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TQM
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FICCI
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FICCI
Your On-line Quality training package
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 252 slides
 LAN/WAN friendly
 Invaluable training tool

FICCI
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FICCI Index

Contents
 Introduction
 Environment
TQM Philosophy
 Universal consensus on TQM
Slide No.
1-6
7-13
14-25
26-34
 Customer focused organisation 35-51
 Leadership, Vision , Mission 52-63
 Quality people
 Process orientation
 Systems approach to management
 Continuous improvement
 Factual approach to decision making
 Mutually beneficial supplier relationship.
64-80
81-86
87-88
89-91
92-93
94-95
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Contents
Slide No.
 ISO 9000 96-103
 Quality Policy Deployment 104-110
 Quality Costs & Profit 111-133
 Time 134-139
 Quality in Mfg. & Service Org. 140-165
 Problem Solving tools 166-182
 Benchmarking
 BPR


Measures of excellence
International Quality Models
183-196
197-209
210-217
218-224
 Self check, FICCI Model of TQM and TQM action Plan 225-252
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FICCI As the threat of war moves increasingly from the battlefront to the market place - It is the survival of the fittest .
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 We are in the new era of competition . TQM will be the norm rather than the exception . We are in a battle for survival and total quality is going to sort out the winners from the losers ...... Alex Trotman .
CEO . Ford.
 A competitive world has two possibilities for you .
You can lose . Or , if you want to win , you can change. Lester C. Thurow....Management writer.
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21 st . century winners
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Total quality - focused.
Information technology based.
Vision directed.
Flatter and empowered.
Customer driven.
Flexible and adaptive.
Time based.
Innovative.
Global.
Networked.
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From small “q” to big “Q”
 Quality management covers all facets of business and aims to improve the overall quality of work by every one in the organization for achieving greater customer satisfaction and higher returns ( the big “Q”). It is not just confined to quality control or quality assurance ( the small “q” ) .
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 Satisfaction with status -quo and absence of continuous improvement
 Obsession with short term results including profits, market share, costs, budgets & schedules.
 Indiscriminate cost cutting that lead to sacrificed quality .
 Unempowered , poorly motivated and paid personnel and disregard for their ideas and suggestions.
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 Hands-off relationship with suppliers, with contracts being awarded to the lowest bidder.
 Crisis management , Rushing operations , firefighting oriented activities, impractical deadlines .
 Emphasis on correction and inspection rather than preventive and proactive approach .
 Unreliable processes and systems .
 Centralized and bureaucratic decision making.
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TQM Origin

In the 1950’s American industry was enjoying a boom. Whatever was made could be sold. Few industrialists heeded the work of this man called
Deming and his ideas about Total Quality . In Japan
, however , things were different . The Japanese economy was depressed . Goods stamped made in
Japan were known for poor quality and high price.
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
Japanese industrialists were very receptive to the ideas of Deming on TQM and set about implementing them. By the mid - 1970’s Japan was beginning to seriously undermine its American and other western competitors. First in cars , then in the whole range of goods including videos, Hi-fi and computers.
The rest is a history .
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Why TQM
Global competition , downtrend , bottomline pressures Rejoice. All problems come with change . Change is necessary characteristic of growth, and no company ever achieved peak performance without continuous improvementthe philosophy of TQM.

.
Before we proceed further , it would be interesting to know exactly where is your organization placed on the corporate lifecycle .

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Continuous improvement
Corporate Lifecycle
.
Stability
Aristocracy
Recrimination
Bureaucracy
Death
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Growing Organization

Growing Organization : A healthy organiz ational growth is characterized by the culture of continuous improvement.The organization during its process of continuous improvement never loses flexibility or control.
The growing organization consistently meets its customers’ changing needs and improves.
New organizations sprout up, and they are decentralized to provide new lifecycle opportunities. For a growing organization even the latest quality manual is outdated .
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Declining Organization

Stability : Instead of getting what it wants , the organization wants what it gets .
Members welcome new ideas but without the excitement in the growing stages . The financial people begin to impose controls for short - term results.
The emphasis on marketing and R & D wanes.
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Declining Organization

Aristocracy : Not making waves becomes a way of life.
Outward signs of respectability i.e. office decoration , dress and titles take an enormous importance .
The organization acquires companies instead of starting them .

Recrimination : The company witch - hunts to find out who did something wrong rather than trying to discover what went wrong and how to correct it.
Cost reduction takes precedence over efforts to increase revenues .
Backstabbing and infighting rule.
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Declining Organization

Bureaucracy : There are systems for everything . Employees play by book . Time is forgotten . The numbers are more important than the quality .
The organization is the world in itself . The organization survives in an overly regulated environment .
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TQM : Strongest management tool
Whichever stage of the corporate cycle you are on -
TQM clearly emerges as one of the strongest management tools because of its inbuilt philosophy of continuous improvement by every one. TQM is ...
 Continuously improving customer satisfaction levels and
 Simultaneously improving profit margins .
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Deming , Juran and Crosby are some of the world famous quality gurus . All of them have come out with their own ideas and concepts on quality . Their ideas and concepts are briefly given on the next slides.

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Deming
 Deming originated PDCA cycle . He came out with the new “climate” ( organizational culture ) which primarily consists of joy in work,
Innovation and cooperation.
 He referred to this new climate as Win - Win as opposed to I win : You Lose .
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ACT
PLAN
D0
The PDCA cycle is also known as the
Deming cycle
CHECK
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 Juran developed the idea of
Quality trilogy : Quality planning , Quality improvement and Quality control.
He concentrates not only on the end customer , but identifies other external and internal customers. According to him ,
Quality is
“Fitness of use”
Control
Planning
Improvement

