1. Quality-Cost Connect

    September 28, 2015 by ahmed

    Potential_gains2

    By Suresh Lulla, Founder & Mentor, Qimpro Consultants Pvt. Ltd.

    Multinational banks are known to invest in excellent infrastructure and executives. The lowest designation for a new campus recruit two decades ago, in India, was nothing less than Vice President. Salaries matched the designation. The self esteem of these freshly recruited students was always at a zenith.

    They were the prize catch for the most popular campus recruiters—multinational banks.

    I was invited by a multinational bank in South Mumbai, the financial capital of India, to experience excellence. An autopsy of sorts. Yes, this branch of the bank had marble flooring, piped music, art that only a successful bank could afford personal computers at every desk, and more. Perfect.

    The head of the branch took me around to meet with several of his executives. I will focus on one 200 square feet section that was partitioned with a three feet high wall. This section seated four executives, in the four corners, facing the partition wall. All four in pin striped suits. Each of the four was very busy working on his dedicated personal computer

    I asked: “What is the activity of this section?”
    Branch head: “They print the monthly statements of account holders.”
    The qualitist in me: “Oh, they manufacture monthly statements.”
    Branch head: ???
    More of the qualitist: “What is the failure rate for these monthly statements?”
    Branch head: “Can’t you see…it’s all computerized!!”
    Yet more of the qualitist: “Oh. I see. Do any customers come back for reconciliation?”
    “Hardly any.”
    “How many?”
    “Perhaps one in 200.”
    “Ah ha. That’s 0.5% failure rate.”
    “So what’s the cost of failure?”
    “Minimal.”
    “Let’s find out”

    The branch head and I invested a half-day finding out what work the four executives actually did. As it turned out, one needed the equivalent of two persons to do 99.5% of the work right the first time and the equivalent of another two to correct 0.5 % failures!

    Potential_gains

    So what is the cost of poor quality (COPQ) of this section? It’s 50% of the budget for that department plus the equivalent of marble flooring, piped music, and art.

    The bank heard the alarm. They commenced their pilot projects by working on COPQ for the auto loan process in South India.

    Lessons Learned:
    – COPQ is alive and well in every service process
    – A low failure rate can disguise a high COPQ
    – COPQ is an opportunity
    – Problems for pilot projects should have high visibility
    – Quality has two arms: product/service features and freedom from deficiencies

    This fable aims to demystify the concept of COPQ and how it affects our balance sheets everyday! The costs associated with poor quality are due to both sporadic and chronic quality problems.

    These costs together are referred to as COPQ. The COPQ in any organisation is approximately 30% of total costs. Consequently, the proposition is: halve your COPQ and double your profit (without capital investment).

    A sporadic problem is a sudden, adverse change in the status quo, which requires remedy through restoring the status quo. Firefighting.

    A chronic problem is a long standing adverse situation, which requires remedy through changing the status quo. Fire prevention.

    The skills required for fire prevention are distinctly different to those required for fire fighting. Likewise, the skills required for solving chronic problems are distinctly different to those required for solving sporadic problems.

    Do managers have the skills to solve chronic problems?


  2. Quality Equals Trust

    September 20, 2015 by ahmed

    Quality

    Originally posted on Quality Digest by Carlos Venegas and Gaurav Tamta

    Quality goes beyond the purview of the quality professional. Quality, it has been said, is everybody’s business, but too many outside this discipline see it as something dry, bland, and boring—and perhaps for good reason.

    For example, one of the authors of this article had the painful, all-too-familiar experience of annual quality training, in this case by enduring someone reading PowerPoint slides out loud in an officious monotone. Quality was a check-the-box exercise. Yuck!

    Here is how people in a software company (where the other author worked) described quality: “When the quality people talk to us, it seems very boring, monotonous, overly methodical, and number-driven. We don’t even understand what they say. Who wants to hear that? We get pushed by our managers to attend.”

    Too many quality efforts are experienced—and received—this way. The result? Resistance. Frustration. Apathy. And the cost to the organization? Quality suffers, employees suffer, and customers suffer.

    It doesn’t have to be this way. There is a way to turn around a quality program that’s not getting results. It begins with understanding that quality is not just about numbers, parameters, or measures. Like every other business process, it’s also about human behavior. So how can we humanize quality?

    Quality = trust
    If you want people to care about quality, you need to help them understand that quality is an important part of working relationships. It affects how they are viewed by others, and how they affect others by their actions.

    The objective is simple: Help people understand the emotional effect of quality. They need to see that quality is intertwined with trust, a value many hold dear and believe is worth upholding.

    Less quality = less trust
    Trust is powerful, and not just as an emotionally charged value. It has economic currency.

    In the article, “Trust, Transaction Cost Economics, and Mechanisms,” appearing in Handbook of Trust Research (Edward Elgar Publishing, 2006), authors Reinhard Bachmann and Akbar Zaheer claim that, in large part, this is because trust increases the speed of transactions. You’ve probably experienced this yourself. Think of those with whom you do business who consistently deliver a quality product or service. Isn’t your decision to use them again easier (and quicker) than deciding whether to use someone you don’t know or trust (yet)? Think of your colleagues: Isn’t it easier to work with the ones you trust to give you quality work? Now think of those you don’t trust because of the lack of quality in their work. You spend more time making sure you are getting what you expect, which is a frustrating, nonvalue-added process.

