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A. CONCEPT ‘QUALITY’

It is an accepted fact today that no organisation can progress, grow and be competitive unless it pays continuous attentionto quality of its products and services.

Responsibility for the attainment of quality at economic cost to satisfy the customer depends on all the departments of anorganisation.

There is no such thing as absolute quality. It is different for different people. Whether it is service or a product, qualitymatters.

Dr. J M Juran one of the pioneers of the quality philosophy defined quality as ‘FITNESS FOR USE’. Fitness for use will bechanging with time. It is dependent upon various factors such as successful progress in the field, changing expectationsof the customer and his preferences (affluence, knowledge, experience etc. influencing decision) availability and so on.

Fitness for use implies freedom from deficiency, including product features catering to customer satisfaction.

In simple terms, quality can be defined as product or service characteristic or feature that gives customer satisfaction.

If we divide quality as product quality and service quality there are steep changes in parameters for assessing them.

Product quality is decided based upon,

• Customer’s need

• Evolving specifications or designing to meet them

• Conformity to those specifications while making the product

• Keeping similar objective or vigil on bought out items and assemblies received from vendors

• Assured performance and safety

• Proper packing

• Timely availability or delivery

• Easy instruction for use

• Efficient technical service

• Feed - back to plant

• Incorporating customer feed-back in design features / manufacture

In case of service quality

• Speed of response

• Dependability

• Control

• Facilities etc.

became important factors.

ISO definition of Quality

The international organisation for standardisation (ISO) has defined various terms and concepts in the context of adoptionof Quality Management systems in an organisation. The standard ISO 8402 (1986) defines Quality as “Totality of allfeatures and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.”

B. WHAT IS QUALITY CONTROL?Quality Control is “The operational techniques and activities that are used to fulfil requirements of quality.”

In order to understand ‘Quality Control’ we should know how to achieve the Quality i.e. ‘Fitness for Use’. To achieve this‘FITNESS FOR USE’, which is ever changing, all levels have the responsibility to maintain quality and will be responsiblefor certain specified actions.

1. Concept of Quality, Quality Control, SPC, TQC and CWQC

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Top Management:

They have the responsibility to keep track of market conditions, customer reaction etc. This should be converted intodecision and converted as new product, or product with additional or changed features.

Middle Management:

Their job is to understand the requirement and cover them as working systems.

Junior Management / Work Force:

Understand the work systems and conform to the requirements in terms of standards / specifications.

All these functions have to be carried out in an integrated manner, each one keeping the two-way communication aliveand understanding the changing situations and requirements.

In other words everyone in their respective level should understand his/her responsibility, for which he/she should chooseappropriate units of measurement, establish these measurement, as well as standard of performance. Then, measurethe actual performance, interpret the difference and take action on the difference. This is quality control function for alllevels.

Dr. J M Juran explains it as follows:

QUALITY CONTROL

• choose control subjects - what to control?• choose units of measurements - establish measurements• establish standards of performance• measure actual performance• interpret the difference (actual versus standard) take action on difference

Dr. K Ishikawa says, “the very purpose of quality control is to develop, design, produce and service a qualityproduct which is most economical, most useful and always satisfactory to the customer.”

To sum up, Quality control activity in an organisation has to be carried out in an integrated manner at all levels from top tobottom, each level taking responsibility for quality in their sphere of activity, and only then can organisations make continuousimprovement and improve its competitive position.

C. WHAT IS STATISTICAL QUALITY CONTROL / STATISTICAL PROCESS CONTROL?

After having had an insight into the basic concepts of quality, the next question is how to control and achieve it. The firstapproach was given by Statistical Quality Control (SQC).

In the words of Dr. K Ishikawa “modern quality control, or statistical quality control (SQC), as we know it today, began in the1930s with the industrial application of the control chart invented by Dr. W A Shewhart of the Bell Laboratories.”

The second world war was the catalyst that made the control chart’s application possible to various industries in the UnitedStates when mere reorganization of production systems proved inadequate for meeting the exigencies of semi-wartimeand wartime conditions. However by utilising quality control, the United States was able to produce military suppliesinexpensively and in large quantity. The wartime standards published at that time came to be known as Z-1 standards.

From the above brief account, it is clear that application of control chart and other statistical methods played a key role inachieving the objectives of industrial production. Therefore SQC can be stated as “Application of Statistical Concepts

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and Techniques in Control of Quality in all areas.”

These statistics have five stages of statistical integrity

1. Collection of data2. Organisation of data3. Presentation of data4. Analysis of data5. Interpretation of data

Correct and factual data are a must for correct interpretation and sound decision-making.

When statistical system is used for process control purpose it becomes statistical process control.

D. WHAT IS TOTAL QUALITY CONTROL?

Dr. Armand V. Feigenbaum, who was working in General Electric Corporation U S A, originated the theory of “TotalQuality Control” . He published an article in Industrial Quality Control in May 1957 and wrote a book “Total QualityControl: Engineering and Management’’ in 1961.

Dr. Feigenbaum defined TQC as “an effective system for integrating the Quality development, Quality maintenance andQuality improvement efforts of the various groups in an organisation so as to enable production and service at the mosteconomical levels which allow full customer satisfaction”.

Thus, Quality Control can be considered as a function of every individual. Total Quality Control (TQC) is understanding thenecessity and importance of Quality Control by each and everyone and the entire organisation being engaged in that.

According to him, TQC requires participation of all divisions in an organisation. But, he felt that quality which is everybody’sjob in an organisation can become nobody’s job. He suggested that essentially Quality Control specialists might managethe quality function. But this was not acceptable to Japanese. They had some reservations about the definition given byDr. Feigenbaum. They wanted TQC approach to be people oriented and evolved their own version. Here is what Dr. K.Ishikawa has said about Japanese TQC or CWQC “ Between 1950-1960, we have been going through what may becalled the permeation of CWQC in Japan. When a company wants to apply CWQC, all the employees from top Managementto the foreman and workers study Quality Control methods and participate in Quality Control (QCC reports 1973 JUSE). Itbecame a reality when Quality Control Circles concept was pioneered in Japan in 1962. Quality Control no more wasconfined to Quality specialists or Quality professionals.

E. WHAT IS COMPANY WIDE QUALITY CONTROL (CWQC)?JAPANESE CONTRIBUTIONS TO QUALITY CONTROL

Japan had the knowledge of British standard 600 in the pre-war years and had them translated during wartime. But theydid not use them, as the mathematical language reportedly was difficult to understand and hence, lacked popular appeal.After the Second World War, military forces of USA stationed at Japan started to use quality control techniques intelecommunications area because that was the worst area that the occupied forces of America experienced with respectto Quality. This was the beginning of SQC use in Japan.

Japanese Standard Association established in 1945 evolved use of SQC for quality assurance under the JIS standardsagency. This was responsible for popularising it.

JUSE (The Union of Japanese Scientists and Engineers) a national body established Quality Control Research Group(QCRG) with members drawn from universities, industries and government. QCRG conducted its first main course in1949, but realised the necessity to change the systems to suit their country.

During the 1950’s Dr. W E Deming visited Japan at the invitation of JUSE and conducted seminar on SQC for managersand engineers. His seminar covered the following topics.

a) How to use PDCA cycle to enhance quality

b) The importance of having a feel for dispersion in statistics.

c) Process control through use of control chart.

Dr. J M Juran visited Japan on the invitation of JUSE in 1954. He conducted seminars for top and middle managementlevel, explaining their vital roles in promoting QC activities.

Dr. Juran’s visit made a transition in Japan’s quality control activities making it an overall concern of the entire management.

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His visit made them to realise QC as a tool of the management. This created an opening for the establishment of TQC orCWQC.

Japanese accepted the basic principles of quality, quality control and SQC system. They also understood Dr. A VFeigenbaum’s theory of ‘TQC’.

According to Dr. A V Feigenbaum, TQC requires participation of all divisions, including divisions of marketing, design,manufacturing, inspection, and shipping. Fearing that quality which is everybody’s job in a business can become nobody’sjob he suggested that quality function may be managed essentially by Quality Control specialists.

Thus the above problems are due to lack of involvement of production people. Therefore, from the beginning, the Japaneseinvolved all the divisions and all the employees in studying and controlling quality. The training received from Dr. Demingand Dr. Juran enabled them to change their orientation to Quality. (I.e. involving all employees right from the beginning).

They made Quality Control function a part of production function and called it Process Oriented Quality Control Systemor Company Wide Quality Control System ( but we will call it as TQC improvised version).

Definition of CWQC

“Control or management of Quality of all services, business, human beings etc. and control of everything but thisshould be executed through all departments, all employees that is from top management, middle management tothe bottom, QC Circle leaders, members and non-members”.

(Dr. K. Ishikawa)

Later on, Dr. A.V. Feigenbaum, agreed to the modification according to the changes made by the Japanese to his philosophyas an improvement over his theory.

Hence, today, when we talk about TQC, we talk about the one advocated by the Japanese and accepted by everyone. Thedistinguishing features of CWQC are

a) Quality first, profit next

b) Customer oriented Quality Assurance

c) Adoption of the concept ‘Next process is the Customer’

d) Application of SQC techniques

e) Practice of Quality Control Circles

f) Practice of Humanistic thought in management.

F. TOTAL QUALITY MANAGEMENT

If one looks at it carefully, it will be evident that Quality has become an important element for competitive success.But the initial approach for Quality was final inspection and postproduction adjustment. Quality was not viewed as aresponsibility of all employees. Quality function was separated from such areas as planning, design, production andsales.

In contrast to this approach, Japanese Companies adopted an innovative and integrated approach to achieve Quality.They have, no doubt learnt the basics from Dr. W.E.Deming and Dr. J.M.Juran. Dr. W.E.Deming taught them theimportance of statistical systems and mainly the use of control charts and gave a 14-point programme. Japanese ontheir own made a systematic approach to the adoption of statistical methods. Dr.K.Ishikawa insisted on everyonehaving a thorough knowledge of statistical methods.

Dr. Juran taught them the basic tenets of quality management for achieving total quality on a continuous basis viz.

a) Commitment to Quality at all times and top management leadership for Quality.

b) Continuous education and training on quality for all (Universal).

c) Annual plan for improvement of quality and cost reduction.

Ideas of Dr. W.E.Deming (14 points) and Dr. J.M Juran (3 Points) became the basic quality management principlesin Japanese companies. Japanese added an important dimension viz. Understanding the importance of grass rootlevel employees and their role in the achievement of quality. All these principles and practices became the foundationof Total Quality Management and what the Japanese termed as Company Wide Quality Control.

When we say Total Quality Management we mean a new approach to improve product Quality and increased customer

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satisfaction on a continuous basis by restructuring traditional management practices.

The main features of TQM are

a) Customer driven quality

b) Strong quality leadership

c) Continuous improvement

d) Action based on facts, data and analysis

e) Employees participation

f) Improved two way communication systems. (Top to bottom and bottom to top)

What we should understand is that TQM is not a particular way of function. It talks about certain basic principles thatare needed for proper functioning. Whatever quality concept one may adopt whether it is Total Productive Managementor Business Process Engineering or say even Six Sigma approach these basic ideas cannot be ignored. It has beendeveloped over a period and can be considered as a foundation for the development of all other new concepts, whichwe are aware of today or can be considered as a broad umbrella under which the new concepts can be fitted in.Hence one should not consider any new idea as a replacement for TQM philosophy.

How do we measure or find out whether an organisation has properly adopted TQM or not? There are many waysand means, but the most important ones are

i) Employees relation

ii) Operating procedures

iii) Customer satisfaction

iv) Financial performance.

Employees relation

If you find that there is an increased satisfaction among employees and they are regular in their work and highernumber of suggestions is received from them then we can say that there is a better employee’s relation. You will alsonotice less turnover, i.e. the number of people leaving the organisation would be less and there is improved safety andhealth. The Japanese strongly believe that “employees’ satisfaction precedes customer satisfaction”.

Operating procedure

If there is a higher reliability, prompt delivery, shorter order process time, error free production, better product lead time,lesser inventory, improved quality cost, higher cost saving and two way communication system we can say that thereis an improved operating procedure.

Customer satisfaction

The improved overall satisfaction, fewer or low complaints and higher customer relation reflect greater customersatisfaction.

Financial performance

Increased Financial performance is reflected by the higher market share, which means more sales, higher sales peremployee and better returns on investment.

Some people adopted TQM, paying attention to overall improvement, without giving special focus to areas that will givefinancial gain and strengthen the organization. But Pareto Principles, which is an essential tool used by all qualitypractitioners, emphasizes the importance for prioritization of the tasks.

Dr. J. M. Juran in his Quality Improvement Process in the first lesson states that Managers have to be ‘bilingual’i.e.should know the language of things and language of money. When putting proposals for improvement they shouldpresent it to the top management about the gains in terms of money.

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In the chapter one we have seen the progress of the concept of quality over the past decades. If one looks at it carefully,it will be evident that Quality has always been an important element for competitive success. But the initial approach forQuality was final inspection and post production adjustment. Quality was not viewed as a responsibility of all employees.Quality function was separated from such areas as planning, design, production and sales.

In contrast to this approach, Japanese Companies adopted an innovative and integrated approach to achieve Quality.They have, no doubt learnt the basics from Dr. W.E.Deming and Dr. J.M.Juran. Dr. W.E.Deming taught them the importanceof statistical systems and mainly the use of control charts and gave a 14-point programme. Japanese on their own madea systematic approach to the adoption of statistical methods. Dr.K.Ishikawa classified them as elementary statisticalmethods, intermediary statistical methods and advanced methods. He insisted on everyone having a thorough knowledgeof statistical methods. Dr. Juran taught them the basic tenets of quality process for achieving total quality on a continuousbasis viz.

a) Conviction to Quality at all times and upper management leadership for Quality.

b) Continuous education and training on quality for all (Universal).

c) Annual plan for improvement of quality and cost reduction.

Ideas of Dr. W.E.Deming (14 points) and Dr. J.M Juran (3 Points) became the basic quality management principles inJapanese companies. Japanese added an important dimension viz. understanding the importance of grass root levelemployees and their role in the achievement of quality. All these principles and practices became the foundation of TotalQuality Management and what the Japanese termed as CWQC.

When we say Total Quality Management we mean a new approach to improve product Quality and increase customersatisfaction on a continuous basis by restructuring traditional management practices.

The main features of TQM are

a) Customer driven quality

b) Strong quality leadership

c) Continuous improvement

d) Action based on facts, data and analysis

e) Employees participation

f) Improved two way communication system.(Top to bottom and bottom to top)

What we should understand is that TQM is not a concept but a philosophy. It has developed over a period and can beconsidered as a foundation for the development of all other new concepts which we are aware of today or can beconsidered as a broad umbrella under which the new concepts can be fitted in. Hence one should not consider any newidea as a replacement for TQM philosophy. How do we measure or find out whether an organisation has properly adoptedTQM or not? There are many ways and means, but the most important ones are

* Employees relation

* Operating procedures

* Customer satisfaction

* Financial performance.

Employees relation

If you find that there is an increased satisfaction among employees and they are regular in their work and higher numberof suggestions are received from them then we can say that there is a better employees relation. You will also notice lessturnover, i.e. the number of people leaving the organisation would be less and there is improved safety and health. TheJapanese strongly believe that “employees’ satisfaction precedes customer satisfaction”.

Operating procedure

If there is a higher reliability, prompt delivery, shorter order process time, error free production, better product lead time,lesser inventory, improved quality cost, higher cost saving and two way communication system we can say that there is animproved operating procedure.

2. BUSINESS EXCELLENCE THROUGH TOTAL QUALITY

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Customer satisfaction

Greater customer satisfaction is reflected by the improved overall satisfaction, fewer or low complaints and higher customerrelation.

Financial performance

Increased Financial performance is reflected by the higher market share which means more sales, higher sales peremployee and better returns on investment.

All these things are achieved by organisations focusing on customer quality requirement. In this effort of TQM dissemination,management should lead. They should empower the employees to continuously improve all the key business processes.The management has to nurture a flexible and responsive corporate culture. Management systems should support factbased decision making and another important aspect is partnership with suppliers.

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NTPC has embarked upon a very ambitious capacity addition programme for the company in X, XI and XII plan to becomea 66000MW company by 2017. The Construction and Equipment erection activities of ongoing and upcoming projectshave significantly increased and bound to multiply manifolds in near future. NTPC has also diversified into development ofHydro Power generation and Coal Mining Operation. R & M activities of ageing plants are taken up in a big way forimproved plant availability and efficiency. All These activities call for more concerted efforts in the area of Field QualityAssurance, to ensure that the processes have a continued focus on Quality.

The role of FQA is significant during erection and overhauling of units. In that perspective, FQA manual proves to be veryuseful and effective as it elaborates the framework in which FQA needs to work for successful erection & overhauling ofunits in a time bound programme. The FQA activities are guided and implemented as per system manual revised in 2006with the Doc. No QS-01-FQA-Q-00.

Objectives of Field Quality Assurance

Quality Assurance Organization in NTPC (Corporate level, Regional level and Project / station level) has been structuredto function in a systematic manner for all the Quality related activities during the various stages of design, engineering,procurement, manufacture, assembly, construction, erection, commissioning, operation and maintenance so as to ensureQuality and Reliability in all System, Materials and Equipment of Power Plants / Power Stations.

FQA Systems broadly describe the various management & working systems and procedures to be implemented at theProject sites so as to achieve the specified Quality, consistent with corporate objectives of Quality Management, keepingin view the specified project schedule to obtain high availability of equipment during Operation. This describes the func-tions and responsibilities of various Departments in respect of matters affecting Quality and identifies distinct interface ofsite functions amongst various departments of Corporate Centre, Region and Site. These also provide guidelines for auniform and integrated approach for systematized implementation of lied down procedures for all NTPC Projects / Sta-tions / Units. The FQA activities play a vital link in the Integrated Quality Management of a Power Project.

