CHAPTER 1 -

TQM Evolution

Happiness is

when what you think, what you say, and what you do are in harmony.
-- Mahatma Gandhi

Introduction 1 Total Quality Management (TQM) is costumer oriented management philosophy and strategy. It is centered on uality so as to result in customer delight. The word !Total" implies that all mem#ers o$ the organi%ation make consistent e$$ort to achie&e the o#'ecti&e o$ customer delight through systematic e$$orts $or impro&ement o$ the organi%ation. 2 The TQM philosophy was e&ol&ed in (apan a$ter the )orld )ar II. *dward +eming, an ,merican uality e-pert helped the (apanese to apply concepts o$ TQM. They concentrated on customer satis$action and $ocused on understanding customer needs and e-pectations. 3 Howe&er, the ,merican industry ignored this de&elopment as it was still riding high #ecause o$ lack o$ competition. +uring the ./01s they were $orced to look $or new ways to sur&i&e in an en&ironment o$ deregulation, a growing trade de$icit, low producti&ity, recession, downsi%ing and increasing consumer awakening. 2ord Motor 3ompany lost more than 45 6 7 #illion during ./01-08 4 The 45 market share o$ 9ero- 3orporation which had pioneered the photocopier, o$ +eming:s teachings and started applying them. This helped 9ero- to regain market share $rom the (apanese, 2ord to come out o$ the red, 2lorida ;ight and <ower, 45, reduced customer complaints #y =1 percent in ./07. In ./0>, the ,merican ?a&y coined the term TQM to represent #roadly the (apanese way o$ uality management. +*2I?ITI@? @2 Q4,;ITA (uran, one o$ the uality gurus, de$ined uality as fitness for use. , &ery concise de$inition indeed, $or a term that has so many dimensionsB Quality o$ a product or ser&ice in simple terms is its suita#ility $or use #y the customer. I5@ International @rgani%ation $or 5tandardi%ation (I5@), the world #ody $or standards $ormulation was $ounded in the year ./C= and has its head uarters in Gene&a, 5wit%erland. Most countries in the world are mem#ers o$ I5@. The national

standardi%ation #odies o$ &arious countries represent their countries in time in the year ./0D. In case of the computer software, which is a unique service, the quality of the product can be defined as the ability to deliver the product within the time schedule, within budget and with the least number of defects.

+IM*?5I@?5 @2 Q4,;ITA Quality has many dimensions. The dimensions o$ uality are nothing, #ut the &arious $eatures o$ a product or ser&ice. )e will discuss some o$ them #rie$lyE

<F@+43T Q4,;ITA 1. Functionality 2unctionality re$ers to the core $eatures and characteristics o$ a product. The de$inition o$ $unctionality as per I5@G I*3 /.8=E .//.E !, set o$ attri#utes that #ear on the e-istence o$ a set o$ $unctions and their speci$ied properties. The $unctions are those that satis$y stated or implied needs." 2. Reliability , car should not #reakdown o$ten. This is the relia#ility attri#ute to uality. Felia#ility is measured #y mean (a&erage) time #etween $ailures (MTH2). Felia#ility is an indicator o$ dura#ility o$ products. 2or instance, the MTH2 o$ a car can #e speci$ied as .111 hours o$ running or .1111 kilometers. 3. Usability , product should #e easily usa#le. The customer should #e a#le to use the product easily without the help o$ e-perts. 4. Maintainability Maintaina#ility re$ers to ease with which a product can #e maintained in the original condition. <roducts may #ecome de$ecti&e while in use or in transit. It should #e repaira#le so as to retain the original uality o$ the product at the lowest cost at earliest possi#le time. 2or so$tware, maintaina#ility is de$ined in the 5tandards I5@ /.8=E .//.as !, set o$ attri#utes that #ear on the e$$ort needed to make speci$ied modi$ications". Maintaina#ility is measured as Mean Time o Fepair (MTTF). 2or instance, the MTTF o$ a street light controller is .> minutes. 5. Efficiency This is applica#le to most products. *$$iciency is the ratio o$ output to input. 2

6. Portability This more important in the conte-t o$ so$tware. <orta#ility is de$ined as a set o$ attri#utes that #ear on the a#ility o$ so$tware to #e trans$erred $rom one en&ironment to another. Service Quality 1. Quality of Customer Service 3ustomer ser&ice is important in e&ery #usiness. In a ser&ice industry, meeting customers and $inding out their implied re uirement is more challenging. There$oreI a#ility to satis$y customer depends on the uality o$ customer ser&ice. This includes #ut is not limited toE 1 How well the customer is recei&edJ 2 How well the implied re uirements are elucidated 3 How well the customer is treatedGhandledGsatis$iedJ 2. Quality of Service Design 5ince ser&ices are usually made to order, it is important that the ser&ice is designed as per the re uirements o$ the speci$ic customer. 3. Quality of Delivery Quality o$ deli&ery is important in any sector, #ut more crucial in case o$ ser&ices. +e$ects on deli&ery should #e %ero to satis$y the customers. ,dditional attri#utes o$ uality, which are applica#le to #oth products and ser&ices, are gi&en #elowE 1. Timeliness +eli&ery on schedules as per re uirements o$ the customer is a must #oth in the product sector as well as in ser&ice sector. ?o customer likes waiting. ,ny anticipated delay in schedule should #e communicated to customer well in ad&ance. Timeliness is critical $or many products and ser&ices. +elay in arri&al o$ aircra$ts or trains are instances o$ poor uality o$ the ser&ices encountered in day-to-day li$e. 2. Aesthetics , product or ser&ice should not only per$orm well #ut also appear attracti&e. There$ore, aesthetics is an important element o$ uality. ,esthetics may include, #ut not limited to the appearance o$ the product, the $inish, colour, etc. 3ustomers will #uy only those re$rigerators or TK recei&ers or music systems, which look good. 3. Regulatory Re uirements Fegulatory re uirements as stipulated #y the local and $ederal go&ernments should #e $ul$illed #y the product or ser&ice. 2or instance, an automo#ile has to meet *uro II 5tandards in respect o$ emission to 3

minimi%e en&ironmental pollution. 5imilarly, there are regulatory re uirements in respect o$ sa$ety o$ electro-medical products. 4. Re uirements of Society The products should $ul$ill #oth the stated and implied re uirements imposed #y society. The customer re uirement should not &iolate society or regulatory re uirements. Thus to satis$y a customer, a product cannot #e #uilt in such a way as to &iolate the re uirements o$ society o$ a sa$e and healthy product. 2or instance, pro&iding #elts $or persons sitting in the $ront seat in a car is a re uirement o$ the society. Hence, the car manu$acturers should pro&ide #elts $or the passengers tra&eling in the $ront seat. 5. Conformance to Stan!ar!s <roduct ser&ice should con$orm to the stated and implied re uirements o$ customers. )here applica#le, they should con$orm to applica#le standards such as national standards, international standards and industry standards. 2or instances, *lectro-Magnetic Inter$erence (*MI) $rom a <3 should #e within the limits prescri#ed #y the corresponding standard. Basic Terms Related to Quality to Understand TQM 1. Quality Control QC! L @perational Techni ues and ,cti&ities that are used to $ul$ill the re uirements $or Quality. 7 steps o$ Q3 are E .. *&aluate and actual per$ormance to goals. 8. 3ompare actual per$ormance to goals. 7. ,ct on the di$$erence. 2. Quality Assurance QA! L all the planned and systematic acti&ities implemented within the uality system, and demonstrated as needed. Huilding uality to products re uire the $ollowing E 1. Quality o$ +esign L how well the product or ser&ice is designed to meet the current and $uture re uirement o$ the customer and add &alue to all the stakeholder (stakeholder L customers, employees, suppliers, owners, society) 2. Quality o$ 3on$ormance L consistency in deli&ering the desired product. 3. Quality o$ <er$ormance L Indicator o$ the per$ormance o$ the end product. 4. Quality o$ 5er&ice L all acti&ities that will ena#le the customer to procure and use the product without any hassles. 3. Quality Plannin" QP! L acti&ities that esta#lish the o#'ecti&es and re uirements $or uality, it usually in&ol&es the CMs (man, machine, materials, methods) 4. Quality Im#rovement L this process aims at attaining unprecedented le&els o$ per$ormance, which are signi$icantly #etter than the past le&el. 4

5. Quality Mana"ement L all acti&ities o$ the o&er-all management $unction that determine the uality policy, o#'ecti&es and responsi#ilities and implement them #y means such as uality planning, uality control, uality assurance, and uality impro&ement within the uality system. 6. $ust in time $IT! L this means that at no stage o$ manu$acturing no#ody or nothing waits $or anything. It $ocuses on right scheduling to keep in&entory as low as possi#le.

MI%& TEASERS 'rite s(ort notes on t(e )ollo*in" +

1. +imensions o$ Quality 2. 2our ,#solutes o$ Quality 3. 3hain Feaction 4. *&olution o$ Quality 5. Quality <lanning Foadmap 6. (uran:s 2itness o$ Quality L 7. (IT 8. I5@ 5tandards L 9. Quality ,ssurance L 10. 5trategic and Quality <lanning -

CHAPTER ,- Quality Cost

To exist is to change, to change is to mature, To mature is to go on creating oneself endlessly.

-Henri Ber"son TQM -was e&ol&ed to satis$y customers in the most economical way. Quality-means cost o$ e$$ecti&eness. It means reducing e-penditure #y eliminating wastes through systematic uality management approach. There$ore it is important to compute e-penditure incurred an account o$ poor uality, and pre&ent it. TQM- aims at gradual reduction o$ waste$ul e-penditure and e&entually their total elimination. Quality cost -should #e accounted separately so as to know how much the organi%ation is loosing on account o$ poor uality. +ecreasing cost o$ production should indicate uality impro&ement. ,ccounting and analy%ing uality cost has gi&en innumera#le #ene$its to the organi%ations. Thus the uality cost is an important tool $or TQM

C-ST -. QUA/IT0 Cost o) 1uality C-Q! - is the sum o$ cost incurred #y an organi%ation in pre&enting poor uality. There are essentially 7 types o$ uality costs as gi&en #elowE

1. <re&ention 3osts 2. ,ppraisal 3osts 3. 2ailure 3osts

PREVENTION

APPRAISAL

INTERNAL

EXTERNAL

PA. M-&E/ This is called <,2 model, name a##re&iated $rom the $irst letters o$ the 7 categories. ,ny uality cost which arises in an industry can #e classi$ied in one o$ the a#o&e 7 categories.

Prevention cost

1 ,re the planned costs incurred #y an organi%ation to ensure that no e$$ects

de$ects occur in any o$ the stages such as design, de&elopment, production and deli&ery o$ a product or ser&ice. 2 Include education and training o$ employees, process o$ impro&ements e$$orts, process control, market research, product uali$ication, $ield testing, pre&enti&e maintenance, cali#ration o$ instruments, audits, uality assurance sta$$, etc. A##raisal costs

1 ,re incurred in &eri$ying, checking or e&aluating a product or ser&ice at &arious

stages during manu$acturing or deli&ering. They are incurred due to lack o$ con$idence in the uality o$ the product or ser&ice either due to the incoming material or due to the process. 2or instance, the incoming materials are inspected, #ecause, the recei&er is not sure a#out the uality o$ the incoming goods
inspection during the process and $inal inspection, etc.

2 Include incoming inspection, internal product audit, supplier e&aluation and audit
.ailure cost

1 Incurred #y an organi%ation #ecause the product or ser&ice did not meet the
e-pected re uirements and the product had to #e $i-ed or replaced or the ser&ice had to #e repeated. The $ailure costs are due to the incurred $ailure o$ the organi%ation to control de$ects in the product. loyalty. @ne dissatis$ied customer will tell .11 others, which means the loss o$ #oth present and $uture customers.

2 +e$ecti&e products in the market can lead to the loss o$ reputation and customer
C/ASSI.ICATI-% -. .AI/URE C-ST Internal )ailure cost

1- Includes costs o$ e&ery $ailure that takes place #e$ore the product is deli&ered to
customers. 1 Fe'ected material, supplied #y &endor 2 Fe'ected pieces o$ su#-assem#lies 3 Fe'ected products at $inal inspection 4 5crap on account o$ poor workmanship 5 @&ertime due to non-con$orming products

E2ternal .ailure Costs 1- These are on cost o$ $ailure o$ the product a$ter its deli&ery to the customers. 1 )arranty cost 2 2ree replacements gi&en due to $ailure o$ items supplied 3 3ost incurred to tra&el to customer:s site $or repair 4 3ost o$ product returned 5 3ost o$ customer complaint administration 6 3ost o$ customer $ollow up and $ield ser&ice department $URA%3S M-&E/ -. -PTIMUM QUA/IT0 C-STS The uality le&el increases, when the num#er o$ de$ects in the product or ser&ice reduces. The cost o$ non-con$ormance ($ailure cost) decreases as uality le&el impro&es. The uality le&el increases when the cost o$ con$ormance (sum o$ pre&ention and appraisal cost) increases. The total uality cost is the sum o$ #oth. A%A/0SIS -. C-Q .-R IMPR-4EME%T Management should use the 3@Q data to identi$y and prioriti%e impro&ement opportunities. The $irst priority is to eliminate e-ternal $ailure and then internal $ailures. Therea$ter inspection can #e reduced gradually. Hy spending more money on pre&ention all these can #e achie&ed. , typical case study is gi&en.

3ost o$ Quality as a percentage o$ total Manu$acturing cost year .//> .//D ./// 811. *-ternal 7 ..> 1.> 1.. internal ..> 8.> . 1.8 appraisal . ..> ..> 1.> pre&ention 1.> 1.> . ..8 Total 3@Q = = C 8

+uring .//D, increasing appraisal without increased internal $ailures #ut reduced e-ternal $ailures. Howe&er, the total 3@Q did not change. This is certainly an impro&ement #ecause e-ternal $ailures a$$ect #usiness &ery #adly. +uring .//D, the organi%ation decided to get I5@ /111 and $ocus on pre&ention. +uring ./// when pre&ention was stepped up, keeping the same le&el o$ inspection, the $ailure and o&erall 3@Q came down. .///, the 3*@ decided to adopt TQM. Kigorous e$$orts were made to impro&e uality $urther and do things right, the $irst time and e&ery time. Hence in the year 811., appraisal could #e #rought down drastically. ?ow #oth the internal $ailures and e-ternal $ailures are uite low. *$$orts should #e made in the same direction so that o&erall 3@Q reduces $urther. Thus, TQM is aimed at ena#ling the lowest cost o$ uality.

