Rise and Fall of Quality Control Circles:

A Sri Lankan Case Study of a Porcelain Factory Draft: October 26, 2009

Presenter

Mangala Fonseka

University of Sri Jayewardenepure, Sri Lanka

1. Introduction With the proliferation of neo-liberal ideologies from the 1980s, less developed

countries such as Sri Lanka also began to embrace alternative management practices

that promote competitiveness and efficiency in their emerging neoliberal economies.

Our case study witnessed a rise and a fall in its Quality Control Circle (QCC)

movement during the period 1989-2009. Quality Control Circles are shop-floor level

groupings of workers who voluntarily work on micro projects aimed at enhancing

quality, productivity and cost improvements in their work stations. Before making any

particular theoretical choice, this paper (its first draft) is an attempt to illustrate how

and why a particular Japanese management practice became articulated with this

Western agenda of neo-liberalism and how this “rise and fall” took place in a

particular work organisation.

This paper is organized as follows: First, the macro (socio-cultural) environment of

Sri Lanka is given, followed by a narration of the Quality Control Circles (QCC)

Movement in Sri Lanka. Next, Quality Control Circles are described in some detail.

Finally, the story of the rise and fall of QCCs in the micro-setting of Dankotuwa

Porcelain Ltd. is narrated.

2. The Macro (Political-economic) Environment of Sri Lanka This section provides a very brief description of the political-economic changes that

took place in 1977 and the ensuing years when Sri Lanka moved into adopt some of

the neo-liberal ideas that were emerging at the time.

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Early years of the free enterprise regime, 1977-1984

The year 1977 marked an important land mark in the political -economic annals of Sri

Lanka as J R Jayewardene of United National Party (right-wing), having gained a

landslide victory at the general elections, in keeping with his election manifesto

declared a free enterprise economic policy for the country. During 1970-1977 the

coalition government in power, with Marxist and Communist factions in the fold and

in several key ministerial positions, was committed to a closed economic policy with

the goal of self sufficiency driven by import substitution and large scale

nationalization projects high up in the governance agenda. Though a shift towards self

sufficiency was evident the period was also one of scarcities, hardships and a sense of

pessimism which the United National Party exploited to the full in order to come to

power.

Thus, with the opening of the economy it was joining the neo-liberalist free enterprise

movement that was emerging in certain countries including Great Britain and even to

a lesser extent in India at that time. The period 1977 – 1982 was one of revelation

during which the country experienced significant changes in the socio-economic

sphere such as lifting of import restrictions, setting up of a foreign investor promotion

zone, promoting the involvement of the private sector in economic activities and

gradual relaxation of the hold of the government in trade and commerce. A spirit of

competition slowly began to appear with concepts viz. quality, effectiveness and

efficiency beginning to be buzz-words in business organizations, government offices

and institutes of training and higher learning. Young Sri Lankan professionals from

the areas of industrial engineering, business management, accounting and finance

were increasingly being exposed to new management concepts and techniques

through fellowship and other short term training programmes offered by friendly

countries such as Japan, Singapore and Malaysia. As a whole, there was aura of

activity, enthusiasm and hope in the air. And, in this environment J R Jayewardene

was re-elected convincingly for a second term of office, in 1982.

Further developments

In Sri Lanka, the period 1982-1989 witnessed a gradual but a concerted effort to move

into deeper and far-fetched aspects of free enterprise economic policy which

culminated with a large scale privatization programme encompassing industrial,

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plantation and service sector organizations. By 1989, President Ranasinghe

Premadasa of the United National Party was at the helm that accelerated the

privatisation programme with gusto; deliberating on and trying out various models,

particularly those tried out in Great Britain, in the process. It was widely publicized

through various media that privatization would entail a range of benefits viz. bringing

finances to the government’s coffers; transforming loss making enterprises efficient

and profitable ones and importation of advanced technology and new management

concepts and techniques into the country.

These local occurrences were in compliance with the events that were unfolding itself

in the macro environment. The far reaching socio-economic changes that were taking

place in the East European countries, Germany, China and India had a catalytic effect

on the regime of free trade and commerce that had already commenced to unfold itself

in the capitalist world. The winds of globalization were beginning to be felt all over

the world and there was no sparing of Sri Lanka. It too entered the main-stream of

globalization with the buzz-words competition and competitive edge, vision and

strategies, total quality management taking centre stage in the corporate and academic

arenas. Thus, for corporate managers of Sri Lanka, the period 1977-1989 and years

thereafter was one of finding answers as to how to face increasing levels of

competition, and how to be more effective, efficient and productive.

Thus, Sri Lanka was one of the first countries to enter the neo-liberalist stream,

moving away from a closed economic framework overnight. And, with this shift

many management concepts and practices originated in far-off countries, began to

appear in the country through diverse sources. QCC movement was one of them.

3. The Quality Control Circles (QCC) Movement in Sri Lanka*

The QCCs, with their origin in Japan, was at its height by 1980 when its diffusion to

Sri Lanka took place with the involvement of a local professional who was overseas

on a training assignment , the story of which is narrated below.

Early years

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We shift our focus again to 1980 Japan, where the main actor of this story WGS is

found listening attentively to a live presentation by a Quality Control Circle in a NEC

factory during an industry visit, in the course of a training programme that he

attended in Japan. WGS, an Industrial engineer (Chartered Engineer) cum

management accountant (Associate Member of the Chartered Institute of

Management Accountants, UK) by training, was in Japan on a short fellowship

programme offered by JASTECA (Japan and Sri Lanka Technical, Educational and

Cultural Association). JASTECA which is still active in Sri Lanka boasts of

providing such fellowship opportunities to selected professionals annally.

This presentation had a lasting effect on him and he quickly purchased a book on

QCCs written in the English language which were rare and expensive those days..

This was when QCCs were at the height of popularity. It stuck him that QCCs could

be tried out in his place of work, a tyre manufacturing corporation. Back home, he

immediately set off to starting a QCC in his place of work the news of which got into

the minutes of a steering committee. This reached the BF Goodrich of USA, with

whom the company had an industrial collaboration. B F Goodrich, noting that their

associate in Sri Lanka was interested in QCCs was quick to send big packet of

material which contained success and failure stories of QCC in various countries viz.

Germany, France, USA etc. WGS read them with much interest which gave him

useful insights about many aspects of QCCs.

Around this time he was also exposed to a workshop on Importation of Management

Techniques organized by a German Foundation Institute located in Sri Lanka. This

also gave him insights about the usability of QCCs in the Sri Lankan context. It stuck

him in particular that the employees in Sri Lanka with a relatively high level of

education were not being used to their full potential. Further, he visualized that there

was similarity between the socio-cultural value systems of Japan and Sri Lanka owing

to both being predominantly agrarian societies with a high degree of Buddhist

influence which he guessed could have contributed to the success of QCCs in Japan.

(Although there are ideological differences between the Mahayana tradition of Japan

and the Theravada tradition of Sri Lanka both are driven by a common set of basic

tenets or codes of behaviour). Further, he felt that the paternalistic attitude shown by

employers towards their employees in Japan is common to Sri Lanka as well which

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could also be an inducer to possible success of QCCs here. Thus, he noted the blend

of a culture free element and a culture-borne element in this management practice

which he thought would strengthen the case for planting it in Sri Lanka.

However, his attempts to commence a QCC at his work place turned out to be a

failure. Although he made initial attempts to educate workers and commence a QCC

he had to abandoned his project as his superiors and peers advised it stating that the

Chairman, being a person with an autocratic style of management would not support

it. WGS, not being a senior person in the organization did not pursue his plan.

However, WGS’ s enthusiasm to introduce QCCs was so high that he discussed his

views and experiences with two of his colleagues AAA and DT, both quality

enthusiasts that he had been in acquaintance for some time. AAA and WT were

senior level employees of the Bureau of Ceylon Standards (BCS) at the time. They

met in the small veranda of AAA’s residence in Colombo and the more they

itdiscussed more they were convinced of the appropriateness of QCCs in the Sri

Lankan environment. They felt that QCCs would help immensely towards finding

solutions to the quality and productivity problems that were affecting the Sri Lankan

private as well as state sectors alike.

The first QCC, Matsuyama Quarrier Equipment Circle of Nippon Telegraph and Telephone Company

of Japan was formed in May, 1962 as an initiative of Dr. Kaoru Ishikawa, an outcome of Japan’s

continuous search for indigenous innovations in quality and productivity, during the days of recovery

after the colossal destructions of World War II.

