Company Cultural Influence

TQM

Company Cultural Influence

In the past two decades, many companies restructured and down-sized operations. Gone are the companies that could not compete successfully.

Among many of those that survived, there is a common ingredient. They recognized that they must change. This change involved the basic way they conducted their business.

Culture within many companies changed dramatically. For most companies, the new culture is still is still evolving.

Much of the change involved humanizing the work place. Workers during the 80s were much different from their predecessors. Unskilled labor accounts for only 30% of the work force down from 50% in the 1960s. Women in the work force increased from 16% in the 1940s to 42%. The employees with only an eighth grade education dropped to 6% from 30% in 1950. College graduates now comprise 40% of the work force. The workers are well informed and much more technically oriented. They are also less willing to work in a hierarchical, autocratic business setting. Because of this, many companies have modernized their style of management. Self - management is widely practiced rather than rigid supervision. A team approach involving interested parties is used to solve problems instead of taking the problems to management for solution. In many plants, workers are allowed to stop production lines to assure consistent quality. They also changed to that of a facilitator to help employees make improvements.

Other major changes have taken place in the work environment. There is now a customer centered mentality. It is widely recognized that meeting the needs of the customer is the only way to survive in the market place. Also there is awareness that better solutions are drafted by those involved in the process than management.

The last observation is that the only competitive strategy for a company is continuous improvement. Those believing in continuous improvement recognize that the journey will be long and hard and probably never end.

Quality became the dominant issue. Understanding quality has become a high priority.

There is a common theme to the thinking of the quality gurus of the 1980s, Deming, Juran, Crosby, Feigenbaum and others. They all express a strong agreement that quality must be a fundamental business strategy for accompany to survive. This new strategy was observed as the driver of an immense culture change in companies.  Real change in culture is often a painful experience. It forces all employees to adopt new roles. Long term employees may feel uncomfortable in new roles that often result in more participation and responsibility. For management the change is particularly difficult since it seemingly reduces power and authority. A different style of management is necessary involving everyone in decision making.

The process to assure quality product involves everyone in a company. Giant strides were made in creating widespread understanding of these concepts and that is the start of cultural changes in many companies.

Quality & Productivity

TQM

Quality & Productivity

There is a direct relationship between quality and productivity. Better quality increases the productivity of an organization. To succeed in the market place, whether it is domestic or international, a company must be efficient at making high quality products. Many companies found that it pays to invest effort during development to assure a quality product. This avoids the high cost of repairing products in the hands of customer. Unhappy customers may not buy products from that company again.

Productivity is a key factor in the competitive advantage, long enjoyed by the United States. For nearly 100 years, gains in productivity in the United States were more than any other country in the world. During the 1960s, Japan and Europe started having larger increases in productivity than the U.S. This has eroded the lead in productivity that the U.S once had.

In the past, productivity gains resulted from better technology. Lately there is an increasing awareness that up to 80% of the gains of technology may be possible just through better attention to business basics. Productivity, in simplistic terms, can be defined as the value of the output of a company divided by the value of the input to produce that output. A manufacturing company may use revenue as the value of the output. Cost may be used as the value of the input.

Quality, for simplicity can be defined as the cost of product failures divided by revenue. Failure could be within the plant and include such things as rework, scrap, re-inspection and sorting. Other failures occur after shipping to the customer and may be due to warranty claims, customer complaint handling and field service. Failure costs are typically high for any firm and a high priority in a quality improvement program.

The potential gain in productivity through quality improvements is very attractive. The direct relationship between quality and productivity has important implications in maintaining a strong competitive position for a company.

TQM - Need for Continuous Quality Improvement

TQM 

Need for Continuous Quality Improvement

Quality is a competitive advantage in the market place. This means a company must have the same or better quality than its competitors. The quality of competitors, however is constantly improving. This situation keeps a company improving quality continuously to remain a viable force in the market place.

Gaps in quality between competitors mean a substantial competitive advantage to the quality leader. Too great a gap could result in the quality follower losing market share or going out of business. Once a gap in quality is recognized by customers, it will take a long time for the quality follower to regain needed confidences in the market place.

Once customer perceptions about inferior quality are formed they are hard to change. The message is clear.Companies can no longer tolerate adverse gaps in product quality between their products and those of their competitors. To prevent this, viable program of continuous improvement must be developed and put in to practice.

An Introduction to Total Quality Management – Part 3

An Introduction to 

Total Quality Management – Part 3

Improve Quality ……. What happens?

It leads to a chain reaction

- Costs decrease because of less rework, fewer mistakes, fewer delays, snags, and better use of machine, time and materials.

- Productivity improves

- Capture the market with better quality and lower price

- Stay in business ----- Provide jobs and more jobs

Continual reduction in mistakes, continual improvement of quality means lower and lower costs. Better quality and lower price with a little ingenuity in marketing will create a market, keep company in business.

