Total Quality Management ppt unit II by c.coomarasamy, Professor,TEC, Trichy

1. MG 1401 TOTAL QUALITY MANAGEMENT
2. TQM Principles

2. TOTAL QUALITY MANAGEMENT
THE PRINCIPLES
• Total Quality Management has 10 basic principles .
• They explain how it is implemented and the "rules" by
which it operates.
These are:
1. Agree Customer Requirements (more than
specifications)
2. Understand and Improve Customer Supplier chains
3. Do the Right Things
4. Do things Right First Time
5. Measure for success
6. Continuous Improvement is the goal
7. Management must lead
8. Training is essential
9. Communicate more effectively
10. Recognize successful involvement

3. Organizational objective:
• Total quality management must not be seen as a tool but
rather as a philosophy that underscores the corporate
strategy of all organizations.
• All businesses and organizations must have
a primary purpose.
• They should all seek to maximize their gains,
whether it be "for profit" or "not for profit".
• There are two types of businesses and organizations.
• Those that deliver a product and
Those that deliver a service.
• Products are tangible items and are mostly consumables.
• With regard to service there are two perceptions.
• Some people see service as banking, consulting and similar
businesses.
• But, this is only one aspect of service.
• They are selling you a product with the profit motive as
incentive.

4. Organizational objective:
• Service should also be regarded as those services rendered by
institutions who do not have profit as their primary purpose.
• Good examples are government or local institutions that
render social service to the communities that they serve.
• They are dependent on financial grants received from
governmental budgets (The taxes that you pay).
• Thus the application and usage of such grants by institutions
will determine their continued survival.
• What is common is that both groups perform work and
produce outputs with a specific customer in mind.
• Every activity within an organization should be directed
towards the fulfillment of the customer requirements.

5. A Customer
A customer is the most important person in any business
A customer is not dependent upon us. We are dependent
upon him.
A customer is not an interruption of our work. He is the
sole purpose of it.
A customer does us a favor when he comes in. We aren't
doing him a favor by waiting on him.
A customer is an essential part of our business--not an
outsider.
A customer is not just money in the cash register. He is a
human being with feelings and deserves to be treated with
respect.
A customer is a person who comes to us with his needs and
his wants. It is our job to fill them.
A customer deserves the most courteous attention we
can give him.
He is the lifeblood of this and every business.
He pays your salary.
Without him we would have to close our doors.

6. Measure value
Product review redesign
• Customer loyalty is measure of value achieving customer satisfaction We are continuing to
build the model and consider measuring value as determined by the customer as evidence of
customer satisfaction. See the graphic

7. 2.1 Customer satisfaction
Customer is the King in TQM system
•Customers Customers
are the most •Quality is a measure
important asset Front line of customer satisfaction
of any organization
representatives
ie., Quality is what
•The success of a Functional
customer wants
business depends on operational areas
customer satisfaction,
which can be achieved Senior
through quality products Customer satisfaction
Managers
and service Organizational diagram
CEO
Quality of product Customer Business
or service satisfaction success
Customer satisfaction is a psychological attitude
-it is more of a feeling or attitude
-is difficult to measure
-is defined as “the degree to which the customer’s experience of the
product or service matches with the customer expectations”

8. Customer satisfaction
• “What customer think” is more important than
“what company thinks”
Teboul’s model of customer satisfaction
Company offer
Customer
satisfaction
Customer
needs
• Company should strive for increasing the intersection
portion
• Company should ensure that its marketing, design,
production and distribution processes truly meet the
expectations of the customer.
• When an organization produces goods & services of
quality at economic cost and consistently meeting the
customer needs, then the organization is said to have

9. Customer satisfaction
• To realize the customer value strategy, the concept of
customer value must be made optional
• Devise methods to measure value and use the
information to make better strategic and operational
decisions
• The manager must develop a comprehensive system to
measure each point of customers “means-ends model”
Needs, wants, preferences-
Product/service quality
Customer
needs Measure satisfaction
Measure the value during usage
or dissatisfaction
Design and Usage Customer Customer
production situation value satisfaction
A general model of Antecedents, Usage consequences and
Product Realised end states of customer satisfaction and value
attributes

10. Customer satisfaction
The task of measurement is not a simple one. Managers must
(i) Understand which aspect is being measured- needs, quality,
value, satisfaction etc.,
(ii) identify the dimensions of each aspect that are more important
to customers
(iii) Simply low cost or price cut-erroneously defined value
The determinants of value differ for each product/service.
Category Cost Value Quality
components components components
Bank Service charges Variety of services Financial stability
Interest rates Personal interest
in customers
Furniture Credit policies Delivery Well known
store Low prices Display methods brands
Price range Knowledgeable
sales people
Ice Low cost Container size Taste
cream Specials Richness amount
coupons of flavour
creaminess

11. Customer satisfaction
• Customers: Types Customers
Outside the organization Inside the organization
External Internal
One who uses the product or service Engineering
One who purchases the product or Order processing
ervice
One who influences the sale of product Production
r service
Mc Donalds determined the child as the Sales etc.,
ustomer in their happy meals, why?
Because the child influenced the sale.
Every person in a process is
considered as a customer of
Categories the preceding operation
Goal/aim: make sure that quality
meets the expectations of the
Current Prospective Lost customer
Inputs
Internal customer-supplier chain
from Outputs
External to external
customer
customer
c/s c/s c/s c/s c/s

12. Customer satisfaction •Product requirements
•User requirements
•Need for change •System specification
•Strategy •Requirements management
•Operation •Quality and risk levels
•IT support •Process criteria
•Usability •System constraints
•Development process
•Confidence that product
•Assurance process
requirements met
•Process risks
•Argument / evidence about quality
•People competence

13. Kano model (diagram)

14. Kano Model (diagram)
Supplier's Ability vs. Customer's Perception
• Expected requirements are "self-evident" and
unspoken.
• E.g. one can expect that a car will drive and can stop.
• Even a 100% fulfillment of these functions will never satisfy a
customer - it is expected anyway.
• On the contrary, when these functions are absent or fail, customer
will be dissatisfied.
• Kano calls them dissatisfiers
• Revealed requirements are expressed somehow.
• They are known; the degree of fulfillment correlates with customer
satisfaction - like asking for a specific interior of a car.
• Kano calls them satisfiers.
Exciting requirements are not expected and are not
asked for - they are unspoken.
• However, should they be available in the product, customer can
become very excited - like having a new system at no extra cost.
• Kano calls them delighters.

15. Kano model (diagram)
Region 3
Innovations
-vague written instructions
-excite and delight the customer
-ideas get converted as expected
s
2 ent
n rem er
g i o requi l- to t om
R e plicit verb ected
a us
Ex itten, , exp is fy c Region 1
r d sat Undeclared or unspoken requirements
-w tifie d le to
n
ide ulfillesimp -hardest to explain but prove very costly
f ,
be filled if ignored
ul
If f
The Kano model conceptualizes customer requirements
The model suggests three major regions of customer satisfaction

16. Kano model (diagram)
• The vertical axis measures customer satisfaction, and
• The horizontal axis measures the technical level of the product
or
service.
• Dr. Kano first identified the zones of this diagram.
• In the basic quality zone,
any technical failure causes customer dissatisfaction,
and no level of technical excellence causes customer
satisfaction—
in other words, you can cause the customer to be unhappy,
but you cannot cause him to be happy.
• In the performance zone,
the more you give the customer, the more satisfied he (or she)
becomes.
• In the excitement zone,
the customer is very happy—
even if the execution of the concept is imperfect,
the concept causes excitement.
• The pink arrow representing time shows the natural progression of
the
marketplace.
• The exciting idea of today becomes the required product

