Technical Guideline

Total Quality Management in Micro, Small and Medium

Enterprise

Sujan Karki

Pushpalata Poudel

November, 2010
List of Abbreviation
TQM Total Quality Management

QMS Quality Management System

GDP Gross Domestic Product

BDS Business Development Services

TA Technical Assistance

PF PlaNet Finance

PDSA Plan-Do-Check-Act

Ms. Pushpalata Poudel, SME & MF Expert, joined PlaNet Finance Nepal in December 2007 and Mr.
Sujan Karki, SME & MF Expert joined PlaNet Finance Nepal in January 2009. Both authors are working
to provide training and technical assistance in business development services to micro, small and
medium enterprises under the framework of SMElink project, funded by European Commission. They
also deliver trainings and technical assistance to Micro Finance Institutions.

For any feedback, authors can be reached at:

Sujan Karki – skarki@planetfinance.org/email.sujankarki@gmail.com
Pushpalata Poudel – ppoudel@planetfinance.org/pushpalatanp@yahoo.com
Table of Contents
List of Abbreviation ....................................................................................................................................... 2
Executive Summary....................................................................................................................................... 4
Background ................................................................................................................................................... 7
Part A: Understanding Micro, Small and Medium Enterprise ...................................................................... 9
Introduction to MSMEs ................................................................................................................................. 9
General Orientation (Macro) - .................................................................................................................. 9
Managerial Orientation (Micro) -.............................................................................................................. 9
Strategic Management in MSME ................................................................................................................ 11
Three Hats in MSME ................................................................................................................................... 12
Importance of QMS in MSME ..................................................................................................................... 13
Cost of Quality - ...................................................................................................................................... 13
Overall Benefits from Quality Program - ................................................................................................ 15
Part B: Designing QMS for MSME ............................................................................................................... 16
Total Quality Management: Conceptual Framework ................................................................................. 16
Designing Quality Management System: Prototype of QMS Manual ........................................................ 18
Components of QMS Manual - ............................................................................................................... 19
Components of Process Manual - ........................................................................................................... 21
Implementation of QMS in MSME: Technical Guideline ............................................................................ 23
Strategic Quality Management Orientation – ........................................................................................ 23
Forming a Quality Council – .................................................................................................................... 23
Activating the Quality Council – .............................................................................................................. 24
Conducting Internal Audit – .................................................................................................................... 24
Special Implementation Consideration for Small Enterprises .................................................................... 25
Conclusion ................................................................................................................................................... 27
Annexure - 1 ................................................................................................................................................ 28
Annexure - 2 ................................................................................................................................................ 34
Annexure - 4 ................................................................................................................................................ 39
Executive Summary

Irrespective of the size of the enterprise, the essence of its success lies in its ability to satisfy its
customer, staffs and stakeholders which can be achieved through quality program. In case of
MSMEs, developing and adopting certain form of quality program is difficult because of their
lack of abilities and product centric focus. PlaNet Finance provided business development
service for implementing quality program in MSMEs as technical assistance program to address
the quality issues in MSMEs. This paper documents experiences of SMElink project as a
technical guideline to technical service provider, MSME consultant and MSME manager/owner
in their effort to design and help adopt initial form of quality program in an enterprise. However,
the paper doesn‟t address all implementation issues that can come across in the process of
implementation.

MSMEs are important to economies worldwide considering their contribution in GDP,

employment, and local resource utilization. Although the definition of MSMEs varies across
countries, what remains constant is the fact that no economy can envision prosperity without
contribution of MSMEs. In Nepal, MSMEs are defined based on size of fixed assets. Industrial
Enterprise Act categorizes industries with up to 50 million rupees as small industries, and
industries with fixed asset from 50 million to 150 million rupees as medium industries. Micro
Enterprise is defined as one having investment in fixed asset excluding land and building of up
to 2,00,000 NRS, annual turnover of less than 2 million rupees, entrepreneur should be involved
in the business, total number of staffs including entrepreneur not exceeding nine and if the
industry is using engine, energy capacity of less than 10 KW.

Despite being important economic entity, MSMEs face challenge of meeting quality
requirements and create environment of trust for customers which usually stems from their size.
MSMEs tend to have informal rules and procedures, a fluid culture, a simple planning and
control system, modest human and financial resources, and a limited customer base. As a
result, compared to large enterprises, they tend to have greater quality issues.

QMS is one system which can provide effective solution to quality issues faces by MSMEs. Its
aim is to continually improve effectiveness and efficiency of company‟s performance through
process approach. The main thrust of QMS lies in producing quality products and services in the
first place rather than correcting defective products/ services.

Given the benefits of QMS, it can only be fully realized if decision to adopt QMS is strategic
decision of an enterprise. A study had concluded that success of QMS depends on
management commitment which can be derived only if QMS is considered strategically in
enterprise. Similar experience was drawn during implementation of QMS Technical Assistance
program under SMElink project. Approximately only 50% of fifty two enterprises which enrolled
for TA program survived till final certification audit, of which only 50% were QMS certified.
Among many other reasons for such scenario, one of the most influential reasons was that QMS
implementation was not the strategic decision of the entrepreneur/business owner rather
encouraged by the project.
In MSME, design and implementation of quality program is highly dependent on three roles an
individual or few individuals play in an enterprise: entrepreneur, manager, and leader.
Entrepreneurial role visualizes opportunistic value from quality program, managerial role is
needed to execute the program, and leadership role itself is one of the core principles of TQM.
Though it‟s hard to find all three qualities in MSMEs or any enterprise in general case, BDS
should be planned after accessing them and nurturing if possible.

The importance of QMS program for any enterprise can be justified through the cost of quality
approach and of course the overall benefits such program can bring for the enterprise. The cost
of quality is cost of not delivering the quality product or service. Implementation of QMS helps to
reduce certain components of cost of quality immediately while other components are gradually
reduced over time in the long run. Other benefits of QMS include streamlining of business,
identification and rectification of issues/problems facing company, and creating environment of
trust for customers.

This paper adopts QMS as a tool in the pursuit of achieving Total Quality Management. TQM is
the operating philosophy with its focus on leadership, customer satisfaction, employee
involvement, continuous improvement, supplier partnership and performance measures.

Implementation of QMS is a step wise procedure which begins with strategic quality
management orientation of MSME owner/manager to ensure management commitment for
quality program. Forming a quality council headed by businessperson/entrepreneur is the next
step. Quality council sets the direction of QMS and ensures that QMS is in place as intended.
Activating quality council is the next step. Internal audit completes the process whereby the
actual performances are measured, non-conformance is followed up, and corrective actions are
proposed.

