Statistical tools play an important role in improving Manufacturing Quality. The usage of these tools is not very popular in the Indian Manufacturing. The benefits and simplicity of these tools make a strong case for the Manufacturing companies to take a serious look at these tools.
A Tele- communication plant was experiencing large scale failures, 45 % in 20 pair cable and still higher % in larger sizes of cables, in water penetration (WP) Test of PIJF (Polythene Insulated jelly Filled) cables.
Foreign collaborators concluded, after extensive investigations and trials, the technology was not capable of meeting that rigorous WP Test, which in their view is not required.
However the Customer was insisting conformance to the WP Test. As a consequence the company was losing several Millions of Rupees on account of price cuts, rework and scrap.
World Bank, which financed the project, ordered a Statistical Investigation. Studies were conducted on 20 pair cable, which could easily be extended to larger size cables
Phase 1: Process Control
Large variability, 1.0 mm against a tolerance of 0.4 mm, in cable core diameter was noted, hampering smooth passage of cable core through Jelly filling machine- loose conductors hanging out, insulation getting ruptured and conductors breaking.
Wire drawing and insulation operations were identified as critical stages of manufacturing. Analysis of data showed that the processes were evidencing frequent disturbances (out of control); conductor diameter (CD) was varying by 33 microns and Insulated CD (ICD) was varying by 120 microns as a against tolerances of 10 microns, 20 microns respectively.
scatter diagram between conductor diameter and resistance, thus, showed large variability
in cable resistance: 86 ± 7 ohms / km as against a specification of Max 91 ohms / km; expected rejection for high resistance was 44 %, and Resistance un –balance was 18 %. These got masked under high WPT failures.
a first step, scientific feed-back through line charts was instituted at both the stages. These helped identify process disturbances, link them with product dimensions and diagnose the problem: goal- post interpretation of specification, Not much effort in controlling process parameters, and not much concern for rework or scrap.
1. Reformulation of specification : Target ± Tolerance
510 ± 5
25 ± 3
1.05 ± 0.1
Ohms / km
88 ± 3
2. Training of operators to aim at Target rather than anywhere within spec. Band
3. Application of reduced tolerance for test sample, as variation in one km cable length was about twice that of one meter test sample.
4. Locking line speed and fixing wire Tension at insulation process after studying Regression of these parameters on ICD
5. Institution of process monitoring Control charts, and discussions with shop personnel on preventing disturbances. These helped improve ’Process Capability’ of ICD to 16 microns, evaluated using Normal probability plotting method, against a tolerance of 20 microns, and past variability of 120 microns.
6. Draw-down in CD (wire drawing to final cable stage) after controlling elongation was estimated as 8 microns, revealing scope for reduction in CD
These steps resulted in significant reduction in variability of mechanical and electrical dimensions and consequent large financial benefits.
CD - Average
ICD - Variability
Cable Core dia.
Phase II: Process Engineering
Failure of cables in WPT continued even though cable core became uniform. A critical examination of graphical representation of WP test results helped diagnose the problem:
“ Plant technology is basically capable of meeting WP test; parameter levels possibly located at unstable values and highly prone to disturbances”.
Deficient process engineering and lack of process control of jelly filling operation.
In order to examine the optimality and criticality of control of parameters at Jelly filling process a Statistically designed experiment was planned. Two teams- a Top Management Team and an Investigation Team, were setup for smooth conduct of the experiment.
Detailed discussions and elaborate lecture sessions with Managers, Engineers and shop personnel were conducted as a part of planning and organizing the experiment.
‘Experimental factors’ and their levels: 5 factors at two levels and 3 factors at 3 levels, levels for ‘Local control factors’ and ‘ Noise factors’ were identified.
Out of the 864 (=25x33) factor level Combinations 18 combinations that make up L18 OA (Orthogonal Array) design was selected.
The experimental factors were classified as ‘primary’, ‘secondary’, and ‘tertiary’ depending on the lack of ease in changing the factor levels. Two factors were nested in other factors.
The details of conducting trials, cable samples to be collected and test on samples planned.
The three cardinal principles of experimentation: Randomization, Replication, and Local control were ensured.
One km length of cable was produced for each of the 18 trials, and 3 samples from start, middle end of the cable were tested for WP and in case of failure, the day of failure was recorded.
Tests of Hypotheses on proportions of failure and expected life showed only one factor, Type of core wrap to be having significant contribution to WP failures. A critical examination of the data showed large sampling and experimental errors, in spite of the care taken.
The data were further subjected to ‘Minute Analysis’ of Prof. Taguchi and ANOVA performed. In addition to Type of core wrap, Jelly Application conditions: Temperature – Pressure, and Jelly Brand were significant.
