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TQM Best Practices

Competitive Edge
Management Consultants
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Index
TQM Best practices of global leaders :- 8-46
Honda
Hewlett Packard
Ford
Motorola
American Express

Why TQM initiatives fail 47-56


Reasons of failure

Best practices for implementation of TQM 57-59

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Index
Effective Leadership - Best Practices 60-62

Customer Satisfaction Management 63-99


What constitutes value to customers
Characteristics of customer satisfaction
What drives customer loyalty
Measures of customer satisfaction
Quality Function deployment

Building Quality Culture 100-119


Components of quality culture
Developing Quality culture- methodology
HR Best practices
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Index

Developing High Performing Processes 120-167


Analysis of a process
Principles of process improvement
Waste reduction
Process simplification
Cycle time reduction
Process measures
Foolproofing
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Index

Improving Product Reliability 168-182


Techniques of improving product reliability
Six Sigma

Building Supplier Partnerships 183-191


Objective of supplier quality program
Potential quality drivers
Methods of supplier evaluation
Supplier evaluation - questionnaires
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Index
Creativity and Innovation 192-206
Elements of creative process
Characteristics of creative people
Factors that enhance creativity
Barriers to creativity

Measures of Quality 207-219


Employee related
Operations related
Customer related
Financial related

Eliminating Root Causes of Failure Costs 220-228


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TQM Best Practices of global leaders

There is no one correct way to implement


TQM - sure there are best practices that have
proven in the past and incorrect ways of doing
things that can get you into big trouble. We will
first begin with an insight into the practices of
some of the global leaders in quality.
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Honda Experience
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Honda Experience
Brief History

Honda Motor was founded in 1948. It began as a


motorcycle company and has grown to become the largest
producer and seller of motorcycles in the world. Honda
entered the automobile business in 1963 - making it the
youngest among the 11 manufacturers in the Japanese
industry.
Today it has 88 factories world over and 10 million
customers are buying Honda products globally.
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Honda Experience

The company achieved the number one


position among all mass production cars
sold in the U.S.A.
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Management policy

Honda was founded upon a fundamental respect


for, and belief in, the value of each individual. The
company respects independent spirit, fundamental
equality and mutual trust of each human being
who works for, or comes in contact with the
company. The management policy focuses on
developing and enhancing the essential character
that every individual possesses - such as freedom,
creativity and hard work.
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Management Philosophy

The company believes that it is imperative to


establish a trust relationship in which employees
and customers can share a common joy through the
experience of the service and products which Honda
provides. They call it the philosophy of 3 joys.
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3 Joys

Honda works to ensure that the products and


services results in 3 joys :
Joy for people who buy them
Joy for those who sell them and
Joy for people who produce them
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Quality objective

The company has a formalized quality


objective which states :

Maintaining an international viewpoint, we


are dedicated to supplying products of the
highest efficiency yet at a reasonable price
for worldwide customer satisfaction.
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TQM Methodology

For implementing TQM , the CEO strongly demanded :-


Customer focused viewpoint
Enhanced efficiency
Cost cutting efforts
Delegation of authority
Expediting daily operations and
New product development which in turn will create
new demand and improvement in quality.
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TQM - Methodology

Each individual shares a common target and


integrates the capabilities of every employee to
accomplish the assignment, without big variance
between plan and result. In other words, every one
is trained to pursue the highest efficiency and
effectiveness.
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TQM - Methodology

The company requires every individual to set a


common target based on customers viewpoint -
and a customer focus practice. The customers here
do not necessarily mean consumers or external
customers. In daily operations any associates
linked through the job are customers. In order to
achieve the target every one adopts the procedure
called PDCA. ( Plan-Do-Check-Action)
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PDCA

The basic principle of TQM at Honda is to narrow


the gap between the Target and Status-quo. In
order to achieve the target the company makes the
initial plan, implements the plan, analyzes the
outcome of the implementation and recognizes a
new problem and finally improves the process of
operation. When the company progresses through
one cycle of PDCA, the gap between the target
and the status quo becomes narrower. The process
is repeated till the plan is achieved.
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Hewlett Packard
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TQM - A long range strategy

TQM at HP is a long-range intrinsic


improvement of the total company
operations, not a quick remedy - therefore
the movement was directly led by the top
management of the company.
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HP-Problems

It all began in 1979. Challenges facing HP included


higher customer expectations and competitors with
low labor costs. The internal survey of HP
manufacturing showed that although the company
enjoyed a reputation for high quality, 25 % of their
manufacturing costs were from reacting to quality
problems.
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TQM implementation

The times called for a new approach to quality. A


bold approach. An attention - grabber. A startling
goal. That is when the company President and
CEO Mr. John Young announced the stretch
objective: A ten fold reduction in failure rates of
HP products during the 1980s.The program was
called 10x.
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10X

The program 10X made the entire company


examine itself :
How do we do our jobs?
What are our processes?
Who are our customers ?
How can we work better?
Who are our competitors?
And so on
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Phenomenal results

The company was able to save nearly $ 1 billion


in terms of warranty costs from 1981 to 1990
$ 492 million in cash saved in 1989 that would
have been tied up if the inventory levels were the
same as 10 years ago.
Overall improvement in business performance
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Results

Yes, the results are incredible says, CEO John


Young, but the results are not grand-slam, home
runcrowd cheering type of achievement. They are
the collective efforts of thousands of HP
employees hard work, perseverance, incremental
improvements, creativity and team work. Lack of
complacency, I think is an HP strength. We always
have an urge to make things better.
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Ford Quality Excellence


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Ford
FORD Quality Policy
The concept of Ford Quality Excellence emphasizes the
importance of quality in everything we do. To us Quality
comes first. To achieve customer satisfaction, the quality
of our products and services must be our number one
priority.The fundamental precepts of Ford Quality
Excellence are :
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Ford
Quality is determined by the customer, the customer wants
products and services that throughout their life, meet his or
her own needs and expectations at a cost that represents
value.
Quality excellence can best be achieved by preventing
problems rather than by detecting and correcting them
after they occur.
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Ford