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Crosby
 Crosby is known for his concepts of
“Do it right first time” and
“zero defects”
. He defines quality as conformance to requirements which the company itself has established for its products based directly on
.
customer needs.He
emphasizes prevention management in every area
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Quality Management Principles
 Since various quality gurus have propounded their own concepts and ideas on Quality , there is an element of confusion in the minds of people as to which quality methodology should be adopted in their organizations.
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Universally acceptable Principles
To resolve this problem International
Organization for Standardization ( ISO ) had established a working group to remove the element of confusion and come out with 8 universally acceptable principles of TQM .This
should be kept in mind by the organizations while formulating their quality objectives
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Quality Management Principles
1. Customer focused Organization
2. Leadership
3. Involvement of people
4. Process orientation
5. System approach to management
6. Continuous Improvement
7. Factual approach to decision making
8. Mutually beneficial supplier relationships.
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1. Customer focused Organization
 Organizations depend on their customers and therefore should understand current and future needs , meet customer requirements and strive to exceed customer expectations .This requires :
1. Identification of customers ( Internal & external )
2. Understanding stated and implied needs / expectations.
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1. Customer focused Organization
3. Establishing measures of satisfaction customer needs/ expectations.
4. Determining how far customer needs are being met at present.
5. Efficient processing of customer complaints.
6. Establishing customer focus down the line including distributors.
7. Seeking customer feedback and its analysis for taking measures to improve customer satisfaction.
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.
The next generation customers will be different than the previous generations.
More and more customers will be high achieving people with technical knowledge
. The resistance to buy something may not just be the price ,but the risk involved, time involved and psychic costs .
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Customers - The Quality Chain
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 The customers and suppliers not only exist outside the organization , but inside too ( internal customers ). There is a series of supplier/ customer relationships which serve as important interfaces in the quality chain. Failure to meet the requirements in one part of a quality chain will affect the other and the external customers.

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Transition from traditional to TQM organization.
Traditional TQM
Customers
Top
Mgt.
Middle Mgt.
Functional Mgt.
Employees
Front-line supervisors
Functional Mgt.
Middle Mgt.
Front-line supervisors
Top
Mgt .
Employees
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Customers : Paradigm
 Customer service
 Customer satisfaction
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A paradigm is a mindset

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Paradigm Shift
Exceeding the expectations of the customers.
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Customers :Best Practices
1. Understand the Markets and Customers
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2 . Involve customers in the design of products and services
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3. Market and sell products & services i . Secure channels of distribution.
ii . Establish pricing.
iii . Develop advertising
& promotion strategies.
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& deploy a sales force.
v. Process orders.
vi . Develop
Customers.

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4. Involve customers in the delivery of products & services
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ii. Use Delivery customization to attract .
iii. Develop distribution capability.

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5. Provide customer service i . Establish points of contact ii . Develop service delivery capability iii . Train people to improve customer’s expectations
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6. Manage customer information i . Build customer profiles.
ii . Establish service information.
CE iii . Measure customer performance & satisfaction.

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Your end product is the best quality statement .
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Traditional
 PRODUCT
Customers : New directions
Driving Force
Interactive
 RELATIONSHIP
 MASS
BROADCAST
 CUSTOMER
ACQUISITION
 UNITS SOLD
Media usage
 PERSONAL &
ELECTRONIC
Resource Allocation  CUSTOMER
LOYALTY
Profit Measurement  NUMBER OF
CUSTOMERS
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Market place and market space
Today, interaction with customers happen both in the market place and market space*.Eventually, the market space environment will dominate. In the era of high costs of real estate , it is the market space which provides the economical solution to reach the global customers .

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2. Leadership
Leaders establish unity of purpose and direction of the organization. They should create and maintain the internal environment in which people can become fully involved in achieving the organization's objectives.This
requires following steps :
1.
Establish long term vision and strategy .
2. Enlist others in a common vision by appealing to their values, interests , hopes and dreams.
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Leadership
3. Search for challenging opportunities to change, grow, innovate and improve.
4. Experiment , take risk and learn from the mistakes.
5. Foster collaboration by promoting cooperative goals and building trust
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Leadership
6. Strengthening others by sharing information and power and increasing their discretion and visibility.
7. Set an example by behaving in the ways that is consistent with the stated values.
8. Plan small wins that promote consistent progress and build commitment.
9. Recognize individual contributions to the success of every project.
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The world over, just one thing has fired the imagination of people : A vision of a future
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Corporate Vision
 A vision is a vividly descriptive image of what an organization wants to become or wants to be known for .
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 An organizational vision offers a compelling method for forging employees into an empowered , highly motivated team.

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Customer driven vision statements...
 HDFC : Develop close relationships with individual households , maintain position as the premier housing finance institution in the country , transform ideas into viable and creative solutions.
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Customer driven Vision statements...
 Colgate Palmolive : To be the company of first choice in oral and personal hygiene by continuously caring for consumers and partners.
 Anderson Consulting : To help our clients change to be more successful.
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The core function of an organizational vision is to ignite people into thinking beyond company’s existing capabilities and present environment .
Only a shared vision can achieve this.

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VISION : Impact .
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A statement of intent of what a company wants to achieve and through which lines of business over a period of time
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Mission
 Embrace a single clear quality philosophy.
Without one your company is like a ship without a rudder. It will loose its way and self destruct in the midst of global opportunities and problems.The
mission statement is a primary expression of quality philosophy, more powerful and enduring than any body in the organization .
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Quality Policies.
 Review all systems , policies , and procedures in the organization and check their harmony with your quality mission.
These include organizational structures, manufacturing and purchasing policies , quality control procedures , HR policies, and incentive systems. Immediately discard all existing systems or structures that are not consistent with the corporate quality philosophy/ mission.
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3. Involvement of people
 People at all levels are the essence of an organization and their full involvement enables their abilities to be used for the organization’s benefit. This requires :
1. Employees must be treated with dignity and respect
2. They must be trained to build competence where required
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Involvement of people
3.
Each employee must know what exactly is required to be done and where possible must be able to assess the quality of his work.
4. Fear must be totally removed from the organization and employees must be encouraged to bring out weakness in the system.
5. Empower employees to take appropriate action in their area of work for improvement.
6. In case of a mistake , examine the system rather than the man to prevent its recurrence.
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Involvement of people
7. Involve employees in quality plans and draw upon their intimate knowledge of processes for improvement.
8. Assess employee satisfaction level and take appropriate measures to improve their morale so that they take pride in belonging to the company.
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Culture change
FROM
 Manage tasks
 Major breakthroughs
 Will this improve profits
 Some how do it
TO
 Manage people
 Small continuous improvements
 Will it improve customer satisfaction
 Right first time
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FROM

Spend company’s money
 Suppress problems
 Some how in time
 I .
 Talk about quality
Culture change
TO
 Spend as if your own money
 Expose problems
 Just in time techniques
 We
 Walk quality
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The human side of quality
 While considerable attention has been given to the technical side of quality, there is an increasing need of the importance of the human side to total quality.
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Employees - Foundation stone to TQM.
The greatest contributions to the process of
TQM are made by the people who make the organization . People - who share the vision .
Intellectual capital and knowledge are more and more the true assets of any organization.

