BI-109

““ I am not much of an optimist but it is astonishing to witnessI am not much of an optimist but it is astonishing to witnessthe degree to which the quality issue has become a part ofthe degree to which the quality issue has become a part ofthe corporate debate in a more sceptical Western Europethe corporate debate in a more sceptical Western Europe

and US in the space of just 10 to 12 years. There are upwardsand US in the space of just 10 to 12 years. There are upwardsof 380 million Western Europeans and 250 million Americans,of 380 million Western Europeans and 250 million Americans,

and our business men are all talking about quality. Thatand our business men are all talking about quality. That’’s s quite an achievement.quite an achievement.””

Tom PetersTom Peters 19851985

Business CultureBusiness Culture

The Fundamental Concepts of ExcellenceThe Fundamental Concepts of Excellence

Key driver for any organisation

Is a managed process

Makes the difference between winningand losing

Effectiveness of which can be assessed

LeadershipLeadership

There are those who make There are those who make things happen ...things happen ...

…… those who watch things happen ...those who watch things happen ...

……. and those who say . and those who say WHAT HAPPENED?WHAT HAPPENED?

Policy & StrategyPolicy & Strategy

In the future, organisations In the future, organisations will be heavily dependent will be heavily dependent on KNOWLEDGEon KNOWLEDGE--BASEDBASEDMANAGEMENTMANAGEMENT

It is the people that MAKE It is the people that MAKE THINGS HAPPENTHINGS HAPPEN

People People

WHAT YOU PUT INIS WHAT YOU GET

Partnerships and ResourcesPartnerships and Resources

• DETERMINE CUSTOMER NEEDS• TRANSLATE CUSTOMER NEEDS• PRODUCE CUSTOMER REQUIREMENTS• DELIVER CUSTOMER REQUIREMENTS• MANAGE CUSTOMER RELATIONSHIP

ProcessesProcesses

It doesn’t matter what you do, it is customer perception of you which really counts

Customer ResultsCustomer Results

Evidence point out thatDirect correlationpeople motivation & satisfaction to increasesin productivity, profitability and corporateperformance overall

People ResultsPeople Results

ZERO EMISSION

ZERO ACCIDENT

ZERO RISK

ARE REAL & AFFECT DIRECTLYTHE FUTURE OF ORGANISATIONS

Society ResultsSociety Results

VALUE, PERFORMANCE, VALUE, PERFORMANCE, GROWTH, PROSPERITY & GROWTH, PROSPERITY & SUSTAINABILITY ARE SUSTAINABILITY ARE WHAT ORGANISATIONS WHAT ORGANISATIONS ARE MEANT TO ACHIEVEARE MEANT TO ACHIEVE

After all, isn’t this the real purpose of creating organisations in the first place?

Key Performance ResultsKey Performance Results

LEARNING FROM THE BESTLEARNING FROM THE BEST

Six Sigma QualitySix Sigma QualityParticipative Management Program Participative Management Program (PMP)(PMP)BenchmarkingBenchmarkingEmployee InvolvementEmployee InvolvementCustomer FocusCustomer Focus

MOTOROLA INC.

LEARNING FROM THE BESTLEARNING FROM THE BEST

Sales in 1987 totalled $6.7 billionSales in 1987 totalled $6.7 billionMost products have increased their Most products have increased their market share, in the US and abroadmarket share, in the US and abroadCustomer SatisfactionCustomer Satisfaction

MOTOROLA INC.

LEARNING FROM THE BESTLEARNING FROM THE BEST

Management Leadership Management Leadership –– Total Quality Total Quality CultureCultureProduct and Process LeadershipProduct and Process LeadershipHuman Resource ExcellenceHuman Resource ExcellenceCustomer Service Plans created for each Customer Service Plans created for each clientclient

WESTINGHOUSE ELECTRIC CORP.

LEARNING FROM THE BESTLEARNING FROM THE BEST

High levels of customer satisfactionHigh levels of customer satisfactionYields in the manufacture of fuel rods Yields in the manufacture of fuel rods increased from less than 50% to 87%increased from less than 50% to 87%Substantially reduced scrap, product Substantially reduced scrap, product reworking, and manufacturing cycle reworking, and manufacturing cycle timetimeAchieved over 3 years 100% onAchieved over 3 years 100% on--time time delivery of high quality productsdelivery of high quality products

WESTINGHOUSE ELECTRIC CORP.

