Amended MG 622 Project
-
Upload
ugochukwu-nnorom -
Category
Documents
-
view
215 -
download
0
Transcript of Amended MG 622 Project
-
8/2/2019 Amended MG 622 Project
1/25
Title:
A Quality Managers Report of the implementation of a new Quality Program
In Philips: A Critical Evaluation of TQM Implementation
Joachin .U. Nnorom: s20101013
MG 622: Quality and Environmental Management
9th
January,2011 Dr. Pieris Chourides
http://www.euc.ac.cy/ -
8/2/2019 Amended MG 622 Project
2/25
Executive Summary
Quality improvement efforts in the 1980s and continuing into 1990s throughout the world have
been fueled by a host of good ideas to make quality integral to the business decision making
process. On technical front, SPC , JIT, DOE, Taguchi Methods, QFD, and TPM philosophies and
methodologies have been attempted. On the system front, ISO 9000 has been interpreted as a
must. On the human front, Total Employment Involvement(TEI), Participative Management, and
quality circles have attracted the attention of many companies. On the motivational front, many
quality improvement awards have be instituted.
In spite of widespread interest and massive investment, there are reports of only isolated
successes. By and large, quality is not yet integral to all businesses or all activities in any given
business. The progress is only in terms of how many people are trained rather than how many
inherent quality problems have been recognized and resolved.
Within the context of TQM Practices, organizational visions, missions, and Strategic objectiveswill often determine which method of quality management practice to implement within
organization, and also how effective that strategy will be. As illustrated in this report, Philips
tends to take a more thorough and detailed approach to quality management as seen in the six
process that they employ.
The total quality management(TQM) concept has the potential to integrate all the improvement
philosophies proposed thus so far. However, TQM can end-up being diffused like all other
improvement philosophies if the TQM concept is not well executed. The execution difficulties
arise from the fact that the TQM is a soft science and as such as invites philosophical discussion.
The element of TQM are rather straight forward, but the execution is quite difficult. Afterfinishing initial conceptual journey, many companies falsely believe that TQM is simply a matter
of applying common sense.
The purpose of this report is to illustrate the principles behind TQM and how its introduction and
successful implementation in Philips Group will achieve the desired improvement in already
existing quality management Assurance policy. Although TQM may be simple but their
execution is not. TQM implementation options must be aware of the execution options. Some
options are very effective whereas others sputter after initial eager blips. Without the awareness
and analysis of critical implementation issues, it is not possible to make a better choice.
This report will also examine critically the benefits as well as difficulties/ obstacles that may be
arise from the implementation of TQM. The report further analyzes the factors to be considered
for a successful implementation of TQM.
-
8/2/2019 Amended MG 622 Project
3/25
Introduction
In 1997, When bestowed the Prestigious European Quality Award For Business Excellence,
Philips leaders paid tribute to the benefits of TQM in defining the goals and ensuring that
strategic objectives were met. Philips employ the five key principles of TQM within the
organizational mission. Specifically, Management Commitment, People Empowerment,
Continuous Improvement, fact-based decision-making, and Customer focus are employed to
ensure standard, consistent, and data-driven, measurable results in the organization.. For
Philips, TQM is proved to be an integral component of developing strategies to meet changing
industry conditions, satisfy customers needs, and compete effectively( Pistorio,1997). Philips
decided to develop a plan that would take into consideration the need, strength and valuable
resources that the company had at its disposal. Specifically, the organization felt that by
establishing the quality goals; effectively identifying customers; discovering customer needs;
developing product features; developing process features, and transfer to operations, the
organization could achieve its goals of a continuous process improvement and quality operation.
These six component of process improvement are the foundation in which the Philips TQM
strategy is based upon. Accordingly, it can be easily ascertained that data, customers, and
processes are paramount to the organizational strategy and quality is the focus of the
organization as a whole.(Pistrio,1997).
Why TQM?
TQM is a management philosophy that seeks to integrate all organizational functions (marketing,
finance, design, engineering, and production, customer service, etc.) to focus on meeting
customer needs and organizational objectives( Hill,1991). TQM views an organization as a
collection of processes. It maintains that organizations must strive to continuously improve these
processes by incorporating the knowledge and experiences of workers. The simple objective of
TQM is "Do the right things, right the first time, every time". TQM is infinitely variable and
adaptable. Although originally applied to manufacturing operations, and for a number of years
only used in that area, TQM is now becoming recognized as a generic management tool, just as
applicable in service and public sector organizations. There are a number of evolutionary strands,
with different sectors creating their own versions from the common ancestor. TQM is the
foundation for activities, which include:
Commitment by senior management and all employees Meeting customer requirements Reducing development cycle times Just In Time/Demand Flow Manufacturing Improvement teams Reducing product and service costs Systems to facilitate improvement Line Management ownership
-
8/2/2019 Amended MG 622 Project
4/25
Employee involvement and empowerment Recognition and celebration Challenging quantified goals and benchmarking Focus on processes / improvement plans Specific incorporation in strategic planning
The Oakland Model of Total Quality Management
This shows that TQM must be practiced in all activities, by all personnel, in Manufacturing,
Marketing, Engineering, R&D, Sales, Purchasing, HR, etc.
Objective of TQM:
The classic observation of quality is the position of a product attribute on a good-bad scale.
