Productivity- Definition (Productivity is a ratio)

The amount of output per unit of input (labor, equipment, and capital).

Number of products / No. of hours taken to produce them Revenue generated by employee / Salary of employee

Example of Productivity
1. By spending Rs 100 I make 100 pieces, the productivity is 1 2. By spending Rs 200 I make 250 pieces , the productivity is 1.25 3. By spending Rs 400 I make 300 pieces, the productivity is 0.75 So my action 2 gives me higher productivity although action 3 gives higher output

How to improve Productivity

Increasing the output with the same input Decreasing the input for the same output Increasing the output more than the increase in input Increasing the output with decreasing input

Productivity Improvement
Create a Motivated atmosphere Work study, Method study and Work measurement Product and Process improvements Automation to avoid manual effort Common sense Management Techniques Structured techniques like TQM, JIT, Kaizen, QC etc. Incentives and Bonus

How to Increase Profit

Increase Sales Volume (Increase Market share) Increase Sale Price Reduce Purchase cost of Input Reduce cost of production Improve quality (Reduce cost of Quality) Improve productivity

Productivity and Profitability

Profitability is dependent on Break-even point BEP is the point where the sales revenue equals to expenses Hence there is no profit & no loss at BEP Every business will try to lower the BEP so that they can make some profit BEP can be lowered by improving productivity thereby reducing cost BEP can not be lowered by increasing price as the market share is likely to shrink
6

Efficiency and Productivity

If a worker is expected to produce 800 pieces in 8 hours time and he produces 720 pieces , his effy is 90% and productivity of the machine is 0.9 If another worker produces 600 pieces in 6 hours, his effy is 100% The machine was under breakdown for 2 hours that is why the second worker could run the machine for 6 hours only instead of 8 hours While the effy of the second worker is 100% the productivity of the machine is 0.75 Higher effy does not mean higher productivity
7

Strategic Steps to Improve Productivity

Improve processes by R & D or redesign or new technology Improve/provide new plant and equipment Simplify product spec and reduce variation Improve existing methods and procedures Improve the work plan and the use of manpower by automation Increase overall effectiveness of employees
8

Break-even Analysis
Everyone in the organization must know the breakeven point (BEP) This gives them a clear picture of expenses and what it takes to run the business In a company it is every person s responsibility to bring down the break-even point Cost reduction of any kind brings down the BEP When BEP comes down the profit improves

Breakeven Point Diagram

SALES

TC PROFIT

C O S T S

B VC FC LOSS

UNITS OF SALES PER PERIOD

10

Elements of Cost
Fixed cost has elements like plant and machinery depreciation, managers remuneration, taxes for plant , common electricity use etc Variable cost is composed of material cost, component cost, labour cost and electric power used to manufacture the product

11

Inputs
Materials Tools Equipment People Abilities People Attitude Knowledge Level Processes Systems Management
12

Human Resource Development (Employee Productivity)

Identify Training Needs of Employees: 1. Quality Awareness and understanding 2. Quality Principles 3. Quality Measurement 4. Quality Processes 5. Quality Systems 6. Cross Functional Teams 7. Cost of Poor Quality 8. Continuous Improvements 9. Problem solving Tools 10. Statistical Application 11. Breakthrough Improvements
13

Employee Motivation
Maslow s Hierarchy of Needs Level 1: Level 2: Level 3: Level 4: Level 5: Survival Security of job Social Belonging Self Esteem Self Actualization
14

Intrinsic and Extrinsic Motivators

To promote intrinsic motivation, the environment for work should be conducive and enjoyable. The work alone may not motivate but challenges and responsibility would surely help Extrinsic motivators are related primarily to job benefits, one does the job in anticipation of a reward. Such motivators are short lived.
15

Partial & Total Productivity

Partial productivity is the ratio of output to one class of inputs while Total Productivity takes into consideration the sum total of inputs Partial Productivity=output Quantity / one class of input Total Productivity= output Quantity / total input quantity
16

Measures of Productivity
Partial Productivity Measure = PPM PPM= Gross Domestic Product / total Hours worked Total Productivity Measure = TPM TPM = Real Gross Output / Real Gross input TPM = Products+Services+value addition / Labour+Capital+Energy+Materials+Other Inputs

17

Business Growth v/s Productivity

Improvement in productivity results in less requirement of labour force If there is no growth in the business then retrenchment of labour force is inevitable Growth is a natural outcome of improvement in productivity If there is no productivity improvement the business is likely to close down due to competition So business growth and productivity improvements take place simultaneously

18

National Productivity Council (NPC)

NPC is a national level organization to promote productivity culture in India It is a non-profit organization established by GOI in 1958 It has equal participation from GOI, employers and workers organizations They provide training , consultancy and undertaking research in the area of productivity It works in conjunction with Asian Productivity Organization (APO) an inter-Govt body of which GOI is a founder member
19

Objectives Of NPC
To promote the cause of Productivity in Industry, agriculture, services and infrastructure sectors of economy It aims at enhancement of quality of life of people in general It aims at professional approach to provide worldclass services needed by Indian industry to become internationally competitive in a global economy NPC is also a change agent, aiming to assist central and state govt in improving the quality and efficiency of public services
20

Consultancy Services by NPC

Process Management Energy Management Environmental Management Integrated Human Resource Solutions Technology Management Agri Business Strategic Consultancy Information Technology Productivity Awareness Economic Services
21

KAIZEN
It is a system of continuous improvement in quality technology processes company culture productivity safety leadership
22

KAIZEN
Kaizen is focused on making small improvements on a continuous basis and finding creative solutions instead of capital expenditures KAI ZEN to change or modify ..to improve