17. 2.2. Customer perception of quality
• Customer driven quality cycle
Customer needs and expectations
(expected quality)
Identification of customer needs
Translation into product/service
Specifications (design quality)
Perceived quality= Output
Actual quality- Expected quality (actual quality)
Satisfaction A Q > EQ
Dissatisfaction AQ < EQ
Customer perceptions
(perceived quality)
One of the basic concepts of TQM philosophy is continuous process
improvement.
This implies that-there is no acceptable quality level because the
customer’s needs, values and expectations are constantly changing
and becoming more demanding

18. Customer perception of quality
ASQ- American Society for Quality – Ranking
1. Performance
2. Features/ Attributes
3. Service
4. Warranty
5. Price
6. Reputation
1.Performance- fitness for use, Availability, Reliability,
Maintainability
2. Features/ Attributes- Secondary characteristics
are- psychological, time oriented, contractual, ethical
& technological
3. Service is- an intangible (made up of many small things),
not quantifiable, but adds value to customer satisfaction
-organizations should emphasize service
-never stop looking
-find ways to serve their customers better, even if they
are not complaining

19. Customer perception of quality
4. Warranty- represents
- a public promise of a quality product backed up by a
guarantee of customer satisfaction
- also represents a public commitment to guarantee a level
of service sufficient to satisfy the customer
- generates feedback by providing information on the
product and service quality
- also forces the organization to develop a corrective action
system
-builds marketing muscle
-encourages customers to buy a service by reducing the
risk of the purchase decision and
- generates more sales from existing customers by
enhancing loyalty
5. Price
-customers –willing to pay a higher price to obtain
value
-constantly evaluating to determine who provides
the greater value
-customer’s concept of value is continuously
changing
-efforts must be made to identify, verify, and update
each customer’s perception of value in relation to

20. Customer perception of quality
6. Reputation - Past performance and other intangibles,
recognized
-ourselves rating organization by our overall experience
-total customer satisfaction-based on the entire experience
with the organization, not just the product
-good experiences are repeated to 6 people and
bad experiences are repeated to 15 people
-therefore it is more difficult to create a favourable reputation
-customers –willing to pay a premium for a known brand name
and often become customers for life
-customer retention is important-to win new customer- 5 times
cost to keep an existing customer-is required
-difficult to quantify improved customer satisfaction
-very easy to quantify an increase in customer retention
-investment in customer retention-more effective bottom-line
approach-than concentrating on lowering operational costs
-effective marketing retention strategy is achieved through
using feedback from information collecting tools

21. Customer feedback
• must be continually solicited and monitored-
as they change their minds, their expectations
and their suppliers continually
• is not a onetime effort
• is an ongoing and active probing of the
customer’s mind
Why?
1. Discover customer satisfaction or
dissatisfaction
2. Discover their relative priorities of quality
3. Compare performance with competition
4. Obtain the customer’s needs and develop
5. Establish opportunities for improvement
Techniques for measuring customer value
• Scaled measures
• Absolute measures

22. Customer feedback
There are many techniques that fit the mean ends
model better than scaled customer
satisfaction measures
1. Personal interview
2. Protocol analysis
3. Focus groups
4. Laddering
5. Trade off analysis
6. Market test
7. Direct observation
8. Other sources of data on customer value
9. After sales feedback

23. 2.3. Customer complaints
• Customer complaint is reactive whereas the customer
feedback is proactive
• A dissatisfied customer can easily become a lost customer
• Customer retention is less costlier than getting new customer
• ASQ survey on dissatisfied customer says that
-only about 1.5% took the time to complain the management
-about 20% took up the dissatisfaction on frontline personnel
-about 80% did nothing
What does the survey indicate? Analyze.
More than ½ of the dissatisfied customer will buy again, if they
believe their complaint has been heard and resolved
Only 1/5 will buy again if their complaint is heard but not
resolved
Less than 1/10 will repeat buying when a complaint is not
heard

24. Customer complaints
-Even though such complaints may not reach the top
management they do reach other potential customers
-As a positive approach complaints can be seen as an
opportunity to obtain information and provide positive service to
the customer
-In reality the customer is giving the organization a second
chance
-Recognition and reward should be linked to service, quality,
performance and the ability
-Front line employees should have the responsibility and
authority to provide services necessary to satisfy the
customer
-Management should encourage employee to take risk, make
decision and not to be afraid of making a mistake

25. Customer complaint flow chart
For any organization CC&F is the must
Letters Phone calls Meetings Verbal inputs Others
Record customer Collect data
Complaints or
use CC&F forms from other locations
feedback and countries
Within 15 days
Simple thank you
yes
Is it a Thank Transmit to
Complement? customer Central data bank
No or solution use CAR form
(Corrective Action
Is there an yes Inform Routine review Request form)
available fix? customer Data and
identify company
No wise systematic
issues
Conduct
analysis or central coordinator
or analyst level
Resolve
Analyze and Analyzed systematic issues
locally
No generate Identified, resolved &
Local
corrective action eliminated
problems
request
yes Identify performance measures
Contact Take corrective •Number of complaints per month
Process or action to eliminate •Average time to resolve
issue owner the issue and prevent •Percentage resolved
Represents local recurrence
entry activity •Pareto diagram of complaint
Determine
Inform Inform customer
Long term Represents central
customer if necessary
fix coordinator activity

26. 2.4. Service quality
Motto: If we take care of our employees,
they will take care of customers
Application of TQM have produced significant results in
manufacturing industries but often harder to implement in
service sectors. Service quality is customer service
Customer service can be provided
-before the sale of product
-during the sale of product
-after the sale of product
-to win and retain the customer’s satisfaction
Service quality is an activity that can be controlled and
Dimensions: improved
Organizations with higher quality, service can charge
• Time up to 20% more and still retain customers
• Timeliness Satisfied customers continue to patronize the
• Completeness organization- they also add to profits by referring
new customers
• Courtesy
Referrals can be twice as effective as advertising, an
• Consistency essential part of the customer satisfaction occurs
• Accessibility after the sale
• Accuracy
• Responsiveness

27. Service quality
Characteristi Expectations
cs
Delivery Delivered on schedule in undamaged
condition
Installation Proper instructions on set up , or
technicians supplied for complicated products
Use Clearly written training manuals or
instructions provided on proper use
Field repair Properly trained technicians to
promptly make quality repairs
Customer Friendly service representatives to
service answer questions
Warranty Clearly stated with prompt service
Organizations should: on claims
-emphasis traditional or reactive services after the sale
-must move to the proactive level
-proactive organizations contact their customers and determine their service
quality needs and expectations
-this information is used to develop the organization strategy for customer satisfaction

28. Service quality
• 25 elements of customer service-Jacques Horovitz and
Chan- Cudennec-poon
III. Communication
Organization 13. Optimize the trade off between time and
Identify each market segment personal attention
Write down the requirements 14. Minimize the number of contact points
Communicate the requirements 15. Provide pleasant, knowledgeable and
Organize processes enthusiastic employees
Organize physical spaces 16. Write documents in customer
friendly language
Customer care
Fulfill or meet customer’s IV. Front line employees (People)
expectations 17. Hire the best people who like people
Identify/get customer’s 18. Challenge them to dev. better methods
point of view 19. Give them authority to solve problems
Deliver what is promised 20. Serve them as internal customers
Make the customer feel valued 21. Be sure they are adequately trained
Respond to all complaints without 22. Recognize and reward performance
reluctance
Over-respond to the customers V. leadership
Provide a clean and comfortable 23. Lead by example
customer reception area 24. Listen to the frontline people
25. Strive for continuous process
improvement