From the TQM standpoint, quality is the whole thing that an organization(Philips) does in the
eyes of its customers, which will give confidence to them to look upon that organization(Philips)
as one of the pre-eminent in its meticulous field of operation.
-
8/2/2019 Amended MG 622 Project
5/25
The Four Pillars of TQM
Principles of TQM
The key principles of TQM are as following:
Management Commitment
Plan (drive, direct) Do (deploy, support, participate) Check (review) Act (recognize, communicate, revise)
Employee Empowerment
Training Suggestion scheme Measurement and recognition Excellence teams
-
8/2/2019 Amended MG 622 Project
6/25
Fact Based Decision Making
SPC (statistical process control) DOE, FMEA The 7 statistical tools TOPS (FORD 8D - Team Oriented Problem Solving)
Continuous Improvement
Systematic measurement and focus on CONQ Excellence teams Cross-functional process management Attain, maintain, improve standards
Customer Focus
Supplier partnership Service relationship with internal customers Never compromise quality Customer driven standards
The Concept of Continuous Improvement by TQM
TQM is mainly concerned with continuous improvement in all work, from high level strategic
planning and decision-making, to detailed execution of work elements on the shop floor. It stems
from the belief that mistakes can be avoided and defects can be prevented. It leads tocontinuously improving results, in all aspects of work, as a result of continuously improving
capabilities, people, processes, technology and machine capabilities.
Continuous improvement must deal not only with improving results, but more importantly with
improving capabilities to produce better results in the future. The five major areas of focus for
capability improvement are demand generation, supply generation, technology, operations and
people capability.
-
8/2/2019 Amended MG 622 Project
7/25
A Framework for Improving Service Quality
A central principle of TQM is that mistakes may be made by people, but most of them are
caused, or at least permitted, by faulty systems and processes. This means that the root cause of
such mistakes can be identified and eliminated, and repetition can be prevented by changing the
process.
There are three major mechanisms of prevention:
Preventing mistakes (defects) from occurring (Mistake - proofing or Poka-Yoke). Where mistakes can't be absolutely prevented, detecting them early to prevent them
being passed down the value added chain (Inspection at source or by the next
operation).
Where mistakes recur, stopping production until the process can be corrected, toprevent the production of more defects. (Stop in time).
DEVELOP SERVICE QUALITY STRATEGY
ANALYZE SERVICE PROCESS AND DEFINE ALL
QUALITY MEASURES
ESTABLISH PROCESS CONTROL SYSTEM
INVESTIGATE THE PROCESS TO IDENTIFY
IMPROVEMENT OPPORTUNITIES
IMPROVE PROCESS QUALITY AND MONITOR
-
8/2/2019 Amended MG 622 Project
8/25
The Quality Manager
Martins (2007) identifies the functions that a quality manager should perform for the smooth
functioning of the team towards the achievement of the organizational quality goals. For the
purpose of this report, one of the Quality Managers roles is to acquire the needed resources for
the quality plan. To realize this objective, the Quality manager must possess both hard and soft
skills of persuasion, negotiation and communication which are needed to provide direction and
leadership to Quality department; including people management as follows: managing
performance; addressing disciplinary issues; hiring; assisting people with career development;
communicating information to direct reports and passing information up the management chain;
ensuring team is aligned with and accomplishing goals/objectives; administrative processing;
and, maintaining trust and confidentiality
The Quality managers failure to build an appropriate team will water down whatever positive
attributes he may possess, because a quality plans success is judged on its outcome. The QualityManager must also possess a powerful personality to communicate the objectives of the
organization, the quality plan and the approaches that should be espoused by the team members
which will help develop and promote the customers understanding of the Philips quality
philosophy.
The Quality Manager must possess the skills and experience to devise and implement quality
systems/ procedures that provide continuous improvement methodology supporting
manufacturing and operational consistency.
Quality Management Approaches at Philips Group
The Quality Management Approach most commonly used by Philips Group is the Jablonskis
approach to Quality Management. Jablonski's approach is one of many that has been applied to
achieve TQM, but contains the key elements commonly associated with other popular total
quality systems. Jablonski(1992) offers a five- phase approach as described below with each
phase designed to be executed as part of long-term goal of continually increasing quality and
productivity.
-
8/2/2019 Amended MG 622 Project
9/25
Figure 1: Quality Management Approaches at Philips Group
Preparation
This is the stage in which the Quality Manager first communicates the idea which later becomes
a plan if accepted. In the case of the plan under study in this report, the idea originated from
Quality Manager. A detailed document highlighting the scope ,purpose and relevance of the
TQM framework was tabled before the board of Directors for approval, and forwarded to the
management board for adoption. Once it was adopted, the quality department under the
supervision of the quality Manager was then instructed by the management to plan and design
the TQM program.They undergo initial training, identify needs for outside consultants, develop
a specific vision and goals, draft a corporate policy, commit the necessary resources, and
communicate the goals throughout the organization.
