MANAGEMENT PROGRAMME Term-End Examination December, 2OO8 MS-96 : TOTAL OUALIry MANAGEMENT

Time : 3 hours Maximum Marks: 700 (Weightage 700/o)

Note : (i) There are two sections : Section A Section B. and

(ii) ' (iii)

Attempt any three questions from SectionA, carrylng 20 marks each. Section:B is comrpulsory and carries 40 marks.

SECTION A 1. (a) How do "international siandards'l facilitate intemational trade ? Give one example of international standard which has achieved universalimplementation.

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(b) What is kaizen and what are its benefits ? List

the various techniques of continuous improvement.

2. (a) How can strategic quality goals be deploSe{ at

various levels in an organization ?

(b) Discussthe varioustypes of quality costs' What

kind of cost should a firm be more concerned with ? 3. (a) What are the principal objectives of quality circles ? It has been said, r'Quality circles do not work beyond Japan." Do you agree? (b) What, according to Crosby, are the four 'absolutes'of quality management? Explain' 4. (a) Why are teams vital in TQM and how are teams structured ? (b) How does TqU. integrate a humanistic 'Can you approach with scientific methods ? identifYsome elementsof each ?

5.

Explain any fout of the following : (a) Robust design and its usefulness (b) Difference between Statistical Process Control (SPC) and StatisticalQuality Control (SQC)

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(c) Activities 'covered under Management System(EMS) (d) Reliabilityengineering (e) Three pillars of 5 'S'

Environmental

. between Award and

(0

differences Certification

Rey

SECTION B 6. Analyzing the following case, answer the questions given at the.end. SINGHAL BOSCH LTD. rnkaj Singhal, the "Five years ago," confided Pq 4S-year-old CEO of the automotive components manufacturer, Singhal Bosch Ltd. (a.k.a. SBL), to his guest, Taducha Ishikawa,the S0-year-oldCOO joint ventuqe,ABC Isami Ltd' of the Indo-Japanese (AIL), the leader in the domestic light commercial vehicles market, "we commissioned a training company, Dickens Inc., to introduce kaizen at our plant. As you know, we were born in 1985, in technical collaboration with the Munich-based Robert GMBH, manufacture hydraulic and mechanical gears for the automobile industry, and so, had adopted its rigorous German management to

methods. But we felt the need for a system of continuous improvement in our manufacturing , processesfive years on, which is why I thought of l kaizen," "Aftdr beginning with a flourish, what l am worried about is where our kaizen movement is . MS-96 4

taking us. For, the number of kaizensper man_year at the plant has' actually started falling'in the last two years.From 1.57 in !gg0, the first year of its implementqtion, the kaizen rate per man-year.went up to tL.76 in 1993, but feil to 7.50 in 1995. Although this has nothing to do with the contract (for the supply of gears) we have signed,', he laughed shyly, "l was wondering if I could use this drive to Pune to tap your knowledge of the evolution of TQU programmes, in general and kaizen,inparticu|ar.Wheredoyouthinkwecou|d have gone wrong in implementing kaizen in our company ?" am a great believer kaizen," replied Ishikawa, quietly acknowledging the compliment, and settling down more comfortablyin his corner of the car. "Contrary to what you sV, what is happening at SBL may be a good sign. Every company concentrates on quantity in the first few years, which is why the number of kaizens initially always shows an uptrend. Then, the focus shifts to quality although thd norms for what constitutes quality vary from company to company. But, invariably, the numbe of kaizensfalls, as a result, r

before it stabilises.That is quite normal- You are still on the right track..." "That is not our'problem," argued Singhal'

"This decline has little to do with the quality of our kaiizens. I feel there are more fundamental " issues... Smiled Ishikawa : "You are in good company' Even corporations in the US and Europe have faced difficulties in implementing kaizen. Primarily, it is because they are so used to focussingon the results that they fail to recognise the importance of the processes that facilitatethose results.Only when the the top management conveys the message that process is as important as the result are workers automatically encouraged to improve the way they work. And they are conditioned to look for ways by which to enhance their efficiency. That is what kaizen is all about. But, tell me; why did you.think of kaizen in the first place ?'l

SBLs FINANCIALS
100 85.20 67.50

43.30 =1'20

-g
Rqo

1992-93 1993-94 1994-95 1995-96r996-97

=_J HJ
Elsdu.