A%A/0SIS -. E5TER%A/ .AI/URE C-ST

ot(ers 167 )ailure o) )use ,67

solder de)ects 867 )ailure o) diode 967

The a#o&e pie chart gi&es the priorities $or action to #e taken as gi&en #elowE 1. impro&e the uality o$ soldering 2. eliminate the cost o$ $ailure o$ diode +. 3. *stimate the correct rating o$ $use and analy%e the causes o$ $ailure o$ $use. I$ all the a#o&e $ailures can #e eliminated then the $ailure cost will reduce to a#out .1 percent. A%A/0SIS -. I%TER%A/ .AI/URE C-STS

:6 ;6 <6 86 96 ,6 16 6 A B C

1. wrong component placed 2. soldering $ailure 3. other causes

, ma'or cause o$ internal $ailure was insertion o$ wrong components in the <3H. The process was studied and $ound that the lightning in assem#ly line needed impro&ement and the operators needed training. This analysis and the e-ternal $ailure analysis pointed to pro#lems in the soldering process. , thorough study was re uired to reduce the de$ects cause #y poor soldering.

10

MI%& TEASERS 'rite S(ort %otes on t(e )ollo*in" E

1. 3ost o$ 3on$ormance 2. 3ost o$ ?on-3on$ormance 3. @ptimum uality le&el and %ero de$ect L 4. TQM and Quality 3ost L 5. <ro&e that at optimum uality le&el a dollar o$ cost o$ con$ormance reduces the
$ailure cost #y the same amount.

11

CHAPTER 9- /eaders(i#
To accomplish great things, we must not only act, but also dream; not only plan, but also believe. -Anatole .rance

Total Quality Mana"ementIs a way o$ managing an organi%ation with the o#'ecti&e o$ carrying out right 'o#s rightthe $irst time and e&ery time. In uality management, there is a thum# rule called 0>G.> Fule. It means that the root causes o$ 0>M o$ the pro#lem in the organi%ation are due to $aulty systems and .>M are a result o$ the #eha&ior o$ employee. The top management is responsi#le $or the $aulty systems. In addition, the top management should also ha&e $aith in the $ollowing to #uild uality &alues in the organi%ationE

1 3ustomers are the only reason $or #eing in the #usiness and hence they should
#e delighted 2 Nero de$ect is possi#le to achie&e 3 Team work results win-win situation 4 3*@ has to lead the uality mo&ement 5 <roper communication is essential 6 3ontinuous impro&ement is needed in the processes &E.I%ITI-% -. TQM The International 5tandard, I5@ /111, de$ines Total Quality Management (TQM) as !a management approach o$ an organi%ation, centered on uality, #ased on the participation o$ all its mem#ers and aiming at long term success through customer satis$action and #ene$its to the mem#ers o$ the organi%ation and to the society". E/EME%TS -. TQM TQM is application o$ a num#er o$ acti&ities with per$ect synergy. The &arious important elements o$ TQM are illustrated in as $ollows.

Constancy of purpose/long term commitment

Trainin g

ocus on
process

Total Employee In"ol"ement/Team #or$ T! %

!uantitati"e %et&o's Continuous process

impro"ement

Lea'ers&ip

Custome r ocus

Supplier Partners&ip

/EA&ERSHIP -. TQM ,s 3ros#y says senior management is .11M responsi#le $or the pro#lem o$ uality and its continuance. ,ccording to Harrington, #etween D1 and 0>M o$ all errors can only #e corrected #y management. Thus, it is important that top management understands TQM and

leads the organi%ation through the TQM 'ourney &EMI%=3S 18 P-I%TS .-R T-P MA%A=EME%T 1> Create Constancy o) #ur#ose )or Im#rovement o) Products and services The top management must #elie&e that their #usiness will continue $or .11 years. They will in&est in research to inno&ate new products and will train their employees without the $ear o$ loosing them. ,> Ada#t t(e ne* #(iloso#(y The new philosophy means elimination o$ wastes, delays and radically changing the work culture. The new philosophy means (ust-In-Time ((IT) manu$acturing is possi#le with %ero de$ects. 9> Cease &e#endence on Mass Ins#ection +oing things right and doing it right the $irst time would reduce the dependence on inspection, in $act it would #e eliminated. TQM is aimed at eliminating inspection in the long run through pre&ention.

8> End t(e Practice o) A*ardin" Business on t(e Basis o) Price Ta" Alone

1 3

This point addresses supplier partnership. The supplier should #e selected on the #asis o$ the $ollowing C parametersE 1 Quality 2 <rice 3 +eli&ery 4 5er&ice There$ore price alone should not #e the criterion $or selection o$ supplier. <> Constantly Im#rove t(e System o) Production and Services The processes in the organi%ation need continuous impro&ement o$ processes so that the uality o$ products and ser&ices impro&e continuously. ;> Institute Trainin" Management needs training to learn a#out the organi%ation, all the way $rom incoming material to the customer. Today e&ery (apanese employee recei&es = weeks o$ training e&ery year. This is the proo$ o$ +eming:s teachings and adoption o$ his concepts #y the (apanese. :> Ado#t and Institute /eaders(i# +eming urges that the senior employees must conduct themsel&es as leaders rather than managers. ;eader and Manager Mana"er Feacti&e 2inds $ault +oesn:t care to understand 5its in his chair Maintain process 3ommunicate rarely Question

/eader <roacti&e 3oaches 4nderstand <rocess Mo&es around Impro&e process 3ommunicates $re uently 5eeks suggestions

?> &rive -ut .ear *mployees should #e encouraged to suggest impro&ements and new ideas, ask uestions a#out the e-isting process, etc. This will stunt impro&ement. 2ear is detrimental to impro&e on processes. @> BreaA do*n Barriers Bet*een Sta)) Areas TQM dictates remo&al o$ #arriers #etween the departments. 16> Eliminate Slo"ansC E2(ortations and Tar"ets )or t(e 'orA .orce Here +eming talks a#out slogans and targets $or increasing producti&ity. To achie&e higher producti&ity, the system has to #e impro&ed $or which, management is responsi#le. The posters are directed at the wrong people, $amily $rom the workers. They only

1 4

generated"$rustration and resentment" among workers. The #est strategy $or impro&ement is to correct de$ects in the system, not slogan or posters.

11.

a! Eliminate %umerical Quota )or t(e 'orA .orce (2) Eliminate %umerical =oals )or #eo#le in Mana"ement

12. Remove Barriers t(at roB Peo#le o) Pride o) 'orAmans(i#

The organi%ation should esta#lish the right processes and a proper system $or uality management. This will lead to carrying out 'o#s correctly. I$ the work is carried out correctly, it gi&es pride to those who did. 19> Encoura"e Education and Sel)-im#rovement )or every -ne *mployees should #e encouraged to pursue higher education and training while in ser&ice, $or impro&ing the skills or updating knowledge. 18> TaAe Action to Accom#lis( t(e Trans)ormation The top management should understand the a#o&e .7 points and then ena#le their employees to understand them. They should interpret the .7 points properly and educate their employees appropriately. T*? 5TF,T*GI*5 2@F T@< M,?,G*M*?T

1. Proactive Mana"ement 1 <roacti&e Management ?eeds <roper system 2 TQM calls $or proacti&e management 2. Adventurous and Bold C(an"e Mana"ement 1 ?o#ody likes change 2 3hange is essential 3 He ad&enturous 4 He #old 3. &IR.T- &o it Ri"(t .irst Time
-Take Fight +ecisions -)hy people don:t +o it Fight the 2irst TimeJ

1) 2) 3) 4) 5) 6)

The employee does not know what to do clearly, lea&e alone how to doB I$ he knows how to do, he is not moti&ated to do it right He does not ha&e the necessary education or training to know <ro#a#ly his seniors ha&e trained him the wrong way He is not proud o$ the 'o# he is doing He does not get appreciated when he does it right

?ot doing it right $irst time is going to cause hassles to e&ery stakeholder. There$ore, it is important to know how to make +IF2T happen.

1 5

Basic Re1uirements )or &IR.T

1 Fight the 2irst Time and *&ery Time 2 5et Fight Goals 3 5elect Fight <ersonnel 4 *sta#lish right <rocesses 3hoose +ura#le Faw Materials 5 3hoose Fight machinery 4. Continuous Preventive Action 1 <re&ention is Hetter than 3ure 2 @ne 5hot <re&ention is not Good enough 5. Care )or /ittle t(in"s and Accumulate =ains 1 3aring $or 5mall Things 2 3ommunicate with (unior *mployees 3 Oeep on accumulating 6. Ensure economic Per)ormance 1 Importance o$ economic <er$ormance 2 Quality should Increase <roducti&ity ,lso 3 Talk a#out 5uccess in *conomic <er$ormance 4 5takeholders will 4nderstand *conomics Hetter 7. Mana"ement By *alAin" around 8. Measures )or Success
-Measures 7 <s

<roduct

<rocess

<ersonnel

16

%ever rest on Past /aurelsC Continue to Im#rove 1- The Tail o$ Tortoise and Fa##it 10. Build a virtual -r"aniDation -Fe uirements 2or Kirtual *nterprise 1) Identi$y the most critical partGs 2) Identi$y the other parts 3) +e&elopGidenti$y &endors $or the other parts 4) 3ontinuously increase su#-contracting

17

MI%& TEASER 'rite a S(ort %ote on t(e .ollo*in" +

1. / *lements o$ TQM 2. +eming:s .C points $or management 3. Quality Kalues $or TQM 4. <roacti&e Management 5. 3ontinuous pre&enti&e action 6. MH), 7. Measure $or success 8. 3hange and TQM 9. +FI2T 10. ,d&antages o$ &irtual organi%ations

18

CHAPTER 8 TQM Im#lementation P&SA TQM Im#lementation S(e*(art de&eloped <lan, +o, 3heck, ,ct P&CA! cycle $or impro&ement o$ processes. &emin" modi$ied it as <+5, cycle. There are $our phases- <lan, +o, 5tudy and ,ct

,ct

<l an

5tudy

+ o

<+5, 3ycle

P&SA cycle is suita#le $or process impro&ement pro'ects. *ach process impro&ement should #e organi%ed as a pro'ect. <+5, typically in&ol&es the $ollowingE 1 The !<lanning" phase is the preparation phase where the actions proposed to #e taken $or implementation o$ TQM are determined and documented a$ter a detailed analysis. 2 The !+o" phase is in&ol&es implementation o$ the action on a pilot #asis. 3 The !5tudy" phase is where the results o$ pilot implementation are measured and analy%ed to see whether there is a real impro&ement. +uring this phase one has to understand which plan worked and which did not. This may either lead to con$irming the new process in the !act" phase or modi$ying the plan and re&ising

the cycle again. The <+5, cycle repeats itsel$ $or each impro&ement action proposed. The important actions taken during each phase o$ <+5, are gi&en #elowE Plan 1 *sta#lish o#'ecti&es 2 *sta#lish a plan that will $acilitate achie&ing the goal 3 *sta#lish a measurement system

1 9

&o 1 <lan $or implementation and measurements 2 Implement the plan on pilot #asis Study 1 3ompare the results with the o#'ecti&es 2 Identi$y gaps 3 ,naly%e the causes $or gaps and e-ceptional results, i$ any Act 1 5tandardi%e the procedure that met or e-ceeded the goal 2 I$ there were gaps, impro&e the plan and carry out <+5, again Plannin" #(ase o) TQM 1. Announcement. The 3*@ will #e a#le to con&ince the workers and the 'unior employees a#out practicing TQM uite easily as they tend to ha&e an open mind. Hut he may ha&e pro#lems in con&incing the $irst line managers and the senior managers. ,ccording to Harrington, !they (first-line and middle managers) admit that participative management is good for the employee and good for the organization, but they dont view it as beneficial to themselves. In fact, they see it as a threat, taking away some of their authority 2. Select Consultant> 3onsultants ha&ing ad&antage o$ #eing independent will #e a#le to put $orth the new ideas to change the organi%ational culture. I$ a consultant moots an idea, it could easily $ind the acceptance amongst the employees, unlike an idea gi&en #y an employee in the organi%ation (e&en i$ the idea o$ the employee is much #etter than the consultantB) there$ore, a competent consultant can #e hired $or help in implementation o$ TQM. 3. Cor#orate Strate"ic Plannin"> The ne-t step would #e planning the strategy as to how the organi%ation is going to get into TQM. 5o it has to carry out the strategic planning with the help o$ the senior management and consultant. The important acti&ities in strategic planning are $ormulating &ision, mission and o#'ecti&es $or the organi%ation #y the 3*@. The three essential statements are e-plained #elowE 9A> 4ision Statement> It is the &ision o$ the 3*@ a#out where the organi%ation should #e in the long run. It may not ha&e any relation to the current status with regard to the products and ser&ices o$ the organi%ation, #ut what the organi%ation should #e capa#le in the $uture. The &ision statement should appeal to all stakeholders namely !the employees, customers, suppliers, shareholders and the society" Here are $ew e-amples o$ &ision statements Fane Hrake ;inings ;td, 3hennai !"o remain market leader in India and to become a global player, through superior, environment friendly technology and people competence 20

9B> Mission Statement. It descri#es the purpose $or which the organi%ation is in #usiness and pro&ides the strategies to achie&e this purpose. The mission statement should communicate the guiding principles and &alues held common #y the organi%ation. Here is one e-ample o$ a mission statement The Mission statement o$ Fane Hrake ;inings ;td, 3hennai MI55I@? ,?+ K,;4* 1 <ro&ide superior products and ser&ices to our customers and maintain market leadership 2 *&ol&e as a n institution that ser&es the #est interest o$ all stakeholders. 3 <ursue e-cellence through Total Quality Management 4 *nsure the highest standards o$ ethics and integrity in all our actions 4. Quality Policy> The uality policy should clearly con&ey the &iews o$ the management on dealing with the customers and achie&ing customer satis$action. The uality policy is aimed at impro&ing the customers: perception a#out the organi%ation and there#y impro&ing the organi%ation:s image. #or instance, it could be one of the ob$ectives that the organization will reduce the total %uality cost by &' percent every year as compared to the previous year or that they should double their production every two years. 8A> Plan )or estaBlis(in" communication )rame*orA . The communication $ramework starts $rom the &ision, mission and policy statements as $inali%ed #y the 3*@. The important document $or communications within the organi%ation is the uality manual. I$ the organi%ation is already certi$ied under I5@ /111 standards, then the same uality manual can #e used. Helow the uality manual, the ne-t tier o$ document is uality plan. (hile %uality manual says what is to be done, %uality plan says how it is to be done. Hased on the uality manual and uality plan, the process documents are to #e prepared. The process document consists o$ the $ollowingE 1. General procedures, which cut across the entire organi%ation, in&ol&ing one or more processes. 2. The documents speci$ic to a particular process such as detailed procedures and work instruction. 8B> Plan )or 1uality council QC!> The ape- uality council can #e called the 5teering council and the others the +i&isional Quality 3ouncil. The 5teering Quality 3ouncil consists o$ 3*@ and the +irectors. The TQM $acilitator will act as the secretary to the 5teering Quality 3ouncil. +i&isional Quality 3ouncil are $or each di&ision under General Managers in which TQM $acilitator will also #e a mem#er. In a 5maller organi%ation, there would only on Q3 chaired #y the 3*@, with the managers and TQM $acilitator #eing mem#ers o$ the Q3.

