Cover Story: Total Quality Ltd, Pg 2

K K Nohria

"Quality is about continuously rejecting the status quo, which is a tough thing to implement, but can have phenomenal results in the long run."
K K Nohria
CEO, Crompton Greaves

Turning people into quality practitioners is a process that is parallel to the actual deployment of TQM tools, techniques, and systems at Sundaram-Clayton. Central to any quality corporation, people management is especially crucial to the Deming corporation because it covers several aspects of the assessment: the scope of responsibility and authority, co-operation between departments, and training. Sundaram-Clayton's people management road to the Deming Prize rests not just on its focus on people, but also on the way it configures and trains them.

People are inducted into the company's quality culture through regular on- and off-the-job training; not just in their functional areas, but also, importantly, in the statistical tools of quality control that were central to Sundaram-Clayton's quest for the Deming Prize. Workers spend a minimum of 45 hours a year on class-room training--that is, 6 man-days--which is way above the industry average of 4 hours. Confirms S. Ramachander, 53, Director, Institute for Financial Management & Research (IFMR): "It rarely happens that there is no Sundaram-Clayton employee in our management programmes." Adds S.R. Ramachandran, 41, Sundaram-Clayton's former business planning manager, and now a Chennai-based TQM consultant: "Sundaram-Clayton knows that cutting back on quality-related investments will be counter-productive."

The starting-point of all worker-training is housekeeping: how and why to keep the machines and shopfloor clean. Workers are also put through the 5 Ss: Seiri (clearing up), Seiton (organising), Seiso (cleaning), Seiketsu (standardising), and Shitsuke (training). Soft skills are backed by training in the 7 tools of TQC-- the checksheet, the control chart, the Pareto chart, the cause-and-effect diagram, histograms, graphs and charts, and the scatter diagram--to enable the operators to identify, analyse, and solve every-day problems on their own. The emphasis is on making every worker think, rather than take orders, about what he is doing, so that the pursuit of quality is by choice, with the end-result always in sight. The preferred tool for inculcating this awareness: small-group activities, where workers identify, diagnose, and solve problems--or suggest improvements to forestall problems--in self-governed teams.

@ WORK. The company has 67 quality circles, 250 of whose suggestions are implemented on an average--only half the number actually made--every month. The suggestions range from the simple, such as changing the position of a coolant pipe, to the relatively complex, such as a change in tooling design. Every Quality Control Circle (QCC), comprising 6 members, operates with a sub-theme and specific projects, making monthly presentations to the management, and competing for a prize. Naturally, the PDCA cycle is used: projects are first identified (Plan), data is collected (Do), analysed (Check), and solutions are implemented (Act).

Entry-level TQM involves solving problems as and when they arise, delving into the roots to ascertain the actual cause, and eliminating the root defects. But the approach often ranges between the intuitive and the symptom-driven. The Deming corporation, however, neither addresses problems on an ad hoc basis, nor waits for the trouble to show up before applying the tools of TQM to it. Instead, it tracks, analyses, and draws conclusions systematically from the data that all processes generate. Concurs IQL's Basu: "There simply has to be a data-based way of thinking if quality is to take roots."

That, precisely, is Sundaram-Clayton's approach to quality control. Every process is accompanied by a continuous analysis of the data generated about production, time-related issues, faults and breakdowns, quality variations, productivity, and wastage so that hidden linkages and cause-and-effect relationships emerge. And so that the extent of the problem, and the impact of solutions, can be quantified in precise terms. Says K.N. Radhakrishnan, 36, Senior Manager (Business Planning), Sundaram-Clayton: "Statistical analysis ensures that targets can be set, and that the success or failure at meeting them can be analysed." Workers are asked to think statistically rather than intuitively. For instance, once an operator himself goes about collecting data on a particular problem, and analyses it, his perspective isn't subjective any more. Posits Surinder Kapoor, 55, the CEO of the Rs 166-crore Sona Steering: "Exactness. One hundred per cent exactness. That's the starting-block of quality."

Suresh Krishna

"The prize is not just a recognition of quality, but of the organisation itself. Sundaram-Clayton meets the requirements of a world-class company."
Suresh Krishna
CEO, Sundram Fasteners

To practise data-dictated quality, Sundaram-Clayton uses Statistical Quality Control (SQC) as the bedrock, applying it across departments and functions. And to solve the problems that emerge, it uses kaizen--continuous improvement--as well as Taguchi techniques for problem-solving and systems-failure analysis. Every machine on Sundaram-Clayton's shopfloor has its own daily work-management system through which its operators meet quality and hourly production goals.