Cables filled with indigenous Jelly are stable over time compared with imported Jelly, and low temperature, high pressure filling results higher rate of success in WPT compared with high temperature- low pressure filling.
These were contrary to existing belief and practice of the plant, but a vital technological input. Based on the experiment, technological and economic considerations, optimum levels for the 8 factors determined.
Recommended process parameter levels implemented: higher HP motor for pumping jelly installed, line speed locked, and chilled water plants set right. Process manuals prepared, graphical feed back instituted and shop personnel were trained.
The success rate of cables in WPT increased from 55% to 100 % in the 20 pair cable, and 99-9 % in bigger size cables in 2 years. Also, the number of cables marketed increased from 450 to 8050.
The testing of cables reduced to 1/8 th, test duration curtailed to 4 days from the earlier 14 days. The Management proclaimed a saving of 30 Millions of Rupees over an investment of Rs 9 lakhs.
Much more significant aspects are development of cordial relationships and improvement in work culture with customer and among employees.
About the author
Professor J.Venkatappaiah is a Post-graduate in Mathematics and Statistics (M. Stat., Indian Statistical Institute) with specialization in Quality Technology and Management. Overfour decades of rich professional experience as consultant and faculty on Quality Technology and Management to many prominent private and public sectorIndustrial and Academic organizations. Worked in association with UNIDO and other International Experts, and Genichi Taguchi, OA & QE Pioneer. Continuing the professional activity after retirement as Professor, SQC&OR, from Indian Statistical Institute;
Indian manufacturing firms need to change their approach to quality. Let me start by taking the case of export quality tag. It is meant to convey the ”Best Quality”. The assumption here is the domestic market is not discriminating enough and can be sold sub-standard stuff; that export markets demand and deserve quality better than the domestic market. I pondered over this and began to realise there is a cultural bias within us giving rise to our attitude to quality. Quality is one of perception for us. What is bad for one is good enough for another. Our subjective nature predominates. There is also a popular misconception that Indian consumers are price conscious all the way and any increase in cost for quality sake is not on.
Defining Qualityis a complicated exercise. Most would agree it is an attribute. An attribute which makes a product or service fit for use and satisfies the customer expectations. The ISO quality guideline manuals tries to resolve to some extent the issue of differing perceptions. They define quality terminology elaborately leaving very little to imagination. However the creation of actual operating manuals are always left to the individual organisations. These operating manuals are supposed to be faithful in spirit to the ISO guidelines.
By 1992-93, about 50 companies mainly the large companies had obtained ISO-9000 certification. By 2010 more than thirty thousand ISO 9001 certificates have been issued in India. Most of the firms employ consultants to write out procedures and guide them in obtaining the certificate. Besides it is being said that there are more than fifty certifying bodies in India for all QMS (Quality management systems) related accreditation. The field has given rise to big employment potential. But the ground reality is not very encouraging.
Ask any experienced head of vendor selection department of a big company about QMS certification. Answer would be invariably, it serves at best only as the first filter. The actual selection is mostly with audits undertaken with the part production process. The run at rate, rejection analysis, FMEAs, past history are the key factors evaluated in this audit. It is very important to conceive metrics for constant review by top management for quality sustenance. The five metrics below will help. It highlights successes, gaps, and areas for improvement.
Metric 1: Yield
The First Pass Yield measured as the percentage of products produced that meet both quality and compliance standards without the need of re-run or re-work. A simplified definition of first pass yield is the number of units coming out of a process divided by the number of units going into that process over a specified period of time.
Metric 2: Scrap Rate
The simplest definition of scrap rate is that it measures the percentage of raw materials sent to production that never make it into the finished product.
Metric 3: Supplier Defect Rate
Supplier Defect Rate measures the percentage of materials or products received from suppliers that do not meet required quality or compliance specifications. Organizations operating in industries such as automotive are not only responsible for managing immediate supplier quality, but the responsibilities also extend to measure areas such as the supplier’s supplier quality.
Metric 4: Cost of poor quality and Supplier Chargebacks
Organizations need to have stringent norms for charging non-material costs such as late delivery and employee time, which in some cases might be more expensive than the material cost itself.
Metric 5: Customer Complaints
A simple way is to measure the number of customer complaints over 12 months. In addition to measuring just the number of customer complaints, organizations should also measure metrics such as number of customer complaints resolved, time taken to resolve a customer complaint, and also metrics related to measuring overall customer satisfaction.
