© C P CHANDRASEKARAN CONSULTANT PROCESS QUALITY RESOURCES 2009 AUGUST

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY TQM 2007 . Critically examine, with examples, the following statements:

(a) Total quality is too important to be considered as subsidiary to profit." Do you agree? Why or Why not?

I agree with the statement.

The reasons are as follows:

1. Profit is the result of an economic activity which adds value to a stakeholder and is required for the sake of continuing that activity. It is necessary in any society and is essential to ensure the production of goods and services. However, making profit without considering expectations of customers or employees is not acceptable.

2. Profit can even be made by building potentially unsafe products but Total Quality requires that the efforts should be made to produce safe products. It is important that the company first addresses the safety of customers. Hence Total Quality is superior to the basic aim of making profit.

3. Total Quality means employee involvement and hearing their views. We want workers to contribute to all improvements. The aspect of employee involvement has no immediate impact on profits but no company believing in TQM can ignore it.

4. Total Quality will require us to innovate and make the products and processes friendly to environment so that the society is not affected. This aim cannot be subsidiary to profit as there are many who may make profit by polluting the environment.

5. Total Quality is not subsidiary to profit because Profit is figure which does not reflect the mental efforts which go into improving the processes. Kaizen teams, small group activities and cross functional teams improve the processes step by step and this is called continuous improvement.

(b) "Quality and cost are complimentary and not conflicting business objectives."

It is a myth that superior Quality is costly. This is not inline with TQM. TQM directs us to improve Quality and reduce costs. It happens as follows.

Customers want right products in time. We lose out on time due to poor planning and poor coordination with suppliers. TQM insists on advance planning and close working with suppliers. Due to the fact that cooperation exists between suppliers and organization, last minute emergency purchases and increased transport costs are avoided. Cost comes down Input Quality improves.

Once the materials are received in the factory, products are produced but with mistakes. Productivity goes down as the products need to be reworked. Cost of rework and rejection is incurred. In TQM, process control is implemented whereby capability of process is first ensured before starting the production and monitored. So, the defectives are few, in process Quality improves and cost comes down.

Products are shipped to customers but still there warranty failures leading to replacement costs. In TQM, reliability of the product gets due attention and warranty failures i.e. the field Quality improves and so the costs come down.

The seemingly contradictory objectives of superior quality and cost are complementary when companies adopt TQM principles. However, for those who do not adopt the TQM, the objectives remain contradictory.

2. Examine the role and responsibility of top management of an organisation in achieving centred focus on strategic planning.

The role of Top management in the strategic planning is the sole determining factor in success or failure of strategic planning.

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For example, Strategic Planning starts with evolving the vision and mission of the company. Top management people are to be the key players in this exercise. It is they who need to deliberate and show the directions for others by defining what would be the future vision and mission. Company’s strategy depends on this direction. For instance, the vision of Motorola is “become the trusted integrator of complex communication and information solutions for the public sector and business critical enterprise customers”Here it is observed that the Top Management of Motorola has laid out three specific directions for evolving strategy by the team of managers.

1. Trusted Integrator meaning the company should work to win the trust of customers2. Integrator of complex communications ….. meaning the company’s strategy should be to work

and grow in complex sectors rather than commercially competitive sectors.3. Public sector and business critical enterprises meaning that the company should work with

both Government and private sector.

Then the Top Management needs to carry out the SWOT analysis to understand in which direction the company can move considering the strengths and weaknesses. For example, the Tata Motors Top Management decided to go in for a small car like Nano after fully studying its own strengths and weaknesses whereas other car makers did not enter that field.

Then comes the strategic planning process which consists of

1. Inputs from stakeholders and economic scenario2. processing the inputs to define strategic objectives and a time plan for achieving them.

A typical strategic planning process is given below; Customer analysis: Top management discusses the changes in the preferences of customers and shifts in market segments.Competitor analysis: Top management analyses the effect of new competitor entry.Priorities: While the data may indicate certain changes which will happen, it is the Top Management’s decision to lay out the objectives to be achieved. For example, all companies know that air travel was becoming an aspiration of common man but not affordable, but it was Capt Gopinath’s objective which made the difference for Air Deccan.Capital allocation: Resources are scarce and there are many strategic objectives. New products are to be launched and new plants have to be opened but the resources need to be allocated carefully.

© C P CHANDRASEKARAN CONSULTANT PROCESS QUALITY RESOURCES 2009 AUGUST

Next, the deployment of the strategic objectives needs to be done. Top management needs to personally lead the efforts of communicating the objectives to every one in the organization. Different companies follow different methods and whatever may be the method of deployment (Policy deployment, MBO, Balanced score card) CEO and top mangers are in the fore front.Lastly, the action plans and their progress need to be reviewed by the top management at regular frequencies. The reviews lead to modification of plans and acceleration of some plans.

Thus, the Top management plays an important role in making the strategic plans and deploying them.

3. (a) Discuss the primary applications of control charts.

Control charts are used for monitoring the processes in an ongoing manner. They are based on statistical principles and so they are also called Statistical control charts. When the process is under statistical control and stable, the observations fall within control limits thought they vary. This variation is called variation due to chance causes and is inherent in the process.When the observation goes outside the control limit, it is called outlier and the variation is due to an assignable cause. This calls for action by the manager.Primarily, the following cases call for the application of control charts.

