MS 96 Total Quality Management Sample Paper

MBA - Master of Business Administration

Note: Attempt any three questions from Section A. Section B is compulsory and carries 40 marks.

1. (a) "The strength of the chain is determined by its weakest link," Explain with examples, in the context of quality management.
(b) The American quality crisis of being prolonged by what Derning called "the seven deadly diseases" associated with traditional management practices. What are these seven deadly diseases? Explain.

2. (a) Why should 'prevention costs' take precedence over the other three types of quality costs?
(b) What benefits the tem 'Statistical Control' mean? Explain the difference between process capability and control. Explain how to carry out a process capability study.

3. What does the term 'Statistical Control' mean? Explain the difference between process capability and control. Explain how to carry out a process capability study.

4. (a) If you visit an organisation, how would you identify and determine that it practices TQM?
(b) What are the negative effects of a performance appraisal system, particularly from the viewpoint of TQM.

5. (a) Describe the type of documentation required for implementing ISO 9000 in an organisation and seeking registration.
(b) What are the general requirements in a quality award process? Examine one of the quality awards critically and identify the factors contributing towards performance excellence in an organisation.

SECTION B

6. Read the following case carefully, analyse it, and answer the questions at the end:

ORIENT LTD

Rahul Verma, Vice President (Operations), Orient Ltd., was confronted by a terrible dilimma. He had met CEO Abhay Shukla a few hours ago, and had been offered an additional responsibility: of co-ordinatinf\d Orient's Total Quality Management (TQM) programme. But, instead of being enthused, Verma seemed a little hesitant. Nothing his reluctance, Shukla gave him a week to make up his mind.

Verma's attitude was understandable. The TQM project had been co-ordinated by Bharat Saxena, vice-president, human resources management (HRM), until his recent exit from Orient. It was Saxena who had introduced TQM in the organisation a year-and-half ago, and, as a member of the apex committee which was piloting the project, Verma was fully aware of its chequered progress. A change of guard at this juncture could make or break his career. He decided to call Varun Mitra, who had taught him HRM and organisational development in college. For, Mitra, who was now a TQM consultant, would give him an outsider's perspective.

"It is an oppurtunity that I would have jumped at." Verma told Mitra as they met later. "There are several positive elements. The company is young; the people are enthusiastic; and the rank and file are receptive to chage.The CEO has assured me of his personel support.But I have an uneasy feeling the whole thing. It could be something to do with the false starts we have had in implementing TQM." Mitra became after alert. "False starts?" he asked. "They mean trouble. They often turn the clock backwards. But let us start at the beginning. Tell me about Orient. And why the company thought of TQM."

"We make paper-insulated cables, polyvinyl chlorine cables and cross-linked polyethylene (XLPE) cables. They come in a varied range --- low-voltage cables of upto 11 kilovolts (KV), medium-voltage cables of 33 KV, and high-voltage cables of 230 KV. We are, in fact, the only company oin India to make 400 KV cables. Orient has a technical collaboration with Jigucji of Japan, which has given us access to their quality manuals. We have kaizens and quality circle in place, and obtained an ISO 9000 certification. With a 17 per cent marketshare, we rank second in the cable industry."

"That is quite impressive. You have the right ambience for TQM," said Mitra. "Now tell me about the motivation. Who are your customers?" "We are largely dependent on the State Electricity Boards (SEBs) for the offtake of our products. The main problem with SEBs has been the collection of receivables, which takes anywhere between six months and one year. There is little on prices, which are negotiated annually, We are compelled to absorb hikes in input prices since there is no provision for an escalation clause in the agreement. But the biggest constraint is the fluctuation in the prices of raw materials like copper and aluminum, 70 per cent of which are imported. Evidently, the only way to get a grip on the costs-revenues-margins chain is to tighten up production processes and secure efficiencies in internal operations. That was why we thought of TQM."

"That is the classic trap that most companies fall into," said Mitra disapprovingly. "There is no link with the customer. The raison d'etre of a TQM movement is customer satisfaction. Without the linkage it becomes merely process oriented. Without the big picture, you would only be pursuing incremental improvements in operational efficiencies. You would not be aiming for geometric leaps in business results."

"I stand corrected," said Verma instantly. "I must mention that the decision to go for TQM was also influenced by the emergence of a new marked category --- industrial power cables --- in the last three years. We have been selling nearly 30 per cent of our output to the industrial sector through a dealer network. The share of industrial power cables in our turnover is likely to go up to 50 per cent in two years. The specialised TQM requirements of industrial users have ensured higher margins. Although the dealer happens to be our customer, we are now talking directly to end-users to ascertain their needs. We have developed customized products for several of our customers. So, the TQM movement did have its origin in the needs of a growing customer segment."

THE CHALLENGES OF TQM

CHANGE DRIVER: Orient dearly needs to provide a compelling need for transforming the organisation.
LEADERSHIP: The change initiative needs the backing - and personal investment -- of its CEO.
CUSTOMER FOCUS: Orient needs to shift to a customer-oriented mindset from a process-oriented one.
EMPLOYEE INVOLVEMENT: To drive TQM, it needs to secure the buy in of middle managers first.
TEAM CULTURE: A quality transformation like TQM is primarily a team effort, not an individual initiative.
EXTERNAL INTERVENTION: An external agent is extremely important to prepare Orient for change.
OVERALL OBJECTIVE: Orient should synergise its subordinate goal with various operating goals.

"The link is still not wholesome," said Mitra. "But tell me, how did you go about implementing TQM processes?"

"We began ny asking ourselves several questions," said Verma. "What does the customer want? The answer was self-evident: a high-quality output a competitive price. What drives prices? Raw material costs, interest, and employee costs. What is the most critical issue that merits management attention? Reducing the lead-time of the production cycle by bringing down the downtime for imports of copper and aluminum. All that was part of an attempt to identify processes that would give us a tight control over costs. Simultaneously, we started looking at the key result areas: commodity-trading skills that would enables to make timely purchases of copper and aluminum and inventory and receivables management."

