Back to Basics – Quality Strategy for Financial Results

Being Simple is Difficult - Suresh Lulla

This article appeared in Business India, 28 January – 10 February 2019

Over the past two decades, numerous organisations have claimed that they have adopted best practices, leading to performance excellence. This seems the fashionable trend. As we all know, globally, ‘performance excellence’ best practices are embedded in the Baldrige criteria and the efqm criteria. In India, they have been cloned in the IMC Ramkrishna Bajaj National Quality Award criteria and the CII Exim Bank Award criteria, respectively. These are tough world-class criteria.

Several of these organisations are gradually getting disillusioned by the performance excellence models. The leaders see no improvement in their financial results, their personal report card! So we have a huge problem.

I wish to point out that the prerequisite for performance excellence is the habit of quality improvement. In turn, the prerequisite for quality improvement is the effective implementation of a quality management system, aligned to ISO 9001, NABH, NAAC, etc.

In my view, leaders are guilty. They have delegated the entire responsibility for quality improvement to middle level managers. These leaders have failed to realise that the habit of quality improvement reduces, as a by-product, significant wasteful costs. These wasteful costs are referred to as the cost of poor quality (COPQ). The COPQ in any organisation is at least 20 per cent of the total costs. It can even go as high as 40 per cent.

Two leaders who embraced quality improvement and reaped a financial harvest are: Chandra Mohan, former vice-chairman, Punjab Tractors Limited, and Suresh Krishna, chairman, Sundram Fastners Limited. I salute both of them as being the earliest qualitists in India. In fact, they were individually recognised as the Qimpro Platinum Standards in 1995 and 1997 respectively.

Heroic Leadership
(reproduced as is from Quality Fables™ Book 1)

On a Sunday afternoon, I received a long-distance call on my land line, from the vice-chairman of a tractor manufacturer in North India. He was calling from his factory, where he, his wife, and the surviving work force had locked themselves in, a few days back.

As explained to me, two company buses that transport the workers back to their homes had been highjacked by Khalistan separatists. They had shot to death all workers in the two buses. A blood bath!

Soon thereafter, the vice-chairman and his wife had entered the factory with trucks full of food supplies, and sealed the gates. Their mission was to keep the morale of the workers as intact as possible. They cooked meals together. They slept at the factory. They counselled individuals. The factory was kept alive running with the inventories on hand.

The inventory was now over.

Although a hard-core engineer, the vice-chairman also nursed an active rightbrain. He saw in this crisis an opportunity to train his workers on quality improvement. He had a captive audience that had the time. On this Sunday morning, he had just completed a participative workshop on ‘How to identify chronic problems’. His Bible was Juran’s Handbook of Quality Control, the second edition.

The immediate realisation after this first session was that engaging the right-brain of workers had a therapeutic impact. He needed to share this finding with someone.

The sagging morale had been substantially rejuvenated.

Lessons learned

  • Employees are the biggest asset of an organisation
  • Treat your workers with ‘love’ and ‘dignity’
  • Leaders should walk their talk
  • Leaders should have an aptitude for training
  • Leaders should also be coaches on skills and counselors on behaviour
  • Successful leaders have unconditional support from their respective spouses
  • Engaging the right-brain for creative ideation has an amazing ability to recharge people

Waltzing with the Phantom – ISO 9004
(reproduced as is from Quality Fables™ Book 2)

1987 was a momentous year for Quality. Globally.

ISO 9001 was inaugurated in Europe.

Among the earliest adopters of ISO 9001 systems were several auto and ancillary manufacturing units in India. This was 1987. International consultants descended and mushroomed. India was set to become the cradle of quality manufactured goods.

Newspaper after newspaper and banner after banner screamed that Company X was the first to be awarded the ISO 9001 certificate, in their sector (that grew narrower and narrower with time).

The business opportunity for management consultants grew…they even started offering quality consulting.

Did ‘Made in India’ improve? After all, we had the second largest number of companies in the world that were ISO 9001 certified? There was hardly a third.

Where was the world queuing up to? Japan. Yet, Japan had perhaps only one company certified by 1990.

It took a leader in Chennai to explain the following to me:

  • The ISO 9001 is a quality management system, not a product standard
  • The ISO 9004 manual provides the guidelines for interpreting iso 9001 requirements – the guidelines address: the role of upper  management; quality control of supply chain; continual quality improvement.

This leader chose to first stabilise his manufacturing processes through quality control. Then he adopted the Japanese method for quality improvement: ‘total productive maintenance’. Finally, he introduced the ISO 9001 system standard that stabilised the practices of quality control and quality improvement.

The clients of this leader’s company were in the US . They bought out his full capacity of auto ancillary parts. The company was even recognised as the best supplier to the auto giant for several successive years.

Lessons learned

  • Leaders must be fully aware of the fundamentals of quality management
  • Process stability is a prerequisite for implementing a quality management system
  • A system is effective when customers vote for you with their money
  • Implementing a quality management system does not assure outcome quality. only consistency
  • ISO 9001 is not an award
  • ISO 9001 is not a marketing strategy
  • ISO 9001 is a quality enabler.

Ideal management
My wish list is that I would like to see every organisation structured as follows:
– Managing director; a visionary leader; a role model for values
– President, finance, reporting to the managing director, for vertical functional management
– President, quality, reporting to the managing director, for horizontal cross-functional process management

Can this happen in businesses, healthcare, education, government? I do wish so.

Being simple is difficult.

6 thoughts on “Back to Basics – Quality Strategy for Financial Results”

  • Of the entire article my key takeaways are the two “lessons learnt”.
    Credence to employees and process stability/are key enablers.

  • These articles are thought provoking and great references. Please compile them in a book form for the benefit of the quality community. Thank you.

    • Dear Ashok, Recently, in Abu Dhabi, Dr James Harrington suggested I put my thoughts in writing. I hope to start work on this project from April 2019. Regards, SSL

  • Being simple is difficult indeed! The Leaders you talked about are a rare breed! Also, I believe most Leaders do not understand what a system or business management system is, else we would see piecemeal responses to business problems. A key ingredient of Japanese success is discipline. We need to get disciplined before we can think of simplicity or sustainable improvement or development.

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