The activities related to the achievement of Quality Assurance are not prejudicial to the achievement of the time scheduleand emphasis should be on the advantages of Quality Assurance activities to achieve good Plant performance and highavailability in service, at the same time maintaining the time schedule.

Activities and Responsibilities of FQA

The overall responsibility and Authority for ensuring that all field activities are performed according to the laid down QualitySystems and fully complying with the approved design & code requirements and the Contract, rests with the Head of theProject / Power Station. The other concerned Departments, including FQA, shall function to achieve this.

Achievement of Quality is not only the responsibility of CQA, RIOs and FQA Departments, all other concerned Depart-ments, whose functioning will affect product Quality and Performance are also responsible and is not solely the domain ofthe FQA Function at Projects.

The FQA shall exercise control and authority on installation of a Non-conforming items or unsatisfactory conditions at siteuntil proper disposition has been affected. The authority of Head (FQA) includes the right to stop work, which does notconfirm to QP, drawings or specifications.

Authorization of erection checks as per field quality plans is in three categories :

Category – A The accepting authority is FQA Engineer and Surveillance by Head FQACategory – B The accepting authority is Executing Engineer and Surveillance by FQA Engineer.Category – C The accepting authority is Contract Engineer and Surveillance by Executing Engineer.

To review the quality and inspection/testing requirements in the Purchase specifications and finalize the QA requirement.

Co-ordinate with the external inspection and CQA Audit at Site.

Associate with Equipment Erection Contractor in all statutory inspection activities.

Ensure that all welding electrodes are approved by CQA.

Carry out Surveillance Checks during storage of materials and equipments as per FQA guide lines.

Finalization of maintenance quality Plans and categorization of the Checks along with documents and acceptance normsduring Overhauling / Capital Maintenance / Preventive Maintenance

3. FIELD QUALITY ASSURANCE

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Review of completed maintenance checklist.

Updation & regular calibration of testing equipments in FQA lab. , material handling equipments and construction equip-ment by NTPC/Constructor .

OTHER DEPARTMENTS INVOLVED

1. Equipment Erection / Construction / Execution Department.2. Materials Management Group at Site.3. Contract Services Group at Site.4. Field Engineering Dept.5. CQA6. Regional Inspection Services7. O & M

The above departments are responsible for field quality assurance activities –

Receipt Inspection of Materials at Site

Materials Storage and Preservation

Welding and Heat Treatment at Site

Calibration of Measurement and Testing Equipment

Construction Equipments

Dispositioning pf Non-Conformities

Quality Audit at Site

FQA for Site Awarded Contracts (Manufacturing as well as Execution)

FQA for Overhauling / Capital Maintenance / Preventive Maintenance

CORPORATE QUALITY ASSURANCE (CQA)

Activities and Responsibilities of CQA :

1. Finalizing all the Field Quality Plans (FQPs) and the Categorization of checks for Corporate awarded contracts

2. Providing Technical support and general policy guidelines to FQA at Project/Power Station.

3. Assisting FQA, wherever required, for Audit of Contractor’s FQA system.

4. Conducting periodic Audits on Project/Power Station activities, Identifying the quality issues and suggesting thecorrective actions thereon.

5. Dispositioning of Non-conforming items referred by FQA.

6. Apprising higher Management the status and adequacy of Quality Assurance systems through Audits and Re-ports.

7. CQA will inform the Head (FQA) and Head (Equipment Erection) or Head (O&M) (as applicable) regarding anypending works / tests, not performed at the manufacturing works on equipments but agreed to be carried out atsite after the equipments are cleared for dispatch to site by Inspection CQA will consult Head (FQA) regardingfacilities available at site before accepting such a proposal for carrying out such tests at site. CQA will also informHead (FQA) and Head (Equipment Erection or O&M) (as applicable) regarding deviations concurred / NCRDisposition Clearance during manufacture, which will have a bearing on site assembly and erection.

8. CQA will inform Head (FQA) and Head/ Equipment Erection about important testing programme like shopassembly and testing of Turbine and Turbine Generator, performance test of Boiler, Fans, Pumps, Testing ofEHV Transformer etc. to enable site involvement, if necessary.

9. To accord approval of Field Welding Schedule (FWS) for SG and TG Package and general purpose weldingelectrodes to be used at Sites for Corporate and Site awarded packages (Special purpose electrodes requiredduring O&M/Overhauling/R&M phase of the Project shall be finalized and approved by a committee at Site).

10. To ensure that topic of all final test report / QA documentation are sent to Head (FQA) for onward transmission toHead (O&M) for their reference and record during the course of commissioning and operation.

11. Standardization of FQPs and finalization of Reference FQPs (RFQPs).

12. Periodical review and issue amendment of FQA System Manual, as per requirement.

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4. ASSESSMENT AND SELECTION OF VENDORS

This procedure covers evaluation of Vendor for supply of Ancillary items, Raw materials, Intermediaries, Spares compo-nents, Equipments, Instruments, Machinery, Job work, Services, etc.

PROCEDURE

A. Identification of Vendors

Purchase identifies Vendors in the following ways :• Through self introductory letters• Trade Directories• Paper advertisements

B. Evaluation of Vendors

Purchase sends “Vendor Evolution Chart” to vendors, identified as mentioned above for filling up and return.

C. Visit to Vendors

For selection, depending on the criticality of items to be developed, Purchase/QA personnel may visit Vendor works eitherindividually or as a team, assess / verify the following.

• Plant/Equipment Capacity• Quality Assurance Systems in Operation.• Vendors quality rating as evaluated by existing customers• Financial soundness

However, visit to Vendor’s Works may not be made in the following cases :

• Vendor is well established.• Item to be developed, which does not effect product performance.• Foreign suppliers.

The decision of not visiting is taken jointly by QA and Purchase.

In such cases, Purchase negotiates with the Vendors for price, release letter of intent/Purchase Order and asks thevendor to supply samples of items for approval.

On approval of sample by QA, vendor is approved for bulk supplies.

VENDOR SELECTION REPORT

Whenever personnel visit Vendor’s Works, Vendor Selection Report is prepared.

Vendor Selection Report is signed by visiting Purchase/QA/personnel and given final assessment of vendor for develop-ment.

If selected for development, Purchase negotiates with Vendor for prices, release Letters of Intent/Purchase Order andask the Vendor to supply samples of item for approval.

On approval of samples by QA/User Dept., Purchase releases purchase order whenever letter of intent only has beenissued earlier.

Vendors become eligible for inclusion on approved vendor list after approval of samples.

SPECIAL CHARACTERISTICS TO BE MAINTAINED BY VENDOR

Vendors are provided with the Following :

Drawing with Special Characteristic identified.Process Schedule/Inspection Layout.Parameters and specifications for control of Special Characteristic.Tool Control affecting Characteristic.

In addition, all Special Characteristic are controlled by adequate sampling size at vendor premise and by receipt inspec-tion.

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PROCESSING THE PURCHASING DOCUMENTS

This procedure covers Processing of Purchasing documents for suppliers.

A. Preparation and Issue

Purchase prepares purchasing documents after finalization of prices and other terms and conditions with suppliers.

• Purchasing documents contain :

• Item/code/description

• Drawing No./With latest Revision No.

• Quantity

• Delivery Schedules

• Prices

• Payment Terms

• Mode of dispatch

• Special Instructions

• Items/Quantities purchased are based on average consumption during the previous year.

• In case of job works, the purchasing documents indicate the items provided by the company such as Raw Mate-rials, Tools, Gauges etc. and the details of the jobs to be performed by the Vendors.

• On Preparation, purchasing documents are reviewed and signed by two authorized signatories, as per officeorder.

• Purchasing documents are issued to supplier and copies are sent to Stores and Accounts.

B. Receipts, Inspection, Storage, Issue & Record Maintenance at Stores

The receipts of material in Stores in controlled by Control Register.

Detailed Work Instructions for Receipt Stores activities are as follows:

• Receipt of items in Stores

• Material Movement before Storage

• Storage of Items in Stores.

• Issue of Items from Stores.

• Maintenance of Records in Stores

C. Contingency Purchases

For purchase of stores and spares of contingency nature, the suppliers challan/invoice/cash memo duly authorized byPurchase is treated as Purchasing Document.

VENDOR RATING

This procedure covers Vendor Quality Rating, Delivery Rating, Overall Vendor Rating, Review of Rating and feedback ofvendors of ancillary items and bought out components. Special indent are procured by reputed suppliers/stockiest andretail dealers.

The responsibilities are as under :

• Vendor Quality and Supply Rating – QA

• Delivery Rating – Purchase

• Overall Vendor rating – Purchase

• Review of Overall Vendor Rating – Purchase

• Feedback to Vendors – Purchase

OVERALL VENDOR RATING

Overall Vendor Rating is evaluated by Purchase of Vendors. Overall Vendor Rating is combination of Quality rating,Supply Rating and delivery rating.

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Over Rating at 10 Point Scale Category

Above 8.0 A+Above 7.0 & upto 8.0 AAbove 6.0 & upto 7.0 BAbove 5.0 & upto 6.0 CBelow 5.0 D

SELF CERTIFIED VENDORS

Based on the past performance or vendor rating certain selected suppliers are self-certified to supply material from timeto time. Material received does not under go receipt inspection and issued directly to user departments. They are reviewedannually for quality / delivery performance by QA / Purchase.

REVIEW OF VENDOR RATING

QA prepares the Quality and Supply Rating. Purchase prepare the Delivery Rating and the Overall Vendor Rating (OVERRating).

FEEDBACK TO VENDORS

Based on the Over Rating, vendors are categorized into grades. Vendors are informed about their OVER Rating bypurchase for taking corrective action in the subsequent supplies.

RE EVALUATION OF VENDOR

Vendors graded “D” continuously for six months or incase the individual rating of Quality, Supply and Delivery Rating areless than 2.0 for six months are liable to be excluded from the approved vendor list. However CEO-Works may authorizeto continue procurement on the recommendation of Purchase / QA pending establishing alternate source.

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5. ISO 9000

1. WHAT IS ISO 9000?

The International Organisation for standardisation (ISO) brought out in 1987 a set of standards called ISO 9000 series ofstandards on Quality Management system.

This was brought in for the purpose of establishing a customer oriented quality discipline in marketing, design, engineering,procurement, production, inspection, testing and related service functions. Thus quality becomes everybody’s job.

In 1979 UK published Quality system standard as,

BS 5750 Part 1 : Specification for design, manufacture and installation.

Part 2 : Specification for manufacture and installation.

Part 3 : Specification for final inspection and test.

BS 5781 : Measurement and calibration system.

Throughout the World various Quality standard systems were getting established.

Seeing the interest, ISO Geneva published in 1987 a series of Quality system models to enable the world communities tostandardise on a common set of Quality System requirements.

The following constitute the ISO 9000 series.

ISO 9000 - 1 : Quality Management and Quality Assurance standards - Part 1 Guidelines for selection and use.

ISO 9000 - 2 : Quality Management and Quality Assurance standards - Part 2 General guide lines for the applicationof ISO 9001, ISO 9002, and ISO 9003.

ISO 9000 - 3 : Quality Management and Quality Assurance standards - Part 3 Guidelines for the application of ISO9001 to the development, supply and maintenance of software.

ISO 9001 - : Quality systems-Model for Quality Assurance in design/development, production, installation andservicing.

ISO 9002 - : Quality Systems - Model for Quality Assurance in production installation and servicing.

ISO 9003 - : Quality Systems - Model for Quality Assurance in final inspection and test.

ISO 9004 - : Quality Management and Quality system elements - Guidelines.

3. HOW DID THIS BECOME A CERTIFICATION SYSTEM?

In case of Britain, in July 1982 it published a white paper on standards.

The white paper announced the government’s intention to set up arrangements for the accreditation of certification agencies.

Accordingly an independent national accreditation council was established which has as membership, governmentdepartment, national industries, professional institutions, insurance and inspection experts and the certification bodiesthemselves.

This was established as an independant council by British Standard Institution’s royal charter.

There are four certification categories eligible for accreditation.

a) Certification of Quality Management systems.

b) Product conformity certificate.

c) Product approval.

d) Certification of personnel engaged in Quality verification.

4. WHY AN ORGANISATION SHOULD GO FOR ISO 9000 CERTIFICATION?

• The basic objective of every organisation is to attain excellence in economic performance.

• The most important factor for good economic performance is quality of products/services.

• Quality is the basic customer decision factor. Whether a buyer is a house wife, industrial organisation, governmentdepartment or defence programme, departmental store or importer, everyone wants to buy only best qualityproduct.

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• A buyer looks for an organisation which has established consistency in quality of products or services.

• Consistantly producing good quality product or service is very important for customer confidence and higherpositioning of buyer perceptions. Such an effort needs a set of rules or guidelines. This can be established atnational level but in the context of trading at international levels, rationalising and standardisation of nationalguidelines are the needed efforts. This is the purpose of ISO 9000.

5. HOW CAN ONE ESTABLISH THE QUALITY MANAGEMENT SYSTEM AND GET THE CERTIFICATION?

There is a need for a structured approach which includes preparation, implementation and certification.

a) Preparation - Awareness Training Programme

This calls for creating an awareness amongst all including grass root level employees about why we should go for ISO9000 certification, where we stand and what is our desired objective.

After awareness management should make clear of their committment to the system and form a committee andappoint a co-ordinator.

Then comes the necessary training for each and every one. The training time may vary from 4 to any number of hoursdepending upon the need but a training is a must for all. Next step is the choice of model. This is normally decidedbased on certain parameters like, customer need and the interface with him, complexity of the design process (Isthere any design process?) and its maturity, how complex is the process, characteristics of the product or service,safety and economic consideration. Above all we should have a clear time frame for implementation.

b) Implementation

First and foremost the organisation should review its business plan, policies and strategies and how they suit with theimplementation.

Next sensible step will be conducting a preliminary assessment of current status. All organisations have written downstandards, but the problem is their effectiveness. So understanding the status is very important.

Then draw out an action plan and get it approved by the Steering committee. Most important aspect in action plan isconsideration of how well and effectively the standard is established. While a quick action is essential it should notbecome the sole criteria.

Once action plan is drawn, next step is documentation.

Documentation involves preparation of quality manual, procedures, work instruction, quality plans and quality records.ISO 9000 calls for documentation of all work that will affect quality. The most important thing is establishing a guidelineexplaining the system to be adopted for documentation. Standard systems are available as a guideline for this purpose.

i) Quality Manual: This explains the Quality policy, quality aims and objectives, the organisational structure andfulfilling the ISO 9000 requirement.

ii) Procedures are the documents which describe how an activity is to be carried out.

iii) Work instruction are documents which specify how a job is to be done.

iv) Quality plans describe what are quality requirements, how they are to be verified, who will do and what measuringinstrument/equipment will be used.

v) Quality records are results of activities carried out as per the documented system.

Next step is not mandatory but advisable i.e getting a second party audit done. This is done by a customer overa supplier, persons from sister organisation or by an external agency knowledgeable (not the certifying agency)on the subject.

c) Certification

Now go for certification. For this contact accredited certification body and remit the required fee. On application thecertifying agency will carryout a document review(also called adequacy audit) i.e check up the documentation toensure that it covers all the aspects and fulfils the requirements of the chosen standard. Once the adequacy audit issatisfactory they carry out a conformity audit or compliance audit which is a ‘Third party audit’. Such an audit is carriedout in accordance with the ISO 10011 standard. On satisfactory compliance audit, the agency grants certificate andincludes the organisation in the certified list. Such a certification has a validity period (Currently it is 3 years).

But it does not end here. We have to ensure that the systems established do not die away. Hence the certifyingagency carries out surveillance audit as part of the certification scheme.

To ensure continuity, it is important to carry out internal Quality Audit regularly as per requirement of ISO 9000 standard.

Audit by customer also can be conducted on a regular basis.

After the expiry of the 3 years period recertification audit is carried out.

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6. Quality Manual?

There are many books available which detail out step by step method. A general guideline is given in ISO 10013. Thecontents of the manual are:

Introduction

This normally contains profile of company’s activities, its products and market, top management’s committment and atable of contents.

Quality Manual Management

This gives manual review, history of revisions carried out and names of registered holders.

Object of the Quality Manual

Here a description of the organisation, scope of the manual and normative references are given.

Upto this it is common for manufacturing as well as service organisations. Quality system requirements vary dependingupon the model chosen.

For ISO 9001 the system elements are

4.1. Management Responsibility

4.2. Quality System

4.3. Contract Review

4.4. Design Control

4.5. Document and Data Control

4.6. Purchasing

4.7. Control of Customer - Supplied Product

4.8. Product Identification and Traceability

4.9. Process Control

4.10. Inspection and Testing

4.11. Control of Inspection, Measuring, and Test Equipment

4.12. Inspection and Test Status

4.13. Control of Nonconforming Product

4.14. Corrective and Preventive Action

4.15. Handling, Storage, Packaging, Preservation, and Delivery

4.16. Control of Quality Records

4.17. Internal Quality Audits

4.18. Training

4.19. Servicing

4.20. Statistical Techniques

For ISO 9002

For this leaving Design Control (clause 4.4) all other sections are applicable

For ISO 9003

In this barring Design Control (4.4), Purchasing (4.6), Process Control (4.9), Preventive Action (4.14) and Servicing (4.19) all othersections are applicable.