All work that is done by company employees, suppliers


and dealers is part of a process that creates a product or
service for a customer. Each person can influence some
part of that process, and therefore, affect the quality of its
output and the ultimate customer satisfaction with our
product and services.
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Ford

Sustained quality excellence requires continuous process


improvement. This means, regardless of how good present
performance may be, it can become even better.
People provide the intelligence and generate the actions
that are necessary to realize these improvements.
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Ford

Each employee is a customer for the work done by


other employees or suppliers, with right to expect
good work from others and an obligation to
contribute work of high caliber to those who, in
turn, are his or her customers.
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Motorola
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Motorola

Our fundamental objective-


Total Customer Satisfaction
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Motorola

Key beliefs - How we will always act

Constant respect for people


Uncompromising integrity
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Motorola

Key goals - What we must accomplish


Best in class
-People
-Marketing
-Technology
-Product
-Manufacturing
-Service
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Motorola

Key initiatives
Six sigma quality
Total cycle-time reduction
Product, manufacturing and environmental
leadership
Profit improvement
Empowerment for all in a participative,
cooperative and creative manner.
And creative workplace
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American
Express
Vision : Be the worlds most respected service brand
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Customer Satisfaction Management at :

American
Express
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Conditions of customer listening

It must serve to identify customers and determine


their requirements.
It must define measures of success with which the
performance of Amex TRS can be judged
It must indicate the extent of customer satisfaction
in absolute terms as well as relative to its
competitors
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1. Customer Expectation Determination

Market research teams


Customer group/segmentation
Competitive analysis/ differentiating factors
Environmental scan
New products / emerging market research
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2. Customer Relationship Management

Developing Relationship strategies


Access to customer
Continuous Customer feedback
Conducting Transaction based surveys
Establishing Customer focus groups
Conducting lost customer analysis
Employee feedback
First call resolution research
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3. Customer Satisfaction Determination

Customer satisfaction measurement


Competitive comparisons
Dissatisfaction analysis
Post -installation survey
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Amex - TRS : Best Practices

Listen to customer continuously and not at


discreet intervals.
Keep comment cards at high volume locations.
Use feedback to identify new segments and
customer expectations.
Design varying customer listening devices for
different needs.
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Amex - TRS : Best Practices

Convert every point of customer interaction into a


listening point.
Use feedback to update, monitor and correct
complaints.
Come out with new products to meet the
expectations.
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Amex - TRS : Best Practices

Process each transaction with speed, accuracy and


consistency.
Use technology to speed up communications and
cut cycle-time.
Delegate specified decision making powers down
the line.
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Why TQM initiatives fail


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Reasons of failure

Implementing TQM is not as simple as acquiring


knowledge about it. TQM is more than a religion. The
reasons for failure of TQM are related to the various
approaches followed by the organizations in
implementing TQM. The approaches followed by the
organizations can be divided in 3 categories :
Materialistic
Ritualistic
Spiritualistic
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Materialistic approach

The organization is concerned about results


and focus less on systematic approach or
people involvement. They skip steps and
treat people as mechanical beings. These
kind of organizations usually end up in a
chaotic situation.
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Ritualistic approach

The organizations go after systematic approach


without adequate focus on people involvement and
results. They end up simply creating beaurocracy
and the results do not show any improvement.
People lose faith and confidence. This is
particularly common to many ISO certified
companies. Following systems and procedures is
no guarantee of quality.
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Spiritualistic approach

The organizations under this approach go after


people involvement and create a lot of enthusiasm.
They however fail to channelize their energy
through proper systems and well defined
approaches towards the results which can be
measured in a quantified terms - thus they end up
in total confusion.
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Balancing act

Successful implementation of TQM requires the


balancing act between all the three aspects without
over or underdoing any one thing. 90 % of the
companies who fail in TQM initiatives do not
understand this. They just handpick a few TQ
tools like 7 QC tools, SPC, QCC, TPM, 5 S etc
and want quick solution to their problems - as if
TQM is a magic wand.
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Reasons of failure

The awareness of the potential obstacles that may


hinder the TQM process will prevent many of
them from happening. Forewarned is forearmed.
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Reasons of failure

TQM implementation without building the quality


culture
Lack of top management commitment and
involvement
Employees resistance to change
Barriers between departments
Measuring Quality
TQM viewed as quick fix with emphasis on short
terms goals
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Reasons of Failure
TQM overly complicated by Statistical Process
Control techniques. Employees did not see much
purpose.
Clashes with other initiatives. Failure to link TQM
strategically with business goals.
Since TQM has a lot to do with downsizing and
delayering, the middle management did not
support.
Many initiatives were left half way because they
did not result in improved profits.
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Reasons of Failure
Although TQM was conceptually applicable to all
depts./ functional areas , in actual practice it was
confined to Quality Assurance or Quality control of
product or service.
Failure to deploy the quality policy throughout the
workforce.
Too many project improvement teams with lost focus.
Lack of proper understanding of customers and
competition.
Inefficient processes or inadequate process capability.
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Best Practices for successful implementation


of TQM

1. Effective Leadership
2.Customer satisfaction Management
3. Building quality culture
4. Developing high performing processes
5. Improving product quality and reliability
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Best Practices for successful implementation


of TQM

6. Creativity and innovation


7. Building supplier partnerships
8. Continuous improvement through measurement of
quality
9. Eliminating root causes of important failure costs
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Continuous Improvement
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1. Effective leadership - Best Practices

CEO commitment - lead TQM by direct


involvement and not delegation.
Develop quality initiatives to suit the organization
and do not rely on ready made packages.
View TQM as a strategic tool.
Emphasize long term investment in education,
innovation and research.
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Effective leadership - Best Practices

Understand key business processes hands-on style.


