Quality Management Implementation In

The Indian Automobile Industry

Management Essay
To examine the success level of TQM implementation in an automobile industry by
analysing the strengths and weaknesses of its critical success factors.

2. Research Questions
What are the critical success factors of TQM implementation in an automobile
industry?

To what extent have the critical success factors of TQM been implemented in the
automobile industry through the analysis of the strengths and weaknesses of the
critical success factors of TQM?

3. Hypothesis
1. In an automobile industry there exists a critical set of success factors for successful
implementation of total quality management.

2. The extent of TQM implementation is positively and significantly associated with

the strengths of the Critical Success factors.

4. Introduction
“Total Quality Management is not a destination but a journey toward
improvement.”
V. Daniel Hunt.
Quality by no means is a new concept in modern business. In October 1887 William
Cooper Procter, told his employees, “The first job we have is to turn out quality
merchandise that consumers will buy and keep on buying.” While working with
Daimler Chrysler to improve its quality several decades ago, a Vice President of the
United Auto Workers stated the importance of quality: “No quality, no sales. No
sales, no profit. No profit no job.”

One of the key elements of Ford’s 2002 Revitalization Plan was to “Continue Quality
Improvements.” The top two “vital few priorities” set by Ford’s president for North
America were “Improve Quality” and “Improve Quality”.

Thus we can see that quality assurance has been an important aspect of production
operations throughout history. Although initial initiatives focussed on reducing
defects and errors in products and services through the use of measurement,
statistics and other problem solving methods, organizations began to recognise the
lasting improvement could not be accomplished without significant attention being
given to the critical success factors that contribute to the quality of the management
practices used on a daily basis.

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The real challenge today is to ensure that managers continue to apply the basic
principles on which quality management and performance excellence is based. The
global marketplace and domestic and international competition have made
organizations around the world realise that their survival depends on high quality.

As the business world becomes more complex, quality must be approached from a
system, rather than a process perspective. Quality has transitioned from control, to
assurance, futher on to management. Thus it is important to understand the various
critical success factors which are responsible for the effective implementation of
TQM.

5. Literature Review
5.1 Background
The roots of TQM can be traced back to early 1920s when the concept was
developed in Japan in the late 1940’s and 1950’s and pioneered by Americans
Scholars Freigenbum, Juran and Deming. Total quality management (TQM), in its
total effect is to involve all stakeholders in organization fully in programs that will
increase organizational productivity, its profitability, effective work-place efficiency,
improved job satisfaction, employee morale, and continuous product quality
improvement.

Quality is a term that has significant meaning to both the producer and customer. In
today’s global cut-throat marketplace, the demands of customers are continuously
increasing as they require improved quality of products and services.

Total quality management (TQM) has become increasingly prevalent as one of the
management strategies in companies today with the objective of ensuring customer
satisfaction and loyalty, besides improving products and service quality and
reinforcing continuous improvement known as Kaizen. TQM is the only instrument to
either maintain competitive advantage or survive competitive disadvantage (Spitzer,
1995).
Total quality management is a major factor in the business quality revolution that has
proven itself to be one of the 20th century’s most powerful creators of sales and
revenue growth, genuinely good new jobs, and soundly based and sustainable
business expansion (Feigenbaum , 1999).

5.2 What is Quality?

In today’s business there is no single definition for quality. One of the ways quality
can be defined is as” the totality of features and characteristics of a product or
service that bears on its ability to satisfy the given needs” (American National
Standards Institute, 1978). Quality can be defined as the process to meet or exceed a
customer’s expectation.

The term Total Quality Management was developed by the Naval Air Systems
Command to describe its Japanese – style approach to quality improvement and
became popular with business in the United States during the 1980s. Total quality is
based on 3 basic principles:

To focus on customers and stakeholders

Ensure participation and teamwork by everyone in the organization

Creating a process focus supported by continuous improvement and learning

Total quality management is one of the measurements used in the automobile

industry to ensure that the cars manufactured are reliable, satisfying the consumers
at large and to ensure competitiveness in the market, as well as conformance to the
international standard.

All the existing automotive industries have reduced costs, increased process
efficiency and strive to improve the quality of their products and services by meeting
the needs of the people they serve through the application of total quality
management (TQM) principles.