For service organisations ISO 9004 - 2 is the model in which system elements are as follows:

4.1 Management Responsibility

4.1.1 Quality Policy and Customer Satisfaction

4.1.2 Organisation

4.1.3 Resources

4.1.4 Management Review

4.1.5 Continuous Improvement Programs

4.2 Quality System

4.3 Contract Review

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4.4 Service Design Control

4.5 Document and Data Control

4.6 Purchasing

4.7 Control of Customer- Supplied Product and Service

4.8 Service Identification and Traceability

4.9 Service Delivery Process Control

4.10 Inspection and Testing

4.11 Control of Inspection, Measuring and Test Means

4.12 Inspection and Test Status

4.13 Control of Nonconforming Service

4.14 Corrective and Preventive Action

4.15 Handling, Storage, Packaging, Delivery, and Protection of Customers’ Possessions

4.16 Control of Quality Records

4.17 Internal Quality Audits

4.18 Training

4.19 Servicing and Customer Feedback

4.20 Statistical Techniques

4.21 Interface with Customers

4.22 Service Quality Improvement.

This is followed by Procedures and quality plans (list or references) and terms and definitions

8. What are the advantages of ISO 9000 Quality System?

Major benefits are,

- Reduction in Quality Costs.

- Improvement in work culture and quality of products and services.

- Involvement and commitments of management and employees.

- Regular audit and management reviews establish good communications.

- Increased market share and customer confidence.

- To deal with only one certification agency.

- Benefits to the members of the organisation and society.

- Preference in foreign exchange entitlement.

- Improved pressure in national and international markets.

9. What is a sum-up of ISO 9000 standards?

• Standards on quality system and not on products.

• Complementary to products specifications.

• Twenty elements affecting quality.

• Organisations to establish their own procedures and implement.

• Management responsibility.

• Responsibility and authority of the departments well defined.

• Documented Quality System - quality manual and procedures.

• Training needed to all on quality system standard and organisation procedures.

• User friendly, logical and easily understood format.

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6. ISO 14000

Section 1 - EMS - Need, Scope and Benefits

1.1.0 Environment

Environment is defined as ‘surroundings in which an Organisation operates including air, water, land, natural resources,flora, fauna, humans and their interrelation.’

Surroundings in this context extend from within individual households to organisations and then to the entire globalsystem. Keeping the environment fit for living is the duty of every citizen and Organisation, because a clean environmentenhances the ‘quality of life’ of all species on the earth.

There is an increasing awareness by individuals and organisations to achieve and demonstrate sound environmentalperformance by controlling the impact of their activities on the environment.

1.2.0 Causes of environmental degradation

There are many causes that have contributed for the degradation in the environment. Some of them are populationincrease, ozone depletion, global warming, air pollution, water pollution and ecosystem disturbance.

1.2.1 Population increase

The World population is increasing rapidly. Current population is around 6 billion and will increase to 12 to 15 billion byyear 2100. There will be great demands on resources such as space, water and food. There will be serious pollutionproblems as a result of population growth.

1.2.2 Ozone depletion

CFC’s and other gases are responsible for attacking and reducing the thin layer of high-level of ozone 15 km up in thetroposphere. Ozone, the three atom form of oxygen is destroyed by the CFC’s and other similar chemicals which releasechlorine when exposed to sun light. The chlorine then attacks the ozone converting it into oxygen. During turbulence atthis height the ozone thins out, creating a hole which allows ultra violet light from the sun to the surface of the earth.

Ultra violet radiation has widespread effects on human health, crops, photo synthesis and ecosystems.

1.2.3 Global Warming

The mean temperature on the earth over the past 140 years has gone up by about 0.5 degrees Celsius. The green housegases that contribute to the global warming are as follows:

Green House Gas Contribution to Global Warming

Carbon Dioxide 50%

Methane 18%

CFC’s 14%

Ozone 12%

Nitrous Oxide 6%

1.2.4 Air Pollution

Air pollution is caused by several factors. Some of the major causes of air pollution are - smog, emissions from vehicleexhausts, release of hydrocarbons from industries.

Nitrogen dioxide, Carbon monoxide, solvents and complex hydrocarbons cause air pollution. Many different concernsmanifest themselves as ‘acid rain’. Acid rain, particularly caused by sulfurdioxide causes extensive damage to ecosystems.

Low level ozone generation from the release of hydrocarbons from industry and vehicles is a problem, particularly duringsummer when sunlight creates a photochemical smog. Air pollution is cause for many disorders like asthma, bronchitis,eye infections and headaches.

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1.2.5 Water Pollution

Water pollution is caused by nitrates from agricultural operations, discharges from factories either directly or throughwater treatment plants, sewage discharges, spillage of chemicals, run-off from mining and quarrying operations andground water contamination due to landfill sites.

Classification scheme for river and canal water is as follows:

Class Potential Use

1A-Good Drinking water. High quality fisheries.

1B Less high quality, but can be used for the same purpose as 1A.

2-Fair Potable water after treatment. Can be used for coarse fisheries.

3-Poor Polluted. No fish. Low grade industrial use. Further use if cleaned.

4-Bad Polluted water. Not recommended for use.

1.2.6 Ecosystem Degradation

In pursuit of industrialisation, large scale destruction of geographical regions is causing massive degradation of theecosystem. Inadequate planning and poor management of the resources are resulting in destruction of rain forests andupland regions. Exploitation of forests for wood (as industrial raw material, fuel and construction material), mineralextraction and construction of dams for irrigation and power generation are creating imbalance in the ecosystem.

1.3.0 Environmental concerns

Managements of Business organisations are under constant pressure from various groups like Legislation, Customers,Markets, Insurance, Public and Media to achieve and demonstrate sound environmental performance.

1.3.1 Legislation

Organisations need to adhere to the statutory and regulatory requirements applicable to the country to be in business.There is no equal pressure in all the countries. In developed and advanced countries, the legislation for protection ofenvironment has become a high priority.

Environmental regulatory bodies, like the Pollution Control Board play, a significant role in the implementation and monitoringof the legislative requirements.

1.3.2 Customers

Individual customers and corporate customers would like to purchase products from manufacturers who are committed toenvironmental protection. Eco-Label award or certification to ISO 14000 EMS standards provides confidence to thecustomers that the suppliers are committed to environmental protection and improvement.

1.3.3 Market Trends

Environmental issues have influenced the consumption patterns of many products. Manufacturers need to study themarket trends to prepare the business plans. Some examples of this changing trend are

• Usage pattern of pesticides, refrigerants and solvents

• Reduction in the use of solvents due to water based alternatives

• Alternatives to wood being developed

• Usage of sodium hexafluoride as insulating gas under threat

1.3.4 Insurance

Insurance companies are creating pressure on the industry to institute an EMS by providing tailored insurance policiesthan general policies. Pollution liability is restricted to sudden and accidental and no cover for gradual pollution incidents.

* Sudden and accidental-Bhopal, Chernobyl etc.,

* Gradual - Disposal of toxic waste by burial

- Leakage of pipes, tanks or pits

- Discharge into streams or rivers

- Release of fumes into atmosphere

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1.3.5 Public and Media

Public consisting of local residents, organisation’s workforce, investors and insurers, customers and environmental interestgroups like Greenpeace and Friends of the Earth are creating awareness on environmental issues. Wide usage of theInternet and government regulations will lead organisations to provide information on the environmental performance.

1.4.0 Environmental Management Systems - Need

Organisations of all kinds are increasingly concerned to achieve and demonstrate sound environmental performance bycontrolling the impact of their activities, products and services on the environment taking into consideration theirenvironmental policy and objectives. The Environmental Management System of an organisation is expected to meet thefollowing needs:

* Meet the regulatory, and legislative requirements.

* Improve the control of the environmental impact.

* Provide confidence to the customers that the products and services are manufactured with the aim of reducing thenegative impact on the environment.

* Suitably accommodate changing market trends and gain competitive edge.

* Reduce the costs associated with environmental liabilities and Insurance.

* Gain public and media support.

1.5.0 Environmental Management Systems - Scope

The Environmental Management System enables an Organi-sation to formulate policy and objectives taking intoconsideration legislative requirements and significant environmental impacts and specifies the environmental performancecriteria. The scope of the Environmental Management System of an orgnisation consists of :

* Implement. maintain and improve EMS.

* Conformance to the stated policies and objectives.

* Demonstrate conformance to the EMS through certification.

Environment Management System of an organisation shall consider the following issues:

* Improvement to the Quality of life

* Benefits to society

* Commitment to the future generations

* Minimisation of environment risk

* Prevention of pollution

* Environment care and continuous improvements

* Save resources

1.6.0 Environmental Management Systems - Benefits

Environmental Management System benefits the organisation as well as the society. Significant benefits of the EMS are

* Assurance of policy implementation.

- Forces organisations to link policy to objectives and targets.

- Policy linked to operations and activities.

- Management involvement.

- Compliance with the regulatory requirements.

- Continuous environmental improvement.

- Spot and correct potential problems.

* Technology tie-ups.

- Multi-national companies (MNCs) would like to provide technology to companies which have implemented EMS.

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7. QUALITY CIRCLE CONCEPT AND PHILOSOPHY

BEGINNING OF QUALITY CIRCLE

While Dr. Deming taught the Japanese management Statistical Quality Control, Dr. Juran taught them Quality Management.Dr. Juran explained that Quality Management is attainable if the following THREE Strategies are implemented in anorganisation.

i) Upper management leadership for quality.

ii) Massive education on quality related subjects (Top-bottom)

iii) Annual Quality improvement plans and annual cost reduction plans and their implementation.

Later in April 1962, when the magazine “Gemba to QC” (QC for foreman) was published Dr. Ishikawa wrote that the studygroup be renamed as Quality Control Circles.

It is necessary to recognise here that Japanese started QC circles long after all management had been trained inQuality control and CWQC was put into operation i.e., Quality Circle came at the end of the total programme ofimplementation of Quality Control. Against this some organisations in India attempted starting Quality Circles withoutpractising CWQC or TQC and hence, failed.

The Quality Circle or Quality Control Circle concept originated in April 1962, and this idea was presented in theinaugural issue of the JUSE's journal 'Gemba to QC' by Dr. K. Ishikawa. He described Quality Control Circle as,

- a small group

- to perform Quality Control activities

- voluntarily

- within the same workshop/workarea

- the group continuously carries on QC activities

- as a part of CWQC

- for self-development and mutual development

- thereby control and improvement within the workshop

- utilising Quality Control techniques

- with all members participating.

In the last four decades Quality Circle concept has been introduced in as many as 130 countries. But Quality Circleconcept is well established only in ASEAN countries like Japan, South Korea, Peoples Republic of China, Taiwan etc.

Based on the experience and knowledge gained over 30 years and more 'JUSE' the apex body for the movement inJapan modified the definition of the concept in 1995. Original and Revised Versions are shown here.

The revision was with a view to rectifying certain misconceptions and deviations in its practice, particularly outsideJapan.

Revised

A. QC Circle is a small group in which people who work in the first line work place , continually improve andmaintain the quality of products, services, job and so on.

This small group promotes the activity in such a way as to autonomously administer it, utilize the QC conceptand technique and others, display creativity and make self development and mutual development.

This activity intents to:

* Develop their capability, perform the self actualization for QC Circle members, make its work place full of brightnessand vitality.

* Enhance customer satisfaction and make a social contribution.

B. The executives and the mangers in order to make QC Circle activities successful, contribute to improving theenterprises, constitute and implement company wide TQM or similar one by themselves. Facilitate the environmentfor the activity and continually, conduct appropriate guidance and support based on the respect to humanity, aimingat the participation by everybody and positioning the activity as important for human resources development andwork place utilization.

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As may be seen from the Revised Version, it clarifies many important points. This version can be broadly dividedinto two aspects i.e.,

A. Connected to workmen.

B. About managerial responsibility and activities needed to be carried out by them to ensure QCC's success.

A. Work man aspect

a. It is a small group activity for the workers in the first line work place i.e., for grass root level employees.

b. The role of QCs:

i. to continually improve and maintain the quality of products, services, jobs and so on.

ii. it is autonomously administered.

iii. to utilize the Quality Control concept, technique and others i.e., utilizing elementary statistical system,planning tool, new seven tools etc.

iv. to bring about self-development and mutual development of the grass root level employees by enhancingtheir capabilities to reach self-actualization level.

v. to make workplace better and with full of brightness.

vi. to enable them to function on their own (autonomously) thereby empowering them and increasing customersatisfaction (internal and external).

vii. customer satisfaction comes by (producing) high quality product at lower producing cost, free from defects,timely delivery and prompt service.

viii. make social contribution. After all industries or service organisations exist in society to contribute to the well-being of society.

B. Managerial Responsibility

In order to make QC Circle successful and contribute to the enterprises, Managers/Executives,

i. should implement TQM or such similar philosophy by themselves so that they can fulfil the primary responsibilityto enterprises.

ii. should use the knowledge gained through TQM to create an environment for conducive Quality Circle activities.

iii. continually give appropriate guidance and support.

iv. based on respect for humanity.

v. ensure participation from every person in the Quality Circle.

vi. should position Quality Circle as important to human resources development and work place utilizations.

The above mentioned revised concept answers many questions often raised by many people on distinctive role ofemployees in Quality Circles and the management.

The three dimensions of Quality Circles can be epitomised as Humanistic, Scientific and Spiritual.

The most important aspect of Quality Circle is making the man first. This is amply borne by the statement of Mr.Matsushita (the proprietor of Masushita Corporation) who said “we make people before we make the products”.

HOW TO INSTITUTIONALISE QUALITY CIRCLES?

We can call installing and sustaining as institutionalising. This process in an Indian organisation has three phases. First,understanding of the QC philosophy through literature and orientation programmes for top management down to grassroot level personnel. Second, launching of pilot Quality Circles and acquisition of experience and success. Third isInstitutionalising the Quality Circles.

A general frame work for institutionalising will be presented here. However, depending upon localised situation in aparticular organisation, some changes may be done.

Steps to Institutionalise

a) Training:

Proper training is basic to QC movement. Therefore training is required to be given at different levels from seniormanagement to grass root personnel. The various modules for training are presented in later chapters.

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b) Steering Committee:

Steering committee should meet once in two months and review in-depth the functioning of Quality Circles. This willenable in taking corrective steps whenever necessary.

c) Quality Circle operation system.

System for Quality Circle operation should be drawn up and incorporated in the Quality Assurance Manual. This willensure legitimacy and enjoin executives and managers to support and guide QC’s, thus becoming accountable forperformance of QC’s in their spheres of responsibility.

d) Periodic reviews

Every division/section within an organisation should set apart one day in a month for middle management presentation byQuality Circles in that section. Even partially completed studies can be presented. Like wise Divisional Heads shouldreview once a month the status of Quality Circle activities in their division alongwith review of Quality status and initiatecorrective steps where called for.

e) Competitions:

QC competitions should be conducted regularly Division-wise and unit - wise for multi unit organisations annually andtrophies awarded to winning circles and mementos given to all participating circles. This will enable every Quality Circle tohave a chance to participate in any one of the levels of the competitions like heats 1,2,3 in sports. No Circle would feel thatthey did not have the chance to participate in a big event.

f) Recognition to best performing circles:

Consistently best performing circles should be nominated to regional and national conventions (preferably the entiregroup of members), the selection should be made through an impartial panel of judges and if the norms for selection areinformed to the circles in advance there will be no room for dissatisfaction. Best performing circle could be asked topresent its study before the “Board of Directors” at the Board’s meetings. This will be another means of motivation.

g) Periodic Assessment:

A periodic assessment as to the health of Quality Circle should be conducted by the coordinator. The study of observationsand actions called for should be presented to the steering committee. (Assessment could be once in 6 months or 12months). This will enable remedial actions before it is too late.

h) Publicity / Communication

An exclusive Magazine/Newsletter for publicising circle activities, making it as a vehicle of communication for the QCmembers and others should be brought out periodically.

i) Participation in Chapter / National Conventions

This must be provided for in the annual plan of Quality Circle activities. Circles should be informed well in advance of suchevents and they should be allowed to participate.

j) Budget Provision

A formal provision of budget for Quality Circle activities - training, publication, unit convention, participation in chapter andNational Convention etc. should form a part of TQC budget in the company to enable management of circles successful.

k) Other aspects:

Quality Circle projects need not always be major ones. Even smaller improvements of incremental nature should bewelcome and a record of such improvements maintained divisionally and centrally. They could even be stratified,computerised, and compiled annually. Such compiled record would be useful for evaluating best performing circles andalso serve as an educational tool for future generation of circles.

A certificate of appreciation can be issued to circles coming up with 100 or more such improvements in a year. More oftenthan not, such contributions by circles are ignored and Executives often remark “they have not made more than 1.5 or2 case studies in a year. At this rate, we should consider the progress as unsatisfactory”. Such remarks areuncharitable to the Quality Circles who have been, indeed making small improvements continuously.

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If one looks at it carefully, it will be evident that Quality has become an important element for competitive success.But the initial approach for Quality was final inspection and postproduction adjustment. Quality was not viewed asa responsibility of all employees. Quality function was separated from such areas as planning, design, production andsales.

In contrast to this approach, Japanese Companies adopted an innovative and integrated approach to achieve Quality.They have, no doubt learnt the basics from Dr. W.E.Deming and Dr. J.M.Juran. Dr. W.E.Deming taught them theimportance of statistical systems and mainly the use of control charts and gave a 14-point programme. Japanese ontheir own made a systematic approach to the adoption of statistical methods. Dr.K.Ishikawa insisted on everyonehaving a thorough knowledge of statistical methods.

Dr. Juran taught them the basic tenets of quality management for achieving total quality on a continuous basis viz.

a) Commitment to Quality at all times and top management leadership for Quality.

b) Continuous education and training on quality for all (Universal).

c) Annual plan for improvement of quality and cost reduction.

Ideas of Dr. W.E.Deming (14 points) and Dr. J.M Juran (3 Points) became the basic quality management principlesin Japanese companies. Japanese added an important dimension viz. Understanding the importance of grass rootlevel employees and their role in the achievement of quality. All these principles and practices became the foundationof Total Quality Management and what the Japanese termed as Company Wide Quality Control.