Some time later, AAA managed to sell the idea of QCCs to Dr RLW an elderly bio-

chemist of repute and Director, National Institute of Plantation Management (NIPM),

the national level institution for upgrading the managerial and technical skills of

plantation personnel. Thus, under the auspices of the NIPM a two day seminar on the

‘Concept of QC Circles’ was conducted at the Golf Club, Nuwara-Eliya in July, 1982.

Twenty three top managers (superintendents and manufacturing advisors) from tea

plantations of the Hatton Group, Janatha Estate Development Board took part in this

pilot programme. where. The seminar covered quality, productivity and problem

analysis aspects of QCC and WGS, AAA and WT took part as resource persons.

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This was followed by a 2 day seminar conducted by the Education and Training unit

of BCS (on behalf of NIPM) for the benefit of 18 employees (factory, office and field

level) of Kirkoswald Group, Bogawantalawa, in September, 1982. It was initiated by

the superintendent of Kirkoswald Group who was a participant in the first seminar.

The second seminar dealt exclusively with practical aspects and AAA served as the

sole resource person. Subsequently, AAA published his experiences an article titled

‘Quality Control Circles: New Tool for Quality and Productivity Improvement’ in the

Journal of the National Institute of Plantation Management, Volume 3, No. 2 of 1983.

Though the plantation sector takes the honour of pioneering the effort of initiating

QCCs in Sri Lanka it did not proceed beyond the initial enthusiasm sans the

experiments of DVS, the superintendent of Eskdale Estate, Kotapola and Waltrim

Group, Lindula. DVS initiated QCCs on a limited scale in his estate and went on to

present a paper on ‘Introducing QCCs on Tea Estates in Sri Lanka’ at the National

Convention of Quality Circles, 1990. In addition, limited use of some of the QCC

tools viz. problem analysis, fishbone diagram and Pareto analysis by some of the

participants had also been noted. NIPM too did not continue with the project though

Dr. RLW continued to be its Director for some more years thereafter.

The trio, WGS, AAA and DT continued to hold seminars, workshops and public talks

in and around Colombo on a regular basis, with a frequency about two to three

programmes per year. Notifications to these were publicized in papers. They were

conducted in both English and Sinhala media and about 50 participants were enrolled

for a programme. A small fee was levied (slightly different rates for individual

participants and institutional representatives) mainly to cover the hall charges and

expenses for the reading material and refreshments. There was a growing trend,

mainly from private sector institutions, to sponsor a few representatives, from

production, human resources, quality assurance and general management for these

QCC awareness programmes. These participants, back at their work places started

QCCs with varying levels of success. Numerous practical problems that participants

had were directed mainly to AAA who could respond from BCS the national level

institution dedicated to education, training and promotion of quality control in Sri

Lanka. This trend further intensified as we move towards the late eighties. In the

mean time, other individuals, including a few who had already been inspired by the

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local QCC activities were exposed to the Japanese QCCs through JASTECA. We

observe by 1989, a considerable following dedicated to the QCC movement among

private sector organizations in Sri Lanka.

Parallel to the above activities, another strand of development was taking place in

the public sector of Sri Lanka. In 1984, CG, Secretary to the Ministry of Public

Administration and Home Affairs, having been exposed to Work Improvement Teams

during an official visit to Singapore (WITs, a synonym for QCCs) experimented with

such teams in several divisional administrative offices. Initially, they were introduced

in Nugegoda, Homagama, Hanwella and Kolonnawa offices of the Colombo District

of the Western Province which were subsequently extended to a few other locations

in the same district. CG also authored a booklet titled ‘Quality Circles in the Public

Sector - Some experiences in the District Administration’ (a publication of the

Training and Development Division of the Ministry of Home Affairs, 1986) that

contained his experiences and guidelines for prospective implementers of QCCs. As

the Chief Executive Officer of the Public Administration arena in Sri Lanka, CG was

in the enviable position of promoting and implementing QCCs in a sector that

generally regards as lethargic, disorganized and sloppy.

Years of growth and maturity

The year 1989 turned out to be one of significant developments in the QCC

movement in Sri Lanka. During this year the QCC movement was further

institutionalized through the formation of the Quality Circles Association of Sri Lanka

(QCASL) whose objective, according to its constitution, was to promote the QCC

concept and practice nationally with prime focus on improving the quality of work

life of employees1 Improvements in quality and productivity was considered as

natural by-products of the process. The QCASL Council (consisting of a president,

two vice presidents, secretary, assistant secretary, treasurer, assistant treasurer, editor,

accounting officer and a committee of twenty members) met at the JASTECA

premises monthly and discussed its plans for the forthcoming periods. The regular

activities carried out by QCASL included: conduct of workshops, seminars and

public talks; publication of a quarterly newsletter, pamphlets and booklets;

1 In contrast the primary objective of QCCs in Japan was quality and productivity improvement.

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preparation of reading material; visits to organizations with a view to conduct

awareness and follow-up programmes; the membership drive and conduct of an

annual national convention. A detailed constitution was developed and was duly

registered as a non-profit making organization. Two types of membership were

offered, individual and institutional, at two different rates. QCASL had its own bank

account and receipts and payments accounts were prepared on a monthly and annual

basis. Annual General Meetings were also held with a ceremonial flavour either at its

registered office, the JASTECA premises or at a selected venue. QCASL membership

(individual and institutional) swelled to two hundred in less than a year since its

inception. The treasurer of QCASL turned out be a busy person as there was a regular

cash flow arising owing to various activities that took place every month. WGS was

unanimously as the President, QCASL which he continued to hold until 1996 when

the scope of QCASL was further widened through the setting up of the Sri Lanka

Association for the Advancement of Quality and Productivity (SLAAQP). AAA, DT

and close associates were appointed to various positions in the Council.

The first ever company level quality circle convention also took place in the year

1989. This was at Ruhunu Cement Works, Galle. The Production Engineer there with

a stint of recent Japanese QCC exposure was behind this success in this southern

location and when, a few months later, he was transferred to the far-off Puttlam

Cement Works (a different factory within the same company) he repeated this feat

within in less than one year. Many companies from different companies followed suit

thereafter. Officials of QCASL were often invited to serve in the selection panels of

company level conventions which were usually of a ceremonial nature. Their

participation naturally enhanced the status of the conventions and companies were

always bent towards extending these invitations.

It is relevant to record, though briefly, the pomp and pageantry of the National

Quality Circles Convention as is typical of similar events in this part of the world.

Having decided on the agenda, venue and the dates for the event the QCASL re-forms

into a number of sub-groups to look into the various operational aspects of the

convention. A prominent Sri Lankan, either from the political arena or otherwise,

and a celebrity in the area of QCCs usually grace the occasion as the Chief Guest

and the Guest of Honour respectively. The venue is always a plush location in

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Colombo such as the Bandaranaike International Conference Hall (BMICH), Sri

Lanka Foundation Institute (SLFI), Sasakawa Hall etc.

The ceremonial opening takes place in front of a representative gathering from

industry, service and public sectors and is usually held on a Friday evening. It consists

of speeches and one or two exhibition presentations (say, representing manufacturing

and service) by model QCCs. The entirety of the following day is devoted for

technical presentations on QCCs, case study presentations and competitions.

Companies nominate their best QCCs (generally through internal competitions) for

the convention and thus it turns out to be a battle for supremacy among the best

teams. Competitions are held for a number of categories such as manufacturing,

services, public sector etc. and parallel tracks are used owing to the large number of

contestants. Officials from QCASL and valued representatives from various sectors

serve as judges in the selection panels. Trophies, cash prices and certificates are

awarded to the winners. The awards presentation ceremony which takes place in

evening is the grand finale and is followed by applauses, hugs, kisses, handshakes,

photographs and tears of joy and of course tears of disappointment. Most of the QCC

teams linger around the venue until nightfall when they have no other option but to

leave for their towns and villages, a journey of many hours for some of them.

The QCC presentations are of a collective nature and all the members take part in

some way. Innovatively prepared transparencies (power point presentations were yet

to appear in Sri Lanka) are used and narrations take the form of poetry, dramas etc.

that exhibit the aesthetic skills of team members. They attempt to convince the

audience through exhibiting their products, production processes (often using

models), methods of analysis as well as cost and benefit statements. Most of the

presentations are well structured, organized and rehearsed and it is a treat to listen to

them. In addition to providing a forum for the QCCs to show their accomplishments

the national convention also gives them an opportunity to visit the metropolitan and

socialize and enjoy themselves.

Years of decline

We left at the point where Sri Lanka Association for the Advancement of Quality and

Productivity (SLAAPQ) was formed. The members of QCASL automatically became

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members of SLAAQP. Though the new constitution stated that the association would

operate on a wide scope the activities it carried out were confined mostly to QCCs.

Further, they were not as varied and colourful as those of the days of QCASL.