=modify to improve
23

What is Kaizen
Kaizen is a system in which every employee is encouraged to come up with small improvement suggestions in their area of work on a regular basis This is a continuous exercise 60/70 suggestions per employee per year are written down, shared and implemented

24

Process of Kaizen
Ideas are not for major changes Ideas are little changes on a regular basis always improving productivity, safety and effectiveness and reducing waste To support the higher standards, Kaizen also involves providing the training, materials and supervision needed for employees to achieve higher standards
25

Elements of Kaizen
Quality Circles Improved Morale Teamwork Personal discipline Suggestions for Improvement

Happy employee is a Productive Employee

26

FIVE S Program

Sort (clean up) Systematize (organize) Sweep (regular cleaning) Standardize (simplify) Self Discipline

27

Kaizen Problem Solving Tools

Pick a project (Pareto Principle) Gather data (Histogram and control chart) Find cause (Process flow diagram and fish bone diagram), Brainstorm Pick likely causes, seven deadly wastages Try solution (PDCA), plan do check act Implement solution Monitor results Standardize on new process
28

Kaizen v/s Innovation

Small improvements Fair knowledge Personal involvement Many people Improve the process Even in slow economy Major improvements Technology or equipment Money investment A few champions Improve results Mainly in good economy
29

Steps to Implement Kaizen

Discard conventional fixed ideas Think how to do it, not why it can t be done Start by questioning current practices Do it right way, if you make a mistake, correct it Do not spend money for Kaizen, use your wisdom Find root cause of the problem Seek wisdom of 10 people Kaizen ideas are infinite
30

Benefits of Kaizen
Involves every employee in making a change Focuses on identifying problems at their source and addresses seven deadly wastages Continual small changes add up to major immediate benefits Results: Improved productivity, quality, safety, faster delivery, lower costs and greater customer satisfaction
31

Suggestion Scheme
This is a method of cost reduction and productivity improvement The employees are working in the organization at different levels While on the job they get number of ideas in their mind to do some improvements Every improvement yields some gains To garner these gains suggestion scheme is implemented
32

American v/s Japanese Approach

Both these countries have immensely benefited from this technique American style tends to buy ideas depending on how much the company benefits and give 10% to the suggestor Japanese style is to create ideas to make jobs easier to do and motivate the concept of group exercise
33

Suggestion Scheme in India

In India we tend to follow American style A form is developed to be filled in by the suggestor where he has to write present method , proposed method and expected savings in money terms Such forms are collected periodically Suggestion committee approves/rejects the proposals based on implementability 10-20% of annual savings are paid to the suggestor as one time award It is ensured that suggestor does not give suggestion on the area where he/she is employed

34

Structure of Suggestion scheme

Scheme co-ordinator Suggestion Scheme Committee The Suggestion Evaluator The Suggestor

35

Principles of Suggestion Scheme

Give a subject for each month Motivate employees to think about that subject, like energy saving, water saving, Lubricant saving etc. Give details of the subject so that employees know the current consumption, the purchase price, best in the industry norms etc. Give a token gift for each suggestion Announce the annual awards to motivate employees

36

How to make the Suggestion Scheme effective?

Respond to all the suggestions immediately Highlight the suggestions publicly Award must be given immediately for best suggestions Establish categories for regular awards Award presentation should be a big function Act upon the suggestions Participate in Indian National Suggestion Schemes Association contest
37

Kaizen v/s Suggestion Scheme

Kaizen/QC are generally a group activity Suggestion Scheme is an individual activity Kaizen focuses on pain areas Suggestion scheme aims at cost reduction Kaizen is small continuous improvements Suggestion scheme can give big benefits Kaizen aims at eliminating pain areas in employees work Suggestion scheme aims at cost reduction in any department of the company Kaizen motivates employees and suggestion scheme focuses on award for cost reduction
38

Incentive Schemes
The sole objective of the incentive schemes is to increase the production with or without increase in productivity The basis of this system is on the time standards The standards are laid down and communicated to all workmen Anyone giving more production than the standard is paid extra This is one of the methods of sharing gains of improvement in production/productivity This is also a part of collective bargaining This is a useful tool when the demand for the product is high

39

Incentive Schemes
Incentive programs are used to motivate employees Different schemes are designed for individuals as well as for the groups This improves productivity of employees due to attraction of rewards It is necessary that employees and managers trust and respect each other
40

Advantages of Incentive Scheme

Employee effort is focused on important targets which match organizational goal Rewards are variable cost linked directly to results Incentives are directly related to improved performance Rewards go to the responsible persons for higher performance
41

Limitations of Incentive Schemes

Employees suspect that the standards are set unfairly on higher side Employees feel that they have to work very hard to get the benefit of rewards The schemes create unfair competition among employees Increased earnings result in tougher standards Schemes are sometimes complex to understand Schemes create friction between employees and management
42

Types of Incentive Plans

Piece Rate Plans Direct link of increased wages to the increase in production Standard Hour Plans Incentive is given for saving time, if he finishes the job in 90 min in place of normal 120 min. This is common in project type of business

43

Profit Sharing Plans

Profit sharing plan distributes a portion of the annual profit to the employees by way of ESOP (Employee stock ownership plan) Typically a percentage of profits is distributed among the employees The company gets loyalty and commitment in return The company does not pay any money but gives them shares based on their length of service and pay levels

44

Effects of Incentive Systems

In the beginning the production goes up but gradually this system loses the charm There are frequent clashes between union and management Unions oppose this system due to the abuses under such plans and ill effects Collective bargaining becomes very complex due to confusion created by complex incentive schemes Employees treat this as a matter of right and demand extra wages as annual bonus contd