Take long-term and balanced stakeholder view of
performance.
Integrate TQM into business plans.
Emphasize the need for corporate values
-transparency, honesty, customer focus and
continuous improvement .
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Effective leadership - Best Practices

Focus on deployment - reduce communication


lines, use cross functional teams, team emphasis
and not individual appraisal.
Use transparent performance measures.
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2. Customer Satisfaction Management


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Customer satisfaction management

No matter how effectively a company meets the


needs of its customers, it must remain constantly
alert and responsive to the dynamic competitive
environment and continuously changing needs
and expectations of the customers .
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Customer Satisfaction

Customer satisfaction is determined by the value-to-price ratio

Value the customer gets


Customer =
Satisfaction
Price the customer pays
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What constitutes value to customer

Product

Performance
Reliability
Durability
Serviceability
Aesthetics
Perceived quality
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What constitutes value to customers

Service
Accessibility
Reliability
Tangibles
Responsiveness
Empathy
Assurance
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How to exceed
customer expectations
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Customer Satisfaction- Characteristics

Japanese scientist, N.Kano identified three


characteristics of customer satisfaction :
Basic
Performance
Delight
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Basic- must requirements

Basic relates to requirements that the customer


takes for granted. Customers expect the products
they use to display such basic, hidden or assured
characteristics. When we travel on an aircraft, we
expect the flight to be safe. This is hardly a subject
for negotiation with the airline. Meeting such
requirement may not necessarily create
satisfaction, although not meeting it may result in
creating considerable dissatisfaction.
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Performance- expected requirements

Performance parameters relate to customer


requirements that are negotiated and agreed. For
example, if the airline releases the flight schedule,
the passenger expects the flight to take off and
land at the specified time. Meeting these stated
requirements creates customer satisfaction and not
meeting them will certainly lead to customer
dissatisfaction.
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Delight - Excitement features

Finally wherever the organization performs far


beyond the expectations, so as to create pleasant
surprises, the customer feels delighted.
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Customer quality perceptions


Very satisfied
Delight

Performance

Needs Needs

Basic

Very dissatisfied
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It is therefore quite clear that


satisfaction of the basic needs
of the customer is not going to
help the organizations any
more. The organizations will
have to constantly strive to
meet more than the basic needs
of the customer and delight or
excite them to have the
competitive edge.
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What drives customer loyalty

Since customer satisfaction is an attitude, and


quite a complex one it is not very easy to measure.
After decades of research on customer satisfaction,
the most widely used models explain satisfaction
as the degree to which the customers experience of
a product or service matches their expectations.
See next slide for relationship between customer
expectations, customer value and customer
loyalty.
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Drivers of customer loyalty


Perceived
quality
Customer
complaints

Perceived Customer
value satisfaction

Customer
Customer
loyalty
expectations
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Customer satisfaction

Thus, a mediocre experience in the context of low


expectations can be highly satisfying to a
customer. However, a mediocre experience against
very high expectations could lead to customer
dissatisfaction. The rule of the thumb is never
overpromise and underdeliver.
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Measures of customer satisfaction

Overall customer satisfaction with the


organization and its products
Rating in the industry on the basis of overall
customer satisfaction
Satisfaction with value for money
Desire to recommend the product or service to
others.
Loyalty in terms of repeat purchases
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Sample : Seeking customer feedback and taking corrective action
flow diagram.
Customer
Issue satisfaction
owners dept.

International
Surveys Customer marketing
satisfaction Review actions
dept Emerging issues
Administration
Action plan
Complaints
Issue Domestic
identification Marketing
Customer
Prioritization
Critical Ownership Technical
Situations

Delivery

Other
Service

Develop action plans


Resolve issues
Improve
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Quality Function Deployment ( QFD )

Business is usually started because their founders


recognize a customer need and believe that they
can satisfy it better than other companies. At the
time of fresh start, the product may be unique to
the industry and have competitive advantages.
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QFD

No matter how effectively a company meets the


initial needs of the customers, it must remain
constantly alert and responsive to the changing
needs of the customers. Because if the company is
not responsive to these changing needs, the
passage of time will erode the early competitive
advantages.
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QFD

QFD is a scientific technique for translating the


voice of the customer into development of
products and services. It is a complete product
planning process as opposed to problem solving
and analysis. The technique was invented by
Akashi Fukuhara of Japan and first applied with
very good results at Toyota.
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Components of QFD Matrix

Technical
requirements

Relating customer Customer


Customer
requirements to competitive
requirements
technical requirements assessment

Competitive technical assessment

Operational goals
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Step 1 : List customer requirements and rank

Importance
Customer Requirements on 10 point
scale

Very Important

Moderately Important

Slightly important
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Step 2 : List technical requirements to meet customer requirements

Technical Requirements
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Step 3 : Comparing product with the nearest competitor

Complaints
Customer competitive
evaluation on 5 point scale( 5 high , 1 low )

Rank
1 2 3 4 5 Action

Customer Requirements

Competitor product Our product


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Step 4 : Establish relationship between customer requirement


and technical requirements

Technical Requirements
Strong relation

Moderate relation

Weak relation

Rank
Customer Requirements
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QFD Matrix overview after step 4

Competitive evaluation

Rank
Customer Requirements
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Step 5 : Do competitive technical Assessment

Technical Requirements
Competitive evaluation

Rank
Customer Requirements

5
Competitive 4
Technical Competitor assessment
3
Assessment 2 Our assessment
1
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Step 6 : Mention operational targets or action points

Technical Requirements
Competitive evaluation

Customer Requirements Rank

Competitive
Technical
Assessment

Operational
New Product
Targets
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QFD - Customers Voice

The whole process of the QFD can be linked to


GIGO ( Garbage in garbage out ). This is because,
if the voice of the customer has not been captured
properly, the final product will also not be the one
actually desired by the market place. It is therefore
extremely important to capture the correct voice of
the customer before taking any other step in the
QFD planning process. We will explain this by the
forthcoming example of new car development.
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New car development


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A product development team wants to determine


what the customers want in a new car. After
interviewing about 120 car drivers, the team came
out with the following chart of the customer
requirements :
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Desired product attributes in a new car
Requirement Rank
Easy to drive 5
Quiet riding , no squeaks or rattles 4.8
Excellently finished 4.6
Smooth riding even on rough road 4.5
Excellent gas mileage 3.9
Aerodynamic design 3.8
Hugs the road 3.7
Free from breakdowns 3.6
Fast acceleration 3.5
Virtually maintenance free 3.4
Durable - will last 150000 miles 3.3
Protects the driver and passenger in case of accident 3.2
Classic styling 3
Has instruments to read critical functions 2.2
Has many electronic devises 2
Has convertible roof 1.4
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Translating into technical requirements