Quality leadership and business strategy:

Among the factors which determine marketability, quality is given the highest weight. Quality includes the usual parameters of fitness for use plus the important factor of quality reputation of the manufacturer.

Quality and Value:

What emerges is that for many consumers perception of the quality - price relationship is derived from unique interpretations of the term used.

Quality is interpreted as including factors which go beyond the inherent functional features of the product. Price is interpreted as relating to Value and is paid for those added factors along with the inherent functional features. Companies whose products are in the high quality category have the option of seeking their reward through either higher price or higher share of market (or both).Generally company’s strategy has been to opt for higher price. The price itself is perceived by many consumers as a quality rating. There appears to be a widespread belief that a higher priced product is also a higher quality product and some companies have exploited this belief as a part of their marketing and pricing strategy.

Generally the market is willing to pay premium prices for quality products. However if the premium price is not demanded the market responds by awarding so high an increase in market share that the supplier ends up with a return on investment greater than that resulting solely from premium pricing. Finally the market share affects the morale of the people involved. It is an established fact that members of a winning team fight their competitors where as members of a losing team fight with each other.

Also the form of a nation’s economy and its degree of affluence strongly influence the approach to its quality problems. In all economies a shortage of goods exceeds the supply; users take what they can get. In contrast, a buyers market results in a tightening of quality standards.

Seven Myths about Quality:

1. Quality and productivity are trade-offs.
2. Quality makes goods and services cost more.
3. Quality improvement applies only to production.
4. You can set up a quality system like you set up a machine.
5. Quality is just another program.
6. Quality is determined by the manufacturer.
7. A nation’s ability to produce quality products depends on its culture.

 We all know that some companies keep improving their quality and productivity so fast that they become industry leaders and remain so, while others seem to lag behind despite pumping in huge sums of money into their business and facilities but end up doing badly.

What they do differently? Experiences of a large number of companies suggest that the way the human resources is managed is the key of productivity and quality, and there by leadership in competition. In leading companies most of the work force is involved in continuous improvement in quality, productivity, production and costs. In lagging companies this effort is limited to a few managers and specialists. The total employee involvement is the outcome of an enlightened approach to the management of men. This implies a management capable of specifying multiple goals weighing them interrelating them and finding synergistic policies. World class leaders give employees skills, knowledge and power required to effect change and inspire their people to reach beyond basic customer requirements to provide the uncommon, unexpected dimensions of quality and service that delight rather than merely satisfy their customers.

Customer Perception:

• 68% of the customers who stop doing business with a company do so because of poor service.
• Customers are five times more likely to leave for poor service than inferior product quality or high cost.
• The average unhappy customer tells nine other people about the experience. 13% tell twenty or more people.

• Losing a customer costs as much as five times the annual value of that customer’s account.

• The average happy customer tells five other people and many of these become customers of the business that was praised.

• 50-70% of customers who complain and have their problem resolved, continue doing business with the company; if the complaint is resolved quickly, 90% of the unhappy customers can be saved.

 

An Introduction to Total Quality Management Part 2

An Introduction to 

Total Quality Management - Part 2

What is Quality?

As defined by ISO 8402 (BS 4778) “Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs”.

The Quality of a product is the Loss imparted by the product to the society from the time the product is shipped…Taguchi

Quality is conformance to agreed and fully understood requirements…..Phil Chrosby

Juran defines Quality as Fitness for purpose/use.

Quality Vocabulary:

Quality:

The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

In a contractual environment, needs are specified, where as in other environments, implied needs should be identified and defined.

In many instances, needs can change with time. This implies revision of specifications.

Needs are usually translated into features and characteristics with specified criteria. Needs may include aspects of usability, safety, availability, maintainability, economics and environment.

The term quality is not used to express a degree of excellence in a comparative sense nor is it used in a qualitative sense for technical evaluations. In these cases a qualifying objective shall be used.

1. “Relative Quality” where products or services are ranked on a relative basis in the “Degree of Excellence” or “Comparative Sense”
2. “Quality Level” and Quality Measure” where precise technical evaluations are carried out in a Quantitative sense.

Grade:

An indicator of category or rank related to features or characteristics that cover different sets of needs for products or services intended for the same functional use.

-        Grade reflects a planned, difference in requirements or, if not planned, a recognized difference.

-        A high grade article can be inadequate as far as satisfying need and vice-versa.

 E.g. a luxurious hotel with poor service or a small guest house with excellent service.

Why is Quality Important?

1. Quality is not negotiable.
2. Quality is pervasive.
3. Quality increases productivity
4. Quality leads to better performance in the market place
5. Quality means improved business performance.
6. The cost of non-quality is high.
7. Quality is a way of life.