Nevertheless they carried out a regular programme of activities including the annual

National Quality Circle Convention. A few years later, ideological and personal

differences of the members emerged and SLAAPQ ceased to function in the year

2004. During the 2005-2008 there was no organization that was taking the lead in

the propagation of QCC activities. However, a new institution by the name of

National Productivity Association (NPA) has just been formed for which the

National Productivity Association and the Ministry of Labour and Man Power has

come together. Thus, unlike the QCASL and SLAAPQ which were purely voluntary

organizations there seems to be political patronage behind this new association and

its actual role is yet to be seen. Interestingly, WGS has been appointed as the national

level advisor in this new project.

There are organizations where QCCs are active in Sri Lanka, both in the private and

public sectors. However, the number of organizations with QCCs and details about

the extent to which they are practised are not known. Further, the forces that drive

their implementation in certain organizations is also not known..

Other quality related projects in Sri Lanka

Although the Government had been voicing the importance of quality and quality

management since early eighties there was no national level drive in this direction

until 2006 when under the Ministry of Industries a National Productivity Decade was

declared. WGS was appointed as the advisor to the minister and a secretariat

(National Productivity Secretariat, NPS) was established in Colombo for the purpose

whose task is to promote Quality, Productivity and Safety. At present, the NPS

functions under the Ministry of Labour. Though two policy guidelines for the

private and the state sectors were prepared, dynamic and large scale programmes

to propagate the ideas and practices (such as in Japan) were not in place. However,

radio-talks, TV programmes and publications of a low key nature were carried out. A

quality week was also declared. Among the activities that the NPS organized were

management programmes viz. TQM, Kaizen, 5S and QCCs for the benefit of school

children, and employees of the state sector including government departments and

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provincial and divisional secretariats. It also initiated the task of awarding the

National Productivity Award, an event conducted with much pomp and pageantry.

Parallel to these activities the National Institute of Business Management (NIBM), a

government based organization (set up in 1970 s to enhance managerial skills of

personnel particularly in the public sector) is conducting programmes on TQM, Total

Productive Maintenance (TPM), 5S Lean Manufacturing Production, JIT and Six

Sigma for the benefit of managers from both private and public sectors. NIBM with

the conception that QCCs can be introduced and sustained only within an

environment of TQM and not in isolation, which is contrary to the views of QCASL.

These programmes are well attended.

In the meantime, JASTECA actively pursues with activities associated with 5 S and

annually awards the national level 5 S award. In addition, Sri Lanka Standards

Institute (SLSI) is responsible for quality programmes aimed at granting ISO quality

standards certifications to organizations. The National Quality Award is presented by

the SLSI.

Thus, in Sri Lanka, an environment pervades in which the quality and productivity are

propagated mainly through concepts, ideas and practices ‘imported’ from Japan. The

curricula of Universities and other higher educational institutions also contain a high

dose of Japanese management accounting practices. 5 S is a concept much written

about and practised in many establishments in Sri Lanka. There seems to be a

growing interest in the concepts and practices such as TQM, lean production too.

There are establishments, though not many, where QCCs is in practice too.

Therefore, one sees clear evidence of a strong QCC movement in Sri Lanka which

weakened over time. On the other hand, there is a tendency for Japanese management

practices to continue in the country in various forms and intensities.

4. The QCCs in perspective This section is devoted to describe the concept, their implications on managing costs

and operating aspects of QCCs as they are practised in Sri Lanka.

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What they are and implications on managing costs

Monden and Sakurai, eds. (1989) define QCC as a small group that is voluntarily

organized within a series of companywide, participatory, quality control activities.

They give three objectives of organizing QCCs: To foster study groups in which

foremen/ and or workers study quality control together; to apply the results of their

studies to their work areas, thereby creating more effective management and an

improved work environment and \to expand and enrich personalities of foremen and

workers.

Wijesinha (1992), the originator of the QCC movement in Sri Lanka elaborates it

further as he defines a QCC as a ‘A group of four to ten workers at non-executive

level working in the same work unit or doing similar work, who have got together

voluntarily to use their skills, knowledge and experience in order to identify, analyze

and solve their own work related problems thereby enriching their work life and

realizing their full potential.’

‘... the focus of QCCs in Sri Lanka has to be the satisfaction and self-fulfilment that it

gives to the workers ... quality and productivity improvement have to be by-products.

Its the opposite to the Japanese experience where the quality and productivity

improvement is the prime focus,’ Sunil Wijesinha quipped.

The definitions imply that while QCCs contribute towards quality and productivity

improvement with implications on managing cost they also develop bright and

happy workplaces with meaningful work and also respect for humanity through

revealing the infinite possibilities and capabilities of all workers. It is evident that

quality and productivity improvements are aimed at securing bigger surpluses for the

company.

A quality improvement exercise will be meaningful only if the additional benefit

gained is greater than the additional cost that has to be incurred for the purpose. Like-

wise, productivity improvement focus upon gaining a higher output (unit/ value

wise) at the same input value or the same output at a lesser input value. Thus, quality

improvement and productivity improvement exercises necessarily contain a cost

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dimension that can take the form of either controlling or reducing costs. Controlling

costs relate to containing costs within pre-determined (estimated) levels while

reducing costs aim at improving on the pre-determined levels. Though QCCs are

associated mostly with projects that involve incremental changes they could have

implications on managing costs on both these fronts, cost control and cost reduction.

Further, these incremental savings when added up over long periods can result in

considerable savings for the company. .

QCCs play unique role as a medium or a facilitator for managing costs. The cost

savings come through micro-projects, mostly at shop floor (ground) level, which are

identified, isolated, analyzed and solved by workers who have an intimate knowledge

of the ‘substance’ they are dealing with. It s a bottom-up approach and a process of

empowering workers to take decisions related to their work, in consultation with the

appropriate level of management. These micro-projects will be associated with a

wide range of functional areas viz. production, administration, human resources,

stores, quality assurance, accounting and finance and internal audit etc. A sample of

QCCs projects are: reducing the high defect rate of items coming from a specific

machine; eliminating the waste of an expensive raw material; eliminating delays of an

inventory issue process; developing an accurate procedure to ascertain customer

balances and developing a quicker method of ascertaining inventories. These micro-

projects invariably involve a calculative aspect as the QCCs are required to convince

the management of the cost advantages associated with their solutions. They

accomplish this in their own indigenous way, using their own structures of presenting

and their terminology and language. Thus, QCCs play the role of little units of cost

management.

The voluntary mode of formation and conduct of QCCs enable operational level

problems and issues to be identified early (a sequel to on-line investigation that is

found in developed countries) and analyzed by those who have an in-depth knowledge

and a need to rectify the situation. In contexts of less developed countries where the

shop-floor processes are still not fully automated and other high-tech innovations are

not in place (e.g. enterprise resource planning systems) these micro-projects (QCCs)

could play an important role in organizational life.

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Another important feature associated with QCCs is the multi disciplinary approach

that QCC members are required to adopt in solving work related problems involving

products, raw material, machinery, men and technology ( methods). Thus, in the QCC

process they unknowingly venture into the peripheries of material and industrial

engineering, work-study methods, accounting and cost benefit analysis. There are

instances where they are compelled seek assistance of subject specialists in finding

solutions to their problems. In a country such as Sri Lanka, where most of the skilled

workers in establishments such DPL possess the General Certificate of Education-

Advanced Level in the science or commerce stream with very little of their potential

harnessed in their monotonous daily routine work, QCCs provide an avenue to re-

discover themselves and exhibit their capabilities.

The structure and operating mechanisms

A QCC is formed by workers at the shop floor level (or other functional area) with a

foremen or senior worker, generally as the circle leader. The members in a circle all

belong to a certain section or area of the work-place and thus are faced with a

common operational level problem. The number of members in a circle is

recommended to be under 10, preferably 4 to 7 as this provides an opportunity for all

members to communicate with each other and actively participate in circle activities.

It is customary that the QCC meets according pre-decided schedule either weekly or

fortnightly at a given venue and time. The Sri Lankan experience has been to meet

during the lunch break or after work-hours, for which no remuneration involved. The

meetings are conducted according to an agenda and minutes of the meetings are

maintained in a separate note pad.

Although at the beginning of a QCCshop-floor supervisors such as foremen or charge-

hand play the role of a circle leader, with the advance of circle activities the workers

gain more and more experience and take up the role of circle leaders in turn. Since an

organization usually consists of many units, divisions and departments many QCCs

working on different projects can be found.

QCCs select a problem which affect them in their daily routine work and attempt to

bring about a solution to it. It is customary that a QCC handles one problem at a time.