About the author
The field of leader development has seen rapid advances in the past few decades. There is an ever growing body of knowledge about things like what constitutes effective leadership, what styles are effective, what it takes to identify potential leaders, what it takes to develop them and so on. The global aspirations of organisations which are so strongly dependent on their ability to find the right leaders has fuelled a thriving leader development industry which is geared to meet the large scale need for leader development interventions. Unfortunately some of these standardised interventions run the risk of viewing leader development as a mechanistic rather than as a humanistic process. The role of one’s personality, one’s preferences and the very personal nature of effort involved in becoming a leader are often ignored.
Given this reality, Executive Coaching signals a great advancement in the field because it is a very personal, humanistic and deeply impactful developmental experience. The ability of such a one-to-one helping relationship to make a difference to the executive’s ability to make significant developmental progress is now well researched and documented. (see box for coaching basics)
While Executive Coaching can benefit every leader across disciplines, in this article, I would like to dwell on the special value that coaching can deliver to leaders in manufacturing. This will include the entire spectrum of manufacturing organisations ranging from Indian SMEs to global manufacturing giants located in India. All of them have leaders and all of them have certain unique challenges in developing these leaders.
It is my well-considered view that coaching as an intervention becomes invaluable for manufacturing for two important reasons:
1. Capability gap: The demands placed on existing leaders in manufacturing today far exceed the capabilities at their disposal and they therefore need help in bridging that gap.
2. Supply gap: The supply of new manufacturing leaders in the job market is far less than the demand for such leaders and therefore organisations have a need to invest in growing the available ones from within to bridge the gap
The capability gaps
When we talk about capability gaps, we are not referring to leaders in manufacturing being deficient or not having capabilities. We are talking about the fact that new demands are creating these capability gaps.
So, what is changing in manufacturing and causing these capability gaps? What are the new demands?
1. Globally aligned and competitive
A manufacturing facility is no longer operating in isolation in India. It is either part of a global supply chain or has to remain globally competitive. In addition, businesses are seeing the need for sourcing globally to remain competitive.
Whatever might be the situation, all this requires manufacturing leaders to develop a global mind-set, think and act globally. They may also need to have the ability to work in facilities outside India with a global workforce.
Coaching can certainly help manufacturing leaders recognize this need, understand where they personally stand and prepare themselves for this.
2. Managing change
Manufacturing is witnessing large scale changes in terms of the way products are designed, produced and delivered.
The biggest change is in the large scale reliance on contract labour for manufacturing. Many factories are run entirely by contract staff while others have a large percentage of contract labour in their workforce. This is a new reality.
This poses huge challenges for any manufacturing leader in terms of maintaining quality, ensuring compliance and ensuring uninterrupted deliveries.
Beyond this, manufacturing businesses find it very hard to attract good engineering talent to work for them. While some of this can be attributed to pay and brand and facilities, a lot also depends on the abilities of the leaders to make these jobs attractive.
Manufacturing businesses are also constantly reengineering their manufacturing systems and models, looking at modernization and automation, adding fresh capacities, driving large scale quality initiatives and innovation efforts. These place huge demands on manufacturing leaders. Central to this is the ability of leaders to inspire their teams to embrace and support these changes.
Coaching can help leaders develop the mind-set and skills necessary to not just manage change but champion it and make a success of it.
3. Balancing work and life demands
With rapid urbanization and spirally real estate costs, manufacturing facilities have to move far away from metropolitan centres into remote locations or the deep outskirts. This means a trade off in terms of travel time or quality of life in these locations. At a time when more and more young professionals are becoming choosy about living and working in good suburbs within metros, it is not easy for a manufacturing professional to convince his family to make these compromises. This certainly places a huge psychological burden and stress. Coaching can help manufacturing leaders resolve these dilemmas and come up with strategies to cope with these limitations in an inclusive manner.
4. Engaging with customers
Manufacturing businesses serving other businesses (B2B) need to work in a closely integrated manner with their customers. The expectation is to move from a transactional supplier relationship to a long-term strategic partner. This engagement starts right at the design and engineering stage and moves all the way down through to regular production support.
The sales and business development teams rely on those in manufacturing to have the ability to transition these relationships smoothly over a period of time.
For a large number of manufacturing leaders, building and nurturing assertive strategic relationships where they are expected to influence and succeed does not come naturally. In the coming years, manufacturing leaders will need to shed their back-office image and emerge as well-rounded leaders comfortable in the front and back end of the business.
Coaching can certainly help leaders in manufacturing develop these capabilities.
5. Meeting global benchmarks
Beyond all this, manufacturing leaders in global corporations now face an additional challenge. As their Indian facilities get integrated with their global supply chain, these global corporations are now expecting their manufacturing leaders to measure up to their global benchmarks in terms of leadership competencies. They expect a manufacturing leader in India to be as good as their leaders in Germany or China or Brazil or France.