Quality of human behavior
 In its original Japanese context, Total Quality refers not only to the quality of management which ultimately produces quality goods and services , but to the quality of human behavior , skills and commitment necessary to accomplish our business objectives.

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This not only makes good business sense, it also reflects a deeper yearning of the human spirit to be of service , to build loving, caring relationships , to affirm our interdependence , and to bring value , beauty , and benefit into the world.

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Human side of quality
The human quality should always include the following three components :
 Creativity - The joy of thinking
 Physical activity - The joy of working with sweat on the forehead.
 Sociality - The joy of working together
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Quality begins with me.
There are three kinds of people -
 People who make things happen
 People who watch things happen and
 People who wonder “what happened ?”
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Quality begins with me.
 If we are to take Total Quality to heart , we too must come to look at our own lives in a more multidimensional , interrelated and holistic manner. Taking the theme of Total Quality personally has the potential to tap us into the flow of life giving forces and ways of living and working that are ultimately most rewarding and productive.
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Quality Control Circles
Quality control circles is a small group of employees voluntarily performing quality control activities within a single work unit.
The aim of QCC’s is to facilitate process control , mutual and self development of employees and improvement of their workplace and productivity by full participation of all members.

Quality Control Circles- Objectives
 To contribute to the improvement and development of the organization.
 To respect humanity and to build worthwhile lives and cheerful work areas .
 To give fullest recognition to human capabilities and to draw out each individual’s infinite potential.

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4. Process orientation
 A desired result is achieved more efficiently when related resources and activities are managed as a process. This requires :
1.
Planning of processes to meet customer requirements.
2. Process capability study and qualification of process.
3. Establishment of mechanism to keep process under control.
4. Ownership of process with full responsibility of quality
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Process orientation
5. Verification of product/ service for conformance before instruments.
6. Maintenance/ calibration of process equipments and measuring instruments.
7. Analysis of process data for improvement.
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Quality process grid
Right things wrong Wrong things right
Wrong things wrong
Right things right
How you do it

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Management of processes
Work 1 2 3 4
Customer
Processes are managed vertically , but work flows horizontally.
We must get information from users of our output to manage our processes
Have a system of tracking products or order completion through various processes
Institute interprocess coordinating mechanism for smooth work flow

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1
2
Process vs system optimization
4
3 5
Throughput
1 3 5
2 4
 Improving some processes may not bring any benefits, in fact it may result in more losses e.g producing components at higher rate that can not be assembled by the next process will increase cost.
 Prioritize processes depending on the constraint they offer to the throughput

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1
1
2
2
Process vs system optimization
4
3 5
Throughput
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3 5
4
 Concentrate on those processes which offer maximum constraint.
 Optimize the business system rather than individual processes.

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5. System approach to management
 Identifying , understanding and managing a system of interrelated processes for a given objective improves the organization’s effectiveness and efficiency.This requires :
1. Clear objectives
2.Organizational structure with well defined authority and responsibility.
3. Planning for Quality .
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System approach to management
4.
Control of functions affecting quality.
5. Coordinating of interrelated processes.
6. Audit mechanism for self regulated organization.
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6. Continuous Improvement
 Continuous improvement should be a permanent objective of the organization. This requires :
1. Measurement of quality
2. Analysis of quality data and investigations for non conformities.
3. Seeking opportunities for improvement rather than reacting to quality problems.
4. Benchmarking

Continuous Improvement
5. Organization for quality improvement like quality circles
, quality improvement teams for taking up specific projects.
6. Review of Q.I.P’s ( Quality
Improvement Projects ) by top management .
7. Recognition of significant achievements.

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7. Factual approach to decision making
 Effective decisions are based on the analysis of data and information . This requires :
1. Recording of data on :

Quantitative production

Equipment failures

Process conditions

Delivery performance

Customer complaints

Quality costs

Supplier performance.
Period
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7. Factual approach to decision making
2. Ensuring the data is accurate , reliable and accessible.
3. Analysis of data to understand the impact on organizational performance and cost implications and for deciding corrective actions.
4. Data on results of application of corrective action.
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Period

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8. Mutually beneficial supplier relationships.
 An organization and its suppliers are interdependent , and a mutually beneficial relationship enhances the ability of both to create value.This requires :
1. Consideration of quality capability while selecting vendors.
2. Specification of quality on purchase documents.
3. Clear understanding of supplier needs .
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8. Mutually beneficial supplier relationships .
4. Mutual trust and share responsibility and accountability.
5. Clear and open communication.
6. Mutual commitment for continuous improvement.

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ISO 9000
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Definition - Quality System*
 Quality system : Organizational structure, procedures, processes and resources needed to implement quality management.
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*As provided in ISO 8402 : 1994, quality management and quality assurance-vocabulary