When we say Total Quality Management we mean a new approach to improve product Quality and increasedcustomer satisfaction on a continuous basis by restructuring traditional management practices.

The main features of TQM are

a) Customer driven quality

b) Strong quality leadership

c) Continuous improvement

d) Action based on facts, data and analysis

e) Employees participation

f) Improved two way communication systems. (Top to bottom and bottom to top)

What we should understand is that TQM is not a particular way of function. It talks about certain basic principles thatare needed for proper functioning. Whatever quality concept one may adopt whether it is Total Productive Managementor Business Process Engineering or say even Six Sigma approach these basic ideas cannot be ignored. It has beendeveloped over a period and can be considered as a foundation for the development of all other new concepts, whichwe are aware of today or can be considered as a broad umbrella under which the new concepts can be fitted in.Hence one should not consider any new idea as a replacement for TQM philosophy.

How do we measure or find out whether an organisation has properly adopted TQM or not? There are many waysand means, but the most important ones are

i) Employees relation

ii) Operating procedures

iii) Customer satisfaction

iv) Financial performance.

Employees relation

If you find that there is an increased satisfaction among employees and they are regular in their work and highernumber of suggestions is received from them then we can say that there is a better employee’s relation. You will alsonotice less turnover, i.e. the number of people leaving the organisation would be less and there is improved safetyand health. The Japanese strongly believe that “employees’ satisfaction precedes customer satisfaction”.

8. Total Quality Management

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Operating procedure

If there is a higher reliability, prompt delivery, shorter order process time, error free production, better product lead time,lesser inventory, improved quality cost, higher cost saving and two way communication system we can say that thereis an improved operating procedure.

Customer satisfaction

The improved overall satisfaction, fewer or low complaints and higher customer relation reflect greater customersatisfaction.

Financial performance

Increased Financial performance is reflected by the higher market share, which means more sales, higher sales peremployee and better returns on investment.

Some people adopted TQM, paying attention to overall improvement, without giving special focus to areas that will givefinancial gain and strengthen the organization. But Pareto Principles, which is an essential tool used by all qualitypractitioners, emphasizes the importance for prioritization of the tasks.

Dr. J. M. Juran in his Quality Improvement Process in the first lesson states that Managers have to be ‘bilingual’i.e.should know the language of things and language of money. When putting proposals for improvement they shouldpresent it to the top management about the gains in terms of money.

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9. COST OF QUALITY

The conventional accounting processes are not able to catch the cost of quality efficiently. It is not uncommon forcompanies to estimate the cost of quality to be around 3 to 7 %. This is generally a low or poor estimate. Quite often costof quality may be as high as 15 to 25% of total sales. Generally costing systems account for the defects, wastes andrejections. What slips from their system is the cost of inspection, testing, attending on calls regarding defective products,cost of receiving them back, cost of analyzing the defectives received, review meetings of such analysis etc. They areconveniently not accounted in the cost of quality. The matter does not end there. Rework, retesting, repacking, reship-ping, redelivery and re-demonstration to the customers cost a lot. Some market share loss may also be there.

Also usually accounting systems miss the time factor of reworking while they are efficient in accounting for wastes. If allthese factors are taken into account, then it will not be surprising that cost of quality may be around 15 to 25%. A lowerestimate of 3 to 7% makes the companies complacent.

The above is from the manufacturing angle. More often, equal amount of errors do occur by not noting the right addressto be delivered, errors in dispatches etc. These come under error in quality of service. Usually such service errors are notmuch highlighted. But these do cost to the company.

From a long time Quality Gurus have been emphasizing this factor of Quality Cost. Quality Cost is taught as a separatesubject wherein how to segregate them as prevention cost, appraisal cost and failure cost is explained.

Prevention Costs: Costs of activities that are specifically designed to prevent poor quality, such as prior inspection ofmaterials supplied, sensory devices, etc.

Appraisal Costs: Costs of activities designed to find quality problems, such as code inspections and any type of testing.

Failure Costs: Costs that result from poor quality, such as the cost of fixing bugs and the cost of dealing with customercomplaints.

a. Internal Failure Costs: Failure costs that arise before your company supplies its product to the customer, alongwith costs of finding and rectifying, including costs like lost opportunity.

b. External Failure Costs: Failure costs that arise after your company has supplied the product to the customer, suchas customer service costs, or the cost of replacement and any other payment made in lieu of that. Some of these costsmust be treated with care, for example, the cost of public relations efforts to soften the publicity effects of adverse publicityabout our product or service or about the organization.

Total Cost of Quality: The sum of costs: Prevention + Appraisal + Internal Failure + External Failure.

Once the project manager or quality manager starts measuring the cost of quality including all the components we men-tioned in the beginning of this section, we will get a real insight into the right figures. Definitely at some point law ofdiminishing returns will start showing up. It is at that point; the company or the manager has to decide whether there arealternate ways of doing the product/process.

Cost Of Poor Quality (COPQ)

The cost of quality, or more accurately the cost of poor quality (COPQ), was described by Dr. J.M. Juran as “the sum of allcost that would disappear if there were no quality problems”. This definition applies to all sectors; and to for-profit and non-for-profit organizations.

COPQ consists of those costs which are generated as a result of producing defective materials.

This cost includes the cost involved in fulfilling the gap between the desired and actual product / service quality. It alsoincludes the cost of lost opportunity due to the loss of resources used in rectifying the defect. This cost includes all thelabor cost, rework cost, disposition costs, and material costs that have been added to the unit up to the point of rejection.COPQ does not include detection and prevention cost.

Cost Of Non-Conformance

COPQ should contain the material and labor cost of producing and repairing defective goods, you can include a portion ofthe appraisal cost if you have an inspection point, but never should you include prevention costs.

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Cost of Poor Quality from Suppliers

Suppliers can generally affect our cost due to :

a. Producing defective materials

b. Damaging materials during delivery.

Our COPQ will generally cover the followings :

1. Cost of labor to fix the problem.2. Cost o extra material used.3. Cost of extra utilities.4. Cost of lost opportunity.

a. Loss of sales/revenue (profit margin)b. Potential loss of market share

COPQ Assessment – The First Step

A COPQ assessment is an important first-step for organizational transformation. It involves the identifying the key valuecreation, and support process of an organization; and therefore quantifying the chronic waste in these processes, in thelanguage of management – Money !

Some Examples of COPQ are :

Scrap; Rework; Downtime due to failure; Warranty claims; Lost sales; Complaint investigations; Price discounts due toquality problems; Excess allowances for material, labour, and expenses that are built into company standards; Annualinventory write-downs; Accounts receivable write-offs; Rarely used information systems; Memos never read; Financialreports not used; Irrelevant procedures; Meetings with no objectives or outcomes; and many more…………………..

Stapes for COPQ Assessment

1. Identify Activities That Result In Poor Quality2. Decide How To Estimate Cost Of Activities3. Collect Data4. Estimate Costs5. Analyze Cost6. Identify Major Opportunities7. Improve Quality

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10. THE CASH-TO-CASH CYCLE

A lean business is a stream of value adding activities that culminate in satisfying the needs of a customer. The key agentsare people, equipments and Cash. Yes, cash is a factor that fuels value stream activity. It is used to acquire and supportactivity by other factor of production. Its availability for service constraints is its utility i.e. when it is not available, it cannotbe adding value and therefore a loss and west. When cash sits locked up and out of reach such that it can not be investedin activities that enhances the value, this is also non-productive and a loss.

One way to detect how lean you are operating with regard to Operating Capital – the funds available for use in day to dayactivity of a business - is to measure the length of the cash to cash cycle.

The cash to cash cycle calculates the time cash is out of reach for use by your business. The speedier your cash to cashcycle, the fewer days your cash is unavailable for use. This can be used to know whether you are operating lean withregards to cash and also good performance on the cash to cash measurement is associated with the improved earningsper share.

Cash Out Of Reach

Your business’s cash is out reach when it is uncollected customers and when it is soaked up by inventory that sits on theshop floor, in office storage areas, or on computer disks.

Uncollected payments are termed “receivables” and are reported on your business’s balance sheet. How quickly a receiv-able is registered and how long it sits uncontrolled is determined by your business’s order-to-cash-receipt value stream.

Inventory is cash converted into materials and intermediate outputs that are not ready to benefit a customer. Think ofinventory as a cash absorbing sponge. As long as inventory sits, it holds your cash captive. How long it sits is a functionof how well your supply chain and production value streams are synchronized with customer demand. When thesesystems flow, are pulled by the customer, and free of all waste – inventory is zero.

Desired Result of Cash – To- Cash Cycle

In a truly Lean system, there is no value in any value stream. Goods are not manufactured or shipped to the customerunless “pulled” and they are produced by production systems that flow continuously without reliance on inventory. Rawmaterials are not acquired and processed unless a customer demands a finished output. Customers are billed and payimmediately upon receipt of a purchased product or service. In its ideal state, it is a just-in-time system from the origins ofits supply chain through to the receipt and payment by its customer. In this scenario, the lean producer also pays itssuppliers upon receipt as its customers pay upon delivery. There are zero receivables, inventory, and payables and thusa zero day cash-to-cash cycle time. Although a zero=day cash-to-cash cycle is truly Lean, your business approaches itsbest achievable state progressively by shorting the cycle times it initially displays.

While a shorter cash-to-cash cycle is generally considered a positive indicator of Lean operation, you need to look deeperto be sure. You can achieve shorter or even negative cycle times by means that are inconsistent with Lean.

To properly evaluate your cash-to-cash cycle performance, you need to analyze your cycle time in conjunction with otherinformation.

How To Improve Cash To Cash Cycle

To improve cash-to-cash cycle begin internally. Start by reducing inventory and increasing inventory turnover. This willspeed the cash-to-cash cycle.

Speed the invoicing process, reduce billing errors, speed response to overdue bills and reduce the incidence of baddebts.

As your cycle time and error rates come down, cash become available for timely payment to suppliers and redeploymentin business.

Develop a supply chain that reliably provides you exactly what is needed, when it is needed, with the least waste incurredon the part of suppliers. This will minimize both inventory and the cash you need to spend for the business.

28

IntroductionQuality Circles commonly use certain basic techniques to identify, analyse and resolve problems. They are:

1. Flow Diagram

2. Brainstorming

3. Data Collection

4. Cause & Effect Diagram

5. Stratification

6. Pareto analysis

7. Histogram

8. Graphs

9. Scatter Diagram

10. Control Charts

These techniques, though simple, are very powerful ones and they help the circles in investigating the causes for theirwork related problems and find solutions in a scientific way.

1. FLOW DIAGRAM

Flow Diagram was introduced and popularised by early computer programmers. For a long time, they were identifiedsolely as a computer programming tool. Today, they find application in a wide variety of areas. It is because of theirusefulness as a tool in:

representing any information in a simple straight-forward manner, and

analysing the logic of any operation. They directly appeal to the analytical human mind and hence they are very easyto understand.

Any written information on an operation can be broken into easily understandable packets and then arranging themin a sequential order results in a flow-diagram (also known as flow chart). Flow diagrams can be used in problemsolving and thus as a good quality improvement tool.

Concept of Flow-diagrams :

Definition:

A flow diagram is a graphic representation of the sequence of steps that we perform to produce same output. Theoutput may be physical products,a service information or a combination of the three.

Symbols used in flow diagram: Flow diagrams constructed using the following set of basic symbols .

Activity Symbol

Decision Symbol

Terminal Symbol

Document Symbol

11. PROBLEM SOLVING TECHNIQUES

29

Database Symbol

Flowline Symbol

Connector Symbol

These basic 7 symbols are used to show the actual sequence of steps in a process, running consistently from topto bottom or left to right.

Flow diagram is used to understand clearly the various steps involved in a process sequentially and for analysing thelogic of the process.

In the context of Quality Circles, the flow diagram can be used as the process flow chart representing the sequenceof operations/steps used for explaining the problem background/present situation and highlight the problem area takenfor solving. The same can be shown after the problem is solved and implemented.

2. BRAINSTORMING

Stimulating generation of ideas in a group is done through brainstorming, which is more effective than trying togenerate ideas alone. Brainstorming helps to release the creative power of the group. It also helps effective groupparticipation. Its effectiveness would increase with the skill of its application by the leader.

Brainstorming is generally used at four stages by Quality Circle:-

1. While listing out the problems,2. While listing out the probable causes influencing the effect,3. While foreseeing the possible resistance to the solution4. While listing out the suggestions/recommendations.

After all the ideas are exhausted and the brain storming is over, each one is taken up for detailed discussion and aconsensus is arrived at based on the merit of each one of the ideas. An agenda made available to members priorto the meeting, would enable them to think about the topic in advance and come prepared with ideas when the sessionstarts. It would be useful to keep record of ideas pooled through brainstorming for future reference.

Guidelines for Brainstorming :

Each member, by rotation, is asked for the ideas (this continues until all ideas are exhausted),

Member having no Idea, just says ‘Pass’,

No idea should be treated as stupid (criticising or ridiculing any idea would inhibit free flow of ideas),

Rigid formality may be avoided. Good natured humour inclarity of expression,

No evaluation of ideas is done during brainstorming.

A black-board or large sheet of paper could be used for listing out the ideas.

Brainstorming technique can be fruitfully used to identify problem affecting the work area, factors which help preventpotential problems, causes responsible for problems, solutions to problems etc.

3. DATA COLLECTION

Data are nothing but collection of facts in terms of figures, which gives a clear picture of work situation and allowsfor comparison. Data collection forms the first step in statistical analysis of a problem. It would also form a soundbasis for decision making and corrective actions. The analysis and solution would depend on the correctness andaccuracy of data.

Why Data?

Data forms the sound and scientific basis for decision making and corrective steps. By collecting data, we will be ina position to focus attention on the problem or pinpoint it. Based on the data and analysis alone we can identify thecause/causes, analyse further and recommend solutions to any problem.

30

Type of Data:

Generally data can be two types. One is measurable Eg. Length, weight, time etc., (Variable) and the other one iscountable data Eg. Smooth running of a machine, smell etc. (attribute).

Sources of Data:

There are two sources of data, past data (previous records, previous feedback) and live data (Current observations).

Past Data:

In many cases the required data will be readily available with some agency or recorded through a feedback systemand the data so available are termed as “Past data”. The past data helps to have a preliminary study and to understandthe causes of the problem.

Live Data:

Where such a recorded data is not available we have to systematically collect data through fresh observations overa period of time and this is termed as “Live Data”.

The advantages of Data are:

Biased opinions or personal impressions are eliminated.

The magnitude of the problem will be known,

One would have specific information to act, by knowing whether causes are uniform or concentrated,

One can check back the extent of improvement after implementing the solution,

One can watch the trend to know if the condition or process is stable.

Collection of Data:

Before the start of the Collection, one should be clear in his mind about the parameters or characteristics and theirperiodicity for which data are to be collected. For easier collection of data, a pre-designed checklist/format/check sheetor any designed format as per the requirement should be used. This would simplify the process of analysis.

Analysis of Data:

After the data are collected, it is analysed and information is extracted by applying statistical methods. Decisionmaking or further course of action should be based on analysed data.

4. CAUSE AND EFFECT DIAGRAM

Cause and Effect diagram is an investigative tool. This is also called “Ishikawa Diagram” since the technique wasdevised and popularised by Dr.Ishikawa, the well known exponent of Quality Circle philosophy, important functionaryin the Japanese Union of Scientists and Engineers, Japan. As a mark of honour, it is named after him.

Because of its shape it is also termed as Fish-Bone diagram.

In this diagram a systematic arrangement of all possible causes which gave rise to the effect is made. It is plannedto present all the possible causes which may have any relationship with the result or effect.

How to construct a Cause and Effect Diagram :

This effect is represented in a box with a horizontal line with an arrow pointing towards the right and touching the box.Main causes contributing the effect are represented by slanting arrows meeting the main horizontal arrow; sub causesare shown by horizontal lines meeting the relevant arrows lines indicating the main cause. The tallest column of ParetoDiagram could be seen in the box of the cause and effect diagram generally.

A cause and effect diagram is an excellent aid in scientific analysis of problems and finding out what really happenedand then to find solutions to avoid their recurrence.

31

The process of finding solutions is done through brainstorming session. Once the solutions are arrived at, necessarysteps for implementing the recommendations are then taken.

5. STRATIFICATION

Data collected should be properly classified if meaningful and correct inferences are to be drawn. The technique ofdata collection based on segregated elements is called ”Stratification”, in simple words segregating or regrouping thedata in the form of divided elements for identifying the influencing factors. The stratification is performed as described:

1. Material Base:

Data are stratified on the basis of the supplier of the materials, delivery lot of the materials, preliminary process etc.By this, the effect that the materials have on the quality of the final product can be traced.

2. Quality Base:

Data are stratified by kinds of products, specifications etc. A phenomenon inherent to a special group of products canthus be traced.

3. Workers Base:

Stratification on the basis of workers is often very effective.

4. Time Base:

Data is stratified by season, day-and-night,etc. Atmospheric conditions such as temperature, humidity and physiologicalconditions of the workers differ from time to time. The influence of these elements on quality by some times foundby time based stratification.

5. Surrounding condition :

The quality of products may be influenced by such surrounding conditions as weather, production schedule, tightnessor slowness of the market etc.

6. Processing :

Elements such as production equipment, measuring instruments, manufacturing methods etc. There are many morestratification bases other than listed above.

6. PARETO ANALYSIS

0100200300400500600700800

100

80

60

40

20

0

%

Noof

compla

ints

Types of defects

Pareto was an Italian economist who discovered a universal relationship between value and quantity and he used thistechnique for assessing uneven distribution of wealth. Pareto analysis helps in the identification of “ the vital few fromuseful many” at a glance when projected, using the column graph named after Pareto. Pareto diagrams are frequentlyused to select the few important problems out of many.

