Business Environment, Performance Excellence & Best Practices: India Perspective
(January 7, 2019)
Quality management, performance excellence, benchmarking and environment are few words for which modern corporations are quite serious and allocating their time, resources and money to be able to attract, retain customer and market share in a competitive global market.
In today’s world customers are well-informed thanks to technological innovations that have diffused geographical boundaries. The marketplace has changed from local to global and the business environment has become increasingly complex. There are always pressure on the management to improve competitiveness by lowering operating cost while improving their reach. Customers have now access to a wide range of products and services to choose from and are becoming increasingly aware of the rising standards. The global revolution has forced organizations to invest substantial resources in adopting and implementing total quality management strategies in an ever-increasing demand for quality product and/or services.
Today, organizations have adopted Business Excellence Models (BEMs) to assess and improve their work practices and performance. BE can also be described as a “business aim (that circumstance where all stakeholders are satisfied), and quality management … as the means of achieving that aim” (Foley, 2004, p. 13). BEM, in particular, can be described as a non-prescriptive organizational framework based on several main criteria that can be categorized as enabler and result (Dahlgaard-Park, 2008; EFQM, 2003; NIST, 2010). Dahlgaard-Park (2008).
For providing a culture based on process management an accredited quality assurance system such as ISO 9000 are essential although perhaps not enough by themselves. A starting point and a key element for the implementation of total quality management (TQM) is, therefore, Quality systems and which are widely acknowledged (Oakland and Porter, 1994; Porter and Parker, 1993; Price and Chen, 1993). The Lean production works synergistically to create a streamlined, high- quality system that produces finished products at the pace of customer demand with little or no waste is its core thrust. The Six Sigma approach when implemented delivers data to drive solutions, delivering dramatic bottom-line results popularly known as the statistically based problem-solving methodology.
The integration of Lean Manufacturing and Six Sigma (Smith 2003) enable and help companies across the spectrum and have found it a most effective way to get rid of the defects that lead to refine and change and create the whole uniform idea of continuous improvement. Per Salzman et al. 2002, Antony et al. 2003, the prerequisites for effective implementation of the respective program:
• top management commitment,
• cultural change in organizations,
• good communication down the hierarchy,
• new approaches to production, and;
• to servicing customers and more training and education of employees
In today’s economic world society’s organ of economic expansion, growth and change is Business beyond doubt. An activity consisting of manufacture, processing, purchase, sale, and/or marketing of products and/or services is referred to or known as business.
Abundant literature is available on benchmarking, continuous improvement, business process re-engineering, and many other approaches to modern management. The corporate boardroom was introduced to total quality management (TQM) and total productive maintenance (TPM) erstwhile two shop ﬂoor entities. Both have received wide acceptance in the industry now (Singh, 1991; Bhadury and Mandal, 1998; Umeda, 1996; Sahay et al., 2000). Per Harrington (1995), to remain competitive in the 21st century, the organization need to improve continuously and perform to an excellent standard thus establish a new benchmark.
The mothers of most Excellence Models (EM) / National Quality Awards (NQA) are essentially the Deming Prize, Malcolm Baldrige National Quality Award (MBNQA) and The European Foundation for Quality Management (EFQM) models, however, it has been observed that several EM/NQA are unique despite having many features of these models (Bohoris, 1995; Miguel, 2001; McDonald et al., 2002; Hughes and Halsall, 2002; Tan et al., 2003; Talwar, 2008).
A global perspective is emerging through the integration of various aspects of quality in excellence models (McDonald et al., 2002) since the organizational quest for excellence has resulted in various conceptualizations and paradigms (Hermel, 1997). Per Harrington & Lomax (2000), it has been estimated that there are more than 900 improvement initiatives that include approaches, systems, tools and/or techniques that can be used for improving an organization’s performance (Adebanjo & Mann, 2008a; Business Performance Improvement Resource [BPIR], 2009.
Discussion and Analysis
Every business organization and each industry operate in a unique environment. One cannot think that a business can function freely without interacting and influencing forces that are outside its boundary. Let us first understand the “environment – which is dynamic, multi-faceted, complex, and further, it gets divided into External and Internal” factors under which the business is being conducted.
