CEO - Business Excellence Models Lecture by Dr. Kamran Moosa

12/15/2010

MS at UCP – CEO by Dr. Kamran Moosa 1

Business ExcellenceModels &Qualiticains

Dr. Kamran Moosa

Popular QualiticiansDEMINGPopular QualiticiansDEMINGAn American Consultant; regarded as the father of TQMIn 1940, used SPC in workplaceIn 1950, US Supreme Commander invited him to Japan forlectures to CEO’s representing 80% of Japan’s capitalIn 1951, Deming application prize was initiatedIn 1960, he was decorated by the emperor of JapanMessage: reduce variation, which he learned from Shewhart in Bell Laboratories in 1931:variability is universal, caused by random and special causes that must be eliminated.Estimates 94% problems are through system deficiencies - which are management responsibility(e.g. variation in raw material caused by tendering; fear encourages burying mistakes;individualism discourages teamwork.Key thoughts: 14 points; Seven deadly diseases; 16 obstacles;

the new climate; and a system of profound knowledge.–14 Points: constancy of purpose, adopt a new philosophy, use statistical methods, singlesupplier, institutionalize training and education, adopt and institute supervision, drive out fear,break down barriers between depts, eliminate slogans for targets, eliminate numerical quotasand targets, encourage pride of workmanship and eliminate the annual rating or merit system,institute vigorous program of education and self-improvement in new skills, involve everyone.

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–Seven deadly diseases: the western style of management needs to becompletely transformed. The weaknesses are: lack of customer values amongevery level; emphasis on short term goals (no 5-10 year goals); annualperformance ratings and reviews (they are usually biased, unstable, anddisregard teamwork); job hopping; using visible figures with no consideration forunknown figures (happy/unhappy customers and intangible losses - companymay appear to be doing well, but in reality could be going downhill, etc.)

For him, quality has as much to do with people as with products. It isabout the importance of management’s role and commitment and its obsession withquality. He stresses the importance of educating employees to understand theprocesses employed in organizations and the causes of variation as well as theneed for teamwork. Traditional approaches to management have created barrierswhich need to be broken down

Popular QualiticiansJURANPopular QualiticiansJURAN

4 He helped Japan and was decorated by its emperor. He was a colleague ofDeming at Western Electric Company at Chicago.

4 Juran shifted his emphasis to the management of quality.4 Wrote Quality Control Handbook in 1951, the most comprehensive book on

quality control, assurance and management.4 Quality: customer satisfaction + freedom from deficiencies = fitness for use. It is

not conformance to specifications4 Juran Trilogy: Quality Planning, Control, and Improvement

– Quality Planning: determine customers, their needs, develop product, thenprocesses, and transfer to operations

– Quality Control: evaluate operating performance, compare to goals, andeliminate the difference. Use SPC. Feedback and learn

– Quality Improvement: Most significant contribution to TQM. Eliminatewaste, and improve continuously.

4 Customers: External and internal supply chain. Who is ones customer? Notalways easy to define.

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Popular QualiticiansCROSBYPopular QualiticiansCROSBY4 Introduced ‘zero defect’ concept in 1960s4 Formed Philips Crosby Associates in 1979; now owned by Proudfoot Inc. He

was ITT’s Vice Chairman for Quality for 14 years (1965-79)4 Author of: Quality is Free; Quality Without Tears; Running Things; The

Eternally Successful Organization.4 Four Absolutes of Quality:

– 1. Everyone must understand quality as ‘conformance to the agreed requirements ofthe customers; not as goodness or excellence

– 2. There must be a system to ensure quality (conformance). That system isconcerned with preventing errors, not checking or appraising them.

– 3. The standard of performance against which non-conformance must bemeasured is zero defects, not acceptable quality levels or percentage defectivevalues.

– 4. Measure price of non-conformance (preferred the word price to cost). He assertsthat manufacturing firms spend at least 25% of sales doing things wrong; servicecompanies spend at least 40% of their operating costs on the same wasteful actions.

4 Deming and Juran reject zero defects. Juran believes that there is a law ofdiminishing returns on quality and that a point can be reached where furtherimprovements in quality are more expensive than tolerating a level of failure.Deming believes that individual worker only has limited control.

..(cont.)

4 Estimates 80% of problems caused bymanagement and leadership. Executive integrityessential, with personal example. Companiesreflect standards of their leaders.

4 Requirements for Permanent Improvements: senior managers should stopconsidering quality being a problem, and turn it into an asset; prove commitmentto the four absolutes of QM; and the conversion to the respective way of thinkingshould be permanent.

