million to GEs operating income.

Johnson Controls India. This company provides building control systems-automative seating equipment and energy and integrated facility management services. It faced problem with its supply chain. The ship from the companys headquarters in Milwankee, USA was taking too much time to dock, causing huge freight bill and customer dissatisfaction. The logistics department was frustrated with an average delivery time of 69 days and multiple freight handing agents. The company applied Six Sigma to the logistics process. As a result delivery time declined to 49 days and freight costs were down by more than 10 per cent. Now almost the entire staff has been trained in Six Sigma methodology. Wipro. At Wipros Waluj factory near Aurangabad in Maharashtra, the management found that rejection rates for the tubelights made were as high as 20 per cent. Apart from breakage there were major quality issues to be dealt with- tubelignts not firing, black ends, powder leaks, sealing problems at the sides and so on. Enter Six Sigma, with breakthrough statistical tools to establish direct linkages, between processes and output. The first breakthrough came when it was discovered that uneven heating of the baker-which is used to bake glass- was at the root of the problems. Just one change- a change in the baker-brought the rejection rate crashing down to 12 per cent. The next objective was to Six Sigma to bring rejections below six per cent. Wipro has saved Rs. 30 crore through its Six Sigma efforts. Quality and Integrity are Non-negotiable: Premji Consistency and continuous improvement are two embedded concepts in quality and without consistent execution and continual improvement, there can be no sustainability, said Azim Premji, chairman, Wipro, inaugurating the CII Institute of Qaulitys 12 th summit. With realization that quality is a core driver of sustainable growth, at Wipro, it has always been a practice to build organisation where quality comes first, he said, adding. It is through this practice and with many mistakes along the way that we have learnt a few cardinal principles of quality. I call them tenets of quality. The company needs to have processes to continually anticipate customer needs and a leadership willing to deliver to those shifting needs. This requires hard work and risk taking. The will and the process have to work together for the company to align around a true customer based definition of quality. He said. The Wipro chairman said quality is also non0negotible as integrity in any organisation. Quality and integrity are non-negotiable because that is the only way to be and to behave. But integrity is not just a moral compulsion, it also translates into immediate economic value by fostering trust with all the stakeholders that organisations interact with, he added. Speaking on the occasion. A Anantharaman, managing director, Standard Chartered Bank, said the financial services sector is undergoing a sea change with the adoption of IT. Power of computing, communication, delivery and information available on financial services to customers have altered quality and consistency of delivery, he said. Jose Dominic, CEO, The Casino Group (CGH), quoted A Dutch institutes study of travel patterns to Asia. Two types of travellers have emerged-sun, sand and sea (SSS) loving travellers and travellers and alert independent traveller (AIT)- and their , travel patterns have undergone a sea change.

SSS travellers are defined as people who confine to the hotel or destination and are not adventurous. AIT those who go out to explore the region and come back for more, he said. In 1996, travel to Asia comprised of 90% SSS travellers and just 5% AIT but as per the latest study, it is 40% SSS and 45% said Mr. Dominic. Source: Economic times, November 26, 2004. Godrej Appliances, there was a problem with the glass-sealed terminal, a key component in a refrigerators compressor. The error rate was over 50 per cent and rejections ran into lakhs of pieces. One of the key inputs was being imported as the supplier could not meet the quality requirements. When Six Sigma was applied, the process was found to be abysmal. The problem was defined and various factors that contributed to the making of a glass-sealed terminal were measured and analysed. The vital causes of problems were identified and divided into black noise which is n assignable cause, and white noise, which is a random cause. The process was re-designed and quality variations reduced. A local supplier was trained to meet the specifications and he replaced the foreign supplier resulting in huge savings. Since the rupee had over the years declined against the dollar. The total amount saved was nearly 10 times the initial projected savings as the number of rejections came to a few thousand a year. For those of your think Sig Sigma is some kind of magic mantra for business success, forget, it, Six Sigma works only for companies that are willing to work hard at it. At Wipro, the first year of Six Sigma yielded practically no results. The big gains came later, after much perseverance. Others, like ICICI Bank, have found success in key projects- like the payments group , which takes care of payments to suppliers and also, internal dole-outs for things like employee reimbursements, etc.-but are still debating how wide and deep the Six Sigma initiative should go. Mumbais dabbawallas who deliver 1.5 lakhs lunch boxes to office goers everyday, score a Six Sigma ratting. Bombay Dyeing has reduced annual losses of Rs. 40 crore to Rs. 10 crore through application of Six Sigma in its DMT division.