BDS/TA provider need to take into consideration few issues unique to MSMEs while
implementing QMS in small enterprises, which are as follows:

 As MSMEs are resource and capacity constrained, a non-accredited quality program is

a suitable platform to begin with, which can be stepping stone for enterprise to ultimately
embrace accredited quality program.
 Scope of quality program should be limited to critical processes to begin with. Critical
processes are few crucial specialized processes which determine success of enterprise.
 Business development service designer or quality consultant should cultivate or nurture
the vision of quality of the enterprise or entrepreneur.
 Consideration of value system is must while implementing quality program in MSMEs.
MSMEs are usually family based businesses which is hybrid of socio-anthropological-
economic value system while the value system of quality program is managerial. As a
result, implementer should ensure that these two value system don‟t oppose each other
during implementation of quality program.
 The level of formalization and documentation should be dealt with special consideration
especially because many of the advantages being MSME are derived from low level of
formalization and documentation.
Background
Irrespective of the size of the enterprise, the essence of its success lies in its ability to satisfy its
customer, staffs and stakeholders. In case of MSMEs, developing and adopting certain form of
quality program is very difficult for number of reasons such as limited managerial abilities,
funding ability and overcoming its product centric focus rather than process.

PlaNet Finance provided business development services on both non-accredited and accredited
quality certification to its beneficiary enterprises as an access to performance enhancement
services under the framework of SMElink project funded by European Commission. This paper
documents experiences of SMElink project as a technical guideline to technical service provider,
MSME consultant and MSME manager/owner in their effort to design and help adopt initial form
of quality program in an enterprise.

This technical guideline is a non accredited quality program which inherits basic quality
principles in pursuit of total quality management. From our experience, this form of quality
program can be beneficial in an enterprise with up to 50 staffs.

This technical guideline is divided into two parts: Part A explains micro, small and medium
enterprise in terms of its managerial features, strategic management characteristics, three most
important roles in enterprise and importance of quality program in terms of cost of quality.
Contents of Part A are selected for those are the ones which have most impact in the design
and implementation of quality program. Part A acts as a premise for the reader to develop the
acceptance to quality program design and implementation logic.

Part B of the technical guideline offers the simple form of quality program in detail. It includes
review of quality principles, design of a simple quality program, implementation guideline and
special considerations to be made in MSMEs. Contents in Part B is supplemented working
documents which are presented in corresponding annexure.

Objective of the paper: The objectives of the paper are as follows:

Provide technical guideline to the implementers of quality program in MSMEs, who might
be the Technical Assistance providers, BDS consultants, or the entrepreneur/ manager/
leader of an enterprise.

Document the experience of PF team of implementing Quality program in micro and

small enterprises as a reference for implementation of similar program in future.

Scope of the paper: This paper draws upon the experience of PF team while implementing
quality program for its beneficiary enterprises which belong to Jewelry/Metal Craft, Pashmina,
and Sustainable tourism sector. Thus, the technical guideline provided in this paper can be
used, with adaptation, in the enterprises working in both product and service sectors. Similarly,
the guideline will be useful in an array of enterprises which fall under the spectrum of micro and
small enterprises with up to 50 employees. This paper provides technical guidance in the
following areas:
 Pre-implementation preparation to be carried out in enterprise and considerations to take
into account prior to implementation of quality program in enterprise.

Documentation related with QMS implementation, including QMS Manual and Process
Manuals.

Audit Checklist to support the internal audit process after implementation of quality
program.

Limitations: In spite of the effort to encompass all aspects of implementing Total Quality
Management Program in an enterprise, the paper still has some limitations which are as follows:

The main focus of paper is on QMS as an approach towards achieving Total Quality
Management in an enterprise. As a result, the broader framework required for achieving
TQM is lacking. As a result, this technical guidance can be of lesser value to enterprises
which already have some sort of quality programs (QMS or other programs) and aim to
move towards achieving Total Quality Management.

The paper intends to provide technical guideline to implement quality program in

enterprise, and thus might not address all implementation details which one can come
across while actually implementing QMS in enterprise. TA/BDS provider will need to
develop implementation strategy based on given guideline.

The paper doesn‟t address certification issue which is usually carried out at the end of
implementation of quality program to check conformity with given standard. The paper
suggests that a standard/ benchmark be prepared before implementing quality program
against which actual implementation be measured and enterprises be certified but
doesn‟t include the standard itself.
Part A: Understanding Micro, Small and Medium Enterprise

Introduction to MSMEs

General Orientation (Macro) -

Much have been said and written on MSME, in the special focus on its contribution/share on
industrial Gross Domestic Product that generally surpasses eighty percent in all economies.
MSMEs also contribute to employment creation and local resource utilization. Considering the
entire positive benefits that MSMEs bring, they are the subject of interest to politicians, policy
makers, development agencies and management consultants.

MSMEs are defined in one or the combination of the three measuring parameters: number of
staff, size of fixed assets and annual turnover. In Nepal, MSMEs are identified based on the size
of the fixed assets. Industrial Enterprise Act categories industries with up to 50 million rupees as
small industries, while industries with fixed asset from 50 million to 150 million rupees are
categorized as medium industries. Further, the traditional industries utilizing specific skills or
local raw materials and resources, and labor intensive and related with national tradition, art and
culture are classified as cottage industries 1 . Micro Enterprise is defined as one having
investment in fixed asset excluding land and building of up to 2,00,000 NRS, annual turnover of
less than 2 million rupees, entrepreneur should be involved in the business, total number of
staffs including entrepreneur not exceeding nine and if the industry is using engine, energy
capacity of less than 10 KW.

Managerial Orientation (Micro) -

To understand small and medium enterprise, realizing that the very idea is „enterprise‟, two
important definitions emerge from the sociological and managerial interpretations.

An enterprise is studied as a formal enterprise which differs from other groups in terms of their
scale, structure and goal orientation. A formal enterprise is a group designed and created to
pursue specific goals, and held together by explicit rules and regulations. A formal enterprise
takes birth when a goal requires coordination skills and efforts. Once firmly established,
enterprise assumes its own life (Micheal S. Bassis, 1998). Also, a formal enterprise has five
elements identified by Richard Scott (1987) as: social structure, participants, goals, technology
and environment.

Small and Medium Enterprises differs from large enterprises in many aspects, inferring that size
does matter. In a study of Ghobadian and Gallear, common characteristics of MSMEs were
compared with large enterprises in aspects such as enterprise structure, procedures, behavior,
processes, people and contact. The study found out that MSMEs, in relative to large
enterprises, tend to have fewer layers of management, informal rules and procedures, a fluid
culture, a simple planning and control system, modest human and financial resources, and a
limited customer base.