Planning and Design
In the planning stage, a detailed plan of implementation is drafted (including budget and
schedule), the infrastructure that will support the program is established, and the resources
necessary to begin the plan are earmarked and secured. Other researchers (Kloppenborg et al.,
2011) point out that the quality manager must at this stage adequately estimate the work needed
and effectively manage risk during the implementation of the plan. Failure to plan adequately
reduces the programs chances of successfully accomplishing its goals. The quality manager
must pay attention to the following activities in order to avoid the ultimate failure of the program
Preparation
AssessmentImplementati
on
Planning
and design
Diversificatio
n
-
8/2/2019 Amended MG 622 Project
10/25
Planning Developing the scope statement Selecting the planning team Identifying deliverables and creating the work breakdown structure Identifying the activities needed to complete those deliverables and networking
the activities in their logical sequence
Estimating the resource requirements for the activities Estimating time and cost for activities Developing the schedule Developing the budget Risk planning Gaining formal approval to begin work.
In the context of this program, this was the most critical stage for the quality manager, especially
selecting the planning team. This is where the quality manager needs to show his good
communicating attributes by communicating the importance of the right skills in the program.
Assessment
This stage emphasizes a thorough self-assessmentwith input from customers/clientsof the
qualities and characteristics of individuals in the company, as well as the company as a whole.
-
8/2/2019 Amended MG 622 Project
11/25
Figure 2: Assessment Cycle
Implementation
Program Implementation refers to the processes used to complete the work defined in the quality
management plan in order to achieve the program's requirements. This involves coordinating
people and resources, besides integrating and performing the activities of the program in
accordance with the quality management plan. The deliverables are produced as outputs from the
processes performed as defined in the program management plan. Jablonski(1992)explains:
The success of the plan or the quality manager will usually be judged according to how
well they achieved the organizational goals of continuous improvement and quality
operations. Many things need to be in place and many actions taken during the project
execution period to help ensure success .
At this point, the organization can already begin to determine its return on its investment in
TQM. It is during this phase that support personnel are chosen and trained, and managers and theworkforce are trained. Training entails raising workers' awareness of exactly what TQM involves
and how it can help them and the company. It also explains each worker's role in the program
and explains what is expected of all the workers
The Quality manager responsible for implementing the program was faced with the mammoth
task of coordinating people from diverse backgrounds. But as explained above, the Quality
Where we are
(Measurement)
How can we get
on track again?
(Correction)
Where we
planned to be
(Evaluation)Negotiate forpersonnel with
right skills.
-
8/2/2019 Amended MG 622 Project
12/25
manager is evaluated on the basis of the teams achievement of the two stakeholder goals. In the
case of this particular program, the QM could achieve the goals by successfully implementing
the program.
Diversification
In this stage, Quality manager utilizes TQM experiences and successes to bring groups outside
the organization (suppliers, distributors, and other companies that have an impact on the
business's overall health) into the quality process. Diversification activities include training,
rewarding, supporting, and partnering with groups that are embraced by the organization's TQM
initiatives.
Difficulties/ obstacles to Successful TQM Implementation
Several researchers have focused more directly on the obstacles that hinder the ability of
organizations to make a successful transformation to TQM or quality management. In an early
paper on the topic, Glover(1993) argues that TQM failures follow one of three patterns;
conceptual weakness, design flaws or ineffective implementation. Recognizing that TQM
requires a true organizational transformation, Glover explains conceptual weakness as failures
occurring because organization make only superficial attempts at change. Design flaws occur
when TQM systems are not designed to fit the cultural circumstance of the organization. And the
most common reason for failure- ineffective implementation-results when TQM becomes so
much extra work instead of a new way of doing things. Glover also argues that without a
change in management evaluation and reward policy, TQM cannot be taken seriously. He
advocates managers will need to know that their evaluations, and subsequent pay increases andbonuses, are dependent on having high levels of quality, satisfied staff and customers, and
successful TQM implementation in their respective areas of responsibility. Subsequent research,
based on both case studies and surveys, has led to similar conclusions regarding the role
managements plays in the success of TQM. Using a structured approach, Mann and Kehoe(1995)
interviewed the managing directors at 21 leading TQM organizations about organization
characteristics affecting the success TQM. Of the seven Quality-critical organizational
characteristics(QCOCs) considered, they found that management style and shared values were
the two QCOCs having the most impact on the successful implementation of TQM; process
factors were reported to have least effect. Kanji(1996) identified managements failure to lead as
the primary obstacle to successful TQM. Based on several company case studies, he compiled alist of poor management practices that contribute to failed TQM initiatives. These include a
management style that inhibits a learning culture, is based on fear or intimidation and creates
barriers between departments. Matta et al.,(1996), in a study of Malcolm Baldrige National
Quality Award(MBNQA) winners, found that difficulties in implementing TQM are rooted in
three causes:(i) the holistic change of corporate culture; (ii) achieving and maintaining employee
buy-in and acceptance of TQM; and (iii) Integration with suppliers and customers. However the
-
8/2/2019 Amended MG 622 Project
13/25
only factor that 100% of the MBNQA winners considered critical to the success of TQM was top
managements commitment and involvement.
Examining middle managers perceptions about the relationship between quality management
practices and organizational climate at Taiwans top manufacturing companies, Kuei et
al.,(1997) found a stronger emphasis on top management leadership at higher qualityorganizations. Recent studies continue to find that management plays a critical role in an
organizations successful quality transformation. Gunasekaran(1999) examined the enablers of
TQM implementation in a British manufacturing company using structured interviews of
employees from different functional areas of the organization. Emphasizing people-oriented
factors, such as teamwork, and empowerment, he found that the major enabler of TQM
implementation was communication between managers, supervisors and staff, and that poor
communication between departments was a real barrier to implementing TQM.