4 Key points for bringing change in organization: people take quality just asseriously as management takes, no more; perpetual integrity is essential, it can’tbe done in short bursts of enthusiasm stemming from regret; Quality Control isnot prevention; Quality Improvements are increased earning per share; continualeducation for every individual to get things right the first time.

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Popular QualiticiansISHIKAWAPopular QualiticiansISHIKAWA4 Japanese Guru, 1950’s4 Developed and promoted the following main concepts

– seven basic QC tools, he himself developed the fish-bonediagram

– internal customers, as the next person in the line– Quality Control Circles, involving workers into teams to solve

quality problems through seven basic QC tools– Rigorous development of workers in QCC and Seven basic QC

Tools would not require separate QC Dept. He brought QualityControl in workers at the shop floor level in Japan

4 Japanese Guru, 1960s4 His prime focus was in making statistics practical4 He viewed quality as an issue for the entire company and focused on the use of statistical

methods to improve quality, particularly in the area of product design.4 Two of his concepts are particularly significant

– The Loss function– Design Characteristics and ‘noise’

4 Loss Function:

Popular QualiticiansTAGUCHI

Lowerspecification limit

Upperspecification limitTarget

Loss

Loss

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4 Noise: variation due to controllable factors such asdeterioration (inner noise), and uncontrollable such as operatingenvironment and human errors (outer noise). Both kinds ofnoise are more significantly impacted by off-line activities:– System Design: designing a product to satisfy customer’s

requirements. He used QFD (Quality Function Deployment) toestablish the customer’s requirements and convert them to designcharacteristics

– Parameter Design: involves identifying key process variables thataffect variation and then establishing levels for these parametersthat will minimize the variation. He used experimental designs toidentify these parameters

– Tolerance Design: identifies the components that contribute mostto variations in the final product and then sets appropriatetolerances for these components. The objective is to identify themost significant components and tighten tolerances only for thoseinstead of all components.

4 A Japanese TQM consultant of 90’s4 Introduced the concept of ‘must-be’ and ‘attractive’ qualities.

Popular QualiticiansKANO

High satisfaction

Low satisfaction

Low functionality High functionality

Attractive

Must-be

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Quality Evolution in JapanQuality Evolution in Japan

Fitness toStandards

Fitness toUse

Fitness toCost

Fitness toLatent

Requirements

To build a product thatmeets the specificationsset by the designer

To build a product thatmeets the needs of

customer

Obtaining high quality andlow cost by effectivedesigning of both the productand processes

Determining the customer’sneeds before the customer

becomes aware of them

(Ref: Shiba 1992)

QualityEvolution through ISO 9000QualityEvolution through ISO 9000

1987 1994 20001st release 2nd release 3rd release

9001 9001

90019004 9004

9004

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Quality Evolution throughNational Quality AwardsQuality Evolution throughNational Quality Awards

4 JapanDeming Quality Award

4 USAMalcolm Baldrige National Quality Award

4 European UnionEuropean Quality Award

4 A large number of countries have initiated such efforts, some organized andsome unorganized.

4 In Pakistan, an effort was initiated in 1999 but did not take-off. A new effort in2004 by QPSP.

Case StudyBrisa Company -Turkey

Business Excellence Case StudyBusiness Excellence Case Study

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Key Areas of EQAKey Areas of EQA

1Quality

Leadership

7People

Satisfaction

4Resources

5Process

Management

6Customer

Satisfaction

3People

Management

2Policy

and Strategy

9BusinessResults

8Impact

on Society

1. Leadership for Quality1. Leadership for Quality

4 CEO, Dept’l/Sectional Headsand Supervisors to act asdrivers of QUALITY in andamong their departmentsthrough:– Commitment– Involvement– Competence– Customer Focus– Communication– Quality Culture– Recognition

4 12 TQ Committees in 1995– MBP, Quality Cost, JIT, Environment, Kaizen, Labor

Union Joint Meeting, Kaizen, QA, Raw MaterialCouncil, Product Council, TPM, Process Improvement

4 Customer Focus– gather extensive customer data and analyze them

4 Change in Industrial Relations– Confrontation replaced with cooperation

4 Communication– Periodical (Voice of Change), Communication Boards,

CCTV, Open offices, communication meetings,surveys, suggestions system, celebrations

Brisa Turkey CaseGeneral Principles

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1. Leadership for Quality (cont.)