29. 2.5. Customer retention
- means retaining the c with the business
- is more powerful and effective than the c s
- represents the activities that produce necessary c s that creates c
loyalty which actually improves the bottom line
- By using c fb such as c s surveys, focus groups, interviews,
observations- management can think of what c think of a
product or service - however,
- what people say and think is often different from what they do
Research findings reveal the significance of c r as given below
1. Over 60% of future revenue will come from existing c
2. A 2% increase in c r has 2% increase (equal impact) upon
profitability and 10% reduction in operating cost
3. Up to 96%of unhappy c do not in fact complain, but they communicate
bad experience 3 times more than a good one
4. 91% of the unhappy c will never purchase products and services
from you again
5. If you make an effort to remedy c c 82 to 95% of them will stay on
with you
6. It costs 1 time to keep an old c - 5 times to attract a new c
Therefore the c r is more essential than attracting new c
Likewise, high employee retention has a significant impact on
high retention of customers
Therefore one way is : pay attention to the present employees
and to who they are hiring. Then c r can be managed

30. 2.6. Employee involvement
• is an activity by which employee participate in work related
decisions and improvement activities
• is an approach for improving quality and productivity
• is not a replacement in management
• is not the final work in quality improvement
• begins with the personal commitment to quality the employees
who accept and commit to quality philosophy
• or more apt to learn quality tools, and techniques and use them
in the daily work
• as the employees begin to see the benefits of commitment to
quality, they will more willing to work in Teams
• this team interaction, in turn reinforces personal
commitments driving a never ending cycle of improvement
Employee involvement -Important aspects
• Employee motivation
• Employee empowerment
• Teams and Teamwork
• Recognition and reward schemes, and
• Performance appraisal
• Benefits

31. Supply chain management
Employee motivation Employee development
• Employee motivation and employee empowerment are part of employee development.
• The next step is to add employee motivation, employee empowerment and employee
development to our business model.

32. 2.6.1. Employee motivation
• is a process that starts with the physiological or psychological
deficiency or need that activates behaviour or a drive that is aimed at
a goal or incentive
• is the driving force starting and keeping a person at work in an
organization
• Scott defines “Motivation means a process of stimulating people
to accomplish desired goals”
• Edwin B. Flippo defines “Motivation is a process of attempting to
influence others to do your will through the possibility of reward”
Basic motivation process
Needs Drives Incentives
-are created whenever there is or motives are set up to -End of motivation cycle
physiological or psychological alleviate needs - will alleviate a need and
imbalance -Physiological drive reduce a drive
-Extrinsic Motivation
(e.g.,)
(as a deficiency with direction) (e.g.,)
-Psychological drive Eating food, drinking water
- Cells in the human body -Intrinsic Motivation
deprived of food and water - (not coming from Outside)
and obtaining friends will
- physiological need (e.g.,) tend to restore the balance
-need for food & water are trans- and reduce the correspond-
-Personality deprived of friends lated into hunger and thirst ing drives
-Need for friends becomes
-and companions
- drive for affiliation
– psychological need

33. EM
Employee motivation
Extrinsic motivation Intrinsic motivation
-Physiological -Psychological
1. Pay 1. The feeling of having accomplished
2. Promotion something worthwhile
3. Status 2. Satisfaction one gets after doing
4. Fringe benefits work well
5. Holidays 3. Praise
6. Retirement plans & 4. Responsibility
7. Health insurance schemes 5. Recognition
6. Esteem
Associated with financial rewards 7. Power
Associated with non-financial rewards
Theories of motivation
1. Maslow’s hierarchy of needs theory
2. Mc Gregor’s Theory X and Theory Y
3. Herzberg’s two factor theory

34. Prof. A. H. Maslow’s (1943) Hierarchy of Needs (original five-stage model)

35. Importance at work
Higher level needs
Self-realization
refers to the desire to become
everything that one capable of
becoming Using abilities to the full
Esteem
for self confidence,
competence, Promotion opportunities
self respect, knowledge Delegated tasks
Thank you from supervisors
Lower level needs
Social
Liking colleagues
Being liked by colleagues
Safety
Job security,
Pleasant environment
Survival Adequate wage
Employee motivation
Prof. A. H. Maslow’s (1943) Hierarchy of Needs (original five-stage model)

36. Mc Gregor’s Theory X and Theory Y
- has presented two opposite sets of assumptions about employees
Theory X assumes
(i) The average person dislikes work and whenever possible will avoid it
(ii) Most people are not ambitious, have little desire for responsibility
(iii) To make people to work, use strict control, threats, constant pressure,
persuasion and even punishment
(iv) People actually like to be directed and supervised very closely
(v) Many people have little capacity for creativity in solving problems
• He concluded that theory X- are often inaccurate
• The management may fail to motivate many individuals
• Management by direction and control-may not succeed
• We cannot use to physiological and safety needs satisfied people
i.e., to those whose higher level needs are becoming predominant
• Therefore he developed alternative theory Y
Theory Y assumes
(i) The people are not lazy and unreliable in nature
(ii) They enjoy work, show initiative and imagination in self-direction and
self control
-work is natural activity like playing and taking rest, if conditions are favourable
(iii) Close supervision and threats, punishments are not the only ways to
make the people work
(iv) People can be self-directed and be creative at work if properly motivated
(v) Motivation occurs at the social esteem and self actuation levels as well as
at the physiological and security levels
Employee motivation

37. Herzberg’s (Frederick Herzberg-1959)
two factor theory
- extended the Moslow theory by using empirical research
-distinguished between motivational and maintenance (hygiene)
factors in the work situation
Satisfaction Dissatisfaction
(Motivational factors) (Maintenance factors)
Maintenance (hygiene) factors or dissatisfiers: -the company
policies and administration, Inter-personal relations, Working
conditions, Pay, Job security, Personal life and status
-he propounds that these factors help in removing discomfort, dissatisfaction,
discontent on the part of employees but are not motivators
-these factors support employees mental health. Hence known as
hygiene. These are similar to Moslow’s lower levels
-do not provide satisfaction to the employees, but their absence will
dissatisfy them. Hence called dissatisfiers
Motivational factors:- recognition, responsibility, achievement,
advancement, the work itself
-these are similar to Moslow’s upper levels
- creates satisfaction to the workers at the time of presence
- but their absence does not cause dissatisfaction
- therefore hygiene factors must be taken care of before the motivators
can be activated
Employee motivation

38. HYGIENE MOTIVATORS

39. Employee motivation
Employee wants
Sl. Factor Wants Perceptions
No Employee- Manager
ew
rating rating
1 Interesting work 1
2 Appreciation 2
3 Involvement 3
4 Job security 4
5 Good pay 5
6 Promotion / growth 6
7 Good working conditions 7
8 Loyalty to employees 8
9 Help with personal problems 9
10 Tactful discipline 10
If the managers are effectively motivating employees they mus
align their actions closer to the motivations

40. Employee motivation
Motivated work force:
• Managers at all levels can not cause an employee to
become motivated;
• they must create the environment for individual to
motivate themselves
Concepts:
1. Know yourselves, 2. Know your employees
3. Establish a positive attitude, 4. Share the goals
5. Monitor progress, 6. Develop interesting work
7. Communicate effectively, 8. Celebrate success
These can used at all managerial levels of the orgn.
Satisfier: A satisfier is an expected condition / event that
leads to the fulfillment of the customers stated / implied needs.
Delighter: A delighter is a positive condition / event that is
not expected by the customer that leads to beyond stated /
implied needs.
Dissatisfier: A dissatisfier is a negative condition / event
which is not expected by a customer that leads to a
decrease in customer satisfaction.