What is a Pareto Diagram? Pareto Diagram is a column graph, drawn after data collection for the purpose of:

a) Differentiating the major factors (vital) that contribute most to the unsatisfactory situation from other minor ones(trivial).

b) Tackling the major factors responsible for any problem.

How to prepare a Pareto Diagram :

Stratify the problem points according to purpose (by causes, by phenomena, by equipment) and represent themnumerically,

Preferably data could be expressed in monetary value rather than quantity, counts or percentage,

Select a data period proper for the purpose,

32

Arrange the stratified items in descending order of value and draw a bar chart, (on a graph paper)

Draw a smooth line showing cumulative percentage (total = 100%) above the bar chart starting from greatest value.

Pareto Diagrams are used to find out the following points:

1. The most important item.

2. Ratio of each item to the whole.

3. Degree of improvement after remedial action in some limited areas.

4. Improvement in each item compared before and after action.

7. HISTOGRAM

30

0

5

10

15

20

25

WEI GH T (gms )

FREQUE

NCY

A histogram is also known as frequency distribution chart. For example let us take a machine which on a continuousbasis is producing a product or a component to a given value or specification. The manufacturing process of thiscomponent is sent in a way to give the desired value. However, there are bound to be certain variations in the valuedue to machine conditions, material quality, operator’s capability and systems on which processing is done. We callthis as process variation and are specified is tolerance limit in the process specification. Our desire is to keep thisvariation as minimum as possible. We also want the maximum at the mid-value and close to that and minimum atthe tolerance limit. Histogram helps you to find out your process capability. Let us see how a histogram is drawn.

Collect atleast 50 or more samples for making a Histogram. Here we have collected 200 such data.

Class interval is a unit of measurement of a multiple of an integer. In this case, the unit of measurement is 1 mmand the class interval is 3mm. Normally for a class boundary half measurement of the unit is taken. Here theboundary is taken as 0.5mm. This is to avoid confusion about grouping the boundary value.

Here we have divided the data into 10 class intervals and the data are classified into each class interval using a tallysystem as shown below:

On a graph presents these data in the form of bars. Mark the specification limit. This is Histogram.

A Histogram depending upon the shape will reveal the process condition and capability.

8. GRAPHS

Graphs are the diagramatic representations of the actual observations/conditions/real values drawn on a paper in theform of diagram and charts. These graphs give more information than figure and information retrieval is very easyand simple.

A graph is the most familiar and simple technique, the important thing is:

To clarify the object of drawing graph,

To make them correctly is the first step for success.

Any data can be represented in a graph, the major purposes are:

1. For data analysis:

Graphs are very useful for analysing data, checking causes of defects, and recognising problems.

2. For Schedule control:

Plotting data on paper in the order of day or time will often reveal trends or abnormality of data,which makes graphan important means for both process and schedule control.

3. For recording data:

Data are sequentially represented on graphs,and data which was converted to graph can be used whenever neededto check data.

4. For explanation to others:

Data can easily be put on graphs to make others understand the facts by showing.

33

Fundamental Graphs:

Fundamental Graphs which are used frequently at the plant are:

1. Bar Graphs:

Used for comparing “quantity”

2. Plotted Graphs:

Used for observing the quality changes. This plotted line graph indicates the trend of quality of operations,signalinga warning for a corrective action when the graph runs beyond the desired values.

3. Circular Graphs:

Used for showing breakdown of percentages.

4. Line Graph:

Every activity in any organisation has to be carried out within specified limits in terms of time, quality, productivity etc.In order to keep track of the operations confirming to the desired parameters line graph would be useful.

5. Pictorial Graphs:

Leaving this there are many special graphs which are made combining these basic graphs viz. Namely:

1. Belt graph2. Radar chart3. Compound graphs – bar and line4. Strata graph5. Float graph6. Zee graph and7. Pyramid graph

What is a line graph?

A line graph indicates the actual performance over a period of time. On the “Y” axis the figures of measurement onthe basis of data collected are plotted which could be variations of specification or number of rejections in the caseof manufacturing industries, number of identified errors in documentation in a bank or in an administration department,No. of patients treated in a hospital, or quantum of goods produced in a given period of time etc. On the “X” axistime is indicated in terms of hours, days, months etc.

9. SCATTER DIAGRAM

AN GLE BEF ORE LAPPIN G

ANGL

EA

FT

ERLA

PPIN

G

10 20 30 40 50 60 70 80 90

1020

3040

5060

7080

90

Scatter Diagram is one of the methods of studying the relationship or correlation between two variable.

It is a dot chart where data are plotted in the form of dots. There will be as many dots as there are observations.For each pair of (X & Y) observations, values (dot) will be put on the chart.

From a scatter diagram, conclusions can be drawn as to whether or not two variables are related. The more closelythe dots come closer to a straight line, the higher is the strength of relationship. A scatter diagram is a nonmathematical method and it is a first step in investigating the suspected relationship between two variables. We canget an idea about the nature of correlation and the strength of correlation as in a mathematical method.

How to make a Scatter Diagram :

Draw the horizontal and vertical axis of the graph. Indicate the higher figure on the upper part of the vertical axisand to the right of the horizontal axis. If you make the length of both the axis about the same, the diagram will beeasier to read. If the relationship between the two kinds of the data is that of cause and effect the cause values areusually placed on the horizontal axis and the effect values on the vertical axis.

Plot the data on the graph. If the data values are repeated and fall on the same point, make concentric circles,twoor three as needed.

Interpretation

The Scatter diagram may reveal different patterns. If the pattern is such that increasing values of effect variable (Y-axis) are seen with increasing value of cost variable (X-axis) i.e, if the pattern shows an increasing trend, than the

34

variables are said to be positively correlated. On the other hand, if the values of the effect variable (Y-axis) decreasewith increasing values of cost variable (X-axis), then the two variables are said to be negatively correlated. If thereis no clear increasing or decreasing trend, then the two variables may not be related. These patters are shown below.

10. CONTROL CHARTS

UCL

CL

LCL

A control chart is a graphic comparison of process performance data with control limit lines on the chart.

T he purpose of drawing a control chart is to determine whether each of the points on the graph

is normal or abnormal, and thus know the changes in the process from which the data has been collected. So eachpoint on the graph must correctly indicate from which process the data was drawn.

The points on the control chart represent samples from the manufacturing process. These samples are preferred toas sub-groups.

A control chart has three lines. The centre line is target value are average level of the quality characteristic; two otherlines are lower control limit and upper control limit. Control chart reveals whether the process is under control arenot so that action can be taken to control the process.

Types of Control Charts:

A Control chart’s form varies according to the kind of data. For variable data: the following charts are used:

1. X-R Chart = Average – Range chart

2. Moving Range chart = X-MR

3. Run Chart = X-Chart,

For attribute date the following charts are used:

1. p-Chart = Fraction defective,

2. np-Chart = No.of defectives,

3. c-Chart = No.of defects.

The format of a control chart is illustrated by the following example.

35

Introduction

Sigma is Greek letter indicated by the symbol ‘s’. In statistical parlance, Sigma is a measure of variations. Theperformance of processes has been measured in terms of sigma such as 3 sigma, 4 sigma, 6 sigma etc. A processperformance level of 6 sigma means defects level in that process is equal or less than 3.4 parts per million. Currentlythe concept of Six Sigma is proposed as a management tool for achieving process improvement, reduced costs,reduced wastage, increased customer satisfaction and above all increased profitability. Customer satisfaction byreducing defects and increasing the bottom line is the hallmark of this concept. Though it is very deeply rooted instatistics, it addresses itself to business requirements of management. It is not restricted to only manufacturedproducts and processes. It is equally applicable to service industries. Six Sigma is also a march towards perfection.Under six sigma is defined as 'Quality is a state in which value entitlement is realised for the customer andprovider in every aspect of the business relationship without adversely affecting the environment and society"

History

In the early 80’s in one of their management review meetings, Motorola was quite concerned about its outgoing qualitylevel. At that time the general belief was higher quality leads to higher costs. During this period one of the engineersof Motorola’s communications section, Mr. Bill Smith, presented a paper in which he said that if a defect was foundand corrected during a process, there are every chance quite a few undetected defects could find their way to thecustomer and may fail during the early use of their product.

So the company realized that first time right quality product should be made. Also, if the cost of handling customerrejections, repair, rework and loss of goodwill were calculated, it may be cheaper to produce quality goods in the firstplace. It was this idea that drove Motorola to search and analyze more systematically by applying statistical techniques.This was really the origin of Six Sigma concept.

What is Sigma?

‘s’ pronounced as ‘sigma ’ is a letter in the Greek alphabet. It is used to designate the distribution or spread (variation)about the mean of a process i.e. where the process is centered around. Generally as we have seen in our examplemost of the values will cluster around the mean value. Values away from the central value will ocur with lesserfrequency.

For business or manufacturing process, the sigma value is used to evaluate the capability of the process to producedefect-free output leading to customer as well as provider’s satisfaction. It also enables us to make comparisons withsimilar or dissimilar products, processes or services. It is necessary to understand the relationship between the sigmavalue and its implication to meet the required performance specifications of a process.

Change over from per cent (%) to parts per million (PPM)

Now in the changed market conditions performance standard has to be much higher to survive. Dr. Hitoshi Kume, afamous Japanese quality guru mentions in his book ‘Management by Quality’ how he changed the system ofmentioning defects from %age to parts per million to bring a psychological change in the people involved with theprocess. While 0.27% may look small, if it is put as 2700 ppm (parts per million) it looks very high. This will makepeople to react and look for action, which can help to reduce the defects further. This is the need of the hour.

Dr. J.M. Juran in his Quality Trilogy states how over a period of time we start accepting defects level as inevitable andstart living with them. He states that if we have to get out of that chronic condition we should question the accepted defectslevel to prioritize and select problems for finding solution using project-by-project method. If all managerial level personsput such an effort, defects level can be brought down over a period. He calls it as a revolutionary approach to bring downthe inefficiency and to reach an incredible level of performance.

When we start making efforts, many of the chance causes, which were persisting, now start disappearing andimprovement start coming in. This will help to reduce the present spread of ± 3‘s’ to lessser and lesser span as shownin the picture below:

12. SIX SIGMA

36

Spec. Limit (T)

Spec. �e��

3σ 3σ(�� σ) (�� σ)

Spec. Limit (T)

Spec. �e��

3σ 3σ(�� σ) (�� σ)

Sig Sigma concept also professes similar idea with certain approach changes.

With Six Sigma strategy an organization can achieve an incredible level of efficiency i.e., the defects level

Sigma Quality

To achieve Six Sigma Quality, the output of a process/product/service should not only have minimum variation but alsothe process average should approach the target. This is indicated by the process capability indices C

P and C

PK

Higher the CP value, lesser the variation. Higher the CPK value , lesser variation as well as process average is nearerthe target.

A process is said to be at Six Sigma Quality when CP ³ 2 and CPK

³ 1.5.

The following table gives correspondence between process capability value, defect rate and Six Sigma Quality level.

Process Capability

CP

� e �ect rate PP��i �� a � �ality

�e �elCP �

Less than 1.0

1.0

1.1

1.�

1.

1.�

1.�

1.�

1.�

1.�

1.�

�.0

Less than 0.�

0.�

0.�

0.�

0.�

0.�

1.0

1.1

1.�

1.

1.�

1.�

�� �e than ���10

���10

�� 0

1���0

�1��

���

1 �0

��

1��

��.1

1 .�

.�

Less than .0

.0

.

. �

. �

�. �

�. �

�. �

�.1

�.�

�. �

�.0

Process Capability

CP

� e �ect rate PP��i �� a � �ality

�e �elCP �

Less than 1.0

1.0

1.1

1.�

1.

1.�

1.�

1.�

1.�

1.�

1.�

�.0

Less than 0.�

0.�

0.�

0.�

0.�

0.�

1.0

1.1

1.�

1.

1.�

1.�

�� �e than ���10

���10

�� 0

1���0

�1��

���

1 �0

��

1��

��.1

1 .�

.�

Less than .0

.0

.

. �

. �

�. �

�. �

�. �

�.1

�.�

�. �

�.0

Steps for Implementation (DMAIC)

Next big question that hovers one’s mind at this stage is what are involved while starting or implementing Six Sigmain a unit. The following steps are involved.

1. Define

37

2. Measure3. Analyse4. Improve5. Control

1. Define Phase

The “Define” phase is very important in Six Sigma introduction. The “Define” stage should spell out why is thecompany adopting Six Sigma. Introduction of Six Sigma should have clear link with the STRATEGIC GOALS andPLANS of the company. It has to be meshed with it. Also it should be linked to customer satisfaction and profitability.Companies have introduced Six Sigma in their organization for some of or all the reasons mentioned below:

1. To improve capacity with minimum investments

2. To improve yield of a product or process

3. To gain cost savings

4. To reduce cycle times to meet customer demands

5. To produce better products with reduced defects per million i.e. design for Six Sigma (DFSS)

6. To reduce cost of quality.

7. To improve efficiency in billing, delivery and collections

8. To improve efficiency in accounting, costing and other financial services

9. To improve the market share of a particular product in a particular geographical area

10. To bring out a totally new product or a new service.

The above list is not exhaustive but definitely gives an indication of a range of projects for which many leadingcompanies have applied Six Sigma strategy. It is not confined to processes and products but also to accounting,marketing and financial systems as well.

So, before launching Six Sigma strategy the top management has to take into account all products, functions andservices and work out a strategy. It must get a feel of what needs to be invested to get what results.

Prioritization: There will be simultaneous requirements from so many units’ wings and locations of the company,competing with each other, for resources for Six Sigma implementation. It is for the top management to prioritize theprojects and resource allocations based on the needs and strategies of the company.

Short term and long-term goals: When one goes about prioritization then one has to consider whether the companyhas to commit to short-term goals or long-term goals. This is very important. For companies that are operating atThree to Four Sigma level significant gains can come by concentrating on short-term goals itself. There is reallynothing wrong to pluck “LOW HANGING FRUITS” quickly and make the company cash rich in the short run andimprove its share value. The fruits at the top quite often are sweeter but need a ladder to go there and pluck them!

Bench marking: Companies have to keep a constant watch on their rank compared to the competitors. Many projectsmay have to be compulsorily included, so as to match another product or service of a competitor. If not done in time,market share will slip suddenly.

What, if you are a market leader already? If you are a market leader and your product is moving well and thereis reasonable cash richness in the company, perhaps, this is the best time to launch long term Six Sigma projects.This is more difficult than imagined! If the company is not doing well, it is more easy to motivate people to do better,because of the fear of closure of a section of a company or lay off will become the driving force. But when thingsare going well, top managements have to work much harder to shake people from their complacency and comfortzones!

The “DEFINE” stage is the strategic stage; planning stage; goal setting stage; time frame setting stage; Enough homework has to be done by top management and CEO during this stage. It decides the road map. Where we stand today,and where we want to go, how, why and by what time? It may also decide the milestones that the company has tocross on its way. After preparing the road map, the top management has to ensure percolation of the road map tothe rank and file of the organization. Once this step is done well, success in implementing Six Sigma methodologywill follow much easily and more smoothly.

2. The measurement phase

After having completed the Define phase after having defined the priorities, after having mentally visualized the “BigPicture” and the “Road Map” of the company

38

in the Six Sigma journey, comes the “Measurement phase.” Measurement of where we stand today in terms ofcustomer satisfaction of various products, in terms of cost of production, in terms of cost of quality, in terms of costof rework, in terms of cost of warranty replacements etc. become very important.

Why should we measure?

1. Only by measurement we can differentiate between reality, perception and intuition.

2. Measurements form a common denominator for everyone to see and refer.

3. Only accurate and reliable measurements can enable us to analyse, improve and then control.

4. Measurements will expose the limitations of the process, service or the customer satisfaction.

5. Measurements will help to understand cause and effect dependency of a product over the variances of so manyparameters.

6. Measurements help costing departments to do better cost analysis.

7. Measurements can help to formulate our specifications correctly and later help in documentation also.

8. Let us understand what cannot be measured cannot be improved.

Important factors in the measurement phase

i. Accuracy of measurement

The first and foremost is the accuracy of measurement. All the gauges, sensors used should be accurate andsensitive enough to make the measurements. One has to question the resolution of the measuring equipment. If theresolution is not adequate, higher resolution tools and equipments have to be procured. Otherwise only a blurredpicture will emerge. It is management’s responsibility to provide for accurate tools. Very important aspect is using astandard system of expression.

ii. Adequacy of measurements

The measurements should be as per standard sampling plans and techniques. Insufficient data may not lead toreliable conclusions.

iii. Repeatability

When the same person on the same product obtains the same measurement then it is called repeatability. The BlackBelts who oversea the measurements must ensure repeatability.

iv. Reproducibility

When different people do the same measurement on the same part or parameter, and if all of them converge to thesame value (within statistical limits)

then the measurement is called reproducible. Corrective actions taken at a later date will have a meaning and validityonly if the measurements are repeatable and reproducible. The supplier and the customer should be able to convergeto same values by using same tools, methods and procedures. Otherwise endless arguments (and even litigations)may arise.

v. Calibration and traceability

Measuring equipments used must have been calibrated against certain known standards. The standards themselvesshould have traceability against national/international standards.