If there is a second problem that too needs urgent attention it can be attended to by

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another QCCset up for the purpose. The QCC members identify, isolate, analyze and

solve the problem by themselves on behalf of the company. Targets are set for a given

problem depending on its magnitude. QCC will communicate with other departments

and even experts from outside for necessary comments and advice. Once solutions to

a given problem are decided upon the QCC reports its findings to the management via

with a demonstration and a report. The management will carefully study the findings

and recommendations and take steps to implement the recommendations after further

consultation of relevant experts. QCC will be engaged in the monitoring process as

well and once the changes introduced get stabilized it will take up a new problem.

Thus, a QCC can have a long existence taking up different problems over time.

The method of problem solving originally prescribed for QCCs involves seven tools

viz. stratification, Pareto diagram, cause and effect diagram (Ishikawa diagram),

check sheet, histogram, scatter diagram and graphs and control charts. The use of

these seven tools is considered as the standardized method of solving quality and

productivity related problems.

QCCs which make significant contributions by way of quality and productivity

improvements and cost savings are rewarded by the company either on a case by case

basis or at the company’s QCC convention. Conventions are held in organizations

where there are many QCCs in active operation and the best QCCs are duly

recognized. The rewards are awarded collectively and not for any single individual.

The winners of company QCC conventions are nominated to take part in the National

Quality Control Circle Convention, an account of which has already been given.

Since QCCs were introduced in Japan in 1962 many changes have taken place in the

social, economic, cultural and technological spheres the world over. The practice of

QCCs too has undergone changes from its conventional-form as it was diffused and

located it different socio-cultural locations. However, they continue to play a useful

role in different locations as a useful as an quality, productivity and cost based

organizational practice.

5. The story of Dankotuwa Porcelain Ltd. (DPL)

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Our empirical setting is the Dankotuwa Porcelain Ltd. and the following section gives

in some detail the events associated with the rise and fall of QCCs, organized in

chronological order.

The village of Dankotuwa, 1980

We zoom into the rural village of Dankotuwa of the early 1980 s; slumbering

among vast expanses of coconut palms in the north-western province of Sri Lanka,

about 60 kilometres to the interior from its capital city, Colombo. Sri Lanka had just

emerged as a free enterprise economy from the clutches of a controlled economy to

which it was dedicated to in various hues and densities since gaining independence in

1948 after a 150 year old rule of the British in the island nation. Then, the residents

of Dankotuwa were predominantly making a livelihood out of cultivation of paddy,

coconut and other crops. They worked either on their own lands or those belonging to

wealthy peasantry. There were others who worked in medium to small scale tile and

fireworks manufacturing and coconut processing factories and a minority who daily

travelled to nearby towns viz. Negombo, Kurunegala and Katunayake, where they

were employed in state sector organizations as well as in the Coconut Research

Institute, Lunuwila. The residents were predominantly Sinhala Buddhists and had

been living in the area for generations. Harmony, togetherness and the longing to help

each other in times of need prevailed among the villagers as was typical of a village

of this nature in the country. The roots of these natural instinctive practices among

the rural folk in Sri Lanka could be traced to the collective agrarian practices observed

in the paddy fields and numerous rituals and ceremonial events organized around the

Buddhist temple of which they were an important component.

Dankotuwa Porcelain Ltd. the profile

DPL specializes in producing exclusive tableware to the world with a mission ‘To

enhance the life styles by redefining the art of fine dining in distinctive designs and

elegant shapes while providing adequate returns to all stakeholders.’ DPL products

are renowned for their very high degree of whiteness, translucency, resistance to

chipping and scratching as well as the varied and high quality of its designs and

decorations.

16

About 85% of Dankotuwa products are exported; mostly to Western and Eastern

Europe, USA and Japan, and of late to Spain, Germany India, Pakistan. The products

are sold under the company’s brand names (DANKOTUWA, ELAN and LAKLAIN),

co-branded with regular agents, wholesalers or retailers or sold under reputed brand

names. DPL produces for niche markets and hence the prices are higher when

compared with other mass scale producers. Local sales are carried out through its

own show-rooms and agents.

The workforce at DP amounting to 1,000 is highly skilled and experienced and about

60% of them come from the Dankotuwa area itself, while the others are resident

within a radius of about 15 kilo meters. The labour turnover has always been close to

zero. The average age of the workforce is 42 years and most of the workers who

joined at the inception of the company, now in their late forties and early fifties,

continue to serve the company.

DPL has a production capacity of 750,000 items per month and the machinery and

technical guidance has comes from Japan and Germany. Though a few of the raw

material are found within the country the rest is imported. Extensions of the plant and

new recruitments have taken place from time to time. Numerous accolades and

awards that DPL has won over the years in the areas of exports, productivity and

quality bear testimony to the immense contribution that it has rendered to the

economic development of the country.

DPL, the organizational structure and the manufacturing process

The relatively tall organization structure consists of ten layers viz. Chairman &

Board of Directors, CEO/ Managing Director, Chief Operating Officer, GM-Factory,

AGM-Finance, Senior Managers, Managers, Executives, Supervisors, Charge-hands

and workers. There are eight functional departments viz. factory, international

marketing, local sales, supplies and logistics, stores, finance, human resources and

administration and internal audit. The hub of the organization is the factory where

most of the QCCs are formed with the involvement of supervisors, charge-hands and

workers. QCC work in other departments this will be the responsibility of the clerks

and assistants with the support of their immediate supervisors.

17

Zooming into the factory, the manufacturing process of porcelain tableware is

complex with a gestation period of 12 – 15 days. It consists of the following

processes: raw material preparation, casting/ forming, green-ware loading, biscuit

firing, biscuit inspection, glazing, second firing, white-ware inspection, decoration,

decoration firing, packing and dispatching to overseas markets and local sales centres.

A multitude of activities take place in different departments which are handled by

executives, supervisors, charge-hands and workers. There are three types of

machinery: manual, semi-automatic and fully automatic. Most of the processes

require employees with high level of skills.

The birth of DPL

The year 1982 witnessed the germination of the idea to set up a second porcelain

factory in Sri Lanka, as a fully owned subsidiary of the Ceylon Ceramics Corporation

(CCC). CCC, a public corporation dedicated to produce and cell earthenware

ceramic items had been set up in 1960s when Ceylon (as Sri Lanka was referred to,

prior to it becoming a republic in 1972) was vigorously pursuing a policy of setting up

local industries, during yet another spell of controlled economy of the country. In

1974, Noritake Ltd., a subsidiary company of CCC was set up with 25% Japanese

ownership, to produce and sell porcelain tableware and decorative items. Noritake,

with Japanese involvement in technical and management spheres was considered by

CCC as a show-piece to be emulated. In a short span of time it became the cynosure

of the CCC and by 1983 the company desired to own another porcelain factory similar

to Noritake, but fully owned by the corporation.

This idea was pursued vigorously by the Chairman, CCC for which relevant

ministerial and the cabinet approval were obtained. However, there was a division of

opinion about the possible location for the factory. The Minister of Industries and

Scientific Affairs within whose purview CCC fell, and who was from the Kelaniya

(on the outskirts of the capital city) suggested his constituency as a suitable location

while Minister of Fisheries, another powerful senior minister favoured Dankotuwa

owing to his political affiliations there. The latter was of the view that availability of

a part-completed building on a 46 acre land that was originally meant for a sheet glass

company by the previous government could be used for the purpose. After much

deliberation Dankotuwa was finally selected as the location for the new porcelain

18

factory. It is interesting to note that other than for this reason neither Kelaniya nor

Dankotuwa offered any significant economies for the porcelain industry in relation to

factors of production.

The Dankotuwa Porcelain Company (DPL) was set up on January 6, 1984 as a fully

owned subsidiary of CCC and its Chairman was appointed Chairman of DPL as

well. The required funds for the purpose were raised through medium and long term

loans from state banks. Needless to say, that the said senior minister with

affiliations in the area had a hand in the recruitment of employees for the new

company. Thus, most of the employees were selected from in and around Dankotuwa.

Early years of DPL

Though CCC had high expectations of a vibrant porcelain company within a short

period of time its performance during the early years turned out to be dismal. During

1984 -1986, technical problems, learning issues of workers (some below the required

level), sub-standard products and difficulties in finding markets had an immense

strain on the organization. ‘Porcelain products has a long gestation period....to get

the product right and to find markets. So, loss making in the initial years is to be

expected,’ WGS, first Chairman after privatization said. The annual operating losses

of the company were further compounded by the excessive financial costs that the

company had to pay in view of borrowings from the state banks. By mid 1986 CCC

was compelled to seek Governmental assistance for redress.