In case there is any deviation from the daily schedule, the cause is analysed and acted upon immediately at the problem-stage itself. This dramatically lowers non-conformity since the operator traces the problem right back to its roots, and eliminates the possibility of its recurring. Agrees CII's Nagpal: "Sundaram-Clayton's strength is its ability to introduce poka-yokes--mistake-proofing techniques--on its machines." It is, of course, entirely fitting that Sundaram-Clayton's as-yet unrealised quality goal is a statistical one: no more than 60 defects per million parts.

@ WORK. Each of the components in Sundaram-Clayton's products has to go through several stages of turning, milling, and drilling. As the number of activities in the process goes up, the probability of non-conformity goes up too besides pushing up time-cycles and increasing the non-value activity ratio. Recognising the problems, Sundaram-Clayton has farmed out turning, milling, and drilling jobs to many of its erstwhile employees, making them a part of its vendor-base. Part of Sundaram-Clayton's shopfloor works on the two-bin kanban system to minimise in-process inventory. Under this system, every stage manufactures only that many units as the next stage in the production process needs instead of building up inventories, with a visual system of cue-cards indicating the numbers needed.

TQM is, often, focused on the shopfloor for most total quality-driven companies, with all manufacturing processes incorporating techniques and improvements that strive to eliminate the very possibility of errors and, by extension, rejection. The Deming corporation, however, goes even further: it translates its definition of quality as the customer's needs into a continuous system of meeting those needs, starting as early as possible in the production cycle. In fact, at the product-design stage. The logic is simple: a poorly-designed component of a product will make manufacturing that much more difficult, and that much less amenable to quality, kicking off a cycle that may culminate in the loss of the customer. Explains Venkat Subramaniam, 36, General Manager (Exports), Sundaram-Clayton: "Since the brake system is safety-critical, the product is tested rigorously."

That's why Sundaram-Clayton measures its product quality on more than one dimension. First, the features are tailored exactly to the customer's requirement. It then looks at factors like reliability, durability, and serviceability, having set up a grid back in 1990 after consultations with the product-engineering expert S.K. Bhattacharya, Professor, University of Warwick. And how does it achieve these objectives? By involving its customers in the design and test stages. To ensure that problem-solving and quality standards relate to products rather than activities, Sundaram-Clayton switched over from process grouping to product modules way back in 1987. Its product-lines of actuators, compressors, and valves are now separate modules. Thus, a team of workers is now responsible for an entire product instead of manning only a specific station without a holistic view of the entire product.

Much of the cycle-time reduction has been contributed by concurrent engineering. Even as Sundaram-Clayton's product-design team is getting its specs together, a part of the team begins work on the supply-chain, getting the components-base ready. So, by the time the design is approved by the customer and the first prototype made, the suppliers too are ready. Rigorous fault-analysis and validation tests obviate the need for expensive design-work. The downstream benefits are tangible too; for instance, many of its brake systems would need expensive servicing, even replacement. That cost has now been almost eliminated. Acknowledges Narasimhan: "The warranty claims are negligible." Most important, the quality practice that this is the prototype of--understand and meet the customer's needs as early as possible in every process--has permeated across the organisation.

@ WORK. A cross-functional team--representing engineering, marketing, production, purchase, and R&D--forms the product-development team. First, data is collected from the customer by this cross-functional team. A product-development committee--headed by Narasimhan--examines issues like the life-expectancy of the product, production volume, growth, target-cost, and the availability of in-house competency to meet the requirement. If the design is satisfactory, a rapid prototyping of the product is done. This is then tested and validated for manufacture.

Using a cross-functional team right at the data-collection stage enables Sundaram-Clayton to anticipate the downstream implications immediately, and factor them in instead of getting a nasty surprise at a later stage. For instance, the production representative can calculate whether the current processes can sustain the order. The R&D person can look at ways of value-engineering to rein in costs. And the purchase representative can examine the sourcing logistics. This approach has enabled Sundaram-Clayton to reduce its new-product development time from between 24 and 30 months to between 12 and 14 months.

The self-deprecating Srinivasan may not admit it, but Sundaram-Clayton's exploit has brought the best-in-class policy benchmark into the country--and, in the process, given India Inc. the assurance that any of its constituents can emulate the feat. In fact, Sundaram-Clayton--its hybrid name an acknowledgement to a former equity partner--isn't the only quality corporation on Srinivasan's horizon. Two of the 5 companies in the Rs 3,500-crore TVS Group that he manages--the Rs 1,018.62-crore TVS-Suzuki and the Rs 50.57-crore Harita Grammar--are on the TQC trail too, with the former en route to a Deming Prize as well. As, in fact, is the Rs 113.64-crore TVS Electronics, where Srinivasan's writ, as its Chairman, runs large over the quality practices followed by his brother, Gopal Srinivasan, the CEO of the company. Concludes Sundram Fasteners' Krishna: "There are 3 things that Sundaram-Clayton illustrates. One, total quality is not a prerogative of Japanese companies. Two, Indian workers and managers are capable of international standards. And three, that neither size nor location matters in achieving world-class standards."

