Académique Documents
Professionnel Documents
Culture Documents
ACKNOWLEDGEMENT
One of the pleasant aspects of preparing a project report is the opportunity
to thank those who have contributed to make this project possible.
We are extremely thankful to Prof Miss. Mrunali Tikare of LLIM,
whose active interest in the project & insight helped us to
formulate, redefine implement our approach to the project.
We are also thankful to our College Library & other seen unseen hands which
have given us direct & indirect help in completion of this project.
THANK YOU.
CONTENTS
SL.NO.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
PARTICULAR
Introduction of TQM
Characteristics of TQM
Fundamental Elements of TQM
Classification of TQM
Guideline to Improve Product Quality
Dr W. Edward Deming's 14 Principles
DMAIC Six Sigma Approach
Advantages of TQM
Problems & Solutions
Case No.1 Mahindra Group
Conclusion
Bibliography
PAGE NO.
2.
Outline various definition of quality and project TQMS viewpoint about quality.
3.
Trace the various ways TQM has been defined and give its comprehensive
definition.
4.
5.
Give special attention to the way TQM has been presented as a model.
6.
7.
Discuss the evolution of TQM in its present from thought the four phases of
inspection, SQC, Quality Assurance & TQM.
Although the concept of quality is very old, today it is perhaps the major preoccupation of
organization world-wide. However, in the recent years, Total Quality Management (TQM)
has captured the world-wide attention and is being adopted in many organizations, both
profit & non-profit. TQM is being accepted as a management philosophy. Many
organizations around the globe are conduction Organizational Development (OD)
programmes to enhance quality awareness and change the attitudes of their employees.
These efforts towards understandings, adopting and promoting TQM are primarily
because of the changes taking place in the global economy, changing market conditions and
customers expectations and increasing competitive pressure. Many large organizations
have recognized the important contributions that TQM can make in dealing with these
challenges.
The objective of this chapter it to trace the evolution of TQM as a general philosophy and a
set of paradigms. Attempt is also made to discuss the significant contributions of various
pioneering promoters of TQM philosophy towards the design, development and application
of TQM systems. Various definitions and models of TQM are also outlined is this chapter to
have a preliminary but fundamental grasp over the subject.
MEANING OF TQM
TQM, thus, can be considered as being constituted of two composite elements namely
Quality Management meaning that aspect of the overall function that determines and
implements the quality policy ; and Quality Systems meaning the collective plans, activities
and events that are provided to ensure that a product, Process or service will satisfy given
needs.
TQM means many things to many organization. It has evolved itself to be associated more
often with statistical tools and process control, than with a method of management. In its
essential sense, TQM is a means of operating a business that seeks to maximize an
organizations value through maximizing customer satisfaction at the lowest possible cost
and is achieved by continuously improving all processes within the organization and
collaborating with people.
Total Quality Management is thus based on the concepts and philosophies advocated by Juran,
Deming, Crossby, and Feigenbaum. Conceptually, TQM emphasizes on:
Top management commitment and support for quality improvement.
Creating a production oriented total quality culture.
Creating a Customer-oriented manufacturing environment.
Improving participation and teamwork
Prevention of errors at source.
Respect for humanity.
Recongnition and reward for improvement efforts.
QUALITY DEFINED
Quality though familiar to everyone has a variety of uses and meanings. The classic
perception of quality is the position of a product attitude on a good-bad scale. Most people
associate it with defects in products. However, quality relates not only to the product but
also to the instruction for its use, to installations, to service, to marketing and so on. Quality
has been defined in various ways, Some of the important definitions of quality are
presented below :
1.
2.
3.
Quality means The actual use and the selling price of the product (Feigenbaum,
1961).
4.
5.
The Totality of features and characteristics of products or services that bears on its
ability to satisfy given needs (ANSI & ASAC, 1978).
Quality is, thus, both a user-oriented and a production-oriented expression. From the
users point of view, quality is an expression of the products/services usefulness in meeting
the needs and expectations and its reliability, safety, durability and so on. From the
production point of view, the quality of a product is measured by the quality of its
performance which depends on the quality of design and the quality of conformance.
Quality of design is concerned with the stringency of the specifications for manufacturing
the product. The quality of conformance is concerned with how well the manufactured
product conforms to the original requirements.
Different views of quality are held by marketing, engineering and manufacturing departments.
Garvin (1988) outlines these as :
Quality, therefore, is
ensuring no defects.
The Characteristics of TQM, as revealed from the above definitions and models are as follows:
1.
2.
TQM requires a long term commitment for continuous improvement of all processes.
3.
The success of TQM demands the leadership of top management and continuous
involvement.
4.
Responsibility for establishment and improvement of system lies with the management of
an organisation.
5.
TQM is a strategy for continuously improving performance at all levels and in all areas of
responsibility.
2.
3.
Process : The use of problem solving process as a guide to analyze a problem, choose a
solution, develop an action plan and evaluate implementation results ; and the use of
quality improvement process for reducing customer requirements to a specification and
specification to a defined work process so as to focus attention on the customer and
customer requirements.
4.
Customer: TQMs primary focus is the customer and customer satisfaction. Customer
perceptions of quality that correlates with customers satisfaction are expected quality,
satisfying quality, delightful quality, indifferent quality and reverse quality. These must be
aimed at to prevent customer dissatisfaction, to meet customers expectations and delighted
them.
During the industrial revolution, the importance of craftsmen was diminished as mass production
and repetitive work practices were instituted. The aim was to produce large numbers of the same
goods. The first proponent in the US for this approach was Eli Whitney who proposed
(interchangeable) parts manufacture for muskets, hence producing the identical components and
creating a musket assembly line. The next step forward was promoted by several people
including Frederick Winslow Taylor a mechanical engineer who sought to improve industrial
efficiency. He is sometimes called "the father of scientific management." He was one of the
intellectual leaders of the Efficiency Movement and part of his approach laid a further foundation
for quality management, including aspects like standardization and adopting improved practices.
Henry Ford also was important in bringing process and quality management practices into
operation in his assembly lines. In Germany, Karl Friedrich Benz, often called the inventor of the
motor car, was pursuing similar assembly and production practices, although real mass
production was properly initiated in Volkswagen after world war two. From this period onwards,
north American companies focused predominantly upon production against lower cost with
increased efficiency.
Walter A. Shewhart made a major step in the evolution towards quality management by creating
a method for quality control for production, using statistical methods, first proposed in 1924.
This became the foundation for his ongoing work on statistical quality control. W. Edwards
Deming later applied statistical process control methods in the United States during World War
II, thereby successfully improving quality in the manufacture of munitions and other strategically
important products.
Quality leadership from a national perspective has changed over the past five to six decades.
After the second world war, Japan decided to make quality improvement a national imperative as
part of rebuilding their economy, and sought the help of Shewhart, Deming and Juran, amongst
others. W. Edwards Deming championed Shewhart's ideas in Japan from 1950 onwards. He is
probably best known for his management philosophy establishing quality, productivity, and
competitive position. He has formulated 14 points of attention for managers, which are a high
level abstraction of many of his deep insights. They should be interpreted by learning and
understanding the deeper insights and include:
Improve constantly
In the 1950s and 1960s, Japanese goods were synonymous with cheapness and low quality, but
over time their quality initiatives began to be successful, with Japan achieving very high levels of
quality in products from the 1970s onward. For example, Japanese cars regularly top the J.D.
Power customer satisfaction ratings. In the 1980s Deming was asked by Ford Motor Company to
start a quality initiative after they realized that they were falling behind Japanese manufacturers.
A number of highly successful quality initiatives have been invented by the Japanese (see for
example on this page: Taguchi, QFD, Toyota Production System. Many of the methods not only
provide techniques but also have associated quality culture aspects (i.e. people factors). These
methods are now adopted by the same western countries that decades earlier derided Japanese
methods.
Customers recognize that quality is an important attribute in products and services. Suppliers
recognize that quality can be an important differentiator between their own offerings and those of
competitors (quality differentiation is also called the quality gap). In the past two decades this
quality gap has been greatly reduced between competitive products and services. This is partly
due to the contracting (also called outsourcing) of manufacture to countries like India and China,
as well internationalization of trade and competition. These countries amongst many others have
raised their own standards of quality in order to meet International standards and customer
demands. The ISO 9000 series of standards are probably the best known International standards
for quality management.
There are a huge number of books available on quality. In recent times some themes have
become more significant including quality culture, the importance of knowledge management,
and the role of leadership in promoting and achieving high quality. Disciplines like systems
thinking are bringing more holistic approaches to quality so that people, process and products are
considered together rather than independent factors in quality management.
Quality improvement
There are many methods for quality improvement. These cover product improvement, process
improvement and people based improvement. In the following list are methods of quality
management and techniques that incorporate and drive quality improvement
1.
2.
3.
QFD Quality Function Deployment, also known as the House of Quality approach.