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8C> Role o) Quality Council QC!> The roles and responsi#ilities o$ each mem#er o$ Q3 in TQM are gi&en #elowE 1 The mem#ers o$ the uality council should #e con&inced that continuous impro&ement is possi#le in the organi%ation 2 They should constitute the right teams, which can #e called as <rocess Impro&ement Teams (<IT) $or sol&ing each pro#lem. 5ince the a##re&iation does not sound good, we will call them <rocess ,ction Teams (<,T) 3 They should ,ttend Q3 meetings a$ter ade uate preparation 4 They should keep track o$ the steps taken #y the teams towards impro&ement on a regular #asis. 5 They may discuss with the customers and suppliers to get $irst hand in$ormation a#out what is happening in the organi%ation. Hence it would adopt Tom <eters: MH), to know the $acts 6 They should $acilitate training o$ the employees as well as the impro&ement o$ the team mem#ers 7 They should #e champions $or uality in the organi%ations and should #e willing to sponsor uality related initiati&es. 8 They should always #e on the look $or related in$ormation and pro&ide resources continuously $or uality impro&ement 9 ;ast, #ut not the least, they should walk the talk 5. Strate"ic Quality Plan> The strategic #usiness plan in&ol&es the proposed market share, goals #usiness &alue, pro$its, di&ersi$ication to new areas o$ #usiness, in&estment thereo$, etc. The strategic uality planning is the $ormulation o$ strategies to achie&e TQM in the organi%ation. 5ome strategies $or TQM implementation areE 1 Training $or top management- mem#ers o$ uality council, senior managemente-ecuti&es, employees 2 2orming impro&ement teams $or speci$ic pro#lems 3 The consultant can train the uality council mem#ers. The TQM $acilitator can also undergo the training along with the uality council mem#ers. Therea$ter, the TQM $acilitator should take the lead and conduct training $or as many employees as possi#le on TQM principles and how to go a#out TQM. 6. Em#loyee Involvement> Impro&ement plans re uire a lot o$ detailed and intelligent work to #e carried out. 2or carrying out such tasks, cross-$unctional teams, <,T:s will #e $ormed #y the Q3. *ach team should #e assigned clear responsi#ilities and in particular speci$ic deli&era#les #y the teams #e de$ined.

2 2

7. Constitution o) PAT> The $ormal structure o$ TQM consists o$ Q3, the TQM $acilitator and the support sta$$. Impro&ement teams are $ormed $or each impro&ement task. The impro&ement teams will #e $ormed $or sol&ing a gi&en pro#lem on part-time #asis and will #e dissol&ed as soon as the 'o# has #een completed. There$ore, impro&ement teams are not a permanent esta#lishment. *&ery employee should get a chance to #e part o$ the impro&ement teams. 8. Identi)y #rocess. The Q3 should plan to identi$y processes $or impro&ement. Husiness process #enchmarking helps in identi$ication o$ the potential processes $or impro&ement. The potential processes are those, which yield higher return on in&estment. Harriers to TQM implementation 1 ;ack o$ top management commitment 2 ;ack o$ employee commitment 3 ?on-cooperation o$ $irst line managers and middle management 4 ;ack o$ clarity in &ision 5 ;osing Track o$ #usiness per$ormance 6 ?ot in&ol&ing customers and suppliers 7 Helie$ that training leads to employee attrition 8 Fesistance to change at all le&els 9 Ine$$ecti&e TQM $acilitator 10 )rong consultant 11 ;ack o$ consistency and persistence #y management 12 Haste and there#y waste 13 ;ooking $or immediate gains 14 ?ot in&esting ade uate resources 15 ,dhoc organi%ation 16 Quick o#solescence o$ products 17 ;osing con$idence in the middle o$ the 'ourney due to &arious reasons 18 )orking harder than smarter 19 Tough competition leading to $re uent price war 20 4na#le to $ind champions within the organi%ations 21 ?ot properly satis$ied- too many or too less num#er o$ employees The #arriers could #e o&ercome #y dedicated work$orce with a strong and committed leadership.

2 3

MI%& TEASER 'rite a S(ort %ote on t(e .ollo*in" + 1. 3ommunication $ramework $or TQM 2. <+5, 3. Kision, Mission and Quality <olicy 4. TQM tools and Techni ues 5. @rgani%ation $or TQM 6. Fole o$ 3*@ and TQM $acilitator 7. Harriers to TQM 8. Fe uirements $or a winning organi%ation 9. 5teps in&ol&ed in TQM planning 10. Gi&e a se uence o$ e&ents $or any impro&ement action in a TQM company

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CHAPTER < Customer Satis)action Service Quality The de$inition o$ ser&ice as per the international standard, I5@ /111 $ollowsE !The result generated, #y acti&ities at the inter$ace #etween the organi%ation and the customer nad #y the organi%ation:s internal acti&ities, to meet customer needs" The result generated in the case o$ manu$acturing is a product. Howe&er, in the case o$ ser&ice, it may #e a product or may not #e a product. #or instance an organization supplying electricity to a household is a service organization. The o#'ecti&e is supplying electricity to a household $or &arious purposes. In achie&ing its o#'ecti&e, the organi%ation undertakes internal acti&ities such as generation, transmission and distri#ution, so that the power is a&aila#le at the customer:s doorsteps. The customer could only #ene$it $rom the presence o$ electric power, #ut not see it o$ $eel itB Thus, de$initely electric power is an intangi#le product, pro&ided as a ser&ice #y the electric pro&ider. E2am#le o) service #roviders 3olleges, schools, internet ca$e, hospitals, restaurants, hotels, #anks, go&ernment departments, transport organi%ation, insurance agencies, chartered accountants, pu#lishers, so$tware organi%ations, telecommunication ser&ice, real estate agencies, security ser&ices, house-keeping ser&ices, ta-i ser&ices, training organi%ation, test la#oratories etc. Customer &eli"(t Business t(rives on customers> 3ustomers are the &ery reason $or #eing in #usiness. <ro$its can #e reaped only i$ an organi%ation has customers who will pay $or the products or ser&ices on a continuing #asis. It depends on the a#ility o$ the entrepreneur to get into the right areas o$ #usiness $or success. In $act, success$ul entrepreneurs are those who create a market o$ their own. Customer attrition 5ome organi%ation may #e a#le to attract new customers, #ut e-isting customers may lea&e. It is rele&ant to recall an old saying in this conte-t. !If a product is good then the customer will come back again) if not, the product will come back (returned) Quite o$ten the num#er o$ new customer may #e much more than the attrition o$ customers. This may gi&e a $alse con$idence that the customers are happy and the organi%ation is doing well. There$ore, in order to get a true picture, e&ery organi%ation has to $ind out, at any gi&en time how many customers ha&e #een lost rather than how many customers they are ser&ing at that time. The losing o$ a higher num#er o$ customer indicates $alling standards with regard to uality o$ ser&ices pro&ided. ,ccording to Tom <eters, the customers lea&e #ecause o$ the $ollowing reasonsE 25

.>M #ecause o$ uality pro#lems .>M #ecause o$ higher prices D1M did not en'oy doing #usiness with the organi%ations. <6 #ercent o) #roBlems are due to misunderstood re1uirements> @ne o$ the ma'or pro#lems in a ser&ice industry is identi$ying the real re uirements o$ the customers. In many computer so$tware de&elopment pro'ects, >1 percent o$ de$ects are caused due to a misunderstanding o$ the re uirements. This statistic may also apply to any other ser&ice industry. There$ore e&ery e$$ort should #e made #y the customer contact personnel, $or identi$ying not only the stated, #ut also, the implied customer re uirements Contractual and %on-contractual re1uirements o) customers 3ustomer satis$action has to #e analy%ed, with regard to #oth contractual and non-contractual re uirements o$ the customers. The contractual re uirements could include the $ollowing parameters 1 QualityE ser&iceGproduct characteristic 2 Time schedule $or deli&ery 3 <rice 4 5er&ices such as responsi#ility $or installation, ser&ice during warranty and post warranty, etc. 5 +ocumentation support 6 Training support The non-contractual e-pectations include the $ollowing parametersE 1 Quality (not documented #e$ore) 2 Implied re uirements 3 Kalue spent $or money 4 *n&ironment o$ conducting #usiness and the $riendliness o$ the customer ser&ice personnel o$ the organi%ation etc. Customer Service AttriButes C-M.-RT! C )or Carin"> The customer ser&ice employees should not only #e, #ut percei&ed to &ery interested in $inding out the real needs o$ the customer and help them to #uy what they really intend to #uy, product or ser&ice. They should not dri&e away customers. They should also #e ready to answer, #oth the rele&ant and irrele&ant ueries and go out o$ the way to help customers in sol&ing their pro#lems. - )or -Bservant. *ach customer ser&ice personnel should #e a good o#ser&er. The customer contact person should pay attention to the #ody language o$ the customers and should also #e a#le to read their re uirements

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M )or Mind)ul> The customer contact employees ha&e to remem#er that the organi%ation is dependent on its customer. The organi%ation has to stri&e to meet the customer needs. In the ser&ice industry, the customer is always late. This is true in e&ery ser&ice organi%ation. ,t the same time, the ser&ice organi%ation may not #e a#le to complete the 'o# immediately due to genuine reasons. Howe&er, the urgency o$ the customer has to #e considered. They should gi&e importance to the re uirements o$ the customer e&en i$ the re uest was recei&ed &ery late. . )or .riendly> The customer ser&ice employees ha&e to #e $riendly with customers. ,t times, i$ the customers or their representati&es are not &ery $riendly, then, such situations ha&e to #e tact$ully handled #y the customer ser&ice employees. - )or -Bli"in"> The organi%ation should $eel o#liged that the customer has &isited them with an en uiry. It may so happen that the customer may not #e serious a#out gi&ing a #usiness. He may 'ust #e comparing the price $or a 'o# already $inali%ed with some other pro&ider. R )or Res#onsiBle. )hile the proposals are #eing su#mitted, the organi%ation should $eel responsi#le $or success$ully accomplishing the proposal i$ accepted #y the customer. It is #etter to su#'ect the proposals $or !contract re&iew" #e$ore sending. The contract re&iew should not #e an o#stacle $or inno&ati&e ideas and it should not cause delay. T )or Tact)ul> The customer is supreme. Hut this does not mean that they cannot #e wrong. The organi%ation should tact$ully handle such situation. )hate&er is asked $or a$ter a contract is signed should incur additional cost. In a ser&ice organi%ation, generally, the customers would demand that the 'o# should #e completed in a &ery short time. In such situations, the customer contact employees should e-plain in detail how much time is really re uired $or pro&iding the ser&ice. Tact$ul handling o$ customers will make the customers understand and cooperate in completing the 'o#s success$ully. THE EA%- M-&E/ In the late ./D1s, +r ?ariaki Oano o$ Tokyo Fika 4ni&ersity came out with an interesting and practical model $or understanding customer satis$action, known as the Oano Model. He de&eloped the model $rom Hert%#erg:s Moti&ator-Hygiene Theory. Generally, Quality is considered to #e one dimensional in nature as gi&en in $ig >.. <er$orman ce Had
3ustomer 5atis$action

Go od

Had

Go od

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@ne +imensional models $or uality )hen we measure the per$ormance o$ a product, we rate them as good or #ad. 5imilarly, when we rate the satis$action o$ the customer, we rate them as good or #ad. This one dimensional uality model. +r. Oano proposed the two dimensional model $or uality. In Oano:s Model, there aretwo a-es as gi&en in $ig >.8

5atis$action Good

<er$ormance y Two +imensional Quality Model The - a-is represents the per$ormance o$ the product or ser&ice or degree o$ implementing the product $unction. @n the - a-is e-treme le$t point indicates that the product $unction is a#sent. @n the e-treme right point, the product $unction is $ully implemented. The y a-is represents the le&el o$ customer satis$action. @n the top-most point, the customer is highly satis$iedI on the #ottom-most the customer satis$action is uite low.

3ustomer 5atis$action

*-citement Quality

a#sent <er$ormance

<roduct 2unction $ully implemented Threshold (#asic) Quality ;ow Oano Model

The a#o&e $igure is the Oano Model $or representing three le&els o$ uality. There are three graphs in the plot and they represent three di$$erent uality le&els. In $act, the graph is three types o$ responses o$ a customer with regard to uality o$ a product or ser&ice- these are #asic uality, per$ormance uality and e-citement uality.