As the competition is increasing globally quality management is gradually becoming

important to the leadership and management of automotive industry. By
implementing the following quality management tools, organizations will produce
benefits for owners, employees, customers, suppliers and society as a whole.

6. Concepts of TQM Philosophy

Many companies like Ford Motor Company, Motorola and Toyota Motor Company
have implemented TQM in order to meet customer requirements. There are six main
concepts of TQM philosophy (J Juran, G Merli):

Concept
Main Idea

Customer Focus

Goal is to identify and meet customer needs

Continuous Improvement

A philosophy of never ending improvement

Employee Empowerment

Employees are expected to seek out, identify, and correct quality problems

Use of quality tools

Ongoing employee training in the use of quality tools

Product Design

Quality should be in built in the process, sources of quality should be identified and
corrected

Managing Supplier Quality

Quality concepts must extend to a company’s suppliers

Measurement &Feedback

Process performance in financial and non financial terms should be measured and
feedback provision should exist.

Training &Development

Training programs along with education for the suppliers and subcontractors are
covered

6.1 Customer Focus

For every company customer is the king. The automobile industry also depends on
their customers and strives to meet their needs and also exceed their expectations
(ISO) by providing a perfect product. It is never easy to determine what a client
desires due to their changing tastes and preferences for cars. The automobile
companies must constantly gather information constantly, by research groups,
market studies, and meetings with clients, in order to remain close to clients’ tastes.
Customer Driven Quality Cycle

The customer driven quality cycle provides a view of the process in which customer
needs and expectations are translated into perceptions during the design,
production, and delivery processes (Bruce T. Barkley, James H Sailor, 2001).

6.2 Continuous Improvement

The term “continuous improvement” means incremental improvement of products,
processes, or services over time, with the goal of reducing waste to improve
workplace functionality, customer service, or product performance (Suzaki, 1987).

Customer’s expectations are always shifting to a higher level due to better and better
results.

When customers assess quality, not only do they compare companies to their last
year’s performance but also to every other competitor that company has (B.
Abohimed, 2001).

TQM is concerned with continuous improvement in all spheres of work like strategic
planning and decision-making, to detailed execution of work elements on the shop
floor.

Kaizen as it is referred in Japanese means ‘change’ or ‘the action to correct’ while

‘Zen’ means ‘good’ implying that Kaizen means a change for good or an action to
correct something to make it better. Kaizen aims to eliminate waste by improving
standardized activities and processes. One of approaches that help automobile
companies is to constantly improve is the plan -do- study – act (PDSA) cycle which
describes the activities a company needs to perform in order to incorporate
continuous never ending improvement in its operation (Deming, 1950).

Source: Chicago Tribune

PDCA cycle’s first step is to plan. Management must evaluate the current procedures
and make future measures to evaluate performance implementation plans based on
any problems they find.

The next step is to Do which means implementing the plan by documenting all
changes made and collecting the data for evaluation. The third step is to Check, i.e.
study the data collected in the previous stage. The data is evaluated to see whether
the plan is achieving the goals established in the plan phase or not. The last phase of
the cycle is to Act according to the results found in the first three phases.
“Over the long run, superior performance depends on superior learning.” (Peter
Senge, 1960). Continuous improvement should be a part of the daily work by being
practised at personal, work unit, and organizational levels.

6.3 Employee Empowerment

Empowerment as a process of decentralizing decision making in an organization,
whereby managers give more discretion and autonomy to the front line (Brymer,
1991). Continual and extensive training in quality measurement tools is provided to
the workers in order to empower them to make decisions relative to quality in the
production process and their contributions are highly valued.

Source: Employee Empowerment: The Rhetoric and the Reality

(Pearson, 1995)

One good strategy that enhances the feelings of empowerment in employees is

expressing confidence in them as well as establishing a realistic high performance for
them by creating opportunity for employees to participate in decision making and
giving them the autonomy to form bureaucratic constraints. Employees are always in
the best position to detect problems and impose improvements if they are equipped
to take steps to make improvements (Wilkinson, 1997).