Sums up T.V. Subramanian, 58, a Chennai-based consultant: "Sundaram-Clayton has proved that, despite the problems, it is possible to become a world-class manufacturer." In fact, the problems that it has avoided--or solved--are precisely those that have tripped many a corporate quest for quality. Explains K.K. Nohria, 64, the CEO of the Rs 1,639.80-crore Crompton Greaves: "Companies which fail to sustain their quality commitment consistently tend to blame the concept. The truth is, quality is about continuously rejecting the status quo, which is a tough thing to implement, but can have phenomenal results in the long run." Consider the classic reasons for the failure of TQM:

NO RELATION TO STRATEGY. The company picks on quality as a me-too activity, which must be pursued because competitors are doing the same, without trying to relate the results to its business strategy. Thus, the quality process has no serious business-related goals and simply rots into pointless activities sans objectives. As the compulsion for meeting business goals rise, quality becomes a non-issue.

NO CUSTOMER AWARENESS. TQM-chasing companies do everything right in terms of mapping their processes, understanding problems, and reworking the systems to eliminate the possibility of errors. They also introduce standardisation of procedures to prevent deviations. Only, they forget to ensure that what they are doing will meet customer-needs. As quality becomes an internally-defined objective, having no relevance to the marketplace, their business suffers, forcing the quality drive to be called off for delivering no results (a.k.a. the post-Deming effect).

NO INTEGRATION. Quality-seeking companies pick on empowerment for employees without ensuring that all of them are rowing the same boat. Hence, piecemeal solutions are implemented in pockets, each excellent in terms of solving localised problems, but not heeding upstream and downstream implications. Soon, do-it-your-way degenerates into chaos, frustrated managements see no results in operational terms, and everyone abandons the quality initiative.

NO COMMUNICATION. Passing the word about what a company is doing in terms of quality, and why it has chosen the path that it has, remains a superficial exercise. Beneath the surface lies only more surface, and employees never quite understand why they are being pulled off their regular responsibilities--on which their performance is evaluated--to work on seemingly-unrelated quality initiatives. At no point are people told that their performance on quality management will also count towards their appraisal. Not surprisingly, all the quality initiatives collapse.

NO FLEXIBILITY. The easy availability of TQM templates leads the company to pick an off-the-shelf model for its quality practices, without checking for a fit between its operations, culture, or needs and the tools that the model in question uses. Nevertheless, it goes on applying those systems mechanically, generating no useful results, and simply jettisons the process when the costs of quality appear to outweigh the gains.

Yet, as Sundaram-Clayton's example shows, all these can be overcome--and top-of-the-class results achieved. And CEOs are acknowledging as much. Already, the CII has launched 2 clusters of companies under Tsuda's tutelage to turn them into world-class manufacturers: one comprising Brakes India, B.I. Foundry, India Pistons, India Piston Rings, Sundaram Brake Linings, Lucas-TVS, GKN Invel Transmissions, Asahi India Safety, Sona Steering, and Jai Bharat Maruti. And the second is made up of Lumax, Delphi, Amtek, Precision Pipe & Profiles, Krishna Maruti, National Engineering Industries, Shriram Pistons, and Motherson Sumi. Nor are the tenets of TQM--or TQC--particularly abstruse. Concludes IFMR's Ramachander: "When you start peeling the TQC onion, nothing comes as a surprise because what it requires is basic. Yet, few companies follow it."

Actually, it isn't just the impossibility of implementation after such mistakes that has blocked India Inc.'s attempts to take the TQM road to global quality. Lacking, sadly, from the goals of too many CEOs is the objective of quality itself. Forgotten, obviously, is its ability to deliver sustained profits by the two-pronged capability of cutting costs through the elimination of errors and rejection, and increasing prices in exchange for consistency. But, more important, what the quality heathens are ignoring is the short-cut to recognition, which can be translated into business opportunities, that TQM brings. There are no prizes for guessing the identities of the losers--just as there are no prizes for the losers themselves. Mourns R. Seshasayee, 50, CEO, Ashok Leyland: "It will take a long time for total quality to become an industry-wide norm. India Inc. is a long way off from achieving global standards."

Sundaram-Clayton--and Srinivasan--have made it to the top of the world of total quality. Now, it is time India Inc. followed.