6. Having high personal standards
In my job as the Regional HR Head of an international bank, my team and I used to have great trouble dealing with one of the bank Tellers. She used to always fight and complain about even the small things and we always used to wonder why she was giving us such a hard time. Interestingly, she was the most sought after Teller and many high net worth individuals used to come looking for her because her service delivery was outstanding. For some time, I used to see this as a contradiction, almost like Dr. Jekyll and Mr. Hyde. Only later did I realize that her behaviour was actually very consistent and congruent. She was giving the best and demanding the best. Many Leaders in Manufacturing don’t seem to make tough demands and place high expectations from their environment including employees, vendors, suppliers and their own support functions. Many operate with a limiting belief that they cannot demand things just the way they cannot demand anything from civic authorities. Unless manufacturing Leaders push their team members, their workmen and their suppliers to achieve excellence they may fall behind in terms of competitiveness.
7. Demonstrating executive presence
While Indian leaders might do fairly well on technical and some functional aspects, they tend to lose out on some of the leadership and personality dimensions. The inability to have a certain stature and executive presence ranks upper most in the list of deficiencies. Many Indian manufacturing leaders had seldom paid attention to this area as long as they were India centric. Things have now changed.
Coaching can help leaders recognize this need and put together a plan to develop this little understood leadership expectation.
The supply gap
We have so far examined the new demands being placed on manufacturing leaders and how coaching can help address these demands.
We will now turn to examining the other question of supply gaps. In other words, how can coaching help develop leaders from within given the challenge of limited supply and the overall inability of manufacturing to attract great talent.
During the last two decades, the brightest of minds have moved away from Manufacturing as a career towards more lucrative opportunities in the service industry. As a result the industry has been left grappling with some of the most complex challenges without access to the best talent.
Unfortunately, many business leaders chose to take a safe route to address the gap by hiring diploma holders instead of taking the battle to the enemy camp.
While diploma holders have been able to grow into middle management positions quite competently, not all of them seem to have the potential to grow into leadership positions. The few with potential may need significant development investment for potential to become reality.
The good news is that in the last few years, manufacturing is regaining its glory as a potential employment source given the challenges in IT. This combined with the small pool of engineers who have chosen to come into manufacturing and the competent diploma holders form a good pool of potential leaders. But they need to be nurtured.
While external executive coaching as an intervention addresses the needs of senior leaders, it has limitations in addressing the needs of leaders at the middle levels for reasons of cost and lack of contextual knowledge and mismatch in needs. This is where internal coaching can play a huge role.
In other words, if senior leaders in manufacturing are trained to play the role of internal coaches and mentors, they will be able to contribute significantly to nurturing the scarce talent from within and groom them to take on more senior positions.
The focus of such internal coaching should be on proactively developing some of the critical competencies that can help a production manager to transform himself into a manufacturing leader.
So, what are these higher order competencies?
A Leader in Manufacturing must understand the business and how it makes money and how his role contributes to it.
They need to develop a strong commercial orientation and understand how he can drive profitability, how he needs to contribute to better working capital management and so on.
Leaders must also be concerned about building and nurturing talent within their own organisation.
Manufacturing Leaders will also need to develop a strong cross functional perspective and not think only from their narrow functional perspective.
Many have limited business communication skills and find it difficult to sell their ideas to other functions or to customers.
Many manufacturing leaders also tend to be somewhat subservient in their style and easily surrender to anyone that they think is authority. Similarly, they expect their subordinates to be subservient to them and display a directive style.
By systematically assigning coaches and mentors to promising talent within manufacturing early on, it is possible for business leaders to build a strong pipeline of manufacturing leaders.
It must be pointed out that coaching is not a silver bullet to cure all ills. It is also not the only way to tackle these problems. However, when used in conjunction with other developmental interventions, it can make a profound contribution to developing strong manufacturing leaders in India.
In a globally integrated world, it is not the access to technology or raw materials that will determine the competitiveness of Indian manufacturing. All these are easy to obtain. It is the quality of our leaders that will truly determine our growth and competitiveness.
Ganesh Chella is the founder of totus consulting, a strategic HR Consulting firm and totus HR School an institution that promotes HR capability building. He is also the Vice-Chairman of CFI, India’s leading Executive Coaching institution.
Learning To Be Better Leaders
By Anand Prasad Kruttiventi
This series of articles are my personal learning and reflections of working with and observing leaders in business, government and society in general over the last 35 years of my working career. In this period, I have worked in 6 different countries in various capacities. What I liked most was directing the Leadership Development efforts of two very large, global companies that are leaders in their industries.