LEARNING FROM THE BESTLEARNING FROM THE BEST

Management for qualityManagement for qualityA 5 year technology roadmap A 5 year technology roadmap –– updated updated every 6 monthsevery 6 monthsAnnual Annual ““Supplier Quality & Service PlanSupplier Quality & Service Plan””Strong emphasis on cultivating customer Strong emphasis on cultivating customer loyaltyloyaltyPromotion of team work and employee Promotion of team work and employee empowermentempowermentLearning faster than key competitorsLearning faster than key competitorsA flattened organisational structure and A flattened organisational structure and emphasis on trainingemphasis on training

STMicroelectornics, Inc.

LEARNING FROM THE BESTLEARNING FROM THE BEST

SupplierSupplier--management program earned management program earned ““Best Best In ClassIn Class”” rating in an independent evaluation rating in an independent evaluation of performance in 19 benchmark areasof performance in 19 benchmark areasEmployee satisfaction levels in 1999 Employee satisfaction levels in 1999 exceeded the industry composite in 8 out of exceeded the industry composite in 8 out of 10 categories10 categoriesImprovement and significant performance Improvement and significant performance over Semiover Semi--conductors Industry Association conductors Industry Association (SIA) average, as well as competitors(SIA) average, as well as competitors’’averageaverage

STMicroelectornics, Inc.

LEARNING FROM THE BESTLEARNING FROM THE BEST

Customer satisfaction and loyaltyCustomer satisfaction and loyaltyValuing and empowering employeesValuing and empowering employeesMonitoring and measuring against specific Monitoring and measuring against specific targetstargetsProviding superior return to shareholdersProviding superior return to shareholdersThe use of technology to deliver market The use of technology to deliver market leadershipleadershipBehaving responsibly as a corporate citizenBehaving responsibly as a corporate citizenBenchmarking business models and processesBenchmarking business models and processes

RANK XEROX (UK) Ltd

LEARNING FROM THE BESTLEARNING FROM THE BEST

Profitable revenue growthProfitable revenue growthSatisfied and loyal customersSatisfied and loyal customersConsolidated market ShareConsolidated market Share

RANK XEROX (UK) Ltd

LEARNING FROM THE BESTLEARNING FROM THE BEST

Becoming involved with customersBecoming involved with customersBecoming involved with suppliersBecoming involved with suppliersSaying Saying ““thank youthank you”” –– recognition and awards recognition and awards to individuals and teamsto individuals and teamsPeople management People management –– ensuring people get ensuring people get satisfaction from and feel rewarded for their satisfaction from and feel rewarded for their efforteffortReleasing the potential of human resourcesReleasing the potential of human resources

YELLOW PAGES

LEARNING FROM THE BESTLEARNING FROM THE BEST

Developing team spiritDeveloping team spiritDeveloping effective communicationDeveloping effective communicationCaring for peopleCaring for peopleProviding a firm grounding in informationProviding a firm grounding in informationCommunicating Policy & StrategyCommunicating Policy & StrategyFinancial strategiesFinancial strategiesIdentifying key processesIdentifying key processes

YELLOW PAGES

LEARNING FROM THE BESTLEARNING FROM THE BEST

Good customer satisfaction record (95% of Good customer satisfaction record (95% of customers intend to repurchase next year customers intend to repurchase next year ––customer retention average 7 years for customer retention average 7 years for advertisers, 15 years for large customers)advertisers, 15 years for large customers)Services are used 5 times more than the Services are used 5 times more than the nearest competitor nearest competitor –– 90% of advertisers 90% of advertisers regard them as good value for moneyregard them as good value for moneyEfficiency and effectiveness Efficiency and effectiveness –– more effective more effective at selling, beaten efficiency targetsat selling, beaten efficiency targetsSales per employee has increased likewise Sales per employee has increased likewise profits delivered to shareholdersprofits delivered to shareholders

YELLOW PAGES

Year Company Stock Growth (Oct 94)1988 Motorola 373.0%1988 Westinghouse (CNFD) - 49.6%1989 Xerox (BPS) 75.9%1990 General Motors 1.6%1990 Federal Express 10.6%1990 IBM (IBM Rochester) - 34.9%1991 Selectron 526.9%1992 AT&T (UCS) 32.2%1992 AT&T (TSBU) 32.2%1992 Texas Instruments (DS&E) 106.8%1993 Zytec 8.4%1994 Eastman Chemical 18.5%Total Stock Value £23016 (91.8%+)Standard & Poor 500 Stock value £15911 (32.6%+)Source: US Dept. of Commerce Study 1995

TQM TQM -- Cost or Investment?Cost or Investment?