Companies, which have gone through ISO 9000 certification, have an edge on this matter. ISO 9000 certificationdemands periodic calibration and display of the day of calibration and next calibration due. It also demands national/international standard traceability certificates. While certification is not essential for Six Sigma, calibration and traceabilityto standards are necessary for the veracity of the measurements.

vi. Cause and effect measurements

Traditionally companies measure the product quality cycle time, profitability etc. Six Sigma measurements generallygo beyond this. Usually, Black Belts go deep into the cause and effect relationships. If y = f (x), i.e. if product y is afunction of parameter x, then, the exact relationships, optimization or maximization if any between these relations arestudied. For this some hypothesis is made based on fundamental principles of science and engineering or knowntheories and they are tested. To give an example, if the cycle time of a process is directly proportional to thetemperature at which the product is produced, the effect of yield at various temperatures are studied to get the bestyield. Data collection will be focussed on effect of various temperatures. It is such functional analysis, rather thanproduct, that yields long term Six Sigma benefits.

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vii. Measurements conducive to cost sensitivity analysis

Integrated with the data collection will be relevant data regarding the grade of critical raw materials, their quantity andcost. These will be used to analyse the cost of the product under each of these grade of materials. It is not essentialthat high purity is always best for all occasions. The classic example is gold ornaments. 24 carat pure gold has highervalue but adding some percentage of copper makes the gold much more malleable and ductile. Hence ornamentgrade gold is always 22 carats or lower. Integrating casting requirements is an essential part of Six Sigma datacollection. The contribution to bottom line should never be lost sight of.

viii.Collection of attribute data

Every time, quality characteristics may not be measurable. Statistics provides for attribute data collection and analysisalso. It is said that even in the U.S pay slips in many big companies contain about 6 errors per thousand (6000 permillion)! The data collection format should be designed to capture such errors also (category or error type wise)similarly, wrong billing, late billing, wrong deliveries, non deliveries etc can also be captured by proper data designformat and analysed. Quite often, even though products of a company may be good, customers may become waryof billing, delivery errors and switch to alternate suppliers.

ix. Objectivity in data collection

There must be total objectivity in data collection. Very often certain managers may leave out certain factors for thefear of getting exposed about some deficiency in their sphere of action. Such things will vitiate the results and will nullifythe gains that could be accrued by Six Sigma implementation. A good diagnosis is half cure. It is better to be exposedto the shortcomings at the earlier stages and get the situation corrected than allow things to hibernate and burst atsome unexpected, unwanted time. Certainly, the damage will be more at that time.

x. Data Matrix

Most often the data matrix may be quite huge. When redundancy and reproducibility are built into it, the format maybe quite big. But it is better to be that way, than have some hotchpotch data collection. With computer facilitiesavailable for analysis; the size of the arrays should not deter one. Usually it is the Green Belts who collect the dataand the Black Belts who analyse them. Statistically trained Black Belts will be able to decide for how long the datashould be collected and whether they have to be repeated again to remove any seasonal or other bias in the datacollection.

xi. Preservation of data sheets

It is generally a good practice to preserve the original data sheets. Once the original data is there, any analysis (oreven a new type of analysis) can be done at a later stage. Further after an year, when the performance of the progressof implementation of Six Sigma is reviewed, the original data can provide good base line information. Trends orchanges in customer preferences over a time can also be analysed if the data has been preserved. Hence raw datamust be preserved. It can be in a computerized matrix form instead of a paper copy. But, it should be available withoutany mutilation and distortion.

Analysis Phase

Having collected data objectively, the next most crucial step is to analyse the data objectively. A good diagnosis is halfcure. It is in this phase Six Sigma heavily relies on statistics. While 80% of the problems can be solved and analysedby simple statistical tools, the remaining 20% may need more sophisticated and detailed statistical tools. It is in thisphase that Six Sigma scores over other management improvement systems. Even though other Quality systems toogives lot of emphasis for statistical system, it generally never get forcefully implemented. In case of Six Sigma its blackbelts, green belts and senior managers are well trained in statistical analysis. Even accountants, purchase managers,marketing managers and general administrators are not spared. All of them are exposed to reasonable and requiredlevels of statistics.

Some of the important tools of analysis

We have briefly given an idea about most often used tools of analysis in a seperate chapter. A detailed descriptionof each one of these tools is beyond the scope of this book. For them you may refer to books published on the subjectby QCFI and others.

“Improve” Phase

At the end of the “Analysis Phase”, the Master Black Belts and Black Belts will have sufficient data and analysis aboutthe various parameters of the product, process and service. It is the job of the Master Black Belts and Black Beltsto determine what are the factors that are affecting the critical to Quality (CTQ) , improve process capability etc and

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implement those set of conditions in the process. Quite often more than one option will give the same result. In suchsituations, the Black Belts have to determine the most cost effective solution.

The “Measure - Analyse - Improve” Iteration

Once a particular CTQ option has been chosen, the black belts will be implementing them in the process. They cannotpassively assume that things will happen automatically as anticipated earlier. Once again they have to collect data ofthe output of the improved process, measure the parameters, and analyse and confirm. If there are deviations or ifthere is scope for further fine timing, then they have to repeat the process of resetting the parameters, measure andanalyse the output. This is an iterative process. Sometimes this iteration has to be done a few time before the finalprocess parameters are frozen.

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The iteterative process applies not only to technical parameters but also to subjective parameters such as customersatisfaction.

A fleet service company brought down the average delivery time from 8 days to 4 days by taking concious steps insidethe company. When they measured the customer satisfaction again after the improvements, they did not find muchchange. So, a team of black belts once again went through the process. They found that the average delivery timeof 4 days was not critical to quality. The company which received the fleet in one day, was not ready with garage andsecurity arrangements and hence was unhappy to receive the fleet earlier! In another company, there was a delay of3 days from the committed date. The receiving company had already terminated their existing contracts with an agencyin the hope of getting their own fleet. For 3 days there was utter chaos. This customer was also not satisfied. In thesecases, delivery on the day of commitment was critical to quality. It was the variance that mattered.

Control Phase

The Control phase is the consolidation phase. After the black belts have optimized the process after a few iterations“ of measure-analyse-implement “ cycle, they should freeze the process parameters. They should determine the yieldas well as well as the process capabilities of various process. These parameters should be used for drawing up a new“Control Chart”. The upper control limits and lower control limits calculated based on such data should form the basisof control. Any deviation or change in trend in the process control should be attended to immediately.

Documentation Audit

The process parameters that have been obtained above should be incorporated into the specifications of the process.The raw material requirements should form part of the material indent specifications. The vendors should be educatedabout the critical to quality specifications required. Companies following ISO-9000 should incorporate these specificationsand characteristics in their documents. Once it forms part of ISO documentation, then it comes under the purview ofroutine ISO-9000 internal and external audits. Companies which do not have ISO-9000 certification, should establisha periodic system of auditing the process parameters and material specifications, the packing and delivery parametersand the customer complaints.

And not the reduction in average per se. After these experiences and analysis, the black belts developed methods toestimate the time of delivery more accurately. It was thus, the revised system that was finally documented for futureguidance.

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13. Five S

What are Five S?

Before learning about it let us look into an example of an improperly managed Storeroom.

Suppose you are given the task to set it right, what are the steps, you have to take?

After studying the condition first, you may have to sort them out as necessary and unnecessary items. Will you thenstart straight away keeping the necessary items in the stores? Certainly not!

First you will get the place thoroughly cleaned, do the necessary repairs, and then keep the needed items in a properway, keeping safety in view. You will also ensure easy removal and put back things in the right place.

But does it remain like this? After sometime we may again see disorder created and also accumulation of unwantedthings. This means, we should check up periodically to ensure this does not happen and also create a written systemor a standard practice for proper house keeping. Next step will be to make sure that it becomes a habit with thepeople. Then only we can say that we have a culture of keeping things in a proper way ensuring easy functioning,cleanliness and safety.

Now let us look into the steps you have taken to make the storeroom remain in a proper way. You will observe thatfive steps have been taken - organisation, neatness, cleaning, standardisation and discipline. This is what Japanesefollowed and integrated them as workplace management.

Japanese in their language call these steps as SEIRI, SEITON, SEISO, SEIKETSU and SHITSUKE.

SEIRI - Organisation or re-organisation.

SEITON - Neatness

SEISO - Cleaning

SEIKETSU - Standardization

SHITSUKE - Discipline

Thus Five S is an integrated concept for housekeeping or workplace management.

Importance of Five S

Five S is the silent informer of a company's attitude to quality.

Easiest way to determine a company's attitude towards improvement activities is simply to walk around the factory andobserve the house keeping practices on the shop floor. Housekeeping often tells us more about the company thanany financial statement. One can judge the level of improvement activities from the way tools are stored, swath andchips from machines handled, work table organised, inspection points indicated, factory floor swept, machines cleaned,toilet condition etc. Of course, housekeeping practices reflect the management's general attitude towards work. Weshould understand the linkage between the level of Five S and the amount of defective products produced, the numberof machine breakdown, inventory level and so on. Five S should therefore, be among the first steps managementshould take for improving the company's quality status.

Five S for teamwork

Takashi Osada says that nowadays we are all talking about top-down and bottom-up management and so on. Theyare all nothing but indicating teamwork. Five S are an important aspect of teamwork. If we don't do five S, we can'tdo any other work efficiently. They are features, which are common to all places and are the indicators of how wellan organization is functioning.

Five S starts with each individual practicing it.

Unfortunately there are many things we do without thinking about Five S. They can be considered as a mirror reflectionof one's attitude and behavioural pattern. When we go to work we notice many things, which are not in order, butwe overlook them and turn a blind eye to them. Unfortunately we do not realise that many of our problems willdisappear if we pay attention to Five S.

One important point to be observed is that we should not think that they are for others to implement. First take a lookat yourself and carryout the improvement needed from your side. Let the Five S practice start from you.

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Five S for marketing a product:

Action speaks louder than words. Five S are not merely a factory process. In fact it can now be used also formarketing a product effectively. A clean factory always impresses everyone and also helps to create confidence onthe quality of the output and the product marketed.

Five S for improving the quality of human behaviour:

Think that you are in a place, may be a temple, garden, airport, which is very neat and clean. Do you like to throwanything there? Even if your normal habit is not caring for cleanliness, you don't do such a thing in these places. Whyhas your behaviour changed? It is because the condition prevalent there will make your behaviour odd and you startfollowing the standard set.

Why does anybody want to go to a neat and clean restaurant? Because this reflects the quality and the hygienicconditions of the food served. The same thing is applicable to workplace also.

If our work place is neat and clean, our way of working will be better. Better workplace will give better workingenvironment. This also changes our way of behaviour. We have observed that those who were not interested to hearabout the modern quality concepts, now after implementing Five S are taking a lot of interest not only to learn theseconcepts but also in introducing in their home.

Five S for good housekeeping practices:

It is believed that good housekeeping and workplace organization are directly linked to achieving discipline inmanufacturing. If production control, maintenance, quality assurance, layout etc. are not done properly then problemswill appear. A general attitude of cooperation should be established so that people are willing to practice good housekeeping not only in their own area but also to help in other areas. Five S concept is considered the basis forcontinuous productivity and quality improvement. Only when these practices are coordinated can a world classmanufacturing operation be achieved.

Five S is the software for safety

Space-full, bright and unobstructed workshop will show the flow of things at a glance. Keeping things in proper waytaking safety into consideration e.g. regulations about height, putting items on the basis of weight, size, quality ofmaterial and applying visual management, Colour coding for paths and storage give a sense to observe trafficregulations faithfully (utmost attention is paid to avoiding accidents).

Brief description of each S:

SEIRI

The literal meaning of the Japanese word 'SEIRI' is 'to straighten and contain. It can be understood as 'discardunnecessary things i.e., get rid of waste and put things in such a way as to have quick access. This is how 'straightenand contain' can be interpreted.

If we apply this idea to a factory, office, house, farm or shop, waste of time in searching for an item and havingunnecessary things taking up space will be reduced. Developing a system can bring consistency in what we do. 'SEIRI'thus means 'organisation' or more appropriately 'Reorganisation'.

By practicing 'SEIRI', we can discard unwanted things and above all stop further waste. Generally we have thetendency to cling to things. We don't want to throw away a thing easily, be it milk bag, newspaper, empty containers,broken part or defective items. We store these things, saying that they will come for use at a later date, but the onlypitiable thing is that when we want them we will not be able to locate them!

Such an attitude was perhaps alright earlier as there was scarcity of items and saving things in those days wasmeaningful.

In this information age we have many things in abundance. All are talking about functional efficiency and such anaccumulation of unwanted items, particularly the precious space, affects efficiency.

In major cities like Bombay, Delhi etc., people use lots of space paying high rent to keep records. None are interestedin scanning and putting them into Compact Discs (CD's). One CD can store thousands of pages of information andwanted information can easily be located. With the introduction of 'DVD' (Digital versatile disc) system millions ofpages can be stored in one disc. Still people would like to stick to old ways. Practice of 'SEIRI' involves several steps.

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They are,

• Planning and training

• Method of sorting.

• Categorisation (use-frequency classification)

• Survey (stock verification and similar checks)

• Cleaning

Procedure for 'Seiri':

1. Form a team.

2. Decide on the scope of the operation (what workplace and zones) and the targets that group has to achieve.

3. Get ready.

4. Define objective and teach people to recognise what is unnecessary, what to discard, what things to save so thatthey can be accessed later.

5. Put red tag for unnecessary items and yellow tags for the items to be sent to stores.

6. Apply stratification management

Advantages of 'SEIRI'

a. Saving in use of space.

b. Removal of excess equipments/parts

c. More space made available in filing cabinet/shelf

d. Avoidance of error

e. Easy access to things

f. Eliminate unsafe situation

g. Preventing rusting or damage to materials

h. Reduced inventory by sale of scrap material/excess materials

SEITON

While 'SEIRI' helps us to decide what are the items needed, 'SEITON' helps to decide the way things are to be placedso that our working is smooth. 'SEITON' involves safety and productivity.

First we should decide where things belong. Everything should have a place and they should be kept in that placealways. This will help us to pick up things needed without wasting the time on searching for them.

Three rules to be followed for this are:

1. Decide where things need to be placed

2. Keep things in that place

3. Always follow the system.

This may look simple but difficult to follow. Success depends upon how well these simple rules are folllowed.

'Seiton' it is an activity carried out along with 'Seiri'. To state simply we sort out things as wanted and unwanted andthen keep the wanted in an orderly way or organize them properly. It is said 'Seiri Seiton' activities are done. However,for detailed understanding let us understand them separately.

Seiton can be called as 'straightening' or neatness. Neatness is not just collection but putting them in a way whichshould help in our regular working. Things should be kept in such a way that they could be easily located and usedwithout any time loss. If we don't find the right material we may use a substitute which may have an adverse effecton quality. Hence, Seiton helps in upkeep of Quality.

Points to be remembered are:

• Keeping things in the best way

• What to keep, where to keep, how to keep and how much to keep.

• Having ground rules for organising things neatly

• Marking areas and cautions

• Proper place for things:

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Jigs, fixtures, tools and cables

Consumables

Storing defective items

Emergency items

Storage of liquids and fire hazard items

• Filling removable containers

Advantages of SEITON

a. Helps reducing time consumed in searching materials for use.

b. Easy to inspect and recognize when materials are taken out from their location.

c. Creates work effectiveness.

d. Creates safety atmosphere.

e. Helps in inventory control.

f. Improves work place utilization.

g. Better identification by using colour coding.

SEISO

Since olden days we in India have given great importance to cleaning. Our Gurus, Saints used to teach us about it.According to them "Create an atmosphere and environment of sanctum - sanctorum where Gods and Goddess willbe enshrined". "Seiso' is nothing but, cleaning up. In Five S practice, cleaning is looked upon as an activity whereineach and every employee has a role. It is a philosophy and commitment to be responsible for all aspects of the thingsyou use and to ensure that they are in tip-top condition. Dust, dirt, grim, foreign matters etc., are looked upon as primecauses for unexpected failures of equipment, unhygienic environment and even accidents.

The literal meaning of the word 'SEISO' is clean up. It means take up the job of cleaning. Such cleaning is notrestricted merely to the machines, table, kitchen cabinet, etc., i.e., whichever area we have taken up. It should beextended to the entire surroundings. The word starting with 'S' for this is 'Scrubbing' or 'Scrub'.

Cleaning is getting rid of bad things and purifying. Cleaning first calls for an inspection and then acting on it. Whyshould things we use or deal with become dirty? It is mainly because of not taking timely action and lack of attention.If a work place and the place where we live are dirty it means that something is wrong with our system and/or care.

In India we always worship those things which are responsible for our living. We call them 'Pancha Bhootha' viz. fire,water, air, earth, and sky. A farmer worships the hull, his land and the bulls, which help him in ploughing. A workmanworships the machine he works and the tools he uses. Every year factories observe 'Vishwakarma Puja' or 'AyudhaPuja'.

But with the time they have become rituals and value for machines, equipment, tools etc. are going down. Availabilityin abundance has created complacency amongst people. We often feel that it is cheaper to buy than repair. We donot for a moment think why in the first place it went out of order or got damaged. Is it because of a defect or becauseof our carelessness? We can see people using cast iron items in place of hammer (e.g. spanner) and breaking them.The damage and wastage is due to sheer misuse.

Seiso is inspection:

The essence of cleaning is not just making things or place clean. Thorough cleaning will help us to quickly detect orsee defects with our eyes. Abnormal sound can be observed and by touching with hands one can feel vibration,temperature etc. Observation by looking, listening and feeling (LLF) at the time of cleaning, can identify abnormalitieslike abnormal smell, discolouration, loose parts, knocking, abnormal sounds, over heating, leaks and dispersion,vibration and shaking, misses and skipping, irregular movement, abrasion, trash and dirt, damage, etc. These canbe quickly discovered and attended to. Hence we can say Seiso is to reveal potential defects.

Points to be remembered:

• Who should do the cleaning? Is it a separate function?