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Standardization of business activities
4
2 5
1
3
6
Workstations
 Have you ever wondered why the performance of individuals or groups within the same organization varies so widely.The reason is that the method followed by them is some what different from each other - the processes are not standardized.
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Methodology and application of ISO 9000
 Identify high achievers
 Study their methods of work and document it in discreet steps
 Discuss use of this method by other groups and develop a consensus.
 Define the standard method of processes and make it mandatory.
 Evolve audit mechanism to check compliance.
 Continuously improve the processes by corrective and preventive methods.
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ISO 9000 Quality systems - Benefits
 ISO 9000 Quality systems brings various benefits to their users. The primary purpose of an effective quality system is to inspire confidence among customers in contractual situation.It is of immense value to the organization itself because it enables them to achieve customer satisfaction cost effectively.
 Implementing ISO 9000 can help transform the adhoc method of functioning ,which leads a company from one crisis to another .By combining high quality with low cost it can result in tremendous competitive advantages
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Other benefits of ISO 9000 Quality systems.
 Enables to identify and plan tasks and their method of performance in order to yield right results.
 Provides the means for identifying and resolving problems and preventing their recurrence.
 Enables staff to control their own operations.
 Provides means for documenting the company’s experience
 Provides data that can be used to determine the performance
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ISO 9000 and TQM
 Many companies make attempt to launch TQM in their organizations without formal systems like ISO
9000. Any such attempt may not give very positive results because without the support of ISO 9000, the
TQM can not go very far in any organization .
 The relationship between TQM and ISO 9000 is shown on the next slide.
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ISO 9000 system supports the Quality movement
P D
A C
ISO
9000
ISO
9000
P D
A C
Time
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Quality Policy Deployment
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 Quality policy deployment is mechanism used for deploying corporate goals at all levels and to manage quality strategically.
Quality policy deployment is translation of Japanese words
“HOSHIN KANRI”. HOSHIN means “direction” and KANRI means “deployment or administration

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Quality Policy Deployment
 Rank Xerox defines Quality policy as follows : A key process by which Rank
Xerox can articulate and communicate the Vision , Mission , Goals and vital few programmes to all employees. It provides the answers to the two questions:
 What do we need to do ? and
 How are we going to do it.?
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Quality Policy Deployment
 Quality Policy Deployment is the necessary trigger for processes to perform well and for goals to be achieved. It is the mechanism by which the quality effort is cascaded down throughout the organization.
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Essential steps in Quality Policy Deployment
 1.
Issue of Corporate Quality Policy for the year laying down quantified targets and milestones for monitoring the progress.
 2.
Formulation of sub-policies of different departments and identification of critical processes and activities for achievement of departmental objectives.
 3 .Interfacing with other departments and functional groups and agreement on inputs required from them along with time schedule
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Essential steps in Quality Policy Deployment
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 4.
Preparation of departmental plans for identified activities, with well defined targets, methods and allocation of responsibilities down to the lowest operating level.
 5.
Implementation of plan after providing necessary resources including training and requisite information.

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Essential steps in Quality Policy Deployment
 6.
Periodic monitoring of policy deployment progress by departments along with co-ordination meetings with other related departments to sort out operational problems in achieving departmental targets
 7.
Top management reviews at regular intervals to ascertain the progress of policy deployment and taking mid course corrective action for attainment of organizational goals
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Many people think that quality costs money and adversely effects profits. But these costs are the costs of doing it wrong first time .
Quality in the long run results in increased profitability .
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Quality , Cost and Profit relationship.
For example if we design the product right first time , build it right first time - we save all the costs of redesign , rework, scrap, resetting, repair, warranty work etc.
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Quality and Profit : Paradigm
QUALITY
* A Paradigm is a mind set .
COST
PROFIT

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QUALITY & PROFIT - PARADIGM SHIFT .
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PROFIT
QUALITY
COST

Higher productivity
1.Higher production due to improved cycletime and reduced errors and defects
2.Increased use of machine and resources.
3.Improved material use from reduced scrap and rejects
4.Increased use of personnel resources
5 .Lower level of asset investments required to support operations.
6.Lower service and support costs for eliminated waste, rework and non value added activities.
Increased profitability due to :
• Larger sales
•
Lower production costs
•
Faster turnover

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Quality and Profit
 If the organization does not offer high quality product or service , it will soon go out of business . But just having high quality will not be enough , because your competitors will also have the high quality. To win , companies will need to offer high quality for a lower price than their competitors.This requires organizations to identify and reduce their quality costs
High
Quality
Lower price
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Quality costs are all those costs that arise from not performing a task the right way the first time.
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Categories of Quality Costs
1. Prevention Costs
2. Appraisal Costs
3. Internal Failure Costs
4. External Failure Costs.
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Prevention Costs
 Prevention costs are associated with design, implementation , maintenance, and planning prior to actual operation in order to avoid defects from happening.
 The emphasis is on the prevention of defects in order to reduce the probability of producing defective products. Prevention activities lead to reduction of appraisal costs and both type of failures ( internal and external ).The motto is
“Prevention rather than appraisal” .
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Activities associated with Prevention costs
 Market research
 Quality training programmes.
 Contract review
 Design review
 Field trials
 Supplier evaluation


Process plan review
Process capability review
 Design and manufacture of jigs and fixtures
 Preventive maintenance
 Engineering changes for easy producibility
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Appraisal costs

Appraisal costs are spent to detect defects to assure conformance to quality standards.
Appraisal cost activities sums up to the
“cost of checking if things are correct” .The appraisal costs are focused on the discovery of defects rather than prevention of defects
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Activities associated with Appraisal costs
 Proto type testing
 Vendor surveillance
 Incoming material inspection
 Process inspection/control
 Final inspection
 Laboratory testing / measurement
 Depreciation cost for measuring
 Quality audits.
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
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Activities associated with Internal failure costs
 Design changes/ corrective action
 Scrap due to design changes
 Excess inventory
 Rectification / reject disposition of purchased material
 Rework/rejection in manufacturing
 Downgrading of end product
 Downtime of plant & machinery
 Trouble-shooting & investigation of defects
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External failure costs

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Activities associated with External failure costs
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 Processing / investigation of customer complaint
 Repair/replacement of sold goods
 Warranty claims
 Product liability & litigation costs
 Interest charges on delayed payment due to quality problems
 Loss of customer goodwill & sales.

FICCI
Size of four categories of quality costs.

The organizations which do not follow TQM,there is less emphasis on prevention and their main quality efforts are on appraisal with very little control on internal and external failure costs.

Various studies have shown that quality cost in manufacturing companies the world over range from
20 % to 30 % of turnover and in the case of service companies it can go up to 40 % as illustrated in graph on the next slide.
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Size of various quality cost elements
10-15%
10-12%
The total quality costs 25-35 % of turnover.
4-6%
1%
Preventive Appraisal
Internal
Failure
External
Failure

FICCI
Impact of TQM on costs.

TQM is primarily aimed to improve the quality of the product , higher customer satisfaction and better working environment for the employees. The most dramatic impact of TQM is on reduction of quality costs which directly effect the profitability .