The product development team is all set to


translate the requirements of the customer into
technical requirements as per the QFD matrix.
Fallacy : The survey is based on aggregate data
management and its basic assumption is that
there is one best answer for every one.
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Classification of needs

The product development team is asked by the


CEO to classify the needs of various drivers and
then give it a rating instead of proceeding simply
with the aggregate data management. After the
market survey the product development team
divided the customer into two broad categories :-
1. The performance driver and
2. The practical driver
The team then came with the following findings -
FICCI Two different profiles of desired product attributes CE

Performance driver 5 Practical driver

Fast acceleration Excellent gas mileage


Aerodynamic design Virtually maintenance free
Hugs the road Free from breakdowns

4 Easy to drive
Easy to drive Durable
Excellently finished Quiet riding
Quiet riding Smooth ride
Classic styling Protects driver
Smooth riding Excellently finished
3

Free from breakdowns


Many electronic devises


Excellent gas mileage 2 Aerodynamic design
Protects drivers
Hugs the road
Durable
Instruments to read functions
Many electronic devices
Classic styling
Convertible roof
Convertible roof
Virtually maintenance free
Fast acceleration
1
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New Car

The classification of the customer requirements


clearly reveals that the attribute which is most
important for the performance driver, is least
important for the practical driver and vice versa.
A simple listing of the customer requirements
would have definitely ended up in the
development of incorrect product for the market.
Reading the voice of the customer is therefore the
most critical and challenging aspect of the whole
QFD process.
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QFD - Conclusion

It is therefore very important that your


organization is constantly looking for the living
customers instead of mythological ones created by
aggregate data management. Once the voice of the
customer has been properly captured, translating
them into technical requirements should not be
much of a difficulty.
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3. Building Quality Culture


FICCI Total quality is a marathon and CE

not a sprint
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Building quality culture

People are the most important essence to TQM.


Many organizations after creating the vision,
mission and quality policies have failed to create
the quality culture and blamed TQM for not giving
concrete results.
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Culture has to be gradually built

Nearly every one talks about the need to change


towards quality culture, but cannot describe what
is involved. Culture is not something like
manufacturing part which can be changed or
replaced when they become broken or obsolete.
Culture is also not something which can be bought
or sold. It can not be prescribed or dictated. It has
to be gradually built.
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An organizations culture consists of ideas, customs


and norms of its people. The culture of the
organization can be best defined by observing and
describing the behaviors of the people in the
organization. Culture can only be changed by
changing the organizational behaviors.
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How to change culture

Change in the common language and quality


beliefs.
Change in peoples behavior to focus on
prevention and continuous improvement.
Change in management's behavior so that quality
is managed with such priority as is given to the
organizations other important task.
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Common language and beliefs.

Central to the entire TQM


movement is the idea of customer
focus and satisfaction. The
customer - supplier model is a
way to express its focus and
relate quality to each persons
work. People must become aware
of their multiple roles as suppliers
to those who receive their work
and as customers of those who
provide the input needed to their
work.
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Change in peoples behavior

Involvement of everyone in continuous


improvement and not just people in
operations and quality functions.
Less fire fighting and rework.
Attitude of right first time.
More upfront effort to clarify
requirements and proactively prevent the
occurrence of defects and errors.
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Change in peoples behavior

Greater focus on work processes and


improvements.
Intolerance of mistakes and errors which people
have previously learn to accept and work around.
More open and frequent communication amongst
people who view and treat each other as customers
and suppliers.
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Change in Managements behavior

The managers must select ways of operating to


improve quality that are the same as those used for
meeting other key performance goals. The
management must elevate the importance of
quality through following actions for development
of quality culture.
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Change in Managements behavior

Organize and provide others with legitimate


structures and time for dealing with quality issues.
Select, review on a broad range of quality issues.
Provide requisite training for quality
improvement.
Ask everyone about quality performance levels.
Weigh heavily the cost of quality in funding
decisions.
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Change in Managements behavior

Make quality a primary factor in performance


evaluations and rewards.
Include quality as key business strategy and align
them with the key result areas of all the
employees.
Make quality as a primary concern at all times
including when the pressure is on.
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Building the quality culture

Quality results Recognition and rewards

Quality action Process ownership

Commitment & Integrity Continuous improvement

Internal and external customer focus Quality work environment

Organization loyalty to employees Employee loyalty to organization

Top down leadership Vision mission and quality policy


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Remove any one block and the wall collapses

Re
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Commitment r ew
Pro ard
Qualit c ess s
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Intern Con
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custom veenmvi
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Organization loyalty to s y r ent
esu
l ts
Top down leadership Vision mission and quality policy
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HR Best practices

Define the outcome you want from managers and


insist that they find their own way there. This
practice encourages creativity and makes people
empowered enough to innovate their way to
achieving goals.
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HR Best practices

Do not waste time to put into an individual what


was left out, instead spend time trying to draw out
what was actually put in. Find every person the
job that needs his strongest abilities.
Provide continuous feedback as quickly as
possible, irrespective of whether it is negative or
positive instead of using annual formal
assessment.
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HR Best practices

The seniors genuinely share the joys and sorrows of


the individuals.Treat every employee as a distinctive
individual. Every individual is a unique bundle of
needs, insecurities, ambitions, spirit and genius. This
must be translated into specific action in managing
every individuals growth, training, rewards etc. In
majority of cases the employees do not leave
companies - they leave their seniors and supervisors.
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HR Best practices

To motivate a person to give his best to your


organization, demonstrate to him how his best will
make the organization a better performer. Their
opinions must be taken in the decision making
process.
Translate the organization mission into individual
mission.
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HR Best practices

Get teams to generate quality management process


and recognize their achievements. Only then you
will find every one committed to quality.
Encourage team based rewards rather than
individual rewards.
Encourage people to develop healthier relationships
with others at the work place instead of only
encouraging professional relationships.
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HR Best practices
Create a work culture that is transparent, open to
new ideas and promotes lot of creativity and
innovation.