41. 2.6.2. Employee empowerment
Empower means “to give the means, ability or authority”
• Empowerment is an environment in which people have the
ability, the confidence and the commitment to take the
responsibility and ownership to improve the process and
initiate necessary steps to satisfy customer requirements
within well defined boundaries in order to achieve organizational
values and goals
Steps: 1. Arm people to be successful through coaching,
guidance and training
2. Letting people do by themselves
Delegation v/s empowerment
Delegation or job enrichment refers to distributing and entrusting
work to others
Empowerment requires that the individual is held responsible for
accomplishing a whole task
Conditions to create employee empowerment
1. Everyone must understand the need for change
2. The system needs to change for new paradigm
3. The organization must enable its employees

42. Employee empowerment
Matrix: Build Empowerment in three dimensions-
Capability, Alignment and Trust
Without Alignment and Trust we will ls
ia s
er s
suffer with paralysis, bureaucracy or chaos y stem at hod ne
lit y M et hi
a bi S M ac
ap M
C
Alignment
ld
ui a l
B u
d
vi ty
di lity e
ili
In bi l dg
ty
e b
A kil wl a
ili
ap
ab
S no C
ap
K
C
Trust
uild Alignment
Alignment
Bureaucracy Empowerment
Teach your mission, vision
values and objectives
Build everyone’s commitment Paralysis Chaos
to them
Trust
Build mutual trust
Employees feel that
1. They can trust their managers
2. Their management trust them

43. Employee empowerment
Some important characteristics of empowered employees
identified by Hubert Rampersad:
They 1. feel responsible for their own task
2. are given a free hand in their work
3. balance their own goals with those of the organizations
4. are well trained, equipped, creative and customer
oriented
5. are critical, have self esteem and are motivated
6. are challenged and encouraged
7. monitor and improve their work continuously
8. find new goals and change challenges
Benefits:
1. Builds confidence in workers
2. Generates commitment and pride among employees
3. Gives employees better experience and opportunity
John Akers, former Chairman of IBM said,
“ Empowering our employees and including a sense that everyone
owns his or her piece of the business not only un leases
the talent and energy of our people, but also flattens the
organization and reduce satisfy bureaucracy”

44. 2.6.3. Teams and Teamwork
Teams are essential within an organization as they are the most
suitable vehicle within which problem solving and
implementation can be achieved.
Objectives: refer short- term planning
Goals : refer long- term planning
A team is defined as a group of people working together to
achieve common objectives or goals
Teams should be established to address real tasks and disband
when they have achieved their objectives
Team work is the cumulative actions of the team during which
each member of the team subordinates his individual and
options to fulfill the objectives or goals of the group

45. Teams and Teamwork
Teamwork - is also a key element of TQM to become
successful in business
-with the use of teams, the business will receive quicker and
better solutions to problems.
-provide more permanent improvements in processes and
operations.
-In teams, people feel more comfortable bringing up
problems that may occur, and can get help from other workers to
find a solution and put into place.
Principles of teamwork
-It should
-have clearly defined objectives or goal
-a well defined time schedule should be given
-listen to the suggestions of others and are conflict creatively
-maintain discipline, build team spirit and motivate each other
-everyone work hard to see the task is completed
- have the companionship, fulfillment of personal growth and
self respect

46. Teams
History of teams: Two types:
1. Quality circles 2. Focus teams
-small group of employees-from one -Similar to Q C,
work unit -was born in US
-5-6 people -identification of problems
-lead by a supervisor- - Management provides input
-developed in Japan -other discipline
by-Kaoru Ishikawa skilled individuals included
-beginning - the use of teams -multidisciplinary team
-shop floor people -normally abandoned
select the problem once problem is solved
-In course of time,
Disadvantage: -QCs became FTs
-lack of middle management support -FTs became our present teams
-lack of focus

47. Teams
Can be divided into three main groups:
Process Cross Natural Self-directed /
Improvement Functional Work Self managed work
Team Team Team Team
-work unit- a group
Purpose -meant for each -in solving complex -work unit of individuals work
operation of processproblems-functions together continuously
or sub process of various depts.
-all the work unit -extension of NWT
No. of 6 to 10 6 to 10 members except the supervisor
Members including Manager -team coordinator
-selected and rotated
-limited to work unit -a number of diff. -is not voluntary among members
Scope -an I /E supplier functional areas -projects to be
-an I/ E customer E,M,P,Q,HR also improved are -meet daily –plan-
a supplier & selected by decisions are usually
Customer management made consensus
-temporary -temporary -manager motivates -additional responsi-
Life cycle-is disbanded when -however a the non-cooperating bilities are:
the objective have production support employees in a -hiring/dismissal
been obtained team would be proper direction -performance evaluation
permanent and make them to -customer relations
feel comfortable in -supplier relations
e.g., a design the team -recognition/reward
review team -training

48. ByT the direction of QC
The use of Teams
Quality
Several CFTs can be established Council
These teams address
Business Process Team
specific improvement
problems of several
function areas
Cross Functional Teams
Within functional areas, one or more
PITs are established
Process Process Process Process Process
Improvement Improvement Improvement Improvement Improvement
teams teams teams teams teams
In turn, one or each functional areas may establish a work group to address overall
improvement
to the Work group Work group Work group Work group Work group
particular
area

49. Characteristics of successful teams
1. Sponsor
2. Team charter
3. Team composition
4. Training
5. Ground rules
6. Clear objectives
7. Accountability
8. Well defined decision procedures
9. Resources
10. Trust
11. Effective problem solving
12. Open communication
13. Appropriate leadership
14. Balanced participation
15. Cohesiveness

50. Effective team work
7.Team
recognition
• Main Elements
6.Team 1.Team
results purpose
Effective teams
5.Team 2.Team role and
decisions responsibilities
4.Team 3.Team
effectiveness activities

51. Nine activities Four roles
Team Management wheel
• Margerison & McCann graphic tool Advisors
Advising
Linking Innovating
Controllers
Promoting
Maintaining
TEAM
Explorers
Developing
Inspecting
Producing
Organizing

52. Team development
Stages
1. Forming-learnt-purpose, roles of members, acceptance of
roles, authority and roles of functioning
2. Storming-challenge and establish-initial agreements, role
allocations
3. Norming-establish- formal and informal relationships,
observe- openness and cooperation
4. Performing-start- operation, reach- trust, openness, healthy
conflict, & decisiveness of a group’s performance
5. Maintenance-maintain-performance of teamwork at the
earlier stage for some period of time
6. Evaluating-evaluate- team’s performance- both self and
management based
A team consists of
1. A team leader- selected by the QC or team itself
2. Facilitator-not a member, will not get involved in the content
3. Recorders-by the leader or by the team, rotated periodically
4. Time keeper- by the leader or by the team, rotated periodically
5. Members-by the leader, sponsor or QC or a member of the

53. Barriers to team progress
Barriers
1. Insufficient training
2. Incompatible rewards and compensation
3. Resistance from first line supervisor
4. Lack of planning
5. Lack of management support
6. Lack of access to information systems
7. Lack of union support
8. Project scope- too large
9. Project objectives- not sufficient
10. No clear measure of success
11. No time to do improvement work
12. Team is too large
13. Trapped in group thinking

54. 2.6.4. Recognition and reward schemes
• Recognition: is the form of employee motivation in which the
organization publicly acknowledges the positive
contributions an individual or team has made to the
success of organization
-This acknowledgement is delivered by verbal and
written praise like certificate
• Reward: is something tangible day-to-day, such as a cash
award, bonuses, increased salaries, commissions, gain
sharing etc., to promote desirable behaviour
1. Intrinsic rewards- related to feelings of accomplishment
or self-worth
2. Extrinsic rewards- related to pay or compensation issues
• Recognition and Reward
-go together to form a system for letting people know they are
valuable members of the organization

55. Recognition and reward
• Employee should be involved in the planning and
implementation of the recognition and reward program
• The system that is developed by the team must have clear
recognition criteria
• The system should be so developed that monetary reward
is not a substitute for compensation
• Reward may be delayed until an appropriate time
• The recognition should on a timely basis
• People like to be recognized, either as a team or
individually
• Gain sharing is another form of reward
- is a measurement of organizational productivity and a
method to share productivity gains