This is demonstrated by the results of TQM programme in Xerox Corp . The change in various elements of quality cost before and after launching
TQM by Xerox Corp is shown on the next slide.
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FICCI Impact of TQM on costs.
An example from Xerox Corp.
Internal Failure 35
30
25
20
15
10
5
0
Before TQM
Appraisal
Prevention
After TQM
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1-10-100 Rule
1
Prevention
Correction
Failure
Rs
Rs
Rs
Rs
Rs
10
100
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Visible costs
Hidden Costs
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•
Scrap
•
Rework
•
Warranty costs
•
Excessive use of material
•
High inventory
•
Low plant utilization
•
Cost of redesign and re inspection
•
Cost of resolving customer problems
•
Cost associated with poor quality of purchased material
•
Cost of non value adding activities
•
Opportunity cost of lost customers

FICCI
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Time Based Competition
 Time has emerged as a dominant dimension of global competition , fundamentally changing the way the organizations compete. The traditional cost based competition is defenseless against organizations that can provide products and services with the most value for the lowest cost and fastest response time.
Time based competitors are changing the rules by developing reengineered processes that are simpler , faster and have world class quality .
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Reduce cycle time
Customers now penalize suppliers that infringe on their time, whether through delays, mistakes or inconveniences. Today’s customers demand operations that are airborne, on-line and realtime. Soon is not the answer the customers want to hear. They count the speed of response time as a Key Value Dimension .
Their directive to the market place is loud and clear continuously shrink the interval between our need and when you can fill it - qualitatively.
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Time Based Competition : Added Value.
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 The key to time - based competition is not about driving people and machines faster, but about the elimination of waste .
 Waste is often confused with materials ruined or discarded or time which could obviously have been better spent .
However this view is only partial.
 Waste is any operation which does not add value.*
* See next slide on operations that do not add value

FICCI
Sources of unproductive Time.
 Waiting time.
 Set- up times.
 Time spent on over production .
 Avoidable Transportation.
 Ineffective communication.
 Inopportune timing of activity.
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Time based competition - Gains.
The implementation of a real-time organization, with real time systems , will have the effect of changing the working relationship within the organization as well as those with the partners and customers . The application of technology will change the corporate culture.
As these systems are adopted , new ideas for services and products , new ways of gaining customer loyalty and new methods of team collaboration will take shape resulting in tremendous gains.
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5 - S Technique
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The 5 - S practice is a technique used to establish and maintain quality environment in an organization .The name stands for 5 Japanese words
Seiri
Seiton
Seiso
Sieketsu
Shitsuke

FICCI
Seiri :Sort out items and discard the unnecessary
Check :
1.Do you find items scattered in your workplace
2.Are there boxes, papers and other items left in a disorganised manner.
3.Are there equipments and tools placed on the floor.
4.Are all items sorted out and placed in designated spots.
5.Are the tools properly sorted and stored
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Seiton :Arrange a place for everything .Everything in its place.
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Check :
1. Are passages and storage places clearly indicated.
2.Are commonly used tools separated from those seldom used.
3.Are containers and boxes stacked up properly.
4.Are fire extinguishers and hydrants readily accessible.
5.Are there grooves , cracks or bumps on the floor which hinder work or safety.

FICCI
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Seiso :Clean your workplace thoroughly .
Check :
1. Are the floor surfaces dirty.
2. Are machines and equipment dirty.
3. Are wires and pipes dirty or stained.
4. Are machine nozzles dirty by lubricants and inks.
5. Are shades , light bulbs and light reflectors dirty.

FICCI
Seiketsu :Maintain a standard.
Check :
1.Is any one’s uniform dirty and untidy
2.Are there sufficient lights.
3. Is the noise or heat at your workplace causing discomfort.
4. Is the roof leaking
5.Do people eat at designated places only.
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Shitsuke :Train people to be disciplined
Check :
1. Are regular 5 - S checks conducted.
2. Do people clean up without reminders.
3. Do people follow rules and instructions.
4. Do people wear their uniforms and safety gears properly.
5. Do people assemble on time.

FICCI
Designing Quality
Taguchi methods
The aim of a good design is to minimize loss to the customer and the society .
Sources of loss : Product life , wear and tear, set up time etc.
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Designing quality: Taguchi methods
A good design is the optimal trade off between cost and performance and must aim at simplicity . It is easier to make complicated designs , but it takes a genius to simplify the design. Costs are reduced as a result of :
 Fast assembly & production
 Robustness
 fewer suppliers & less administration.
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FICCI
Designing quality
A good design should aim at reducing
Signal to noise ratio.
Televisions emit both signal and noise.
The signal consists of sound and picture.
It is the desired part of transmission . The noise is the unwanted part of transmission.
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Conformance to design
Conformance to design is a systematic way of guaranteeing that the designed quality is achieved .Good things only happen when planned , bad things happen on their own.
In production systems you only get what you put in , but unless you are careful , you may not even get that.
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Pokayoke : Poka yoke is a
Japanese word which means
Mistake Proofing .The aim is to engineer production systems to eliminate the possibility of error rather than relying on quality inspections.
Your ultimate inspector is the customer.
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TPM : Zero sum approach
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Total Productive Maintenance is productive maintenance involving total participation for increased productivity .

FICCI
Why TPM
Downtime
(a) Breakdowns due to equipment failure.
(b) Setup and adjustment e.g
.
exchange of die injection moulding machines etc.
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Why TPM
(a) Idling and minor stoppages e.g.
abnormal operations of sensors
(b) Reduced speed e.g.
discrepancies between design and actual speed of equipment
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Speed losses

FICCI
CE
Defects
Why TPM
(a) Defect in process and rework ( scrap and quality defects requiring repair )
(b) Reduced yield between machine startup and stable production.