It must be remembered that good pay and perks


can always be matched and even bettered by your
competitors - it is only the great work places that
will make significant difference to the quality of
the organization.
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4. Develop high performing processes


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Process Management
Customer
requirements
and expectations

Equipment
&
Technology Continuos
Quality
Right
Empowerment
Measurement
Zero
Prevention
SPC
PDCA
5TPM
first
improvement
Defects
Principles
S
Tools
time

Quality of raw
material / suppliers Processes

Quality
Benchmarking
BPR
Techniques
Competent
people

Product
quality
FICCI CE

Process Improvement

Operational Process
Analysis of improvement
process Principles

A D

C
FICCI CE

Analysis of a Process

Who?

What?
How?

Where?
FICCI CE

Who is performing the task ?

Reveals hidden organizational problems


Shows division of responsibility and authority
Communication issues
Skill base and experience
Decision making power
Technical vitality
FICCI CE

What task is done ?

Redistribution of task
Elimination of waste and unnecessary task
Proper utilization of skills
Consolidation of group activities
Elimination of wasted efforts
Correct skill deficiencies
Task dependencies
Time utilization
FICCI CE

How is the task done ?

Simplification of tasks
Prioritization of task elements
Elimination of excessive delays and transportation
Rearrangement of work stations
Use of faster methods and tools
Change in processing time
Work load balancing
Performance assessment
FICCI CE

Where is the task done?

Scrapping unwanted tools and equipment


Efficient location of work stations
Elimination of unwanted transportation
Improvement in employee morale
Changes in ergonomics
Changes in work design
FICCI CE

Principles of process
improvement

Waste Reduction

Process Simplification

Cycle-time reduction

Process measures

Error free principles


FICCI CE

Waste reduction

The first step in improving a process is to eliminate


waste with the following techniques :-

Value-added assessment
Minimize checks and inspections
Minimize administrative tasks
Minimize storage and transportation activities
FICCI CE

Value added assessment


FICCI CE

Value added assessment

Value to customer : First, the customers view


point should be considered. The customers are
only interested in receiving the product or service
that satisfies their requirements. All activities that
must be performed to cater to the customers
requirements are value -added activities.
FICCI CE

Does the activity add value to the customer ?

Would any customer care if the activity was not performed ?

Would any customer object if the activity was not performed ?

Do the customers appreciate the results of the activity?


FICCI CE
Value added assessment

Value to business : There are many activities that


may not add value from the customers point of
view. Attending meetings, developing plans,
compliance with regulatory guidelines, writing
procedures etc are examples of activities that may
not add value to the customers, but they do add
value to the organization. Each of these activities
must be carefully examined.
FICCI CE

Minimize checks and inspections


FICCI CE

Minimize checks & inspections

Checks and inspections may be necessary in a


process, however they do not add value to the
process. Each inspection point should be identified
and challenged.
The next slide lists some questions to use in this
challenge.
FICCI CE

What if the inspection was deleted?

What if the inspection was deleted?


Would the inspection be missed?
What is the potential impact in eliminating the
inspection?
What potential consequences exist if the
inspection is eliminated?
What is the likelihood that the inspection would
have revealed a problem?
FICCI CE

Minimize administrative tasks

Administrative tasks can reduce the ability of the


organization to respond and focus on the needs of
its customer.
FICCI CE

Administrative tasks often result in delays in


process time due to excessive paper work, levels
of reviews and multiple signatures (mostly by
people who, it seems, are never available when
needed). Reviews, approvals, signatures, preparing
written documentation, making and distributing
copies etc needs to be thoroughly reviewed.
FICCI CE

Minimize storage and transportation activities

Sometimes storage and transportation are


necessary evils but because they are both non-
value adding they should be minimized. The
purpose of just-in-time inventory systems to
minimize the amount of inventory stored.
FICCI CE

Transportation activities are also non-value


adding. Often the relocation of single activity can
significantly reduce the transportation
requirements.
FICCI CE

Process Simplification
FICCI CE

Process simplification

Simplification means reducing the complexities of process.


Simplification can lead to lessor activities and lessor things to
go wrong. Process simplification can be done by combining
similar activities and by analyzing decision points.
Efforts should focus on reducing layers of management and
structures that cause delays. Outdated systems and procedures
need to be evaluated.
FICCI CE

Example of waste elimination


Old Process
Assemble
computer parts

New Process
Assemble Self
Inspect
computer parts unit
sub-assembly Quality

Waste

Move Pack and ship


to customer

Pack and ship


to customer
FICCI CE

Cycle time reduction


FICCI CE

Cycle-time reduction

Cycle-time is the time required to deliver a


product or service to a customer. Long cycle-times
not only prevent prompt delivery of product/
service to your customers, but also increase costs.
One of the best ways to cut down on your cycle-
time is to conduct activities in parallel and
eliminate unnecessary waste times as
demonstrated on the next slide.
FICCI CE

Activities Performed in serial

Activities performed in parallel


FICCI CE

Create and implement performance based


measures
FICCI CE

If the performance of any system or process is not


measured, it can not be meaningfully improved.
Quantitative and qualitative measures that address
both objective and subjective elements should be
implemented.
The measures recommended are Revenue per
employee, percent defectives, cost of quality,
profitability ratios, customer satisfaction index etc.

See section on Measures of Quality.