One of my beliefs is that while we can always see what others leaders DO, we can’t emulate those actions. Nor is it the best way to develop our own leadership potential. It is easy enough to see what Bill Gates does as a leader. It is both difficult and unprofitable to mimic his leader behavior. His context and his reality are different from ours.
I believe the best way to learn from leaders like Gates is to understand their thinking frameworks; the internal workings of the machinery of leadership inside those people. I believe this is a better way to develop our own leadership potential in a sustainable manner.
This could also help us avoid the fads that are always present around us – servant leadership, inspirational leadership, mindful leadership, and so on. While all these types of leadership have many insights we can learn from, none of them are panaceas – each of us needs to develop our own philosophy of leadership and our own personal style in order to sustain our growth as leaders over a lifetime.
In this first article, I will lay down the framework of my own thinking, drawing from my observations of leaders. In subsequent articles, I will deal with each of the elements of this framework in depth.
Here is the framework.
1. They Compete and they Win: Firstly, leaders are competitive. They thrive in competition. They aspire to betterment and they like to do the more difficult thing. As one of the leaders of women’s tennis, Victoria Azarenka said in a TV interview, “The easy is boring”. They typically compete in the following ways:
a. Compete with existing records of excellence:Leaders like to set new records of excellence. In their quest for new records, their competition is always with the standard of excellence, not with people who hold the current record. Jack Welch of GE wanted all his businesses to be #1 or #2 in their industries. Tha was a nearly un-heard standard of excellence at that time.
b. Compete with their own record of excellence:Leaders like to beat their own records all the time. One of the most apparent ways they do it when they set financial and commercial goals – next quarter is usually always better or higher than the last quarter. Steve Jobs’ obsession with creating the ultimate interface with technology produced so many excellently designed products that were all better than the last one.
c. Create unique accomplishments:Leaders often want to leave a legacy that is difficult to replicate. Sometimes, it is the businesses they create; sometimes it is the product/ technology that are unique; sometimes it is the way of doing business. While having many forms of expression, this desire to be a stand-out, a path-breaker/ pioneer, a change agent is another quality of the thinking of best leaders.
d. They create conditions for winning:They create winning businesses and organizations. This is reflected in:
- Choice and Commitment: Leaders choose where they play and compete. And, once they choose which is often late and at the last minute, they fully commit themselves to that particular path, nearly to the exclusion of other alternatives. Through this commitment, the invest resources, energy, people, and themselves in pursuit of the goal that they have chosen. Choice focuses the energy and resources of the organization and commitment provides the level of self-belief and concentration on the goal.
- Focus on Execution: Once the choice has been made and resources committed, best leaders make execution easy. They invest up front in communication, in getting people on-board the chosen path, in training them to capable and placing the right people in the right places. Once this up-front effort is completed, execution occurs without distractions, without a lot of cross-talk and dissent, without too much re-training while in action.
- Culture of Performance: Great leaders create and nurture a culture of high performance that is clearly balanced by fairness. Culture of high performance is usually evident in the milestones for progress that are set up; results that are published broadly for everyone involved to be clearly aware of progress and problems; a review process that focuses on learning from the past period to do better in the next period of action. Fairness is evident in this culture in two ways – 1) Performance Feedback that is data-based; and 2) a reward/ pay structure that is geared to the market.
- They are present: Best of leaders are in touch with the reality all the time – about themselves, their business, their customers, their consumers, their operating environment, their best people, and their management. They seek and quest for feedback on all these aspects so that they can learn, change and do better. They don’t set goals and depart for the golf course. They are present in action with their people all the time.
2. They develop others into leaders: Great leaders are not threatened by people with better abilities than themselves. They love to see such people achieve their full potential and do all that they can to help them grow. They take risk – they place the people with most potential, sometimes less tested people into the most critical and challenging roles in the business. They create space where their people can be innovative and are able to take initiatives and risk. They give autonomy gladly and also support and help with equal level of happiness.
3. They work at being better leaders every day:Best of leaders are conscious of their actions; they are mindful and purposeful in most of their behavior, especially public behavior. They learn constantly and from everything and everyone. They are curious. They love to teach because that is one of the best ways to learn – especially about themselves.
This, in short is my framework for being the best leader one can be and continue growing every day. In future articles, I will examine each element of this framework in some depth and offer some real-life observations and commentary on leaders that I knew or I observed.
Today’s Business world is steeped with stress and anxiety. This is due to the fact that the Companies are chasing short term results and the people involved in the business are adapting ‘any means’ to get those results. The focus on Annual results has shifted to Quarterly results. Within the companies, the focus is there on monthly ,weekly and daily results ! Added to this the Economic situation is not helping the whole business climate. The top lines are not growing and bottom lines are shrinking. There is pressure to reduce cost. Many times this is read as downsizing the people. The Employees do not have as many job opportunities as they used to have. There are many companies who have not given a raise to the Employees for second year in row !