56. Recognition and reward
An effective recognition and reward system:
1. Serves as a continual reminder that the organization
regards quality and productivity as important
2. Offers the organization a visible technique to thank
high achievers for outstanding performance
3. Provides employees a specific goal to work toward. It
motivates them to improve the process
4. Boosts morale in the work environment by creating a
healthy sense of competition among individuals and
teams seeking recognition

57. 2.6.5. Performance appraisal
Performance appraisal
- is a systematic and objective approach of evaluation of
performance of an individual in an organization
- is an exceedingly difficult HRM activity
- is a process of evaluating and generating information about
employees’ effectiveness and efficacy at work
“How one is elevated determines how one
performs”
Team spirit “All for one and one for all”
Process of performance appraisal
1. Establish performance standards
2. Communicate expectations to employees
3. Measure actual performance
4. Compare actual performance with standards
5. Discuss the appraisal with employees
6. If necessary, initiate corrective action

58. Performance appraisal
Purpose
- to let employees know how they are doing and provide a
basis for promotions, salary increases, counseling, and
other purposes related to employee’s future
- to motivate employees by providing feedback on their
performance levels
- to guide the individual to plan job and personal objectives
and help him in career planning
- to validate the selection processes
- to determine training and development needs of the
employees
- to know personal strengths and weaknesses of different
individuals
- to establish a basis for research and reference for
personal decisions in future
- to improve communication in an organization
- to make the supervisors and executives more observant of
their sub-ordinates

59. Performance appraisal
Common appraisal formats
Sl. Type (method) Description (Expectation)
No (characteristics)
1 Ranking compare employees by ranking from
highest to lowest
2 Narrative gives a written description of
employee’s strength and weaknesses
3 Graphic indicates the major duties performed by the
employee and rates each duty with a scale which
is usually from 1 (poor) to 5 (excellent)
4 Forced choice place each employee in a category with a
predetermined percentage
For example: Excellent - 100%
Very good - 80%
Good - 60%
Fair - 40%
Poor - 20%

60. 2.6.6. Benefits of employee involvement
Involving employees, empowering them, and bringing
them into the decision making process
- provides the opportunity for continuous process
improvement
The untapped ideas, innovations and creative thoughts of
employees
- can make the difference between success and failure
Competence is so fierce that
- it would be unwise not to use every available tool
Employee involvement
• improves quality and increases productivity - because,
employees
- make better decisions using their expert knowledge of the
process
- are more likely to implement and support decisions they
had a part

61. Benefits of employee involvement
- are better able to spot and pin point areas of improvement
- are better able to take immediate corrective action
- are better able to accept change because they control the
work environment
- have an increased commitment to unit goals because they
are involved
- reduces labour / management friction by encouraging
more effective communication and cooperation
- increases morale by creating a feeling of belonging to the
organization
More involvement might be encouraged by the sign
“No one of us knows as much as all of us”
S.T.A.R- program ? Suggestions, Teams, Actions, Results- program

62. 2.7. Continuous Process Improvement
“ Don’t bother just to be better than your contemporaries or
predecessors. Try to be better than yourself ”
- William Faulkner
“ We need never-ending improvements……
to establish better economy” - Edwards Deming
Process definition begins with defining the I / E customers
Customer defines the purpose of the organization and every
process within it
Organization exists to serve the customer
Therefore, Process improvements must be defined in terms of
increased CS as a result of higher quality products and
services. All processes have at least one owner
The process will cross multiple organizational boundaries
and supporting sub-processes will be owned by individuals
within each of the organizations
Thus, ownership should be part of process improvement
Continuous improvement may be achieved through big steps
(breakthroughs) and little steps (increments)

64. Continuous improvement
• Total Quality Management is not a short-term program
that will finish as soon as the target has been met.
• It is a strategy of continuous improvement.
• Organizations must keep revising the cost targets
downwards and productivity targets upwards with
achievable results and a commitment to succeed.
• No matter how much an organization improves, its
competitors will continue to improve and customers
will continue to expect still better quality.
• Organizations cannot afford to stop or slow down.
• They can never be satisfied with what they have
achieved.
• Organizations must always be trying to do even
better.
• If organizations always do the things you have
always done, they will always get the results they
have always got.
• Productivity is a common theme.
• Therefore develop approaches to productivity improvement.

65. Continuous Process Improvement
Input / Output Feedback
Process model Business and to improve the process
production activities
Interaction between
I&O
this may be input
Process to other process
Input People
Money Materials Output Desirable
Materials Equipments Product (Qty, Qlty)
Machine Method Service Outcomes
Equipments Measurement Pollution
Laws Environment
Information
Information data ,etc., such as
Procedures
data etc., Service etc.,
requires Customer satisfaction
performance
measures
must be effective, efficient,
under control, adaptable
Conditions
constraints related to policies,
regulations, union, environmental,
ethical & political issues

67. Continuous process improvement

68. The system of Total Continuous Process Improvement (TCPI)

69. Continuous Process Improvement
Basic ways to improve process
1. reduce resources
2. reduce errors
3. meet or exceed - expectations of down stream
4. make - process safer
5. make - process more satisfying to the person doing it
Continuous improvement in process
- can be achieved by practicing following concepts
1. Juran trilogy- Quality improvement from a cost oriented
perception
2. PDSA cycle - engineering scientific method
3. 5 S - house keeping
4. Kaizen - focuses on making small incremental
improvement to individual and organization

70. 2.7.1. Juran’s Quality Trilogy
Components: based loosely on financial processes
1. Planning - budgeting
2. Control - expense measurement
3. Improvement - cost reduction
Planning: process is crucial for improvement to become continuous
activity. Therefore planning has to be conducted with a long term
review rather than project by project basis
Control: is used by operating forces to help meet the product,
process and service requirements
Statistical process control-is the primary technique for achieving
control. If the process is capable and is centered, process
capability information such as Cp and Cpk are used to determine
Improvement: aims to attain levels of performance that are
significantly higher than current levels
begin with the establishment of an effective infrastructure
such
as Quality Council.
- process improvement can be incremental or

71. Juran’s Quality Trilogy Diagram
(Dr. Joseph M. Juran)
1. Quality 2. Quality Control
planning (during operations)
.
Cost of poor Quality: % of operating budget
Sporadic spike
40
Original zone of
Quality control
20
Chronic waste New zone of
Operations
(an opportunity for Quality control
Improvement)
begin
3. Quality
improvement
0 Time
Lessons learned

72. Continuous Process Improvement
Improvement strategies: Jack L. Huffman- 4 Rs
1. Repair - anything broken must be fixed
2. Refinement - activities that continually improve a process
3. Renovation - major/ breakthrough improvements- more costly
4. Reinvention- a new product, service, process or activity
PDSA cycle: first developed as PDCA cycle, then PDSA cycle
Plan - carefully what is to be done?
Do - carry out (do it)
Study- the results- did the plan works as indented?
Act - on the results- what worked as planned? and what not?

73. 2.7.2. PDCA cycle (first developed by Shewhart)

74. Phase of problem solving method by PDSA cycle
(modified by Dr. W. Edwards Deming)
Phase 7:
Plan for the future- Phase 1:
Objective is achieving improved levels Identify and prioritize the
Of process performance opportunity for improvement
Phase 2:
Understand and analyze the
Phase 6: current level of performance
Standardize the solution of the process
Institutionalize by
Positrol of the process,
process certification &
operator certification
Phase 3:
Analyze causes and
Phase 5: develop the
Study the results optimal solution/s
Monitoring and evaluating
the change by tracking
and studying the effectiveness
of the improvement efforts
through data collection and
review of the process
Phase 4:
Implement changes-Prepare the implementation plan,
obtain approval and start implementing the process
improvement

75. Continuous Process Improvement
5W 2H method
5W
What? Stands for subject matter
what is being done? Can this be eliminated?
Why? Stands for purpose
why is this necessary? Clarify the purpose.
Where? Stands for location
where is it being done? Does it have to be done?
When? Stands for sequence
when is the best time to do it? Does it have to be done then?
Who? Stands for people
who is doing it? Should someone else do it? why am I doing it?
2H
How? Stands for method
How is it being done? Is this the best method?
Is there some other way?
How much? Stands for cost
Does it cost now? what will the cost be after improvement?