1
Industrial Enterprise Act of 1992, annexure 1 further limits the nature and requirement for cottage industries.
Confusion always remains on the meaning of the terms “small business” and
“entrepreneurship”. Though the concept between the terms overlaps, they are, in fact, different.
A Small business firm is owned and operated independently. It does not engage in innovative
practices. In contrast, entrepreneurial venture is any business which pursues goal of profitability
and growth, and most importantly, engages in innovative strategic practices. Thus, the
difference lies on their fundamental orientation on growth and innovation (Thomas L Wheelen,
2004).

MSMEs and Quality Program

Despite being economically important entity, SMEs face a number of challenges, major one
being the inability to address the demand of quality by the customers. In the globalized
environment while SMEs have the opportunity to explore global market, at the same time they
face the challenge of addressing the quality requirements that are usually higher in export
market.

For this reason, MSMEs require a system which effectively handles the issues of quality and
creates an environment of trust for their customers, especially in the export market. Quality
Management System can be one system that can provide such solution.

A QMS can be defined as a set of coordinated activities to direct and control an organization in
order to continually improve the effectiveness and efficiency of its performance. The main thrust
of a QMS is in defining the processes, which will result in the production of quality products and
services, rather than in detecting defective products or services after they have been produced.

A fully documented QMS will ensure that two important requirements are met:

The customers‟ requirements – confidence in the ability of the organization to deliver the
desired product and service consistently meeting their needs and expectations.

The organization‟s requirements – both internally and externally, and at an optimum cost
with efficient use of the available resources – materials, human, technology and
information.

QMS enables an organization to achieve the goals and objectives set out in its policy and
strategy. It provides consistency and satisfaction in terms of methods, materials, equipment, etc,
and interacts with all activities of the organization, beginning with the identification of customer
requirements and ending with their satisfaction, at every transaction interface.
Strategic Management in MSME
Strategic panning process and the plan itself is quite informal in MSMEs. Studies show that
formality of strategic planning increases with the enterprise growth and when the manager and
owner do not coincide (Juhan Teder). Taking into consideration that MSMEs derive benefits
from its informality in many aspects of enterprise management, too much effort in formalizing
the planning process is not practical and it might actually be detrimental. The strategic planning
process is what benefits the enterprise rather than the plan itself.

Quality Management System, in pursuit of total quality management (TQM), is an operating

philosophy with its utmost focus on customer satisfaction and continuous improvement,
everything through process approach. For the TQM to be value adding to an enterprise, the
decision to adopt TQM should be strategic decision. Once the decision to adopt QMS is made
strategically, management will commit resources in its attainment, hence fulfilling one of the
prerequisites of successful QMS development and implementation. A report by McKinsey &
Company reported that two third of the TQM programs it examined had failed to produce
expected improvement. Conclusion presented out said the failure or the success of the TQM
program depends on the management commitment.

Similar experience was drawn during the implementation of Quality Management System
Technical Assistance Program under MSMElink project. Total of fifty two MSMEs participated at
the start of the non-accredited QMS for MSME standard certification program. However, there
were significant drop outs from the program with only twenty four remaining for the final
certification audit. Among many other reasons for such scenario, one of the most influential
reasons was that QMS implementation was not the strategic decision of the
entrepreneur/business owner rather encouraged by the project.

TQM philosophy asserts that the quality failure is the result of the poor processes design and
implementation. Processes are the strategic asset of an enterprise. Processes of an enterprise,
like the enterprise itself, mature over time. Starting from the chaotic stage, it reaches to
optimized stage developing serially through repeated, defined and managed stages. Unless
entrepreneur/manager/owner manages processes strategically, total quality management -
through developing, implementing and improvising quality management system as the subject
of this paper – is hard to achieve.

MSME has its own life cycle (existence, survival, success, take-off and resource maturity).
Strategic Management is not relevant in the first two stages rather on the last three stages. It is
therefore the issue of great attention as to when a MSME should decide to integrate QMS from
the strategic-state point of view.

Developing appropriate quality programs, implementing them and improvising them over the
course of time is absolutely necessary. Generally, one way or the other, consciously or not,
completely or partially, enterprise has certain quality program. MSMEs tend to have partially and
unconsciously developed and implemented quality programs. First, MSMEs need to recognize
the strategic importance of quality program. Second, partial quality program should be
developed into complete quality program, implemented and monitored for progress.
Three Hats in MSME
Three most important roles which affect enterprise are the roles of a manager, a leader and an
entrepreneur. In the context of MSME, limited by its size and range of functions all three roles
should be ideally played by one person, however, it is not simple as it might sound.

Manager: The focus of manager is on the complexity of the situation, while the challenge is to
optimize the resource in the process of achieving organization goal. Optimizing the complexity is
hard therefore, managerial functions evolves to reduce this complexity though planning,
organizing, controlling and coordinating.

Source: http://www.mel-institute.com/manager-leader-entrepreneur/

Entrepreneur: While the focus of the entrepreneur is always on opportunity, one being highly
achievement oriented individual, his/her playing ground is market, where opportunity prevails.
Functions of entrepreneur is therefore to identify the opportunity, for the attainment of which
s/he gathers resources, innovates the way of doing things, all functions leading to the creation
of value.

Leader: Leader is a person with vision and one who can influence others to walk towards the
vision. Leader always focuses on change and works with people. The need of strong leadership
is essential for the success of quality program in the organization.

In MSME, design and implement initial quality program is highly dependent on these three roles
in an enterprise. First, being an entrepreneur, he/she should get opportunistic value from the
quality program such as increased customer or better competitive edge. Second, quality
program needs great deal of planning, organizing, directing, delegating and controlling which
are functions of a manager. Third, value of leadership is itself one of the core principles of total
quality management.

In this paper, leadership, more precisely team leadership with quality of both transformational
and transactional leadership quality, is embedded in the quality program, which will be
discussed in detail in the following sections.
In MSME, a person with qualities of a manager, a leader and an entrepreneur would be highly
desirable; however, it is not very common, rather very rare. Research conducted found that two
of the qualities is common. Manager and leader, commonly referred to as managerial leader,
and leader and entrepreneur were found in most enterprise. However, the evidence of a person
being a manager and an entrepreneur was very low.

On TQM/QMS program, all three roles are equally important. Though it‟s hard to find all three
qualities in MSMEs or any enterprise in general case, BDS should be planned after accessing
them and nurturing if possible.

Importance of QMS in MSME

Enterprise, regardless of its size, needs to establish certain approach to total quality
management. In more simple terms, a kind of quality program is indispensible to an enterprise
to achieve its goal. We will try to draw the relevance of quality program through the cost of
quality perspective and later, through overall benefits offered by such program.

Cost of Quality -
Confusing it may sound but the cost of quality is not the price of delivering quality product or
service rather the cost of not delivering the quality product or service. According American
Society for Quality, cost of quality represents the difference between the actual cost of a product or
service and what the reduced cost would be if there were no possibility of substandard service, failure of
products or defects in their manufacture.