Figuresin Rs.crores

flNet profit

Singhal sighed,and shifted uncomfortably."The early !990s were a difficult period," he explained. "With the automobile industry in a recession,our capacity utilisation fell to 40 per cent. There was a compelling need to lower our break-evenpoint even as we introduced new types of gears, especially since there were competitive pressureson quality, prices, and delivery-schedules. Moreover, our raw material, energy, and labour costswere going up by 20 per cent a year. We had to find ways of reducing our costs and improving our productivity. That is why I decidedto deploy kaizen..."

"Forgive my saying so, but that approach was flawed," interrupted Ishikawa, uncharacteristically' "Kaizen is not a panacea for cost-reduction or a not is productivity ' improvements. It problem-solving tool : it only creates a mindset of improvement that equips people to address the ldrger issuesbetter. What was your understandingof kaizen ?" . "l saw it as a way of constantly securing improvements everywhere by involving everyone in the company," said Singhal, after a thoughtful pause.

SBIIs KAIZENS
L6L74

t897 1.57

a223
I I

E _ _ - ^ E E l I

1992-93 rggS-94 L99L95 1995-96 L99G97 per ofKaizens E Kaizens Man-year I Number

H]

I ' tzoo

ll

NumberEmployees of

i'Fine. Then rryhydid you confine it to only your workers ?" asked Ishikawa immediatelv. "But that is what Dickenssuggested,"protested Singhal. "Kaizen was untestedground for me and I had to go by what the experts told us .... Also, we wanted results with which we could measure the successof the assignment. I must tell you that we linked their remunerationto cost-reduction. We said that our direct labour costs should come down to 8 per cent of our turnover over the next three years. Then, we structuredtheir fees in such a way that 5O per cent was paid up-front, 30 per Qent on completion of training, and the rest was tied to the results the kaizen rnovement achieved..." 'lshikawa shook his head reproachfully. "In my experience, one way of ensuring the failure of kaizen is to link it to a businessobjectiveright at the ouiiet. That linkage, we in Japan believe, should be establishedlater. In fact. kaizen works well only if it operates in a strategic vacuqm for the first two years. That period should be used by the CEO to create an atmosphere that will enable people to find new ways of lobking at issues,to get

them to think in terms of what is good for the organisation, and to make it a habit to secure improvements, however marginal they may be, in the way they work. It is, of course, very different if you already have a progressive workforce..." Singhal admitted that SBL's 1,450-strong workforce wasn't particularly progressivealthough, with an averageage of 27 years, they were quite receptive to new ideas and, initially at least, quite enthusiastic about kaizen.Ishikawathen asked how the consultants had gone about the training process. "Dickens spent the first six months training the workers. I addressed the inaugural session,where I spoke about why everyone should be constantly seeking little improvements every day in the way he, or she, works. And how we would always recognise.- and reward - those improvements." "Reward ? That's tricky," said Ishikawa, his eyebrowsshooting up immediately. "Yes," winced Singhal. "But we realisedit only as we went along, We came up with a flat monetary reward of Rs. 10 per kaizen. But Dickens

suggested an in-built step-up mechanism, which appealed to me. So, the first t0 kaizens by a worker were rewarded at Rs. 10 each, the next tA kaizens by the sameworker at Rs. 13 each, and the next lO kaizensat Rs. 15. each...' "You were after quick results," was all that Ishikawa would say, adding : "But this is like killing the goose that layi the golden eggs. Instead of seeking impror;ementsout of their own free will, your employeeswould soon have begun chasingthe money for its own sake. And there will be a spurt of enthusiasm initially but, sooner or later, the systemwill get reducedto a farce. That's why I said rewards aie a tricky issue. There is nothing wrong in offering a reward as long as you rnake sure that it is pegged to the stage at which the improvement has been effected. The greater the improvement, the lesser the reward. That is what we do in Japan..." "l don't quite.understand..." "Every problem, as we Japanese see it, has stages. Now, the gravity of the pqoblem increases progressivelywith each stage. Real improvement