4.
Kaizen , Japanese for change for the better; the common English usage is
continual improvement.
5.
Zero Defect Program created by NEC Corporation of Japan, based upon Statistical
Process Control and one of the inputs for the inventors of Six Sigma.
6.
Six Sigma 6, Six Sigma combines established methods such as Statistical Process
Control, Design of Experiments and FMEA in an overall framework.
7.
PDCA Plan, Do, Check, Act cycle for quality control purposes. (Six Sigma's DMAIC
method (Design, Measure, Analyze, Improve, Control) may be viewed as a particular
implementation of this.)
8.
9.
10.
The Toyota Production System reworked in the west into Lean Manufacturing.
11.
12.
13.
14.
Proponents of each approach have sought to improve them as well as apply them to enterprise
types not originally targeted. For example, Six Sigma was designed for manufacturing but has
spread to service enterprises. Each of these approaches and methods has met with success but
also with failures.
10
Some of the common differentiators between success and failure include commitment,
knowledge and expertise to guide improvement, scope of change/improvement desired (Big
Bang type changes tend to fail more often compared to smaller changes) and adaption to
enterprise cultures. For example, quality circles do not work well in every enterprise (and are
even discouraged by some managers), and relatively few TQM-participating enterprises have
won the national quality awards.
There has been well publicized failures of BPR, as well as Six Sigma. Enterprises therefore need
to consider carefully which quality improvement methods to adopt, and certainly should not
adopt all those listed here.
It is important not to underestimate the people factors, such as culture, in selecting a quality
improvement approach. Any improvement (change) takes time to implement, gain acceptance
and stabilize as accepted practice. Improvement must allow pauses between implementing new
changes so that the change is stabilized and assessed as a real improvement, before the next
improvement is made (hence continual improvement, not continuous improvement).
Improvements that change the culture take longer as they have to overcome greater resistance to
change. It is easier and often more effective to work within the existing cultural boundaries and
make small improvements (that is Kaizen) than to make major transformational changes. Use of
Kaizen in Japan was a major reason for the creation of Japanese industrial and economic
strength.
On the other hand, transformational change works best when an enterprise faces a crisis and
needs to make major changes in order to survive. In Japan, the land of Kaizen, Carlos Ghosn led
a transformational change at Nissan Motor Company which was in a financial and operational
crisis. Well organized quality improvement programs take all these factors into account when
selecting the quality improvement methods.
Quality standards
The International Organization for Standardization (ISO) created the Quality Management
System (QMS) standards in 1987. These were the ISO 9000:1987 series of standards comprising
ISO 9001:1987, ISO 9002:1987 and ISO 9003:1987; which were applicable in different types of
industries, based on the type of activity or process: designing, production or service delivery.
11
The standards have been regularly reviewed every few years by the International Organization
for Standardization. The version in 1994 and was called the ISO 9000:1994 series; comprising of
the ISO 9001:1994, 9002:1994 and 9003:1994 versions.
The last revision was in the year 2000 and the series was called ISO 9000:2000 series. However
the ISO 9002 and 9003 standards were integrated and one single certifiable standard was created
under ISO 9001:2000. Since December 2003, ISO 9002 and 9003 standards are not valid, and
the organizations previously holding these standards need to do a transition from the old to the
new standards.
The ISO 9004:2000 document gives guidelines for performance improvement over and above
the basic standard (ISO 9001:2000). This standard provides a measurement framework for
improved quality management, similar to and based upon the measurement framework for
process assessment.
The Quality Management System standards created by ISO are meant to certify the processes
and the system of an organization and not the product or service itself. ISO 9000 standards do
not certify the quality of the product or service.
Recently the International Organization for Standardization released a new standard, ISO 22000,
meant for the food industry. This standard covers the values and principles of ISO 9000 and the
HACCP standards. It gives one single integrated standard for the food industry and is expected
to become more popular in the coming years in such industry.
ISO has a number of standards that support quality management. One group describes processes
(including ISO 12207 & ISO 15288) and another describes process assessment and improvement
ISO 15504.
The Software Engineering Institute has its own process assessment and improvement methods,
called CMMi (Capability Maturity Model integrated) and IDEAL respectively.
12
The manager who is "too busy managing the business" to listen to good sense about
environmental management could actually be costing the business, instead of achieving benefits
like those above.
13
Certification
(i)
(ii)
In the context of ISO 9001:2000 or ISO 14001:2004, certification refers to the issuing of
written assurance (the certificate) by an independent external body that it has audited a
management system and verified that it conforms to the requirements specified in the standard.
Registration means that the auditing body then records the certification in its client register.
So, the organizations management system has been both certified and registered.
Therefore, in the ISO 9001:2000 or ISO 14001:2004 context, the difference between the two
terms is not significant and both are acceptable for general use. Certification is the term
most widely used worldwide, although registration is often preferred in North America, and
the two are used interchangeably.
On the contrary, using accreditation as an interchangeable alternative for certification or
registration is a mistake, because it means something different.
In the ISO 9001:2000 or ISO 14001:2004 context, accreditation refers to the formal recognition
by a specialized body an accreditation body that a certification body is competent to carry
out ISO 9001:2000 or ISO 14001:2004 certification in specified business sectors.
In simple terms, accreditation is like certification of the certification body. Certificates issued
by accredited certification bodies may be perceived on the market as having increased
credibility.
Quality terms
Quality Improvement can be distinguished from Quality Control in that Quality Improvement
is the purposeful change of a process to improve the reliability of achieving an outcome.
Quality Control is the ongoing effort to maintain the integrity of a process to maintain the
reliability of achieving an outcome.
14
15
2.
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).
3.
Where mistakes recur, stopping production until the process can be corrected, to prevent
the production of more defects. (Stop in time).
16
consumers or other stakeholders for improved quality of service. After a crisis, a leader may
intervene strategically by articulating a new vision of the future to help the organization deal
with it. A plan to implement TQM may be such a strategic decision. Such a leader may then
become a prime mover, who takes charge in championing the new idea and showing others how
it will help them get where they want to go. Finally, action vehicles are needed and mechanisms
or structures to enable the change to occur and become institutionalized.
Process Oriented Management V/S Result Oriented Management:
Lets consider this, said the professor. How is Process Oriented Management (PROM)
different from Result Oriented Management (ROM)? Is it that in Process Oriented Management,
you dont bother about the result? No. That is not the case.
Process oriented management is based on the paradigm (mindset) that the result is the effect of a
number of causes, If we concentrate on the causes an ensure that the causes operate exactly as
the way we want to, the result is bound to happen (barring a random element that is
uncontrollable by its very nature, such as major earthquake.) Since results are bound to happen
when the causes are perfected, Process Oriented Management recommends that we stop
worrying about the result. (Incidentally, the philosophy of karmanye wadhikaraste ma phaleshu
kadachana implies the same thing; concentrate on perfecting the causes in the process and the
result is bound to come since the result is bouondto be achieved, we can therefore, forget about
it. This philosophy is often misunderstood as keep working without caring for the result)
Process oriented management is deeply concerned about the result. An analogy might help. A
student is told Get good marks, I dont care how. What kind of management is it Is it good?
Another student is told, You must get the marks, so find out the correct way to study, and study
with regularity and diligence. Would this policy work? Which kind of management would you
like to use in your organization? Western management has gone too far with result oriented
management; managers find that they have to produce result by hook or by crook. Naturally they
find that producing result is a marathon exercise every time.
In Process Oriented Management, you first study the process.
What is the difference between a process and an operation?
17
Increased revenue and market share obtained through flexible and fast responses to
market opportunities.
19
Ensuring that the objectives of the organization are linked to customer needs and
expectations.
Ensuring a balanced approach between satisfying customers and other interested parties
(such as owners, employees, suppliers, financiers, local communities and society as a whole).
Principle 2: Leadership
Leaders establish unity of purpose and direction of the organization. They should create
and maintain the internal environment in which people can become fully involved in
achieving the organization's objectives.
Key benefits:
People will understand and be motivated towards the organization's goals and objectives.
Considering the needs of all interested parties including customers, owners, employees,
suppliers, financiers, local communities and society as a whole.
Creating and sustaining shared values, fairness and ethical role models at all levels of the
organization.
Providing people with the required resources, training and freedom to act with
responsibility and accountability.
20
People at all levels are the essence of an organization and their full involvement enables
their abilities to be used for the organization's benefit.
Key benefits:
People understanding the importance of their contribution and role in the organization.
People accepting ownership of problems and their responsibility for solving them.
People evaluating their performance against their personal goals and objectives.
Lower costs and shorter cycle times through effective use of resources.
21
Identifying the interfaces of key activities within and between the functions of the
organization.
Focusing on the factors such as resources, methods, and materials that will improve key
activities of the organization.
Integration and alignment of the processes that will best achieve the desired results.