The success of TQM depends largely on managements ability to lead the organizations quality
transformation. In addressing why transformation efforts fail, Kotter(1995) identified eightcommon management errors: (i) not establishing a sense of urgency; (ii) not creating a powerful
enough guiding coalition;(iii) lacking a vision; (iv) not communicating the vision; (v) not
empowering others to act on the vision; (vi) not planning for short-terms wins; (vii) not
consolidating improvements and producing more change;(viii) not institutionalizing new
approaches.
In study of companies that won the Australia Quality Award, Abraham, Crawford, and
Fisher(1999) found the key factor in achieving a successful change to a quality culture was
management support. They state managers must be clearly perceived to support the change
through communication, resource allocation and recognition/ award. Recently, Leonard and
McAdam(2002) reiterated the importance of upper management participation in the quality
transformation through their exploration of strategic quality management.
From this review of the literature, it is apparent that many of the obstacles found to hinder TQM
efforts ( such as poor communication, lack of employee empowerment, inadequate resources,
inadequate performance evaluation and reward systems, and so on) are linked to how effectively
the quality transformation is managed. Ultimately, it is managements responsibility to plan for,
lead, and effect the organizational change required for TQM success.
Theoretical Backgrounds
Factors and processes to TQM Implementation
Factors as a top management commitment and leadership, people management, policy and
strategy, partnership and resources management and management of processes, are generally
considered as the inputs to the implementation of TQM. According to the European Foundation
-
8/2/2019 Amended MG 622 Project
14/25
for Quality Management( 1999), these factors are called the enablers. In this model of excellence
essentially customer satisfaction(results), employee satisfaction(results), and a favourable impact
on society(results) are achieved through leadership driving and strategy, people partnership,
resources and processes, which lead ultimately to excellence in business results(Key
performance results). The enablers deliver the results, which in turn drive innovation and
learning (Oakland,2000). This suggests that the quality factors can be classified as soft and
hard quality factors. Leadership and employee involvement are intangible and difficult to
measure quality factors. However, cost of quality, statistical process control and quality
management systems impact the internal efficiency of the organization.
Wilkinson(1992) highlights that it is practical to refer to the experience at Black and Decker(UK)
and the Co-operative Bank Plc to classify the quality factors along soft and hard criteria.
Factors like leadership, employee involvement and quality policy development have long-term
nature and some of them are difficult to measure. These factors have an impact on maximizing
wide-wide support and involvement in attaining the quality goals of an organization. Such
factors are considered as internal marketing issues( Wilkinson,1992). They include;
Senior executives commitment and involvement, actively demonstrated Comprehensive policy development and effective deployment of goals Entire workforce commitment to quality goals of the organization Supervisors, unit heads and divisional managers assume active new roles Empowerment Effective Communication Teamwork System for recognition and appreciation of quality efforts Training and education
These soft quality factors are long-term issues, something that cannot be switched on and off.
These quality factors must be addressed accordingly in the implementation plan. There is a good
chance that the TQM process will end up in failure if there is insuffici ent attention to soft
factors (Wilkinson,1992). The implementation of the Soft quality factors must be supported by
tools and systems hard quality factors to achieve the goals. These hard quality factors
include;
Benchmarking Managing by process Self-assessment Quality Control tools Cost of quality process Documented quality Management system Supplier management Customer management
-
8/2/2019 Amended MG 622 Project
15/25
These soft and hard quality factors reflect the total quality management model proposed by
Oakland(2000). The soft quality factors are expected to be rated highly in terms of critically
and emphasis in TQM implementation process. The hard quality factors are considered as
tactics rather than strategies( Black,1993). This review of the available literature is based on such
classification of soft and hard quality factors that are reflected in the sets of criteria of the
European Quality Model. The attempt is to provide landmarks for Total Quality
Management(TQM).
Hard Quality Factors
Suppliers Management:
Suppliers quality management is an important aspect of TQM since materials and purchased
parts are often a major source of quality problems( Zhang et al.,2000). Poor quality of suppliers
products results in extra costs for the purchaser; e.g. for one appliance manufacturer, 75% of all
warranty claims were traced to purchased components for the appliances( Juran and
Gryna,1993). According to Besterfield(1994) on the average, 40% of production cost is due to
purchased materials; therefore suppliers management is extremely important. It follows that a
substantial portion of quality problems will be due to the supplier. In order for both parties to
succeed and their business to grow, a partnership is required. The supplier should be treated as an
extension of the production process. Flood(1993) states that companies should treat their
suppliers as long term business partners. Many authors advocate that companies must establish
supply chain partnerships to motivate suppliers to provide materials needed to meet customer
expectations(Harrison et al.,1996; Kumar(1996); Lambert et al.,1996; Clifton,2001;Jabnoun,2000; Thakur,2002). Wong et al.,(1999) state that partnership with suppliers lead to
quality results from the supply chain.
According to Kanji and Wong(1999) the creation and enhancement of the customer-supplier
partnership is a major quality practice. This is also emphasized by Wong and Fung(1999). The
quality gurus believe that supplier should be viewed as an integral part of the organizations
business operations( Ishikawa,1985; Deming, 1986; Crosby,1989). Crosby(1986) states that one
of the most important parts of the quality improvement process is the relationship between
suppliers and buyers. In his letter to the 3rd
Shanghai International Symposium on quality,
Juran(1998)(in Sun,2000) said that there is universal set of unions that are the essential elementsof quality management. These elements include, among others ,partnering with suppliers.
