From Deming, with love

Like many others, I must confess I was deeply sceptical of what quality clusters of the type organisations like the Confederation of Indian Industry (CII) keep propagating could actually achieve.

Yet, when SRF Limited’s industrial synthetics business (tyre cord) division became the 12th Indian recipient of the prestigious Japanese Deming quality management award, I decided to take another look.

More so since, of the CII’s very first quality cluster, four companies have also won this award—how difficult it is to get this award is best seen from the fact that while India has around 6,000 ISO 9000 certifications, there are only 10 companies and two plants that have won a Deming award and another 65 that have won the Japan Institute of Plant Maintenance’s equally prestigious Total Plant Maintenance (TPM) awards.

It’s foolish to knock China’s achievements, but despite the country’s 75,000-odd ISO certificates, it hasn’t got even one Deming or JIPM award.

That, of course, is why you see Maruti’s Altos in Europe but no car made by any Chinese automobile firm or for that matter few items that require complex engineering talents of the sort Indian companies are increasingly becoming known for.

What I saw was truly mind-boggling. To cite some numbers first from SRF’s tyre cord division, which accounts for 56 per cent of the group’s sales and 49 per cent of profit (EBIT) and operates out of four plants including one in Dubai, sale volumes have grown 17 per cent annually for a full decade, the market share is up from 15 to 37 per cent during the same period, conversion costs are down 40 per cent, and manpower productivity rose nearly 12 per cent year on year since 1998-99 and, over the past three years, the number of equipment breakdowns fell to a third.

What’s important, of course, is the story behind those numbers that began when SRF chief Arun Bharat Ram first attended a quality control course in Japan and set up a TQM cell in 1993.

SRF then designed its own total quality management framework, and got workers in its Chennai plant to come up with small changes (kaizen) to constantly upgrade quality.

What also began was the concept of daily management, which is fundamental to any quality programme where every fault/success was analysed and documented on a daily basis—why did the machine break down, why did productivity go up, and so on.

In each case, detailed histograms, bar charts, and other statistical charts were prepared and solutions/causes documented, so after a while, it was impossible for SRF to slip in terms of yesterday’s quality—the only way left for the company to go then, was up.

Today, SRF runs 18 joint programmes with customers to improve their quality, shares all details of its input prices, and conversion costs with them, and commands a premium over market prices—sales with one client have increased 50 per cent over four years after five joint projects were done with it.

The best example of the change, of course, is that SRF no longer has a marketing division, but has a customer relationship team instead—this is more than cosmetic since the team has members from divisions such as the plant and the purchase department, and any customer query/problem reaches all members simultaneously.

The fact that the company has a total of 62,000 documented kaizens today and worker absenteeism is down from around 12 per cent in 2001 to around 4 per cent now shows the entire company has bought into the process.

Nor is that surprising since, while evaluating a company, Deming examiners quiz employees at random and expect reams of back-up documentation for each claim made or reply given—since all this has to be done on the spot, there is no room for fudging, or for coaching employees to give the right answers.

Quality just has to be part of the organisational ethos.

At Surinder Kapur’s Sona Koyo Steering Systems, where I went next since Kapur heads the CII Quality movement, there’s a separate room full of charts for daily management, each of which represents the Plan Do Check Act for different divisions.

Since Kapur’s also a Deming awardee—others in this first cluster who are Deming awardees include Brakes India Foundry, Sundaram Brake Lining, Lucas TVS—his results are equally impressive.

Compared to seven years ago, in-house rejections are down from 23,000 parts per million (ppm) to 1,097, supplier rejections from 49,500 ppm to 1,171, customer returns from 1,579 to 90, the number of times the inventory is turned is up from 7.5 to 30 a year, manufacturing costs are down by around 45 per cent, per worker suggestions are up eight times to 20 per year, products designed in-house are up from 11 to 44 and the lead-time for new products is down from around a year to under half.

For each cluster—Kapur intends to increase these from the existing 21 to 100 by September—of units, similar exercises are carried and workers taught to do a “gap” analysis of why there are stoppages in the line, why productivity is up or down, and so on.

Each unit is also asked to make regular presentations to the cluster on, for instance, “dust levels of the shop floor” or some other aspect related to quality manufacturing.

If the companies find the experience worthwhile, they then go on to hire their own TQM gurus and, like SRF and Sona, move to the next step. Given the rapid pace at which, for instance, the number of JIPM TPM awards is rising (from one company in 1995, 1998, and 1999, these rose to 3 in 2000, 4 in 2001, 11 in 2002, 18 in 2003 and 26 in 2004), a lot more clearly are.