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Quality through People.

Effective use of Statistical Process Control Tools Involving Employees.

(Pakistan Tobacco Company A case study) Abstract

By: Turab Ali Khan Product Assurance Manager. Introduction: Quality is the probably the most important point in the world market and efforts to improve quality eventually leads to enhanced market share and provides a competitive edge. Aiming for quality means analyzing products and processes to reduce production cost and improve customer satisfaction. The study and proper implementation of the basic statistical quality control (SQC) tools is important to achieve these goals. Effective implementation of SQC tools could enable an organization to improve its products and process to levels exceeding the expectations of all its stakeholders including the consumers. While there is no doubt, in the minds of the quality leaders, abut the effectiveness of the SQC tools, the perception of the management and employees is not the same. We see an extensive application of these tools in the developed word but very limited use in the developing word and specifically Pakistan, where the drive for quality is in its initial stages. Mostly the blame of the failure to achieve the required results is put on the tools rather than the implementation process. It is just another case like the ERP- implementation programs, where the ultimate culprit is identified as the computer system. Many case studies have revealed that people, data integrity and computer systems are the three main pillars of a successful ERP implementation program and during the implementation period it was the computer which was doing its assigned job and the other two had issues. Same is true with SQC-tools too. The key to success is ownership of the shop-floor-employees and the top management commitment. These two factors, especially employees ownership, is normally ignored and the blame of the resultant failure is invariably attributed to the SPC tools. This paper is focused on the successful implementation and contribution of the SQC tools to the total quality management implementation program of Pakistan Tobacco Company. The main focus is on the impediments faced by the company and how it managed to overcome these. Pakistan Tobacco Company: Pakistan Tobacco Company (PTC) was incorporated in 1947 immediately after partition, when it took over the business of the Imperial Tobacco Company of India which had been operational in the subcontinent since 1905. We are part of the trans-national British American Tobacco Group (BAT), which employs some 85,000 people worldwide at its operations in 180 countries. BAT has a position of market leader in more than 50 countries selling over 300 brands. In 2005, the Group sold and produced a nearly 17% share of the global market of cigarettes.

Pakistan Tobacco Company is the largest excise tax generator in the private sector in the country. In 2005 alone, Pakistan Tobacco Company paid the government close to Rs.20 Billion in excise and sales taxes. This amounts to Rs.66 million per working day. Over one million people are economically dependent on the industry in Pakistan. PTC is the first company in Pakistan which was awarded Class A status, as part of the international total business excellence program MRPII, audited by the internationally renowned consultants Oliver Wight. Subsequently, it was recertified and again achieved Class A. Both its factories at Jhelum and Akora Khattak and its Leaf operations are ISO 9001 and 14001 certified, showing its world-class standards. The manufacturing sites are equipped with some of the most modern machines in the industry in Pakistan. TQM programs:. The market in Pakistan is such that both low cost and high quality is essential for survival and long term sustainability. In order to achieve these objectives, one needs to have a very highly efficient and responsive supply chain focused on high asset utilization, low process wastes and high product quality. This makes total quality and continuous improvement programs vital for any organization. Keeping this in view, PTC embarked on a Total Quality Management (TQM) program in 1997. The program titled as BEST 2000 (Building Excellence & Success Together) was aimed on people involvement, process improvements and customer focus. Besides other initiatives like training the employees on the concepts of internal & external customers, team-work, Continuous improvement and Supplier collaboration, extensive use of the following techniques was the considered to be the main objective of the program. 1. Process mapping 2. Seven basic Statistical Quality control Techniques. BEST 2000 was completed successfully which was reflected in improvement in the companies business growth, however the ultimate destination was still far away although not out of sight. The basic aim of the program was to change the organizational culture from the classic authoritative and shareholder-focused to a more participative and consumer-focused. This required a people to change their behaviors and do their jobs in a different way using different set of tools. To motivate such a large number of employees to adopt this paradigm shift was a huge task and could not be achieved through one program. The logical solution was reinforcement of the concepts. So PTC embarked on a series of improvement programs like WOW (Winning in Our World), Business excellence program (MRPII) and Supply chain reorganization in accordance with the Supply chain Operating Reference (SCOR) model. SQC Tools:

As already mentioned, PTC embarked on a series of complementary programs with an aim to change its culture and improve its processes in order to serve its customers in a more befitting manner. These programs had different module but SQC basic tools was part and parcel of every improvement programs. Variation in product characteristics is one of the main source of customer dissatisfaction in general and in FMCGs (Fast Moving Consumer Goods) in particular. As cigarette is a highly taxed commodity and this makes the market more lucrative for counterfeit products. Any variation in taste or other sensory characteristics of the product immediately rings an alarm in the mind of the consumer about the origin of the product. This perception of counterfeit product makes it utmost important for PTC to fight this necessary evil of variation. In other words, it is utmost important for the members of PTCs team to understand variation and take necessary steps to reduce it to the minimum. Keeping in mind these things PTC top management was committed to use the basic quality control tools throughout its manufacturing facilities and also its main suppliers. The company embarked on the SQC implementation program with the following outlines: 1. Educate line Mangers. 2. Educate shop floor employees (Team Members) 3. Developing graphs and use on machines manually. 4. Introduce an online system. It was planned to get assistance of highly qualified outside consultants for the training and education of its managers and employees. An aggressive training schedule was made, however the experience of the first session was devastating. The commitment demonstrated by the top management and the high profile of the SQC training consultant proved to be insufficient to create enthusiasm in the participants. There were about 40% dropouts from the course on the second day and all most all were absent due to unexplained health problems like stomach and headache. There were some more dropouts on the third and last day. As a result less than 50% of the participants could manage to get the course attendance certificate. The menace of failure came on the shoulders of the consultant and obviously a search for a better consultant was in full swing. The new consultant, a highly respected and experienced consultant, proved to be as ineffective as the first one was. This time the company management started thing on different lines. Instead of looking for a consultant, they approached the academia. A professor from the nearest government Engineering University was contacted and he very kindly agreed to conduct the training sessions. A PhD in mechanical engineering and with quality management background was considered to be the recipe of success but the end result was the same. The company management arranged a fact finding meeting with the two consultants and the university professor. This team looked into all the possible root causes for the lack of enthusiasm on part of the line managers and employees. Matters like low level of education (most of the operators with 10 years of school), outside environment, age profile of the employees and the extra work perceived to be on the way if they learnt these techniques were discussed

in detail. The consensus was that these are the realities we have to live with and at the same time we must get the program rolling successfully. The team recommended that the training manager of sight should have a brainstorming session with the participants of the last three sessions and find out their views and provide feedback to the team enabling it to make a more realistic action plan. In a way this was the first step to listen to the Voice of the customer and customers, in this case, are definitely the participant of these training sessions. Voice of the Customer: After thorough consideration, it was decided that the venue of brainstorming session should a place away from the factory premises. A hotel in Islamabad was selected for this day long session and all the members (participants of the last) three SQC sessions were properly invited to the event. Inputs were provided to the training manager about the objectives of the session and how to conduct it. The results of the session were; 1. This is not for us: The participants were if the view that SQC tools are too sophisticated tools to be use on normal processes like they had. It might work in Toyota Indus Motors or PAC (Pakistan Aeronautical Complex) Kamra. The reason they stated was that all examples give and references quoted by the trainers were from these two fields. This meant, in their view, it is for high- tech product like aero-planes or automobiles and not for FMCGs. 2. What is in it for me (WIIFM): The management gurus say that every human-being listens to the radio with frequency WIIFM and PTCs people are not an exception. The second question of the employees was that what will get after learning this, extra work? 3. What are the benefits for PTC: PTC is in a business of manufacturing and marketing tobacco related products and not high-tech products like the modern automobiles, so what benefits as a company we are going to accrue. The outcome of this exercise was an eye-opener for the core team. They were thinking on the following lines: 1. Low literacy rate of the workforce is an impediment. 2. Age profile of the workforce is contributing to the lack of enthusiasm for leaning new tools. 3. Most of the workers have not been to classroom environment for more than twenty years and are finding it difficult to adjust to the environment. 4. The lack of confidence to acquire the same level of skills on the new tools and thus loose their personal leadership. The Alternate Route:

The fact-finding team found itself facing a set of ground realities totally different what they were assuming. After thorough deliberations, it recommended the following: a. There is dire need of aligning the training contents to the training needs. (Develop training material in light of the voice of the customer b. It is a do it yourself project. The site management should carry out all the development work using indigenous resource. Consultant can only provide guidance. c. Training of the employees should be done by someone from within. d. There should reward and recognition system in place for high performers. These recommendations were taken seriously and an action-plan was developed and agreed. A task team was formed to develop the training material. In less than six months, the training material was developed in the form of a book on SQC tools in Urdu, with all examples from tobacco industry and the first few pages on connecting to the big picture. i.e. Why quality?, What are the deliverables for PTC and how these tools are going to make their life easier. Impelmentation: After the training material was developed and approved, the first course was announced with many doubts in mind (keeping in view the recent failures). The result was great and the enthusiasm of the participants on the second day is worth mentioning. The course was completed successfully and all the participants got above 60% marks in the final exam. After this huge success a crash program was chalked out to train all the machine controllers (Seniormachine operators) on these seven tools. The enthusiasm of the people proved to be instrumental in implementation part of the program. They started constructing run chart as well as control charts for three important attributes of the product, weight, circumference and pressure-drop. Soon they learnt how to practically interpret the graphs. This interpretation capability combined with their product and machine knowledge enabled them to take prompt corrective actions. The product variability came down and the results of manufacturing quality indices (Internal measures of product quality) went up. Looking into the interest of the employees, the company developed a web-base quality information system which displays the graphs on CRTs installed on machines. This system also enables concerned managers, even in the head office, to monitor machine performance on their computer screens. Reward and Recognition: An innovative way of recognizing high performance was adopted. A comprehensive test was scheduled at the end of each course to ascertain the top three positions. Professors of the University of Engineering & Technology were requested to honor the top three position holders by joining a dinner. This created even more interest in the learning process.

Conclusion: The program proved to be very successful and within one year the shop-floor employees started using control charts, Ishikawa & Pareto diagrams and histograms for analyzing product and process quality and taking corrective actions. The enthusiasm was so high that people started to volunteer for the training course. Looking into the success of the program, the management decided to launch an online quality information system and it made the visibility of product quality high throughout the organization. In the last 7 years, the company has taken many forward leaps in terms of sale and profitability including regaining the market leadership. Although many parallel programs of people development, branding activities and supply chain improvement projects are responsible for these improvements, the contributions of consistent high quality cannot be ignored and this was possible only when the shop floor employees were involved and the programs were made relevant to their needs.

Results: The company measures its product quality at two stages. 1. Factory Production Floor: (MQI) Samples are taken by every machine operator after 30 minutes and product of that machine is analyzed using dedicated testing modules called Quality Test Module (QTM) and the results are displayed on machine and can be seen by all concerned people through their computers in their offices (Figure 1.) In addition to that samples are taken from every machine in each shift and the product is analyzed by trained quality team members. The measure which is for product quality at this stage is called Manufacturing Quality Index (MQI). MQI evaluates the product quality on the basis of product parameters which are under the direct influence of the manufacturing team. Figure # 2 illustrates the results of the product quality measures for the period starting 1999 to 2007. These figures are based on the annual weighted average for all brands.

Figure 1 (On line display of control charts)


Figure 2 (Manufacturing Quality Index)

2. Ex-market. In a country of extreme climatic conditions variations and geographical spread, the product delivered in the market has already gone through a lot of stresses and strains in the transportation. It is not only the extreme hot/humid and extreme cold/dry weather which affects the product quality in the stages between the factory and the final consumer but also the transportation and storage conditions are not enviable and ass to the adverse effects of logistics activities on the product quality. So the company has also introduced a retail quality index (RQI). Samples are taken from the market and are analyzed for almost the same parameters as in MQI. The main difference between the two is that both mean and Standard deviation (SD) are considered in MQI whereas only SD is considered in RQI. One of the main reasons is that RQI is used for comparison with the competition brands, the targets of which are not known. Figure 3 shows the results of the RQI for the same period as MQI in figure 2.

Figure 3 (Retail Quality Index)

Market Complaints: The number of consumer complaints is measured in number of complaints per 100 million sticks shipped. Complaints by consumer are taken seriously and as mention earlier, regular market visits of machine operators are arranged to give them a feel of the market and voice of consumer. Each consumer complaint is analyzed to reach the root cause. Statistical and other quality improvement tools are used by the operators extensively in the analysis. As a result a considerable reduction in consumer complaints has been observed. Figure 4 shows the improvements in this area on year on year basis.

Figure 4 (Consumer Complaints)

About The Author: Turab Ali Khan is a graduate mechanical engineer with masters in Engineering Management. He has over 28 years of industrial experience in the fields of power generation, petrochemical and manufacturing industries. Has worked for both national and multinational organization and his main areas of interest remained production planning, product and process quality improvement, environment health and safety and people development. He has attended international courses and seminars in these fields both as participant and speaker. He presented papers on QFD and OEE. He is also a visiting member of the faculty in CASE (Centre of Advanced Studies in Engineering) Islamabad and teaches Enterprise Resource Planning (ERO), Supply Chain Planning and Productivity Improvement and Engineering Management.