Structuring a system to achieve the organization's objectives in the most effective and
efficient way.
Providing a better understanding of the roles and responsibilities necessary for achieving
common objectives and thereby reducing cross-functional barriers.
Targeting and defining how specific activities within a system should operate.
22
Providing people with training in the methods and tools of continual improvement.
Making continual improvement of products, processes and systems an objective for every
individual in the organization.
23
Informed decisions.
Applying the principle of factual approach to decision making typically leads to:
Ensuring that data and information are sufficiently accurate and reliable.
Making decisions and taking action based on factual analysis, balanced with experience
and intuition.
Flexibility and speed of joint responses to changing market or customer needs and
expectations.
Applying the principles of mutually beneficial supplier relationships typically leads to:
24
1.
2.
The new philosophy: Adopt the new philosophy. We are in a new economic age, created
in Japan. We can no longer live with commonly accepted levels of delays, mistakes,
defective materials and defective workmanship. Transformation of Western management
style is necessary to halt the continued decline of business and industry.
3.
Cease dependence on mass inspection: Eliminate the need for mass inspection as the way
of life to achieve quality by building quality into the product in the first place. Require
statistical evidence of built in quality in both manufacturing and purchasing functions.
4.
End lowest tender contracts: End the practice of awarding business solely on the basis of
price tag. Instead require meaningful measures of quality along with price. Reduce the
number of suppliers for the same item by eliminating those that do not qualify with
statistical and other evidence of quality. The aim is to minimize total cost, not merely initial
cost, by minimizing variation. This may be achieved by moving toward a single supplier
for any one item, on a long term relationship of loyalty and trust. Purchasing managers
have a new job, and must learn it.
5.
Improve every process: Improve constantly and forever every process for planning,
production, and service. Search continually for problems in order to improve every activity
in the company, to improve quality and productivity, and thus to constantly decrease costs.
Institute innovation and constant improvement of product, service, and process. It is
management's job to work continually on the system (design, incoming materials,
maintenance, improvement of machines, supervision, training, retraining).
6.
Institute training on the job: Institute modern methods of training on the job for all,
including management, to make better use of every employee. New skills are required to
keep up with changes in materials, methods, product and service design, machinery,
techniques, and service.
25
Institute leadership: Adopt and institute leadership aimed at helping people do a better
job. The responsibility of managers and supervisors must be changed from sheer numbers
to quality. Improvement of quality will automatically improve productivity. Management
must ensure that immediate action is taken on reports of inherited defects, maintenance
requirements, poor tools, fuzzy operational definitions, and all conditions detrimental to
quality.
8.
Drive out fear: Encourage effective two way communication and other means to drive out
fear throughout the organization so that everybody may work effectively and more
productively for the company.
9.
Break down barriers: Break down barriers between departments and staff areas. People in
different areas, such as Leasing, Maintenance, Administration, must work in teams to
tackle problems that may be encountered with products or service.
10.
Eliminate exhortations: Eliminate the use of slogans, posters and exhortations for the
work force, demanding Zero Defects and new levels of productivity, without providing
methods. Such exhortations only create adversarial relationships; the bulk of the causes of
low quality and low productivity belong to the system, and thus lie beyond the power of the
work force.
11.
Eliminate arbitrary numerical targets: Eliminate work standards that prescribe quotas
for the work force and numerical goals for people in management. Substitute aids and
helpful leadership in order to achieve continual improvement of quality and productivity.
12.
Permit pride of workmanship: Remove the barriers that rob hourly workers, and people
in management, of their right to pride of workmanship. This implies, among other things,
abolition of the annual merit rating (appraisal of performance) and of Management by
Objective. Again, the responsibility of managers, supervisors, foremen must be changed
from sheer numbers to quality.
13.
14.
Top management commitment and action: Clearly define top management's permanent
commitment to ever improving quality and productivity, and their obligation to implement
all of these principles. Indeed, it is not enough that top management commit themselves for
life to quality and productivity. They must know what it is that they are committed to-that
is, what they must do. Create a structure in top management that will push every day on the
26
preceding 13 Points, and take action in order to accomplish the transformation. Support is
not enough: action is required!
DMAIC six sigma approach.
The six sigma approach for projects is DMAIC (define, measure, analyze, improve and
control). These steps are the most common six sigma approach to project work.
Some
organizations omit the D in DMAIC because it is really management work. With the D
dropped from DMAIC the Black Belt is charged with MAIC only in that six sigma approach.
We believe define is too important be left out and sometimes management does not do an
adequate job of defining a project. Our six sigma approach is the full DMAIC.
Define (DMAIC).
Define is the first step in our six sigma approach of DMAIC. DMAIC first asks leaders to
define our core processes. It is important to define the selected project scope, expectations,
resources and timelines. The definition step in the six sigma approach identifies specifically
what is part of the project and what is not, and explains the scope of the project. Many times the
first passes at process documentation are at a general level. Additional work is often required to
adequately understand and correctly document the processes. As the saying goes The devil is in
the details.
Measure (DMAIC).
Many think when they start a journey the most important thing to know is where they are going.
While we agree knowing where you want to go is very important, we believe some of the first
information you need before starting any journey is your current location. The six sigma
approach asks the Black Belt project manager to quantify and benchmark the process using
actual data. At a minimum consider the mean or average performance and some estimate of
the dispersion or variation (maybe even calculate the standard deviation). Trends and cycles can
also be very revealing. The two data points and extrapolate to infinity is not a six sigma
approach. Process capabilities can be calculated once there is performance data,
Analyze (DMAIC).
27
Once the project is understood and the baseline performance documented and verified that there
is real opportunity, it is time with the six sigma approach to do an analysis of the process. In this
step, the six sigma approach applies statistical tools to validate root causes of problems. Any
number of tools and tests can be used. The objective is to understand the process at a level
sufficient to be able to formulate options for improvement. We should be able to compare the
various options with each other to determine the most promising alternatives. As with many
activities, balance must be achieved. Superficial analysis and understanding will lead to
unproductive options being selected, forcing recycle through the process to make improvements.
At the other extreme is the paralysis of analysis. Striking the appropriate balance is what makes
the six sigma Black Belt highly valuable.
Improve (DMAIC).
During the improve step of the six sigma approach ideas and solutions are put to work. The six
sigma Black Belt has discovered and validated all known root causes for the existing
opportunity. The six sigma approach requires Black Belts to identify solutions. Few ideas or
opportunities are so good that all are an instant success. As part of the six sigma approach there
must be checks to assure that the desired results are being achieved. Some experiments and trials
may be required in order to find the best solution. When making trials and experiments it is
important that all project associates understand that these are trials and really are part of the six
sigma approach.
Control (DMAIC)
Many people believe the best performance you can ever get from a process is at the very
beginning. Over time there is an expectancy that slowly things will get a little worse until finally
it is time for another major effort towards improvement. Contrasted with this is the Kaizen
approach that seeks to make everything incrementally better on a continuous basis. The sum of
all these incremental improvements can be quite large. As part of the six sigma approach
performance tracking mechanisms and measurements are in place to assure, at a minimum, that
the gains made in the project are not lost over a period of time. As part of the control step we
encourage sharing with others in the organization. With this the six sigma approach really starts
to create phenomenal returns, ideas and projects in one part of the organization are translated in a
very rapid fashion to implementation in another part of the organization.
28
TQM helps to focus clearly on the needs of the market. The traditional approach of quality
control focuses on the technical details of a product so as to satisfy the customer. However,
the customer longs for different satisfaction perspectives which are generally overlooked in
the traditional approach. The needs change from person to person and also from place to
place. As TQM focuses on the concept of universality, it tries to abstract the satisfaction
perceptions of market and thus helps the organisation to identify and meet the requirements
of the market in a better way.
2.
TQM facilitates to aspire for a top quality performer in every sphere of activity. It is a well
accepted fact that the negative attitudes of employees and non-participative culture of the
organisations success, growth and prosperity. TQM emphasises, on bringing about
attitudinal and cultural change through promotion of participative work culture and
effective team-work. This serves to satisfy the higher human needs of recognition and selfdevelopment and enhances employees interest in the job. The employees performance,
thus, is not restricted to the product or service areas but reflects in other spheres as well.
3.
It channelises the procedures necessary to achieve quality performance. Quality in its true
sense can not be achieved instantly. It requires a systematic and a long-term planning and
strategic approach. By focusing on defining the quality policies, goals and objectives, and
communicating these properly to one and all in the organisation, adopting SQC and SPC
techniques and developing and using a system of evaluation, the organisations can
channelize their efforts to achieve the desired and objectivated quality performance.
4.
29
continuous effort to identify the problems and resolve them helps to reduce the waste. The
culture of well being thus improves housekeeping, cost-effectiveness and safety.
5.
6.
It helps to develop good procedures for communication and acknowledging good work.
