How We Met The Quality Challenge - The Indian Experience

Global competition is increasing.  If India has to compete with front runners like Malaysia, Singapore, South Korea, Thailand and even China, it needs to rethink its strategy on quality. Key signals emanating from industry have led me to conclude that our companies need to chart out a new direction in managing for quality. The signals are:

• Indian industry generally is synonymous with poor quality.  This does not preclude the fact that there are some companies which have achieved excellence in production but they are few and far between
• Non-conformance with delivery schedules. This is critical for foreign buyers. Delays cause heavy losses in a competitive environment because margins are very low
• High cost of the product due to the fact that infrastructural facilities in India are either too costly or inadequate. Cases in point are power, road and rail transport, coal and crude oil
• Low productivity in spite of induction of sophisticated technology.

In view of the above our global trade has decreased from two per cent in 1951 to 0.4 per cent now, even though international trade has been increasing.

This crisis is not going to go away by itself.  Competition in quality will go on. So will the impact of poor quality on our economy and society.  Our traditional ways are not adequate to deal with the quality crisis. In a sense our adherence to those traditional ways has led to the crisis. Therefore, it is imperative that we break with the crisis. Therefore, it is imperative that we break with the crisis. The pedestrian pace set by top management must be improved.  And how can this be done? It would involve:

• Charting a new course that requires a universal way of thinking about quality that is applicable to all functions and to all levels in the hierarchy from the Managing Director to the shop floor worker
• Extensive personal leadership and participation by upper managers
• Proper training in managing for quality for all levels of management
• Designing a basis for management of quality that can be readily implanted into the company’s strategic business plan
• Responding to constantly changing customer needs
• Achieving a revolutionary rate of quality improvement.  (By revolutionary I mean a rate that is faster than competition).

A company that wants to chart a new course in managing for quality obviously should create an all pervasive unity so that everyone will know which is the new direction and will be motivated to get there. But creating such unity will mean dealing with forces that resist a unified approach. These forces are for the most part due to certain non-uniformities inherent in each company. These are:

• The multiple functions in the company; product development, manufacture, office operations, etc. Each regards its function as something unique and special
• The multiple levels in the company hierarchy, from the chief executive officer to the nonsupervisory worker. These levels differ with respect to responsibility, prerequisite experience and training, etc.
• The multiple product lines: large and complex systems, mass production, regulated products, etc. These product lines differ in their markets, technology, restraints, etc.

Such inherent non-uniformities and the associated beliefs in uniqueness are a reality in any company, and they constitute a serious obstacle to unity of direction.  Such an obstacle can be overcome if we are able to find a universal thought process - a universal way of thinking about process - which fits all functions, all levels, all product lines.

This brings us to the concept of the Quality Trilogy and the Juran methodology.  The underlying concept of the Quality Trilogy is that managing for quality consists of three basic quality oriented processes:

• Quality Planning
• Quality Control
• Quality Improvement.

When companies are implementing these processes they usually begin with improvement, then move into planning and finally self control.  The improvement process is a structured approach based on a universal breakthrough sequence.  It is the process of breakthrough to unprecedented levels of performance.

This project by project, breakthrough sequence has proved to be very effective overseas and in India.  Even though the Juran methodology has only been seriously implemented since 1988, several companies have come up with astounding results.

Take the case of Tata Steel.  Bottom pouring of steel is practised for making high quality steels for automotive and engineering industries.  During casting, metal loss occurs due to a variety of reasons.  This loss assumes serious proportions particularly due to high costs of these steels and limited capacity of producing through this route.  Tata Steel adopted the Juran quality improvement approach and despite many problems a breakthrough was achieved.  As a result the company was able to save Rs 18.2 lakhs per month on a recurring basis.

In the case of Mukand Limited currently there are over 70 projects companywide, covering the three manufacturing divisions - steel, machine building and foundry.  The company did a preliminary survey of the cost of poor quality, which according to rough estimates runs into crores of rupees.  Though many of the projects have not run through their entire course the savings on many of them are very impressive. One of the more impressive projects was concerning delays due to crane breakdowns in the steel melt shop.  It was estimated that loss of production time due to crane breakdowns of the steel melt shop for the period July 1988 to June 1989 for all cranes amounted to Rs 38.5 lakhs.  But one crane accounted for losses to the tune of Rs 19.30 lakhs which is around 50 per cent of the total loss.  After going through the various stages of improvement the loss in crane delays was brought down to Rs 6.61 lakhs, resulting in savings of Rs 12.69 lakhs.

Punjab Tractors is another company that has made considerable progress in quality improvement which has directly impacted the bottom line.  For instance, the strength of the quality engineering group has reduced from 200 in June 1982 to 120 today resulting in an annual saving of Rs 21 lakhs.  Scrap in the manufacturing process has come down from Rs 425 per tractor in 1981-82 to Rs 99 per tractor, an annual saving of Rs 45 lakhs at current production levels.  Warranty costs have come down from Rs 238 per tractor in 1983-84 to Rs 115 per tractor, an annual saving of Rs 15 lakhs.  Also, substantial savings have been brought about by reduced work-in-progress inventory and inventory of tractor components.

Bombay Dyeing in order to boost exports initiated four pilot projects.  One such project was to improve the exportable percentage of processed export sheetings by reducing the incidence of selvedge cuts and less width.  The incidence of selvedge cuts and less width were reduced from 1.10 per 100 metres to 0.30 per 100 metres resulting in an estimated saving of Rs 6.8 lakhs per annum on a recurring basis.  The company to date has embarked to 16 projects of which five are completed.

Other companies like Mahindra and Mahindra and Otis Elevator have also done considerable work in quality improvement resulting in a distinct upgradation of quality with reduction in costs.  A few companies like Mahindra and Mahindra and Advani Oerlikon have gone a step further and began work on the planning process.

However, I must admit that managing for quality is a complex and time consuming process.  This discourages companies to take on quality related projects.  But success is achievable if companies make the commitment.  This is borne out by those companies that have made a serious effort towards achieving quality.  Its a tough journey but not beyond the reach of most companies.  However, the effort has to be made now.