45

Effects of Incentive System

Creates friction among workmen Tends to affect the quality of product Managements feel that the gain through such schemes is not adequate The cost of computation of extra wages for each worker becomes very high Customer discontent due to inferior quality Increased frequency of accidents Dis-satisfaction among management staff to run such schemes due to frequent disputes
46

Work Study
Work study involves investigation of what employees do, how they do it and how long they take to do the job assigned to them Work study/ Industrial Engineering uncover inefficiency and task redundancy Change the methods and the need for the job itself may brought into question Diplomacy and sensitivity are integral part of work study/ Industrial Enginnering
47

Method Study
Work study has two elements: Method Study ( Actions ) Work Measurement ( Time taken ) Method Study is the process of subjecting work to systematic, critical scrutiny in order to make it more effective and / or more efficient Method study was designed for analysis and improvement of repetitive manual work but now it is used for all types of activities at all levels
48

Method study
Defination: Method Study is a scientific & analytical procedure for determining a preferable work method considering Raw Material Design of the product Process or order of work Tools , the workplace and equipment Hand and body movements used in each step
49

1. 2. 3. 4. 5.

Objective of Method Study

To find economy of money, economy of human effort, economy of time, material, skill, space, machine time, tools etc Method Study is used for locating deficiency in any the factors stated above Method Study encourages designing a work method through logical analysis and synthesis Improve the work method to get maximum efficiency

50

Analysis of Work Content

Reason of work Basic work content poor product design Material wastage Bad quality Poor layout Inadequate material handling Inappropriate work method Breakdown of machine Late coming/absenteeism Poor workmanship accidents

Category of work Unavoidable A: Work content due to poor design B: Work content due to process, equipments and tools

C: Work content due to operator

51

Analysis of work content

General study indicates that the basic work content is about 30% of total work and this can not be reduced A category is generally 50 to 54 % B category is about 18 to 20 % C category is 12 to 15 % Method study has the scope to reduce or eliminate all three types of work content A , B & C Type C is a bit sensitive and can be minimized However type A and B should be eliminated

52

Technique to Conduct Method Study

Select the task to study Record the facts about it Examine these critically Eliminate / reduce A B & C categories Develop a new efficient method Install / implement the new method Maintain the new method
53

Selection of Task
Decide aim of Study Determine the objective in terms of area of the job to be changed Establish better solution for doing the job Concentrate hand and body movements Study the process and work sequence Study product design Study input Raw Material Study layout , tools and equipment
54

Record the Facts

Record all facts and use charts and diagrams Collect and collate the data Analyze and arrive at a conclusion Get more data to verify the conclusions Try out the conclusions

55

Examine the data

The recorded data are subjected to examination and analysis Normal methods of this process are critical examination and system analysis The aim is to identify questioning process which will decide the improvements or beneficial change

56

Develop a new method

Thorough analysis automatically leads to identified areas of change The aim is to identify possible actions for improvement and develop a preferred solution Identify short term and long term solutions to get the benefits The success of method study project is realized when actual change is implemented The change should meet the initial objective at the time of selection of the project
57

Install
Making a real change demands careful planning and handling of the people involved in the solution They may need reassuring, retraining and supporting through the acquisition of new skills Installing new method may require a parallel running of old and new systems Sometimes there is only one chance to make a change It is essential to document the changes

58

Maintain
It is necessary to check that the new method is working as per expectations Also it is giving desired benefits It is common that people slowly shift to old methods Initiate Method audit to observe irregularities Industrial Engineers must monitor that the changes are followed in totality The changes have to be stabilized quickly

59

Ergonomics
Greek words Ergo means work and nomoi means natural laws This is the application of knowledge about human capabilities and limitations to the design of workplaces, equipment, tools, work methods, products and organizational structures Ergonomics is based on the concept that workplace injuries and illnesses can be caused by the very tools and equipment used in the job processes The purpose of ergonomics is to promote physical comfort, productivity and efficiency This will result in reduction in the risk of physical injury, stress and fatigue

60

Principles of Ergonomics
While working all activities should permit the worker to have several different healthy and safe postures Largest appropriate muscle groups should exert maximum where muscular exertion has to take place Work activities should be performed with the joints at about midpoint of their range of movement
61

Factors affecting a worker

Force used by man causes exertion Repetition of action again and again Awkward posture of unnatural style Overexertion due to excessive strength Repeated exposure to work condition Temperature, ventilation and humidity Noise level at workstation Poor lighting or seeing continuously Posture of man at work giving rise to muscular pain, backache, neck ache, leg cramps etc
62

Computer related problems

Workstation design Keyboard working height Wrist rest Monitors Chair design and adjustment procedure

63

Manual material handling

Lifting , pushing, pulling, carrying, holding Heavy work Static work postures, especially sitting Bending twisting Repetitive work Vibration Sudden, unexpected movement
64

Work Measurement
Work study has two elements: Method Study ( Actions ) Work Measurement ( Time taken ) Method Study is the process of subjecting work to systematic, critical scrutiny in order to make it more effective and / or more efficient Method study was designed for analysis and improvement of repetitive manual work but now it is used for all types of activities at all levels
65

Work Measurement
Work Measurement has another name which is called Time Study It is an appraisal in terms of value of work involving human effort It produces time standard for the performance of a series of acts by man or group of men The standard is carefully defined so that consistent & reliable measurements are made Normally the standard time is 30% higher than most efficient worker is likely to take under given conditions This 30% is called an allowance for an average worker who is not expected to be most efficient day after day
66