Improper procedure and inadequate communication are yet another bane of many
organisations, which result in misunderstanding, confusion, low productivity, duplication of
efforts, poor quality, low morale and so on. TQM brings together members of various
related sections, departments and different levels of management thereby providing an
effective vehicle of communication and interaction.
7.
It helps to review the process needed to develop the strategy of never ending improvement.
Quality improvement efforts cannot be restricted to any time period. They nee to be
continuous to meet the dynamic challenges. TQM emphasises on a continuous and periodic
review so as to make the required changes.
The benefits derived by the organisations, therefore, are many and multi-faceted. Many of
these can be measured in quantitative terms. However, the intangible benefits, which include
enrichment of the quality of the worklife and many more are not quantifiable. At the same
time, it has to be established whether they do occur or not in order to prove or disprove the
efficacy of the concept. This can be assessed by a well-planned research project or by carrying
out an opinion survey periodically. The tangible and intangible benefits of TQM are as
presented
ADVANTAGES OF TOTAL QUALITY MANAGEMENT.
TQM is a collaborative system. It can be conceptualized as a network of processes and
activities through which various people in the organization can see different aspects of a
problem and can constructively explore their own limited vision of what is possible.
30
Problems/Issues
Situation
ABC bank is one of the biggest banks in Asia established 85 years back. Recently it was faced
with some problems such as increased. Customer complaints, inconsistent service at the front
counter, unbalanced investment resulting in reduced profit margins and a significant drop in
customers.
31
Solution:
The Organization, therefore, set up a quality improvement team which took up a Customer
Care program to bring about a change in managing customer service. The program primarily
focused on trouble shooting, customer service improvement and improving the management and
staff relations. In building quality this, the groups were composed of people from all levels and
no status titles were assigned. Groups were set up keeping in view the group dynamics and small
group bonding principles in mind. The workshops were arranged for the groups focusing on a
super ordinate goal to put the Customer First as a philosophy.
The workshops opened with personal value searching session so as to create a motive for action.
To further the value motive the prospects of personal growth were reviewed. A congruence
between personal value and organizational goal was established. The workshop programmes
emphasized on creative problem solving approach to permit innovation, and challenge the
existing cultural norms. During the workshops the culture, work environment and attitudes
towards customers in the banking section were discussed openly, resulting in developing a sense
of trust and commitment amongst participants.
Through these workshops a network of committed people was established across the branches.
To promote commitment and strong bonding, the rewards were given. The process percolated
downwards and the cultural change upwards. Thus, by stepping outside the system and focusing
on motivation and reward, the organization brought about a necessary cultural change to keep the
satisfaction of the customer as a primary goal of all the employee.
TQM FAILURES CASE EXAMPLE:
Mr. Pandit, President of G.T. Electronics, read a lot about the
TQM.
He
instructed
the
subordinates to arrange a meeting with all department heads and plan to implement TQM in G.T.
Electronics. Mr. Pandit personally addressed the meeting and subsequently also wrote an
enthusiastic article about TQM in the company newsletter. He sent the top managers for TQM
training
programs and declared that the TQM be initiated. However, he himself later got
involved with joint ventures in Europe. The TQM program was forgotten. When he returned to
the country. After few months, he found that very few people showed interest in TQM. The
earlier initiative and interest waned out because of the CEOs lack of convication.
32
Academic resources
International Journal of Productivity and Quality Management, ISSN 1746-6474, Inderscience
International Journal of Quality & Reliability Management, ISSN: 0265-671X, Emerald
Publishing Group
OUT OF THE CRISES-WRITTEN BY EDWARDS W. DEMINGS
THE TOYOTA WAY -WRITTEN BY STEPHEN R. COVEY
33
CASE NO 1.
COMPANYS NAME
MAHINDRA & MAHINDRA GROUP. [Farm Equipment Sector]
Mission Statement
Our core values are influenced by our past, tempered by our present and are designed to shape
our future. They are an amalgam of what we have been, what we are and what we want to be.
These values are the compass that will guide our actions, both personal and corporate. They are:
Professionalism
We have always sought the best people and given them the freedom and the opportunity to
grow. We will continue to do so. We will support innovation and well-reasoned risk-taking,
but will demand performance.
Customer first
We exist and prosper only because of our customers. We will respond to their changing needs
and expectations speedily, courteously and effectively.
Quality focus
Quality is the key to delivering value for money to our customers. We will make quality a
driving value in our work, in our products and in our interactions with others. We will do it
"first time right".
Dignity of the individual
We value individual dignity, uphold the right to express disagreement and respect the time and
efforts of others. Through our actions, we nurture fairness, trust and transparency.
34
Objective
Our Core Purpose
Indians are second to none in the world. The Founders of our nation and of our company
passionately believed this. We will prove them right by believing in ourselves and by making
Mahindra & Mahindra Ltd. known worldwide for the quality, durability and reliability of its
products and services.
Goals
1. The Core Purpose and Core Values of M & M
A.
"The Indians are second to none in the World. The founders of our Nation and of our Company
passionately believed this. We will prove them right by believing in ourselves and making
Mahindra and Mahindra Ltd known Worldwide for Quality, Durability and reliability of
its Products and Services".
B.
1.
2.
Professionalism
3.
Customer First
4.
Quality Focus
5.
2. M & M organization
Since 1994 M & M is organized into six Sectors, each a Strategic Business Unit, as Follows 1.
Automotive Sector
2.
3.
4.
Infrastructure Sector
5.
35
36
Background/History of Co.
Foundation of organisation
This company was founded by two Mahindra brothers - Jagdish Chandra and Kailash Chandra in
the year 1945. Around this time, Independence for India was seen as a certainty and the National
Leaders of that era had given a call to all Indians, especially to the youth, to contribute their best
in the 'Building of a strong and self reliant Nation'. This had prompted the Mahindra brothers to
leave their then existing professions and start this new venture.
Few groups can identify as closely with India's destiny and industrial progress as the Mahindra
Group. In fact, Mahindra is like a microcosm of India. Both were born around the same time, had
the same aspirations and both experienced the inevitable troughs
and crests in the journey towards their goals. And both continue to march on the path to progress
and global recognition.
The birth of Mahindra & Mahindra began when K.C. Mahindra visited the United States of
America as Chairman of the India Supply Mission. He met Barney Roos, inventor of the rugged
'general purpose vehicle' or Jeep and had a flash of inspiration: wouldn't a vehicle that had
proved its invincibility on the battlefields of World War II be ideal for India's rugged terrain and
its kutcha rural roads?
37
Swift action followed thought. The Mahindra brothers joined hands with a distinguished
gentleman called Ghulam Mohammed. And, on October 2nd, 1945, Mahindra & Mohammed was
set up as a franchise for assembling jeeps from Willys, USA.
Two years later, India became an independent nation and Mahindra & Mohammed changed its
name to Mahindra & Mahindra. Ghulam Mohammed migrated to Pakistan post-partition and
became the first Finance Minister of Pakistan.
Since then, Mahindra & Mahindra has grown steadily in size and stature and evolved into a
Group that occupies a premier position in almost all key sectors of the economy. The Group's
history is studded with milestones. Each one taking the Group forward. In fact, today, its total
turnover is about 6 billion dollars.
These days, Mahindra is a group in a hurry, engaged in an ambitious, sustained and prolonged
penetration into the global arena. Its spirit can be encapsulated in the words of the poet Robert
Frost, a favourite of India's first Prime Minister, Pandit Jawaharlal Nehru:
"The woods are lovely, dark and deep,
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep."
For Mahindra & Mahindra, this translates into many more milestones to be set up before it rests.
If ever.
OTHER ACTIVITIES
Mr. Mahindra is the co-founder of the Harvard Business School Association of India, an
association dedicated to the promotion of professional management in India. The association has
grown substantially over the years.
He is Past President 2003-04 of the Confederation of Indian Industry and has also been President
of the Automotive Research Association of India (ARAI).
Mr. Mahindra is a Director of The National Stock Exchange of India Limited appointed under
the Public Representatives category.
38
He takes a keen interest in matters related to education and apart from being a Trustee of the
K.C. Mahindra Education Trust, which provides scholarships to students, he is also on the Board
of Governors of the Mahindra United World College of India.
Mr. Mahindra is the Founder Chairman of the Mumbai Festival, which was launched in January
2005. The event was the first comprehensive festival to celebrate the rich cultural diversity of the
city.
He is the Co-Chairman of the International Council of the Asia Society, New York.
Mr. Mahindra is a Member of the following organisations:
1. Harvard Business School - AsiaPacific Advisory Board
2. Harvard Business School - Member of the Board of Deans Advisors
3. Harvard University Asia Centre - Advisory Committee
4. Asia Business Council
5. National Sports Development Fund (NSDF), Government of India Council and Executive
Committee
6. The Nehru Centre, Mumbai - Executive Committee
7. National Council of Applied Economic Research
8. National Institute of Bank Management, Pune Governing Board
How are the organizations implements Quality Management.