Feignebaum(1998)(in Sun,2000) suggested in his speech in the same symposium ten principles
of quality management, one of them is that ,quality is implemented in a complete system
connecting customers and suppliers. Crosby(1998)(in sun,2000) stated in his speech that
management must describe the responsibilies of employees, suppliers, and customers.
Genna(1997) states that the idea of adding value to products and services is keenly linked to
-
8/2/2019 Amended MG 622 Project
16/25
customer satisfaction, although not every company realizes it. He suggests that steps such as on-
time shipment, and defect-free can improve the suppliers product quality, as well as , help to
provide the same quality to the ultimate customers.
Quality management is based on prevention rather than detection. This is emphasized by
Eshennawy et al.,(1992) when they consider that managing suppliers is a major issue to beaddressed to have a complete total quality management organization.
Philips Group created a long-term business partnership with its suppliers. They coined the
phrase Comarkership simply means working together towards a common goal. It is based on
the principle that both parties can gain more through co-operation than by separately pursuing
their own interests. Comarkership means establishing a long-term business partnership with
each supplier-base operation. It pushes a desire for both parties to continuously improve the
product and to clearly understand their responsibilities. The Philips Group found that to develop
comarkership considerable changes in behavior and attitudes were required from both customers
and suppliers. Customers have to prepare to develop plans and procedures for working withsuppliers and allocated time and resources to this. Suppliers for their part must accept full
responsibilities for their products and not depends on their customers inspectors(Flood,1993).
Rank Xerox, TI Rayleigh and Locas all adopted a comarkership approach with their supplier to
improve quality(Flood,1993). At Toyota and Nissan, full-time specialized management
consulting groups provide suppliers with assistance to improve their production and to achieve
total quality in their products and services. At least one consultant works with four to six
suppliers. All of this supplier assistance is free of charge(Dyer et al.,1993).
Deming(1986) considers the reduction in the supplier base will minimize total cost.
Besterfield(1994) says that single sourcing with a large contract will create better quality atlower cost (also Dyer et al.,1993). Companies worldwide realize that optimizing operations
within the four walls of their enterprises is not enough to achieve business excellence. They
understand that the involvement of suppliers, which is critical to improve quality and meet
customer specifications can enhance their performance( Kanji and Wong,1999).Organizations
world-wide are using teams to improve the quality of their products and services and recognize
that this teamwork should include suppliers(Wong,2000).At shorts Brothers-UK, they motivate
suppliers to initiate total quality by providing training services and joint involvement teams. This
is done as the company reduces the suppliers base and builds long-term relationships with a
number of preferred suppliers(Oakland et al.,1994).
Adopting single sourcing strategy requires supplier selection criteria. Besterfield(1994) suggests
that effective selection requires the supplier to be knowledgeable of the purchasers quality
philosophy and requirements. The supplier must demonstrate technical capability and capacity to
provide quality products, and of particular importance, is the credibility of the supplier. He
continues a well-designed check list with weights( for suppliers ability to provide quality
products as evidenced by quality system and improvement programme, suppliers and suppliers
-
8/2/2019 Amended MG 622 Project
17/25
accessibility) will aid in evaluation and selection. Quality-oriented companies no longer have
cost as the primary criterion for selecting suppliers and are being more proactive in developing
long-term relationship with their suppliers by extending technical support and training to
suppliers to improve the process, quality and productivity of their suppliers( Rao et al.,1999;
Clifton,2001;Thakur,2002). Easton(1993,1998) states that many Baldrige Award applicant
started quality programmes with their suppliers( concerned with supplier rating and qualification
systems, supplier quality system audits, joint design teams, join quality improvement teams ,
training, and supplier recognition schemes) to spread gradually the quality movement throughout
their entire suppliers chain. The report of the U.S General Accounting Office identified the
establishment of close supplier relationships by high scoring Baldrige Award applicants as a
key feature, which contributed to improved organizational performance(G.A.O,1991). A study
conducted by Wong(2000) reveals that working together with suppliers can be very useful for
improving customer satisfaction. The findings indicate that supplier satisfaction will help
increase the level of customer satisfaction. Other recent studies support these findings(
Dayton,2001; Lau and Idris,2001, Martinez-Lorente et al.,1998; Thiagarajan et al.,2001).
During the early 1980s the production of Jaguar cars reached its lowest point as confidence and
identity slowly ebbed from this most prestigious of car marques. A critical in depth review of the
business was carried out by the purchasing manager of Jaguar cars. Findings pointed to the
necessity for Jaguar to address its internal controls, its dealer network and to enlist the support of
its suppliers to improve overall quality of the vehicles. The initial task was to identify the
problem components from the warranty figures. Following this a supplier conference was held
with managing directors and chairpersons of the companies concerned to discuss the issues.
Multifunctional task forces were set up involving the suppliers. Each had a specific role, which
clearly identified the suppliers responsibilities to quality. Poor suppliers were dropped.Components were resourced in the relentless quest for quality. A single source supplier strategy
was implemented and care was taken to involve the suppliers at the concept stage(Flood,1993).