While we may want to change all this, it may not be possible! The people involved in the Business will have to put up with the change and they will have to grow their companies in a systematic manner.
While there can be help from different Business models, Change programs and so on, there needs to be a support system for the Individual involved in the Business. A Support system which helps him/her to change what he/she can and endure the rest.
Today Spirituality in business is gaining ground across the world. What do we mean by Spiritual?
Web dictionary defines Spiritual as “relating to or affecting the human spirit or soul as opposed to material or physical things”. To put it simply, it is relating to the higher purpose of Business than just the profits. It does not mean we should forego the profit motive in the Business. We can aim at a higher goal by which we definitely achieve our short term goal which is the Profitability. But, go on to achieve something higher beyond.
Let us take an example of Toyota.
Toyota will lead the way to the future of mobility, enriching the lives around the world with the safest and most responsible ways of moving.
Through our commitment to quality, constant innovation and respect to the planet, we aim to exceed expectations and be rewarded with a smile.
We will meet our challenging goals by engaging the talent and passion of people , who believe there is always a better way.
Toyota truly lives up to this Vision statement. It spends about 5% of its turnover on new technologies, it shaped its Systems based on the tenet of ‘Respect to people’.
This is one good example at a company level. There can be more good examples!
There are several people in Business across the world who are Spiritual and achieving stunning results!
Let us look at some of those examples.
Stephen Covey is the author of the best seller ‘7 habits of highly effective people’ and many other books. He is the Vice Chairman of Franklin Covey, a Global professional services firm based in the USA.
Stephen Covey explains about Spirituality as three things. 01. You are dealing with the whole person. That includes the person’s spirit or soul. 02. You are dealing with those principles which are timeless and universal 03. You are dealing with peace of conscience. Obeying or following your conscience , means that you are true to that which you have internalised as being right and this gives you tremendous tranquillity and courage.
Stephen gives the following example for demonstrating how spirituality can help in Business.
“I was working with a large college in Ontario, Canada. They really had a terrible culture; it was characterised by turfism and fighting and interdepartmental resistances, with everyone looking out for themselves, protecting their own situation, silo thinking, and all that kind of stuff. I worked with them over a period of an year to develop a mission statement that would be supra-ordinate. By this I mean larger than one’s self , larger than one’s own institution. It took them about two years before there was broad agreement, and eventually what happened was that they developed a mission statement to become the yardstick educational institution for all of the state of Ontario – the institution others could measure themselves against. When they really brought into that intention to leave a legacy, the littleness of their souls completely submerged and the magnanimity of soul exploded inside them.
I have these eye-opening experiences almost on a daily basis, both in my own leadership work at Franklin Covey and in my work helping leaders of other organizations.”
Stephen Covey’s views on the purpose of Business are as follows:
“Spiritual based leaders respect others and are guided by the fundamental ethic; service to others comes before serving one’s self. From an existential perspective, the raison d’etre of organisations is to serve human needs. Really, there is no other reason for their existence. Individuals and organisations grow when they give themselves to others. Relationships improve when there is a focus on serving the other, be it at the level of the individual, the family, the organisation, the community, the society, or all of humanity. The phrase so eloquently developed by Greenleaf sums this up : Servant Leadership. (Robert Greenleaf was former Director of Management Research at the American Telecommunications company AT&T. who developed the concept of servant-leadership.)
In short: The purpose of business organisations is to serve human needs. Period!”
Stephen defines the success of organizations as :
“There are two kinds of success. Primary success has to do with strength of character and contribution to others. Secondary success has to do with formal authority and with being rich, famous, popular and positioned. So moral authority, which is the only real basis on which formal authority can ever work over time and be sustainable, is primary success.”
John R. Behner, El Salvador
John was the Country Manager of Nabisco in El Salvador till about 2005. He worked for about 40 years before he retired.
John defines spirituality as ‘the application of the human values – truth, right conduct, peace, love and non-violence- In your way of doing things. But it’s also more than that. It’s trying to see God in everyone and trying to interact with everyone on a very loving basis, seeing everything as being perfect, and not pointing your finger at anyone or anything. Being spiritual is being humble and trying to help’.
His spiritual theme is ‘Realising god by serving others’.
John gives an example of how the spiritual dimension helped him bond much better with his customers.
“In 1986, there was a big earthquake in San Salvador, so we got a little experience in dealing with a crisis.