QUALITY MANAGEMENT SYSTEMS
1.1. General Requirements
FES has established and documented a Quality Management System which is implemented,
maintained and continuously improved for effectiveness in accordance with requirements
of International Standards ISO / TS - 16949:2002 and Japan Quality Medal Guidelines.
For this the organization has identified the following processes for application throughout the
organization. The list of processes is as follows:-
39
Process
Main Process
No. Number
1
Business Planning
1
1a
Strategy Formulation
Process Owner
1b
1c
Tracking
2
Human
4
5
6
7
8
9
2a
2b
2c
2d
2e
2f
(Officers)
Capability Building & Training
Staffing & Compensation
Employee Care
Improving Employee Morale
Policy Deployment
Performance Management
10
11
3
3a
3b
3c
3d
3e
3f
Recognition
Service Provision Process
Customer Care Operations Head
Spares Management Process
Customer Care Operations Head
Product Launch
PMMS Head
Sales process (Mahindra Sales System - Special Projects, Sales Zonal Heads
3g
MSS)
Customer
17
3h
Process
Marketing Planning Process
PMIS Head
18
4
4a
International Operations
Identification of New Market
Regional
Head
International
19
4b
Appointment of Distributors
Operations
Regional
Head
International
Sales Management
Operations
Regional
Head
International
Operations
Regional
Head
International
Spares Management
Operations
Regional
Head
International
12
13
14
15
16
20
21
22
4c
4d
4e
Resource
Satisfaction
Management
HR & PMS Head
HR & PMS Head
HR & PMS Head
HR & PMS Head
HR & PMS Head
HR & PMS Head
40
Sr.
Process
No. Number
Main Process
Process Owner
Operations
23
24
25
26
27
28
29
30
31
32
33
34
35
36
5
5a
5b
5c
5d
5e
5f
5g
6
6a
6b
6c
6d
6e
6f
6g
Product Quality
Field Quality Assurance
Head PQPU- Field Quality
Supplier Quality Assurance
Head PQPU- Supplier Quality
In-house Quality Assurance
Head PQPU- In-House Quality
IQS
Head PQPU- In-House Quality
Material Testing
Head PQPU- Laboratory
Improving DR Preparedness
Head PQPU- NPD
Receipt Inspection
Head PQPU Receipt Inspection
Manufacturing
Manufacturing Process
Head- Manufacturing
Supply Module Process
Head- SCPC
Manufacturing Support (Maintenance)
Head- Manufacturing
Manufacturing Engineering Support
Head- Manufacturing
MSA
Head- Manufacturing
Production Planning
Head- SCPC
Logistic Processes (Inbound and Stock Head- SCPC
yard)
37
Head-
PQPU,
Manufacturing,
SCPC,CDMM, PDRDS
38
39
8
8a
8b
Head- ER & D
Head- ER & D
40
8c
Head- ER & D
41
42
43
9a
9b
9c
Safety
Central Maintenance
Statutory Compliance
44
45
46
47
48
49
10
10a
10b
10c
10d
10e
10f
Head- Horizons.
Head - Program Office
Head- CAE
Head- T & E
Head- Technology
Head - Product Improvement
50
11
11a
Component Development
New Component Development
41
Sr.
Process
Main Process
Process Owner
No. Number
51 11b
Target costing
Head- Component Development
52 11c
Supplier Quality Assurance and Handover Head- Component Development
of components
12
12a
Manufacturing Engineering
Capital Resource planning & Installation Head- ME
59
12b
12c
12d
12e
12f
13
13a
process
Calibration
Tooling Management
New Product Productionizing
Tooling Design
Strategic Manufacturing
SSBU
Supplier Up gradation
60
61
62
63
14
14a
14b
14c
14d
Business Excellence
Continuous Improvement process
Head- Business Excellence
Control of documents process
Head- Business Excellence
Control of Records
Head- Business Excellence
Establishing, Implementing & continually Head- Business Excellence
53
54
55
56
57
58
15
65
66
67
68
69
16
Information Technology
16a
Provision of IT resources
Head IT
16b
Helpdesk - IT services
Head IT
16c
Software Development
Head IT
16d
Asset Management
Head IT
17
ER Implementation process
(Cross Functional Team )
The sequence of activities in each process is shown in the process flow chart with references
of respective procedures, formats and work instructions. The Interrelationships between
processes are shown in the attached Annexure.
Criteria and methods needed to ensure both the operation and control of these processes are
specified in the process matrix and flow diagrams of the processes, procedures, formats etc.
wherever applicable. These are available in the documented system.
Resources are made available to support all the processes and procedures through the
determination of required infrastructure for each of the processes.
42
Monitoring, Measurement and analysis of Main processes is done through various measures
as listed in Policy Deployment Documents of the ELs, PULs and PGLs & Sub Processes
will be monitored. All processes shall be reviewed once in a year in the month of April and
modified if necessary.
Actions are implemented to achieve planned results and continual improvements of these
processes.
The outsourced processes under the scope of this manual are- The Strategic Sourcing
Business Unit (SSBU) processes. The supplier is selected by this unit and is formally
approved for supplying components to FES which suffice the delivery and quality
requirements.
However, the inter phase of SSBU with various PUs at FES is as follows -
The PQPU is responsible for monitoring & improving supplier Quality and is
responsible for Quality Assurance of existing Supplier Component combination.
Process No.5b.
Supply Modules from SCPC PU are responsible for procurement of material from the
suppliers approved by SSBU with SOB and Pricing guidelines. The order is put on
supplier as per production plan and market requirements. Supplier Module is
responsible for monitoring and improving the delivery schedule adherence
performance of the suppliers. Process No.6b.
43
b.
c.
d.
Documents like Standard operating procedures, Work Instructions etc required for ensuring
effective planning, operation and control of processes by those, who actually implement the
processes (Level 3 documents)
e.
44
45
Mahindra & Mahindra Ltd; FES has prepared, documented and implemented procedures and
processes in consistence with requirements of ISO/TS-16949:2002. The procedures make
reference to other documents.
The Manual includes the Policy and describes the Quality Management System, of Mahindra
& Mahindra Ltd; FES. The scope of the documented system is Design, Manufacturing,
Marketing and Servicing of Tractors, Aggregates & Components.
The manual briefly explains methodology adopted for meeting the requirements of the
various clauses of ISO/TS 16949:2002 QMS, and also includes some broad procedures.
References of critical departmental procedures are given in the Manual at appropriate places
in each section.
The procedures, flow charts and listing of processes is applicable to each area. These are
decision oriented, management activities. These documents give the information related to the
sequence of activities, control points and different agencies involved at different stages of a
process.
Control Plans, SOPs and Work Instructions are working documents and these include
guidelines for performing a task/ set of activities, which are repetitive in nature.
46
Level of Document
Quality Manual - Level I
Common Procedures and Formats
Process Flow Diagram & Process maps
Work Instructions / SOPs
Formats
Approval Authority
MR office
MR office
Respective Process Owner
PGL/Manager of respective Processes
PGL/Manager of respective Processes
Sr. No.
1
Level of Document
Quality Manual
Procedures
Methodology
Level I as per clause numbers
Common Procedure - QAP14.1
Common MQS Manual - C._
Supplier QA Manual - PQ/S
Main Process no. code. - *
Formats
Sub Process no code .- *a, * b.*c -(*-> Ref. Table X for those nos.)
QAP AA.1,---(AA stands for sub process no code)
Common Formats:- TQM 1/---Other Formats: - To be decided by respective process
owner. Generally starts with PU name abbreviation.
47
The above documents are available in the companys ERP System with Read Access to all and
the new documents shall be numbered by the next serial no. for all types of documents.
Also regarding documentation the following shall be ensured1.
The changes and current revision status of documents will be identified as per the
document control procedure.
2.
3.
4.
5.
Top Management i.e. the President and Chief Operating Officer and the respective ELs and
PULs along with respective PGLs directly or indirectly through the PU Managers provide
evidence of its commitment to the development and implementation of the quality, system
and continually improving its effectiveness through the process of Policy Deployment and
so also by:
48
4. Conducting Management Reviews as per the documented procedure QAP14.1 and Process
No.14d.
5. The Quality Systems meeting requirement of Mahindra Quality System (MQS) are
communicated to the whole organization through local Website. In addition the Statutory
and Regulatory requirement are available with respective department.
6. Process Efficiency - The results of satisfaction of Managing Points at all levels are reviewed
by the Top Management. Process No.1b and Process No.2e and No.2f.
2.2. Customer Focus
The key processes are mapped using format TQM 32 i.e. Process Mapping Format, which
requires the Process Owner to identify the Customers of the process and Requirement of the
customers.
Also the processes are managed to identify and address the final customer needs
(Process
Nos. 3f, 4a, 5a, 5c, 5d, 10a, and 10f) and improve CSI (ProcessNo.3g).