"Good start," said an enthused Mitra. "Tell me how TQM was co-ordinated." "We did not enlist any external consultants except for some of the training programmes," continued Verma "The vice-president, HRD, had some experience in TQM in his earlier job. He was also a qualified trainer. That helped we formed an apex committee, headed by Saxena."

"A basic mistake," intervened Mitra. "The apex committee should have been headed by the managing director with the vice-president HRD action as the convener."

"On hindsight, yes," said Verma. "The committee would meet once a month with a structured agenda. The idea was to examine the feedback on some of the internal training programmes we had initiated on team-building, of continuous improvement programmes, and experiential workshops. We had also started computing the cost of poor quality, and some of the tasks of the apex committee was to keep track of such costs regularly. We had a cascading organisation structure for TQM, wherein the vice-president, HRD, was the head of the apex committee, and each member of the apex committee was the head of a sub-committee pertaining tohis department. For example, I headed the Operations sub-committee for TQM."

"You seem to be, by and large, on the right track"said Mitra," But why are you in two minds about accepting the offer?"

"You know, the CEO's intentions are right, But I don't think about the kind of change he wants. TQM needs he is clear sustained backing of the CEO. The change initiative must be the personal responsibility of the CEO; the role of the co-ordinator is merely to facilitate change Shukla has not spelt out the factors thaat drive him personally towards TQM. If he withdraws the mandate at a later stage, overtly or covertly, the change process would collapse. That is my biggest concern."

"Secondly, as I said earlier, we have had some false starts. Let me give two examples. After some initial hesitation, which was quite natural, people at Orient were enthused with the team concept. Everybody plunged into the new style of working and a number of small-improvement projects took off. Once the team members got to the root of a problem that they were asked to solve, they became confident. They believed that any problem at any level in the organisation, however formidable, could indeed, be tackled. Surprisingly, Orient's line managers started feeling uncomfortable. When teams were uncovering major problems and people went around seeking information from sources they had no access to earlier, the line managers felt that the situation was getting out of control. Lone used to screening information before it went outside their departments, they found the new openness quite daunting. The result? Departmental heads started pulling out their subordinated from various cross-functional teams on seemingly-valid grounds. This cross-functional teams on seemingly-valid grounds. This led up to a backlash. Employees felt bitter at having their hopes raised only to be let down. Perhaps the mistake lay in not securing the buy in of line managers right at the beginning of the programme.

"Another example is with regard to our capacity utilisation. As we started developing custimised products, Orient's capacity utilisation level started falling. It fell from 80 to 45 per cent within the first five months. When you eater to customised demand, an increase in cross-sectional area and voltage requirements of finished cables become the new value drivers, not output as measured by cable length. The overall output measured by tonnage of metal drawn would increase, but the output in terms of kilometers of cables --- the conventional measure of capacity utilisation --- would decrease. It took time for indicator of the productivity of fixed assets in customised manufacturer. But the decline in plant capacity was attributed to TQM.

The third reason for my apprehension: TQM co-ordination is, essentially, a staff role --- and not a line function. And I am a line manager. In my 20 -year-long career, I have been used to issuing instructions and commanding action by allocating responsibility and ensuring accountability from people on the Shopfloor. I am used to chasing results on a day-to-day basis. It is a mindset unsuited to a staff function like TQM, where the role of a co-ordinator is not to hand out instructions, but into facilitate change through a slow and steady process of individual transformation. I have seen it happen in many companies: any attempt by a staff functionary to chase results is doomed to fail."

"Perhaps you are over-reacting," said Mitra. "Let me address each of your concerns. The best way to ensure the continuing support of your CEO is to make him the sponsor of the apex committee. The false starts are, of course, alarming. You should have factored in these changes right at the beginning. The only way of undoing the damege is through training. Your line managers, in particular, must be put through development sessions. And there is no reason why you can't hold on to two contradictory roles simultaneously. It depends on the kind of person you are. Three issues are relevant here: are you likely to be biased towards your own traditional function? You should avoid giving too much attention to Operations in implementing TQM. Can you build trust among your people easily and establish your credibility with them without the backing of the authority? And, if the change process details for some reason do you still have a job at Orient? My own feeling is that you have a good opportunity to add value to the company."

"Thanks for your confidence in me," said Verma. "If I decide to accept the offer, are there any other specific issues that I should look at?"

"Yes," said Mitra. "I think what Orient needs is a change driver. Something that provides a compelling need for change in the company. It could be a vision that is just our of reach unless a radically new thinking is applied, it could be some signs of decline within the company. It could be the fact that competition is closing in on you. If people do not see a fundamental reason for change, the leader's commitment, however genuine, may be discounted by them as one person's eccentricity.

"I think it is also important for you to realise that TQM is not an employee motivation programme. Nor is it a panacea or a guarantee of success. In its very nature, a quality transformation is a team effort, and not everyone starts off with the same enthusiasm. Unless someone takes responsibility for masterminding the whole affair, either nothing gets done or there is complete chaos. This is where the skill and dedication of the change agent is a key success factor. You cannot succeed as a TQM co-ordinatos if you are inclined to hogging the limelight. You have your priorities cut out at Orient. But the choice is entirely yours. All the best,."

Questions:

(a) Has Orient Ltd. Identified the objectives of TQM? If yes, what are they?
(b) How can Orient CEO galvanize the organisation to bolster of quality and overall performance? What kind of approach would it need?
(c) How can Verma ensure that the quality movement will not be drailed in the company? Should TQM be a stuff function? What roads map should Verma choose and why?