1988 - 1998 Publicly Traded Award Recipients (Source NIST 2000)

$ Investment $ Value - 12/1/99 Change1988-1998 Award Recipients 8,883.31 83,617.73 841.29%

Standard and Poor’s (S&P) 500 8,883.31 28,564.67 221.55%

1988 - 1998 Publicly Traded Whole Company Award Recipients

$ Investment $ Value - 12/1/99 Change

1988-1998 Award Recipients 6000 72,043.00 1100.74%

Standard and Poor’s (S&P) 500 6000 19,653.85 227.56%

QUALITY PAYS OFFQUALITY PAYS OFF

Bradford Study 1996Bradford Study 1996

•• 81% had higher sales turnover per employee81% had higher sales turnover per employee

•• 81% had higher productivity per employee81% had higher productivity per employee

•• 74% had higher employee remuneration74% had higher employee remuneration

•• 65% had higher profit per employee65% had higher profit per employee

•• 62% had higher net asset turnover62% had higher net asset turnover

……..than their peer group..than their peer group

Critical Success Factors

♦Product Testing♦Statistics♦Workmanship Control♦Complaints

Critical SuccessFactors

♦Quality AssurancePrograms

♦Process documentation and

Qualification♦Quality Assurance Standards-ISO etc

Critical SuccessFactors

♦Quality Manuals♦Process Manuals♦Software QA♦Quality Assurance

“everybody’s responsibility”

♦Quality Assurance StandardsISO-9000/1400(ISO 9000/14000)

Critical Success Factors

♦Customer Satisfaction♦Strategic Planning♦People and Change Management♦Process Improvement♦Impact on Society♦Quality Award Maturity Model♦Performance Measurement♦Teamwork

1960s to 1970s 1970s to 1980s 1980s to 1990s 1990s to Current

Quality Control Quality Assurance Quality Management Total Quality Management

Evolution from Quality Control to Total Quality Management

Employee Training/Skills

Benchmarking

1988 (WorldClass)

1999 (WorldClass)

Product Orientation Service orientation Customer Orientation Market OrientationSix Sigma Customer Service Customer Satisfaction Quality ManagementStatistical Variation Meas Service Delivery Customer Loyalty Customer LoyaltyCycle Time Reduction Responsiveness Customer Complaints Supplier ManagementProcess Efficiency Quality Audits Customer Retention Customer ServiceProduct Reliability Service Business Improv. Customer Service Customer RelationshipsZero Defects Customer Satisfaction Innovation InnovationContinuous Improvement Process Mapping Responsiveness ResponsivenessCost Reduction Service Delivery Customer Partnership Employee EmpowermentQuality Circles Employee Training/Skills Employee Training/Skills Policy DeploymentTechnology Quality Culture Quality Culture BenchmarkingCustomer Service Service Reliability Continuous Improvement Process ImprovementEmployee Incentive Flexible Job Assignment Quality Leadership Stakeholder ManagementProduct Design Right First Time Flexible Job Assignment Continuous ImprovementFlexible Job Assignment Continuous Improvement Right First Time Environmental Impact

Quality Leadership Process Improvement Societal ImpactQuality Culture Customer Complaints Communications Quality CultureQuality Leadership Process Improvement Accountability Process Mapping

Communications Service Reliability Quality Leadership

Evolution and History of TQM PathEvolution and History of TQM Path

Main FocusMarket analysis SpecificationDesignManufactureInspectionConformanceReliabilityTechnologyCost reductionEfficiencyPreventionStatistical measuresTotal quality controlZero defectsCustomer Complaint

Main FocusPerformanceStatistical tools SPCQuality measureCustomer surveys

" satisfaction" expectation" perception

ResponsivenessAccessibilityEmployee trainingEmpowermentTechnologyService deliveryCompetenceCommunications

Main FocusCustomer Relations

" Loyalty" Satisfaction " Service" Expectation" Perception" Needs" Information

Added-valueService deliveryMan. CommitmentQuality AssuranceCont. ImprovementDeployment (QFD)Worker Motivation

Main FocusCompetitionPolicy Deployment(QFD)BenchmarkingMan. CommitmentEffectivenessCommunicationCont. ImprovementCustomer Relations

“ Satisfaction“ Expectation

InnovationResponsivenessLong-term ProfitMarket Share

Customer OrientationProduct Orientation Service Orientation Market Orientation

Paradigm Shifts in Concepts and Practice of Management

-StakeholderPerspective

M

Driver Stages of Evolution Sustainable Performance

NE

ED

for

TQ

M

Paradigm Shift Required(Orientation)