Categorization of Cost of Quality:

The cost of quality is generally classified into four categories:

1. External Failure Cost

2. Internal Failure Cost

3. Inspection (Appraisal) Cost

4. Prevention Cost

1. External Failure Cost: Cost associated with defects found after the customer receives the
product or service. Example: Processing customer complaints, customer returns, warranty
claims, product recalls.

2. Internal Failure Cost: Cost associated with defects found before the customer receives the
product or service. Example: Scrap, rework, re-inspection, re-testing, material review, material
downgrades

3. Inspection (appraisal) Cost: Cost incurred to determine the degree of conformance to

quality requirements (measuring, evaluating or auditing). Example: Inspection, testing,
process or service audits, calibration of measuring and test equipment.
4. Prevention Cost: Cost incurred to prevent (keep failure and appraisal cost to a minimum)
poor quality. Example: New product review, quality planning, supplier surveys, process reviews,
quality improvement teams, education and training.

Implementation of QMS help to reduce the cost of quality, some cost components immediately
after its implementation and others gradually over a period of time. Failure cost, especially
external failure cost, is reduced significantly once QMS is established because one of the focus
of QMS is to deliver consistent quality to its customers and ensure customer satisfaction. To
achieve this, QMS takes organization-wide preventive measure.

There is also a school of thought which believes that QMS implementation, though reduces
external failure cost, moves the cost to other cost areas like internal failure cost, inspection cost,
and prevention cost. This might actually be true during the beginning phase of QMS
implementation when the total cost of quality might even increase, especially for MSMEs where
the quality control mechanism is usually not in place at all. But in the long run, the focus will be
towards strengthening the processes, including product realization processes, through continual
improvement which are geared towards producing the products/delivering services right the first
time.

Similarly, there is a TQM rule called 1-10-100 rule which also strengthens the counter argument
to this school of thought. This rule depicts relationship between three cost components:
prevention cost, correction cost, and failure cost as illustrated below:

Source: Total Quality Management, Joel E. Ross

The illustration above shows that one dollar spent on prevention will save ten dollar on
correction, and hundred dollars on failure cost. As one moves along the streams of events from
design to delivery or “dock-to-stock,” the cost of errors escalates as failure costs becomes
greater. Thus, although the implementation of QMS will move the some external cost to other
cost components, its not as high as the external failure cost and there is some cost cutting in the
process.

On the other hand, prevention cost, inspection cost, and failure cost can be reduced in the long
run through the establishment of optimized processes through continual improvement.

MSMEs have high cost of quality. It is very likely for MSMEs to have a very high external failure
cost because of weak preventive and inspection functions which are amongst the low cost areas
compared to failure cost. When the cost of quality is high, enterprise will face serious problems
reasonably allocating resources across business functions. This problem will lead to difficulties
in retaining customer and maintaining competitive edge in the market. Thus, developing
appropriate quality program, implementing it and improvising over the course of time is
absolutely necessary.

The intervention of QMS can help to reduce the external failure cost but the prevention and
inspection cost will increase though not proportionately. However, when the processes become
optimized through continual improvement, even these costs get reduced in the long run. While
implementing QMS in MSMEs, it thus becomes absolutely important to determine the immediate
cost saving and cost saving in the long run. This will also help to quantify the benefits of QMS to
MSMEs.

Overall Benefits from Quality Program -

QMS implementation brings a number of benefits to any enterprise, including MSMEs, which
are discussed below:

1. A planned approach to running an organization: Implementation of QMS requires

thorough documentation of the way an organization operates. As a result, a QMS
ensures that a business runs in a streamlined and coherent way.

2. Ensures issues are identified and addressed: The mandatory internal control
mechanisms like team meetings and internal audit help to identify the issues/problems
facing a company and gives opportunity to rectify them

3. More Customers: Customers have more trust in suppliers which operate QMS, while
some might even mandate that their suppliers have such system in place before even
establishing business relations with them.
Part B: Designing QMS for MSME

Total Quality Management: Conceptual Framework

Defining quality is as difficult as managing it. However, three perspectives on quality are
noteworthy. User based definition view quality as judged by user themselves. Manufacturing
based definition view quality as ability to conform to the established standard. Product based
definition view quality as a precise and measurable variable.

International Standardization Organization defines quality as a question of degree in which

inherent characteristics of something meets a set of requirement, meaning to say that the
quality of something can be determined by comparing a set of inherent characteristics with a set
of requirement. If those inherent characteristics meet all requirements, high or excellent quality
is achieved. If those characteristics do not meet all requirements, a low or poor level of quality is
achieved. The central idea of quality lies on the question of how well does a set of inherent
characteristics comply with this set of requirement. Thus, quality is a relative concept (PRGL,
2010)

Total Quality Management is not a new concept. TQM is the collective philosophy and tools &
Techniques developed over the period of more than 50 years by notable quality gurus such as
Walter A. Shewhart, W. Edwards Deming, Joseph M. Juran, Armand V. Feigenbaum, Kaoru
Ishikawa, Phillip B. Crosby and Genichi Taguchi.

Total Quality Management is the operating philosophy with its focus on leadership, customer
satisfaction, employee involvement, continuous improvement, supplier partnership and
performance measures. All tools and techniques for total quality management focus on
maintaining abovementioned elements.

There are number of tools and techniques in pursuit of total quality management such as
benchmarking, information technology, quality management system, environment management
system, quality function deployment, quality by design, failure mode and effect analysis, product
liability, total productive maintenance, management tools, statistical process control,
experimental design and Taguchi‟s Quality Engineering.

Figure below explicitly depict that both the philosophy and tools & techniques are concentrated
to strengthen the product or service realization aspect of the enterprise which is to ultimately
ensure the satisfaction of the customer.

TQM has continuous process improvement approach implemented with strongly established
performance measures.

This paper is focused on Quality Management System as a tool in pursuit of Total Quality
Management. While accredited QMS is referenced from ISO 9001:2008 standard, non-
accredited QMS is suggested as a business development service module for small and medium
enterprise.
 Shewhart Benchmarking
Deming Information Technology
Juran Quality Management System
Figenbaum Environment Management System
Ishikawa Quality Function Deployment
Crosby Quality by Design
Taguchi Failure Mode and Effect Analysis
Products and Service Liability
Total Productive Maintenance
Management Tools
Statistical Process Control
Experimental Design
Taguchi‟s Quality Engineering

Tools and
Gurus
Techniques

Principles Products or Service

Customer
and Realization
Practices

People and relationship Approach:

Leadership Continuous Process Improvement
Customer Satisfaction
Employee Involvement Measure:
Supplier Partnership Performance Measurement

Source: Besterfields, Total Quality Management, 3/e, p.6.