76. 2.7.3.
5S: House keeping
1. SEIRI 2. SEITON
Structurize
Systemize
Keep needed
Clearly distinguish
items in the
needed items from
correct place
unneeded items
and 5.SHITSUKE to allow for easy
and immediate
eliminate the later
retrieval
Make a habit of
Maintaining established
procedures
This is the condition
Keep the workshop
we support when Self discipline swept and clean
we maintain the
first three pillars
3. SEISO
4. SEIKESU
Standardize Sanitize

77. 2.7.4. Kaizen:
KAIZEN :
• "Kai" means change, (school) and
• "Zen" means good ( for the better ) (wisdom)
• Basically Kaizen is for small improvements , but carried
out on a continual basis and involve all people in the
organization.
• Kaizen is opposite to big spectacular innovations.
• Kaizen requires no or little investment.
• The principle behind is that "a very large number of small
improvements are more effective in an
organizational
environment than a few improvements of large value.
• This is aimed at reducing losses in the workplace that affect our
efficiencies.
• By using a detailed and thorough procedure we eliminate losses
in a systematic method using various Kaizen tools.
• These activities are not limited to production areas and
can be implemented in administrative areas as well.

78. Kaizen
• Kaizen is a system of continuous improvement in
quality, technology, processes, company culture,
productivity, safety and leadership.
• Kaizen was created in Japan following World War II.
• Kaizen is a system that involves every employee - from
upper management to the cleaning crew.
• Everyone is encouraged to come up with small
improvement suggestions on a regular basis.
• This is not a once a month or once a year activity.
It is continuous.
• Japanese companies, such as Toyota and Canon, a total of
60 to 70 suggestions per employee per year are
written down, shared and implemented.
• In most cases these are not ideas for major changes.
• Kaizen is based on making little changes on a regular
basis: always improving productivity, safety and
effectiveness while reducing waste.

79. Kaizen
• " The Kaizen philosophy is to "do it better, make it
better, improve it even if it isn't broken, because if we
don't, we can't compete with those who do."
• Kaizen in Japan is a system of improvement that includes
both home and business life even includes social
activities.
• It is a concept that is applied in every aspect of a person's
life.
• In business Kaizen encompasses many of the
components of Japanese businesses that have been seen as
a part of their success.
Quality circles, automation, suggestion systems,
just-in-time delivery, Kanban and 5S are all included
within the Kaizen system of running a business.
• Kaizen involves setting standards and then continually
improving those standards.
• To support the higher standards Kaizen also involves
providing the training, materials and supervision that is
needed for employees to achieve the higher standards
and maintain their ability to meet those standards on
an on-going basis.

80. Continuous process improvement
Kaizen:
Kaizen
Philosophy
Improvement activities
• Customer motivation • Kanban
• TQC (Total Quality • Quality Improvement
Control) • Just in time
• Robotics • Zero defects
• Quality Circles • Small group activities
• Suggestion system • Co- operative
• Automation labour management
• Discipline within relations
work place • Productivity
• TPM (Total improvement
Productive • New product
Maintenance) development
Kaizen umbrella

81. Continuous process improvement
Comparison between Kaizen and Kairyo
Small steps
Many small improvements KAIZEN
.
One or two great improvement
Large step/s
KAIRYO (Innovation)
Japanese- “Kaizen” - is process oriented way of thinking
Western- “Innovation” – result oriented thinking
Japanese word for “Innovation” is “Kairyo”
Kaizen- improvements are accomplished gradually, ie., in small increments
(constant, slowly)
Kairyo – improvements in one or two great jumps. Does not allow constant
improvements (in spurts, through major, but regular changes.

82. 2.8. Supplier partnership
• An organization spends about 50% of the sale value on
purchase of raw materials, components and services
• Therefore supplier quality can substantially affect the overall
cost of the product or service
• One of the keys to obtain high quality products and
services is for the consumer to work with suppliers in a
partnering atmosphere to achieve the same quality level as
attained with the organization
• Customers and Suppliers should have the same goal to
satisfy the END USER
• They must work together as partners to maximize their
return –on-investment
• True partnering relationship- exists with long term
commitment, trust and shared vision
Number of forces that have changed supplier relations are:
1. Deming’s philosophy
2. JIT- Just In Time
3. Kaizen- or continuous improvement
4. ISO 9000 QMS
5. SCM- Supplier Chain Management

83. Supplier partnership
Principles of Customer / Supplier relation:
10 principles suggested by Dr. Kaoru Ishikawa preaches a
family type relationship to ensure quality products / service and
to eliminate unsatisfactory condition
1. Both – responsible for COQ
2. Both- independent each other, respect each other’s
independence
3. Customer-responsible for clear and sufficient requirements
4. Supplier- responsible for quality- satisfying the customer
5. Both- decide the method to evaluate the quality to satisfy both
6. Both- enter into non-adversarial contract w.r.t quality,
quantity, price, delivery method and terms of payment
7. Both- establish – in the contract- amicable settlement of disputes
8. Both- continuously- exchange information, sometimes using MFT
9. Both- perform business activities to maintain amicable and
satisfactory relationship, viz., procurement, production,
inventory planning, clerical work and systems
10. Both- have the best interest of the END USER in mind in all
business transactions

84. Strategic Partnership Process

85. 2.8.1. Partnering
Graphic interpretation of partnering

86. Partnering
• is a long term commitment between two or more
organizations for the purpose of achieving specific
business goals and objectives by maximizing the
effectiveness of each participant’s resources.
• The relationship is based on trust, dedication to
common goals and objectives, and an understanding of
each participant’s expectations and values.
Benefits include
1. Improved quality
2. Increased efficiency
3. Lower cost
4. Increased opportunity for innovation
5. Continuous improvement of products/services
6. Increased market share
Japanese view on Partnering: Concept is KEIRESTU
Key point – develop long term relationships with a few key
suppliers rather than short term relationships with many
suppliers

87. Partnering
Key elements to a partnering relationship
1. Long term commitment
2. Trust
3. Shared vision
1. Long term commitment:
-both S and C to work towards continuous improvement
-total organizational involvement from CEO to the workers
-each party contributes its unique strengths to the processes
2. Trust
-enables the resources and knowledge of each partner to be
combined
-mutual trust forms the basis for strong working relationship
-open and frequent communication avoids misdirection and disputes
-mutually motivated when Win-Win rather than Win-lose solutions
3. Shared vision
-must understand the need to satisfy the final customer
-shared goals and objectives ensure common direction and
must be aligned with each party’s vision
-sharing of business plans aids in mutual strategic planning

88. Partnering with clients

89. Types 2.8.2. Sourcing
1. Sole sourcing
2. Multiple sourcing
3. Single sourcing
Sole source is a non-competitive purchase or procurement
process accomplished after soliciting and negotiating with only
one source, so-called sole source, thus limiting Full and Open
Competition (FOC).
Sole Source is also known as: sole source procurement,
sole sourcing, sole-sourced contract, direct sourcing,
sole supplier, direct source,
Sole Source?
Specific products or services available from only one source, also
called sole source, sole provider, sole supplier, sole
vendor, or sole distributor.
Single Source?
A single source is a source specifically selected amongst
others, if any, due to specific reasons, i.e. replacement parts,
compatibility, quality, service, support, etc.
Sole Brand?
• Products or services from a specific manufacturer, whether
available from one or more than one source or distributor.