2.3. Quality Policy
1.
A Quality Policy appropriate to the purpose of the organization has been established. It is
in line with the organization's strategy and aims at improvement of Customer Satisfaction,
Employee Satisfaction and Profitability.
Customer Understanding
Speed to Market
Cost Leadership
Employee Empowerment
Execution Excellence
2.
3.
The understanding of Quality Policy is ascertained through each Internal Audit and
necessary actions are taken.
4.
The Quality Policy shall be reviewed annually during the policy formulation of the
President and periodically reviewed during Management Reviews.
49
FES announces the President's Policy every year in February. The responsibility of
documenting the President's Policy lies with the Business Planning PU.
2.
The President's Policy is generally drawn from FES strategy and Long Term plan with due
consideration to earlier year's performance, changes in Business Scenario etc.
3.
The President's Policy has two partsa) Objectives to be achieved (including targets)
b) Guidelines - How to achieve targets.
4.
The President's Policy is further deployed through more layers of the organization. The
deployment is in form of Managing Points (objectives) with targets and Major Measures
(how to achieve these targets)
5.
Each Policy Holder reviews achievement of respective policy through monthly PDCA.
6.
The Quality Management Systems are aligned to the requirement of Policy Deployment.
50
Organization Chart:-
51
52
B. Manufacturing
Assembly of aggregates like Engine / Transmission (at Mumbai, Nagpur & Rudrapur
Plants )
Selling and Servicing of tractors in India through Dealers controlled by Area / Sub Area
Offices.
Selling and servicing of tractors abroad either through MUSA, MCTCL, Mahindra
Australia and various other distributors in different countries.
Integrated Plants at
a. Mumbai
b. Nagpur
c. Rudrapur.
d. Jaipur
The Mumbai plant also houses divisions like Product Development and R & D Services
(PDRDS), Component Development & Manufacturing Engineering (CDME), Accounts, IT
Division, HR & PMS, International Marketing, Business Planning and Quality & System.
54
Nagpur and Rudrapur Plants are also equipped with necessary manufacturing infrastructure and
support services. Jaipur Plant is supported by the above three plants for manufacturing of
Tractors.
C.
Marketing establishment
6. Employee Strength
The Employee strength of FES consists of employees located at Mumbai, Nagpur, Rudrapur and
Jaipur plants and employees located at Marketing Establishments.
6. Market Share
Manufacturer
MAHINDRA FES
Market Share
F03
F04
25.8
25.5
F05
26.5
F06
29.5
FO7
29.7
7. Sales
No. of
Tractors
F-94
F-95
32743
F-96
F-97
F-98
F-99
F-00
F-01
F-02
F-03
F-04
67119
67744
68739
77201
54485
39449
44807 60005
No.
Tractors
of
516
680
923
1488 2868
8. Vision of FES
55
F-05
F0-06
F0-07
78048 95006
Event
1963
1964
1970
1978
1981
1983
1988
FES achieved Leadership position in Indian Tractor Market - a position retained till
today.
200000th Tractor was produced.
The Tractor Division became a Sector (SBU) of M & M, to be known as Farm
1994
56
1997
1998
1999
2000
2001
2002
2003
2004
2005
2007
2007
Won the Golden Peacock National Quality Award for the year 2007
Won the coveted Japan Quality Medal.
Organogram of Organization
The Board of Directors of the Company has, as its members, eminent persons from Industry, Finance,
Investment and other branches of business, who bring diverse experience and expertise to the Board.
The Company's current Board of Directors is as follows:
57
NAME
1.
DESIGNATION
2.
Director
4.
Director
5.
M. M. Murugappan
Director
6.
3.
8.
Narayanan Vaghul
Director
9.
Director
10. R. K. Kulkarni
Director
Director
2,006.0
2,008.00
Gross
1
Sales/Income
2,007.00
from
Operations
591,454.0
934,757.32
769,559.22
2
(94,378.1
(112,489.36)
822,267.96
58
(103,504.06)
666,055.16
1)
497,075.9
Operations
1
8,668.7
2
3
a.
10,385.98
in
(2,143.2
(10,320.18)
of
10,850.27
(17,405.43)
3)
raw
337,429.7
581,696.75
477,669.10
5
41,745.3
c.
Staff cost
55,178.39
46,425.17
9
65,820.7
d.
e.
3.1
Other Expenses
Provision for contingencies
98,910.85
(Net of reversals)
Total
Expenditure
78.45
(a+b+c+d+e)
Profit
before
Depreciation,
82,272.72
4
342.0
33.99
0
443,194.6
725,544.26
588,995.55
Interest,
Exceptional
62,550.0
107,109.68
87,909.88
2
5,158.6
(1,840.16)
(557.56) 5
16,519.9
Depreciation / Amortisation
Profit Before Exceptional
20,000.53
88,949.31
6B. (Note 3) )
21,001.18
18,405.45
0
40,871.4
70,061.99
7
2,947.8
1,355.16
3
43,819.3
109,950.49
71,417.15
tax
6,350.0
28,540.00
21,500.00
0
2,615.0
(4,300.00)
(1,350.00) 0
34,854.3
85,710.49
51,267.15
34,854.3
12
13
value
Rs.
share) (Note 4)
Reserves
and
excluding
14
10
85,710.49
51,267.15
per
11,600.8
23,339.96
11,164.79
Surplus
Revaluation
164,414.6
266,054.93
185,845.57
6)
Diluted Earnings per Share
30.0
38.07
23.04
6)
Aggregate of non-promoter
17
shareholding :
30.0
34.93
20.72
86,565,251.0
Number of Shares
185,962,626.00
88,185,587.00
0
0.7
Percentage of Shareholding
Included in above are GDRs
0.77
0.76
14,623,601.00
7,226,243.00
0
0.0
Percentage of Shareholding
Dividend
18
per
0.06
0.06
Ordinary
9.0
10.00
60
13.00
Mumbai October 22, 2007: Mahindra & Mahindras Farm Equipment Sector (FES), the 3rd largest
tractor company worldwide, was awarded the coveted Japan Quality Medal on October 16, 2007, by
the Union of Japanese Scientists and Engineers (JUSE), Tokyo. Mahindra is the only tractor
manufacturing company in the world to win this highly acclaimed award for excellence in Total
Quality Management (TQM). Mahindra is also one of the very few companies globally to win this rare
honour.
FES was also the first tractor company in the world to win the prestigious Deming Prize in 2003. It
had won the award for customer focus, commitment and demonstrated results in improving product
and process quality.
61
CASE 2
COMPANYS NAME
62
Amul follows a unique business model, which aims at providing 'value for money' products
to its consumers, while protecting the interests of the milk-producing farmers who are its
suppliers as well as its owners. Despite being a farmers' co-operative, Amul has given
multinationals a run for their money.
In butter, cheese and saturated fats, Amul has remained the undisputed market leader since its
inception in 1955, by offering quality products at competitive prices. In other categories, Amul
has nullified its late mover disadvantage through aggressive pricing, better quality, innovative
promotion, and superior distribution
GCMMF, endeavour to satisfy the taste and nutritional requirements of the customers of the
world, through excellence in marketing by our committed team
Through Co-operative networking. They are committed to offering quality products that provide
best value for money.
OBJECTIVE
GOALS
Customer Orientation
Commitment to Producers
Belongings
Co-operation
Pride in Organisation
Employee Satisfaction
Integrity
Excellence
Leadership
Quality
Innovaton
63
64
customer, then the contract loses its value. If Amuls sales continue to rise, it is because that
contract has been honoured, again and again. I would like to think that the granddaughters of
some of our first customers are now contracting with us to buy their butter, cheese, baby food,
chocolates and other fine Amul products. It is also a fact that when we first thought of exporting
to West Asia and even to the United States, it was because of the loyalty of Amul customers who,
even when far from home, still craved our taste of India.
What goes into the contract that is a brand name? First is quality. No brand survives long if its
quality does not equal or exceed what the buyer expects. There simply can be no compromise.
Thats the essence of the contract. In the case of a food product, this means that the brand must
always represent the highest hygienic, bacteriological and organoleptic standards. It must taste
good, and it must be good.
Second, the contract requires value for money. If our customer buys an Amul product, she gets
what she pays for, and more. We have always taken pride in the fact that while we earn a good
income for our owners the dairy farmers of Gujarat we dont do it at the cost of exploiting the
consumer. Even when adverse conditions have reduced supplies of products like butter, we have
resisted the common practice of raising prices, charging what the market would bear. Rather, we
have kept prices fair and done our best to ensure that retailers do not gain at the consumers
expense.