One of the first things we saw was that all the super markets, which were our biggest clients, were affected; all their merchandise was all over the floor. They had a tremendous job of trying to clean what was saveable and to throw out what was broken and may be take some kind of inventory of it. We also say that our production lines were useless, because of the supermarkets could not put our products on their shelves, what good was it to produce it ? So we shut down our production lines and sent the salesmen to all the major supermarkets. They offered them a team of our production people to help them clean up. We did this very successfully, and we were the only company that did it. All the super markets were happy to get this kind of service. Which did not cost them anything. It only took about a week of very concentrated effort. It got them on their feet faster, and so we could start selling faster.
We took stock of our employees, and we had nine employees who had lost their homes. Since we had shut down the production, our maintenance department wasn’t doing anything. So we asked these guys to go and rebuild the homes of these nine employees on a temporary basis. In an earthquake, what happens is that the floor is still there, but the roof and the walls may have fallen down. Temporary structures were put up in the nine homes, and the employees were grateful. El Salvador gets earthquakes periodically. In 1994 when we had another earthquake, we were all prepared, because we had already gone through the big one in 1986.”
John explains the purpose of Business as follows:
“The purpose of a business is to make other people happy, especially your clients and your employees”.
John explains the measure of success of business as “Having good relationship with the employees and customers and they acknowledging it”.
It is very clear that Spiritual outlook in business can be very profitable too!
I will come back with more examples in the next edition.
Ram is not having a good feeling looking at the P&L for 2013-14. The Profits are down to lower single digits! Infact, in the last quarter the company went in to the negative! With some panic stricken cost cuttings (Or Postponements?) , further damage is avoided to the P&L. Ram’s company experienced CAGR of about 25% continuously for about 5 years till 2011. During the growth period, the purse strings were loosened and the goal was to capture as much growth as it was possible. The slowdown forced Ram to slam down on the brakes! This is leaving scars on the organization in terms of sudden clamp down on all big expenses! Recruitment ban is one of the bigger steps that Ram initiated. The Manpower costs have gone up from around 8% of the turnover to 14% in a matter of about 3 years! ‘During the growth years, the recruitment was perhaps too liberal?’ , Ram is not sure. He always focused on capturing the growth and did not really focus on the Manpower costs so much.
This sudden ban on recruitments has caught most of the functional heads by surprise. They do not seem to have the tools to improve the Productivity in their functions! There is a lot of bad feeling among the employees. They appreciate that the Business has gone down. But, they do not know how to manage their work. A few of the team members have invented a few ways to save time and cost! But with their ideas, they may be sacrificing medium term interests of the Company! The Business Systems team had been dismantled and they have been transferred to Production, Planning and other places where some existing people left. Similar things have happened in Marketing team in the interests of Sales team vacancies! Are they are becoming too focused on the ‘here and now’?
The thought whether he and the organization is over reacting and harming the medium term interests of the company is bothering Ram! He wants to look at the Productivity improvement opportunities in his company!
The Slow down
The Economic Slowdown in the last two years had been painful to many companies! But, may be it is making these companies focus on some fundamental issues regarding their cost structure and their efficiencies! As Ram in the above example, there are many CEOs in the Indian Manufacturing who started looking at their efficiencies!
The lower Productivity of Indian Manufacturing is not a new phenomenon. It had been on the tables of the CEOs of this industry for a long time!
The Productivities of Indian Labour is about 15% of that of Labour in USA. May be we are not looking at it as our costs are lower? Is this advantage going to last forever? Many companies who are witnessing increase in Labour costs do not agree with this. While there is a big difference between the Labour Cost of India and USA to the advantage of India, the profitability of Indian Companies is fast receding!
Cumulative effect of unproductive People
The People Productivity is not just related to the Salary & Wages bill! When Employees are not productive and their work methods are not smart, it will affect every aspect of the business. A Sales person who is not Productive would lose many opportunities in the field! A Stores Manager who is not Productive and not working using a good System will have much higher inventories than necessary! A Production Manager who does not know Lean principles and not using Lean Systems would be inefficient in the Production process! It would consume higher resources to deliver the same! Hence, a Company which is not having skilled employee force and not having a good Work System would have a very low profitability as it grows! When the company size is small, the owner would sometimes be able to control everything in the Company very well and would manage the profitability well. But, the growth years of 2004-2012 have catapulted many Indian Companies beyond this ‘small’ size. Many companies are going beyond the control of the owner. In this situation, the lack of Skills on the part of employees and lack of proper Work Systems is having a huge effect on the company’s profitability!
Why are we less Productive?