• Assigning roles and responsibilities

• Providing implements and tools

• Making SEISO a day-to-day routine

• Care of special and sophisticated equipment

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• Education on SEISO

Advantages of Seiso

a. Good, neat and clean working place motivates for effective functioning.

b. Increases the efficiency of machines and equipment.

c. Extends machine and equipment life.

d. Creates safe environment and working place.

e. Helps in identifying the potential cause of problems.

f. Helps in developing the skill of operator for doing autonomous maintenance.

g. Reduction of wastage.

SEIKETSU

Seiri, Seiton and Seiso are easy to do once, but it is very difficult to maintain. To maintain, we have to standardizethe system. Seiketsu is nothing but standardization. In Five S this means ensuring whatever cleanliness and orderlinesshave been achieved through Seiri, Seiton and Seiso, they are maintained. We should keep a strict control over thesituation.

We cannot achieve this by one time effort of carrying out the activities of cleaning. We should make sure that whateveris achieved is not allowed to deteriorate. If we face any problem, our capabilities coupled with the system should beable to overcome that problem. Hence Seiketsu is only complete when its horizons have been expanded to includethe entire working environment. It is a proof of good 'Seiri, Seiton and Seiso'. For healthy and vital environment, alongwith work place management, personal cleaning, neat and clean work clothes, work hats, safety shoes, aprons arealso essential. Hair, beard and nails must be kept trimmed and neat so that work can be done easily.

Points to be remembered are:

• Standardization is to systematize.

• Knowledge of putting the finger at the trouble spots

• Imparting knowledge systematically

• Visual Management

• Sensory alertness and control

• Position marking

• Ways of promotion of Seiketsu

• Incentive at workshop level:

• Incentive at the factory level.

Advantages of SEIKETSU

a. Proper and nice working areas

b. Help in synchronising the activities of SEIRI,SEITON and SEISO.

c. Helps in educating the new persons joining the area on standard methods in practice.

d. Reduce breakdown and increase MeanTime Between Failure (MTBF).

e. Reduction in defects and breakdowns.

f. Visual management improves work efficiency.

SHITSUKE

Shitsuke means discipline. Discipline is following a system, which calls for changing from our present unsystematicway of adherence to set procedures. Systems function to an orderly manner. You might have heard a joke abouta gentleman who entered his friend's house, was surprised to see that his friend was writing a letter sitting on a chairand his wife was shaking the chair. When he inquired the reason for shaking the chair, the friend's wife replied thathe had the habit of writing any thing only in this condition, as he is a bus conductor. This may be a joke, but imagine,can we write sitting in a moving bus? How does a bus conductor write and make a report neatly? This all dependsupon practice. Hence keep practicing Seiri, Seiton, Seiso and Seiketsu activities until they become habit.

If you make this task of bringing changes as teamwork you will find it easier. It is due to two reasons. One, insteadof as an individual if we do things as a team, it becomes fun and not a work that is disliked. Secondly, if the job isdifficult, teamwork makes it easier. Tougher the job, easier the teamwork makes it. Teamwork does not mean thatall have to do the same job. Each one may be carrying out one of the tasks of the entire operation by sharing. Startingfrom a relay race to a space journey, success depends upon teamwork. Remember Apollo 13's near disaster. It was

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the teamwork, which was responsible for saving the lives of the astronauts.

Points to be remembered are:

• Routine and complacency

• Make the tasks small or big a habit

• Instructions/communications should be clear

Advantages of SHITSUKE

a. Promotes habit for complying with workplace rules and procedures.

b. Creates healthy atmosphere and good workplace.

c. Improves safety and hygiene.

d. Improves morale of the employees.

e. Develops Teamwork.

f. Develops ability to think and analyse causes for improving control system.

g. Improvement of company culture, rules, safety devices etc.

Why should things go wrong in spite of introducing Five S?

We should try to find out why in certain areas things tend to go wrong again and again. The simple reason is lackof sincere practice. Practice can make things perfect and should be a way of life. Anyone of the following can bethe reason.

(i) Checkup whether it is easy to clean, there is anything out of the way, etc. If people are not able to carryoutthe job the way we want or that a particular method is responsible for the disorderliness then try to find out thereason and also whether there is any other easy method of doing it.

(ii) The systems should be such that all involved should be able to understand whatever is happening and why itis carried out in that way. Another important requirement is ownership and happiness derived from it. Checkup whether the people are proud of cleanliness and feel that it is their achievement.

Somebody asked an artist the secret for his melodious voice. His answer was simple 'practice'. Practice makesthings perfect. There is no alternative to that. Everyone in the unit should practice till they learn it better.

(iii) When things are not normal no point in getting upset. Check up to find out the reason for it. See whether theyare following the system. Are things kept and handled in the way it should be.

(iv) How do you do this in a systematic way? The answer is simple, Audit.

Audit shows the situation properly. Problems can be due to not following the instructions. Make it a systemand ensure that it is followed. Another problem can be that systems are there but not helping. Then one shouldreview and find out the changes needed to get the desired results and implement them.

(v) For effective implementation of Shitsuke one should internalize the rules. Each and everyone should pledge tohis job. They should thoroughly know what they are doing and that it matches the requirement. Ask peopleto memorize. But here too we will face one problem. If there is a change brought out in the system peoplemay not see and continue to do it in the old way. To avoid this, ensure whenever changes are there, widepublicity is given and make sure that everyone involved comes to know about it. This information should makeevery one's responsibility clear and should give time wherever possible for learning. Knowledge of basicmathematics is needed.

As we said practice is the best way to ensure cleanliness. Make it a habit. But routine things are boring. So addcolours and make it interesting. Campaigns, contests etc. should be arranged. Arrange cleaning campaign with timelimit. Lumberjacks have yearly contests like who climbs the tree fast, cuts the wood faster etc. Similarly organizescrubbing contest, picking contest etc., as annual and half-yearly event.

Five S in offices

Office is also like a factory where main inputs are paper; processing is in paper and output is also in paper. Officemanagement is management's job. Offices need the Five S to eliminate inefficiencies, to prevent mistakes, and tokeep things running smoothly.

Five S can be carried out in any place including home. Only the objective will have variations. In case of offices theneeds are elimination of inefficiencies, error free function, keeping things in a tidy way and a smooth way of functioning.Now a days a lot of attention is paid for aesthetics. Offices in the olden days used to have cabins, and a big group

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sitting outside in rows. There used to be noise, paper every where but such things can now be noticed only ingovernment organizations.

Now, even executives sit in cute cubicles, everyone has a separate location, well lit office space, glass panels asentrances, revolving chairs, enough provisions to stick papers needed for constant reference, to put charts etc. Allare done in a colourful way with the help of interior decorators. Plants are kept in places and periodically changed,centralized coffee/tea centre etc. add colour to the entire office environment.

They all add up and create a healthy atmosphere for efficient functioning. Many organizations are giving good brandname dresses to all i.e., from executives to grass root level employees.

Shredders are provided to shred out unwanted papers. Computers have come as handy. Many things are stored incomputers. People refer to information through local area network thereby eliminating unnecessary paper work. Now-a-days compact discs are used to store old data thereby reducing the space needed for keeping volumes of files andpapers. All of them help in a big way for the Five S implementation.

Still offices have problems. One of the important reason is that people have individuality and have their style offunctioning. This makes standardization process a difficult one. Again, in information generation there is a lot ofvariation, which is very difficult to monitor.

Few important tips for office Five S

1. In lockers, file cabinets, almirah, side racks no irrelevant material to be kept. Necessary items to be kept in aproper way. There should not be any loose paper in any file. File index should be prepared neatly so that afile should be kept/taken out without loosing any time.

2. There is a normal practice to put papers, greeting cards, slogans, photographs etc., below glass top at one table.The table area is for your work. This should be neat and clean. Hence nothing should be below the glass table.There should be prefixed location for telephone, desk calendar, in-out tray etc.

3. In-out tray should not be storage place. Most of the times you will find that for months together, the unnecessarypapers are lying on tray.

4. Desk calendar to be used properly. Their pages should not be used as slip pad.

5. Paperweights should be used. Don't use nut, bolt, scale, pencil, stapler etc., in place of paperweight.

6. Calendar and all visual displays of the room should be updated.

7. Inside the drawers of table, things to be kept properly in a specified place.

8. Every thing should be stored in a fixed place. Old records to be kept with proper identification.

9. All dividing lines and notice boards to be clearly indicated.

10. Cleaning of floor, windows, windowsills and shelves, corners of the wall, ceiling, grills tearoom, toilets, etc.

11. For clean and odourless atmosphere, ventilation system should be proper.

12. Floor conditions, electrical fittings, proper plugs, sufficient light, condition of table and chair to be taken care of.

13. There should not be any water leakage and foul odours in toilet.

14. There should be prefixed location for waste box and system for getting rid of waste paper.

How to make Five S to work effectively

For any important activities taken up in an organization we always need the support of the top management. FiveS are not an exception to that. But it is not necessary that whatever is initiated by the top management will beacceptable to all. They may say 'yes' because top management accepts it but their heart will not be in that. In thatcase you will have to keep a constant vigil in ensuring that activities are carried out in the way we want them to, whichis a difficult task. What we need is compliance willingly, which will call for convictions on the part of everyone involved.How do we do that?

Planning Stage

First make a decision to implement. This will call for proper planning. As step number one, decide a date and timefor the activity. Give it wide publicity. Such an activity will call for many items. Not only publicity materials but items

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for implementation also. They can be shelves, labels, red tags, paints, etc. They will cost money, which means abudget. Then take up jobs, which will involve everyone. Many times spectators may not appreciate the good workout of jealousy. You should ensure that they also contribute so that they feel proud of the achievements. Such aninvolvement is not only at the implementation stage but also at the time of planning the input.

To sum up you should plan a date, workout a schedule with targets. But again it is not merely carrying out the job.People involved should understand the significance and benefit of such a system. This means wide publicity andeducation. In spite of all activity, after sometime, people lose interest. Here the top management should be firm intheir belief and should have continuous interest and zeal. As a part of this activity we should educate people on theimportance and benefit of continuous improvement.

When you get into the job of Five S, it is not necessary that you take it up in all areas simultaneously. You may pickupa conducive area and also one which badly needs such an activity. If you do it in a place already well maintained,differences may not be visible. What you do there, should demonstrate to others its benefit and significance. Whenyou carryout such operations, you can even fix up awards for people who do good jobs. It should create an interestand a healthy competitive spirit amongst all.

The actual job should be planned as follows:

a) First step is Seiri i.e., removal of unwanted things and sending them away

b) Second step is to find out the reason for untidiness. Clean them up and create a clean place. Next step ismaintaining that place in that clean way. This may call for even change of present layout. Ensure changes, whichwill help in visual control. The final step is going into micro level of improvement.

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14. KAIZEN

1. What is Kaizen ?

Kaizen is based on the simple principle that, whatever the field in our lives, be it social life, working life, domestic lifeor even leisure life, we need continuous improvement in order to progress and advance as opposed to statusquo and stagnancy. For such an effort we must have participation and involvement of one and all whether it is societyor an enterprise.

The Japanese economic miracle is attributable to this unique approach in all walks of their lives and we could seethe demonstrative evidence of this continuous improvement in all their products or service.

In industry, they felt that, to stay in business and compete, there should be an unending improvement and progressto provide the leverage against other competitors.

2. Can you explain the degree of responsibilities of each category in the practice of KAIZEN andmanagement's function in particular?

Management has two major functions in KAIZEN

Impr o ve

ment

Mainte

n ance

Top Mgt.

Middle Mgt.

Supervisors

Workers

Fig.1 : Perception of the above functions category wise

i) Create a conducive environment and encourage continuous improvement (technological, managerial and operative)and establish standards.

ii) Maintaining the standards established.

It can be seen from Fig.1 that, as we go from the bottom, the improvement function increases and the top and middlemanagement have a greater role in it. Similarly, as we come down from the top, the supervisors and workers havea greater role in maintenance function.

The important role of management in maintenance function of Kaizen are:

- policies and procedures.

- establish the standards.

- ensure that standards are followed by all.

- review and monitor improvements.

- educate and train people to enable them to follow the standards with emphasis on its importance to follow them.

In Kaizen, new standards are not static, though they are to be maintained. They, nevertheless, yield place to newstandards as a part of continuous improvement, one succeeding the earlier one.

Maintenance ofexisting standards

New standards

New standards Maintenance

Though maintenance of standards play a vital part in worker's function, they are also expected to suggest small,incremental continuous improvements.

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3. What are the perceptual differences between Japanese and Western nations' with regard to jobfunctions?

Western Approach Japanese Approach

1. Impportance to systems and procedures. 1. Systems and procedures, important are not rigid.They are subject to change.

2. Establish organisational setup with functional 2. Though heirarchies are there, they are closelyresponsibilities and authority at each level. knit horizontally and vertically and no barriers

between each other.

3. Processes are kept under control by 3. Continuous process control starting from themanagement by ensuring that processes bottom level ensuring that variations are keptoperate on chance cause variation levels. kept under chance causes.

4. Act when assignable causes occur 4. Improvements and changes are all pervasiveactivities.

5. Changes are only through innovatons, a 5. Continuous improvements from all levels of thenew system or new machineries. empoyees (top to bottom).Responsibility for this lies with top and middlemiddle management in different degrees.

As far as changes are concerned they were mainly through innovations i.e., any major change in process is dueto invention.

a. Status quo organizations.

This category of organizations are those which neither attempt innovations nor improvement until change is forcedon them by the market conditions where survival depends on the ability of an organization to compete. The statusquo management will be in a quandary in such a situation and all sorts of fire fighting would start when externalpressure is brought on them. (Fig.3)

b. Innovation centered organizations.

This is yet another type of High Technology industries which appear on the horizon like a bright meteor,

INNOVATI

ONS

Mainte

nance

Top Mgt .

Middle Mgt.

Supervisors

Workers

Fig.3 Western Perception

and stay for some time and disappear. These are innovation centered organizations. This is also explainedpictorially.(Fig.2)

But perception of Japanese varied from this. While technological and process innovations fall largely in the domainof top and middle management, improvements are an all pervasive activity from top to bottom with varying degrees.(Fig.4)

4. Briefly, explain what are the roles to be played by the four important functional categories i.e., TopMgnt., Middle Mgnt., Supervisors and workers in the implementation of KAIZEN in an organization?

The Following Table Explains it.

5. KAIZEN or continuous improvement - What are its wider connotations? (KAI - Change; ZEN - Better) (Forthe better)

The interpretation of the meaning of improvement goes far beyond the Western perceptions about it. For the

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Western management improvement simply implies only improvement in equipments, processes and maintenance.But, the Japanese perception of improvement starts with the improvement of the human element . Thus, KAIZENcovers every aspect of human activities.

6. Is not KAIZEN an off-shoot of other improvement concepts, tools and techniques already developed andadopted by the Japanese right from the early fifties, say like TQM/CWQC?

Yes, Masaaki Imai himself says in his book that “Such terms as QC (Quality Control), SQC (Statistical Quality Control)or CWQC (Company Wide Quality Control) often appear in connection with KAIZEN”. Again, Imai says that any seriousdiscussion on Quality would boil down to its definitions, methods of measurement and relating to the benefitstherefrom. However, the basic thing in all the concepts, he maintains, is improvement or KAIZEN and it iswithout any complications in definition. KAIZEN is to first develop a mind-set for continuous improvement.

7. What were the various chronological developments that preceded the birth of the idea of KAIZEN ?

i. 1950s - Dr. W.E.Deming’s visit to Japan and his teachings on statistical methods.

ii. 1954 - Dr.J.M.Juran’s visit to Japan and his teachings on Quality Management and particularly the followingthree tenets.

a) Upper management leadership for quality.

b) Massive education on quality related subjects (top-bottom).

c) Annual quality improvement plans and annual cost reduction plans and their implementation.

iii. 1956 - Japan’s short wave broadcasts on Quality Control Education.

iv. 1960 - Declaring November of every year as National Quality Month and formal adoption of Q-Marks andQ-Flag.

v. 1962 - Issue of “Gemba to QC”, a JUSE Journal edited by Dr.K.Ishikawa, to educate foreman and throughthem workers on Quality Control Methods.

vi. 1962 - As a sequel to “Gemba to QC” birth of QC Circles as a small group activity.

vii. 1962 - Dr.K.Ishikawa’s emphasis that QC Circles is only a part of TQC or CWQC.

8. Is KAIZEN a part of TQC ? How do they relate to one another ?

Though Masaaki Imai has mentioned in the introductory part of his book that even TQC or CWQC would come underKAIZEN umbrella, he mentions elsewhere as follows; “Japan has developed an elaborate system of KAIZEN strategiesas management tools within TQC movement ” He further says “TQC in Japan is a movement centered on improvementof managerial performance at all levels ”.

As pointed out by Masaaki Imai, “TQC undergoes perpetual change and improvement”. One of TQC’s indispensabletool is seven statistical tools and is widely used by management, Engineers as well as QC Circles. Japanesemanagement has been using TQC as a tool for improving overall performance. TQC has been directed by theJapanese Management for the purposes of education, systems development, policy deployment and management,cross-functional management and quality goals deployment. In today's world wide accepted terminology of TQMcovers all these aspects referred to above as a part of it.

KAIZEN needs and uses various problem solving tools. Improvement comes through every problem solved and itheightens improvement. So, KAIZEN is the essence and purpose of all tools and techniques .

9. Are KAIZEN and Suggestion Scheme one and the same ?

According to Masaaki Imai, “Japanese management makes a concerted effort to involve employees in KAIZEN throughsuggestions. Thus, the suggestion system is an integral part of the established management system”.

Imai also states that the Quality Control System and suggestion system work in concert where the companies areactive in KAIZEN.