A. External-Macro (General) Environment: “opportunities and threats” are being created and included here to all businesses which are operated in any country and within broad global aspects. Following are the elements of External Macro environment:
i) P-E-S-T-A-L: refers to – Political-Economic, Ecological, Socio-Cultural, Technological, Legal-Regulatory forces. All the business, industries, (small, large, and medium) across countries (whether developing, backward, or developed) are subject to these environmental factors, and they focus their scanning in each area on trends that have far-reaching impact and the relevance on their existence and survival.
B. Micro/Operating Environment: The environment which is close to business and impacts their capacity to work. It consists of Suppliers, Competitors, Market Intermediaries, Customers, and the Public.
C. Internal Environment: It includes 5 Ms’ i.e. material, machinery, money, man, and management that will have both “strengths and weaknesses.”
The various objectives of business relate to profitability, productive efficiency, growth, technology dynamism, stability, self-reliance, survival, competitive strength, customer service, financial solvency, product quality, diversification, employee satisfaction, and welfare, and so on. However, a critical purpose of business is to create customers. It is the customer who determines what a business is. A broader environment includes Business which functions as a part of it. The inputs drawn from the environment are in the form of financial, human, physical, and other related resources. Through various processes, the business converts these resources into outputs of products and/or services. Because there involves diversity, uncertainty, complexity, and limitations of entrepreneurs/managers, environmental forces are difficult to analyze and understand.
Framework to understand the environmental influences
• Take an initial view on uncertainty.
• Audit of environmental influences to identify significant forces which are likely to affect the organization’s development or performance.
• Focus towards the immediate environment of the organization which is an obvious consideration.
Why environmental analysis?
An environmental analysis would generally include the following three goals:
• First, it must provide inputs for strategic decision making.
• Second, it should enable, facilitate and foster strategic thinking in business organizations.
• Third, the analysis must provide an understanding of current and potential changes taking place in the broader environment.
Business Organization and its Environment
The relationship between business organizations and its environment may be discussed in terms of interactions between them in several major areas like an exchange of information, exchange of resources, exchange of influence and power, etc.
It is said that one approaches perfection in work, one approaches excellence. Per Adebanjo & Mann (2008a, p. 1), BE can be related to Business performance results that have been validated by assessments using proven business excellence models is defined as “Excellence in strategies, business practices, and stakeholders.”
Understanding Total Quality Management (TQM) leading to Performance Excellence
Quality is a continuous improvement process towards a predictable degree of uniformity and dependability, Deming stated and identified 14 principles of quality management to improve productivity and performance of an organization. Quality as “fitness for use” as described by Juran. He further advocated that every person in the organization must be involved in the effort to make products or services that are fit for use.
Per Crosby quality must conform to requirements. Zero defects and doing it right the first time were the focus area of Crosby. Per Ishikawa quality does not only mean the quality of the product, but also a quality of management, of after-sales service, the company itself and the human life. Total quality as continuous work processes, starting with customer requirements and ending with customer’s satisfaction defined Feigenbaum.
Various research papers have shown the benefits of implementing quality initiatives which have helped identify a set of critical factors for successful quality management implementation, to improve performance and customer satisfaction. The activities which must be completed to achieve the organizational vision and objectives are being considered in Critical success factors (CSFs). If organizations focus on the management of these critical factors, improvements in quality performance and its reflection in financial results are bound to happen revealed literature.
While Wali, Deshmukh, and Gupta have tried to synthesize various critical factors given by some authors, the factors and the approach may vary from author to author, country to country, however, eventually it leads to the goal of ‘continuous improvement and performance excellence’. Some 76 TQM factors (1974 to 1995) were compared and then analyzed, validated by Sila & Ebrahimpouri and their impact on different performance parameters across the nations. The findings showed most commonly extracted factors which include:
When selecting appropriate improvement initiatives, the areas in which the initiatives will be implemented and the levels of BE maturity are some of the contextual factors that need to identify and must be considered (Mohammad et al., 2009; NIST, 2010; Saunders & Mann, 2007). There can be few initiatives which can be used across more than one area such as, Knowledge Management, Self-assessment based on BEM, Benchmarking, Quality Management System, so on and so forth.
Over the past three decades, more organizations from various nations are using Business Excellence Models (BEMs) to assess and improve their work practices and performance. Across the globe, 83 countries have adopted and are using 96 national Quality / Business Excellence Awards (BEM) in some way/various ways, per a few studies findings.