Designing Quality Management System: Prototype of QMS Manual
This first step in building a Quality Management System is the creation of a "Quality Manual".
The purpose is to describe in a concise and brief format, the scope and extent of the company
quality system. Quality Manual is precisely the reflection of the quality program being
implemented in an enterprise. Therefore, it should be developed very carefully and with
involvement.

QMS inherits the quality principles: quality leadership, customer satisfaction, employee
involvement, supplier partnership, continuous process improvement and performance
measurement, which are reflected in one or more areas addressed in QMS manual. Also, QMS
manual should embed PLAN-DO-STUDY-ACT cycle.

A prototype of the Quality Management System manual is presented as here:

QUALITY PRINCIPLES

1: Quality Leadership QUALITY COUNCIL

2: Customer Satisfaction
3: Employee Involvement
QMS MANUAL
4: Supplier Partnership
5: Continuous Process Improvement QMS Manual:
6: Performance Measurement 1. Introduction
2. Strategic Posture

P DSA CYCLE
3. Enterprise Structure
4. Description of Processes
5. Internal Control
STRATEGIC LINKAGE 6. Internal Audit

Pareto Principle PROCESS MANUAL

Critical Processes Identification 1. Presentation

CUSTOM Critical
- Critical Process 1 2. Process Map
ER Success
- Critical Process 2 3. Explanation of the steps
SATISFAC Factors
- Critical Process 3 4. Annexure (if necessary)
TION
- Critical Process 4

CERTIFICATION AUDIT

Fig: Prototype of Quality Management System manual

Quality manual determines the scope of the quality management system, identify and detail the
procedures and describe the interaction of the processes.
Components of QMS Manual -
Component Introduction
Rationale QMS manual is guiding document for all the staffs on their work which
is developed with the strategic emphasis. Introduction component
orients the reader on the context in which QMS is developed.
Sub-Component 1. Introduction of the enterprise
2. Context in which QMS is developed
3. Brief Description of the product and/or services
Description A simple introduction of the enterprise with brief description of its
products and services is the start of the QMS manual.

Component Strategic Posture

Rationale Clear strategic posture sets the direction of the enterprise towards total
quality management. Established strategic posture in the enterprise is
one of the major signs of management commitment. In addition,
Quality Council with the help of established strategic posture will be in
a position to lead the enterprise.
Sub-Component 1. Vision Statement
2. Mission Statement
3. Quality Objectives
4. Quality Policy Statement
Description In small enterprise, strategic posture is most likely to be unwritten,
unclear and informally acted upon. Considering the fact that the
entrepreneur is the ultimate strategist in small enterprise, strategic
quality management orientation (discussed later) should emphasis
discussion with him/her. Later in the stage, strategic posture might
need to be redrafted with the support of quality council, while
consulting entrepreneur with special emphasis.

Component Enterprise Structure

Rationale Clearly established enterprise structure is necessary to execute quality
management system in a manner to satisfy both the internal and
external customers.
Sub-Component 1. Organization Structure
2. Job Description
3. Communication Matrix
Description Staffs in small enterprise are compelled to undertake several
responsibilities and are identified performing in confusing chain of
command. Organization structure can be designed with the recognition
of either the staffs in the enterprise or the functions.
Quality Council should be integrated into the organization structure.
Once the organization structure is established, quality council can
initiate drafting job descriptions. Job description should put sufficient
emphasis on the need of staffs to contribute to quality.
Component Description of process
Rationale Quality Management System is principally built on the process
approach. All the functions carried out in the enterprise are identified
as processes. Philosophy of Total Quality Management asserts that
the poor quality is result of the faulty processes.
Sub-Component 1. Critical Processes
2. Support Processes
Description Critical Processes are those processes which contribute to maintain
critical success factors in the enterprise. Critical success factors are
contributing factors to customer satisfaction. In that logic, successful
critical process design and its implementation will help enterprise
achieve/ maintain customer satisfaction.
Three to five critical processes are identified. The answer why three to
five critical processes lie on the pareto principle that explains few
processes contribute most of the value. Once the critical processes are
identified by the quality council, a manual is prepared with rigorous
discussion with each staffs involved in the particular process.
Support processes are not the major processes in the enterprise, but
are supporting them.

Component Internal Control

Rationale Successful execution of Quality Management System requires clear,
workable and established internal control measure in place. Internal
control system within QMS will eliminate malfunction and under-
operation during its implementation.
Sub-Component 1. Documentation Policy
2. Team Meeting Requirement
3. Customer Feedback Review
4. Control of Non Conformity in the Process
5. Quality Council
Description Although small business derives most of its advantages through
informal operation, establishing formalized internal control measures to
little extend since the beginning is fruitful. To systematically establish
successful internal control system, PDSA cycle should be embedded
in most possible ways.

Component Internal Audit

Rationale Internal audit fulfills following three objectives:
1. Identify the actual performance against those recorded in the
QMS manual.
2. Follow up on the non conformance from the previous audit.
3. Propose corrective actions activities to businessperson/
entrepreneur.
Sub-Component
Description Internal audit is divided into three sections: preparation/ plan, carrying
out the audit and reporting the result.
Internal auditor should prepare the audit reviewing the QMS manual,
taking checklist of the questions to be asked, preparing the schedule
 and list of the persons/ process owners to be interviewed.
Conducting the audit is to follow the audit plan. Generally, audit is
conducted into three phases: pre audit meeting, audit and closing the
audit. Refer the annexure 3 for more detail.
After conducting the audit, auditor submits the report to the
management in the proper format. Audit report should be standardized
and written with the use of parameters. For example, the parameters
can be classified as: Conformance, Non Conformance – Major and
Non Conformance – Minor.

Components of Process Manual -

Component Presentation
Rationale Pre determination of the input and output of the process with clear
objectives together with the mention of the context in which it was
developed is a first of building process manual.
Sub-Component 1. Name of the Process
2. Context/ Description
3. Objective of the Process
4. Input in the Process
5. Output of the Process
Description This section introduces the process manual.

Component Process Map

Rationale A graphical representation of the series of steps to be carried out to
deliver value is methodologically comprehensible.
Sub-Component
Description With the involvement of process owner and quality council, all the
steps are identified with its input and output. Steps identified are later
analyzed and evaluated on the basis of their contribution in value
chain. Best approach would be to assess the process in five
dimensions commonly called SIPOC: Supplier, Input, Process, Output
and Customer. All identified steps are sequenced to form a process.
Process mapping is built in such a way to satisfy both the internal and
external customer.
Note: Internal customers are the staffs who work on the process. Staffs
who works on the following step is the customer of the staff who is
working on the preceding step.
This step demand higher degree of involvement and critical analysis
and evaluation.
A simple technique of process mapping is recommended.