6.4 Use of Quality Tools

TQM requires the employees to identify and correct quality problems using certain
graphical and statistical methods to plan work activities, collect data, analyse results,
monitor progress, and solve. These are also known as the seven means for quality
control which are:

Cause and effect diagrams

Scatter diagram

Flowcharts

Pareto chart

Histogram

Control charts

Checklist
6.5 Product Design
Every company should ensure that while building quality into a product it should
meet a customer’s expectation which is not an easy task as customers often speak in
everyday language. A product that is meant to be “attractive,” “strong” or “safe” can
have different meanings to different customers. It is necessary to convert customers’
everyday language into specific technical requirements in order to produce a product
that customers want.

A valuable tool to translate the voice of the customer into specific technical
requirements is Quality Function Deployment (QFD). QFD originated in 1972 at
Mitsubishi’s Kobe shipyard site. It benefits companies through improved
communication and team work between all constituencies in the value chain, such as
between marketing and design, or between design and manufacturing. For example
an automobile manufacturer would evaluate how changes in materials would have
an impact on the customer safety requirements.

Designing Production Systems for Quality

These three are the important production system design objectives. After Ford
acquired Jaguar, Jaguar’s quality improved rapidly due to production system
changes. This was due to Ford adopting Toyota’s production process at the Jaguar
plant which proved that production system affects quality (Smith, 2001).

Also Ford analysed incidents when defective purchased parts caused Ford to halt
shipments of vehicles which made Ford conclude that ‘manufacturing problems
caused 83 percent of these incidents, while design problems caused17 percent.’
(Wilson and Sedgwick, 2002)

QFD is a systematic procedure which is used to help build quality into the upstream
processes and also into new product development while avoiding problems in the
downstream production and delivery processes.

6.6 Managing Supplier Quality

TQM extends the concept of quality to a company’s suppliers. The philosophy of
TQM extends the concept of quality to suppliers and ensures that they engage in the
same quality practices. If suppliers meet preset quality standards, materials do not
have to be inspected upon arrival.

With the shift in emphasis from price to quality, automobile manufacturers have had
to restructure their ties with their suppliers. Spokespeople for the automobile
manufacturers generally emphasize how they are trying to build more cooperative
relationships with suppliers, based upon long-term contracts, information sharing,
and trust (Gardner, 1993).
Some of the benefits of developing long term business partnership include:

Reduction and elimination of the inspection of supplied parts and materials.

Improved product and service quality, and delivery performance and responsiveness.

Value for money purchases

Security and stability of suppliers

Transfer of ideas, expertise and technology between customer and supplier and
dissemination and implementation of best practise.

Exposure of the supplier to new tools, techniques, systems and business practices.

6.7 Measurement & Feedback

Deming has given utmost importance to the fact that all business processes should
be a part of a measurement system along with a feedback structure. The feedback
received should be studied by managers to identify the causes of variation at each
step in a process, and then concentrate on improving that subset of processes. (Paul
Arveson, 1998)

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This framework translates the ‘voice of the customer’ into measures of performance
which the organization can identify and improve. It also deals with internal measures
of performance, assessment of the suppliers and development of rewards and
recognition.

6.8 Training & Development

Companies committed to quality and high performance invest heavily in training and
education as such investments add value to organizational capabilities. The leaders in
quality like Deming, Juran, and Crossby actively promoted quality training and
education.

Training generally includes quality awareness, leadership, project management,

communications, teamwork, problem solving, interpreting and using data, meeting
customer requirements, process analysis, process simplification, waste reduction,
error proofing efficiency and safety.
7. Studies on TQM
As the Indian economy is globalising, achieving quality excellence is becoming one
of the basic goals of all companies specially the automobile companies. Many
companies are trying their best to get their hands on the Deming Award awarded for
achieving for quality standards in their manufacturing activities.

According to a few studies done around the world by a few companies on TQM, it
has been found that TQM has got a positive influence on a company’s growth and
success. When the financial performance of 600 quality award winner companies was
analysed, it lead to the conclusion that when TQM is implemented effectively, the
financial performance also improves drastically (Singhal and Hendricks, 1999). TQM
also helps companies to increase their market share and improve their
competitiveness as found in a study done by Mohrman and Powell in 1995. TQM is
considered to be a direct factor in influencing the corporate performance of a
company.