Objectives of Work Measurement

To set schedules To set labour standards for evaluating the performance of workmen To determine number of machines that a person may run To balance the work of crew of production line To determine the standard cost To determine equipment and labour requirement To determine basis of incentive wages
67

Method of measurement
Decide the task to be measured Identify and note down all the elements of each task and see if there are any unwanted elements Observe the task being done and ensure that reliable observations are noted Record the time taken by stopwatch on the time sheet, this is called Observed Time for each element
68

Standard Time
Standard Time = Basic time + Allowances Allowances are given for sitting standing crouching stretching temperature humidity etc Basic Time = Observed time + Rating Allowances vary from industry to industry Generally a personal allowance is 5% Fatigue allowance may vary between 10-20% Relaxation allowance & performance allowance
69

Benefits of Work Measurement

Improvements of methods Contract estimation Estimate employee cost for a project Facility Planning Scheduling and balancing gap-capacity Manpower planning Accurate Incentive payments structure
70

Problems in Work Measurement

Accuracy of measurement is always doubted by labour Employees are very sensitive to data inaccuracy when their incentive pay is calculated Unless method study is done time study should not be conducted All elements of work including wasteful work elements should be listed on paper Before the study is started it should be communicated to all concerned with purpose and method of study The Industrial Engineer has to be objective, fair, diplomatic and discrete in communicating project outcomes

71

Calculation of Standard Time

Element Basic Time Relaxation Performance allowance allowance 1 4 2 6 3 3.5 4 3.2 5 5.5 6 3.6 Total Standard Time 10% 5% 5% 5% 5% 15% 110% 110% 110% 110% 110% 110% Standard Time 4.840 6.930 4.043 3.696 6.353 4.554 30.415

72

Standard production
If the worker is expected to work for 7.5 hours and the standard time for one piece id 30 minutes then in 7.5 hours*60=450 min he is expected to produce 15 pieces If he produces 12 pieces his efficiency is 80% If his machine had one hour breakdown or power shutdown then his expected out put is 13 pieces and his effy is 12/13*100 and machine productivity is 12/15=0.8
73

Productivity
Efficiency = output / input Productivity = output / input If a worker has produced 80 pcs in one hour and the standard production is 100 pieces per hour his effy is 80% If a worker is expected to produce 750 pieces in 7.5 hours and he produced 500 pieces and his machine was under breakdown for 2.5 hours his effy is 100% and productivity of the machine is 500/750 = 0.667

74

Productivity
Two steel plants having identical equipment with a capacity of 3000 mt/month One produces 3000 mt with 300 people and second produces 3000 mt with 250 people The productivity for the first one is 10 mt/man and it is 12 mt/man for the second one

75

Productivity
Two steel plants having identical equipment with a capacity of 3000 mt/month One produces 3000 mt with 300 people and second one produces 2400 mt with 300 people Productivity of first is 10 mt per man and for the second it is 8 mt per man
76

Job Evaluation
Job Analysis means activities involved in the job which include duties, responsibilities and accountability Job Evaluation is used for proper wage structure, each job is to be evaluated based on importance and responsibility and then group the jobs for a particular wage structure It is essential to do comparison to evaluate worth of each job with respect to other Generally job evaluation is done along with union in the organization Job evaluation is done to decide the levels or grades Normally the grades are fixed based on skill, responsibility, effort and working conditions

77

Job Rotation
Job Rotation involves moving employees to various positions in an organization with an effort to enhance their skills, knowledge and abilities The horizontal movement is generally known as job rotation whereas the vertical movement is called a promotion with or without job rotation
78

Advantages of Job Rotation

It is an excellent method for broadening individual s exposure to company s operations and for turning specialist into a generalist It reduces boredom and stimulate development of new ideas It can also provide opportunities for a more comprehensive and reliable evaluation of the employee over a period of time It is used to develop leadership qualities among the bright employees who can become the future leaders
79

Brain Storming
Brainstorming is a group activity The objective is to take benefit of synergy by involving all participants and obtain the benefit of collective thinking through a brainstorming session The rules of brainstorming are as under: A facilitator will lead the group The ideal group size is 5 to 12 All participants must be aware of the topic All ideas generated to be noted down on board The entire group must participate in the process Look at all ideas for their value
80

1. 2. 3. 4. 5. 6.

Brainstorming
7. In case the idea is not accepted by the management, the same should be communicated to all members 8. If the idea is accepted, the entire group should get the full credit 9. A facilitator must keep the atmosphere relaxed and freewheeling 10. Encourage everyone to contribute 11. Focus on quantity and not on quality of ideas 12. Judgment should not be passed during idea generation phase

81

Benchmarking
Benchmarking is a systematic method by which organizations can measure themselves against the best industry practices It is defined as measuring our performance against the best-of-class companies, determining how they achieve those performance levels and using that information as a basis for our own company s targets, strategies and processes of implementation

82

Benchmarking
Zerox corp USA introduced benchmarking in 1980 s when their global market share shrank to 35% in 1981 Having invented photocopying machines in 1959 the company had virtual monopoly till 1970 s Zerox became synonymous with photo copying With TQM approach with benchmarking as a quality tool, Zerox could regain its market leadership by mid 1980 s Motorola successsfully practiced internal benchmarking resulting in ten fold improvement in ten years

83

Benchmarking
1. 2. 3. 4. The 4 levels of Benchmarking are: Internal benchmarking Competitive benchmarking Non-competitive benchmarking World class Benchmarking The systematic management approach for Benchmarking has 4 phases: Planning, Analysis, Integration and Action
84