90. Sourcing
• Multiple Sourcing is the purchasing policy of using two or
more or even many suppliers to purchase certain components,
products, product groups or services.
Key advantages of Multiple Sourcing when compared to Single
Sourcing include:
1. Low dependency of suppliers.
2. Spreading risks.
3. Encourages price competition.
Single Sourcing Vs. Multiple Sourcing
• Single sourcing may not be the optimal strategy of a buyer
facing suppliers with strictly convex costs.
• In the original setting where suppliers bid, single
sourcing is only beneficial for a buyer that controls a large
fraction of the whole procurement market;
• in contrast, if suppliers organize auctions, then large
buyers prefer multiple sourcing while it is now small
buyers that prefer single sourcing.

91. 2.8.3. Supplier selection
Before supplier selection
- it must be decided whether to produce or outsource particular item
- the decision is a strategic one that must be made during the design stage
Questions:
- how critical the item is?
- does we have the technical knowledge?
- if not, can we develop?
- do we have suppliers specialized in producing the the item?
- if not, can we develop such a specialized supplier?
These questions must be answered in terms of cost, delivery, quality,
safety and the acquisition of technical knowledge
If we decide outsourcing is better and cheaper, then the supplier must
be selected
Stages
1. Survey stage
2. Enquiry stage
3. Negotiation and selection stage
4. Experience stage

92. Supplier selection
Conditions for selection and evaluation of suppliers
listed by Dr. Kaoru Ishikawa
SUPPLIER
1. understands and appreciates the management
philosophy of the organization
2. have a stable management system
3. maintains high technical standards
4. provide raw materials / parts required by the
purchaser
5. capability to produce the amount of production needed
6. should not breach corporate secrets
7. right price, right delivery time, easily accessible in
transportation and communication, should have
system to trace the product or lot
8. sincere in implementing the contract provisions
9. Should have an effective quality system and
improvement program such as ISO / QS 9000
10. Should have a track record of customer satisfaction and
organization credibility

93. 2.8.4. Supplier rating
• A Supplier rating (sometimes referred vendor
rating)
- a business term used to describe the process of
measuring an organization's supplier capabilities and
performance.
- Supplier rating forms part of an organization's program.
- Such systems can vary in the criteria that are assessed;
- falls into quantitative and qualitative types
- the process varies from one organization to another
Common criteria often include:
1. Quality – (including Delivery schedule adherence )
2. Cost/Price
3. Capability
4. Service
• Results of each variable are then weighted into a final
score – usually a percentage, allowing suppliers to be
ranked.
- an ongoing activity
- suppliers are often assessed continuously or
periodically (i.e. assessing the last year's trading).

94. Supplier rating
- various criteria can be analyzed
- a common approach is to utilise Cost Quality and Delivery
- apply weighting against criteria in accordance with company
requirements
-brand suppliers according to results
- highlight poor performing suppliers so that they can be
removed from use.
- trigger improvement programs on suppliers that score low.
- trend analysis is often applied to supplier rating
- it allows organizations to monitor changes in supplier
performance over time.
- both suppliers and buyers should utilise supplier ratings
system to drive performance and improve the business relationship.
(An example of supplier score card)

95. Problems with vendor rating
• Problems with vendor rating
• Effective supplier rating requires a consistent and objective approach -
where rating criteria are open to interpretation inaccuracy can be
introduced. This is especially true where subjective criticism from
buyers is introduced into the rating process. It must be remembered
that past history is not always a guide to future performance and that
suppliers should be consulted as part of the assesment.
• EXAMPLE KEY PERFORMANCE INDICATORS (KPIs)
• TOTAL COST OF OWNERSHIP (TCO)
Cost Reduction Opportunities No.of targeted cost-reduction activities
identified in advance [per month/quarter/six
months/year]
Cost Reduction Realization Realization of cost-reduction targets
(savings / initial total contract value) x 100
Price Competitiveness Product/service is competitively priced
against market rates
Discounts Volume or other discounts post-award
(savings / initial total contract value) x 100
Cost Disclosure Full cost breakdown given when requested (inc.
profit margin)

96. Problems with vendor rating
• DELIVERY
Delivery in Full Quantity supplied matches the quantity ordered and
• each line of the order has been supplied.
(inaccurate deliveries / total no. of deliveries) x 100
• Delivery on Time Delivery to be made within the agreed time
(missed deliveries / total no. of deliveries for period) x 100
• Average Lead Time
Current lead time compares favourably with previous lead
time(improvement of lead time for this period / lead time for previous
period) x100
• Average Time to fill Emergency Orders
Time must be in line with agreed SLA turnaround or within agreed
timescales for these particular orders.
• Consignment Stock Availability
Contractor holds adequate range/no. of units of stock to offer a
reliable
service to the SPCB
(no. of stock-outs / total no. of requests for consignment stock) x 100

97. Problems with vendor rating
• PRODUCT/SERVICE QUALITY Product/Service Compliance
Product/service to meet the agreed, documented standards and also
be fit for purpose (during whole life cycle).(acceptable items / total no.
of items ordered) x 100
• Reliability /Durability Product/service to have been reliable /durable
throughout its use.
• Usability The product is user-friendly when in use
• User Survey Users perception of product / service taken from agreed
user survey.
• Technical Support Acceptable quality of technical information/support
provided by contractor for goods supplied
• Contractor Response Time Timely attendance on site in response to
initial fault report)
(SLA “response” times missed/ no. of calls logged) x 100
• Repair Lead Time Compliance with agreed lead times for repairing the
product or restoring service (SLA “fixed or resolution” times missed/
total no. repairs carried out) x 100
• Equipment Downtime If “downtime” of the system is required, contractor
provides x days notice (notification missed / total no. of downtimes) x
100

98. Problems with vendor rating
Client-site Monitoring Effort: Minimal SPCB resource dedicated to
monitoring contractor performance (actual time spent / goal) x 100
Supply Disruption: Contractor to provide notification of any supply problems
for orders placed with X days.(notification missed / total no. of supply
problems) x 100
HEALTH AND SAFETY
Endangering Health and Safety : Zero reports in relation to the product/service
endangering the H&S of MSPs, staff or visitors.
ADMINISTRATION
No. of Credit Notes per month : Contractor issues no more than x credit notes
per month
Invoice Presentation : Invoices presented in a timely manner to allow on-time
payment

99. Problems with vendor rating
Provision of Quotations:Quotations requests are turned around within x
days
Documentation:Full supporting documentation received for all
installations/updates within x days of acceptance of
installation/update.
BEST PRACTICE & CONTINUOUS IMPROVEMENT
Contractor Innovation : Contractor is proactive in suggesting innovative,
workable solutions (No of innovations actioned)
List of targeted value-added activities No. of
targeted value-added activities identified in advance
Value added activities : High success rate in bringing value added ideas
to fruition % targets achieved/ total no. of activities)
Pro-activity: Contractor is proactive in managing its relationship with the
SPCB
Responsiveness: Responds rapidly to requests for information & support
without having to be chased.
Responsive to Change/ Flexibility: Contractor is flexible in response to
changing SPCB requirements

100. Problems with vendor rating
Openness & Cooperation: Contractor is open and co-operative in its
relations with the SPCB, e.g. in terms of joint problem solving
Understanding of accountabilities & responsibilities : Contractor has a
clear understanding of its accountabilities & responsibilities under
the contract
Best Practices
Best Practices
Many of the ten best practices that are included below grow out of the
C5 (connect, coordinate, check, control, and cultivate) Aberdeen
operational supplier management framework, as discussed in
Aberdeen Group’s “Supplier Performance Measurement
Benchmark Report”.
Open Communication
The first best practice is open communication and data sharing
between parties to make sure that everyone is on the same page.