Component Explanation
Rationale In the process manual, identified steps are explained instructively.
Sub-Component
Description Each step in the process is numbered to be explained with the answer
to questions such as: what, by whom, when, how and where?
Component Annexure
Rationale All the inputs in each of the process should be pre-determined and
standardized.
Sub-Component
Description Inputs in the form of tools, templates and documents are structured to
standardize in the annexure. In some cases, clear sub steps to be
followed or the considerations to be made are included in the
annexure.
Implementation of QMS in MSME: Technical Guideline
Implementation of QMS – There are number steps in the implementation of Quality
Management System in an enterprise, presented as follows.

Strategic Quality Management Orientation –

First step in implementing quality program is to begin with orienting MSME owners/manager on
the strategic nature of quality management and to integrate quality management in the overall
strategic management of the enterprise. Such strategic quality management is conducted by
consultant/ technical assistance provider.

Implementation of QMS demands strong commitment from management. In ISO 9001 standard,
management commitment is specifically detailed into actions such as communicating the need
to meet customer, legal and regulatory requirement, establishing a quality policy, ensuring
quality objectives are established, conducting management review, and ensuring the availability
of resources. For the purpose of this paper, management commitment is embedded with larger
framework of the enterprise – strategic focus. Strategic element of the enterprise is already
explained in detail in above section. Here we focus how we can establish the basis for strategic
quality management orientation.

Quality Management System in pursuit of total quality management is a program that intensely
demands strategic focus of the enterprise. Consultant/ technical assistance provider should
develop the content that best orients MSME owner/ manager towards the need of strategic
awareness and commitment on quality program.

Forming a Quality Council –

Quality council is a team consisting of businessperson/entrepreneur, business function head,
supervisors and consultant. Quality council, the driver for the TQM engine, sets the direction of
QMS. Quality council should be the part of the organization structure. Quality Council, which is
naturally smaller in small enterprises, has to conduct regular meetings to discuss the progress
status and act up it upon necessity. Working of the quality council should be formalized.

In small business, quality council can be headed by the businessperson/entrepreneur himself or

the head of the function.

Quality Council should fulfill following responsibilities which is embedded within the PDSA cycle:

PLAN
1. Facilitate and participate the strategic and quality baseline audit.
2. Develop the planning and road map (with time schedule) of the QMS
implementation/ integration in the enterprise.

DO
1. Develop the strategic posture of the enterprise: core values, vision statement,
mission statement, quality objectives and quality policy statements.
3. Develop and implement the QMS awareness and training plan in the enterprise.
 4. Establish the measurement indicators (quantitative and qualitative), embed them
in the QMS manual and enforce it.
5. Activate new organization structure and new processes.
6. Establish recognition and reward system to reinforce the implementation of the
QMS.
7. Develop functional and realistic QMS manual.

STUDY
1. Monitor the implementation of the QMS in the enterprise.
2. Analyze pre-established indicators against the result.

ACT
1. Eliminate the non-conformance results and standardize the solution.
2. Reinforce the standardized solutions for continual improvement.

Activating the Quality Council –

Since the size of the quality council in small enterprises is smaller, activating the quality council
is easier. All that has to be done is to activate new organization structure. Note that quality
council is a part of organization structure.

Conducting Internal Audit –

Internal audit is done by the consultant/ technical assistance provider. The objectives of the
internal audit are presented below:

1. Identify the actual performance against those recorded in the QMS manual.
2. Follow up on the non conformance from the previous audit.
3. Propose corrective actions activities to businessperson/ entrepreneur.

Internal audit is divided into three sections: preparation/ plan, carrying out the audit and
reporting the result.

Internal auditor should prepare the audit reviewing the QMS manual, taking checklist of the
questions to be asked, preparing the schedule and list of the persons/ process owners to be
interviewed.

Conducting the audit is to follow the audit plan. Generally, audit is conducted into three phases:
pre audit meeting, audit and closing the audit. Refer the annexure 3 for more detail.

After conducting the audit, auditor submits the report to the management in the pre-determined
format. Audit report should be standardized and written with the use of parameters. For
example, the parameters can be classified as: Conformance, Non Conformance – Major and
Non Conformance – Minor.
Special Implementation Consideration for Small Enterprises
1. Non-accredited quality program (or certification) -

Often very expensive for MSMEs to afford accredited quality program in an enterprise, such
program is beyond the strategic sight of small business owner. Enterprise which derives its
operational philosophy far substandard from what is standardized in accredited quality program
is ambitious goal. Non-accredited quality program such as the one presented in this paper,
presented in the simplest structure, is affordable. Also, program like this one also provides
stepping stone for the enterprise to, someday, ultimately embrace accredited quality program. It
is suggested that non accredited quality program can be synergized if it is developed as a
business development service module with intense focus on building entrepreneurs capacity on
quality management.

2. Scope of the quality program –

Enterprise derives its successes from few yet powerful forces which are called critical success
factors. These critical success factors are realized through crucial specialized processes –
critical processes. Quality program which is dictated with the process approach philosophy limits
scope within these critical processes. As a first step to a never ending quest to total quality
management journey, focus on these critical process is a right start.

Besides, unshakable commitment to quality leadership, customer focus, continuous

improvement, employee involvement and customer satisfaction only in the most manageable
application terms should be limited to the scope of the quality program.

3. Leadership element –

Design of a successful quality program in MSME calls and providing consulting services needs
special consideration on the leadership element.

Transformation of leadership philosophy in enterprise is seldom successful unless it is begun

with the correct approach special to MSMEs. Business development service designer or quality
consultant should cultivate or nurture the vision of quality of the enterprise or entrepreneur. This
is the first step.

Administration of leadership - to develop formal influence throughout the enterprise to direct the
efforts of the team towards attainment of quality goal - is the second step. Individual –
management representative - or a team - as quality circle - fulfills the need of transactional
leadership in the enterprise through out the journey.

Top management or board necessary for the transformational leadership which also sets the
strategic direction for the quality program falls within the scope.
4. Value system –

Consideration for the value system is especially important in course of implementation of quality
program. It is very important to understand the fact that value system (old) in place in MSME is
very different and most often is in contrast to the value system (new) of quality program –
whether accredited or non-accredited. For example, family business derives its value system
from two entities: family – which is purely social anthropological entity and business – which is
purely economic entity. Family business has, thus, hybrid of socio-anthropological-economic
value system. Value system of quality program, however, is derived from quality principle which
is purely managerial. These two value system is most likely to contradict each other.

Consultant or quality circle has to recognize the forces that resist quality program and help in
the adoption new value system or the assimilation of both the value systems. It is especially
important to recognize the cause of the resistance to quality program, which will assist the
identification of right solution.