Taguchi s Quality Engineering

Dr Taguchi emphasized engineering approach to Quality, thereby producing the product with target goals or requirements with minimal variations He termed the word variation as noise His objective was to minimize the noise through on-line and off-line quality activities

85

Taguchi s Quality Engineering

Taguchi targets on design for Quality by defining three designed levels: System Design: ( Primary) Functional design focused on pertinent technology Parameter design: ( Secondary) a means of reducing cost and improving performance Tolerance design: ( Tertiary) a means of reducing variation by controlling causes, but at an increased cost Describe strategic ways of improving productivity
86

Improve Profit
Increase Sales Volume (Increase Market share) Increase Sale Price Reduce Purchase cost of Input Reduce cost of production Improve quality (Reduce cost of Quality) Improve productivity

Productivity and Quality Mgmt

Differentiate Production and Productivity Inspection and Quality Control System, Procedures and Processes Quality Control and Total Quality Mgmt (TQM) TQM and Six Sigma

Productivity- Definition (Productivity is a ratio)

The amount of output per unit of input (labor, equipment, and capital).

Number of products / No. of hours taken to produce them Revenue generated by employee / Salary of employee

System, Procedure and Process

System is a set of interactive elements corresponding to the given inputs to produce the desired output Procedure is a set of activities which have to follow in a systematic format without taking any shortcuts Process is a set of activities/operations which follow the procedures and systems with right RM and intermittent checking to avoid any lapses.

Process
Process is a summation of activities such as operations, inspection, delays, storage, transportation and everything else that happens between the beginning and the end of the process

Six Sigma
Six Sigma- (The statistical Representation) is a process of Quality measurement, which helps the organization in the improvement of their Quality Six Sigma is a systematical process which helps the organization to eleminate the defects which prevent it from reaching perfection Six Sigma ensures the QC, TQM and Zero Defect When a process attains six sigma level it means that there is no room for the product to fail Six sigma is professionalizing of the Quality Management functions

Sigma Level

% Good

PPM/DP MO

Cost of Quality as % of Sales

95.45

45500

Over 40%

99.73

2700

25 - 40%

4 5

99.9937 99.999943

63 0.57

15 - 25% 5 - 15%

99.999999 8

0.002

Less than 1%

What is TQM ?
Total quality management (TQM) is a business management strategy aimed at embedding awareness of quality in all organizational processes. TQM has been widely used in manufacturing, education, hospitals, call centers, government, and service industries, as well as NASA space and science programs

What is TQM ?
Total Quality Management (TQM) is a structured system for meeting and exceeding customer needs and expectations by creating organization-wide participation in the planning and implementation of improvement (continuous and breakthrough) processes

Total Quality Management

Total: Involve all functions to have customer focus and give reliable delivery of product+service in line with customer s expectations at lowest cost Quality: Design and manufacture the product+service to achieve zero defect and 100% customer satisfaction Management: Lead to achieve quality for customers by communicating the vision, mission and values to all employees and creating continuous improvement culture

Techniques for TQM

Total Employee Involvement : Kaizen, SGA, Quality Circles, KBP/BPR, customer satisfaction surveys, Training Just in Time/ Waste Elemination : TPM, Zero Defect, supplier Partnership Total Quality Control: TQC is applicable to all functions, use of 7 QC Tools, use of SPC/SQC and PDCA, ISO 9000, Six Sigma, ISO 14000, understand the processes critical to quality (CTQ)

Why TQM ?
In a global marketplace a major characteristic that will distinguish those organizations that are successful will be the quality of leadership, management, employees, work processes, product and service. This means that products must not only meet customers community needs for value, they must be provided in a continuously improving, timely, costeffective, innovative, and productive manner

Principles of TQM
1. Customer-Focused Organisation 2. Leadership 3. Involvement of People 4. Process Approach 5. System Approach to Management 6. Continual Improvement 7. Factual Approach to Decision Making 8. Mutually Beneficial Supplier Relationships

1.Customer Focussed Organization

Understand customer needs and expectations for products, delivery, price, dependability, etc. Ensure a balanced approach among customers and other stake holders (owners, people, suppliers, local communities and society at large) needs and expectations. Communicate these needs and expectations throughout the organisation. Measure customer satisfaction & act on results, Manage customer relationships

2. Leadership

Be proactive and lead by example. Understand and respond to changes in the external environment. Consider the needs of all stake holders including customers, owners, people, suppliers, local communities and society at large. Establish a clear vision of the organisation's future. Establish shared values and ethical role models at all levels of the organisation. Build trust and eliminate fear. Provide people with the required resources and freedom to act with responsibility and accountability. Inspire, encourage and recognise people's contributions. Promote open and honest communication. Educate, train and coach people. Set challenging goals and targets, and Implement a strategy to achieve these goals and targets.

3. Involvement of People
Accept ownership and responsibility to solve problems. Actively seek opportunities to make improvements, and enhance competencies, knowledge and experience. Freely share knowledge & experience in teams. Focus on the creation of value for customers. Be innovative in furthering the organisation s objectives. Improve the way of representing the organisation to customers, local communities and society at large. Help people derive satisfaction from their work, and Make people enthusiastic and proud to be part of the organisation.

4. Process Approach
Define the process to achieve the desired result. Identify and measure the inputs and outputs of the process. Identify the interfaces of the process with the functions of the organisation. Evaluate possible risks, consequences and impacts of processes on customers, suppliers and other stake holders of the process. Establish clear responsibility, authority, and accountability for managing the process. Identify internal and external customers, suppliers and other stake holders of the process When designing processes, consider process steps, activities, flows, control measures, training needs, equipment, methods, information, materials and other resources to achieve the

desired result.