The Government Treasury (GT) and the Employers Trust Fund Board (ETF) came to

the rescue of DPL, a debt ridden organization by then. They introduced a formula

through which they paid the dues to the state banks and took over joint ownership

(50% each) of the company. A representative from GT assumed duties as the

Chairman, DPL and the company was thus run till end of 1989. This was a time of

sustenance and slow recovery as the company sought to find answers to some of their

technical and marketing problems. A significant event that took place during this

period was the fruitful association that it started with International Chemical

Inc.(ICI), a Japanese consortium of ceramic and porcelain-ware producers and

sellers who joined DPL as trading partner with a view to support it in marketing the

19

products overseas. This new acquaintance made significant inroads into the company

as will be evident as the story unfolds itself.

DPL becomes a private company

The year 1989 dawned a new era in the DPL, which had by now, under the ownership

of ETF and GT managed to find solutions to some of their problems in the production

and marketing areas and establish stability. The employees too had developed a

satisfactory skill level that is required in an industry such as porcelain. There were

two trade unions in place, a pro-government based (United National Party) and an

opposition based (Sri Lanka Freedom Party), which were maintaining a good rapport

with each other as well as the management. The fact that most of the employees were

from the area and were related or were known to each other would have contributed to

this peaceful co-existence. There were no industrial disputes during the entire period

from 1984-1989.

DPL came under the island-wide privatization project of the late nineties. In

December, 1990 it became a privatized company with the International Ceramic Inc.

(ICI)., the trading partner of DPL, coming in as an investor. Thus, DPL became a

private company with an ownership formula of ETF: ICI: Employees = 45%: 45%:

10%. GT withdrew from holding a stake in the company giving rise to an ownership

structure commonly known as peoplization (in lieu of privatization) which act an

inducement to neutralize the likely resistance of employees towards privatization.

The ETF continued to hold a stake in the company and its Chairman was appointed as

the Chairman of DPL. The Chairman, ETF at this time was WGS, who became the

first Chairman of DPL owing to its shareholding in the company. The transition of

DPL from that of a public company to a private company was a smooth as DPL

looked forward to a new era of activity.

The Japanese involvement had many implications on the DPL. ICI was well

represented in the Board of Management owing to its high stake in the company and,

in addition, a number of technical and management experts were present as executives

20

in the Dankotuwa factory premises. Therefore, Japanese technical and managerial

know-how as well as international marketing relations of ICI were at the disposal of

DPL. Further, DPL employees of managerial, supervisory and worker categories

were sent to Japan for participation in training programmes on a regular basis.

The rise of QCCs at DPL The QCC movement had reached a high level of momentum by the year 1990 and

DPL had very good reasons to be a party to it: WGS, the Chairman’s involvement as

the Chairman, QCASL, the Japanese involvement in the factory, the paternalistic

attitude of the company towards its employees and perceived conducive socio-cultural

practices in the villager environment were supportive factors for a quick take off.

WGS lost no time in carrying out the initial spade-work by way of communicating the

concepts and the guidelines for practice. A seminar series was conducted by trainers

of QCASL for the benefit of different departments and the QCCs in DPL did take off

in style as by December, 1992 it had 65 active QCCs in the company. However, 58

of these circles were in the production units while two were in workshops and five in

supplies, human resources and administration and accounts and finance.

QCCs at DPL were into a variety of micro projects operating in a wide spectrum of

activities. Company conventions were conducted every year starting in 1991 where

the workers displayed the achievements and benefits they have brought to the

company in front of appreciative audiences of Members of the Board of Management,

management and colleagues.

Operationalization of QCCs

Those days it was a common sight that employees of a work station (division)

voluntarily forms itself into a group, such as Sandaresa (Moon-rays) the recently

formed QCC consisting of seven members of the Glazing division. There was a drive

for setting up QCCs at the time. Sandaresa decides to meet for half an hour during

the lunch break (which is 45 minutes) every Wednesday. The meeting place is a small

room adjacent to the Glazing division which is used as a room to prepare tea and

also keep a water filter. Although the QCCs are encouraged to make use of the

spacious room available in the Training Division most of them prefer to meet in a

21

homely environment in their respective divisions. As the siren goes for the lunch break

at 12.30 pm. Lalitha and Kumudu hurry to the Training Division where white

boards, flip charts, paper, marker pens, and dusters are kept. They bring the required

equipment, set them in the tea room and meet others at lunch. By 12.45 pm the QCC

are ready to commence the meeting. A charge-hand from the division is also in

attendance as a facilitator.

The White-ware inspection division whose task is to examine the quality of the glazed

items that come out of the kiln has informed the Glazing division that the iron

(black) spots percentage has risen to 4%, based on last week’s observations.

Indicators such as iron spots % is computed and displayed (among others) on a daily

basis, by the White-ware division. Sandaresa decides to give priority to this

problem though it is concurrently faced with another problem, i.e. appearance of

bubbles on the surface of the cast and formed items that are glazed. Glazing

involves immersing the cast and formed items in a liquid that gives it the white glossy

colour.

Kanthi, a senior worker from the Glazing division is unanimously selected as the

leader of this project which the QCC titled as ‘Minimizing the iron-spot percentage of

glazed items.’ Ramal, the only male member is assigned the task of keeping minutes

of the meetings. Having identified the problem the next task is to isolate the problem

identified. This involves gathering information to fix the problem to a more narrowly

focussed area, if this is possible. The team decides to study the iron spots percentage

more closely with a view to find out whether it is a general problem or is associated

with a given batch of raw material, shape of product, firing lot, etc. Kanthi speaks to

the person engaged in maintaining records in the White-ware division and requests

for more detailed information.

Since a lot cannot be achieved during one meeting Kanthi is compelled to scan

through the data provided by the White-ware division either after working hours in

the accompaniment of one or two members or by herself at her boarding place

situated near the factory. In addition, she prepares a simple checklist to collect

further information regarding the problem. At the second meeting subsequent to

presentation of minutes of the previous meeting she summarizes her findings and a

22

discussion ensues. She makes use of histograms and graphs to convince the audience.

As instructed at the seminars on QCCs Kanthi pays a special attention to get the

views of the silent members of the team. The second meeting concludes with the

contention that the appearance of iron spots is a general problem and has to be

looked into accordingly in an open and a holistic manner. She also assigns the task of

collecting more information about the ongoing process (using the checklist) to

Ranjani. In the meantime, Kanthi discusses their inference with their charge-hand

(who did not attend the second meeting) and the manager in charge of their division.

The third and fourth meetings are devoted to brainstorm about the possible causal

factors for their observation, i.e. excessive percentage of iron spots. This is the

problem analysis stage. The random ideas that emerge are written on the white board

by Nilanka. These are lively and noisy sessions where team members come out with

all types of ideas, some relevant and others irrelevant, which are initially listed and

then screened and then grouped into broad categories. Later these categories with

sub-causal reasons are transferred to a fish-bone diagram of which team members

are familiar. This is drawn on the flip chart because the fish-bone diagram has to be

referred to from time to time.

The team defines six causal factor categories for iron spot formation, viz. defects

related to the kiln, glazing, casting, forming, defects in raw material and other

reasons. Going into sub-causal reasons it has identified the following as giving rise

to defects related to the forming operation: Man based- not cleaning the clay-box

lids; holding plug-rolls with unclean hands and unclean nature of moulds; Method

based- non use of recommended accessories and relatively long runs of the wheel

without intermittent cleaning.

The fourth meeting is devoted to prioritizing the causal factors with the intention of

picking one or two major causal factors to focus on. The team has also invited the

quality assurance manager, a manager from the division and the charge-hand for this

meeting as they feel their guidance will be of value. After much discussion they

decide on defects related to forming as the major contributor to the excessive iron

spots.

23

Having guessed that ‘improvements in forming’ provides the solution to the problem

the QCC’s next task is to discuss it with the forming unit and get their consent for the

suggestions. This is an occasion for cross functional interaction. Thus, the QCC

invites the manager of the forming unit for the next QCC meeting. If the QCC decided

on defects related to glazing as the major contributor to excessive spots then finding

solutions will have been an internal matter. It is also relevant to note that prior to

going in for recommendations that involve other divisions a thorough scanning of

activities pertaining to one’s own division (in this case glazing) will be made.

In the current situation the forming unit is consulted and persuaded to try one or

more of the recommendations that emerge out of the analysis. In companies where

QCCs are actively pursued such inter-divisional interactions are quite common. This

is because a problem identified in one location may very well have been generated in

different location. However, the recognition to this effect by the staff of the other

location is important in this regard.