FICCI
CE
Requirements for TPM
 Maintain basic equipment conditions
 Maintain operating conditions
 Restore deterioration
 Correct design weaknesses
 Improve technical skill
 Expose hidden defects

FICCI
Leading Japanese companies attribute their success in reducing waste and speeding production to the implementation of so called Just In Time (
JIT ) methods of working.
It is also known as stockless production because the aim is to receive supplies and manufacture components Just in time for next operation.In JIT , the ideal inventory is one.
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FICCI
Just in time
First sell it , then make it : JIT reverses the conventional approach of first making and then selling . Ideally nothing is produced unless a customer is identified . In some Japanese factories the cars are shipped with the customer’s name already attached
.
This helps in reducing inventories , warehousing and other holding costs.
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Just in time
From finish to start : JIT reverses the conventional approach of planning production from start to finish .Employees responsible for final operation receive the production plan first.
The organization is forced to get the production process right before commencing production.
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.
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Quality in service organizations
In a service organization the producer and consumer meet face to face . In a service organization both quality of the service and interface are importantunlike a manufacturing organization where only the quality of product matters.
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Quality in service organizations
Managing service delivery :Service delivery is like a theatrical performance . The stage must be set and the people must act the part .Service
quality is affected not just by the fitness of the product , but also by the manner of delivery .
A customer may desert a restaurant if the quality of service deteriorates even though the quality of food and ambiance is excellent.
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Quality in service organizations
Managing Customers :Planning services require careful matching of capacity to demand . Unlike manufacturing goods , services can not be stored.
Every vacant seat at the flight represents an irrevocable loss of revenue.
Conversely, insufficient capacity creates an even worse problem
- Customers will go somewhere else - a permanent loss of revenues and profits.
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Quality of service
Interaction with the customers :Interactions affects perceptions of quality. Spending a little time with each customer can bring wonders. Properly handled
, a disaster can be turned into a triumph .
When things go wrong the best thing is to overcompensate .A hotel guest who complained of no towel found within few minutes two towels, with apologies from the manager -and his next drink was on the house.
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You can not change the direction of the wind , but you can always adjust your sails
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Kaizen : Importance

The road to excellence is not the major breakthroughs , but small continuous improvements that do not cost money, but result in real cost savings, higher quality or better productivity.

The latest developments in Japan advocate the idea of taking small incremental Risks along with small continuous improvements to win .
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Kaizen : Foundations



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Kaizen : Tools



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Rational model for problem solving
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1
Select the
Problem
Agree the problem
2
Understand the
Problem
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3
Discuss and clarify the problem and come to a common understanding about the same

FICCI
Eliminate Causes
4
Identify possible causes of the problem
5
Gather data and test causes
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6
Select applicable causes

FICCI
7
Options for Improvement
Identify potential options for improvement
8
Gather data and test options for improvement
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9
Select applicable options for improvement

FICCI
10
Implement solutions
Plan implementation of solutions
11
Implement solutions
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12
Monitor success of implementation

FICCI
Complete the process
13
Standardise solution
14
Can the idea be used somewhere else
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Other approaches : PDCA cycle.
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ACT
PLAN
D0
The PDCA cycle has the advantage of being cyclical implying that improvement never ceases.
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FICCI
Other approaches : Cause and effect
 This approach involves breaking problems down into “simple” components.
This normally assumes a simplistic , one- to- one cause and effect relationship. For every problem , there is a single identifiable cause. The cause and effect diagram enables the team to have all causes at a glance.
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See the Cause and effect diagram on the next slide.

FICCI
Men
Cause and effect diagram.
Environment
Machine
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CAUSES
Method Systems Materials
EFFECT

FICCI
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Other approaches : Brain Storming.
 A brain storming activity that is well executed should result in some very unusual ideas that is the underlying purpose for resolving the given problem.
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Benchmarking :
Stages of improvement
World Class
Recognised as the best
Benchmarked by others
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Best in Class
Exceeds customer expectations,outperforms all direct competitors and has clear competitive edge
Efficient
Meets all internal requirements for cost margins, asset utilization,cycle-time and measures of excellence
Effective
Satisfies all customer requirements
Incapable
Is ineffective , inefficient and at the risk of failing.
Needs major redesign

FICCI
World class : Benchmarked by others
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Benchmarking : Relevance
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In the global movement today , the competition is improving at a faster rate , and the only way to improve your relative quality and move upwards is to find out and implement the best corporate practices.

FICCI
Best practice benchmarking
Best practice benchmarking is a technique used by companies around the world in all sectors of business to help them become good or better than the best in the world in the most important aspects of their operations.
There are 5 key steps to the process of best practice benchmarking .
CE

1. Select what to benchmark
This may include :
 Product quality
 End pricing
 Features
 Technology

2. List who to benchmark with
The following are some important considerations in choosing companies with whom to compare yourself :
 Is their experience really relevant
 Are they still at the activity you want to measure

FICCI
Benchmarking : Whom to learn from
A. Internal : Compares depts , sites , countries for the same company. Very relevant . Easy to get information but inward looking.
B. Competitors : Compares practices with direct competitors .Very relevant .Can lead to healthy rewards .
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Benchmarking : Whom to learn from
 C. Generic : Compares with the best from all industry groupings .The key facet of benchmarking is practices and not just processes .This method helps companies to find and then innovatively implement the best corporate practices from all over.
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Generic benchmarking - Examples :
 An ammunitions manufacturer improved the finish on its shell cases from benchmarking a cosmetics lipstick producer.
 A hospital compared its scheduling with an Airline company.
 A financial services company learnt from a Hotel about client relationships .
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3. Get the Information
You can get a great deal of information from trade associations, magazines, journals and special databases. Customers , suppliers and libraries can also be a good source of inputs.The reliability and accuracy of the data is however very important in this regard.
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4. Analyze Gaps.
Too much information is as bad as too little. Gather and analyse only the information you need to make a direct comparison of performance.
Compare like with like .
Identify the performance gaps and adopt practices to close gaps .

FICCI
5. Set new standards .
 Set new standards for the performance and communicate the plan to all concerned .
 Provide the resources for meeting the new standards.
 Monitor the progress of the plan to be implemented effectively.
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Business Process Reengineering

Continuous improvement can only take an organization so far long the quality curve.
Then comes a time when a sharp upward jump into a new orbit is required . And this vertical transition demands a complete redesign of processes known as BPR
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BPR - Radical improvement

Reengineering is all about reinventing the entire organization - including its people, structures - rather than just processes.
Organizations looking for radical improvement need BPR.
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Why Reengineer ?