5. System Approach to Management

Define the system by identifying or developing the processes that affect a given objective. Structure the system to achieve the objective in the most efficient way. Understand the interdependencies among the processes of the system. Continually improve the system through measurement and evaluation, and Estimate the resource requirements and establish resource constraints prior to action.

6. Continual Improvements

Make continual improvement of products, processes and systems an objective for every individual in the organisation. Apply the basic improvement concepts of incremental improvement and breakthrough improvement. Use periodic assessments against established criteria of excellence to identify areas for potential improvement. Continually improve the efficiency and effectiveness of all processes. Promote prevention based activities. Provide every member of the organisation with appropriate education and training, on the methods and tools of continual improvement such as the Plan-Do-Check-Act cycle , problem solving , process reengineering, and process innovation. Establish measures and goals to guide and track improvements,and Recognise improvements.

7. Factual Approach to Decision Making

Take measurements and collect data and information relevant to the objective. Ensure that the data and information are sufficiently accurate, reliable and accessible. Analyse the data and information using valid methods. Understand the value of appropriate statistical techniques, and Make decisions and take action based on the results of logical analysis balanced with experience and intuition.

8. Supplier Relationship
Identify and select key suppliers. Establish supplier relationships that balance short-term gains with long-term considerations for the organisation and society at large. Create clear and open communications. Initiate joint development and improvement of products and processes. Jointly establish a clear understanding of customers' needs. Share information and future plans, and Recognise supplier improvements and achievements.

Ten Steps to TQM

1. 2. 3. 4. Set company strategy, values and culture Identify the customers and understand their expectations Define their specific needs Build the quality in the process from the begining(advocate prevention & not correction) 5. Reduce chronic waste 6. Reduce variation 7. All levels of the organization must be involved/trained 8. Continually improve the quality of product or service 9. Use structured methodology for process improvement 10. Use a balanced approach

Objectives of TQM
100% Customer Satisfaction Zero Defects Continuous Improvement Culture

Eight Building Blocks of TQM

1. 2. 3. 4. 5. 6. 7. 8. Ethics Integrity Trust Training Teamwork Leadership Recognition Communication

Benefits of TQM
Ability to be more competitive Improved market share Cost reduction Increased flexibility and responsiveness Simplified processes Improved communications More satisfaction among the workforce

5 S Practices
1. Seiri : separate out needed items 2. Seiton: organize workplace for faster retrieval (fix place for each item) 3. Seison: sweeping/cleaning around work area 4. Seiketsu: keep everything clean for constant state of readiness 5. Shitsuke: Everyone must understand and practice the rules in the plant

Maintenance
Maintenance is done on the equipments to keep them running as efficiently as possible for as long as possible There are three types of maintenance : 1. Breakdown maintenance (unplanned) 2. Preventive maintenance (planned) 3. Predictive maintenance ( High tech analysis )

Total Productive Maintenance

TPM , developed in Japan, is a scientific company wide approach in which every employee is concerned about the maintenance , quality and efficiency of the equipment The objective is to reduce the whole life cost of equipment through more efficient maintenance management and to integrate the maintenance and manufacturing functions Teamwork is a key element of TPM Analysis of each equipment focuses on reduction of manufacturing losses and costs

Total Productive Maintenance

TPM aims to achieve improvements in cost, quality and speed (productivity) This is equivalent to TQM (reduces variations due to automation) TPM addresses six big losses reduced yield process defects reduced speed idling and minor stoppages setup and adjustment equipment failure

TPM Awards
Effective 1971, the factories which displayed remarkable achievement in plant maintenance were given this award Effective 1989, the factories which have achieved company-wide efficiency & productivity by adopting company-wide TPM are given this award

Five Pillars of TPM

1. Quality Integration (Process capability- Cpk) 2. New Equipment Management (design) 3. Autonomous Maintenance (military like) 4. Planned Maintenance (reduce unplanned) 5. Equipment Improvement (productivity)

Seven Deadly Disasters Dr Deming- TQM

1. 2. 3. 4. 5. 6. 7. Lack of consistency of purpose Emphasis on short term profits MBO and performance Appraisal system Job hopping by managers Using only visible data for decision making Excessive medical costs Excessive cost of liability

Deming Application Prize

For organizations or divisions of organizations that manage their business autonomously Given to organizations or divisions of organizations that have achieved distinctive performance improvement through the application of TQM in a designated year

Deming Wheel
Sales <<<<<<<< < Production I I Research Design I I Design Research I I Production>>>>>>>>>>>SALES

Dr Deming ( 1900-1993) 14 points

1. Create and publish statement of the aims and purpose for improvements 2. Adopt new philosophies 3. Do not depend on inspection for quality 4. End the practice of contract to lowest bidder 5. Continuously improve the system of production and service 6. Institute training on the job 7. Teach and institute leadership

Dr Deming s 14 points
8. Drive out fear, create trust and climate for innovation 9. Direct all efforts to aims and purposes of co. 10. Estimate targets for workforce 11. Eliminate quotas and institute methods of improvements 12. Eliminate annual rating and merit system 13. Encourage education and self improvement 14. Action to accomplish the transformation

Crosby s 14 steps (Born 1926)

1. 2. 3. 4. 5. 6. 7. Commitment of top Management Quality improvement teams Establish Quality measurement Estimate Cost of quality Spread Quality Awareness Identify opportunities for improvement Committee for Zero defect monitoring

Crosby s 14 steps (contd)