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Basic Quality The #asic uality is also called threshold uality. ,s the graph indicates, i$ the $unctions are not implemented as agreed. Then the results in lower le&el o$ satis$action as compared to higher le&el o$ satis$action, when $ully implemented. 2or instance, a #uyer o$ automo#ile e-pects a &ehicle to start easily, pro&ide a sa$e dri&ing en&ironment and #e $ree $rom rattles and noises. 2ul$illing the #asic uality is measured #y the $ollowingE 1 3ustomer complaints 2 )arranty data 3 <roduct recalls 4 ?um#er o$ lawsuit 5 Things gone wrong 6 @ther $ailure results The #asic uality represents unspoken or minimum e-pected re uirements Per)ormance Quality ;ook at the linear graph. This measures satis$action proportionate to the per$ormance o$ the product, per$ormance uality attri#utes generally cause linear response. Increase le&els o$ achie&ements cause increase le&els o$ satis$action. The customer re uirements $or per$ormance uality can #e $ound $rom the customer sur&eys. This is also called &oice o$ customer 2or instance, i$ three two-wheelers gi&e a mileage o$ C1 kms, =1 kms and 01 kms per litre o$ gasoline, then the satis$action o$ the customer will #e proportional to mileage. 5imilarly, i$ the per$ormance is 81 kms, then the customer will #e dissatis$ied. 5o a linear increase in customer satis$action can #e e-pected in the per$ormance uality. E2citement Quality The third uality type is the e-citement uality. *-citement is generated #ecause the customer recei&ed some $eature or attri#ute that they did not e-pect or think o$. 3ustomers generally do not articulate e-citement attri#utes in customer sur&ey, #ecause they do not know that they want them. 2or instance, ta-is in Mum#ai pro&iding $ree newspapers to passengers or an auto-rickshaw in 3hennai playing radio. Howe&er, &ery soon the e-citement uality may #ecome an e-pected uality. There$ore, organi%ations ha&e to #e continuously doing research in $inding out what will e-cite the customers.

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There$ore, the organi%ations ha&e to identi$y the $ollowingE 1 Hasic $eatures, which must #e pro&ided, which i$ not pro&ided, will dissatis$y the customer 2 The $eatures, which gi&e linearly proportional customer satis$action 3 The $eatures that will e-cite the customers and e-ponential increase in customer satis$action. Customer .eedBacA .eedBacA )orms The most common method o$ o#taining $eed#ack is #y gi&ing a response sheet or a $eed#ack $orm to the customers at the conclusion o$ e&ery deli&ery process and seeking $eed#ack. Con)identiality In order to get a true $eed#ack, the $eed#ack $orm should #e kept con$idential. *&en where it is taken orally, the con$identiality o$ the $eed#ack should #e assured so as to get realistic $eed#ack. &is#lay results The $eed#ack data should #e analy%ed at regular inter&als. The data collected could #e con&erted into charts like pie charts, #ar charts and displayed in the organi%ation:s notice #oard. The display o$ the $eed#ack is #ene$icial in two ways to the organi%ation namelyE 1. The customers come to know that their $eed#ack is taken seriously #y the organi%ation 2. The employees in the organi%ation know a#out where they really stand Com#laint resolution )hile $eed#ack $rom customers is to #e dealt with in an independent manner, the resolution o$ complaint is to #e handled #y senior management personnel. It is also good to open a num#er o$ channels $or $eed#ack and complaints, such as suggestion #o- or nominating an authori%ed person independent o$ production and customer contact to recei&e complaints or $eed#ack The $irst task to #e carried out in resol&ing complaints is their entry into the data#ase or register o$ complaints. This is essential $or the $ollowing reasonsE 1. To keep track o$ complaints 2. To carry out the root cause o$ analysis and take correcti&e action immediately so as to eliminate such pro#lems in the $uture 3. To take pre&enti&e action 4. To $ind out the cost o$ poor uality and other statistical purposes

3 0

AnalyDe inde#endently The complaint coordinator may designate a team or a person $or studying the complaint thoroughly and independently. The team should study complaint and &eri$y what is true. The team should approach with an open mind and try to analy%e whether such a mistake could ha&e occurred in their organi%ation. =ive Bene)it o) douBt to customers Quite o$ten, there may #e &ariations in the statements made #y the employees o$ the organi%ation and the customers. 5uch a situation should #e handled tact$ully and the team should #e a#le to $ind out the truth. Satis)yin" annoyin" customer I$ the organi%ation is ser&ing thousands o$ customers, there could #e one or two customers who will #e creating pro#lems $or the organi%ation unnecessarily. I$ the organi%ation puts all its e$$ort to cur# it, then it will #e wasting its time. There$ore, it may #e diplomatically handle the annoying customers and send them #ack as early as possi#le. Com#laint recovery #rocess> *ach organi%ation has to esta#lish a process $or recei&ing complaints, processing them, communicating to customer and resol&ing this issue. This is called a complaint reco&ery process. This process is aimed at satis$ying customers, resol&ing pro#lems and take pre&enti&e actions.

3 1

MI%& TEASER 'rite a S(ort %ote on t(e .ollo*in" + 1. 3haracteristics o$ 5er&ice 2. <sychology o$ customers 3. Importance o$ ser&ice industry 4. Importance o$ customer handling 5. )hy speed is important in ser&ice industry 6. +e$inition o$ ser&ice 7. 3@M2@FT o$ customer 8. 3ustomer delight, gi&e e-amples as well 9. )hy customers lea&e 10. Oano model 11. ,greed customer re uirements 12. Importance i$ 35I 13. 2eed#ack $or process impro&ement 14. 3omplaints and customer satis$action 15. +esign a $eed#ack $orm $or a restaurant, hotel, school, #ank or hospital

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CHAPTER ; Em#loyee Involvement Em#loyee motivation =rou# Be(aviour Moti&ated teams lead to success o$ organi%ation. Howe&er, the concept o$ employee moti&ation is di$$icult to understand #ecause human in nature is uite comple-. Howe&er, some #eha&ioural patterns ha&e emerged o&er the years. 2or instance, in e&ery organi%ation there are three categories o$ people as gi&en #elow in $ig. =..
Top-notch- sel$ actuali%ed (.1M) 2ence 5itters (01M) +i$$icult to impro&e (.1M)

Be(aviour o) em#loyees It is #elie&ed that a#out > to .1 percent o$ the employees are sel$-moti&ated and whate&er #e the circumstances in the organi%ation, they continue to do their #est. They ne&er get demoti&ated, e&en i$ there are demoti&ating $actors in the organi%ation. The #ottom > to .1 percent are the di$$icult people who do not want to get moti&ated. Howe&er, 01 percent are $ence sitters. Their moti&ation le&el depends on management strategies. They 'oin the top .1 percent, i$ the management is e$$ecti&eI otherwise 'oin the #ottom .1 percent. Motivation t(eory o) individual em#loyees T(eory 2 5igmund 2reud is the author o$ theory -. Theory - characteri%es employees as gi&en #elow 1 ,&oid work 2 ?o am#ition 3 ?o initiati&e 4 +o not take responsi#ility 5 ?eeds security To make them work, the management has to do the $ollowingE 1 Feward 2 3oerce 3 Intimidate 4 <unish T(eory 0 3 3

+ouglas Mcgregor is the author o$ theory A. Mcgregor:s theory o$ people are gi&en #elowE 1 )ant to learn 2 )ork is a natural acti&ity 3 Ha&e sel$ discipline 4 +e&elop themsel&es These employees do not get moti&ated as much #y any reward, #ut seek $reedom to do di$$icult and challenging 'o#s. HerDBer"3s T(eory Hy"iene T(eory> It includes the $ollowingE 1 The company 2 Its policies and its administration 3 The kind o$ super&ision which people recei&e while on the 'o# 4 )orking condition 5 Interpersonal relation 6 5alary 7 5tatus 8 5ecurity Motivators> It includes the $ollowingE 1 ,chie&ement 2 Fecognition $or achie&ement 3 Interest in task 4 Fesponsi#ility $or enlarged task 5 Growth and ad&ancement to higher le&el tasks Team *orA '(y TeamsF ,s the organi%ation grows, a $ormal structure is e&ol&ed to ena#le #etter management and communication. Teams are $ormed to $ul$il the o#'ecti&es. The team coordinator will coordinate the day-to-day acti&ities o$ the team he may #e called a manager, super&isor, team leader, head, team coordinator, etc. He is responsi#le $or the output o$ his team while each mem#er o$ the team is responsi#le $or the work assigned to him. Mana"ement3s Role in enaBlin" team*orA It is the responsi#ility o$ the management to $oster teamwork amongst employees. It re uires clear de$inition o$ the $ollowingE 1 Fesponsi#ility 2 ,uthority 34

)herewithal $or accomplishing the task 1 3riteria o$ measurement o$ the work output Team*orA results in a 'in-'in situation> The win-win situation demands that each employee respects the &iew o$ the other employees and regards the sel$-esteem o$ all the colleagues in the team. The employees may critici%e the process, #ut not critici%e the persons. The employee should reali%e that only #y working together they can achie&e more than what each person can do To summari%e, the team can ha&e the $ollowing #ene$its i$ they work $or a win-win situationE 1 ,chie&e dramatic results, which indi&iduals can:t 2 Make #est use o$ skills o$ each mem#er o$ the team 3 Make right decisions 4 Get more en'oyment and 'o# satis$action The pro#lems o$ win-lose are summari%ed #elowE 5 )astes time 6 3reates con$lict 7 5top people listening 8 5poils happiness and health o$ team mem#ers. &o re*ards disru#t team *orAF It is to #e noted that awards should #e gi&en to teams rather than indi&iduals whene&er possi#le. It is true in a teamI contri#utions o$ all mem#ers may not #e e ual. @ne indi&idual would ha&e led the inno&ation and others would ha&e contri#uted in &arying degrees. The whole team should #e appreciated and awarded. In other words the output o$ the team should #e gi&en more importance than the output o$ the indi&iduals. The top management should make it clear that they want the entire team to contri#ute although they know who are the star per$ormers. E))ective Communication In e&ery organi%ation, communication is a three way process $or each employee, as gi&en #elowE 1. To one, employee is working $or- super&isorsGmanagers 2. To the persons working $or him- su#ordinatesG'unior employees 3. To the persons one works with, the peers, counterparts, customers and suppliers (#oth internal and e-ternal) Thus, communication is a three way process and e&ery employee should communicate e$$ecti&ely in all the three roles.

3 5

Trainin" and mentorin" The employees in their $ormal education learn many techni ues co&ering wide range o$ topics, $rom #asic principles to ad&ance topics. Moreo&er, the employee needs to #e gi&en orientation training to carry out his tasks correctly, on the $irst appointment, #e$ore they are deployed $or actual work. The orientation training should help the employees to understand the $ollowing in particularE 1. @#'ecti&es o$ the organi%ation 2. Fe uirements and e-pectation $rom his team with re$erence to the organi%ation:s o#'ecti&es 3. His role 4. His responsi#ilities 5. His authority 6. The know-how and know-why o$ the 'o#s to #e undertaken on day-to-day #asis 7. 2amiliarity and skill in operating the tools or machinery connected with the 'o# in hand. In addition, the employee should #e addressed to see whether he has the a#ilities to per$orm the duties straightway or is he re uired to #e put as a apprentice under a mentor Trainin" is not a -ne-Time activity ,lmost all the Quality Gurus, like <hilip 3ros#y, *dwards +eming and Harrington ha&e highlighted that training is not a one-time acti&ity. In the ser&ice sector, o#solescence settles in $ast. There$ore, there is a continual change in #usiness. This means that the employees ha&e to ac uire the skills needed $or designing, manu$acturing, deli&ering and ser&icing the updated or new products or ser&ices There is reluctance on the part o$ management to send employees $or training, due to some o$ the $ollowing reasonsE 1. *-cessi&e workload in the organi%ation, which does not permit sending them $or training 2. ?on a&aila#ility o$ appropriate training courses. 3. 2ear o$ migration o$ employees a$ter training. P&CA )or Trainin" Though training contri#utes to the prosperity o$ an organi%ation, it also costs money. There$ore, <+3, should #e used $or training o$ employees in e&ery organi%ation. Plan )or trainin". *&ery employee needs training. There$ore, the training needs o$ e&ery employee should #e identi$ied at regular inter&als. Their training needs and the methodology should #e planned and documented. It could #e on the 'o# training, training in an open course, in-house course etc. )hat is important is that the training plan $or each employee is a&aila#le at the #eginning o$ e&ery year. 36

Provide Trainin". *mployees should #e deputed $or training as planned, alternate plan should #e made at the earliest. Measure Trainin" E))ectiveness> ,$ter the employee undergoes training, the e$$ecti&eness o$ training should #e assessed $ormally. The assessment $inding should #e recorded. Im#rove Trainin" E))ectiveness. Hased on the a#o&e, #oth pre&enti&e and correcti&e actions should #e taken $or impro&ing the e$$ecti&eness o$ the training programs. Reco"nition and Re*ards Select a .e* Best Per)ormers It is uite important that awards are gi&en to real achie&ers #ut it should not #e a routine a$$air. The selection o$ the awardees should #e gi&en due consideration, so that the $ew who ha&e per$ormed a top notch 'o# are awarded. The attri#utes $or selection o$ #est per$orming employees in *T+3, 3hennai are gi&en #elowE 1 3ommitment 2 3reati&ity 3 2le-i#ility 4 ,dapta#ility 5 +etermination 6 Fesponsi#ility Ty#es o) a*ards The organi%ation should select the award appropriately. It could #e appreciation in annual meeting, certi$icates, mementos, and cash awards. ?o matter what is the type o$ award, the employees will de$initely #e moti&ated. Howe&er, the organi%ation should #e consistent in gi&ing the awards. )hoe&er or whiche&er team e-ceeds that per$ormance threshold could #e awarded the same type o$ award. The organi%ation should not keep on changing the type o$ award. .eedBacA and #er)ormance a##raisal .eedBacA essential Bot( )or em#loyees and mana"ement> It is more humane to #e curious to know a#out the result o$ an action. ,ctions are to #e taken not only #y management, #ut also #y 'unior employees in the organi%ation. There$ore, #oth the management and the employees should look $orward to getting a $eed#ack on the action taken, the employees $rom the management and &ice &ersa, in the interest o$ impro&ing uality continuously. Mana"ement s(ould seeA )eedBacA It is the responsi#ility o$ the management to seek $eed#ack. The management should there$ore adopt suita#le strategies to get the right $eed#ack $rom the employees 3 7

as well as customers. The management should adopt management #y walking around (MH),) concept ad&ocated #y tom peters to get the right $eed#ack.