FICCI CE

Wrong performance measures create barriers between


strategy and actions

Profit

Strategies Sales

Customer satisfaction

Build Many Select


inventory unfocused low price
projects supplier
Performance
Efficiency Purchase measures
variance Many improved teams price
FICCI CE

Correct performance measures link strategy to actions

Profit

Sales

Customer satisfaction

Strategies
Performance
measures

Cycle-time Cost of poor quality Supplier


quality
FICCI CE

Error free and defect free principles


FICCI CE

Implement error free and defect prevention


principles
Error and defect prevention are primary source of
controlling process variation. Every one should be
trained to prevent errors and defects at the source.
Several types of errors and defects can occur due
to technology methods, materials, personnel,
environment etc.
Errors and defects can be prevented by techniques
of fool proofing which is discussed in the
following slides :
FICCI CE

Foolproofing

Foolproofing is a scientific technique for


improvement of operating systems including
materials, machines and methods with an aim of
preventing problems due to human error. The term
error means a sporadic deviation from standard
procedures resulting from loss of memory,
perception or motion.
FICCI CE

Types of error

Error in memory of PLAN : Error of forgetting


the sequence/ contents operations required or
restricted in standard procedures.
Error in memory of EXECUTION : Errors of
forgetting the sequence/contents of operations
having been finished.
Error in PERCEPTION of type : Error of
selecting the wrong object in type or quantity.
FICCI CE

Types of error

Error in perception of MOVEMENT : Error of


misunderstanding/misjudging the shape, position,
direction or other characteristics of the objects.
Error in motion of HOLDING : Error in failing to
hold objects.
Error in motion of CHANGING : Errors of failing
to change the shape , position , direction , or other
characteristics of object according to the standard.
FICCI CE

Principles
of
foolproofing
FICCI CE

The principles of foolproofing


can be categorized into two
different groups :
A. Prevention of occurrence
B. Minimization of effects
FICCI CE

A. Prevention of occurrence

Prevention of Occurrence : Methods under this


principle aim to prevent the occurrence of human
errors from all stages of operations and make
corrections unnecessary.
FICCI CE

Prevention of occurrence

Prevention of occurrence can be achieved through


the following 3 methods :
Elimination
Replacement
Facilitation
FICCI CE

Elimination

Elimination method aims to remove the system


properties which generate operations/restrictions
susceptible to human errors so as to make them
unnecessary. Consider the error of an operator
touching a high temperature pipe and getting
burnt. One method of preventing this error is to
make the pipe safe by covering it with insulating
material. This improvement removes the property
of the pipe which generates the restriction.
FICCI CE

Replacement

The replacement method aims to use more reliable


methods than operators and make it unnecessary
for operators to perform such functions as
memory, perception or motion. The use of
specially partitioned parts boxes holding specified
number of parts to prevent the error of supplying
incorrect number of parts is an example of
foolproof method based on replacement
FICCI CE

Facilitation

The principles of elimination and replacement


described above make it unnecessary for operators
to perform operations or note restrictions. In
contrast to these, the purpose of facilitation is to
make such functions as memory, perception and
motion required in operations easy for the
operators, and thus reduce the occurrence rate of
human errors.
FICCI CE

B. Minimization of effects
FICCI CE

B. Minimization of effects*

Minimization of effects : Methods under this


principle aim to minimize the effects of human
error and focus on processes where the errors
develop into serious problems of quality,safety or
efficiency. This can be divided into two categories :
1. Detection and
2. Mitigation

*This principle is also known as Stop-in-time.


FICCI CE

Detection
The concept of detection is that even if a human
error occurs, the deviations from standard states
caused by it can be detected and corrected in the
succeeding operation steps. The methods of
correcting the detected deviations are classified
into two types :
1. Operators are informed or find by themselves the
deviations and take necessary corrective action.
2. The deviations are automatically corrected without
operators
FICCI CE

Detection

There are two methods of informing the operator.


The first method is to bring to the operators
notice by alarms or the remained parts and the
second method is by making the successive
operations impossible.
FICCI CE

Mitigation

The mitigation method aims to make operations


redundant or incorporate shock absorbing/protecting
materials so as to mitigate the effects of human errors
in their development process.
Example : Consider the error of burning out the
motor of a production machine by forgetting to
switch off the power supply. The mitigation
countermeasure is to install a fuse which cuts off the
power supply when the temperature reaches certain
point.
FICCI CE

5. Improving Product Reliability


FICCI CE

Product Reliability

Quality improvement has two faces - internal and


external. Internal quality improvements deals with
reduction of scrap, rework, inspection costs etc.
External quality improvement means enhancing the
performance that the customers experience throughout
the products life span.
FICCI
Product Reliability CE

The major gains of external quality come from


reduced field repairs, recalls, warranty, product
redesign etc. Another benefit is the increase in
future sales not only for the product in hand, but
for the additional product the company
manufactures. For example the improvement in
the reliability of motorbikes can also favorably
impact the companys sale of cars .
FICCI CE

Reliability - top priority

Reliability has been defined as quality over time. It


is the ability of the product to satisfactorily perform
its designated function over its customer intended
life time. Examples of unreliable products will
include inability of a product to function upon
delivery , failure of a switching devise to perform
when called upon, premature changes in
appearance, breakdowns etc. Reliability
improvement is the top priority for all customers.
FICCI CE
Techniques of improving product Reliability

An effective reliability improvement program


involves more than statistics. Reliability is the key
element to quality improvement, it is often the part
of quality that affects the customers the most. To
achieve reliability improvement it is essential that
management insists on comprehensive reliability
improvement program at the product design stage
itself.
FICCI CE

Reliability should be proactive

As per Henry Ford if you need an equipment to


improve the product reliability but dont buy it,
you pay for it even though you dont have it. The
most important goal of product life data analysis is
proactive reliability improvement preferably
before the product release.
FICCI CE

Conducting Failure Mode and effect analysis

To improve reliability one must understand why


the failure occurred. Once the process has been
established and the machinery has been acquired
and set up, it is extremely important to determine
the failure modes and effects they have on the
customer.
FICCI CE

Accelerated Testing.

