PHILIPS

 CASE SUMMARY

Royal Philips Electronics is eighth on Fortune’s list of global top 30 electronics

corporations. The company is active in about 100 businesses, varying from consumer
electronics to domestic appliances, and from security systems to semiconductors.

Philips is among the world’s top three producers in many of its businesses, including
lighting, monitors, shavers, and color picture tubes for TVs and monitors. Translated
into figures, the company produces over 1.5 billion incandescent lamps every year,
and some 30 million picture tubes; and each day, the factories turn out a total of 50
million integrated circuits. PolyGram, a 75 percent subsidiary, is the world’s largest
music corporation.

The company initially concentrated on making carbon-filament lamps and by the

turn of the century was one of the largest producers in Europe. Royal Philips
Electronics is managed by the board of management, which also looks after the
general direction and long-term strategy of the Philips group as a whole. The ‘Philips
Quality Award’ (PQA-90) was the next challenge after ISO 9000, with its focus on
process management. Those units that achieved the desired PQA-90 level and thus
obtained the PQA-90 Award defined the next steps toward world-class performance.
BEST is a high-performance change engine that embraces the characteristics of the
Philips quality system and surpasses the PQA standards. BEST reinforces the
significance of the
tools and concepts of Philips quality for building the winning organization. Philips
believes that the BEST way to business excellence is through the continuous four-step
cycle of Plan, Do, Check, and Act.

 QUESTIONS
1. Describe the ‘quality journey’ in Philips, drawing a chart of activities
which a company in a similar industry could follow if it was beginning
the implementation of TQM.
Philips embarked on a process improvement program called BEST (Business
Excellence through Speed and Teamwork). They also incorporated other
instruments and approaches as an extension to BEST i.e. Philips Business
Excellence Model (PBE), Process Survey Tools (PST) and the Balanced Scorecard
(BSC)
After the ISO 9000 certification laid the establishment for persistent improvement,
Philips Quality Award was the next challenge. To achieve business excellence,
Philips chose the EFQM model for the entire organization.
Philips also facilitated the PQA-90 program that taught Philips the value of self-
assessment and made people in the company aware of the value of mutual learning
through peer auditing. In a similar way they applied the EFQM model within Philips
under the theme of ‘Reaching the BEST’ (Business Excellence through Speed and
Teamwork).
 Below is the chart that a similar industry can follow to begin the implementation of
TQM.

Through Philips journey so far, they have always been ahead of technological changes and
incorporating strategies that focus on the satisfaction of its internal and external customers.
They design drivers and processes to help deliver higher levels of customer value and quality,
boost growth, deliver winning solutions, and improve their results.
2. Evaluate the approach taken by Philips and offer constructive criticism and
suggestions for improvement.
The approach taken by Philips was well thought and organized. They focused on
management processes and considered every factor and aspect that contributes to facilitating
business excellence.
The Quality Program ‘Philips Business Excellence’ (PBE) also had a strong impact on the
effectiveness and competitiveness of Philips’ business performance over the last decades.
The power of ‘Philips Business Excellence’ lies in the fact that this program encompasses all
aspects of managing and improving a business, and in the complete involvement of all
managers and all employees in this ‘Journey for Excellence’.
We have no criticism or suggestions for improvement, as we can see their approach was very
well defined with impressive results.
3. What role has teamwork played in the development of business excellence
through speed and teamwork (BEST) in Philips?
In Philips, business excellence through speed and teamwork are the trademarks of running a
successful business. They characterize what the company needs to do to flourish and
prosper. The BEST process indicates how to implement the company goals, how to direct
and centre the endeavours – it is the motor that drives the implementation of what the
company wants: a secure and affluent position, presently and in the future.
Philips identified teamwork and speed as necessary components of business excellence. To
this end the company developed the Business Excellence through Speed and Teamwork
(BEST) process to focus on quality improvement. This process is an effective way to
encourage quality and excellence. In Philips, speed and teamwork is the vital component of
BEST model.
Employee contribution and involvement, understanding of “what” and “how” in
implementation of TQM initiative and feedback, employees at Philips take the responsibility
on quality of their own work, hence maximizing the outcome and achieving business
excellence. At Philips, people are brought together and united in the teams under relevant
condition and environment for teamwork which results in continuous improvement towards
the set goals.
By sharing knowledge and communicating every process decision with the employees,
Philips saw that they can be the best in achieving their goals through teamwork. It enabled
the employees to accomplish tasks faster and more efficiently than tackling projects
individually. Cooperating together on various tasks reduced workloads for all employees by
enabling them to share responsibilities or ideas. In sharing ideas or responsibilities, every
employee had a role that suits his specialization. That’s why Philips is able to be a step ahead
in comparison with their competitors.

 CONCLUSIONS AND RECOMMENDATIONS USING TQM

FRAMEWORKS
Philips BEST tools and competencies are very important in business excellence. The balance
scorecard tool at Philips concentrate on important factors that can lead to the success of the
business while providing the organization with different perspectives including competence,
processes, customers, and financial. In addition, the process survey tool presents a platform
for assessing business process and designing an enhancement plan that helps the team to
evaluate components to increase the performance of the process. With headquarter audits
that provides assessments used by the leadership to achieve business excellence. PBE
assessments also allow the identification of the areas that require upgrading and put the
necessary drivers to help increase business excellence.
Competence are very important in Philips particularly in managing business procedures that
produce products and service to meet clients’ needs. Like knowledge management is
regarded as an important competence for Philips, as such, the firm creates, acquires and
disseminates it and in turn converts it into business competence the fundamental source of
competitiveness. Professional competences such as manufacturing, professional, logistics,
and performance can be used to increase performance while leadership competencies
describe the conduct of each manager that is in turn applied to ensure business excellence.