.eedBacA to t(e em#loyees> *&ery employee in the organi%ation should recei&e a $eed#ack on the uality o$ his output. I$ it is not done the employee will not reali%e the true uality o$ his output. =ivin" A##ro#riate .eedBacA The person gi&ing $eed#ack is at di$$erent le&els in the hierarchy, IQ, education, knowledge and e-perience. There$ore, it is important that the person gi&ing $eed#ack uses a language easily understanda#le #y the recei&er. There$ore, the super&isor should change his style, reduce the le&el o$ technical 'argons to that o$ employees in $ront o$ him and then communicate in a simple and understanda#le manner.

38

MI%& TEASER 'rite a s(ort note on t(e )ollo*in" + 1. Maslow:s theory 2. Hert%#erg:s theory 3. Group #eha&iour 4. Moti&ational techni ues $or employees 5. Importance o$ teamwork 6. Three way communication 7. Mentoring 8. Fewards and recognition $or moti&ating employees 9. <urpose o$ employee appraisal 10. )hy empowerment $ailsJ

39

CHAPTER : Process A##roac( Model )or Process &e)inition The process model is uite simple. It contains three clearly distinguisha#le elements, as gi&en #elowE 1. InputGs o$ the process 2. @utputGs o$ the process 3. The process or task The process orientation helps the organi%ation in identi$ying all the inputs, documenting them and ha&ing a control o&er the uality o$ the product (output) #y ha&ing a control o&er all the inputs and the process parameters. ,ny product manu$acturing or ser&ice preparation and deli&ery can #e modelled in this manner. , little analysis o$ e&ery process will #ring out clearly all the three elements. In#ut o) t(e #rocess The &arious inputs re uired $or any process areE 1. Hill o$ materials 2. 5peci$ication $or each material 3. Fe uirements $or inspection $or the incoming materials 4. <rocedure $or the receipt o$ the materials -ut#ut o) t(e #rocess The output o$ process consists o$ the $ollowingE 1. The products or ser&ice to #e deli&ered 2. +ocuments to #e deli&ered 3. The speci$ications $or all the a#o&e 4. Method o$ measurements $or &eri$ying con$ormance to the speci$ications 5. 3riteria $or acceptanceGre'ection

ET5 M-&E/ The most popular process model is *T9 as shown in $ig D..E

*ntry

Task

*-it

Input *T9 Model

@utput

*T9 stands $or *ntry, Task and *-it. The &alue adding process is called Task. The new items in the diagram are *ntry and *-it. *ntry- 3onditions to #e satis$ied #e$ore the task is undertaken *-it- 3onditions to #e $ul$illed #e$ore the task is considered as completed

40

SUBBURA$3S ;S M-&E/ .-R PR-CESS IMPR-4EME%T 5tudy 5trengthen 5treamline

<rocess Impro&ement 5ynergi%e 5impli$y 5tandardi%e 5u##ura':s =5 $or process impro&ement The important tasks during each one o$ the si- phases o$ process impro&ement as outlined in the diagram are descri#ed #rie$lyE Study The current per$ormance le&el o$ the processes triggers impro&ement. It could #e the de$ects $ound (#oth internal and e-ternal), cycle time achie&ed, customer $eed#ackGcomplaint, employee $eed#ack, customer waiting time, hassles o$ the employees or customers, etc. There$ore, it is important to study the process and document the details as necessary. Streamline It means that the process should o$$er the least resistance to motion in the organi%ation. Quite o$ten, some processes cause delay or hassles leading to pro#lems either to customer or to the employees. There$ore it is important to $irst document the current se uence o$ e&ents and then eliminate unnecessary or non-&alue adding processes. 2or instance, #e$ore em#arking on TQM, the 3*@ o$ the organi%ation was $ormally issuing the test and cali#ration reports under his signature. +ue to his #usy schedules, the issue o$ reports was getting delayed. There$ore, #y including appropriate uality checks, this non &alue acti&ity was dispensed with #y delegating the responsi#ility to middle managers. Sim#li)y 5impli$ying processes impro&es uality. @ne has to $ormulate a simpli$ied procedure $or carrying out the task without increasing the cost and compromising the uality. 2or instance, the organi%ation was making three copies o$ the test reports- one

$or the customer, one $or use as a duplicate and i$ the record was not recei&ed #y the customer $or any reasons and the third as a record. Hy analysis and #y making appropriate arrangements, it was reduced to preparing one copy $or issue to customer and the same was stored in electronic media $or record purposes. This step reduces the work, sa&ed paper and a#o&e all simpli$ied the work 4 1

StandardiDe 5tandardi%ation essentially permits per$orming the process in the same way #y e&ery employee at all times. There$ore, it re uires a documented procedure. Syner"iDe ?o process is a stand-alone acti&ity in any organi%ation. , process may interact with at least two other processes- customer and supplier processes. There$ore it is important that the e$$ect o$ re&ision on other processes is checked. Stren"t(en +uring this phase, a num#er o$ acti&ities are carried outE 1 *ducating and con&incing the process owners, their customers and suppliers 2 <eriodic counselling and assuring that the new process will per$orm #etter than old process 3 Monitoring the results and con$irming that the process transition has occurred, the employees are con$ident and that the process is processed as documented. SUPP/0 CHAI% MA%A=EME%T SCM! 5upply chain management is a task o$ optimi%ing all acti&ities throughout the supply chain, so that the products and ser&ices are supplied in the right uantity, right uality, to the right customer, at the right time and at the optimal cost. 5upply chain management in&ol&es the $ollowing acti&itiesE 1 +emand <lanning 2 Manu$acturing <lanning and 5cheduling 3 5upply <lanning 4 Transportation <lanning These are e-plained #elowE &emand Plannin" , planning process that optimally schedules manu$acturing orders with production capacity. This is per$ormed #y com#ining Material re uirements planning (MF<) and 3apacity re uirement planning (3F<) to create optimi%ed and constrained production plans. Su##ly Plannin" 5upply planning process that meets customer demand #ased on a&aila#le in&entory and transportation resources. This includes +istri#ution re uirement planning (+F<), which needs to replenish in&entory at #ranch warehouses. Trans#ortation Plannin" , planning process to optimally schedule, load and deli&er shipments to customers while considering constraints, such as deli&ery date, mode o$ transportation, carrier, etc. 42

The per$ormance o$ 5upply 3hain Management is to e$$iciently integrate suppliers, manu$acturers, warehouse and retailers, so that the products are produced and distri#uted e$$iciently at optimal costs. EA%BA% S0STEMS )hat is Oan#anJ The Oan#an system was de&eloped #y Mr. Taiichi @hno, &ice president o$ Toyota, to achie&e o#'ecti&es that includes 1 Feducing cost #y eliminating wasteGscrap 2 Try to create work sites that can respond to changes uickly 3 2acilitate the methods o$ achie&ing and assuring uality control 4 +esign work sites according human dignity, mutual trust and support and allowing workers to reach their ma-imum potential. Oan#an stands $or Oan-card, Han-signal. The (apanese re$er to Oan#an as a partsmo&ement system that depends on cards and #o-esGcontainers to take parts $rom one work station to another on a production line. The essence o$ the Oan#an concept is that a supplier or the warehouse should only deli&er components to the production line as and when they are needed, so that there is no storage in the production area. , Oan#an is a card containing all the in$ormation re uired $or the 'o#s to #e carried out on a product at each stage along its path to completion and which parts are needed at a su#se uent process. These cards are used to control work-in-progress ()I<), production and in&entory $low. , Oan#an system allows a company to use 'ust-in-time ((IT) production and ordering systems, which allow them to minimi%e their in&entories while still satis$ying customer demands. It consist o$ a set o$ these cards, with one #eing allocated $or each part #eing manu$actured, that tra&el #etween preceding and su#se uent processes. There are two most common types o$ Oan#ans usedE 1. )ithdrawal Oan#an 2. <roduction Oan#an 'it(dra*al EanBan The main $unction o$ a withdrawal Oan#an is to pass the authori%ation $or the mo&ement o$ parts $rom one stage to another. It gets the parts $rom the preceding process and mo&es them to the ne-t process, remaining with the parts until the last part has #een consumed #y the ne-t process. The withdrawal Oan#an then tra&els #ack to the preceding process to get parts, thus creating a cycle. , withdrawal Oan#an usually carries the $ollowing in$ormationI part num#er, part name, lot si%e, routing process, name o$ the ne-t process, location o$ the ne-t process, name o$ the preceding process, container type, container capacity and num#er o$ container released. The withdrawal Oan#an layout can #e designed in many ways in order to display this in$ormation.

4 3

Production EanBan The main $unction o$ the production Oan#an is to release an order to the preceding stage to #uild the lot si%e indicated on the card. The production Oan#an card should ha&e the $ollowing in$ormationE 1 Materials re uired as inputs at the preceding stage 2 <arts re uired as inputs at the preceding stage 3 In$ormation pertaining to withdrawal Oan#an as gi&en in the pre&ious paragraph

Cellular Manu)acturin" , cell is normally con$igured $or speed and minimal material handling and can reap su#stantial #ene$its in cost sa&ing, time compression and in&entory reduction. It is a group o$ workstations, machines or e uipment arranged such that a product or su#assem#ly can #e processed progressi&ely $rom one workstation to another without ha&ing to wait $or the a #atch to #e completed or re uiring additional handling #etween operations. , cell may produce one type o$ component or a su#-assem#ly or a product, single piece $low can #e implemented in cells in a natural manner. 3ellular manu$acturing and work cells are at the heart o$ lean manu$acturing. Their #ene$its are many and &aried. They increase producti&ity and uality. 3ells simpli$y material $low, management and accounting systems. , *orA cell is a work unit larger than an indi&idual machine or workstation #ut smaller than the usual departments and assem#ly lines. Typically it employs 7-.8 people and >-.> workstations in a compact arrangement. 3ellular con$iguration can #e in the $orm o$ straight line or 4 shape, #ut e uipment containment within the cell, workstations, are normally con$igured in close pro-imity to compress time and space. The ad&antages many companies deri&e $rom linking processes in cells include impro&e uality and reduce rework costs #ecause the material produced in one operation is tested $or $it in the ne-t process. 2or e-ample, i$ a hole is drilled undersi%e and the ne-t step in the cell inserts a screw in the hole, it is uickly apparent what pro#lem e-ists. Thus, the cell #uild takes one piece and complete all the 'o#s in the cell and passes on the ne-t cell.

SI%=/E PIECE ./-' 3ellular manu$acturing demands single piece $low methodology. This is also called one-piece $low or continuous $low manu$acturing. It is a techni ue used to manu$acture components in a cellular en&ironment. , cell is an area, where e&erything that is needed to process the part are within the easy reach and no part is allowed to go to ne-t operation until the pre&ious operation has #een completed. The goals o$ one piece howe&er areE to make one part at a time correctly all the time without lengthy ueue. .lo* manu)acturin" vs Batc( #roduction 4 4

The opposite i$ one-piece $low is a large-production. ,lthough many companies produce goals in large lots or #atches, it #uilds delay into the process. ?o items can mo&e on to the ne-t process, until all the items in the lot ha&e #een process, the larger the lot the longer the items sit and wait #etween processes. ;arger lot production can lower a company:s pro$ita#ility in se&eral ways as gi&en #elowE 1 The lead time #etween customer orders and deli&ery o$ products is lengthened 2 ;a#our, energy and space are re uired to store and transport the lot 3 The chances $or product damage andG or deterioration are increased @ne-piece $low production can help in sol&ing these pro#lems. The $ollowing illustrations will make clear how single piece $low is more ad&antageous. n , $ o Process Process r A B t o t a l o r d e r 7 ;ead TimeE 71P minutes m $or total i order 8.P n minutes , $or $irst $ piece o r ,. Hatch and Queue $i <rocessing r s t p a Process Process Process r A B C t H. 3ontinuous 2low <rocessing
.8 mi

P r o c e s s C

4 5

The di$$erence #etween 2igure , and H is e-plained #elowE In #oth the #atch and continuous $low processing it takes one minute $or manu$acturing one part and in the #atch processing .1 parts are manu$actured at a time. There$ore, it takes .1 minutes $or processing the process in ,, it takes .1 minutes st in H and then sent it to the process 3. Thus, the $irst piece will come out in the 8. minutes and it takes 71 minutes o$ $a#ricating .1 pieces. It takes only .8 minutes $or the total order, when we adopt one-piece $low as gi&en in 2igure H.

