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How L&T, Sterlite & Tata are trying to improve processes

The movement towards total quality as the operating model for organisations is growing at an accelerated pace.

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The movement towards total quality or performance excellence as the operating model for organisations is growing at an accelerated pace. This approach is applicable to organisations of all sizes, in the manufacturing, service, education and healthcare sectors.

In India, the criteria for performance excellence come in two avatars: The Malcolm Baldrige performance excellence criteria have been adopted for the IMC Ramkrishna Bajaj National Quality Award; and the European Quality Award criteria for the CII-Exim Business Excellence Award. In terms of core values, the two are similar.
Each of the two models emphasises that work flows horizontally across functions to the customer. This work, a process, should be managed efficiently in order to deliver quality outputs to the customer.

At the recent Nasscom India Leadership Forum 2009, N R Narayana Murthy, chief mentor of Infosys, said that though the world has seen tough times in 1989-1993 and 1999-2002, the present global recession could be the mother of all recessions. There was a wide consensus that quality and efficiency of management processes is the key to survival, and perhaps progress.

The case for using process improvement methodologies is now beyond question. Care should be taken to adopt a structured process improvement methodology such as Six Sigma, Lean, TPM, or ‘Juran on Quality Improvement.’ The power of any such methodology, when integrated with the IMC RBNQA or CII EXIM criteria, provides for outstanding monetary and non-monetary performance results.

Here are some outstanding examples from the Indian industry.

Larsen & Toubro: Testing service level improvement
Larsen & Toubro undertakes non-destructive testing for the welded seams and joints of its fabricated products, which had to be focused on for reducing the total manufacturing time. A Six Sigma team was formed to standardise the process and reduce delays. The goal was to achieve 80% of the service requests received within 48 hours and 95% of the requests within 72 hours. Tools such as high level process mapping, customer-output-process-input-supplier (COPIS), voice of customer (VOC) were used to identify critical to quality (CTQ) characteristics. Vital CTQs were prioritised through a Pareto diagram and a brainstorming session identified direct improvement causes.

Based on a cause-and-effect diagram, a series of direct improvement actions were implemented. The resulting benefits were: an increase in Sigma levels by factor of 2.5; reduction in project cycle times by 7-15 days per project; overall increase in sales by Rs 600 crore; and an expansion in capacity. L&T has included the IMC RBNQA criteria and as part of its quality management system.

Sterlite Industries: Cycle time reduction of Cenvat credit availment
Sterlite Industries, a leading copper producer of India, was facing an accumulation of working capital in the form of Cenvat owing to the cycle time taken between goods received, consumed and credit availed. It urgently needed to significantly reduce the Cenvat availment cycle time from the current 58 days. A brainstorming session, followed by a fish bone diagram plot, data gathering, and a Pareto analysis prioritised the high level causes. A why-why analysis identified a few root causes. A feasibility and cost analysis helped select the solution.

Consequently, a SAP R/3 system and SOPs were implemented along with the corresponding training. The tangible benefits included reduction in working capital by Rs 8.40 crore annually and the related interest, and system improvement for Cenvat availment. The intangible benefits included training of team members in the structured ‘Juran on Quality Improvement’ methodology; better teamwork amongst departments; increase in confidence and attitude of employees; and development of a paperless and person independent office system. Sterlite too has the IMC RBNQA criteria integrated into its process improvement methodology.

Tata Group: Habit of process improvement
At several Tata companies, such as Tata Steel, Tata Chemicals, Titan and Tata Motors, process improvement is a habit. This has been accomplished by integrating quality improvement into strategic plans as well as job design, performance appraisal, promotion policy, induction training and so on. In addition, the leadership at each unit invests time in identifying improvement opportunities and reviewing the progress of improvement teams with the same intensity that they review financial performance.
It should be noted that the Tata Business Excellence Model (TBEM) is a clone of the Baldrige. All Tata companies are required to adopt TBEM practices.
Process improvement is not sustainable without a performance excellence framework.
An additional thought:

Over the past decade, over 500 organisations have adopted performance excellence criteria in India. Several have earned recognition for their best practices. Some that have earned accolades in India have even gone on to win the Asia Pacific Quality Award (a competition amongst winners in the Asia-Pacific region).

Apart from Process Management, what are the common best practices amongst the winners? Without a doubt, the practices of governance and social responsibility. These practices are exemplified by operational units in the House of Tatas, Aditya Birla Group, HDFC Group, Godrej Group, Mahindra Group, Wipro Group, Infosys and a few more. In essence, each of these organisations has solid practices for most of the following:
1. Accountability for management’s actions
2.  Fiscal accountability
3.  Transparency in operations
4.  Independence in internal and external audits
5.  Protection of stakeholder and stockholder interests
6.  Performance evaluation of senior leaders
7. Performance evaluation of members of the governance board
8.  Impact of products, services and operations on society
9.  Ethical behaviour in all interactions
10. Support for key communities.
World-class organisations do not have a choice when it comes to governance and social responsibility.

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