Market Leadership through TQM

Market Leadership through TQM

Historically Indian industries developed management practices that suited the restrictive trade policies. Till early eighties, the domestic demand for manufactured goods exceeded supply. Economic policies then protected the home market, also offered export market in the former Soviet & Eastern block. Both markets posed limited competitive challenge. This reinforced the inward orientation of the national industries. Indian firms developed management ethos that mistook the rent seeking- through manipulation of regulations, cornering of licenses and exploitation of legal loop holes as main competitive weapon.

By mid eighties, the savings from a sizable middle class created favorable conditions for industrial investment and consumer boom. Indian consumer for the first time received competitive product offerings. Due to the inability of the low income groups to enter the consumer durable market, supply capacities of many industries soon exceeded the demand. The timing of the economic reforms also coincided with the period of sustained recession in the West and the fierce competition in the global markets.

Rated on global scales of quality, India’s performance has been abysmal: among the 41 countries whose products and services were ranked by the world competitiveness report 1994, conducted by the Geneva based World Economic Forum, India occupied a lowly 39^th place on the price to quality parameter. In customer orientation India was ranked 40^th and in time to market it was on 38^th place among 41 nations. It needs no soul searching to understand why on global bench markers on TQM practices the competitiveness report ranks India 38^th on a sample of 41.  

Indian labor productivity was rated at eighth of that in Japan and two thirds that in Thailand. Although availability of skilled labor in India was rated very high the worker motivation and flexibility which were crucial for productivity under the new manufacturing paradigms were rated extremely poor for India.

On the production lines of Motorola, the American telecommunications equipment manufacturer, engineers were laboring to attain 99.99997 percent defect free manufacturing. In India plants were struggling to reduce their rejection rates below five percent.

Economic reforms have remained an enigma to the Indian industry. This was evident from the apprehensions of a section of the industry to the much anticipated import tariff reduction proposed in the union budget. Industry’s hesitancy which was a major cause of the weak supply response is rooted in the fact that the competitive message of the economic reforms had not transcended to the firm level. The raison d’etre for reduced tariffs, as economists agree, was that under free competition they signal efficiency improvement.

Each new measures of economic reform bring global competition nearer home. A vital learning from Japan’s competitive success is their emphasis on adding value to products through manufacturing excellence.

Prior to World War 2 Japanese quality was poor; it was widely regarded as among the worst. Such products could be sold, but only at ridiculously low prices, and even then it was difficult to secure repeat sales.

Soon after World War 2, Japanese quality began to improve, and the pace of improvement had been remarkable. By the mid seventies this pace had brought the Japanese to a state of equality with the West. Japanese quality superiority was a major reason for a dramatic shift in share of market from the West to Japan.