TQM - Case study of Sundaram-Clayton

Venu Srinivasan and the Deming Prize. Kudos for India.

The Chennai-based Sundaram-Clayton has won acclaim and international

recognition for setting global quality standards. From the swamp of unreliable
quality that the traditional India Incorporation was known for, Sundaram-Clayton
has emerged the flag bearer of global class. Despite its disdain for TQM,
Sundaram-Clayton, the manufacturer of air-brake systems and castings has
emerged as Asia's -- first-ever winner of the Deming Prize for Overseas
Companies. Every rupee of its Rs 139.37 crore turnover now carries the mark of
quality that is world-class.

The Deming Prize is, quite simply, the last word in the world, on quality. The
prize was instituted 40 years ago by Japan to honour the man who gave quality
to the world, W. Edwards Deming.

The Deming Prize Committee defines quality as "a system of activities to ensure
the quality of products and services, in which products and services of the quality
required by customers are produced and delivered economically."

Sundaram-Clayton's integrated Deming's 10 parameters into the 4 streams of its

quality practices, namely policies, people, processes, and products, respectively.
Its TQM model ensures Total Employee Involvement, Policy Deployment,
Standardization, Kaizen, and Training, besides promoting employer - employee
relations.

In short, everyone everywhere in the company is a custodian of quality.

Sundaram-Clayton, led by its CEO Venu Srinivasan, 45, has risen above the
countrywide levels for total quality, to be part of an exclusively small global elite,
which have integrated all the Deming's 10 parameters into their streams of
quality practices. This small elite group consists of only three other companies
namely the $6.51-billion Florida Power & Light, which won the Deming Prize in
1989; the $53.26-billion AT&T's Power Systems Division in 1994, and the
$38.05-billion Philips' Taiwan unit.

On November 14, 1998, when Srinivasan received the coveted prize, he joined
the ranks of 163 CEOs and managers who had received the award since it was
instituted.

In quick succession, Sundaram-Clayton's managers were exposed to the quality

practices of global leaders, trained in modern manufacturing techniques, and
taught about Total Quality Control (TQC), first by Yoshio Kondo in a workshop at
the National Institute For Quality & Reliability in 1986. Srinivasan also set up a
core taskforce to baptize Sundaram-Clayton in the new religion of TQC.

The results of Sundaram-Clayton's total quality movement are reflected on the

company's books. Its financial indicators in the 5 years between 1992-93 and
1997-98 tell a tale of top-level performances.

Thus, sales grew at an average rate of 35 per cent per annum, between 1992-93
and 1996-97, although it shrank by 25 per cent in 1997-98, on account of the
recession in the automobile industry.

Likewise, the average growth in net profits in those 4 years was a stunning 83
per cent per annum--a glowing tribute to quality-led cost management--although
it fell back by 35 per cent in 1997-98. But, internally, its performance improved
consistently despite the recession, with turnover per employee rising by an
average of 18 per cent a year, and gross value added climbing by an average of
12 per cent per annum.

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