Apparently KAIZEN also seems to be a form of suggestion system. “The suggestion system is an integral part ofindividual oriented KAIZEN” says Imai. From this statement of Imai it is clear that KAIZEN and individual suggestionsystem are inter-related, maybe with some variations in practice. Whenever a suggestion is made by an employeeand is implemented, then standards are established and he takes pride in it because it is based on his suggestion.

In Toyota Motor Co., it is said that employees provide 1.5 Million suggestions a year, 95% of which are implemented.

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10. Western oriented suggestion system and Kaizen - a comparison.

Western Approach Japanese Approach

1. Suggestion system is based on rewards for. 1. Kaizen is a continuous improvement process.

2. Rewards are proportionate to the worth of 2. Mostly token rewards. A most coveted rewardthe suggestions. could be a fountain pen with the suggester's

name engraved on it from the President andnamed as President's reward. Toyota gives suchtoken reward for QC Circles.

3. Suggestions can be given by anyone and 3. Suggestions of Kaizen are restricted to the areacan relate to any area other than their own of one's function or work only.work area.

11. What are the areas and aspects in which KAIZEN is encouraged to be applied to bring results?

a) Areas: The driving forces for competition (internal to the country or external to it) are PRICE, QUALITY, DELIVERYand SERVICE. KAIZEN programmes immensely help in these areas.

b) Aspects: KAIZEN (a) For process Improvement (b) For Results.

Management have to address themselves to these two aspects. To get results, processes have to be improved first.So, process precedes result.

KAIZEN - People oriented approach

In KAIZEN process improvements are people-oriented . It provides opportunities for the participation andinvolvement of the workers through the creation of conducive environment, providing education, training andencouragement . It is different from just result oriented thinking and approach in western systems of management.

Though results are very important in a result oriented world for progress, for lasting continuous improvement as inKAIZEN, people focus is very much necessary. “Winning is neither everything nor the only thing” .

Process oriented approach

Process oriented approach calls for long term outlook whereas only result oriented approach is short term. All theJapanese concepts which are people focused are process oriented approaches.

The concerns of a process-oriented and people-oriented manager should be:

i. Discipline .

ii. Time management.

iii. Skill development.

iv. Participation and involvement.

v. Morale boosting.

vi. Communication (two-ways)

12. Comparison of Improvements - East Vs West.

While comparing the approaches of East and West with respect to improvements, Mr.Masaaki Imai, compares particularlythe Japanese approach of KAIZEN, which is continuous incremental improvements, as against the dramatic,sudden, once in a way innovative big steps of improvement seen in the Western organizations.

GEMBA KAIZEN

“Eliminating the 7 Wastes (MUDA) for Leaner Operation”

The MUDA refers to a Japanese word, meaning WASTES in workplace and the wastes refers to the wasteful and unpro-ductive practices in workplace that add no value to the products and services being offered to the customers.

Wastes at workplace

MUDA of Motion

MUDA of Waiting

MUDA of Transportation

MUDA Over-production

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MUDA of Process

MUDA of Inventory

MUDA of Correction

We also shall address of MURA – inconsistency and MURI – Overburden. All these have been found and proven to becausing sub-optimal performance, irrespective of type of industries.

Steps for Elimination of MUDA at GEMBA

1. State the wastes i.e. non-value added activities, found at work place related to office work and O&M activities

2. Identify the wastes at work place in NTPC which must be removed;

3. Identify wastes that are to be dealt, with

a. Self – can be done by alone

b. In a group, own functional group or at same level;

c. Help and support of senior management.

4. Prioritize the wastes that need to be addressed in order of importance of safety, monetary implications, ease ofundertaking etc;

5. Formulate a Performance Improvement Project (PIP) on the theme of MUDA identified, along with support required,potential benefit and time span;

6. Do a process study of their workplace, do 5W-IH and bring out opportunities for improvement;

7. Adopt PDCA & SDCA for making standardized procedures;

8. Incorporate visual controls to their work-place in line with principles of MUDA elimination;

Post – Programme Follow – up:

* The potential PIPs suggested to be undertaken for implementation, shall be forwarded to. Station General man-agers with copy for information to regional headquarters.

* TQM deptt at respective Station and regional head quarter shall be requested to play the facilitator’s role for earlyresolution of the issues.

The 7 Manufacturing Wastes

Waste elimination is one of the most effective ways to increase the profitability of any business. Processes either addvalue or waste to the production of a product or service. The seven wastes identified in Japan, where waste is known as“muda.” “The seven wastes” is a tool to further categorize “muda” and was originally developed by Toyota’s Chief EngineerTaiichi Ohno as the core of the Toyota Production System, also known as Lean Manufacturing. To eliminate waste, it isimportant to understand exactly what waste is and where it exists. While products significantly differ between factories, thetypical wastes found in manufacturing environments are quite similar. For each waste, there is a strategy to reduce oreliminate its effect on a company, thereby improving overall performance and quality.

The seven wastes consist of:

1. Overproduction.

Simply put, overproduction is to manufacture on item before it is actually required. Overproduction is highly costly to amanufacturing plant because it prohibits the smooth flow of materials and actually degrades quality and productivity. TheToyota Production system is also referred to as “Just in Time” (JIT) because every item is made just as it is needed.Overproduction manufacturing is referred to as “Just in Time.” This creates excessive lead times, results in high storagecosts, and makes it difficult to defect defects. The simple solution to overproduction is turning off the tap; this requires a lotof courage because the problems that overproduction is hiding will be revealed. The concept it to schedule and produceonly what can be immediately sold/shipped and improve machine changeover/set-up capability.

2. Waiting

Whenever goods are not moving or being processed, the waste of waiting occurs. Typically more than 99% of a product’slife in traditional batch-and queue manufacture will be spent waiting to be processed. Much of a product’s lead time is tiedup in waiting for the next operation; this is usually because material flow is poor, production runs are too long, and

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distances between work centers are too great. Goldratt (Theory of constraints) has stated many times that one hour lostin a bottleneck process is one hour lost to the entire factory’s output, which can never be recovered. Linking processestogether so that one feeds directly into the next can dramatically reduce waiting.

3. Transporting

Transporting product between processes is a cost incursion which adds no value to the product. Excessive movementand handling cause damage and are on opportunity for quality to deteriorate. Material handlers must be used to transportthe materials, resulting in another organizational cost that adds no customer value. Transportation can be difficult toreduce due to the perceived costs of moving equipment and processes together. Furthermore, it is often hard to deter-mine which processes should be next to each other. Mapping product flows can make this easier to visualize,

4. Inappropriate Processing

Often termed as “using a sledgehammer to crack a nut,” many organizations use expensive high precision equipmentwhere simpler tools would be sufficient. This often results in poor plant layout because preceding or subsequent opera-tions are located for apart. In addition they encourage high asset utilization (over-production with minimal changeovers) inorder to recover the high cost of the equipment. Toyota is famous for their use of low-cost automation, combined withimmaculately maintained, often older machines. Investing in smaller, more flexible equipment where possible; creatingmanufacturing cells; and combining steps will greatly reduce the waste of inappropriate processing.

5. Unnecessary Inventory

Work in Progress (WIP) is a direct result of overproduction and waiting. Excess inventory tends to hide problems on theplant floor, which must be identified and resolved in order to improve operating performance. Excess inventory increaseslead times, consumes productive floor space, delays the identification of problems, and inhibits communication. By achievinga seamless flow between work centers, many manufacturers have been able to improve customer service and slashinventories and their associate costs.

6. Unnecessary / Excess Motion

This waste is related to ergonomics and is seen in all instances of bending, stretching, waling, lifting, and reaching. Thesearea also health and safety issues, which in today’s litigious society are becoming more of a problem for organizations.Jobs with excessive motion should be analyzed and redesigned for improvement with the involvement of plant personnel.

7. Defects

Having a direct impact to the bottom line, quality defects resulting in rework or scrap are a tremendous cost to organiza-tions. Associated costs include quarantining inventory, re-inspecting, rescheduling, and capacity loss. In many organiza-tions the total cost of defects is often a significant percentage of total manufacturing cost. Through employee involvementand Continuous Process Improvement (CPI), there is a huge opportunity to reduce defect at many facilities.

8. Waste

In the latest edition of the Lean Manufacturing classic lean Thinking, Underutilization of Employees has been added asan eighth waste to Ohno’s original seven wastes. Organizations employ their staff for their nimble fingers and strongmuscles but forget they come to work everyday with a free brain. It is only by capitalizing on employees’ creativity thatorganizations can eliminate the other seven wastes and continuously improve their performance.

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This phase calls for answering three general questions.

1. What will be Bench Marking?

2. Who is the best competitor?

3. How will the data be collected?

Planning Phase

8. What will be Bench Marking?

Every function of the business delivers a “Product” in the broadest sense. It may be a financial report, a product or aservice. Competitive Benchmarking process is equally applicable to all of these products. So the first step is to identifyyour product.

9. Who is the best competitor?

While competitors who are in the same line of business can be the primary concern, one can and need to benchmarkagainst other organisations that set the standard in a functional way.

Example: One may benchmark his product with his competitor, but also can benchmark with a company on a differentbusiness for say warehousing and distribution. Look into ‘competitors’ in a broadest sense.

10. How will the data be collected?

There is no one ‘right way’ for this. There is no ready made system available for this. While this may pose as a toughquestion at the beginning normally one is able to find a way as he gets into the process and is able to develop andimplement it. Many started by gathering and reading trade journals, corporate reports and other public informations abouttheir competitors. This mostly yielded general information, but also helped them to crystallise the specifics they wanted tozero in. As their data needs became more specific so did their approach for gathering it. Some at this stage take the helpof a consultant to help design and conduct a survey to gather the needed information. There may be other situationswhere consultants can be useful. Operating units have successfully used consultant to design surveys and gather data,particularly when benchmarked company had been hesitant to provide detailed information. Consulting firms can usuallyalleviate these organisations by promising confidentiality. Others found direct contact with Benchmarked companies wasthe best way, especially when there is a mutual exchange of information or when the participating company receives acopy of the results. One covet to this approach is however, to carefully consider all of the security implication involved withexchanging information. To sum up there are many methods for gathering. Pick up the method which most suits you.

11. How to measure the competitive data collected?

There is no specific method for this also. Some of the methods are:

Cost and cost related matrics

- Percent of cost of function to revenue

Sales

Service

Customer Management

Distribution

General and Administrative

- Labour Cost

- Material Cost

- Manpower performance ratio

- Months of supply

- Cost per unit

- Cost per order

- Cost per engineering drawing

- Occupancy cost

- Return on Investment

Quality related matrics

- % parts meeting the requirement

15. BENCH MARKING

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- % of finished goods quality improvement

- Number of problem free units or products

- internal and external customer satisfaction result.

- Billing error rate

Service related matrics

- Work support ratio

- Rs/Standard available call activity time

- Service response time

- First time fix of service call problem

- % of supplies delivered on time

- % of spare parts available for the service representative.

Once experience is gained other criteria included are:

Reliability and customer satisfaction. Numerous customer satisfaction surveys have been conducted to assess customer’sperception of product and service in comparison to major competitors. Customer’s attitude towards product failure,quality level and service response are some of the opinion samples. Sources of competitive data are limited only by one’simagination and creativity. They might include one’s own personal and professional contacts, trade associates, technicaljournal or even advertisement. You can solicit information directly from competitor or analyse his products. Many havefound interestingly that competitor’s are often willing and eager to share information usually on quid pro quo basis.

Be creative. Remember sometimes we have our customers inside. We have to satisfy them. There too such efforts areneeded.

15. Analysis Phase

Once the data is acquired it must then be analysed. Objective of this phase is to understand the competitor’s strength andto assess those strength against our own performance. It is therefore essential to ask these basic questions.

1. Is the competition better?

If so, how much?

2. Why are they better?

3. What can we learn from them?

4. How can we apply to our business what we have learned?

Answers to these and to other questions should provide the dimensions of any gap negative or positive between us andour competitor. Now we have an objective basis upon which to act.

To close a negative gap or extend a positive gap. Things to be remembered is that it is an ever shifting basis. One needto clearly understand not only where the competitor is today, but where it is likely to be tomorrow. Try to develop sourcesthat can be kept current through periodic reviews. One must also assess the competitor’s potential performance so thatthe dimensions of the gap can be protected over time. For this it is necessary to collect data from readily updateablesources which will facilitate meaningful analysis now and in the future.

16. Integration Phase

Competitive Benchmarking really begins to “earn its keep”. During this phase we have acquired hard data which hasrevealed the areas to benchmark. We have also worked with it to determine the extent of the task. We are now ready toset our goals to gain our maintain superiority and to weave those goals into formal planning process.

First initiative in this phase is to gain senior management’s acceptance of the competitive benchmarking analysis and itscommitment to develop action plans.

It is essential to success, but it will require time. For this competitive benchmarking data should clearly and convincinglydemonstrate the reliability. In all likelihood, the data will be questioned particularly if it points to a significant negative gap.So it is necessary to make sure that the methodology is sound.

Once senior management understands and accepts the data and the conclusions, the development of strategies andaction plan can be started by using problem solving process.

17. Problem Solving Process

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After identifying and selecting a problem the team management identifies problems within their area of responsibility.

- Analysing the Problem

The team determines what is wrong, gathers and interprets factual data, investigates possible causes and zeros in on theproblem. This process includes need for a satisfactory solution in the form of objectives or desired outcomes and alsonoting any restriction or limitations on that generating potential solutions. Team members ‘brainstorm’ to generate asmany solutions as possible, without any restriction or prejudgment.

- Selection and Planning the solution

The team evaluates the ideas and comes up with a recommendation. Even though proposed idea may not work by itself,it may have valuable elements. Time should be taken to combine the good parts of various ideas; each alternative shouldbe carefully, critically evaluated.

- Implementing the solution

The team anticipated implementation problems makes plans to include those whose support will be necessary, andassigns and accepts action responsibilities.

- Evaluating the solution

The team follows up later, to determine whether the solution actually worked and takes any corrective action necessary .Most of the results are mixed; there are few outright failure and few unqualified successes.

18. Investigation of the process

This is the time when the investigation of the practices of competitor is so valuable. Acceptance of the effectiveness of acompetitor is much easier once we understand the methods being used to achieve those results.

Timing is essential. Data should be gathered, analysed and reported so as to be included in the unit’s overall planningcycle.

Most unit view Competitive Benchmarking data as essential to set long term plan which are based on competitive realities,determine strategies and document those strategies in the business plan. Keep in mind that benchmarked goals can beset at any and all levels of operation. Organisation can set overall unit goals like annual productivity increase. Operationalobjectives supporting the unit goals i.e., specific targets relating to say, shipping accuracy, productivity and operatingbudget. Such cascading of objective downward to all levels ensures that each person clearly understands his or her rolein attaining the overall goal.

19. Summing up

Finally Benchmarking needs to be clearly communicated through formal action plans, down through various organisationallevels:

Action steps for Integration:

1) Results of Competitive Benchmarking are synthesised into proposed goals for the organisation.

2) Findings and proposed goals are established by operating units Senior Management and the mission goals, objectivesand operating principles are approved.

3) Communication process begins on the above items, including discussion to build understanding and to link them withthe units employee involvement problem solving process.

4) Goals are integrated and published in the business plan guidelines with strategic direction.

5) The business plan strategies and action plans are developed to meet these goals, including the strategies required foremployee involvement problem solving activities.

6) The business plan is reviewed and approved by corporate management.

7) Operating unit priorities for operating plan are established, reviewed and approved by operating unit Senior Management.

8) Operating plan guidelines and targets are published along with priorities.

9) Operating plan submission and reviews include plans to meet targets, describing status versus long range goals andcheck points for operating plan years.

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10) Final approval of operating plan establishes commitments for plans and targets performance.

11) Plan and target performance are built into management by objective (MBO)/ performance appraisal process.

12) Subsequent operations review measure interim progress on plans and in meeting target performance.

13) Special management steering committee meetings are held to review specific plans/issues and decisions are reachedand communicated.

14) Recalibration of Competitive Benchmarks is done as part of business plan update each year (repeat step 2 for goals)

15) Progress reports are discussed with employees atleast once a year.

A checklist is given below that

• Are Competitive Benchmarking findings part of the proposed goals of an organisation?

• Are organisation goals, incorporating Competitive Benchmarks published as part of the functional operating plansand strategic direction each year?

• Are there specific benchmarks in each function?

- Is there clear accountability for generating benchmarks and delivering against benchmark driven targets?

• Are the benchmarks chosen appropriate?

• Are the benchmarks supported by a full understanding of how the competitor does business?

- Are competitive practices better, should they be emulated?

- Can we do it differently and accomplish same/better results?

• What are the specific programs/actions to close the gap?

- Is the value of each action understood and quantified?

- Are program/action plan expectations realistic relative to value and timing?

• Are plants to meet targets, with current status, incorporated into all functional operations reviews?

• Are improvement plans and performance targets incorporated into performance appraisals?

• Are business goals and progress toward performance targets communicated and discussed regularly with allemployees?

- Is value of actual results in terms of quality, schedule and cost clearly documented

• Is recalibration of Competitive Benchmarking done on a regular basis?

- Has best competition/function changed?

• Is Employee involvement linked to Competitive Benchmarking?

- Is there work group identification of performance gaps and development of improvement programs?

- Is there a road map from macro benchmarks to micro work group benchmarks and vice versa?

- Is there an established process for reward and recognition of results?

- Are there targets for participation and are they being monitored?

- Are business knowledge skills deficiencies understood and is education being provided?

20. Action Phase

It is now time to implement the plan and to periodically assess and report your progress in achieving it. Remember someof the points in the plan may need updating. Generally it is found such updating do not call for an intensive data gatheringlike original one. It is enough to indicate what is happening as a result of action as well as what the competitor is doing.