According to a study carried out on the efficiency levels of TQM in India, it was found
out that TQM implementation in Mahindra & Mahindra, one of the top India
automobile companies considerably improved its performance. A similar survey
carried out in Larsen & Toubro concluded that TQM has a significant impact on the
company’s financial performance (Singh, 2000). TQM implementation in Indian
industries even though is in its growth stage, is bringing about incredible changes in
the performance of the organizational work force and helps in increasing the
productivity and reducing costs.

Total Quality Management has gained for itself a substantial acceptance in Indian
automobile industry with the aim to raise the performance standards if Indian
companies to world class level (Dinesh Sethi, Deepak Tripathy, 2006).

But implementation of TQM is not an easy task. Many companies still do not commit
themselves to its implementation whole heartedly (Downs and Mohr, 1980, Miller,
1993). One of the major success factors for implementation of TQM is a strong level
of organizational commitment.

Four more indispensible questions required for each company to answer for the
successful implementation of TQM are:

1) Is there a presence of top management involvement?

2) Does the company face opposition from workers’ organizations?

3) Is the middle/upper management involved and interested?

4) Does there exist an organizational quality culture?

A Total Quality strategy is effective only through the long-term commitment and
devoted appliance by the top and middle management. The top management is held
responsible for setting goals, strategically planning and allocating resources to aid
implementation of all plans and initiatives. (Deming, 1982 & Oarvin, 1987).

Another important aspect for successful TQM implementation is employee

participation promoted at all levels. Individual responsibility can be discharged only if
power is delegated in different degree at all levels across the organization. Also the
mission, vision and policies of a company should be consistent with those of TQM.
Visionary leadership of the top management and complete involvement of the
middle management along with the support of employees results in TQM being a
successful endeavour in the company.

It is has been found out that 62% of the Indian automobile sector believes to follow
TQM as a guiding philosophy while 38% has still not adopted TQM as a guiding
philosophy (Caravatta, 1997, Sharma, 1997, Agrawal, 1999). It is estimated that 70 %
of the India automobile sector promises on time delivery more than 80 % of times.
According to the world standards, Indian automobile industry is lagging behind. Only
52 % of the automobile companies are working towards achieving a cost reduction
of more than 5% while shockingly still 48% of the organizations do not consider cost
reduction as an important aspect.

Unfortunately only 10-15% Indian automobile companies are using quality cost as
measure of their quality performance thereby loosing an opportunity to spot critical
areas for improvement (Harrington, 1997)

8. Six Sigma
Motorola pioneered the concept of Sex Sigma as an approach to measuring product
and service quality in the year 1987. Six Sigma provides an outline for
implementation of a total quality system. The word “Sigma” in Six Sigma implies
process performance. Six Sigma acts as a differentiator between world class and
average manufacturing companies with benefits in scrap and rework costs, reject
rates, achieved through teamwork and by removing organizational boundaries.

It is a statistical unit used for measuring a unit’s quality, with not more than 3.4
defects per million opportunities which imply achieving a quality standard of
99.99966%. Six Sigma covers the whole organization, including suppliers and
customers (Quality Times, 1998).

Six Sigma approach focuses on reducing variability and achieving excellence by

working on three key strategies:

Process optimization, standardization, and control

Part standardization and certification of supplier

Following a design for Manufacturability

Six Sigma Conversion Table

Source: Journal of Management Research, 2006

Six Sigma has been applied in product development, new business acquisition,
customer service, accounting, and many other business functions. It is not possible
for all processes to operate at a Six Sigma level. The appropriate level depends on
the strategic importance of the process and the cost of improvement relative to the
benefit. It is generally easy to move from 2 Sigma or 3 Sigma level to 4 Sigma levels,
but moving beyond that requires much more effort and sophisticated statistical tools
(James Evans, 2008).

The problem solving methodologies used by Six Sigma are:

DMAIC – used for projects aimed at improving an existing business process.

DMADV – used for projects aimed at creating new product or process designs.