Obtaining relevant reliability data early in the


product design process is a critical element of
proactive reliability improvement. Such
accelerated testing may require increasing the use
rate of a product - this is specially appropriate for
products which is in operational use only a
fraction of the time.
FICCI CE
HALT

Highly accelerated life testing (HALT) is


becoming popular among reliability and design
engineers for faster elimination of key failure
modes before product release. The objective of
HALT application is to rapidly identify failures,
which may require long time to discover under
normal use conditions. Such testing is typically
done on a few prototype units that are subjected to
combinations of stresses at much higher levels
than encountered in a normal operation.
FICCI CE

Robust design experiments

Robust design experiments have great potential for


leading to improvements in products and process
design, and thus, reliability. The key idea behind
robust design methods proposed by Taguchi is to
choose design conditions that make the product
robust to environmental factors.
FICCI CE
Six Sigma

Six sigma is a product reliability improvement


approach that seeks to find and eliminate causes of
mistakes or defects in business processes by focusing
on outputs that are of critical importance to customers.
FICCI CE

Six Sigma

The ability to produce products with only 3.4


defects per million is described as Six sigma. Six
sigma is action oriented and focuses on processes
used to serve customers and defect reduction.
FICCI CE

Aspects of Six Sigma

1. Six sigma approach integrates the human and process


elements of improvement to produce breakthrough results

Human elements Process elements


Bottom line Process improvement
Manufacturing leadership Analysis of variation
Sense of urgency Disciplined approach
Customer focus Quantitative measures
Project teams Statistical methods
Culture Change Process management
FICCI CE

2. Clear focus on the bottom line

Six sigma places a clear focus on getting the


bottom line results along with the time frame . No
six sigma project is approved till the bottom line
or the success factors are clearly spelt out. Each
project must be completed within a given time
frame which is usually 3-6 months
FICCI CE

3. Scientific approach- MAIC

Six Sigma uses four phase scientific improvement


approach for obtaining fast results.
Measure
Analyze
Improve
Control ( MAIC )
FICCI CE

6. Building Supplier Partnerships


FICCI CE

Objective of supplier quality program

Right quality materials


Right quantity
Right time
Right price
FICCI CE

Potential quality drivers

Develop new materials and equipment which seem


likely to reduce costs and improve performance.
Develop supply capacity through the identification
of additional suppliers.
FICCI CE

Potential quality drivers

Reduce the number of suppliers to the


organization and develop a closer working
relationship with those few who are expected to
provide the most productive link in the
organizations supply chain.
FICCI CE

Potential quality drivers

Reduce inspection of incoming materials and


stress on vendor certification of quality.
Allocate business to more than one supplier to
preserve competition.
FICCI CE

Methods of Supplier Evaluation

Evaluation of product samples


Past history with the similar product
Test results of similar products
Third party certification or registration with major
customers
On-site evaluation assessment
FICCI CE

Supplier evaluation -Questionnaires

Can the suppliers plant and machinery produce at


the required rate?
Are the machines capable of maintaining quality
parameters within acceptable limits?
Does the supplier have well staffed quality
organization and quality control program?
Does the supplier use a considerable number of
components obtained from trade or from
subcontractors? If so how do they control the
quality of these components?
FICCI CE

Supplier evaluation -Questionnaires


What are the suppliers source of raw materials?
Does the supplier maintain adequate reserve stock
of raw materials to safeguard itself from
interruptions in the supply of materials? How is
the supply of raw materials quality inspected for
quality?
Does the supplier have complete testing facilities
for the product in question? If not what alternative
arrangement can be made if pre-shipment
inspection is to be carried out?
FICCI CE

Supplier evaluation -Questionnaires

Has the supplier executed an order for the product


similar to the one being considered? If so the
details of the order should be obtained?
What is the financial standing of the supplier?
What is the general attitude of the suppliers
management to the quality of its products? Are
they confident to comply with the order?
Does the supplier have proper quality system in
place?
FICCI CE

7. Creativity & Innovation


FICCI CE

The organizations ability to continuously


satisfy the ever increasing customer
requirements depends on its ability to create
and innovate new products and services.
FICCI CE

Creativity & Innovation


Creativity is the ability to produce new and
original ideas and things. Innovation makes the
idea practical and usable. The innovative activity
in any business enterprise depends upon the
creative contributions of its members. It also
depends upon how the organization taps the
creativity of its talented members.
FICCI CE

Relationship between Creativity and Innovation

Creativity Screening Innovation

INPUTS OUTPUTS
Criteria
of evaluation Results
Ideas
Daydreaming Better
Observing Faster
Brainstorming Cheaper
Aesthetic
FICCI CE

How are the creative thoughts generated?

New combinations of patterns of existing


knowledge.
Association of ideas , often from widely different
spheres of learning.
Redefinition of a problem.
Mutual stimulation between persons with different
intellectual backgrounds.
A freeing of mind from constraints of normal
logical rational thought process.
FICCI CE

Elements of the creative process

The overall creative process has four elements :

1. Preparation
2. Incubation
3. Illumination
4. Verification
FICCI CE

Preparation

Preparation means building knowledge foundation


and skill base in a chosen field. A wide breadth of
interest and familiarity with aspects of another
field is more helpful to the individual than
exclusive concentration on specialty.
FICCI CE

Incubation

Incubation requires and partially turning off the


process of conventional thinking. This involves
holding of or keeping in check the normal
tendency to criticize and judge the value of what is
taking place in the flow of thought. A lot of free
thinking without any constraints should be
encouraged in the stage.
FICCI CE

Illumination

If incubation is successful, there follows the


moment of illumination, which often is like
a light bulb going on. The sudden insight of
people is linked to a mystical experience.
People who have experienced illumination
have generally expressed as Ah-ha effect.
FICCI CE

Verification

The final stage of creative process is


verification. Here the mind returns to the
pursuit of more conventional patterns and
works out the creative solution in detail,
polishes it in a more final form, and chooses
some test or method of proof so that the
idea becomes creditable and accepted.
FICCI CE

Challenge the impossible

It is not unusual to find the birth of a great


idea in the minds and words of someone
ignorant of the specialized field. Perhaps
they dont know enough to know that it
cant be done.
FICCI CE

You dont have to be an expert.

The bell was invented by an astronomer ( Edmund


Halley ).
The pneumatic tyre was invented by veterinarian
( John Dunlop ).
The safety razor was invented by a sales man
( K.C. Gillette ).
The vaccum cleaner was invented by a bridge
builder ( Hubert Booth ).
FICCI CE

Characteristics of creative people.