5. Formalization and Documentation –

The level of formalization and documentation should be dealt with special consideration
especially because many of the advantages being MSME are derived from low level of
formalization and documentation. Pushing formal procedure and overloading the processes with
documentation might be detrimental and this might ultimately vaporize the essence of quality
program.
Conclusion
The first objective of this technical guideline is to provide technical guideline to the implementers
of quality program in MSMEs, who might be the Technical Assistance providers, BDS
consultants, or the entrepreneur/ manager/ leader of an enterprise. Secondly, this paper aims to
document experiences of PF team of implementing Quality program in micro and small
enterprises as a reference for implementation of similar program in future.

In this technical guideline, we have explained micro, small and medium enterprise in terms of its
managerial features, strategic management characteristics, three most important roles in
enterprise and importance of quality program in terms of cost of quality. These contents have
high impact in the design and implementation of quality program.

This technical guideline also offers a simple form of quality program in detail. It includes review
of quality principles, design of a simple quality program, implementation guideline and special
considerations to be made in MSMEs. This technical guideline supplemented working
documents which are presented in corresponding annexure.

As for further research, it is recommended to develop non accredited standard or benchmark

development methodology to implement non accredited quality program.
Annexure - 1
QUALITY MANAGEMENT SYSTEM MANUAL

[Name the standard if available]

[Document Code Number]

[Address]
[Telephone Number]
[Email Address]
[Website]

[Date of Issue]
[Revision Number]

THE CONTENTS OF THIS QUALITY MANUAL IS THE SOLE PROPERTY OF [NAME OF THE ENTERPRISE] NO PART OF
THIS MANUAL CAN BE REPRODUCED IN FULL OR IN PART WITHOUT THE WRITTEN AUTHORISED PERMISSION.
A. Introduction

1. Introduction of the Enterprise.

Basic introduction of the enterprise.
Who established the enterprise? What does it do? Where is it located? When was it
formed?
2. Context of QMS.
Context when the decision to adopt QMS was taken.
Scope of the QMS.
Mention its strategic focus of the enterprise.
3. Description of Product and/or Services.
List the products and/ or services. [Document Code Number]
Provide brief description of each of the product and/ or service. (For example,
composition and features). [Document Code Number]

B. Strategic Posture

1. Vision Statement. [Document Code Number]

What does the enterprise/ entrepreneur aspires to be in the future?
Vision of the enterprise is timeless, inspirational and deeply shared.
2. Mission Statement. [Document Code Number]
Who we are? Who are the customers? What do we do? And how do we do it?
Mission statement should clearly put the purpose for the employee, customers and
suppliers.
3. Quality Objectives. [Document Code Number]

4. Quality Policy Statement. [Document Code Number]

Quality policy statement guides everyone in the organization on how they should
provide products and service to its customers.
It‟s a statement shared and understood by all staff members.
It underlines the deep commitment towards Quality Management System.
It draws up the main objectives of Quality Management System.
 It reminds the mission of the organization.
It reminds the objectives of the organization.
It emphasizes the main values shared in the organization.

C. Enterprise Structure

1. Organization Structure. [Document Code Number]

What are the functions in the enterprise? (E.g. production, sales and marketing,
accounting, outsourcing etc.)
Who are the responsible staffs for each of the functions?
How the chain of command and span of control established in the enterprise?
Establish the enterprise structure.
Integrate quality council in the enterprise structure.
2. Job Description. [Document Code Number/s]
Template:

D. Description of Process

1. Critical Processes. [Document Code Number]

Name each critical processes and link to the annexure for the corresponding process
manual.
2. Support Processes. [Document Code Number]
 Name each support process/s and link to the annexure for the corresponding
process manual.
Refer to Annexure 2: Process Manual Template.
3. Communication Matrix. [Document Code Number]
Communication Matrix eases the monitoring of the processes.
One communication matrix for each process.
Template:

[Critical/ Support Process]

Name of the Process:
Staffs involved in the
Process (Column)/ Steps in Executive Director Staff Member Staff Member Staff Member
the Process (Row)

Step 1 [Name]

Step 2 [Name]

Step 3 [Name]

Step 4 [Name]

E. Internal Control

QMS helps enterprise to “monitor, analyse, and improve processes”. It will allow
management to check conformity of the products and services, to ensure conformity of
the quality management system and to continually improve its effectiveness.

1. Team Meeting.
Different team meetings are planned in order to allow members of a same team to sit
together, exchange, coordinate, and take the right decisions for an optimal realization of
the concerned product. On the other hand, the complete staff needs also to have a
common meeting. That is the purpose of the staff meeting (on a monthly basis).
Participation to meetings is compulsory (except exceptional cases). Meeting reports
[Document Code Number], which summarize all the issues discussed during the
different meetings, are sent to all concerned staff members.

2. Customer Feedback Review.

Customer feedback mechanism aims at maintaining a strong communication on the
basis of mutual exchange with its customers. Therefore, it allows team to integrate
 feedbacks and to improve continuously on product and/ or services. Moreover, each
complaint is registered in the Problem Log Complaint Feedback Excel Document
[Document Code Number], and is then analysed and corrected during the meeting of the
concerned team.

3. Control of Non – Conformity in the Process.

Firstly, staffs need to identify and register problems in the processes. Problem log
document [Document Code Number] can be used to register complaints or feedback
from customers, regulators, inspection personnel, process owners, and findings of
internal auditors and management.

Secondly, common causes are classified. A repeat problem or problem of serious

consequences can be identified.

Thirdly, quality council can recommend priority to be taken, for analysis and
corrective action to the management.

4. Documentation and Record Control.

Documentation/Record Identification.
Documentation/Record Storage, Retrieval and Disposal.
Documentation/Record Backup.
Documentation access policies.
5. Quality Council.
Quality council is a team consisting of business person/entrepreneur, business function
head, supervisors and consultant. Quality council, the driver for the TQM engine, sets
the direction of QMS.
What is the norms and value of the quality council?
When the regular meeting of the quality council does take place?
What are the deliverables of quality council?

F. Internal Audit

Internal audit is done by the consultant/ technical assistance provider. The objective of the
internal audit is presented below:
1. Identify the actual performance against those recorded in the QMS manual.
2. Follow up on the non conformance from the previous audit.
3. Propose corrective actions activities to businessperson/ entrepreneur.
Determine who undertakes the responsibility to conduct internal audit and who
authorizes him/ her.
Determine at what interval the internal audit will be undertaken.
Establish the process manual of the internal audit (annexure Internal Audit Process
Manual [Document Code Number]).
Establish the report format and reporting system.
Annexure - 2
PROCESS MANUAL

[Document Code Number]

1. Presentation

a. Name of the process:

b. Context/Description:

c. Objective of the process:

d. Inputs for the process:

e. Outputs to be achieved:
 2. Process Map

Process Mapping is done with a technique called flow chart. Please follow symbols
below to map your critical process.

a. Boundaries: Identifies the beginning or end of a process and is represented by

the oval symbol.