People are limited and simple.
The organizations had to design very simple tasks and jobs for them to do . This in turn led to complex organizational systems , because when the work that is being done is simple and fragmented we need a lot of overhead to tie it all together.
Result - high cost , poor quality and bad service.
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5 steps in Reengineering
 Develop business vision and process objectives
 Identify processes to be redesigned
 Understand and measure existing processes
 Identify information technology levels
 Design and build a prototype of the process
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BPR : Where to start.
Forget what your competitor is doing . Take , instead , a clean sheet of paper and design your process the way you would have done it had you started from scratch.
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BPR - Key Business Processes
 Starting afresh enables an organization to identify the Key Business Processes and ordinary business processes.
KBP’s offer maximum value propositions to the customer .Ordinary business processes offer little or no value propositions to customers.
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BPR - Key Business Processes
 The companies must reengineer their Key Business
Processes.
 Each KBP must be reengineered to deliver Speed ,
Service & Quality.
 This in turn will generate both revenues and profits.
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Strategy
Approach
Method
Process
Value added
Human
Resources
Finance
KAIZEN and BPR differences
KAIZEN BPR







Continuous small steps
Start with what you have
Change what you have and learn
Overall process
Eliminate non value added activities
Every one is involved in the system
Less funds required



Infrequent big leaps
Start with clean sheet
Forget and start afresh



Selective , one at a time
Minimise inputs , add value to outputs.
BPR project team

More funds required
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Competitive advantage
 Today the business operates like a corporate Olympics - a series of games played all over the world with international as well as domestic players .
 To know how to compete in a way that enhances rather than undercuts mutual cooperation is the need of the hour. The strategies of the organizations must be oriented towards achieving the highest standards of excellence rather than wiping out competition.
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Competitive Advantage
Nike and Reebok did just this. Both companies market high - tech , fashionable footwear for sports and fitness , yet neither of them actually makes shoes . They contract out the production of their shoes to footwear companies in Taiwan and South
Korea , who can produce the shoes at a lower cost than they are able to - Nike and
Reebok only design and market them - and both are the world leaders.
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Competitive advantage
Hewlett Packard achieved its biggest breakthrough with the launch of the HP Laser jet .
Before this , quality laser printers cost up to $
100,000 , and were only compatible with one company’s products.
HP bought complete components from other companies such as Canon and by combining their strengths were able to produce a quality printer for under $ 2000 that was compatible to any other computer. The rest is a history.
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Continuous improvement is only possible when the quality objectives can be measured and quantified.
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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 .
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Measures of Excellence
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
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Measures of Excellence
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
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Measures of Excellence
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
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Measures of Excellence
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.
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Measures of Excellence
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.
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FICCI
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TQM Models
 Your organizations are built on the tailor made model - the bosses doing the thinking and the workers wield the screwdrivers. For many people , the essence of management is getting ideas out of their boss’s head and passing it on to the hands of the workers.

TQM - Beyond models
 We must go beyond the tailor made models.
Business is now so complex and difficult , the environment is increasingly unpredictable and competitive . The continued existence of the business does not exist on models , but on day to day mobilization of every ounce of intelligence from all.

FICCI Performance Measurement -
U.S.A Quality Award .
 Customer satisfaction
 Quality Results
30 %
18 %
 Human Resource Utilization 15 %
 Quality assurance systems 14 %
 Leadership 10 %
 Information & analysis
 Strategic quality planning
7 %
6 %
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Performance Measurement -
Award by European foundation for Quality management
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This European framework shows the linkages and comparative ratings between the components . For your own self assessment different ratings might be appropriate.
LEADERSHIP
10 %
People
Management 9%
Policy &
Strategy 8 %
Resources 9%
PROCESSES
14 %
People
Satisfaction 9 %
Customer
Satisfaction 20 %
Impact on
Society : 6 %
BUSINESS
RESULTS
15 %
ENABLERS 50 %
RESULTS 50 %

FICCI
FICCI Simplified TQM Model
For Indian industries
 At present various models are existing on TQM . These models are highly complicated and far away from the realities of Indian industries. Therefore FICCI has evolved a simplified model of TQM which can be easily understood and implemented.
 This model lays emphasis on measurable results which alone can justify tremendous investment of time and resources.
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FICCI
FICCI TQM MODEL
Operational Management
Quality planning
Resource Management
Process measurement and control
Quality improvement
Training & motivation
Strategic quality planning
Policy deployment
Customer focus
Participative Mgt. Culture
TQM review & rewards
Process
Quality
Organisational structure
Customer requirement
Standard methods/procedures
Quality data
Tools & techniques
Quality System
Customer
Satisfaction
Business
Results
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Do you need organized Quality improvement?
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 It will be interesting to know whether you need an organised quality improvement at this stage. Please answer a set of 20 questions given on the next slides to analyse your present positions.
 Give yourself 1 Point for each positive answer and 0 point for a negative answer.

FICCI
Do you need organized Quality improvement?
CE
Business Results :
1. Are you getting a larger share of the potential market each year.
2. Has your organization’s productivity growth rate increased at more than the inflation rate over the past 3 years.
3. Have your profit increased more than the inflation rate over the past 3 years.

FICCI
Do you need organized Quality improvement?
CE
Competition :
4. Is your business results comparable with the best organizations in your size and industry.
5. Are you able to compete in costs among the supplier of the products of your class.
6. Do you have inventory level which compares well with the best companies in your size and industry.

FICCI
Do you need organized Quality improvement?
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Customers :
7. Do you fully understand your customer expectations concerning your products and services.
8. Does your customer feedback system show that you are meeting your customer’s 90 % expectations.

FICCI
Do you need organized Quality improvement?
Production :
9. Do you always meet production schedules.
10. Are your scrap and rework costs less than 1 % of your sales .
11. Are you using only parts that meet specifications.
12. Is less than 5 % of your direct work force engaged in inspecting the product.
13. Is the average availability of plant and machinery more than 90 %
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Do you need organized quality improvement?
Employees :
14. Are you able to attract and retain the best people.
15. Are you spending minimum 0.5 % to 1 % of your turnover on educating your employees.
16. Do people in your organization meet their commitments 90 % of the time.
17. Is the rate of absenteeism of staff less than 3 %.
18. Are the employees generally satisfied with the work environment and have high morals.
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Do you need organized Quality improvement?
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Purchase :
19. Is your receiving inspection rejecting less than
1 % of the parts that come into your company.
20. Is the incident of late delivery of purchased products less than 5 %

FICCI
Do you need organized Quality improvement?
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Score:
0-10
: Introduction of TQM is inescapable if you want to avoid loosing your market share or ending up making losses.
10-15
: You may have the product quality which just meets customer requirements , but you need to launch organised TQM activities to increase your market share and have competitive edge.