Over a few meetings that were conducted at the forming unit (at their convenience)

the recommendations of the QCC are discussed. The QCC finally persuades them to

try three of them. In the trial period that follows the QCC is in constant interaction

with the forming unit. Thus, the cleaning process is intensified with use of a special

liquid, more frequent use of gloves and with more frequent cleaning of the turning

wheel. The results are monitored by both the QCC and the forming unit using

scatter- graphs and other control charts.

The results prove positive with a resulting iron spot percentage of 1% of which the

QCC is satisfied because it is within the allowed limits. If it did not, QCC would have

moved into other possible contributory areas that it had identified. However, in the

present situation Sandaresa decides to take up another project. But before that the

story of ‘Minimizing the iron spot percentage’ has to be documented for which the

minutes that based on the minutes maintained is a useful source.

In addition, a cost benefit statement has to be presented to the management

regarding the just concluded productivity enhancement exercise. This will basically

involve two items: the additional monthly cost that has to be incurred with respect to

24

use of various accessories and the additional savings that will accrue to the company

due to the reduced defect rate. This will appear in a simple format prepared with the

help of a manager of the division as the calculative skills of the members of the QCC

are not good enough for the purpose. The, the monthly/ annual cost savings is the

bottom line of the cost benefit statement and this also forms part of the document

about the project.

Sandaresa continues to meet on Wednesdays at 12.45 pm but now the team leader is

Nilanka but Kanthi continues to be an active team member. Nilanka is of the view

that the current problem that they are looking into is a simple one that involves only

internal operations of the Glazing Department.

The golden years of QCC at DPL

The period 1992-1995 was the golden era of QCCs at DPL. During the years 1993,

1994 and 1995 there were no less than 75 active circles. Though most of these QCCs

(about 85%) were centring around the factory and some of the problems dealt with

were minor ones there was an aura that everyone wanted to be a partner in this

movement that was sweeping through the company. Company QCC conventions

were held on schedule and teams that were sent to the National Quality Convention

won many accolades. The national level winning teams also got the opportunity to

spend a short period (a week or so) in Japan, Bangkok and India where they were

exposed to the QCCs in these countries. And, QCCs from DPL were recognized as

model QCCs and, more than once, they had the rare honour of making presentations

at the ceremonial opening of the national convention. Visits by other companies to

study how QCCs operated at DPL was also a common sight. Thus, over a short period

DPL became the cynosure of those who were already involved and were going to be

involved in QCCs. During these years WGS took a keen interest in the propagation of

QCCs at DPL. He often interacted with the Managing Director and the senior

management and enquired into their requirements of the QCC project.

‘Those days the company was in good shape with comparatively low labour and

energy costs and we were very profitable. Workers were also happy with the best

wages in the area, free uniforms, free shoes, free school bags and books for children

etc. We introduced QCCs and they were a success. Through QCCs we enriched the

25

jobs of our workers. Most of the workforce was very young and some of them had the

Advanced Level qualification in the science stream with Physics and Chemistry as

subjects. QCCs enriched their jobs as they got the opportunity to analyze problems,

do experiments and calculations and thereby feel that they are important. Of course

there were contributions in terms of quality and productivity improvements and cost

savings, those followed,’ WGS remarked about the opening days of QCCs at DPL.

Just two years after commencing QCCs at DPL (in 1993), in a paper presented at a

Management Conference in Colombo WGS stated that ‘Initial problems associated

with commencing QCCs have been sorted out. There are 65 active QCCs in place,

however it is too early to predict about their long term sustainability.’

‘Those were happy days and we worked with a lot of commitment. We selected from

within the company as the best and then at the national convention held at the Sri

Lanka Foundation Institute in October 1993. We studied the problem of minimizing

glazing defects.....What we learnt through QCCs we practice even now, in our daily

lives both at the workplace and home. We learnt to be methodical which I try to

inculcate in our juniors, even now,’ Sriyani Premalatha of the glazing section, a

member of the winning team that toured Bangkok in 1993 reminisced.

DPL enters an era of prosperity

DPL soon entered an era of prosperity. The revenue grew as it found new markets in

USA and Europe where they could sell porcelain products at competitive prices when

compared with those of traditional European manufacturers. During this period costs

of production continued to be relatively low, particularly with respect to wages and

energy, and as a result the company recorded profits which grew further over time.

Another contributor to the growth of profits was the continuously depreciating SLR

against the foreign currencies of selling markets. Revaluation of foreign currencies

resulted in additional surpluses every month. The wages of the workforce were above

those of industry averages and in order to further enhance the productivity of the

workers the company introduced a bonus scheme. This provided the employees with

additional source of income. Thus, the company was gaining recognition as a good

paymaster and a respectable place to work at. Sahan Liyamage, a new recruit said,

‘Those days employment at DPL had been considered a qualification to receive good

26

marriage proposals. Our elder brothers and sisters say so. It was considered even a

better place to work at than Coconut Research Institute.’ In early 1994, it became a

quoted public company on the Colombo Stock Exchange which marked a significant

landmark in its history.

There was a change of Government in 1994 when a coalition of the left and centre

wing led by Ms. Chandrika Bandranaike Cumaratunge defeated the United National

Party that was in office for seventeen years. With the change of government WGS

was replaced by the new chairman of the ETF, DG. Although the coalition consisted

of parties of left orientation the new government continued with the free enterprise

economic policy and the functioning of DPL proceeded unchanged.

The Fall of QCCs at DPL

The beginnings, 1994-1998

The period 1994-1998 continued to be one of high surpluses with the highest profits

recorded in the years 1995 and 1996. Increasing demand from the existing markets

and exploring into new markets gave rise to high revenues with production keeping

pace. Though an increasing trend of cost of production was observed, still they were

relatively low when compared with the costs in the west as a reason of which the

porcelain factories in those countries were on a downward spiral that resulted in the

closure of most of them.

In order to drive production further the prevailing bonus scheme was adjusted from

time to time which gave the opportunity for an earning spree by workers. The bonus

received by employees rose to as high as nine months wages and they were an elated

lot. Their focus always was to exceed the monthly profit targets set for them. QCCs

were also active, mainly owing to high momentum that had been set initially, though

the overall enthusiasm seem to be on the decline. The current chairman DG, though

not an ardent promoter of QCCs was appreciative of the accomplishments of workers

through QCCs.

When asked about the decline of QCCs in the company an ex senior manager said, ‘...

No, though WGS was not there all the senior managers were still in the company, and

27

in any case he (WGS) did not take part in day today activities of the company. So, I

do not think there was any reason for QCC activities to decline.’

However, Senehelatha from the glazing division was of the view that the overall

interest declined after WGS’s departure as he was encouraging QCC work all the

time. ‘... I don’t remember clearly. But I think it would have been different if Sir

(WGS), continued to stay since he was pursuing the mangers to encourage the

supervisors ....’

‘As I came in as Managing Director in late 1995 we had QCCs. But, I won’t say that

there were very many. The findings of most of the QCCs were not very significant.

They were not in-depth work. I think where QCCs were active managers were driving

them. Therefore, in the absence of managerial and supervisory persuasion they were

not effective.... Leadership matters a lot here...Our people are very

individualistic...They will work together if there is a benefit is imminent...They will

not work during lunch break and after work hours if there is no clear benefit. That is

why when various competitions were announced that they would work...In Japan it is

quite different...Another problem that was noted was the difficulty encountered when

the recommendations of a QCC involved another unit or a department...Very

often,...though there are exceptions the other department will not accommodate the

suggestions...There were hardly any QCCs by the time I left in 1999,’ he continued.

The dark clouds gathering in the horizon

The period 1944-1999 also has to be recorded as one of complacency. The large

surpluses which were generated during this period were mostly distributed among

employees in the form of bonuses and other benefits. ‘Everyone was very happy and

there were no problems at all between workers and the management’ as per the

comments of WGS after he re-joined as Chairman.

In the mean time, adequate attention was not paid for projects such as expansion of

the factory, replacement of plant and equipment (which were more than 15 years old

by then) , use of high technology etc. By then, dark clouds had begun to gather in

the horizon which DPL did not notice.

28

The winds of globalization had by now formed itself into a formidable force and

enveloped many countries including Sri Lanka and its effects were felt in the environs

of DPL as well. In this emerging consumerist society with handsome remuneration

packages in hand employees of DPL were observed to adopt a life-style that was

different to the one they were used to. And this change came in like a thunderbolt. For

instance, the mode of travel, even for those who live near-by got elevated to motor-

bicycles, vans and cars. The many banks that were appearing in Dankotuwa town

were more than happy to transact with the workers at DPL as they were certain of the

repayments. So, the employees bonded themselves to vehicle, housing, electrical

appliances and all other types of loans. Some of the employees admitted their children

to international schools which were coming up in near-by areas which resulted in

heavy monthly expenses in the form of school fees, van fees, books, clothing and

other accessories.