The third element of the contract is availability. A brand should be available when and where the
customer wants it. There is no benefit achieved in creating a positive brand image, and then
being unable to supply the customer who wants to buy it. In our case, over the years we have
built what is probably the nations finest distribution network. We reach hundreds of cities and
towns through a cold chain that not only ensures that our products are available, but they reach
the customer at the farthest end of the country with the same quality as you would find in
Ahmedabad or Vadodara.
The fourth part of the contract is service. We have a commitment to total quality. But,
occasionally, we may make a mistake or, our customer may think weve made a mistake, and
the customer, as they say, is always right. That is why, for Amul, every customer complaint must
be heard not just listened to. And, every customer complaint must be rectified to the extent
humanly possible.
65
For close to fifty years now, Amul has honoured its contract with the consumer. The contract that
is symbolised by the Amul brand means quality. It means value for money. It means availability.
And it means service.
How did the Amul brand become what it is? To answer that, we must journey back in time, to the
history books, to the time of Indias independence because Amuls birth is indelibly linked to the
freedom movement in India. It was Sardar Vallabhbhai Patel who said that if the farmers of India
are to get economic freedom then they must get out of the clutches of the middlemen.
The first Amul cooperative was the result of a farmers meeting in Samarkha (Kaira district,
Gujarat) on 4 January 1946, called by Morarji Desai under the advice from Sardar Vallabhbhai
Patel, to fight rapacious milk contractors. It was Sardars vision to organise farmers, to have
them gain control over production, procurement and marketing by entrusting the task of
managing these to qualified professionals, thereby eliminating the middle men, the bane in
farmers prosperity.
The decision was taken that day in January 1946: Milk producers cooperatives in villages,
federated into a district union, should alone handle the sale of milk from Kaira to the
government-run Bombay Milk Scheme. This was the origin of the Anand pattern of cooperatives.
The colonial government refused to deal with the cooperative. The farmers called a milk strike.
After fifteen days the government capitulated. This was the beginning of Kaira District
Cooperative Milk Producers Union Ltd., Anand, registered on 14 December 1946.
Originally the Anand pattern included dairy cooperative societies at the village level, and a
processing unit called a union at the district level. Inspired by the Kaira Union, similar milk
unions came up in other districts too. In 1973, in order to market their products more effectively
and economically, they formed the Gujarat Cooperative Milk Marketing Federation Limited
(GCMMF Ltd.). GCMMF became the sole marketer of the original range of Amul products
including milk powder and butter. That range has since grown to include ice cream, ghee, cheese,
chocolates, shrikhand, paneer, and so on. These products have made Amul a leading food brand
in India.
The brand name AMUL, from the Sanskrit Amoolya, meaning priceless, was suggested by a
quality control expert in Anand. The first products with the Amul brand name were launched in
1955. Since then, they have been in use in millions of homes in all parts of India, and beyond.
66
Today Amul is a symbol of many things: Of high quality products sold at reasonable prices, of
availability, of service.
There is something more, though, that makes the Amul brand special and that something is the
reason for our commitment to quality and value for money. Amul is the brand name of 2 million
farmers, members of 12,700 village dairy cooperative societies throughout Gujarat. This is the
heart of Amul, it is what gives strength to Amul, and it is what is so special about the Amul saga.
In the early days of Kaira Union there was no dearth of cynics. Could natives handle
sophisticated dairy equipment? Could western-style milk products be processed from buffalo
milk? Could a humble farmers cooperative market butter and cheese to sophisticated urban
consumers? The Amul team farmers and professionals confounded the cynics by processing a
variety of high-grade dairy products, several of them for the first time from buffalo milk, and
marketing them nationally against tough competition.
What began way back in 1946 was really an effort to carve out a truly Indian company that
would have the involvement of millions of Indians and place direct control in the hands of the
farmers. It was a mandate for producing, owning and marketing and above all, building your
own truly Indian Brand. And successfully at that.
You will appreciate that when the lives of lakhs of farmers depend on a brand, and when your
history is grounded in the Independence movement, when not only competitors but even your
own government questions you, then your resolve to be the best is like the finest steel.
Amul, therefore, is a brand with a difference. That difference manifests itself in a larger than life
purpose. The purpose freedom to farmers by giving total control over procurement, production
and marketing. Amul and all other milk products produced by cooperatives were born in
struggle. It was the producers struggle for command over the resources that they create, a
struggle to obtain equitable returns and a struggle for liberation from dependence on middlemen.
It was a struggle against exploitation. A refusal to be cowed down in the face of what others
believed to be the impossible.
Amuls birth was thus a harbinger of the economic independence of our farmer brethren. Amuls
mission was the development of farmers, nutrition to the nation, and heart in heart, the real
development of India.
67
Given Indias vast geographical spread, the country had very few dairy plants at the time of
independence. As the then Prime Minister Lal Bahadur Shastri had said, One Amul is not
sufficient. Many Amuls are the need of the hour. This led to replication of the Anand pattern
through the Operation Flood programme which has, amongst others, three major achievements to
its credit, namely: making dairying Indias largest self-sustainable rural employment programme,
bringing India close to self-sufficiency in milk production, and trebling the nations milk
production within a span of two and a half decades to make India the worlds largest milk
producer.
Today, 173 milk producers cooperative unions and 22 federations play a major role in meeting
the demand for packed milk and milk products. Quality packed milk is now available in more
than 1,000 cities throughout the length and breadth of India. And this is milk with a difference
pasteurized, packaged, branded, owned by farmers carrying the milk drop logo, like Amul, a
symbol of quality.
Over the course of Operation Flood, milk has been transformed from a commodity into a brand,
from insufficient production to self sufficient production, from rationing to plentiful availability,
from loose, unhygienic milk to milk that is pure and sure, from subjugation to a symbol of
farmers economic independence, to being the consumers greatest insurance policy for good
health.
What of the future? Indias population has risen from 350 million in 1950 to 1,000 million today.
As cities draw people to new employment opportunities, the current urban-rural ratio of 26:74 is
likely to become 33:67 by the year 2010. As per available projections, the population by the year
2010 would touch 1,190 million people. This means that by the year 2010, rural India will be
required to support some 800 million people, an increase of 11% over 1999s 720 million rural
people.
Based on the current population demographics and projections, we estimate that there will be
260 million women in the age-group of 15-59 years in India by the year 2010 and this would
further increase to 302 million by the year 2020, of which only 100 million would be literate.
This means that rural women will comprise 21% of Indias total population. In our country, most
rural women contribute to agricultural and dairying activities apart from the household work
and their activities are not included in Indias GDP despite their significant contribution.
68
Dairying is, therefore, very important to our rural women. For many, it is their main source of
employment and income, incomes that they often manage themselves.
Population gives us one picture. The other is provided by the demand for household
commodities. By 2010, the national requirement for food grains will touch 266 million metric
ton, rising to 343 mmt by 2020. For milk, estimated consumption will be 153 mmt by 2010 and
271 mmt by 2020. For edible oils, demand will soar to 9 mmt by 2010 and 13 mmt by 2020.
It should be clear that agriculture will remain the most important engine of our economy. Amul
and its cooperative sister brands are aware of this challenge. The future, they say, is at best a
mystery. But, it should be clear that the needs of a nation on the move must be met. The country
is young. There are more working women. The needs of an ever-growing population have to be
met with sustainable economic development. And the demand for milk and milk products,
therefore, is only going to grow further. Couple this with the nutritional needs of the new and the
old generations and it is equally clear that there will be a need for more value added milk
products. This calls for production to be enhanced at even faster rate than it is at present.
There is also something very special about milk, something which requires that any brand for
milk and milk products to act not simply as a seller, but as a trustee. Milk is not a white good or a
brown good. It is not something people save their entire lives in order to buy like a car, or a
house. Milk is not a status symbol; rather it is the symbol of nutrition. Milk is a nearly complete
food, providing protein, vitamins, minerals and other nutrients so essential to maintaining good
health.
We realise the value of milk on the day the milkman does not bring it to our doorstep, when our
children have to go to school without it, when we go without our daily cup of coffee or tea. And
what would our lives be like without ghee, butter, cheese, curd, lassi, chaas and the like. Milk is
not only an ingredient in our favourite recipes, it is an essential ingredient of life itself. And, by
its very indispensable nature, it has one of the biggest markets a whopping 82 mmt at a very
conservative consumption of just 214 grams per day per person in India alone.
Our commitment to the producer, and our contract with the consumer are the reasons we are
confident that cooperative brands, like Amul, will have an even bigger role to play in the next
fifty years. Resources need to be deployed with a purpose and a commitment to deliver better
69
results. There is no limit for a marketing exercise then. It must build India and its culture a
second time round. An India, that is the land of our dreams.
2.
3.
Entering the actual figures for milk procurement, milk sales, production, dispatch
& closing stocks till date
4.
5.
6.
7.
8.
9.
Verified copies are given to respective Product Officer, Despatch, Purchase &
GPM.
10.
2.
3.
Name of manufacturer.
4.
Name of Marketer.
5.