8. 9. 10. 11. 12. 13. 14. Employee education Zero defect day Goal setting Error cause removal Recognition Quality councils Do it all again

Crosby s 4 Absolutes of QM
Crosby s philosophy: Do it right the first time The Four absolutes are: Quality conformance to requirements System for causing quality- prevention Performance standard- zero defect Measurement of quality- price of nonconformance (COQ)

Juran s Philosophy(1904-2008)
1. 2. 3. Quality = fitness for use by the customer Juran s Triology: (Quality oriented Principles) Quality Planning Quality Control Quality improvement

Steps of Quality Control

Setting Quality standards Apraising conformance to these standards Acting when standards are exceeded Planning for improvements in standards

Quality Assurance
Definition : For the customer to buy the product/service with confidence and use it for a long time with ease and satisfaction, the manufacturer has to give assurance and also give evidence that the product will not fail

Steps of Quality Assurance

Develop quality plans Carryout vendor quality surveys Carryout product quality audits Review disposition of non-conforming products Initiate customers future needs Co-ordinate document control activity Upgrade inspection records

Concepts of Quality
Variation is the main reason of poor Quality There is no such thing as Quality Problem, it is an opportunity to improve There is nothing like economics of Quality,it is cheaper to do the job right , the first time The only performance measurement is the cost of Quality The only Performance standard is ZERO DEFECT

Cost Of Quality
Prevention Cost Appraisal Cost Internal Cost External Cost .investment cost Inspection & Analysis Scrap and rework Customer Complaints Product Recalls and Returns

Cost of Quality

Contribution of Quality Costs

Prevention costs ..High throughout Appraisal costs low/same throughout Internal costs ..initially high, gradually declining External costs initially high, sharply decline (stability period) Total Cost .sharply decline as the product becomes stable

Economic Balance of Quality and Costs

As we keep improving the Quality, the total Cost of Quality keeps coming down However if we improve the Quality beyond a certain point, the prevention cost will sharply go up and the total cost will also go up Hence we have to find an economic Balance of Cost and Quality (six sigma)

Audit of COQ
Set an annual target of COQ Monitor the actual expenses of COQ All departments to control COQ Evaluate COQ every month/Quarter Compute COQ as a percentage of Sales At the start of TQM activity COQ and COQ as % of Sales is high, but gradually this comes down if TQM is implemented in the scientific manner Revise the annual target of COQ downwards year after year

The Customer Delight

Customer awareness = keeping customer s requirements in mind These requirements are: Right Quality, Right Quantity, Right time & Right Cost The customer delight is far beyond customer satisfaction e.g: Taxi keeping newspapers, Telephone directory, Railway Timetable, etc

Repeat Orders
Why customers Quit ? 1% die natural death 3% relocate 5% move away due to friends contact 9% due to competitive reasons 14% poor quality of product 68% indifferent attitude towards customers

Definition Of TQM
Old Definition of Quality: Products and services are provided exactly as per the specifications already laid down New definition of TQM: Products and services that totally satisfy the customer needs and expectations in every respect, on a continuous basis

Techniques of TQM
Total Employee Involvement : Kaizen, SGA, Quality Circles, KBP/BPR Just in Time/ Waste Elemination: No waiting, material comes in the factory and directly goes for assembly instead of storing in stores Total Quality Control: TQC is applicable to all functions, use of 7 QC Tools, use of SPC/SQC and PDCA

Implementation Process of TQM

Team Leaders, Facilitators and other employees Training : Decision Style : Democratic firm decision Vision : Long Term Dream Mission : Short term objectives to achieve vision Quality Policy : Culture to be followed TQM Team Structure : Team Leader, Facilitator Steering Committee : For Pain Areas Shared Leadership : Develop the company objectives collectively Communication : Throughout the organisation Annual Reward Policy : Annual apraisals and recognition to performers

Elements of TQM

Commitment by senior management and all employees Meeting customer requirements Reducing development cycle times Just In Time/Demand Flow Manufacturing Improvement teams Reducing product and service costs Systems to facilitate improvement Line Management ownership Employee involvement and empowerment Recognition and celebration Challenging quantified goals and benchmarking Focus on processes / improvement plans Specific incorporation in strategic planning

Vision Statement
1. 2. 3. 4. Bill Gates:There will be a personal computer on every desk running microsoft software Vision Statement should answer: Why did I start this business When I move on from this business, what do I leave behind What am I providing for my customers beyond product/service If my business could be everything I dreamed how would it be

Mission Statement
Mission statement describes the WHAT of your business, it states why your organization is in business and what you are hoping to achieve Components of Mission Statement: The overall purpose of your business What is your business: product/service What is important for your businessthe values your business lives by

1. 2. 3.

Expectations from the Mission Statement

Mission draws on your belief statements Mission must be future oriented and portray your organization as it will be Mission must focus on one common purpose Mission must be specific to the organization, not generic Mission statement must be short, two sentences max

Quality Systems ( Quality Mgmt systems) The quality of the product is checked to see the variation The control in variation wrt the design spec/dimension is aimed at More the variation, poorer the quality Less the variation better the quality The analysis of variations ( control charts) give direction for the action to be taken to control the variation

Quality Management System

Quality Plan (Quality Assurance Plan) A Quality plan is a document specifying the quality management system elements and the resources to be applied in a specific case Activities to be considered are: Product spec,quality and delivery requirements, how the product/service is created and resources required,quality verification and records to be kept to demonstrate conformity

Road Map of Quality Plan

Identify who the customers are Determine the needs of those customers Translate those needs into our language Develop a product that can respond to those needs Optimise the product features so as to meet our needs and customer s needs Optimise the process Prove that the process can produce the product under operating conditions Transfer the process to operation