Total Quality Cultureinternal customer relationshipssystems for defect preventiondata base problem solvingemployees participation

Recognition“Respect for People” slogan and policyQuality Awards to individuals and teams.

Categories of Awards: best team work,

Brisa Turkey Case

2. Policies and Strategies

PDCA in actionCompany and Dept’l QualityPolicies/objectivesDeployment of policiesMeasurement of objectivesSharing and Communicationof policies and objectivesRegular upgradation ofpolicies

Annual and mid-term policiespublish policiespublish implementation plansannounce policies annually in a management /

employees meetingbooklet is distributed to employees every year which

contain: vision, mission, values, main policies andfunctional policies

Brisa CCTV and journal also announces thesepolicies

Brisa Slogans1990 Lets Change1992 We are the Company1993 Lets work effectively and

be efficient1994 Let’s carry out Quality to

the Market1995 Get Ready for 1996


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3. People Management

Cooperation and TeamworkCareer DevelopmentTrainingPerformance AppraisalEmployee SatisfactionSurveyEmployee Involvement


HR Policy and Function take care of peopleHiring steps: application, psycho-technical selection

and evaluation and interviewingCareer planning processTNA done based on performance appriasals and

employee surveysSome regular courses: Total Quality, Self

assessment, Process Management, TPM, Kaizen,QMS, EMS

Each employee is appraised regularly againsttargets, skills teamwork, communication,management approach, TQM approach.

Opinion Surveys held regularlyInvolvement in group oriented activities:

Kaizen CirclesTPM Groups5S (housekeeping)Solution Teams

4. Resources

Effective utilization of:FinancialInformationTechnologySuppliers


Financial Resources: short and long term financialsystems for forecasting, budgeting, analysis.Productivity and Quality Analysis and Costing

Information needs to each function and individual isanalyzed and provided. Extensive use ofsoftware/hardware tools at technical and non-technical functions

Technology Centre controls computer controledlabs, international standards, databanks across theworld, and conference facilities

Joint activities with suppliersjoint solution teams, joint kaizen circles, quality

system audits, technical support to suppliers,partnership agreements

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5. Process Management

Processes matching customerneedsprocess ownersmeasure and monitorprocessescontrol processesimprove processes


Process Management Committee one of the TQcommittees meets twice a year to define andreview processes

Process owners are responsible for processimprovement. They are involved through

Kaizen CirclesTPM Groups5S (housekeeping)Solution Teams

Statistical Process Control to measure processes

6. Customer Satisfaction

Measure and identify customer needsdesign, develop and change yourproduct according to these needsdesign, develop and change yourprocesses according to these newlydeveloped productprovide satisfaction together withproductsprovide good customer servicemeasure satisfaction and furtheropportunities for improvement


High degree of focus on CustomersEnsure high degree of accuracy in measuring

customersCustomer surveys, focus groups, interviews are

regularly doneAnnual Marketing plan takes into account the

feedbackclose contact with customersreduction in customer complaint as one of the

quality objectiveCustomer Service CentresJoint Solution Teams work with CustomersReceive customer auditsPerformance Indicators: on time delivery, right

delivery quantity, and trouble free productdelivery are performance indicators regardingcustomer satisfaction

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7. Employee Satisfaction

Working Environment andCorporate CultureEthicsMotivationProgressive


Opinion Survey applied to each employeeTraining hours per man regularly increasedzero accident targetsocial cultural and sport activities attended by

employees and their familiesrecreation sites for both workers and managers of

equal level66% employees were involved in group activities in

1996

8. Impact on Society

Healthy social andenvironmental effects


Environmental impact, ISO 14001Energy conservationcontribution to society, donate 5% of profitSocial surveyShare TQM experience with other companies

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9. Business Results

Financial Results andProfitabilityMarket ShareProduction PerformanceQuality Performance


Regular increases in net sales, costcompetitiveness, and profit

improvement in market share40% increase in productivity in 4-5 yearsdecrease of 91% of quality problems

Managing ChangeManaging ChangeCommitment

Behavior

Knowledge

Attitude

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Phases of ChangePhases of Change

Denial

Exploration

Commitment

Resistance

•What are the reactions of different people at each stage ?

•What should the Quality Coordinator do at each stage ?

TimeDays/months/years

Final WordsFinal Words

YourDept. Other

Depts.

TQM; First in

Then in

…… not the other way around

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Thank You

WorkingWorking together fortogether foraa

WorldWorld--ClassClass

PAKISTANPAKISTAN

The End

CEO - Business Excellence Models Lecture by Dr. Kamran Moosa

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