4 6

MI%& TEASER 'rite a s(ort note on t(e )ollo*in" + 1. *T9 model 2. <rocess orientation 3. <rimary goal o$ process approach 4. *-plain the importance o$ synergi%ing 5. ,d&antages o$ customer supplier chain 6. )hy do we need to practice (ITJ 7. Gi&e atleast 7 re uiremnts $or (IT 8. *-plain the ill e$$ects o$ accepting ,Q; 9. 5upply chain Mnagement 10. Oan#an

47

CHAPTER ? Continuous Process Im#rovement $URA%3S TRI/-=0 (uran #rings out that good $inancial results are achie&ed in an organi%ation through three managerial processes namely planning, control and impro&ement. (uran suggests similar analogy $or #etter uality results. The uality trilogy consists o$ the same three managerial processes and aimed at impro&ing uality o$ products and ser&ices they areE 1 Quality planning 2 Quality control 3 Quality impro&ement

1 The a#o&e is #lot o) time vs #ercenta"e de)ective . The uality planning acti&ity starts much #e$ore the production operations #egin. 2 +uring uality planning the needs o$ the customers are identi$iedI the product and the processes that will $acilitate making there are de&eloped to meet the needs o$ the customer. 3 Then the operation starts a time tQ 1. The operating personnel operate the processes and the produce the products. They will $ind a num#er o$ de$iciencies in the product thus madeI which make the percentage de$ects higher. It could #e as high as 81 percent. The de$iciencies might ha&e occurred due to errors in 48

planning process. (uran call this region o$ high de$ects as the c(ronic *aste re"ion. +uring this phase, a large num#er o$ de$ects are $ound and corrected through uality control. The process operators apply control to pre&ent these things $rom getting worse. 5ometimes, the de$ects could #e &ery high, C1 percent as indicated in $ig 0.. this is called S#oradic S#iAe> 1 I$ 1uality control is not strictly $ollowed, such spike could occur $re uently causing incon&enience to the customer and the organi%ation. 2 This the ori"inal Done o) 1uality control , as indicated in the $igure, in the due course o$ time, due to uality impro&ement initiati&es, a new %one o$ uality control is reached. 3 This gain was achie&ed through the third process namely 1uality im#rovement. ?ow the percent de$ecti&es may reach $i&e percent. This achie&ement is due to uality impro&ement action initiated #y the organi%ation. @nce the per$ormance sta#ili%es at the new %one o$ uality control, the 1uality #lan has to #e updated. EAIGE% Two acti&ities o$ Oai%en 1 Maintenance 2 Impro&ement ,n organi%ation $unctions with a set o$ processes. Maintenance in&ol&es acti&ities directed at maintaining current technological, managerial and operating standards. )hile e$$orts are going on $or impro&ing the processes, the present acti&ities should continue as per the current standards without any interruption. It should not come to halt. Oai%en in&ol&es small, continuous impro&ements o$ the current processes. Thus, an o#ligation will #e in&ol&ed in two distinct acti&ities namely, maintenance and Oai%en T(ree Basic Princi#les o) EaiDen 1. )ork place e$$ecti&eness 2. *limination o$ waste 3. 5tandardi%ation 'orA #lace e))ectiveness> (apanese ha&e de&eloped the >5 tools (sort, straighten, scru#, systemati%e, standardi%e) $or addressing the workplace e$$ecti&eness which will #e discussed later iin detail in this chapter. Eliminatin" *asteC strain and discre#ancy . Oai%en is achie&ed through application o$ >5 tools $or workplace e$$ecti&eness and elimination o$ three M4s. The three M4s stands $or three (apanese words as gi&en #elow Three M4s and their meaning . Muda )aste 8 Muri 5train 7 Mura +iscrepancy The wastes are not $ree, #ut ha&e #een paid $or the organi%ation, since those who produce wastes also get paid and the material waste costs money. There$ore, one has 4

to minimi%e and ultimately eliminate the waste in an organi%ation. The waste, strain and discrepancy in respect o$ the $ollowing are to #e reduced and $inally eliminatedE 1 Human resources 2 <roduction &olumes 3 In&entory (materials) 4 Time 5 )orking space 6 Machinery 7 Techni ues 8 2acilities 9 Tools and (igs 10 Thinking StandardiDation. Oai%en stresses standardi%ation o$ processes, materials, machinery, etc. )ith the $ollowing o#'ecti&esE 1 Fepresent the #est, easiest and sa$est way to carry out a 'o# in the $orm o$ operating procedures and work instruction 2 Fepresent the #est way to preser&e know-how and e-pertise and standardi%e the procedures $or the same 3 *&ol&e e$$ecti&e means to measure per$ormance and standardi%e the same 4 5tandardi%e all the procedure that are used in the organi%ation $or maintenance and impro&ement o$ process 5 5tandardi%e the training programs 6 5tandardi%e the audit $or diagnosing pro#lems 7 5tandardi%e the procedures $or pre&enting occurrence o$ errors and minimi%ing &aria#ility. EaiDen Im#lementation The organi%ations em#race Oai%en in two ways as gi&en #elowE 1. Gradual impro&ement o$ processes 2. Oai%en Hlit% The $irst methodology is similar to what was discussed in chapter $our. The management constitutes an ,pe- Quality 3ouncil which o&erseas continual and gradual impro&ement in the processes. 2or each impro&ement pro'ect, speci$ic teams- <,T are constituted with speci$ic goal. The impro&ement teams use se&en Q3 tools $or pro#lem sol&ing, they use >5 tools $or reorgani%ing work places o$ the $actory $or their e$$ecti&eness. They reduce or eliminate three M4s. They will use <+3, cycle to e&ol&e and implement impro&ement plans. Thus, it is a long-term e-ercise $or e&ery process impro&ement. EaiDen BlitD> Oai%en Hlit%, on the contrary, is a uick impro&ement methodology. , large num#er o$ organi%ations em#ark upon Oai%en Hlit% (e&ents) to unleash employee 5 0

creati&ity and dramatically impro&e the operations o&ernight. 4sually the kai%en #lit% is completed in a single week. The solutions are implemented uickly. Oai%en Hlit% also known as the Oai%en workshop which targets a particular workplace. , cross-$unctional team is $ormed comprising o$ managers, super&isors, workers and sometimes marketing and $inance personnel and e&en consultants. The team a$ter attending a training program on the su#'ect, studies the process, collects and analy%es the data, discusses impro&ement options and recommends the changes. The changes are implemented with the appro&al o$ the Q3. The changes may call $or modi$ying e uipment layout, or modi$ying processes, skipping non-&alue adding processes, etc. , typical impro&ement process using Oai%en is indicated #elowE 5tart

5elect process $or impro&ement

5tudy process $lowchart

Identi$y pro#lems and wastes

,pply > 5 $or workplace

Femo&e 7 M4s

Fe&ised standardi%ed methodologies <S Practices The kai%en tool#o- includes the >s $or impro&ing workplace e$$ecti&eness. .. 5eiri (sort) 5eparate out all unnecessary things and eliminate them.

2. 5eiton (straighten) ,rrange the essential things in order, so that they can #e easily accessed 7. 5eiso (scru#) Oeep machinery and working en&ironments clean 4. 5eiketsu (systemati%e) Make cleaning and checking as a routine practice 5. 5hitsuke (standardi%e) 5tandardi%e the pre&ious $our steps. 1. Seiri-sort 5eparate tools, machinery, products, inspection, work in progress and

documentation into necessary and discard unnecessary items 2or instance, e&ery e-ecuti&e recei&e a lot o$ paper and email. He is una#le to decide which paper he should destroy immediately and which email to delete and which he should preser&e and $or how long. The e-ecuti&es can classi$y items into the $ollowing categories 5 1

;ow usage 1 Medium usage 2 High usage Those items that are low o$ usage can #e kept at $ar o$$ places. The a&erage usage items can #e kept in a cup#oard near#y. The high usage items, which are $re uently re$erred, could #e kept closer to him neatly. ,> Seiton-Strai"(ten The purpose o$ this tool is to arrange necessary items in a neat, proper manner so they can #e easily retrie&ed $or use and to return them to their proper locations a$ter use. The $ollowing could #e adopted $or ena#ling neatness in the organi%ationE Ste# 1+ Plan to arran"e neatly. The management should plan to arrange e&erything at the appropriate places in appropriate manner. 2or instance, a person takes out the cash chest $rom a cup#oard a$ter opening its two locks, uses it $or sometime and then puts it #ack again and locks the dou#le lock. I$ he does this >1 times a day, at the rate o$ 8 minutes, he spends a#out .11 minutes a day, only on taking the cash chest out and putting it #ack. 5electing a proper cash chest with un#reaka#le lock and keeping it permanently near the cashier could eliminate this. In this case, he locks it only when he goes out, may#e .1 times a day and at the rate o$ .1 seconds $or locking and opening, he will spend only .11 seconds a day. 5ee the time sa&ed and there#y impro&ed e$$iciency. 5ome o$ the pro#lems in retrie&ing things areE 1. ?ot knowing the correct name o$ the things 2. ?ot sure where the things are kept 3. 5torage site at a $ar o$$ place 4. 5torage sites scattered all around 5. Fepeated &isits to $ar o$$ places $or taking and putting #ack 6. Hard to locate the things since the #o- contains many other things 7. 5torage location and items not la#elled 8. Things is not there, #ut not clear whether the stock is e-hausted or some#ody is ha&ing it 9. ?o distinction #etween good parts and de$ecti&e parts, all look same 10. Too wide to carry 11. Too hea&y to carry 12. ?o trolleys to carry huge items 13. Improper design o$ pathways with lot o$ o#struction Ste# ,+ &ecide *(ere t(in"s s(ould Be stored> The organi%ation should ha&e a name $or e&ery item and a place $or each item to #e stored. 5imilarly, each tool, each material, each document or $ile should ha&e its address known to the users. The $ollowing procedures should #e adhered toE .. *&erything should ha&e a name 5 2

, place $or e&erything in its place 2. Quick identi$ication and retrie&al mechanism -2re uent-use items should #e retrie&a#le easily 4. 5a$e storageGtrans$er 1Hea&y things on the #ottom 2Hea&y things to #e carried on trolleys 3Henches and ladders to #e used where&er re uired 5. Height consideration $or the storage o$ items depending on the $re uency o$ their use. Ste# 9+ Be consistent in t(e )ollo*in" rules . It should #e the discipline on the part o$ the employees to $ollow the rules, which they made $or themsel&es. )hate&er may#e the pro#lems, the tools or items should #e put #ack at the places marked $or their storage 9> Seiso-ScruB The o#'ecti&e o$ 5eiso tool is to clean and inspect respecti&e work places thoroughly, so that there is no dust on the $loor, machinery and e uipment. Oeep machinery and work en&ironment clean The importance o$ cleaning need not #e o&er emphasi%ed. *mployees in the organi%ation should #e responsi#le $or cleaning their own places. <eriodic cleaning o$ their work#enches, cup#oards, <3s, switchgears, etc. is essential. @therwise psychologically the employees will a#le to per$orm well. 8> SeiAetsu-SystematiDe The o#'ecti&e o$ this tool is to maintain high standards o$ work place organi%ation #y keeping clean and orderly at all times. +e&elop routine practices $or cleaning and checking. I$ the organi%ation can systemati%e the >5 processes, then it #ecomes easier $or continuously and repeatedly maintaining the organi%ation:s neatness and cleanliness. This may call $or &isual management. Kisual Management is an e$$ecti&e means $or systematic workplace organi%ation. It is use$ul $or production, uality, sa$ety and customer ser&ices. Kisual management is a techni ue, #y which the &isitors as well as the employees understand where to keep things like the marked car parking lots, in$ormation a#out lu#rication oil written on the machine, like what type is used, what colour, what grade, when to change and where it is a&aila#le etc. It also includes sign#oards. There should #e also indications $or a#normally hot spot or high &oltage in machinery. It includes identi$ication la#els $or all machinery parts. 5a$e walking areas in $actories are to #e marked so that the &isitors will not go near dangerous machinery. These are all part o$ &isual management. <> S(itsuAe-StandardiDe The o#'ecti&e o$ the last >5 tool is to make the pre&ious $our steps part o$ the daily routine and to o#ser&e sel$-discipline through continuous practice. 2ollow 5 3

procedures and standardi%e continuously to impro&e processes and re-esta#lish standards. +iscipline is the $undamental re uirement o$ success in the organi%ation. +iscipline will come only with repeated instructions, coaching and training. The employee should #e taught what should #e done and what should not #e done. There is a need $or systematic training and coaching $or #ringing in discipline. THE SE4E% &EA&/0 'ASTES 1> -ver#roduction 'aste This occurs due to $ailure o$ production planning when money is #lock in the unsold products. )hen the language (a&a was popular #e$ore the #ursting o$ dot 3om #u##le, an am#itious #ook supplier stocked large &olume o$ (a&a #ooks. )hen there was a change in re uirement and many copies were not sold, he had to close down the organi%ation. There$ore, the o&erproduction is &ery harm$ul. (ust-in-time ((IT) is the right approach. Hut practicing (IT needs a healthy organi%ation practicing Oai%en. ,> 'aste due to *aitin" )ork-In-<rogress ()I<) is a direct measure o$ uality o$ the organi%ation. , product is nearly completed #ut waiting $or a particular part to arri&e $rom another country. Hence the product cannot #e shipped. This is )I< and an e-ample o$ waste due to waiting. This can occur at any stage o$ manu$acturing due to poor planning, organi%ing as well as lack o$ dynamism in making alternate arrangements when a particular man, machine or material is not a&aila#le due to un$oreseen circumstances. The process layout and production should #e such that the $low is continuous and neither a machine nor an operator is waiting $or something. 9> Trans#ortation 4nnecessary transportation is a waste. There$ore, e&ery assem#ly line should #e under one roo$ pre$era#ly. The plant layout should #e organi%ed such that there is no #ack and $orth mo&ement anywhere. I$ there is no con&eyor, the goods or semi-$inished products should #e transported using trolleys or carts. Hut the distance tra&elled should #e kept at the minimum. 8> Processin" 'aste The machinery should #e kept in smooth working condition #y periodic and pre&enti&e maintenance to eliminate processing waste. I$ a process is held up due to #reakdown o$ machinery, money is lost. 2urthermore, appropriate tools and $i-tures should #e pro&ided so that the time taken $or manu$acturing is optimum. The design o$ the product should #e such as to ena#le easy manu$actura#ility, testa#ility and maintenance. <> Inventory *aste 5upply chain management should #e such that there are no e-cess materials. 5imilarly, the organi%ation should produce e-act num#er o$ e&ery part. 5ometimes they produce a little more to take care o$ e&entualities. *&en such e-tra items can #ecome huge in due course o$ time, necessitating selling them as a scrap. In the stores also 5 4