It finally appeared as if the employees had to depend on the monthly bonus to pay the

loan instalments and interest expenses for the various luxuries that they were

enjoying. And with these developments, the employees were entrapped into a

complex web with loads of responsibilities to discharge every month. Thus,

employees had gradually entered a state of struggle which directed them to look for

cash-flows from DPL, more than ever.

By the end of 1999 ETF had disposed of its shares to the public and employees too

followed suit by selling their shares at a price of Rs. 35 per share (par value Rs. 10).

The Japanese, however, held on to their shares that gave rise to an ownership structure

of ICI: Local private investors = 47:53%. As ETF got rid of its stake at DPL

DG’s term of office as Chairman also ended He was replaced by WGS, the first

chairman and the pioneer of the QCC movement in Sri Lanka. However, he came

back to a very different DPL, now a fully private company with many other changes

in its socio-cultural fabric. For WGS, signs of turbulence and challenges ahead were

imminent.

DPL, 1999-2009

DPL entered a period of immense uncertainties and fluctuating fortunes during this

period when the impact of globalization was at its peak. After the boom in 1996

29

profits were gradually on a downward trend which ended up with a loss in 2001. This

was the first occasion that the company incurred a loss since 1986 when the

company was still in its early years. Thereafter, except for moderate profits during

2002, 2004 and 2007 the company incurred losses. In the meantime, the company

passed the However, in the year 2004 the company’s revenue passed the one billion

rupee mark.

These losses were mainly owing to the rising wages and energy bills which accounted

for 35% each of the direct costs. They were far above the comparative costs of new

entrants to the porcelain industry such as China, Bangladesh and some East

European countries. The total remuneration bill, in particular, was on the increase at

an alarming rate owing to the variable cost of living allowance that was pegged on to

the Colombo Consumers Cost of Living Index which stood at Rs. 1,600 per annum

per person by 2007. This was in addition to their normal wages and the bonus

earnings (a new scheme had replaced the earlier one based purely on monthly profit

targets). The energy bill too was exceedingly high as it did not change in tandem

with the declining world oil prices. A rights issue was planned for 2001 with the

objective of meeting the much need capital expenses. But, this did not materialize

owing to the Japanese opposition owing to recessionary conditions in Japan. Thus,

the Capital expenses that could not be delayed further had to be met out of bank loans

which entailed high financial costs. All these contributed to escalation of costs.

Further, the high costs of production could not be passed on to the customers as they

were offered porcelain products at competitive prices by the new entrants to the

industry. The rights issue that was planned for 2001 did not materialize as the

Japanese opposed it while the other, initiated in 2008, was a flop owing to the

industry unrest and all these accumulated to convert DPL to a highly geared company.

Owing to recessionary conditions at the turn of the century and the world-wide

phenomenon of 2008 a sluggish demand ensued for porcelain products during the

entire period. This compelled the company to take a new strategic direction

comprising greater geographical dispersion through specialized brands for different

markets; focus on difficult and new designs and introduction of new products

internationally. Locally, the focus was on popular designs with high margins,

decorative items and also customized products for corporate clients. Many initiatives

30

in this direction were taken such as introducing three brand names, designing a new

logo, securing the services of world-renowned designers, holding dealer conventions,

participation in world fairs etc.

The situation further aggravated owing to the appreciation of the SLR in the years

2007 and 2008 against major currencies. This was contrary to the company

experience hitherto, which resulted in further erosion of the company profits. The

second limited rights issue that was initiated in 2008 was also a flop owing to the

work-stoppage that was on at the time. This necessitated the continuation of meeting

financial charges on further borrowings and the result was further depletion of

liquidity of the company. Thus, DPL was in turmoil other than for brief periods

during the current decade.

In essence, DPL is presently in rough seas; struggling to survive and turn-around for

good. The year 2009 is turning round to be a very difficult one with a strong SLR,

uncertain international markets with the order-book running below 70%, local taxes

on diesel and the inability to raise capital.

DPL, strained relations with the workforce

The employees at DPL were considered to be a privileged lot owing to the benefits

that were enjoyed by them. Comparatively high wage levels, a lucrative bonus scheme

, subsidized meals, refreshments, uniforms, free school books, company sponsored

trips, picnics and family days placed them on a sound financial footing and gave them

social recognition. DPL was considered a model company to work at and at one stage

the dream of youth of Dankotuwa to join the company. ‘We were looked after very

well by the company; and in turn we did our very best for the company,’ Prasad a

worker who has been in the company for 14 years said. However, by the turn of the

century this positive mind-set of the workers changed as in view of the growing

troubled state of the company it was compelled to withdraw some of the benefits that

they were enjoying. This was further felt because their cash requirements were still

growing in a thriving consumerist society.

The workers pressurized for the continuation of the benefits as well as more benefits

through the two trade unions. In the meantime, a third ‘unofficial’ movement of

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workers that was promoted by a leftist political too was becoming visible. According

to the words of an ex senior manager ‘ ...a movement that was against pretence and

show-offs, waste and wrong doings. For example, if there was some irregularity

taking place anywhere news would come to them as their sympathizers were all over

the place. As things stood this movement could also connect up with the two formal

unions because they were also looking for ways and means of pressurizing the

management.’

‘It was one DPL family those days. I never thought that two unions representing two

opposing political politics could play such a constructive role for the company. There

was fair-play, always... For instance, I remember an instance when the secretary of

the trade union of the ruling party did not interfere in the disciplinary inquiry against

her husband who had been caught for pilferage...On another occasion a disciplinary

inquiry was held against an employee for using the official car of an executive to

take his child to the doctor on an official errand.....There was discipline in the

company,’ a former Internal Auditor of DPL explained.

The trust that prevailed between the workers and the management began diminish

over time as the management failed to meet the requests of the trade-unions. In the

year 2000, a collective agreement was signed for resolution of industry disputes

which was renewed each year. This was a new experience as previously any emerging

disputes were resolved through co-operation and consensus. Tension rose to a climax

when the management decided to freeze the variable cost of living allowance at Rs.

1,000 per annum per person (which had risen by then to Rs. 1,600) unilaterally. As a

result the workers struck work in mid 2008 (the first work-stoppage, since 1992). This

was finally settled after two months with the intervention of the Minister of Labour

and Manpower.

There were signs that the workers regretted the work stoppage. They were of the view

that they had no other alternative but to go for industrial action. ‘We love this

company. All our requests were innocent ones. Even during the work-stoppage we

kept essential services like the kiln running, and nobody did any damage to our

material, equipment or factory.’

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QCCs die away

Although it was far below the glory of the early nineties (1991-1995) QCCs continued

to be in existence until the end of the decade when it finally died away. However, a

few QCCs would operate on and off, merely as a responses to a manager or to send a

QCC for a convention. But these occasions were rare.

When enquired as to why he did not vigorously pursue reviving the QCCs on his

return in he said: ‘It was not the right time to talk about QCCs. I felt that people

were under pressure and their priorities were different with more focus now on the

family and children than the company. Further, most of them were there at the time

we had good circles here...There was nothing new to them. Now, they are middle

aged and with the multitude of personal duties and responsibilities it would not have

worked.. .and, however-much you try to explain about the global phenomena our

workers won’t be interested in it.’

‘About five years ago we had a QCC which looked into a persisting problem in the

Accounting Department. We had difficulty in ascertaining the exact amount the

debtors (customers) owed us. The QCC came up with a good solution which we

implemented.. ...QCCs are an extremely useful tool and I am sorry that we don’t have

them now....I have a notion that accomplishments of QCCs should be linked up with

a rewards scheme. If there was recognition attached to their results they would not

have died away...In addition in recent times, owing to more pressing problems the

management could not pursue them That was also a reason for their disappearance ...’

the Senior Manager - Management Accountant said.

Sudantha Viraj, an employee from the decoration division said, ‘We are in a state of

uncertainty. Even continuation of the factory seems to be uncertain. In certain

months our salaries are delayed....All our facilities and benefits have been cut. In this

state no one will be interested in QCCs.’

When the question ‘Don’t you think that the company needs QCCs all the more now,

because you are in trouble,’ was raised the responses of a few employees when

summarized was: ‘...That may be true, but we don’t have the interest to start

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innovative things like QCC with our present problems, when the company does not

treat us well.’

Sriyanee Senehelatha continued, ‘....I cannot actually say what happened. I cannot

remember now. . .But, the previous interest that we had was not there later. Some

members of our team were transferred to other divisions and some got married and

left the organization .... No, it will be difficult me to pay the same attention now. I

stay about six kilometres away. I have two school going children and my husband is

working in the Middle East. So, I have to look after home all by myself....’