FICCI
Do you need organized Quality improvement?
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Score:
15-20
: Keep it up . You are doing well, but don’t be complacent. There is always a room for improvement to meet the challenges of new market environment.

FICCI Self check for TQM status.
1 . Do you have a written quality vision for the company.
2. Based on your quality vision ,have you formulated a strategic plan laying down methodology and long term quality goals or objectives.
3. Have you established any short term measurable goals with respect to quality of your products and services with time bound action plans.
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FICCI Self check for TQM status.
1. Is there an organization, such as, quality council or quality steering committee composed of senior management and does it meet at least once a month to review the status of quality and progress towards achievement of quality objectives
2. Do you have specific quality improvement projects identified, based on analysis of data after prioritization on the basis of expected business results and for achieving laid down quality targets.
3. Have you established cross functional teams for taking up quality improvement projects.
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FICCI
Self check for TQM status.
4. Have you allocated adequate resources in terms of manpower , finance and equipment support for effective functioning of quality improvement project teams.
5. Is the process of quality improvement project team reviewed by top management at least once a month.
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FICCI
Self check for TQM status.
1. Do you collect quality data from the customers and the processes regarding non conformities, rework and late deliveries .
2. Based customer feedback on shortcomings in quality , do you have a institutionalized system for corrective and preventive action.
3. Have you established a mechanism to measure the cost of poor quality covering all departments which have a bearing on quality of products or services .
4. Is the quality cost data analyzed to set targets for taking concrete actions toward quality improvement.
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Self check for TQM status.
1. Do you collect data about satisfaction of employees .
2. Have you got any effective system for redressal of personnel grievance of employees without involving unions.
3. As a matter of policy does the senior management anticipate that their subordinates will usually make sound decisions, and has the management empowered the subordinates for taking necessary action to solve quality problems and satisfy the customers.
4. Are the employees encouraged to bring out the weaknesses or shortcomings in their own area of operations which affect the quality of product or service.
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FICCI
Self check for TQM status.
5. Does the top management spend at least 5 % of their time on planning , review and facilitation of quality related activities.
6. In the case of quality problems or complaints, is it taken as a opportunity to uncover the root cause rather than fixing responsibility on an individual
7. Have you got an organized training programme on quality, covering all levels of employees.
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FICCI
Self check for TQM status.
8. Do you have a system of motivation of employees towards quality by recognition of a kind that is valued by the employees.
9. Is the performance of an employee towards achievement of quality goals taken into consideration for merit rating , compensation , promotion and financial rewards.
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Self check for TQM status.
1. Do you benchmark your important business processes with the best in class to assess the gap and scope for improvement.
2. Is your management alive to the social responsibilities and take effective measures to protect the environment and support community services.
3. Have you got any institutionalized system of quality audit of all departments and functional groups to assess the effectiveness of quality programmes for initiating corrective measures.
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When the going gets tough, the tough gets going.
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1. Develop long term vision or mission of the organization by top management after strategic consideration of markets and core competencies of the company.
2. Constitute Quality Council or steering Committee under the CEO to demonstrate strong commitment to quality mission.
3.Training of members of quality council on basic concepts of TQM and their impact on business.
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4. Organise quality audit of the organisation including customer perception survey, employee satisfaction survey to determine the present status of quality in the company.
5. Define measurable objectives which must be agreed by the top management as indicators of success for the mission.
6.
Identify critical processes and activities for attainment of objectives.
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7. Organise general quality awareness training at all levels, and specialised training on quality tools and techniques for persons who will be required to use them.
8. Based on the critical process already identified , develop departmental TQM plans with well defined sub-targets and responsibilities.
9. Establish a mechanism for inter-departmental coordination for determining agreed inputs and mutual support for attainment of departmental objectives.
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10. Develop monitoring system with milestones for periodic review by the management team.
11. Formally launch the first phase of the TQM programme for implementation.
12.After trial period of say 3 months , carry out organised audit of the programme by trained auditors who are not involved in the activities being audited.
13.Conduct review by the steering committee and apply corrective measures.

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14. Continue implementation effort and corrective measures for at least one year.
15. Evaluate impact of successful activities on business and analyse failures.
16. Expand areas of success and try other approaches for failed projects till major objectives of the first phase are achieved.
17. Benchmark critical functions and processes with best in class to determine gaps.
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18. Conduct extensive review of the first phase of TQM programme.
19. Learning from successes and failures draw up plan for next phase of TQM programme with stretch goals.
20. Institutionalise continuous improvement through
PDCA cycle.
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Quality - A total ideology.
The hallmarks of quality organizations are high return high performing processes , empowered , well paid and highly motivated personnel , good corporate citizenship , respect for the environment, happy and delighted customers , free from shoddy and unsafe products . Quality - a total ideology -creates the ideal win-win-win-win situation for all.
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Source of Information and advise
General H.LAL : General H.Lal is a mechanical Engineer . In 1971 he joined
Defence Quality Organization and held important appointments till in 1987 he reached the highest position of Director General, Defence Quality Assurance
Organisation.After retirement he was appointed as Director General , Bureau of
Indian Standards. In addition to standards he pioneered the Quality movement in
India. By his sustained efforts through TV , media and seminars he brought
Quality into national focus.
He is internationally recognised quality expert and his new book “ISO 9000 :
Guidelines for developing countries has recently been published by ISO and
UNCTAD/GATT. He is the chairman of MSD Council of BIS which formulates national standards of quality management . He is also the adviser to the
UNITED NATIONS DEVELOPMENT ORGANIZATION( UNIDO ).
He is at present the Director General , FICCI Quality Forum.
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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 .
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