Jaguar claim that a single-source strategy was progressive and during the reduction of the
suppliers base, quality improved creating better value for money whilst trust and stability were
built into the relationships. With the mutual benefits of larger contracts, both Jaguar and its
suppliers committed themselves to quality, acknowledging this as a merit of long-term
commitment. Another feature of Jaguars new approach was the introduction of a supplier of
the year award(Flood,1993).
Ways to Quality Improvement in Philips Group
For a leading brand like Philips one of the three largest manufacturers of consumer electronics
in the worldquality control is vital. The costs of the production process are heavily dependent
on the quality of the components supplied. And consumers must be assured that when they buy
Philips they are buying a fine product. In today's complex and global environment, WebFOCUS
provides the necessary insight into supplier quality.
-
8/2/2019 Amended MG 622 Project
18/25
The Trend Toward Outsourcing
The trend toward production outsourcing has gone beyond the computer industry and now is
taking hold in Philips. Philips is blazing the trail in this new arena: Philips focuses more on
product development, assembly, marketing and branding, while the production of non-vital
components and parts is outsourced as much as possible. Specialty suppliers can do that better,
and often more economically.
A lot of production is being moved to countries where the rate of growth is high or wages are
low, such as China. Philips has dozens of factories, and works with some 900 suppliers and
production partners. So it is important to closely monitor the quality of the components supplied.
Distance and time differences should not pose any obstacle to the monitoring process, which
requires delivering information in an innovative and flexible manner something Information
Builders provides through its industry-leading WebFOCUS enterprise business intelligence
technology.
Good, Better, Best
Philips is always looking for new ways to offer consumers innovative products. They strive for
zero defects, for top quality. In that respect, Philips put a program in place for achieving
consistently higher quality standards for all of its products and services. This quality program
impacts on all staff and processes, in every country and within every business unit from the top
down. Philips calls this program BEST (Business Excellence through Speed and Teamwork).
With BEST, Philips strives to achieve business excellence. Initiatives which have been
successful in the past have been integrated into the program ensuring that Philips learns as much
as possible from past successes. Speed and collaboration are at the heart of BEST. Everyone at
Philips knows that business processes can only be perfected by collaborating optimally with one
another and by using practical examples, and the right tools, for example to reduce turnaround
times and such. Philips is focused on working smarter and betterrelying on proven business
intelligence information systems.
Production Processes Improved
Quality management systems are a recurring theme throughout Philips' corporate history. Ten
years ago Information Builders developed Philips' FRR (Failure Registration and Reporting)quality monitoring system a parts per million (PPM) management system, which records and
analyzes the failure of components at the factory. Quality managers can see what the failure rate
is for specific components, the suppliers from which they originate, the factories in which they
have been used and where the failure occurred. The information this generates serves to improve
the production process and offer direction to the suppliers.
-
8/2/2019 Amended MG 622 Project
19/25
Dozens of factories around the world use the software. Although FRR was state-of-the-art when
we created it, it also had its limitations. Installing new versions and functions had to be done
locally and manually, a process that sometimes proved problematic.
Investments Protected
The FRR data was stored locally on a database and uploaded once a month using File Transfer to
Information Builders' central FOCUS database. A full picture of the suppliers worldwide could
be obtained from the central database. In 2002 Philips decided to modernize the information
system and further exploit the possibilities offered by the Internet. They evaluated a number of
options. Initially they thought about SAP, because they were standardizing on that worldwide.
But they found that the basic reporting function of SAP R/3 was too limited. Building a new
system based on SAP was not an option: they did not have the people or the resources. they also
looked closely at Lotus Notes. But WebFOCUS turned out to be the best solution, particularly
because the existing FRR functionality could be quickly and easily upgraded. their earlier
investments in Information Builders technology remain protected. It was also important that
WebFRR integrates easily with other systems. With SAP, naturally, but also with the large
central Philips database which contains all the codes for components, products, suppliers, etc.
Closed Loop BI
It took a little over six months to get WebFRR, the new Web-based version of FRR, operational.
They transferred the historical data to WebFRR. Users anywhere in the world need only a
browser to access the systemanytime, anywhere. The physical installation of client software on
every user PC is a thing of the past. Management and maintenance are now done centrally from
Eindhoven. The WebFRR database is fed directly, partly manually and partly automatically,from SAP. They are working diligently on further developments. WebFRR offers 'closed loop
business intelligence': the users not only are provided with information, but they also can use the
browser to make changes to the central WebFRR database. It is also system's user-friendliness.
You can create your own reports very flexibly by applying filters to the information in an
intuitive way. Those filter settings are saved for the next time. The response times are very short,
even for wide-ranging queries. WebFRR offers a wide variety of output formats: Word, Excel,
pdf and e-mail. They are looking at ReportCaster from Information Builders; it automatically
generates and distributes set reports at fixed times. That would be useful for management
meetings.
Integration of the Production Chain
WebFRR gives real-time insight into quality by component, factory, supplier, organization,
region, etc. The system provides aggregated management information and trend analyses, but
also offers the option of drilling down to more detailed levels. WebFRR helps with further
integration of the production chain. It is not just Philips own factories and internal suppliers that
-
8/2/2019 Amended MG 622 Project
20/25
have access to the information for which they are authorized; external suppliers do too. A lot of
factories (internal and outsourcing factories) where Philips products are produced are now
connected to the system. They can have a new factory or supplier online within half an hour.