SC

P

Paradigm Shift Required

(Measures)

Business Balanced Scorecard Approach

Learningand

Innovation

Culture of Continuous Improvement

TQM Maturity and Sustainable Performance Model TQM Maturity and Sustainable Performance Model (TQM(TQM--MSPM)MSPM)

-Why-What-How-Business Imperative -Competition- Survival

-Stage 1 (P) Production Orientation- Stage 2 (S) Service Orientation-Stage 3 (C) Customer Orientation-Stage 4 (M) Market Orientation

LESSONSLESSONSTQM is an all inclusive TQM is an all inclusive approach to improving approach to improving competitiveness, competitiveness, effectiveness and effectiveness and flexibility of the entire flexibility of the entire organization through organization through planning, organizing planning, organizing and comprehending and comprehending each activity, with the each activity, with the involvement of each involvement of each individual at every levelindividual at every level

LESSONSLESSONS

The methods and The methods and techniques used in techniques used in TQM are applicable TQM are applicable throughout any throughout any organization and are organization and are equally useful in equally useful in every sectorevery sector

LESSONSLESSONS

TQM ensures that TQM ensures that management adopts a management adopts a strategic overview of strategic overview of quality that eliminates quality that eliminates the separation of the separation of planning from planning from execution, and focuses execution, and focuses on problemon problem--prevention prevention instead of detectioninstead of detection

LESSONSLESSONSManaging for quality Managing for quality should not be should not be delegated and it is delegated and it is the responsibility of the responsibility of the senior executive the senior executive leader to take leader to take charge of the charge of the commitment to a commitment to a quality policyquality policy

LESSONSLESSONSAn examination of all An examination of all potential barriers to potential barriers to quality can help to quality can help to achieve the correct achieve the correct mindset that mindset that maximizes the use maximizes the use of time and of time and resources by doing resources by doing things rightthings right--firstfirst--timetime

LESSONSLESSONS

The development of The development of a culture for a culture for continuous continuous improvement and improvement and communications is communications is essentialessential

LESSONSLESSONS

Training and Training and development is development is essentialessential

LESSONSLESSONS

Customer and Customer and Stakeholder focus is Stakeholder focus is an imperativean imperative

LESSONSLESSONS

Use of selfUse of self--assessment assessment techniques techniques ––performance performance measurement and measurement and feed back are vitalfeed back are vital

Winning the award accelerated Winning the award accelerated what we were doing in the what we were doing in the organisation and contributed in organisation and contributed in a powerful way. We are no a powerful way. We are no longer longer ““perfectperfect””, like we used to , like we used to be. We are better than we were be. We are better than we were and getting even better. We and getting even better. We found the Baldrige Award a very found the Baldrige Award a very powerful reinforcement of the powerful reinforcement of the approach we started in the approach we started in the early 1980s.early 1980s.

John Fooks, Vice PresidentWestinghouse Electric Corporation

For us, the Malcolm Baldrige For us, the Malcolm Baldrige Award was a great scavenger Award was a great scavenger hunt hunt -- finding the right finding the right information. We went into it for information. We went into it for selfself--improvement. Our CEO, improvement. Our CEO, Fred Smith, did not allow us to Fred Smith, did not allow us to send it until four or five days send it until four or five days before the deadline. It started a before the deadline. It started a lot of selflot of self--analysis, but the selfanalysis, but the self--improvement is just beginningimprovement is just beginning

Rosetta Riley, Customer SatisfactionCadillac, Motor Car Division

Our reason for applying had nothing to do Our reason for applying had nothing to do with winningwith winning……You are on this quality You are on this quality improvement journey and youimprovement journey and you’’re never re never quite sure where you are.The Malcolm quite sure where you are.The Malcolm Baldrige Award assessment process told us Baldrige Award assessment process told us that our processes were right and that that our processes were right and that there is a light at the end of the tunnel. there is a light at the end of the tunnel. The winners understand the approaches to The winners understand the approaches to quality but for most part they do not quality but for most part they do not subscribe to one particular philosophy. We subscribe to one particular philosophy. We tried tried JuranJuran, Ishikawa, Crosby and , Ishikawa, Crosby and DemingDeming. . None of them alone worked for us. Our None of them alone worked for us. Our success came when we turned to our success came when we turned to our people.people.

John West, Manager of Corporate Quality ImprovementFederal Express Corporation