lies in dealing with a problem right at the initial stages. You will not see savings of a high order then because the problem has still not surfaced. Paradoxically, is only when the problem becomes it progressively more visible that the value of the improvements carry a progressivelyhigher tag, and the savings so achieved appear more and more impressive.That is why, when you link monetary rewards inversely to the stages of a problem, you should pay more for an improvement that carries a lower price-tag and vice-versa." did not think of said a dazed "Our consultants did offer us a choice between payments in cash and payments in kind. We chose the former because it was easy to administer... Anyway, once the training sessions were over, we formed around 150 groups of between 8 and 10 workers each - of the same rank but from different departments and suggestedthat they meet in the first week of every month. Each person was given upto six minutes to make a presentationon the improvementshe had brought about at his workplace during the previous month. We did not want mere suggestions,but ideas that had be'en implemented into

irnprovements. Each had to be presented in a separate A4-sized format with Before and After scenarios. It was a one-hour meeting, with a structuredagenda, conductedby a senior manager, who was designated the ImprovementsCoordinator. Attendance at the meeting was optional since the idea was that there should not be any' external pressure perform..." to Ishikawa looked startled. "l was thinking about your coordinators. There is nothing wrong in confining kaizen to the workers. But, in that case, you should let the workers handle the meetings on their own too. Unlike in Japan, bringing in a manager is bound to create mistrust. I have always known that to happen in the Indian context..." "\,Ve did have problems there,',''said Singhal. "One worker actually asked me : what is the management'shidden agendavis-a-vis kaizens? At the same time, I didn't think there were any hard-and{ast rules we should go by. Honestly, are there any ?" "The crucial factor is the credibility of your message," replied Ishikawa, "and that can only come from consistency. What was your next step ?"

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. "All the"forms were displayed in a,central place we called the Kaizen Hall," continued Singhal. "Soon, there was little spaceleft. So, we decidedto let each employee display his kaizens in- his own workspace after they were signed off by the Improvement5 Coordinator. Two years into the eixercise, there was a huge increase in the number of kaizens, with over 90 per cent of our workers participating. But, as I told you earlier, :the enthusiasmabout kaizen has waned. Nobody seems to be interestedin it any more. In fact, I donrt think the spirit of continuous improvement that kaizen symbolises has percolateddeep enough at SBL. Nor am I alone in my predicament;despite bringing in consultants, most companies have found it difficult to institutionalise kaizen. Evidently, the rewards system'has not been motivating enough. And if I dispensewith it, what do I replace it with ?" "You should link it to perforrqanceappraisal," said Ishikawa. o'But that should be part of the final steps stage.We believethat there are four sequential of kaizen implementation.First,'$et the quantity in kaizens.This is a churning stage,when all kinds of improvements are made, trivial and sound. Let positive energy be released in the .entire organisation, with everybody - from the CEO to

the lowest worker - doing kaizens. This takes about two years for a company of your size. Second, shift. the focus to the quality of kaizens. This will happen on its own, with a cogent definition of wl'1at constitutes improvement automatically evolving.Third, link kaizens.tobusiness goals." "How is that done ?" askedSinghal.. "Each kaizen form should list three of the company's business goals. Which could be, for example, customer satisfaction,. cogt reduction, and quality improvement.As the employeesigns off the kaizen form,' he has to explicitl5r state how it has impacted on at least one of these three goals. This should be done, ideally, sometimeduring the fourth year. And the final stage is when kaizens are integrated with the performance appraisal process, wherein the number of kaizens generated by a worker during the year would be one of the criteria on which he is evaluated.That woulci institutionalise kaizen Of course, simultaneously, you should also develop support structures like a total quality movementin the company..." "Perhaps we have made too many, changes because we did not choose the right kaizen roadmap," said Singhal. "l am not sure how we can get back on the right track. Dickenshas not billed us

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for their last 20 per cent-of the fees, which i5 tied to the resultswe get. They too have suggested that we go in for a TQM roll-out, and we were planning to do so this year. Perhaps that will help us fine-tune ' the kaizen system. Meanwhile, ffiV direct labour costs shot up to L5 per cent last year. Thatr Vou say, is marginal to kaizen. But then, that leavesme even more worfied about the fate of our kaizen." Questions : (i) :

Do you share the despondenceof Singhal ? Has he done enough to ensure the successof SBL's Kaizen programme ? Has SBL. implemented the Kaizen programme in the right way ? How can improvement in the programme be elfected

(ii) Comment upon : (a) The strategicaspects:ofthe reward system, and (b) Participation of organisationalmembers in the quality programme.

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4,000