101. Problems with vendor rating
Strategic Supplier Selection
The second best practice is strategic supplier selection (often known as
supplier rationalization) for strategic engagements. This generally
means concentrating purchases with a small set of suppliers to
provide the buyer with greater leverage and fewer suppliers to
proactively manage in performance and quality improvement
initiatives. This does not mean single sourcing, as that is wrought
with risk
Mutual Performance Targets
The third best practice is the definition of mutually agreed upon
performance targets and mutually agreed upon metrics. Create joint
action plans with suppliers to meet these targets.

102. Problems with vendor rating
• Continual Scorecarding
• The fourth best practice is continual scorecarding to insure that
the metrics are continuously up to date. Scorecarding should be
done at least monthly, data tracked at a granular level by
location, trade lane and product family, and linked to customer
facing metrics. Linking primary KPIs across processes helps
supply managers understand how their metrics link up with
those of their customer facing peers.
• Proactive Monitoring
• The fifth best practice is proactive monitoring of the supply chain
on a regular basis. This is usually done by way of business
process management (BPM) technology that can alert
stakeholders to exceptional conditions, assign accountability,
track resolution progress, and automatically update affected
systems.

103. Problems with vendor rating
• Cross-Functional Problem Resolution
• The sixth best practice is the implementation of cross-functional
problem resolution consistent with overall business objectives.
Considering that there is a huge opportunity cost associated with
human productivity losses from resolving supplier performance
problems, it is vital that problems are resolved quickly and correctly.
Leading companies use pre-programmed rule-management systems to
guide them through intelligent resolution strategies. These systems are
updated regularly with best practices.
• Control Points
• The seventh best practice is the implementation of control points at
suppliers to minimize mistakes. Utilize technology to check that items
and quantities on supplier’s shipping documents on open order lines
reflect those on the most up-to-date purchase order.
• Predictive Analytics
• The eighth best practice is the use of predictive analytics and KPIs to
transform supplier scorecards into forward looking risk management
instruments to identify potential problems well before they materialize.
Best in class firms scorecard, but leading firms are now using predictive
analytics to spot inflection points and KPI correlations that identify
potential capacity issues, lead time variability, quality, or supplier
financial issues before they show up as a metric on a scorecard.

104. Problems with vendor rating
• Supplier Development
• Predictive analytics are good, but supplier improvement is better.
Work with suppliers to help them improve their processes, systems,
and capabilities. This will improve quality, reduce deviations, and
increase a supplier’s capability to meet customer needs.
• SPM Systems
• Finally, it should go without saying that the best way to achieve
supplier performance management is to implement appropriate
systems built on best practices that manage data, provide
standardized tools and templates, and come with useful, relevant
reporting.
• Steps to Success
• In Aberdeen’s “Supplier Performance Measurement Benchmark
Report”, they identified Steps to Success for laggards, average
performers, and best-in-class enterprises alike. As these steps were
thought out, generally applicable and on-target, they will be
repeated as-is and the reader referred to Aberdeen’s report for
additional insights.

105. Problems with vendor rating
• Laggard Steps to Success:
• Measure supplier performance constantly, and at least monthly. This
is one of our best practices and key to continued success.
• Improve visibility into supplier activity and inbound shipments. This
will insure that the data is not only up to date but reliable.
• Measure the downstream impact of supply disruptions. This will
assist in the creation of actionable contingency plans that will
minimize the cost of such disruptions when they can not be avoided.
• Create a cross-functional review team. A key to sourcing success in
general, it is especially true in supply risk management and supplier
performance management.

106. Problems with vendor rating
• Industry Norm Steps to Success:
• Transform procurement and material managers into supply base
developers. This is the essence of strategic sourcing best practices
and improves supplier performance management efforts across the
board.
• Implement supply chain management technology and manage
supply disruptions based on business goals. This is another best
practices that ensures that downtime and costs associated with a
disruption are kept to a minimum.
• Insert control points at suppliers. Yet another best practice, this
helps catch potential mistakes that could be costly before they
happen and streamlines operations.
• Make scorecarding more granular. Good scorecards are granular
scorecards and allow an organization to quickly zoom in on the root
cause of a problem.

107. Problems with vendor rating
• Best in Class Next Steps:
• Apply statistical process control techniques and kick it up a notch.
• Adopt business process management technology. A best practice
that allows an organization to catch exceptions as soon as the
relevant data enters the system and stop small problems before
they blossom into large problems.
• Evolve the scorecard into a forward-looking risk management
instrument. This best practice can assist the organization in
identifying potential supply chain problems before they happen,
giving the organization time to take corrective action before its
monitoring systems even notice a blip. It is the ultimate evolution of
supply performance management.
• Next Steps for Everyone:
• Ask an expert. As the great Sir Isaac Newton once said, “If I have
seen further, it is by standing on the shoulders of giants.” The best
learn from the best. Look externally for best-in-class providers that
can help the organization become best-in-class in supplier
performance management.

108. 2.8.5. Relationship development
Previous information on
• Partnering
• Supplier selection,
• Principles of customer/supplier relations,
• Supplier rating
- contribute to the establishment of the
relationship
Additional topics of
• Inspection
• Training
• Teams
• Recognition and reward
- contribute to the maintainability and growth of
relationship

109. Relationship development
1. Inspection : Phases :
(i)100% inspection- critical quality characteristics
(ii) Sampling - after gaining confidence in Q
(iii) Audit - continuing SPC- initiates its own auditing
(iv) Identity check - verify item No. and Q for accounting & IC
2. Training
Small Orgns., - C or Consultant must start the training process
Larger Orgns., - invite S to attend their courses or
present the course at the S’s plant
- is a requirement for partnership
- should be viewed as an investment; not an expense
3. Team approach
C/S teams are established in number of areas, viz., Product
design, Process design, and the Quality system
- involve Ss when the team is first assembled rather than at
the end of its activities
- Team meetings should occur at both parties’ plants so
they obtain a greater understanding of the processes

110. Relationship development
4. Recognition:
- suppliers should be recognized for the commitment of Quality
improvement journey
- incentives may be in the form of a “preferred supplier
category” with its rewards
usually the supplier is interested in recognition such as
publication of outstanding contributions in
- the Customer’ s newsletter
- a letter of commendation that can be pasted on the TQM
bulletin board
- or mounted in the supplier’s reception area
- PERFORMANCE FOCUSED- CUSTOMER DRIVEN
- PERFORM to PLAN

111. 2.9. Performance measures
• provide information to the senior management to be
successful in Quality and Productivity improvement
programs
• one of the Malcom Baldridge National Quality Award
core values is managing by fact rather than by gut feeling
• managing an Orgn., without performance measure is like
a Captain of a ship navigating without instrumentation
- the ship would most likely end up traveling in circles as
would an Organization
• measures play a vital part in the success or failure of an
Organization
Performance measures
1. Basic concepts
2. Strategy
3. Performance measure presentation

112. 2.9.1. Basic concepts
Basic concepts:
(i) Objectives
(ii) Typical measurements
(iii) Criteria
(i) Objectives- M.B.O
1. Establish baseline measures and reveal trends
2. Determine which processes need to be improved
3. Indicate process gains and losses
4. Compare goals with actual performance
5. Provide information for individual and team evaluation
6. Provide information to make informed decisions
7. Determine the overall performance of the organization

113. Basic concepts
(ii) Typical measurements
1. Human resources
2. Customers
3. Production (Manufacturing)
4. Research and development
5. Suppliers
6. Marketing / Sales
7. Administration
(iii) Criteria
In order to evaluate the existing measures or add new ones,
the following 10 criteria are recommended
1. Simple
2. Few in number
3. Developed by users
4. Relevance to customer
5. Improvement
6. Cost
7. Visible
8. Timely
9. Aligned
10. Results