reorder le&els should #e $i-ed $or e&ery item on a scienti$ic #asis to a&oid dead stock. The poor housekeeping can lead to &alua#le items lying on some cup#oards unnoticed. *&ery part should #e accounted to a&oid in&entory waste. ;> 'aste o) motion ,s )atts Humphrey says, the purpose o$ dri&ing is to reach the destination on time and not to spin the wheel. This happens i$ the person does not ha&e a map. 5imilarly, i$ the workers are not trained in their 'o# properly, there will #e a lot o$ motion #ut no work. 5earching $or things, non-a&aila#ility o$ the correct tools, not monitoring the running machine etc. can cause wastage o$ lot o$ time. The o#'ecti&e o$ the organi%ation is to add &alue #y e&ery motion o$ the employee and machinery. :> Product &e)ects The de$ecti&e parts or supplies cause loss o$ money. ?ot only that, managing the scrap causes unnecessary work like, sa$e custody, accounting, disposal as well as strain on the space a&aila#le $or good manu$acturing. Thus eliminating scrap through %ero de$ects is the only solution on the pro#lem. BUSI%ESS PR-CESS REE%=I%EERI%= BPR! )hat is H<FJ H<F is undertaken essentially to result in a uantum 'ump in per$ormance o$ processes. H<F is synonymous with inno&ation #ecause it is more than 'ust automating or applying In$ormation Technology to the e-isting processes or operations. It will #ring in #ene$its to all stakeholders o$ the organi%ation. Kery high achie&ements are e-pected out o$ H<F 2or instance, e-pectation are as high as >1 percent reduction in design cycle time in case o$ FR+ pro'ects, =1 to 01 percent reduction in total cost o$ manu$acture, reduction o$ deli&ery time $rom a month to a dayB H<F e-ploits the une-ploited potentials o$ the organi%ations. , test la#oratory was committing two weeks to a month:s time $or the same acti&ity. They learnt $rom its customers that a competitor was taking a day:s time $or cali#ration o$ such e uipment. Then they decided to achie&e such a cycle time. They planned and implemented a scheme #y which they take only 0 hours $or the cali#ration 'o#s. .undamental Ret(inAin" +ramatic impro&ements can take place through elimination o$ redundant operation, unnecessary operations and operations, which add cost, #ut, not &alue to the products and ser&ices. H<F is an opportunity $or inno&ati&e persons to decide, a$ter due considerations, which processes are redundant and make a recommendation accordingly to the management. Then the management will take a $inal decision to eliminate the process. Radical Redesi"n +ramatic impro&ements cannot #e achie&ed only through $undamental rethinking. It calls $or design o$ new processes. 5ome ser&ice organi%ation takes .> days to respond to an en uiry through $a-. This is mainly #ecause o$ the redundant system esta#lished 5 5

in the organi%ation. There$ore, in order to reply to a uery in hal$ an hour time, the redundant process, process that inhi#it uick action and need unnecessary appro&als etc. should #e dispensed with. The reengineering team should uestion $undamentally the necessity to $ollow the e-isting procedures or methods or use o$ machinery and should not care to throw all o$ them and start a$resh. @nly then, dramatic impro&ements can take place. Ho* to Carry out Reen"ineerin"F The steps in&ol&ed in H<F are similar to those in TQM. Howe&er in reengineering, much #igger results are e-pected and not incremental impro&ements. The $i&e phases o$ reengineering cycle are gi&en #elowE 1. <lanning 2. <rocess study 3. 5tudy o$ #est practices 4. Fedesign 5. Implementation The cycle repeats itsel$ whene&er the management wants dramatic impro&ements in the per$ormance o$ the organi%ation.

56

MI%& TEASER 'rite a s(ort note on t(e )ollo*in" + 1. >5 tools 2. 7 M4s 3. Importance o$ &isual management 4. +escri#e how each tool will impro&e uality o$ the product 5. ,pplica#ility o$ the >s tools in an o$$ice 6. Oai%en Hlit% 7. Mass production &s. lean manu$acturing 8. (uran:s trilogy 9. H<F 10. Three #asic methodology o$ Oai%en

57

CHAPTER @ Su##lier Partners(i# Im#ortance o) su##liers 1 The dynamics o$ market $orces demand e&ery organi%ation to con&ert itsel$ into a &irtual corporation $or cost e$$ecti&eness and impro&ed uality. 2 In a &irtual organi%ation, the main $unction o$ the company is to make the core o$ the system and depend on the large network o$ suppliers $or the rest o$ the su#assem#lies needed $or #uilding the system. Thus, a large portion o$ the work is outsourced. 3 @utsourcing has #ecome the watchword e&en in ser&ices. It is more critical in manu$acturing. @utsourcing ena#les the manu$acturers to $ocus their attention in managing their #rands rather than the capital e uipment re uired $or manu$acturing e&ery part. 4 There$ore, e&ery organi%ation has to $ind the right suppliers $or the needed raw materials and supplies. Su##lier Standards *&ery organi%ation should stipulate standards to #e met #y its suppliers. The suppliers standards set #y Toyota motors is gi&en as $ollowsE Toyota Su##lier Standard !)e at Toyota rely on outside suppliers $or most o$ the parts and materials in the &ehicles we make. *&ery step in making Toyotas, $rom de&elopment to production, consists o$ 'oint work with suppliers. The suppliers we seek are companies that ha&e the will and the a#ility to #ecome acti&e partners with us. )e are looking $or suppliers who possess world-class competiti&eness in terms o$ uality, cost, deli&ery and technological capa#ilities." Quality- It is essential to customer satis$action. +e$ecti&e products lead to complaints and e&en recalls. Toyota count on suppliers to pursue uality le&els well a#o&e minimum standards Preventin" de)ects- @ur standard practice is to trust the suppliers to pro&ide us with de$ect-$ree products. Toyota does not ordinarily inspect the parts and materials thaw we source. Built-in-1uality- the #est way to assure uality is to #uild uality products systematically. The means designing products and processes to ma-imi%e uality &elivery- <ro&iding customers with the products they want and when they want them is also an important element o$ customer satis$action. ReliaBle delivery- 5uppliers must deli&er the products on schedule and in the amounts re uired. 5 8

.le2iBility in #roduction and delivery- 3ustomer tastes change constantly, 5uppliers need to #e a#le to respond $le-i#ly in production and deli&ery. Tec(nolo"ical Ca#aBilities Com#etitive tec(nolo"y- is something to pursue through continuing ad&ances in product de&elopment and in production engineering. 4alue-ad and so#(istication- , #ig consideration in e&aluating supplier:s technological capa#ilities is the a#ility to o$$er products that are a step ahead o$ the competition. S#eed- the a#ility to translate concepts into products uickly is another important aspect &ramatic cost reduction- 5uppliers should $oster the a#ility to #roaden the marketa#ility o$ their products through dramatic reduction in cost. The selected suppliers should #e clearly intimidated a#out the re uirements. 5ome o$ the essential in$ormation is gi&en #elowE 1 Quantity re uired 2 Quantity re uirements 3 5peci$ication $or the materials 1. 5tyle 2. )orkmanship 3. ,ccepta#le uality le&el 4 +eli&ery instruction 5 <ayment terms

/on"-term Contracts 1 The commercial o$$-the-shel$ (3@T5) items can #e purchased $rom the market as needed. Howe&er, the other raw materials and supplies are to #e purchased only $rom selected &endors. 2 It is ad&antageous to procure the 3@T5 $rom the same selected &endor to a&oid &aria#ility uality o$ the end products. 3 5ome companies are tempted to gi&e short-term commitments $or purchase o$ materials, such as ordering materials re uired $or three months. )hile this may appear to #e ad&antageous to the company, it is certainly, not an ad&antage to the &endor. In the $irst place, it is also not e&en ad&antageous to the company. 4 ;ong term contracts are there$ore important #oth to the &endor and the &endee. It is important to the &endor #ecause he can in&est in tooling, process machinery and inspection e uipment and e&en in new plants. He can spend time in hiring and training employees and esta#lishing uality system 5 9

1 Generally companies are reluctant to enter into long-term contract anticipating that prices will come than o&er a course o$ time, #ut due to the contract they ha&e to pay a higher price than the market rate. *&en this could #e taken care o$ #y agreeing and incorporating progressi&e reduction o$ prices as the Toyota supplier standard indicates. Toyota Su##lier Standard Cost- @$$ering high uality and e-cellent $unction at low prices increases product appeal. The conser&ation o$ material and energy that stem $rom cost-sa&ing measures helps sa$eguard the en&ironment. /o* #rices t(rou"( lo* costs- )e welcome low prices $rom suppliers only when we can see that they are the result o$ genuine cost o$ competiti&eness. Unceasin" e))ort on Be(al) o) cost savin"s- 5uppliers need to stri&e continuously reduce costs and to translate their reductions into lower prices. The &endor will also agree $or such a reduction #ecause o$ production in #ulk as well as cost sa&ings on account impro&ed uality day-#y-day, lesser marketing e-penditure and assured demand. Involvement o) Su##lier in develo#ment ;ong-term relationship has many #ene$its. 2or instance, whene&er new products are de&eloped, the suppliers can #e in&ol&ed right $rom the design stage. It will in the interest o$ the company, i$ suppliers are helped in the de&elopment o$ the components along with the de&elopment o$ the product. 5uch partnership is one o$ the o#'ecti&es o$ TQM. Ali"nment o) Quality System The uality system o$ the &endor should #e aligned with that o$ the company. ?ow that the I5@ /111 standards ha&e #een accepted worldwide, it would #e #etter to help the &endor to esta#lish the uality system meeting I5@ /111 standards. *&en otherwise, the company should train the &endors to esta#lish a system $or managing uality. Quality audit ,t periodic inter&als, the company should carry out $ormal second party uality audit to check the e$$ecti&eness o$ the &endor:s uality system. The uality audit will #e carried out as per the agreement with the &endor with regard to the elements o$ uality system co&ered #y the contract. The agreement may stipulate the re uirements o$ the rele&ant clauses o$ I5@ /111 standards either partly or $ully The scope o$ the audit should #e documented. +uring each audit, correction o$ non-con$ormities o#ser&ed during pre&ious audits should #e checked, #e$ore assessing the uality system and $inding new points $or impro&ements. Product Audit , thorough e&aluation o$ &endor:s products at periodic inter&als is re uired to assess the uality o$ their design and manu$acturing. 2or this purpose, the company 6 0

should pick up samples at random $rom the &endor:s premises and get them e&aluated in an independent test la#oratory or their own test la#oratory. This testing should #e carried out as per the speci$ication agreed to #etween #oth parties. Generally the materials and products should comply with national or international standards. This may also in&ol&e tests to con$irm their relia#ility. Incomin" Ins#ection ,ppraisal or incoming inspection o$ materials on sampling #asis may #e re uired although the supplier would ha&e already inspected the items #e$ore shipment. The company should gradually make the supplier to take the $ull responsi#ility $or the uality o$ the supplies. Howe&er the company should not accept materials without checking. Su##lier Ratin" The &endors are to #e continuously assessedGrated, #ased upon the per$ormance o$ the supplies with respect to some or all o$ the $ollowing parametersE 1 Quality 2 <rice 3 +eli&ery 4 5er&ices There e-ist national standard speci$ications on the topic o$ &endor rating. Kendor rating is an o#'ecti&e oriented method o$ continuous assessment o$ the supplier:s a#ility to supply on time, with uality, at the agreed prices and as per the re uirements o$ the company. ,n e-ample o$ &endor rating is gi&en in the $ollowing section. 4endor Ratin" System Kendors may #e rated #ased on any or all o$ the $ollowing $actorsE 1. Quality 2. <rice 3. +eli&ery Quality Ratin"- Quality Fating (QF) $or a lot or consignment is gi&en #yE QFQ Q. P 9.S Q8 P 98S Q7 Q )hereE Q. Q uantity accepted Q8 Q uantity accepted with de&iation Q7 Q uantity accepted with recti$ication QC Q uantity Fe'ected Q Q total uantity supplied Q Q. P Q8 PQ7 PQC 61

9.Q demerit $actor (less than one) when material is accepted with de&iation 98 Q demerit $actor (less than one) when material is accepted with recti$ication The &alues o$ 9. and 98 are to #e decided #y the management. E2am#le In a lot o$ .11 components o$ type 9 supplied #y &endor ,, =1 were accepted. 2ind out uality rating. QFQ =1G.11 Q .= Price ratin"- <rice rating (<F) $or a lot or consignment is gi&en #yE <F Q <; G < )here <; Q ;ower o$ the prices uoted #y &endors uoted #y the &endor $or the item < Q <rice uoted #y the &endor #eing rated E2am#le The lowest price o$ component type 9 is 6C. The &endor , has uoted 6> $or the same type. 2ind out price rating <F Q <; G < Q CG> Q .0 +eli&ery Fating L +eli&ery rating (+F) $or a lot or consignment depends upon the uantity supplied within the stipulated deli&ery time and also on the actual deli&ery time $or the $ull consignment. The deli&ery rating may, there$ore, #e o#tained #y the $ollowing $ormulaE +F Q (Q.GQ) - (TG (TSp P ..>ST. S )) )hereE Q Q uantity promised to #e supplied within the stipulated deli&ery time Q. Q actual uantity supplied within the stipulated deli&ery T Q promised deli&ery time $or $ull consignment T. Q actual deli&ery time $or the $ull consignment p Q Q.GQ8 Q .- p E2am#le Kendor , was to supply all .11 components in a day. He supplied >1 in .1 days and all in 81 days. 2ind the deli&ery rating 62 Here Q Q .11

Q. Q >1 p Q Q.GQ Q >1G.11 Q .> Q . - .> Q .> +FQ (>1G.11) - (.1G (.1) .> P ..> - 81 - .>) Q >1G.11 - .1G81 Q . 8> Com#osite 4endor Ratin" )e ha&e assign weightages $or each the ratings to get a complete &endor rating $or each lot. 2or some supplies price may #e important, $or some item uality may #e the most important and so on. +epending on the relati&e importance, the management has to assign weightages $or each o$ the ratings. 2or instance, the company arri&es at the $ollowing weightages $or the component type, 9.

Fating Q) L Quality <) L <rice +) L +eli&ery

)eightages C1 C1 81 .11

?ow we can arri&e at composite &endor rating $or the &endor using the $ormula $or the &endor , discussed in the a#o&e e-amples KF Q Q) - QF P <) - <F P +) - +F Q C1 - .= P C1 - .0 P 81 - .8> Q =. Thus composite &endor rating can #e arri&ed at $or each lot supplied #y a &endor. Kendor rating $or a product is o#tained as weighted a&erage o$ the ratings $or the lots recei&ed o&er a period o$ time. This may #e computed #y the $ollowing $ormulaE ,&erage rating Q n. KF. P n8 KF8 P n7 KF7 P ....... n. P n8 P ...... P nk )here, KF Q &endor rating i$ ith lot ni Q lot si%e $or ith lot Hased on the &endor rating calculated a#o&e, each &endor may #e classi$ied into three classes. ,n e-ample to illustrate the classi$ication scheme is gi&en #elowE Fating o#tained /1 and a#o&e 01 to /1 H Helow 01 3 3lass o$ &endor , P nk KFk

63

E2am#le The composite &endor rating and the lot si%e o$ supplies o$ &endor , in the month o$ (anuary 811C is gi&en #elowE 3 K F =1 >0 D8 DC D=

5.?o. . 8 7 C > 2ind out the rating o$ the &endor

;ot si%e .11 .11 .11 .11 .11

,&erage rating Q .11 - =1 P .11 - >0 P.11 - D8 P.11 - DCP .11- D= Q =0 .11P.11P.11P.11P .11 Thus, &endor , has #een rated #ased on supplies made him in (anuary 811C. 5imilarly other &endors can #e rated.

