How to conquer an Economic Slowdown?

How to conquer an Economic Slowdown? - Qimpro

Economic Gloom

We are in the midst of economic gloom. In India. Across all sectors – construction, manufacturing, services, etc.

The main concern for citizens is jobs. The concern for corporates is a shrinking bottom lines. In many ways they are interrelated.

In this tragic environment, I see an opportunity. But that calls for a drastic change in mindset. …..A graduation from the traditional vertical silo mindset, to a competitive horizontal process mindset. The former is suitable for a shareholder driven strategy, whereas the latter is a customer driven strategy woven into the vertical silos.  

Success and Significance

As we all know, success requires a healthy bottom line. This is our focus in vertical silos management..

On the other hand, significance requires that we delight our customers: external; internal; society; Mother Earth. As well as grow the bottom line.

In this economic slowdown, I wish to once again play my broken record titled Cost Of Poor Quality….COPQ, COPQ, COPQ……Please turn the volume full blast!

COPQ

Consider a hypothetical organization with the following profile:

  • Sales: revenue: Rs 1,000 cr
  • Capital: investment: Rs 500 cr
  • Bottom: line profit: Rs 100 cr
  • COPQ: Rs 200 cr.

2022 strategic goal: Double our profit.

Option 1: Double investment; to Double revenue; to Double profit….And pray to God for doubling the customer base.

Option 2: Halve the COPQ by solving the vital few chronic problems. Solving such problems results in quality improvement. This requires no monetary investment. And it does enrich a job profile.

Tata Steel was the first Indian organization to understand COPQ, three decades ago. The pilot projects were localized to the Tubes Division and LD Shop. By 1999, it became the lowest cost steel producer in the world for a couple of product lines. Dr J J Irani captained the change in mindset.

Resistance to Change

In better times, when I asked organizations to make a habit of solving chronic problems, it was considered too time consuming and so they resisted the change.

At a crossroad, pre-liberalization, in 1992, I explained to Dr J M Juran my predicament. He simply responded with: “Pray for the economy to get worse. They will then change”.

Now that our backs are against the wall, organizations should queue up for Qimpro Certified Qualitists to help improve their respective bottom lines.

Random Thoughts

  1. Change is the only Constant.
  2. Why do banks give loans against inventory? Inventory is substantially a COPQ.
  3. Why is COPQ not reported in the Profit & Loss Statements of organizations.
  4. Qualitists must make friends with Cost Accountants.
  5. Dinosaurs and cockroaches co-existed at the start. The dinosaur did not change. RIP. On the other hand, even today, the cockroach adapts to every change!

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7 thoughts on “How to conquer an Economic Slowdown?”

  • Beautifully articulated, Mr Lulla. The slowdown is indeed an opportunity for the men to separate from the boys, as far as individual corporates (including MSMEs) are concerned. Fully agree that nothing better than focusing on CoPQ in these challenging times. Applies to the Central Government as well. They simply need to focus on the economy rather than wasting energy on NVA activities.

  • Have read your blog twice and totally agree. But Top Management still hopes that short-term fixes like manpower reduction, automation, etc. will work since they are not skilled in change management. Time to get them to face their fear of change management. Please counsel through your next blog.

  • Bad times spark a self-realization for an individual as well as for an organization. I could remember an organization that was facing acute cash flow issues due to huge account receivables. That worst situation forced it to look into existing inventory build up and purchasing process. The moment of truth dismayed the top management – Crores of rupees were locked in non-moving inventory which were purchased 5 years back, purchase requisitions raised on materials already lying in plant, etc. etc. This forced the organization to re-engineer its entire inventory management process.

    Severe drought in southern Africa countries (Visual Alarm – Reduction of the mighty Victoria Falls to a trickle) has sounded an ominous warning – Preserve water or get perished. Dr J M Juran’s saying can also be applied here – “Pray for the nature to get worse. They will then change”.

    • Japan came out of the Second World War with a devastated economy. The Emperor of Japan took charge. After 4-5 years of experimental solutions, the Emperor invited Dr Edwards Deming to help ‘Made in Japan’ become a quality benchmark. This was followed by an invitation to Dr J M Juran to teach Quality Improvement, across industry, Top-Down. The rest is history.

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