6.
Ingredients used
7.
71
To take responsibility for your own life and stop blaming others or circumstances.
To take more personal responsibility for your state of mind and emotions.
Values/Mission
Hoshin Kanri
ASC/BRM/Friday Meetings
72
Kaizen
House Keeping
DATE OF IMPLEMENTATION
Kaizen
May, 1995
July, 1995
Housekeeping
October, 1995
June, 1996
Hoshin Kanri
January, 1997
October, 1997
KAIZEN
o Kaizen is basically small improvements carried out by individuals in his/her day
to day work.
o The purpose of kaizen movement is to create a culture of continuous
improvement in the organization.
o Kaizen are being done on
-Thrust areas.
-Systems & processes.
-Communication
-Learning
-Housekeeping, etc.
73
Formation of Teams Team Leader, Facilitator and 5-7 Team members. This
can be cross functional teams.
HOUSEKEEPING
o Principle of Housekeeping
-Segregation
-Arrangement
-Cleanliness
74
-Maintenance of Standards
-Discipline
(A Place for everything & everythings in its place)
o
HOSHIN KANRI
o
Principle of Housekeeping
-Segregation
-Arrangement
-Cleanliness
-Maintenance of Standards
75
-Discipline
(A Place for everything & everythings in its place)
o
of Venue
AQC
members
meeting
17nd
June Office
2007
of
of
members %age
the circle
Desai 7
Milk Centre
76
attendance
71
of
77
DESIGNATION
Shri
PARTHIBHAI
BHATOL
2.
Shri B. M. Vyas
Shri Ramsinbhai P Parmar
3.
4.
5.
7.
Director
8.
HDFC Bank
C.C.Choksi & Co
Auditors
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008
78
Rs
In
Lacs
2006-
20052006
INCOME
BY Sales *
2007-08
2007
"
"
516823.69
9550.46
526374.15
415542.04 314260.39
8586.79
7623.12
424128.83 321883.51
"
964.39
"
"
"
"
"
Other Income
Closing Stock
Finished Goods
Stock-in-process
Scrap Stock
32981.85
253.95
10.11
847.55
730.71
525409.76 423281.28 321152.80
1632.06
2254.51
2876.96
0.00
21851.68 10721.51
137.17
20.39
10.80
11.49
33245.91 21999.65 10753.39
for
Appropriation)
TOTAL
1544.84
1457.29
1369.74
1544.84
1457.29
1369.74
Lacs
2005-
In
EXPENSES
To Openign Stock
"
Finished Goods
2007-08
2007
2006
21851.68
16154.20
10456.72
"
"
137.17
10.80
300.95
17.84
16472.99
464.73
24.88
10946.33
Stock-in-Progress
Scrape Stock
21999.65
Purchases of Finished
"
Goods
(Including
procurement
Expenses
&
Insurance
net
of
claims)
79
Raw
Materials
"
Consumed
113584.53 79767.82
45951.11
"
4599.00
3527.27
2455.54
Materials consumed
Power & Fuel
Other
Manufacturing
7381.26
2264.46
6089.52
1976.76
4797.78
1689.06
"
Expenses
Rent
&
548.93
497.92
446.91
Electricity
"
charges
Repairs & Maintainance
117.57
111.55
105.53
"
Expenses
Rates,
Taxes
867.34
931.72
996.10
&
"
Insurance
80.14
102.63
125.12
"
Marketing Expenses
Turnover Tax, Octroi and
16848.56
13639.36
10430.16
"
Vat Reimbursement
475.35
596.66
717.97
Postage,
Telephone,
"
331.42
323.29
315.16
"
492.45
430.41
368.37
"
Maintenance
Legal & Professional
31.41
31.56
31.71
"
Charges
76.58
54.24
31.90
"
General Expenses
378.28
346.02
313.76
"
113.29
99.66
86.03
"
Commission
Co-operative
201.21
229.14
257.07
616.37
25.00
215.30
0.00
(185.77)
(25.00)
3157.17
3651.88
Development Expenses
(Including
Breed
"
"
Improvement Expenses)
Donation
Depriciation/Amortizatio
"
2662.46
80
grant received
Prior
"
56.85
2605.61
84.89
3072.28
112.93
3538.95
2.02
0.00
265.89
311.80
357.71
Period
Adjustment(Net)
Provision
For
"
Contingencies
Provision For Income
"
Tax
0.00
"
925.00
710.00
495.00
"
(227.00)
(55.00)
117.00
"
52.00
45.00
700.00
38.00
650.00
750.00
"
Nat Profit Carried Down
TOTAL
1544.84
1457.29
1369.74
560287.73 447535.44 334783.15
APPROPRIATIONS :
Transfer to Reserve
To
Funds 25%
Contribution
386.21
364.32
342.43
2.00
2.00
2.00
490.11
480.09
0.00
470.07
666.52
1544.84
610.88
1457.29
555.24
1369.74
to
"
Education Fund
Proposed Dividends @
"
12%(12%)p.a
on Equity Shares
Balance Transfer
To
"
General Fund
TOTAL
81
Story
Amul Butter Girl
Edited from an article by Mini Varma published in The Asian Age on March 3, 1996
The moppet who put Amul on India's breakfast table
50 years after it was first launched, Amul's sale figures have jumped from 1000 tonnes a year in
1966 to over 25,000 tonnes a year in 1997. No other brand comes even close to it. All because a
thumb-sized girl climbed on to the hoardings and put a spell on the masses.
Bombay: Summer of 1967. A Charni Road flat. Mrs. Sheela Mane, a 28-year-old housewife is
out in the balcony drying clothes. From her second floor flat she can see her neighbours on the
road. There are other people too. The crowd seems to be growing larger by the minute. Unable to
curb her curiosity Sheela Mane hurries down to see what all the commotion is about. She expects
the worst but can see no signs of an accident. It is her four-year-old who draws her attention to
the hoarding that has come up overnight. "It was the first Amul hoarding that was put up in
Mumbai," recalls Sheela Mane. "People loved it. I remember it was our favourite topic of
discussion for the next one week! Everywhere we went somehow or the other the campaign
always seemed to crop up in our conversation."
Call her the Friday to Friday star. Round eyed, chubby cheeked, winking at you, from
strategically placed hoardings at many traffic lights. She is the Amul moppet everyone loves to
love (including prickly votaries of the Shiv Sena and BJP). How often have we stopped, looked,
chuckled at the Amul hoarding that casts her sometime as the coy, shy Madhuri, a bold sensuous
Urmila or simply as herself, dressed in her little polka dotted dress and a red and white bow,
holding out her favourite packet of butter.
For 30 odd years the Utterly Butterly girl has managed to keep her fan following intact. So much
so that the ads are now ready to enter the Guinness Book of World Records for being the longest
running campaign ever. The ultimate compliment to the butter came when a British company
launched a butter and called it Utterly Butterly, last year.
82
It all began in 1966 when Sylvester daCunha, then the managing director of the advertising
agency, ASP, clinched the account for Amul butter. The butter, which had been launched in 1945,
had a staid, boring image, primarily because the earlier advertising agency which was in charge
of the account preferred to stick to routine, corporate ads.
83
84
Despite some of the negative reactions that the ads have got, DaCunhas have made it a policy not
to play it safe. There are numerous ads that are risque in tone.
"We had the option of being sweet and playing it safe, or making an impact. A fine balance had
to be struck. We have a campaign that is strong enough to make a statement. I didn't want the
hoardings to be pleasant or tame. They have to say something," says Rahul daCunha.
"We ran a couple of ads that created quite a furore," says Sylvester daCunha. "The Indian
Airlines one really angered the authorities. They said if they didn't take down the ads they would
stop supplying Amul butter on the plane. So ultimately we discontinued the ad," he says
laughing. Then there was the time when the Amul girl was shown wearing the Gandhi cap. The
high command came down heavy on that one. The Gandhi cap was a symbol of independence,
they couldn't have anyone not taking that seriously. So despite their reluctance the hoardings
were wiped clean. "Then there was an ad during the Ganpati festival which said, Ganpati Bappa
More Ghya (Ganpati Bappa take more). The Shiv Sena people said that if we didn't do something
about removing the ad they would come and destroy our office. It is surprising how vigilant the
political forces are in this country. Even when the Enron ads (Enr On Or Off) were running,
Rebecca Mark wrote to us saying how much she liked them."
85
Recommendations on TQM
We found that Amul is having problem of Butter Shortage, shortage of material supply , etc we
recommend them following solutions:
1. Total employee involvement in decision making.
2. Monthly quality review of product
3. Internal quality management for employees
In Mahindra & Mahindra FES we found problem of employee rigidity and beaurocratic behavior
towards working style. We recommend them:
1. Employee involvement in decision making & strategic planning
2. Treat all employees on same scale uniformity in employee treatment.
3. Improvement in Internal quality management for employees
86