1. where we cannot inspect 100% like the sand or ore at receipt, control chart on density or impurity is helpful.

2. sometimes, 100% inspection is possible but the production line cannot stop and the components arrive every two hours, the control charts can monitor the quality from a sample of 5 or 10 taken every hour.

3. In some cases, the operator himself needs to correct the process if it drifts, and so the control charts are used by the operator to measure say hardness of the item and then the heating can be adjusted.

4. Customer needs to do an audit inspection in some factories. It is not possible for customer to be present always and so he can take a few samples and draw a control chart.

5. The suppliers are to be evaluated at the end of the month and month to month Defectives are to be plotted on a control chart and status conveyed to supplier.

6. Customers reject items and the trend is to be tracked over a few years for a model to know how much the company is spending on repairs and replacements. Control chart is helpful in this case if we plot no of replaced items/cost every month.

(b) What is benchmarking? Classify benchmarking based on the nature of firms against which benchmarking could be done.

Benchmarking is the process of an organisation learning the best practices of another organization by visiting and observing the processes and adapting them.

First is the internal benchmarking- one division of the company compares its process measures with another. For example, the electricity consumed per person in Mumbai office can be compared with other offices in the country.

Second is Inter Company benchmarking: Within the same group, companies benchmark with one another. For example, it is possible that productivity is compared between Refrigerator Division with other units of Voltas.

Third is the Industry Leader benchmarking: The company now searches for the leader in the industry and then compares certain metrics with the leader. For example, a company manufacturing soap would like to compare the packing process with Godrej who is the leader in India.

Lastly, Global benchmarking here will mean benchmarking with the world leader. The company reaches out to the entire world to seek the firms (irrespective of their size or product) to benchmark the processes of their choice. A few years back, Unilever carried out a search in the entire world to seek out best practices in Logistics and supply chain management.

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There are certain types of benchmarking which are complementary to the above. They are a) Process benchmarking: where the company goes in for benchmarking a process say recruitment but is not limited by industry. For example Siemens may benchmark with Mc Donald though they operate in different areas. b) Best practice benchmarking: Some companies are constantly in search of best practices through journals and seminar papers. They compile these practices and share them in their workplace.

4. (a) Why are teams important in TQM? How should teams be structured?

Teams are important because no individual has all competences and the ability to carry out improvements. Teams provide the synergy required to implement anything new and innovative. Teams create the buy-in required to push through implementation.

Teams should be structured around a theme and a purpose. For example, HR cost reduction team or a customer relationship team.Each team should have an identity. Like the team is called “Deccan Tigers” or “ Trouble shooters” and this is to have a sense of pride for the members.It should have a good leader. The leader must have the confidence of every one and not have Ego.The team should have 5-8 members. This size is large enough to work but small enough to be able to first hand contact.The team should have a place of meeting and a time which is decided in advance. It is important the team members meet frequently.The team must identify a specific role to each member say a person can be a scribe or a time keeper or a data specialist. With the role comes the feeling of contribution.It must have a time plan and a goal to complete the tasks and a manager should review the team activities often.Lastly, recognition should be given to all members of the team when the team reaches its goal.

(b) Describe some work practices that can promote learning in the context of TQM.

Learning is integral to TQM because it improves the ability of the person and it increases the involvement.There are many practices that can promote learning and some are as follows:

1. Workers sharing their experiences in shop floor: Every week, a worker is asked to share the best practices with others and this can be compiled later.

2. Cross learning among different units: Employees from one location say Chennai are asked to travel and visit another location say Delhi and are made to observe the practices. they can sum up these and explain the pints observed to others.

3. Internal seminars: Internal seminars can be organized for employees in Knowledge intensive activities like Design and accounts. People present papers and discuss improvements and modern practices in these seminars.

4. Competitions: Competitions on a particular problem like reduction of material scrap are conducted and all persons are encouraged to participate. Thus people learn something new every year.

5. Web site: Many companies have a portal for KM (Knowledge management) where employees log in and find the problems solved by others and learn. This is popular in IT industry.

5. What are the principal concepts of ISO 9000 QMS? How does the implementation of the system encourage transparency and accountability?

The principal concepts of ISO 9000 QMS are

1. Customer satisfaction: It is important to realize that the contracts or order conditions are secondary. What is the most important thing is to strive for achieving customer satisfaction.

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2. Process Approach: The company is not to be viewed as a set of departments doing their own tasks but as a system of inter related processes. These processes are to be managed and improved for achieving the Quality objectives.

3. PDCA: Plan-DO –Check-Act cycle is to be followed by every company. This means that the company should have a closed loop system of management wherein the plan- Do is followed by checking the results like customer satisfaction and taking action on the gaps observed.

4. Internal Audits: All the activities are subjected to internal audits by the company’s own employees and the results of these audits are presented to the management.

5. Management reviews: Management takes the responsibility to review the status of activities and the effectiveness of all training given frequently. This gives the necessary guidance to all the people in time.

6. Analysis of data: ISO QMS believes in all data getting analysed for prioritizing the actions and the analysis is made easier by employing statistical tools.

7. Corrective action: All problems and Non conformances in the system are taken up for timely corrective action. This involves not only correcting the instance but finding the root causes which can be addressed in a timely manner.

8. Preventive action: The potential problems and adverse trends of in process measures need to be taken up for preventive action so that the trend does not result in problems which could be costly. Preventive action calls for coordinated action among many departments of the company.