The need to export has become absolutely critical. The country is faced with a balance of payments problem and a rising external debt which has crossed Rs 100,000 crore (both long and short term). The current Aid India Consortium has given a clear signal that concessional aid in the coming years will decline in real terms and that India will have to increasingly take recourse to commercial loans at high interest rates. And now we have an oil crisis on hand! The only viable option is therefore to increase exports.
A recent survey by a leading financial daily of foreign exchange earned by 207 large and medium sized public limited companies in the private sector in 1988-89 showed a deficit of Rs 7.10 crore. One reason for such a dismal performance by Indian companies has been a large, protected domestic market. This situation is rapidly changing. With increasing internal competition, many companies find themselves with excess capacity.
We therefore need to export for survival. But exporting is not easy. Goods have to be of the highest quality, delivered on time and well priced. By and large, we have failed miserably on all three fronts because we lack customer-responsive systems to produce quality goods.
At the macro level, our quality dykes are not in place: power, transportation, communication, education, legal and government administration. At the micro level, companies are not geared to produce goods that are free from deficiencies, while achieving production and profit goals. This pushes up cost.
The Japanese way
For some years, after the Second World War, Japanese goods were rated third grade. The quality revolution itself began in the early fifties by educating industry leaders on managing for quality. This process took about a decade. Then, in the early sixties, the question arose whether one should also train the workers. The unanimous decision by top management was yes, but it should be voluntary. This brought about the birth of Quality Control (QC) circles. The significant fact to note here is that QC circles were introduced after all management personal were trained in managing for quality.
The training of both managers and workers emphasized problem solving. For the manager, the emphasis was on cross-functional problems and, for workers, departmental problems.
Several years ago, the executive vice-president of a large multinational US rubber company went on a plant visit around the world to secure inputs for strategic business planning. He found much similarity with respect to productivity, quality etc. among all the plants in different countries, except in Japan. The Japanese plant was outperforming all others, and by a large margin. The reason was that the Japanese subsidiary of the multinational was doing many quality improvement projects year by year. Because of the resulting improvements, they made better and better products from identical facilities. Creating a climate for quality included such inputs as good housekeeping, focus on safety and accent on preventive maintenance.
Customer responsive
Even though Indian companies by and large have not been star performers on the export front, there are some that are doing reasonably well. To the few companies, we spoke to, it was very evident that quality was that number one priority. For instance, Tata Steel has been exporting a range of items which go beyond just steel. But even for the largest private-sector company it has not been roses all the way. They have had to adopt a quality strategy that is customer responsive - both external and internal.
Tata Steel has adopted the quality culture so seriously, that today it has a company wide programme encompassing all spheres of the company’s activities. For instance, the apex quality council is chaired by Russi Mody, the chairman of the company. This is the council that sets the larger quality strategy. Then there are the divisional councils headed by operational directors, for identifying projects and solving problems. Tata Steel gives so much importance to quality, that the head of the total quality function reports directly to the joint managing director.
On the other hand, a small company like Perfect Machine Tools has been exporting to Japan and a few East European countries for many years. Their strategy has always been to satisfy the customer, no matter what it takes. Company size is no barrier.
Europe after 1992 will become more protective and insulated. It is understood that companies will have to conform to the ISO 9000 standards for quality management and assurance if they wish to export to Europe. But the ISO 9000 only guarantees that a proper system is in place, and in no way guarantees product quality.
What India needs is a national goal on quality. Industrial policy has to be revamped to meet the challenges to the Big Q. It must be customer driven. What is also urgently required is a national quality award for achieving excellence in managing Big Q, such as the Deming prize in Japan or the Malcolm Baldrige National Quality Award in the US.
CREDITS: Suresh Lulla, Founder & Mentor, Qimpro Consultants Pvt. Ltd.