Per Jackson, 2000; Ricondo & Viles (2005), there cannot be one size to fit all while selecting a single BE model, therefore, consultants, practitioners, and/or academicians must understand that the organizational profiles, all the relevant improvement initiatives, as well as the critical contextual factors, should be considered in the beginning to help them make an informed decision in selecting, adapting and adopting the most appropriate improvement initiative for a given context or situation for business organization.
Table 1.1 – An approach based on D-M-A-I-C Principle
A proposed framework for Lean Sigma implementation in the organization.
Table 1.2 – Framework for EFQM Model, 2010
Source: EFQM (2010), EFQM Excellence Award, http://www.efqm.org/.
Frameworks of the Malcolm Baldrige National Quality Award, 2009-10
Organization Profile: Environment, Relationships & Challenges (Table 1.3)
Source: NIST (2009), Baldrige National Quality Program, http://baldrige.nist.gov/.
Business Excellence (BE) in Indian Businesses
The beginning of 1990s Indian business captains realized the strategic implications of quality and maintenance to improve performance. Initially, Indian executives did not pay much attention towards equipment related failures and losses due to protected and controlled economy. Maintenance was viewed as an operating expense to be minimized and a reactive problem ﬁxing.
However, pressure from customers to reduce defects, costs, and lead time have forced management to pay attention towards maintenance and allied issues through improvement drives like TPM. Indian executives are clear now that TPM is an investment like TQM and not a waste. TPM helps in reducing failures and zeroing down the defectives to ensure quality at reduced cost.
Due to the realities of the domestic business environment, the importance of leadership for TPM and TQM in the Indian context is unquestioned. The companies in India, both family owned business houses, and professionally managed still embody the administrative rule-bound and top-down management process. On the other hand, TPM and TQM are far more challenging in public sector undertakings, where apart from normal business impediment, managers deal with inflexible government control, large and unmanageable operations, watchful unions and bleeding bottom lines and changing environment.
Practical Implications for Indian SMEs
Per Job P. Antony (2010), the business excellence model developed and tested for measuring performance and excellence, can be used by small and medium enterprises to evaluate their performance and excellence separately and periodically. Instead of taking it as the outstanding value of organizational performance, the study helps managers to recognize organizational excellence as a measure needing special attention.
Lean Sigma Framework in Indian Context
Lean and Six Sigma are available to organizations today for achieving dramatic results in cost, quality and time by focusing on process performance, the two widely acknowledged business process improvement strategies. Lean Sigma combines techniques from Six Sigma with the waste and non-value-added elimination tools and techniques from Lean Manufacturing and the variability reduction tools to generate savings to the bottom-line of an organization. To enhance the bottom-line results and win customer loyalty, the framework seeks to integrate Lean tools (5S System, current state map, and TPM within Six Sigma, e.g. DMAIC methodology to enhance the end financial results and win and retain customer loyalty.
Zero Defect * Zero Effect (ZED) Certification by the Ministry of Micro, Small and Medium Enterprises (MSME), India
The objective of the launch of the scheme (notified in Jul-2016) is an extensive drive of the government to help enable competitiveness and empower MSMEs by providing them required financial support (viability gap) in ZED assessment, rating and handholding of their manufacturing processes based on accepted Quality and Environment criteria. A national rollout of ZED seeks to assess, rate, and handhold more than 22,000 MSME units in the country in next three years, and further target to cover 12,50,000 (1.25 MN.) in next seven years of time.
It will be of interest for stakeholders to know the journey of ZED movement initiated by the MSME ministry with able support from the Quality Council of India (QCI).
ZED Maturity Level is a two-dimensional maturity aspect of ZED model will have total 50 parameters categorized into (Table 1.4)
The foregoing discussion has provided various perspectives about the importance of Quality management, critical factors, and various tools for implementation in an environment to which businesses and corporations are both party and stakeholder. Indian corporate has adopted various models related to quality for improving their overall performance for the last two decades. However, these quality-related efforts must be taken forward to SMEs and MSMEs in the country by which quality principle will get percolated to a last mile in the entire chain. And it will enable and help businessmen to participate confidently in a fiercely competitive market and achieve success.
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About The Author
Sunil B. Kapadia is a Consultant at Sun Investments & Financial Services, Pune.