Quality and Market Share:

Once a product is actively sold in the market place it attains some share of market i.e.; a proportion of all sales by all suppliers of that type of product. The size of the attained market share is of great economic importance. Greater market share means higher sales volume. In turn higher sales volume results in disproportionately higher return on investment due to the nature of the break even chart. For example, an increase of 20% in sales creates an increase of 50% in profit, since no increase in “constant costs” is involved. There is little risk involved in such an increase since the technology, production facilities, market, etc; are already in existence and of proved effectivemness.In contrast, to increase sales by creating a new product line involves much investment in market research, technology facilities and personnel. In this way a $ of sales gained through quality superiority is commonly much more valuable than $ of sales gained through investment in a new venture.

An Introduction to Total Quality Management Part 1

An Introduction to 

Total Quality Management( TQM)

Part 1

The world has become a global village due to the pace of economic changes and the developments in science and technology.

The turbulent new world is being shaped by the forces of globalization, liberalization, marketisation, and competition. The potential benefits of competition in the market place results in an incentive for improvement.

If human ingenuity and creativity can not be stretched far enough we might end up as victims of this change with widespread misery in terms of high costs,obsolescence,business failures, increased unemployment, destructive and suicidal conflicts and clouding of freedom of action,entrepreneurship,innovativeness,and the basic human values of individual dignity and mutual respect.

Effect of changes:

While global changes are going to affect every aspect of human life the central institution of society which is going to bear the brunt is business. The most critical amongst them is the challenge of survival in the face of changing technologies and quantum leap in the needs and demands of people in various parts of the world for new products and services.

TQM- Need of the day:

Related to this concern of business will be the concerns for cost effectiveness, quality performance leadership and customer satisfaction. To survive and grow a perceptive business, leadership today has to realize that there are no permanent rankings in the world of business. It takes double the efforts to stay at the top if an organization has reached the peak.

In the world of business, competition is what makes quality important. Today business competition is conducted on global scale. No market, product or service is impervious to competition.

BUSINESS GOALS

1. PROFITABILITY
2. GROWTH
3. PERPETUITY
4. IMAGE

PROFIT=PRICE – COST

COST SUBTRACTION PRINCIPLE

1. COST+PROFIT=PRICE

(STATUS QUO)

2. PRICE – COST=PROFIT

(SUBTRACTION PRINCIPLE 1)

3. PRICE – PROFIT=COST

            (SUBTRACTION PRINCIPLE 2)

TARGET IS - LOWEST COST

CONSTRIANTS ARE - PRICE / QUALITY / PROFIT

Environment and Safety Management Systems (ISO 14001 & OHSAS 18001)

Environment and Safety Management Systems (ISO 14001 & OHSAS 18001)

Environmental Management System

ISO (International Organization for Standardization) is a worldwide federation of national standard bodies, comprising of 127 countries. The object of ISO is to promote the development of standardization and related activities in the world with a view to facilitate international exchange of goods and services, and to develop cooperation in the spheres of intellectual, Scientific, technological and economic activity.

ISO 14001: 2004 is a series of international, voluntary environmental standards and addresses the following aspects of environmental management:

Environmental Management Systems, Environmental Auditing & Related Investigations,

Environmental labels and Declarations, Environmental performance analysis

Life cycle assessment and Terms & Definitions

The ISO series of standard effectively address the needs of the organization worldwide by providing a common framework for managing environmental issues and promise to effect a broadly based improvement in Environmental management, which in turn can facilitate trade & improve environmental performance worldwide.

The standards are being developed with the following key principles like better environmental management applicable in all nations and to promote the broad interest of the public & the users, cost effective, non - prescriptive, flexible, to be suitable for internal/external verification, scientifically based, practical, useful & usable.

The main environmental issues are Global warming, Ozone Depletion, Habitat Loss, and Desertification & Acid Rain.

Factors driving environmental management system are International protocols, Globalization of business, Scientific knowledge, Media events, Pressure Group, Supplier pressure and access to information.

Business benefits of Environmental Management System are Risk Management, Competitive advantage, Cost saving, improved relationship with community & regulators and financial institutions

Occupational Health & Safety Management System

Health & Safety at work is an issue affecting the business today. The past few years have witnessed a phenomenal change in corporate response to environmental, Occupational, Health & Safety issues on account of increased pressure and expectations of all interested parties, - employers, employees, customers, suppliers, insurers. Shareholders, the community, contractors & regulatory agencies etc.

A systematic approach towards occupational health & safety system is the sound solution in order to safeguard the business & its stakeholders with changing legislation.

OHSAS 18001: 1999 is a recognizable OH&S Management System standard comprising of a set of voluntary specifications for improving & harmonizing OH&S practices.

It is a certifiable specification appropriate for all kinds of organizations regardless of the nature, size, activities or locations.

A consortium of leading certified bodies developed OHSAS 18001 which enables the organization to eliminate or minimize OH&S risks associated with their activities; to proactively comply with statutory obligations; to improve OH&S performance continually; and to demonstrate such conformance to others.

An OH&S management system as per OHSAS 18001 enables alignment or seamless integration with other management system like ISO 9001, ISO 14001 & other compatible management system.