Optimistic about future


Open to alternatives
Day dreamers
Highly curious and observant
Independent thinkers
Good at turning innovative ideas into practical
solutions
Take action and make things happen
Adventurous with multiple interest
FICCI CE

Factors that enhance creativity in an


organization

Receptivity to new ideas


Giving people freedom to work on areas of their
great interest
Tolerance of failure
Encouraging people to take risk
Opportunity to work alone rather than in teams
Contacts with stimulating colleagues
Encouragement from top management
FICCI CE

Barriers to creativity

Be as practical as you can


Follow all the rules
That is not logical
I am not paid to think
Someone else may already be doing it
To make a mistake is wrong
If I share my ideas someone else may steal
FICCI CE

8. Measures of Quality
FICCI CE

Measures of Quality

Quality is a high level abstraction that is difficult to


illustrate by specific events, observations or
measurements. This is what separates quality from
other measures. Since quality has no direct measure
associated with it, organizations can express quality
in terms of other measures viz. Employee related,
Operations related, Customer related and Financial
measures.
FICCI CE

Employee related

Employee satisfaction
Awards presented
Internal promotions
Turnover
Safety and health
Suggestions received and implemented
FICCI CE

Operations related
Operations related measures can be classified further
into following categories :-
Marketing
Purchase
Manufacturing
Product Engineering
Quality Assurance
Product reliability
Accounting
FICCI CE

Marketing

1. Accuracy of forecast assumptions.


2. Number of incorrect order entries.
3. Overstocked field supplies.
4. Contract errors.
5. Late deliveries.
6. Customer complaints.
7. Warranty cost as a percentage of sales.
FICCI CE

Purchase
1. Premium freight cost/ demurrage charges.
2. Down - time because of parts shortages.
3. Number of Off specification parts used to keep
line going.
4. Cycle time from start of purchase request until
items in house.
5. Excess inventory.
6. Percentage of purchased material rejected on
receipt.
FICCI CE

Manufacturing

1. Yield per ton of raw materials.


2. Percentage of parts scrapped.
3. Percentage of parts reworked.
4. Percentage of parts accepted on concession.
5. Percentage of final product grades as seconds.
6. Production per man / machine.
FICCI CE

Product Engineering

1. Number of engineering changes per document.


2. Number of errors found during design review.
3. Number of errors found in design evaluation test.
4. Percentage of time over- run compared to planned
time for development.
5. Percentage of cost over - run over estimated cost
of development.
6. Number of tooling redesign after trial production.
FICCI CE

Quality Assurance

1. Percentage of lots rejected due to errors.


2. Percentage of products having defects detected by
customers.
3. Number of engineering changes that should have
been detected in design review.
4. Errors in inspection / test reports.
5. Cycle time to get corrective actions.
6. Percentage of appraisal cost compared to
production cost.
FICCI CE

Product Reliability

Mean time to failure


Failure rate
Probability of failure occurrence during given
time interval
Probability of failure non-occurrence during
given time interval
Mean life time
Mean time to first generate overhaul
Mean time to repair
FICCI CE

Accounting

1. Percentage of late payments.


2. Time to respond to customer request for
information.
3. Billing errors.
4. Incorrect accounting entries.
5. Payroll errors.
6. Errors in cost estimates.
FICCI CE

Customer related

Overall customer satisfaction


Customer complaints
Customer retention
FICCI CE

Financial measures

Market share
Sales per employee
Return on assets
Return on sales
FICCI CE

9. Eliminating root causes of


important failure costs
FICCI CE

Root causes of Warranty Costs

Inadequate quality checks within the organization


where defectives are passed on to the customer.
Mishandling in transportation.
Poor packing and packaging.
Poor product reliability.
Lack of inspection at the dealers end.
Inadequate training to the customers or improper
written instructions.
FICCI CE

Root causes of High Inventories

High cycle time from date of order to material in


house.
Incapability of the suppliers to supply when
required.
Poor choice of suppliers.
Manufacturing lead time.
Supplier material rejections.
FICCI CE

Root causes of High Manufacturing


lead time

Inefficient plant layout


Inefficient process routing
Excessive production batch size
Excessive set up times
FICCI CE

Root causes of Under utilization of plant


and machinery

Mismatch of jobs and machines.


Poor work planning and processes.
Lack of preventive maintenance.
FICCI CE

Root causes of Rework

Inadequate process instructions


Employee failure to follow the instructions
Tooling complexity
Lack of training
FICCI CE

Root causes of Excessive use of material

Poor quality of raw materials


Poor work design
Technology
FICCI CE

Root causes of Downgrading of end


product

Human error in inspection.


Failure to stop in time.
Absence of foolproofing.
Undue haste to achieve quantitative targets.
Use of off-spec material.
FICCI CE

Root causes of Scrap

Difficult or complex product design


Quality of raw materials
FICCI CE

Source of Information and advise

General
General H.LAL : General H.Lal is a mechanical Engineer . In 1971 he
joined
joined Defence
Defence Quality
Quality Organization
Organization and
and held
held important
important appointments
appointments till
till
in
in 1987
1987 hehe reached
reached the highest position of Director General, Defence
Quality
Quality Assurance
Assurance Organisation.After
Organisation.After retirement
retirement he
he was
was appointed
appointed as
Director
Director General , Bureau of Indian Standards. In addition to standards he
pioneered
pioneered thethe Quality
Quality movement
movement in in India.
India. By
By his
his sustained efforts
through
through TVTV ,, media
media and seminars he brought Quality into national focus.
focus.
He
He isis internationally
internationally recognised
recognised quality expert and his new book ISO
9000
9000 :: Guidelines
Guidelines for
for developing
developing countries has recently been published
by
by ISO
ISO and UNCTAD/GATT. He is the chairman of MSD Council Council of
of BIS
BIS
which
which formulates
formulates national
national standards
standards of
of quality
quality management
management .. He
He is
is also
also
the
the adviser
adviser to to the
the UNITED
UNITED NATIONS
NATIONS DEVELOPMENT
DEVELOPMENT
ORGANIZATION(
ORGANIZATION( UNIDO UNIDO ).).
He
He is
is at
at present the Director
Director General
General , FICCI
FICCI Quality
Quality Forum.
Forum.
FICCI CE

Research, Artwork, Design and development

Pravin Rajpal :Mr Pravin Rajpal is a Chartered


Accountant with more than 12 years of work
experience in some of the best professionally
managed companies in India. He worked for Eicher
Consultancy services , a premier management
consultancy company in India for 4 years .
At present he is the CEO of Competitive Edge,
Management Consultants .