Subject to authorization, everyone can see exactly what the failure rate is and what is causing it.
They no longer have arguments with their suppliers as to where the fault lies. The system reveals
the truth. It is easier to perform retrospective costing. Philips distinguishes two 'feedback loops'
with the suppliers: tactical and strategic. Tactical feedback relates to day-to-day operations. The
fact that the suppliers themselves have real-time access to WebFRR has considerably cut the
'feedback loop' from weeks to hours. This visibility increases the motivation to tackle problems
quickly, both at the suppliers and at Philips' own sites. Quality improvements are achieved far
more rapidly. Strategically the system helps Philips to evaluate their suppliers' longterm
performance and to establish their negotiating position and the supply base strategy. WebFRR
reports provide an important underpinning for their purchase management process.
Hunger for Information
WebFRR satisfies a great hunger for information that exists both inside and outside of Philips.
Quality managers want to know exactly how things are going inside the factory. Suppliers want
to know how their products are performing in order to be able to respond faster and make
improvements quickly. After all, if their components are underperforming, it will cost them
money andif the problem is structuralcould even cost them business. Buyers need pertinent
information in order to be able to guide their suppliers. The system also helps Philips to improve
its product development. For instance ,If you know that a specific part suffers early or frequent
failures, you can decide to choose a different part or to change the design so that it no longer
needs to be used.
Rapid Payback
WebFRR shows a convincing ROI. Fixed annual costs have been cut from 200,000 Euros to
60,000 Euros. The one-off investment was 130,000 Euros. WebFRR paid for itself within one
year and on top of that there are the returns from process improvements, There are on-going
work on the next function: expanding existing reporting with financial information. However,
WebFRR currently only records the failure of components, and not the associated costs.
Sometimes you need to replace a faulty part during production. The value of that part is
sometimes a fraction of a euro cent, but tracking it down and replacing it can cost dozens of euro
in labor costs. They want to know more about this in order to be able to manage it better.
Purchasing management also wants to use WebFRR to record what the failure rate is after the
products have left the factory and have been sold (Field Failure Rate). It then will also be
possible to analyze and further improve that part of the product cycle. After all, it may be that
components that have passed through all the quality checks in the factory still break down
-
8/2/2019 Amended MG 622 Project
21/25
prematurely during everyday use and to replace a small part during the guarantee period can
result in substantial costs.
With Field Failure Rate recording and analysis, Philips will have completed the quality circle.
What goes into and comes out of the factory will be checked with WebFOCUS. It is clear that by
using WebFOCUS, Philips has laid a solid and future-proof foundation for its information
provision.
Summary and conclusion
With Field Failure Rate(FFR) recording and analysis, Philips will have completed the quality
circle. What goes into and comes out of the factory will be checked with WebFocus. It is
clear that by using WebFocus , Philips has laid a solid and future proof foundation for its
information provision which serves to improve the production process when necessary and offerdirection to the supplier if need be, because there is a saying that knowledge comes from
information and knowledge is power.
With BEST( Business Excellence Through Speed and Teamwork), Philips strives to achieve
business excellence. Speed and Collaboration are the heart of BEST with everyone at Philips
knowing that business processes can only be perfected by collaborating optimally with one
another and using practical examples, and the right tools.
Reference
Abraham, M., J. Crawford, and T. Fisher(1999), Key factors predicting effectiveness of cultural
change and improved productivity implementing total quality management. International Journal
of Quality & Reliability Management 16: 112-132
Besterfield, D.,(1994), Quality Control, 4th
edition, Prentice Hall
Black, S., & Porter, L.,(1996), Identification of Critical Factors of TQM, Decision Sciences,
Vol.27,Pp.1-21
Clifton, N.(2001), System Suppliers towards best Practice?, Benchmarking An InternationalJournal, Vol.8 No.3,Pp.172-190
Crosby, P.,(1989), lets talk quality: 96 questions that you always wanted to ask Phil Crosby,
McGraw Hill, N.Y
Dayton. N.A.,(2001), Total Quality Management Critical Success Factors, a comparison: The
UK Vs The USA, Total Quality Management, Vol.12 No.3,Pp.293-298
-
8/2/2019 Amended MG 622 Project
22/25
Deming, W.E.,(1986), out of the Crisis, Cambridge, MA:MIT Center for Advanced Engineering
Study
Dyer, J. & Ouchi, W.,(1993), Japanese-Style Partnership : Giving Company a Competitive Edge,
Sloan Management Review, Vol.35 No.1,Pp.51-63
Easton, G.,(1998), Learning from Case Studies, 3rd Edition, Prentice Hall, UK
Easton, G.,(1993), The 1993 State of U.S Total Quality Management: A Baldrige Examiner
Perspective, California Management Review, Vol.35,Pp.32-54
Elshennawy, A., & McCarty, K.,(1992), Implementing Total Quality Management at The U.S
Department of Defense, Total Quality Management, Vol.3 No.1,Pp.31-46
EFQM(1999), The EFQM Business Excellence Model, The European Foundation For Quality
Management, www.efqm.org
Feigenbaum, A.,(1991), Total Quality Control, 3rd
Edition, McGraw-Hill, N.Y
Feigenbaum, A.,(2002), The Power Behind Consumer Buying and Productivity, Quality
Progress, Vol.35, No. 4,Pp.49-50
Flood, R.L.,(1993), Beyond TQM, John Wiley and Sons
Genna, A.,(1997), Suppliers are Key to giving Customers what they want, purchasing,
123,Pp.33-34
Glover, J.,(1993), Achieving the Organizational Change necessary for Successful TQM.