The productivity of Indian Labour is an old problem! Why is Indian Manufacturing not focusing on this? Why are we not efficient like Japanese / Americans? Probably the lack of work discipline is one of the big issues. In our society there is inefficiency in many places. Our government lays roads, then digs them up, then lays road again and again they are dug up. I am sure many of the readers would have seen this phenomenon many times in their cities! We see a situation where a road laying or Bridge construction is taken up and the work goes on for years together! Due to this delay a huge traffic would be travelling for longer distance to bypass the construction area resulting in a colossal loss to the Nation as a whole in terms of more petrol and diesel! We see inefficiencies on a regular basis and hence we have come to tolerate them as a normal happening! Are we carrying this attitude to work? Quite possible!
On the part of Managements, there is not enough time spent on designing a good factory, designing a good work system which would help us work with high productivity! We are in perennial hurry to run after the Production or Sales of today! While we can’t get away from the daily realities, are we spending enough time in designing a good work method / a good factory? This is much similar to the way our cities grow! The Town planning does not control the unauthorised construction, they do not lay the Ring roads early enough allowing a disorganized growth of a city. Then, there are struggles on a daily basis in the city in terms of traffic snarls, overcrowding and so on. The Management in many Indian Companies is guilty of this same behaviour in their Companies! While we blame the Government of inefficiency, we do exactly the same in our factories and companies! The shop lay out design is not proper and hence the Raw material travels several times more distance than it should. A lot of material handling also results due to this. The Production does not happen on the basis of Customer need and hence Overproduction happens regularly resulting in too much of Inventories! There can be many examples!
The Office environment is no better! The work is divided in to functions which may not help the cause of continuous flow of work! While functional expertise is needed, how to ensure the work flows between functions in a seamless manner? The finance department does not get the Bills in a smooth manner and hence most of the work happens towards the end of the month. The Dispatches do not happen evenly and hence a lot of work pile up happens toward the end of the month. So, the manpower is always available to do this last minute push! The recruitment methodologies in HR department may not be designed correctly. This results in recruiting misfits or delayed recruitment!
Few bright examples
While this is the situation today, does this mean we as Indians are not capable of working in a productive manner? The truth is far from this.
There are few examples of Indian manufacturing Companies who have improved manifolds in their Productivities. The TVS group, Rane group, Elgi Equipments in the South and many Automotive Companies in all parts of the country have improved their productivities in the last few years. They have implemented Lean manufacturing and improved productivities manifolds.
Productivity improvement is essential
Indian Companies are realizing this importance of improving their work methods and their productivities. The realization is coming fast helped by the slowdown conditions in the past two years! I wish this realization would continue even if the economy starts improving after a few months! An improving Economy may give higher turnover. But, it may not take care of the profitability as much as the Management would like.
Productivity Improvements need to touch every Employee in the organization
The Productivity improvement is needed in every aspect of an Organization. A Manufacturing Organization can be viewed as follows in terms of its’ work:
If we look at it from the point of view of number of people, the centre core is big. But, if you look at it from the point of view of Cost then it can be the reverse.. The majority of the cost is in the Staff category.
The Productivity improvement efforts of many Indian Companies has centred around the shop floor practices. The shop floor aspect is very important and needs to be addressed. But, it is not enough. One needs to address ALL other areas of the organization.
The work in a shop floor is visible and it can be reorganized in to an efficient way in a relatively easier manner. But, the work in the other functions is not as visible. It requires a detailed study using the Industrial Engineering principles of Eliminate, Combine, Re-arrange, Simplify. The flow principle can be used in the Services too. The Software like ERP etc can help in this area of helping to improve productivity of Staff.
DOUBLE YOUR PRODUCTIVITIES!
It always helps to start with a very challenging target in Productivity improvement efforts. Whether the improvement is in Shop floor OR in Offices, the targets should be to at least double the Productivities. This would help in making the team think of bigger ideas to improve the Productivities! In areas where the lean principles were never tried out, the improvement effort can definitely yield 100% improvements! There have been many occasions in the companies quoted elsewhere in this article when they achieved 300-400% Productivity improvements over a period of time.
What is essential to achieve this?
Full commitment from the top management to see the initiative thru.
Co-operation from the employees concerned.
Proper guidance in the Lean principles.
Very often the initiative has to be accompanied with a Behavioural training initiative. The team has to be addressed in a comprehensive manner. As discussed earlier, the problem of accepting less productivity and inefficiency is wide spread in our society and hence it requires a deeper effort if it has to sustain! Many times the people concerned can relapse to their old ways of working if the effort is not addressing the root cause of this behaviour.
It is possible to more than double the productivities of the labour and address the Cost issues of a Company beyond Productivities! Indian Companies have to take this up seriously to sustain their profitability!