ISO 9000 Standards

ISO 9000 is a series of International stds To be used by the cos. wanting to implement in house quality systems These stds are developed by international organization for standardization (ISO) These promote international trade by providing one consistent set of requirements recognized around the world

ISO 9000 Certificate

Any organization in any business field can make application to the certifying agencies e.g. BVQI for obtaining ISO 9000 certificate They guide the organization to make the quality manual of inhouse procedures and systems Management representatives are appointed to look after ISO requirements Any deviation is termed as NC and recorded in NCR (non conformity report) which needs to be resolved Then the certifying agency awards ISO 9000 certificate

Quality Manual
This is an important document and covers the following areas of business:

1. Management responsibility 2. Quality system 3. Contract review 4. Purchasing 5. Product identification and traceability 6. Process control 7. Inspection and test equipments

8. Control of non conforming products 9. Storage, packing and delivery 10. Quality records 11. Internal quality audits 12. Training 13. Statistical techniques

ISO 9000 Series

ISO 9001 covers product design, Mfg, marketing, installation and services ISO 9002 covers Mfg and Mktg ISO 9003 covers installation and testing

ISO 14000
ISO 14001-1996 is a part of Quality Management system pertaining to environment management. All organizations have to control the impact of their activities, products and services on the environment Most countries have stringent norms for control on pollution The company has to audit to assess their performance and ensure that it is within limits This system needs to be integrated with overall quality management system of the organization

QS 9000 (Now known as TS 16949)

QS 9000 issued in 1994 is the name given to the Quality System Requirements of the automotive industry which were developed by Chrysler, Ford & General Motors and the companies having QS-9000 are considered to have higher standards and better quality products. QS-9000 helps companies to stay ahead of their competition. It does this by filling gaps in the quality systems that can cause problems QS 9000 tells current and potential customers that the product has consistent quality and is manufactured under controlled conditions.

Business Process Re-engineering (BPR)

BPR is a management approach aiming at improvements by identifying and implementing new ways of carrying out work. Thus elevating efficiency and effectiveness of the processes that exist within and across the organization

Steps of BPR
Develop the business Vision and process objectives such as cost reduction, time reduction, output quality imrovement etc. Identify the business processes to be redesigned (challenge old processes) Evaluate old processes to avoid repetition of old mistakes Identify IT levers: awareness of IT capabilities can influence BPR process Design and build new process

Malcolm Baldrige Award

This annual award was introduced in US in 1987 to recognize US companies for Business Excellence and Quality achievement. The objectives were : 1. To promote awareness of Quality 2. To understand requirements for Performance Excellence 3. Sharing of successful practices with other companies

Malcolm Baldrige Award

Important Roles: 1. Improve performance practices and capabilities 2. Sharing of best practices 3. Serve as a working tool for managing performance, planning, training and assessment 4. Improvement of overall co. performance

Malcolm Baldrige Award

Award examines the quality of the organization in 7 categories: (100 marks each) 1. Leadership 2. Information and Analysis 3. Strategic Planning 4. Human Resource Development & mgmt 5. Process Management (Improvements) 6. Business Results (Improvements) 7. Customer Focus and Satisfaction

Malcolm Baldrige Award

Steps for Examination 1. Write the application with the overview of co , the vision and mission, strategic plans and trends of improvements in last 5 years in all areas of criteria (categories) 2. The application shall be assessed and marks will be given to individual company 3. The site visits shall be made by the examiners to verify the trends and practices

Product and Service Quality Factors affecting Product Quality

1. 2. 3. 4. 5. 6. 7. 8. 9. Men Materials Machines Manufacturing conditions Manufacturing process Capability to invest money Management commitment to Quality Product design (Tangible and *Intangible) After sales service (*Safety and Reliability)

Product and Service Quality Ten Dimensions of Service Quality

1. 2. 3. 4. 5. Quality Tangibility Reliability Responsiveness Communication 6. Security 7. Competence 8. Courtesy 9. Understanding 10. Access

Some examples of Service Quality

Answer the phone Don t overpromise Listen to your Customers Deal with Complaints Be helpful and knowledgeable Train the staff to be courteous Take the extra step Throw in something extra

Service Quality
Service quality has high level of intangibility Most services are intangible as there are performances and not objects Services are perishable , they can not be inventoried, saved and resold later The actual performance of service differs from provider to provider

Quality Circles
QC is a small group of employees working on similar jobs, mostly at worker level to perform quality control and improvement activities within their workplace These groups work on continuous improvements as a part of company wide activity This was started in Japan in 1962 in line with the conviction of Ishikawa that the workers can significantly contribute to improve quality and productivity Japan attributes phenomenal growth in 1960-1970 to QC

Quality Circles
Basic Objectives: 1. Wider contribution towards improvement and development of the enterprise 2. Respecting humanity and building a happy and cheerful workplace 3. Exploiting human capabilities fully and drawing out infinite possibilities

Quality Circles Components of QC

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Decide on the theme Establish the goals Clarify reasons and their importance Access the current situation Probe the causes and analyze them Establish corrective measures Implement the measures Evaluate results Standardize to prevent slipups Reflection of the results

Structure of Quality Circle

Top management (monitor progress) Steering committee (Evaluate progress) Facilitator (eliminate hurdles) Leader and Dy Leader (guide members) Members (study cause and effect) Non members (give additional inputs)

Sequence of TQM
Operational Management 5 S BPR Quality Management QC ( Quality Circles) ISO TPM ( Total Productive Maintenance) Six Sigma ( For Processes CTQ )