International Journal of Quality & Reliability Management 10: 47-64
Gunasekaran, A.,(1999), Enablers of Total Quality Management Implementation in
Manufacturing: A Case Study. Total Quality Management 7: 987-996
Harrison, J., & ST John, C.,(1996), Managing and Partnering with External Stakeholders,
Academy of Management Excellence,Vol.10,Pp.46-60
Hill, S.,(1991), Why Quality failed but Total Quality Management Might Succeed. British
Journal of Industrial Relations, 29(4), 541-568
Ishikawa, K.,(1985), What is Total Quality Control? The Japanese Way. Englewood Cliffs, New
Jersey, Prentice-Hall
Jabnoun, N.,(2000), Restructuring for TQM:A Review, The TQM Magazine, Vol.12 No.6,
Pp.395-399
Juran, J.M., & Gryna A.,(1993), Quality Planning and Analysis, McGraw-Hill
-
8/2/2019 Amended MG 622 Project
23/25
Juran, J.M.,(1998),Japanese and Western Quality: A Contrast in Methods and Results,
Management Review, Vol.67,No.11,Pp.27-45
Kanji, G.K.,(1996), Implementation and Pitfalls of Total Quality Management. Total Quality
Management 7: 331-343
Kanji, G., & Wong, A.,(1999), Business Excellence Through Customer Satisfaction. Total
Quality Management, Vol.11, No. 7,Pp.979-998
Kumar, N.,(1996), The Power of Trust in Manufacture Retailer Relationships, Harvard Business
Review, Nov.-Dec., Pp.92-106
Kotter ,J.P.,(1995), Leading Change: Why Transformation Efforts Fail. Harvard Business
Review( March-April): 59-66
Kuei, C.H., C.N. Madu, C. Lin, & M.H. Lu.,(1997), An Empirical Investigation of the
Association between Quality Management Practices and Organizational
Lambert, D., Emmelhainz, M., & Gardner, J.,(1996), Developing and Implementing Supply
Chain Partnerships, The International Journal of Logistics Management, Vol. 7, No.1,Pp.1-17
Lau, H., & Idris, M.,(2001), The Soft Foundation of the Critical Success Factors on TQM
Implementation in Malaysia
Leonard ,D., &R. McAdam,(2002), Developing Strategic Quality Management; A Research
Agenda . Total Quality Management 13: 507-522
Mann, R., & D. Kehoe,(1995), Factors Affecting the Implementation and Success of TQM.International Journal of Quality and Reliability Management 12: 11-23
Martinez-Lorente, A., Dewhurst, F., Dale, B.,(1998), Total Quality Management : Origins and
Evolution of the Term, the TQM Magazine, Vol.10, No.6, Pp.378-386
Matta, K., J. Davis, R. Mayor, and E. Conlon,(1996), Research Questions on the Implementation
of Total Quality Management. Total Quality Management 7: 39-49
McAdam, R., & Kelly, M.,(2002), A business Excellence Approach to Generic Benchmarking in
SMEs, Benchmarking: An International Journal, Vol.9,No.1,Pp.7-27
Oakland ,J.S., & Porter, L.,(1994), Cases in Total Quality Management, Oxford: Butterworth
Heinemann
Oakland, J.,(2000), Total Quality Management-Text With Cases, 2nd Edition, Butterworth,
Heinemann
-
8/2/2019 Amended MG 622 Project
24/25
Rao, S.S., L.E. Solis, and T.S. Raghunattan,(1999), A Framework for International Quality
Management Research: Development and Validation of a Measurement Instrument. Total
Quality Management 10: 1047-1075
Sun, H.,(2000), A Comparison of Quality Management Practices in Shanghai and Norwegian
Manufacturing Companies, International Journal of Quality and Reliability ManagementVol.17,No.6, Pp.636-660
Thakur, D.,(2002), 9 Reasons to Switch to a Single Supplier System, Quality Progress Vol.35,
No.3, Pp.61-65
Thiagarajan ,T., & Zairi, M., Dale, B.,(2001), A Proposed Model of TQM Implementation based
on an Empirical Study of Malaysian Industry, International Journal of Quality & Reliability
Management, Vol.18, No.3, Pp. 289-306
U.S General Accounting Office(1991), Management Practices- U.S Companies Improve
Performance Through Quality Efforts, Washington, Gaithersburg: U.S General Accounting
Office
Wong, A., & Fong, P.,(1999), Management in the Construction Industry in Hong Kong: A
Supply Chain Management Perspective, Total Quality Management, Vol.10, No.2, Pp.199-208
Wong, A.,(2000), Integrating Suppliers Satisfaction with Customer Satisfaction, Total Quality
Management, Vol.11, Nos. 4/5 & 6, Pp.427-432
Zhang, Z.,(2000), Developing a Model of Quality Management Methods and Evaluating their
Effects on Business Performance: Total Quality Management 11: 129-137
-
8/2/2019 Amended MG 622 Project
25/25
.
.