‘There was no continuous drive for QCCs. At times we were asked to form QCCs and

then there was no encouragement in other times... However, if WGS continued in the

company things would have been different as he takes a personal interest,’ Ramya

Kumari a senior worker from the forming section said.

A former senior manager had a different view: ‘I think QCCs at DPL was mostly a

show off. When competitions were announced workers got together and set up

QCCs. Very few of those findings were implemented. After the competitions they

forget everything until next time. These were done mostly as a style. It is like opening

a soda bottle.... only for the moment’

Another worker confirmed, ‘...Yes, most of the things that were shown at

competitions and conventions were not put into action...’

The new generation of employees are not familiar with the concepts and tools of

QCCs. For instance, when a relatively young member was questioned as to what is

meant by a fish-bone diagram, or kaizen a satisfactory answer was not forthcoming.

Those who joined during the heyday of QCCs could only remember their senior

colleagues preparing for QCC conventions.

‘Now, there is a scheme of giving lectures and taking us to other organizations to

show what they do. But what is the use of that. We must start at least some of the

things they talk about..... I do not think these talks and demonstrations serve any

purpose.'

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Recent attempts to revive QCCs

When normalcy was restored after the work-stoppage WGS tried to revive quality

related work. He invited AAA to conduct a seminar on quality related topics including

TQM, 5S, Kaizen and QCCs. This was followed by a series of activities conducted

during the Quality Work in October, 2008 comprising a poster competition and

kaizen suggestion competition, and a low key QCC competition. There was also a

invited presentation by a QCC from Telecom where QCCs are very active at present.

A new recruit to the company who watched this presentation said enthusiastically,

‘Well, there was an excellent presentation by the team who came from Telecom...I

have never seen something like that before...Things like that will be very useful, It

was really good.’

Since October, 2008 DPL has initiated steps to re-introduce Kaizen and 5S and also

introduce TQM in a formal way under the direction of the Quality Assurance

Manager. Some initial work has already been taken though it is still at a basic level.

He says that QCCs will not be focussed on just yet, but will be introduced later on. In

order to provide a flavour of ‘moments of truth’ the company has commenced a

programme to enhance the writing and speaking skills of factions of employees such

the reception area, security point etc. The Kaizen suggestion scheme has also been re-

vitalized. Workers are invited to give their suggestions on a specified form which, on

receipt, are handed to a steering committee comprising representatives from various

disciplines. The suggestions accepted for implementation are recognized by issuing a

certificate and the best ones are awarded cash prizes at a special occasion such as the

Workers Day. Further, the Chairman has recently introduced a Kaizen scheme for the

technical staff who were to make their presentations in late August.

In addition, a manager in charge of special project has been appointed recently whose

task is to find ways and means of effecting cost savings. An area that has drawn his

attention is optimizing the stock levels of pieces manufactured for different orders, as

there is a tendency to produce in excess of the required numbers with the mentality of

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‘in case...’ A person with exposure to Japanese management practices, he says

‘QCCs should not be a priority at DPL now....... In Sri Lanka its has been mere show,

a fashion promoted which bring some outward results during times of competition. ..

.... Even in Japan they are not practised that much now and the new generation hardly

knows about them....Four Japanese that I met recently told me so. ........However,

Kaizen seems to be known better everywhere, not the name but is what is done under

the label.....What is required here is to work according to set objectives or goals and a

budget and work towards them....’

Calculative practices for survival at DPL

WGS is presently striving hard on many fronts to sail through the turbulent times.

There is a calculative culture in the organization with many practices in operation. He

keeps a close tab on the daily events which have cost and revenue implications. The

management information system at DPL is de-centralized with the information

generated by the different units on the shop-floor, by the Senior Manager -

Management Accounting and by the Financial Accountant. The Finance

Department at DPL is headed by the AGM-Finance with the Senior Manager-

Management Accounting, Financial Accountant, Assistant Accountant and clerks, in

that order, comprising the hierarchy. There are three main user levels of the

management information that is generated.

WGS keeps himself up-to-date through study of trends and selected critical factors

which he receives from the Accountant. The monthly Management Report prepared

by the Senior Manager (Management Accounting) is studied by the CEO, Chief

Operating Officer and the Senior Managers. This meeting often takes a long time as

monthly variances of relevant indicators and rectification measures are discussed in

detail. Pre-order costing and customer and product profitability analysis have been

introduced recently as it was noted that some of the orders of high value were not

profitable. These accounts are taken up for discussion with the relevant managers

from the production and marketing areas.

WGS in a contemplative mood

‘As things stand profits for the next two years are out of question. Our whole focus is

to survive through 2009 and 2010. We should earn enough to pay for our raw material

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and our workers ....We are cutting costs on all fronts. We wanted to introduce ABC in

the company, but we have given it up because now it is not a matter of deciding where

to allocate costs but to go all out cutting costs,’ WGS informed.

‘ I think the company was too generous when we were doing well...... and it backfired

on us when we are doing badly....We should have been cautious about the future. We

took a very complacent stand point during our good times. Though we were doing

well we did not have the best management practices with us. And when I sent a staff

member to study the management practices of some other organization he came back

and said: ....Yes they have excellent systems ...but why should we take the trouble for

all that when we earn money so very easily!......We pay dearly for all that now.’

When asked whether QCCs will give rise to boredom, once the novelty is gone,

WGS’s response was: ‘I wanted to introduce QCCs as a fun thing. That is how they

will work here, focussing on the process; an occasion for under-utilized workers to

express themselves and rise to their full potential......Once QCCs are in place and have

been there for some time then you have to introduce other things to sustain them.

Much has been discussed and written about this aspect in seminars and conferences..

The matter of boredom is there with anything. You have to find ways and means of

overcoming them.’

‘...In Japan, QCCs is a part of TQM. With the temperament of our employees it won’t

work here. I wanted to introduce QCCs first and later on move on to more advanced

stuff. ...On the contrary, in countries such as India and Pakistan you find more of

analytical stuff and very little participation.’

‘...As things turn for the better at DPL I am hopeful that we will be able to bring back

QCCs to DPL. ....’

The township Dankotuwa, 2009

We sign off with a brief note about Dankotuwa, 2009. It is not the sleepy village that

it used to be, twenty five years ago. It is now a township with commerce, trade and

banking thriving. It is bustling with people hurrying about, clutching on to their

mobile phones all the time. Take away and other food outlets have sprung up all over

the town and mobile vans have a roaring trade selling food items to those returning

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from work. Shops are full of garments, household items and electrical appliances of

the latest styles and designs. Supermarkets and branches of chain-stores have also

appeared in the town.

Though people in the area have much regard for DPL as a respectable place for

employment there are other establishments which are either equally or more lucrative

for workers. Yet another investment promotion zone has come up close to

Dankotuwa which is also a location where young people like to go for employment.

Another lucrative avenue of employment is going overseas, mostly to Italy and the

Middle East. The dependency upon agriculture is on the decline. Amidst all this still

the village fair takes place on Mondays which is attended mostly by the elder

generation which is marked by a drop in attendance at DPL on Mondays! Among all

these changes taking place in the geographical and socio-cultural fabric of the area,

DPL looms and large and survey the landscape with equanimity.

6. Concluding remarks Thus, we conclude our narration of the Rise and Fall of QCCs at Dankotuwa

Porcelain Ltd. When examining why DPL could not sustain the QCCs that it set up so

very enthusiastically in early nineties a few areas of enquiry that merit our attention

are listed below.

Firstly, there could be a socio-cultural reason which can be traced back to 2000 years ,

to the times of olden kingdoms. We have always been under the rule of kings and thus

obeying the orders of the leader is programmed in us. Though collective practices are

part of our rural village life they must be led by a leader. The concept of QCCs does

not carry the notion of a leader in that sense. A leader is appointed from among

members for the purpose of a given task. This could have been an implicit reason for

their discontinuance.

Secondly, the way QCCs were perceived by the locals is different from the way they

were used by the Japanese. For instance, QCCs in Japan is a means to an end,

specified by themes aimed at enhancing competitiveness and profits. But, in the

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Dankotuwa scenario use of QCCs was an end in itself. Thus, over time when workers

get used to the QCCs they reach a state when QCCs cannot motivate them further.

Thirdly, the sudden changes in the lifestyles of workers, accompanied by high

spending that they could not cope with, constrained their willingness to recommence

QCCs. Underlying this is the move of the management to provide them with

remuneration packages without giving due attention to managing finances in a

competitive environment. The Chairperson during the private sector was from the

public sector who had taken a benevolent attitude to workers without giving due

attention to likely future evatualities.

/

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