MI%& TEASER 'rite a s(ort note on t(e )ollo*in" + 1. 5upplier 5eminars 2. Kendor Fating 3. 5upplier 5election 4. <roduct ,udit 5. Kendor Felationship

64

CHAPTER 16 Per)ormance Measures P&CA )or measurement Plan #(ase +uring this phase, the possi#le measures are identi$ied. The right measure is the one that can help the organi%ation to pro&e a point. 2or instance, we may want to pro&e or dispro&e that customers are satis$ied. The per$ormance measures that will clearly lead to such a conclusion #e selected. 3arrying out measurement #eing e-pensi&e and important, due care should #e gi&en $or the same. ,ppro&al o$ senior management may #e re uired $or the planned measures. &o Measure! P(ase The organi%ation collects data in this phase as per appro&ed procedures on a pilot #asis. The procedure will address the $ollowingE 1 )hat will #e measuredJ 2 )ho will measure 3 )hen it will #e measure 4 HowJ The detailed instructions $or measuring. 2or instance, we decide to measure customer satis$action #ased on $eed#ack $orms gi&en to the customers. There$ore we gi&e $eed#ack $orms to select customers and ask them to e&aluate our product or ser&ice #ased on their e-perience. C(ecA P(ase +uring this phase the results are counter checked through other means. The $eed#ack o#tained $rom customers through $eed#ack $orm is compared with $eed#ack o#tained orally through telephone. ,n analysis has to #e made to &alidate the methodology adopted. Act P(ase I$ the results con$irm the reality then the measures can #e con$irmed during the ,ct phase. I$ the $eed#ack o#tained through $orms more or less indicated the percei&ed uality #y customers, then we con$irm the procedure and adopt it $or organi%ation-wide application. E2am#les o) measures Customer satis)action 1 3ustomer 5atis$action Inde- (35I) 2 Total num#er o$ customers 3 ?um#er o$ repeat customers 4 ?um#er o$ new customers 6 5

3ycle time achie&ed 1 <ercentage on time deli&eries 2 Time taken to accommodate design changes 3 ?um#er o$ change re uest accepted 4 )arranty cost 5 Mean time to repair 6 Mean time #etween $ailures 7 ?o. o$ customer complaints as a percentage o$ orders 8 2ailure cost as a percentage o$ turno&er 9 Total uality cost as a percentage o$ turno&er Quality Measures in Production 1 ,ctual production time as a percentage o$ planned time 2 3ost o$ scrapGrework 3 Machine idle time as a percentage o$ total production time 4 Kalue o$ )ork In <rogress 5 3ost o$ miscellaneous materials such as lu#ricants as a percentage o$ production &alue 6 <ercentage o$ #illa#le hours to total time a&aila#le 7 ?um#er o$ accidents Quality measures in R H & 1 ?o. o$ re uirements change re uest 2 ?o. o$ design changes 3 2ailure cost due to FR+ as a percentage o$ sales &alue 4 ,&erage percentage de&iation $rom pro'ect schedule 5 Fatio o$ FR+ e-penditure to turno&er Quality measures in Human resource mana"ement 1 *mployee satis$action inde2 ?o. o$ employee suggestions recei&ed and implemented 3 Training cost per employee 4 ?um#er o$ mentors 5 ?um#er o$ complaints $rom employees 6 *mployee attrition rate 7 <ercentage o$ employees in&ol&ed in process impro&ement 8 Training days per employee per year 9 Training e-penditure as a percentage o$ turno&er Quality measures in #urc(asin" 1 ?um#er o$ deli&eries re'ected as a percentage o$ total 66

3ost o$ $ailures o$ incoming material 1 3ost o$ incoming inspection 2 ?um#er o$ purchase orders that contains de$ects 3 <roduction hours lost due to non-a&aila#ility o$ materials 4 Feorder le&el Quality measures in administration and sales 1 ?um#er o$ in&oices with errors 2 ?um#er o$ credit notes with errors Measure )or )inancial #er)ormance 1 ?um#er o$ credit notes as a percentage o$ total in&oice 2 ,&erage num#er o$ de#tor days 3 Market capitali%ation growth 4 Total turn o&er 5 Total pro$its 6 Growth o$ turno&er and pro$its per year 7 Total outstanding re&enue 8 Fe&enue &s e-penditure ratio 9 Fe&enue as a ratio o$ capital in&estment 10 Fe&enue as a ratio o$ depreciation 11 Quality costs as a percentage o$ turno&er 12 Fe&enue per employees 13 Fatio o$ o&erhead e-penditure to total e-penditure. Measurement Strate"y The Quality council is responsi#le $or $ormulating strategy $or measuring. The measures should #e planned a$ter thorough analysis. 2or each measure the $ollowing uestions should #e answered. 1 )hat is the purpose o$ measuring 2 How will the measurement result will #e usedJ 3 Is it important in determining the acceptance o$ the process or productJ T(ree Activities o) Measurements Plannin" Identify iss!es of &rocess' &rod!cts *!siness' syste+ $nd e+&#oyees "e#ect $nd define +e$s!res Inte%r$te (it) &rocesses

@#'ecti&es o$ The organi%ation

67

Ste#s )or identi)yin" issues 1 3lassi$ying #usiness goals or o#'ecti&es 2 Identi$ying critical processes 3 ;isting the o#'ecti&es $or each critical process 4 ;isting potential pro#lem areas associated with the processes. Questions )or identi)yin" measures 1 )hat determines customer satis$action 2 )hat determines uality 3 )hat determines successJ 4 )hat could go wrongJ 5 )hat is not working wellJ 6 )here are the delaysJ 7 )hat can #e controlled and what cannot #eJ 8 )hat is our real capacityJ 9 How much are we workingJ 10 ,re the processes impro&ingJ 11 Is customer satis$action impro&ingJ Selectin" measures> The a#o&e will #ring out the measures $or per$ormance. 5ome measures will address more than one issue and one uestion. 5ome measures, which will address multiple issues and multiple uestion are gi&en as $ollowsE 1 <roduct uality 2 <roduct cycle time 3 <roduct deli&ery uality 4 <rocess cost 5 3ustomer satis$action 6 *mployee satis$action

The measures that will address the si- common measures are gi&en #elow. Product 1uality 1 Internal 2ailure cost 2 *-ternal 2ailure cost 3 Materials re'ected 4 Kendor rating 5 3ost per piece 68

<roduct uality characteristic 1 <ercent on time deli&ery 2 Mean time #etween $ailures 3 Mean time to repair Process cycle time 1 5et up time 2 Total cycle time Product delivery 1uality 1 )rong shipments 2 +elayed deli&ery 3 <roduct deli&ery with de$ects 4 <roducts returned to supplier Process cost 1 3ost o$ work in progress 2 +own time o$ machinery 3 Materials cost 4 <ercent reduction in $loor space Customer satis)action 1 5ales growth 2 <ro$it growth 3 35I 4 ?ew customers 5 3ustomer attritions Em#loyee satis)action 1 *mployee producti&ity 2 *mployee a#senteeism

Balanced Scorecards BSC! ,ccording to 5tephen 3o&ey, !<eople and their managers are working so hard to sure things is done tight, that they hardly ha&e to decide i$ they are doing the right things". 2or doing right things, an organi%ation needs the right #usiness strategies. Fight strategies will result in continuously impro&ing operations to deli&er products and ser&ices right $irst time and e&ery time. Balance Scorecards Pers#ective H53 is a conceptual $ramework $or translating the organi%ation:s &ision into a set o$ per$ormance indicators distri#uted among $our perspecti&es. The $our perspecti&es areE 69

;earning and Growth perspecti&e 1 Husiness <rocess <erspecti&e 2 3ustomer <erspecti&e 3 2inancial <erspecti&e <er$ormance indicators are used to measure an organi%ation:s progress towards achie&ing its &ision. ,n organi%ation monitors #oth its current per$ormance ($inancial, customer satis$action and #usiness process results) and its e$$orts to impro&e processes, moti&ate and educate employees and enhance in$ormation system- its a#ility to learn and impro&e The #alance scorecard de&eloped #y Fo#ert 5. Oaplan and +a&id <. ?orton pro&ides a strategic $ramework $or identi$ying and linking the ena#lers with the desired results #y de$ining the relationships #etween per$ormance le&els in $our distinct perspecti&es. H53 can #e applied #oth in the commercial organi%ations as well as in the pu#lic sector. Customer #ers#ective This perspecti&e captures the a#ility o$ the organi%ation to pro&ide uality products and ser&ices, the e$$ecti&eness o$ their deli&ery systems and o&erall customer ser&ice and satis$action. 3ustomers include #oth internal as well as e-ternal. It must pro&ide answer to the uestion !To achie&e our &ision, how must we look our customersJ" .inancial #ers#ective The $inancial perspecti&e is di$$erent $or pu#lic and pri&ate sector. <ri&ate sector:s $inancial o#'ecti&e generally represents clear long-range targets $or pro$its $or the organi%ations. 5uccess o$ pu#lic organi%ations should #e measured #y how e$$ecti&ely and e$$iciently they meet the needs o$ the target sector. There$ore, $or the go&ernment, the $inancial perspecti&e captures cost, e$$iciency, deli&ering ma-imum &alue to customers, etc. Internal Business Process Internal #usiness processes are the mechanism through which per$ormance e-pectations are achie&ed. It should pro&ide answer to !To satis$y customers: &alue proposition as well as to satis$y our other stakeholders, what process must we e-cel atJ" This perspecti&e pro&ides data regarding the internal #usiness results against measures that lead to $inancial success and satis$ied customer. /earnin" and =ro*t( This perspecti&e captures the a#ility o$ the employees, the uality o$ the in$ormation system and organi%ational alignment to manage the #usiness adapta#ility to change, in supporting accomplishment o$ organi%ational goals. <rocesses will #e success$ul, only i$ ade uately skilled and moti&ated employees are used and they are pro&ided with accurate and timely in$ormation.

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BA/A%CE SC-RECAR&- a mana"ement system The #alance scorecard is a new approach in strategic management. The #alance scorecard is not only a measurement system, #ut also a management system. The #alance scorecard retains traditional $inancial measures. Hut $inancial measures tell the story o$ past e&ents, an ade uate story $or industrial age companies $or which in&estments in long-term capa#ilities and customer relationships were not critical $or success. These $inancial measures are inade uate, howe&er, $or guiding and e&aluating the 'ourney that in$ormation age companies, must make to create $urther &alue through in&estment in customers, suppliers, employees, processes, technology, and inno&ation." The #alanced scorecard suggest that we &iew the organi%ation $orm $our perspecti&es as gi&en in the $igure and to de&elop metrics, collect data and analy%e it in relation to each o$ the $our perspecti&es.

,ro(t

B!siness ,ro (t

-in$nci$#

C!sto+e

.e$rnin% <erspecti&e o$ #alanced scorecard The customer is the nucleus o$ the whole #usiness. Husiness processes are aimed at delighting the customers. This needs continuous learning o$ the employees, which is the $oundation o$ the organi%ation. ,ll these lead to $inancial growth, will #e $easi#le. Metrics The metrics o$ #alanced scorecards ena#les the $ollowingE 1 5trategic $eed#ack to show the present status o$ the organi%ation $rom many perspecti&es $or senior management as well as employees. 2 2eed#ack on &arious processes to guide impro&ements on a continuous #asis. 3 Trends in per$ormance o&ertime

4 Quantitati&e inputs $or $orecasting and use in models $or decision support system ;et us look at the metrics $or the $our perspecti&es #rie$lyE 7 1

Metrics )or learnin" and =ro*t( #ers#ective @ne o$ the important contri#utions o$ #alanced scorecard is to reiterate that the employees are &ery important assets in the organi%ation. The training and learning o$ the employees will keep the organi%ations growing. The management should consistently ponder o&er as to how to enhance skills o$ the employees through training, continuing education and appropriate mentoring. 5uch knowledge ac uired should #e preser&ed through appropriate means. The knowledge should #e sharea#le. The intranet is a promising tool $or sharing and storing the learning in the organi%ation. Metrics )or Business Process #ers#ective The metric should #e design to indicate how well the #usiness processes are #eing carried out. Measures $or this perspecti&e can #e designed only through intimate knowledge o$ the processes. The metrics collected should address this perspecti&e and help the management in understanding the current status o$ processes, product and ser&ices. This will turn $acilitate identi$ying the goals and targets $or the $uture. Metrics )or Customer Service It has #een pro&ed #eyond dou#t that customer delight and customer $ocus are the key to sustain #usiness. The metrics deri&ed $rom customer perspecti&e should help the organi%ation to understand the le&el o$ customer orientation o$ the organi%ation and the customer satis$action achie&ed. Metrics )or .inancial Pers#ective This is the only perspecti&e on which the traditional organi%ations measure success. Oaplan gi&es e ual weightage to the $inancial per$ormance, the traditional measure. The organi%ation should #uild a corporate data#ase $or collecting and analy%ing $inancial data. There is a need to include additional $inancial related data, such as risk assessment and cost #ene$it data, in this category. ,n e-ample o$ metrics o$ a typical manu$acturing organi%ation is gi&en #eloE CUS !"#$ !b%ective "easu re & 'ercent of customers satisfied . with timeliness ( 'ercent of customers satisfied . with quality custome ) of rs satisfied with the cooperati responsiveness, on and communication s*ills of the Customer Service ea

Customer Satisfaction

#ffective partnership

servi ce

7 2

Internal -usiness 'rocesses !b%ective $educe .I' "easure Cost of .I' as a percent turnover /o. of defects found0 Internal and #2ternal

+inance !b%ecti ve $educe Cost ,uali ty

$educe 1efects "easure

,uality Cost

3earning and 4rowth !b%ective Information 5vailability Strategic 1ecision "a*ing ,uality .or*force

#mployee satisfaction & . ,uality #nvironment ( . #2ecutive 3eadership

*-a mpl e o$ Metr ics

73