    Trust is built one interaction at a time
    “Trust is a practice,” write authors Robert C. Solomon and Fernando Flores in their book, Building Trust in Business, Politics, Relationships, and Life (Oxford University Press, 2003). This practice, or habit, is built one interaction at a time, whether we are talking about Amazon delivering an avocado to your door in two days, or your facilities department fixing your chair this afternoon, just like they promised. When you get what you expect when you expect it, your trust in the supplier and product or service grows.

    Trusting quality: making quality real
    If trust is built one interaction at a time, then attention to quality is the machine that builds trust. This is no easy task, but it is doable—and rewarding. A technology company, where one of the authors of this article was the global quality director, was able to build trust in quality with stellar production results. The company reduced defect rates by 74 percent in three months, and first-time-right rates doubled within two months.

    These improvements were made on a foundation of trust. The quality units began to demonstrate that their intention was to support operations, not find ways to pull them down. The traditional antipathy between quality and operations resolved into a positive partnership. Here’s how they did it.

    Quality champions received training in “soft skills.” This included training in change management, coaching and mentoring, and a change method called Appreciative Inquiry (AI).

    In the AI training, the quality team learned a model for analysis, decision-making, and creating strategic change. Rather than focusing on what wasn’t working, the AI training encouraged the quality team to focus on what the operations units were already doing well. Both teams together then envisioned the best possibilities, developed a way to achieve that vision, and then built on their strengths to implement it. With this approach, conversations during root cause analysis meetings and other quality review meetings evolved from judgmental, finger-pointing blame fests into productive, appreciative analyses of past successes, with brainstorming on how to repeat the success or even expand on it. Two opposing camps became two partners.

    In coaching and mentoring training, the quality team learned how to approach every staff interaction with empathy and humility. Team members became skilled in motivating the staff to understand and contribute to the quality vision. They felt accountable for the staff’s performance, and this encouraged both the quality team and the staff to develop innovative and resourceful solutions. The staff started taking more ownership of quality and generated more quality ambassadors over time.

    With change management training, the quality team learned to communicate effectively, i.e., to speak in a language the staff understood, without using technical jargon. Instead of using buzzwords like sigma value, failure mode and effects analysis, or hypothesis testing, the quality team worked with the operations staff to define the problem in terms that the staff would understand, and linked it to the operations staff’s key performance indicators (KPIs). This activated the staff’s “what’s-in-it-for-me” reflex and got the operations teams’ attention and commitment.

    The quality team also solicited and received regular feedback from the operations staff, which helped the team members improve their listening skills and build a connection with their operations counterparts. One example of feedback was when one member of the quality team was viewed as being rude and judgmental toward an operations team. Although this was not the intention of the quality team member, this individual would have remained unaware of the issue had feedback not been solicited. The person could then do something about the communication approach, leading to more productive outcomes.

    Although this might sound like a trivial example, there were many such communication disconnects. Each one of those disconnects was yet another brick in the wall that separated the quality team from the rest of the organization.

    Armed with skills in AI, coaching and mentoring, and change management, the quality team was able to tap into the workers’ pride and self-respect through skilled, effective conversations. This provided the momentum to build on a technically sound quality program.

    In our next installment, we’ll share the strategy used to rebuild this company’s quality program.


  3. South African Quality Institutes latest news

    September 5, 2015 by ahmed

    South African Quality Institute (SAQI) http://www.saqi.co.za is the national body that co-ordinates the Quality effort in South Africa. Their monthly newsletter is an excellent source of information to keep up with the latest quality issues in South Africa.

    SAQI082015

    • Why don’t people want to perform menial tasks? by Paul Harding
    • Sustaining Business Excellence at Organisational and National Level, by Dr Robin Mann
    • Whistleblowers: Victims or Villains? by Terrance M. Booysen
    • Quality in Schools: Does your child want to be a leader? by Richard Hayward

    Click here to download this newsletter.

     

     

     

     

     

     

     


  4. South African Quality Institutes latest news

    July 26, 2015 by ahmed

    South African Quality Institute (SAQI) http://www.saqi.co.za is the national body that co-ordinates the Quality effort in South Africa. Their monthly newsletter is an excellent source of information to keep up with the latest quality issues in South Africa.

    SAQI062015

    • Deming, Zen and Mathematics, Education, by Ansie Harding
    • AnalysingOperational & Financial Waste for SMMEs in the South African economy, by Peter R Bushell and Ian McDougall
    • What us A3 Problem Solving?, by Jacques Snyders
    • Sexual Hassassment: Dealing with the Pests, by Terrance M. Booysen
    • Quality in Schools, by Richard Hayward

    Click here to download this newsletter.

     

     

     

     

     

     

     


  5. South African Quality Institutes latest news

    July 17, 2015 by ahmed

    South African Quality Institute (SAQI) http://www.saqi.co.za is the national body that co-ordinates the Quality effort in South Africa. Their monthly newsletter is an excellent source of information to keep up with the latest quality issues in South Africa.

    SAQI062015

    • Deming, Zen and Mathematics Education, by Ansie Harding
    • Need a quick profit boost?, by Ed Hatton
    • The lean report: lean news, notes and know-how, by Javed Cheema
    • Economic crime in South Africa: fact or fiction, by Terrance M. Booyen
    • Quality in Schools, by Richard Hayward

    Click here to download this newsletter.