Oval

b. Operation : Identifies an activity or task in the process.

Rectangle

c. Decision: Identifies a decision or branch point in the process. Write the decision
inside. Label each path emerging from the Decision block with the options, such
as yes, no

Diamond

d. Movement or transportation: Indicates movement of the output between

locations.
When all symbols are put together, process will look like:

1. Start

2. Activity

3. Activity

NO
4. Decision 5. Activity

YES

5. Activity

6. End

(Process Map)
 3. Explanation

Every box in the process map is numbered and for each number narrates the details of
the process.

Steps Explanation (What, How, When and Where) By Whom?

4.1

6
 4. Annexure

Annexure is the thickest part in the process manual, it has all the formats which are
explained in the above section.

Use of graphs, templates, pictures, tables, instructions, checklist, list of tools, templates
and documents are recommended.

Code all the annexure.

Annexure - 4
A. INTERNAL AUDIT

Internal Audits should be about processes and systems and should answer the
following questions:

Are they effective

Are they meeting requirements
Could they be improved

Thus, internal audit should be about judging both conformance and effectiveness of
individual processes and overall system. In this regard, internal audit carries out the
following tasks:

Identifying the actual performance against those recorded in the QMS manual
Following up on the non-conformance from the previous audit
Proposing corrective actions against non-conforming processes/products to
improve effectiveness of processes

On the other hand, Internal Audit should be looked upon as a tool that will ensure the
ongoing relevance of the Quality Management System that has been installed in the
organization. With the change in external and internal environment, it becomes
important to ensure that the QMS hasn‟t become redundant. In this context, it should
also look for the elements which ensure the continual improvement of the processes
and overall system.

Internal Audit is usually carried out using an Audit checklist. The checklist should be
such that it captures the dynamism of Internal Audit. It should check conformity against
standard, the efficiency of processes and system and, and also the elements of
continuous improvement. A sample checklist is attached in Appendix …

The Internal Audit should be adapted when it‟s being done for the first time in
organization after the installation of QMS in the organization. The approach should be
like the certification audit where the auditor‟s job is to ensure that the correct system is
in place and that it‟s functioning properly. The internal audits after the first one should
focus more on ensuring that the Quality Management System is functioning efficiently
and if the system needs to be improved for better functioning. Thus, the major
component to look for after the first internal audit will be the elements of continuous
improvement of the system.
 B. AUDIT METHODOLOGY EXPLANATION

1. Quality Management System

1. Strategic Posture

1. Does the organization have vision and mission statements?

2. Does the organization have quality objectives?
3. Does the organization have Quality Policy Statement?
4. Does vision statement clearly identify the direction of company and its core
values?
5. Does mission statement clearly spell out company‟s purpose?
6. Does Quality Policy Statement clearly outline the company‟s commitment toward
quality?
7. Is vision/mission/objectives and quality policy well communicated within the
organization and do all stakeholders identify with these?
8. Do vision and mission statements inspire the stakeholders of the company?
9. Do all organization members believe that Quality Objectives are achievable and
do they identify their contribution in achieving those objectives?

2. Enterprise Structure

1. Does organization have well defined organization structure?

2. Is organization structure communicated to all staffs?
3. Are all staffs aware about the chain of command in the organization? Has there
been an evidence of conflict due to unclear chain of command?
4. Has Quality Council been formally established in organization structure and has
its roles and authority been clearly established?
5. Do all staffs know about the roles and responsibilities of Quality Council?
6. Is Quality Council perceived as positive change maker by staffs?
7. Do all staffs have job description?
8. Are they aware of their job responsibilities?
9. Have there been instances of conflicts due to unclear job responsibilities?
3. Quality Management System: General Requirement

1. Is the process properly explained and documented?

Parameter What to look for How to Judge

Process Completeness i.e. all components of process Process manual
Introduction introduction are present
Objective is SMART as far as its relevant
All inputs are properly identified
Process Logical flow Process Manual
Mapping Understandable
Realistic i.e. whether its followed in the
organization and captures all dimension of
process
Process Clarity of Explanation Process Manual
Explanation
Templates and Whether all tools and templates are either Process Manual
Tools attached or located in the manual

2. Is the process formalized?

Parameter What to look for How to Judge

Formalization Does the process follow standard business Process Manual
of Process practice
Whether the process is carried out using
different tools and templates

3. Is the process Implemented?

Parameter What to look for How to Judge

Implementation Are the concerned people aware of Interview with
of Process processes? concerned staffs
who carry out the
process
Do concerned people have a copy of process Check with
manual? concerned staffs
Do concerned people have materials (tools Check with
and templates) needed to carry process? concerned staffs
Is there an evidence of process being carried Record related to
out? process

4. Is the process measured and monitored?

Parameter What to look for How to Judge

Measurement Whether the objectives are SMART Process Manual
and Monitoring Whether Problem Log Document is Record
of Process maintained

5. Are the documented processes critical for the organization and are they sufficient
to manage all critical aspects of the company?

Parameter What to look for How to Judge

Criticalness of Whether processes directly contribute to Process Manuals,
Processes profitability of the company Interview with
Management
Representative
Whether documented processes represent Process Manuals,
the areas which, if not managed properly, will Interview with
lead to lost clients, wastage, etc. Management
Representative
Sufficiency of Whether documented processes are Observation,
Processes to sufficient to manage all critical aspects of the Interview with
manage Critical company Management
Aspects Representative

6. Are the documented processes continuous?

Parameter What to look for How to Judge

Continuity of Whether processes are carried out frequently Interview with
Processes in the organization Management
Representative
Volume of record
associated with
processes, if
present

4. Internal Control

1. Does team meeting take place regularly in pre-determined interval?

2. Has team meeting been an effective tool of communication between all
organization members?
a. Is staff meeting considered important by top management?
b. Do all staffs feel comfortable to communicate their issues in team
meeting?
c. Are the decisions made in team meeting actually implemented in the
organization?
3. Is customer feedback taken regularly and is the frequency reasonable?
4. Does the organization have mechanism to process customer
feedback/complain?
5. Is customer feedback taken as important element of quality?
a. Is company responsive towards customer feedback i.e. is it used as input
in decision making?
b. Is customer feedback taken for continuous improvement?
6. Is there a mechanism of recording non-conformity in the process?
7. Is this mechanism effectively being used in organization?
8. Has there been any non-conformity in process and has it been effectively dealt
with?