8.1 DMAIC
Source: wordpress.com

Define – The first step while implementing Six Sigma is to define the problem in
operational terms to facilitate further analysis. A good problem statement identifies
customers and the Critical to Quality (CTQ) factors that have the most impact on
product or service performance and identify the performance metrics and the cost
implications of the project along with defining what is to be done by whom and
when (Thomas Bertels, 2003)

Measure – This phase of DMAIC process focuses on how to measure the internal
processes that affect CTQs. This requires an understanding of the relationships
between process performance and customer value.

Analyse – This stage focuses on why defects, errors, or excessive variation occur.
Finding the answers requires identifying the key variables that are most likely to
cause errors and excessive variation – the root causes. One of the tools of identifying
the root cause is the 5 “Why” technique which forces one to redefine a problem as a
chain of causes and effects to identify the source of the symptoms by asking why five
times (George Patterson, 2003).

Improve – Once the root cause of a problem is understood, the team needs to
generate ideas for removing the problem and improve the performance measures
and CTQs. Some of the techniques used to facilitate idea generation are
brainstorming, checklists, etc (Osborn, 2003).

The ideas generated are then evaluated and the most promising ones are selected,
confirming that the proposed solution will positively affect the key process variables
and the CTQs.

Control – This part of DMAIC focuses on how to maintain the improvements, which
includes putting tools in place to ensure that the key variables remain within the
maximum acceptable ranges under the modified process. Controls might be as
simple as using checklists or periodic status reviews to ensure that proper
procedures are followed or employing process control charts to monitor the
performance of key measures.

8.2 DMADV
The DMADV project methodology, also known
as DFSS (“Design for Six Sigma”), features five phases:

Source: SixSigmaTraining.net

Define design goals that are consistent with customer demands and the enterprise
strategy.

Measure and identify CTQs (characteristics that are Critical To Quality), product

capabilities, production process capability, and risks.

Analyze to develop and design alternatives, create a high-level design and evaluate
design capability to select the best design.

Design details, optimize the design, and plan for design verification. This phase may
require simulations.

Verify the design, set up pilot runs, implement the production process and hand it
over to the process owner(s).

In India, only 5% of Indian automobile companies seem to implement the Six Sigma
rule due to which they have not been able to achieve steady level of quality based on
±3 Sigma limits around the specified target value. Six Sigma is a tool for continuous
improvement making an organization to concentrate on the requirements of
customers, process alignment, and timely well planned execution (Skaria, 1995). Thus
to be able to compete internationally Indian automobile sector should follow Six
Sigma program in order to install the TQM philosophy. This would in turn help them
to map their performance overtime and to take required prior measures.
Although automobile sector in India implemented Six Sigma to gain competence in
its quality aspect, it still failed to implement it in the right direction. This was due to a
number of reasons like:

Absence of top management involvement & commitment

Practising an authoritarian behaviour and a hierarchical thinking.

Lack of adequate education and training for the employees.

No strategic goal setting and a weak system of monitoring.

Inadequate knowledge in the field of Six Sigma and its related tools.

Lack of passion to be the best in quality.

No building up of the practise of Kaizen, the culture of continuous improvement.

Not paying enough attention to the needs of the customers.

Impatience to develop a new strategy to achieve quality and thus resorting to a quick
unreliable way of fixing things.

Lack of collaboration, integrity, excellence and respect for each other.

During the 1970s and early 1980s there were not many automobile manufacturers in
India the growth of this sector was slow. But in 1983 a dramatic change in the
scenario occurred when Maruti was taken over by the Indian government and Maruti
entered joint venture agreement with Suzuki (Japan) which stirred a revolution in the
Indian automobile industry.

With the adoption of the policy of economic liberalization by Indian government in

1991, major car manufacturer companies such as General Motors, Fiat and Honda,
got a chance to set up their manufacturing bases in India.

Even after two decades gone after implementing TQM in the automobile sector,
India is still a very small player in the world auto market production. The overall
economy of India is a direct factor influencing the growth of the Indian automobile
sector and still lot is required to be done by the companies to implement TQM tools
like Kaizen, Six Sigma, 5S and TPM. Since growth of automobile in any country is an
indication of overall economy, thus lot need to be done by the automobile sector in
implementing TQM quality tools particularly 5S, Kaizen, Quality Function Deployment
and Business Process Re engineering.
9. Lean Organizations
Lean production was a concept developed by the Toyota Motor Corporation to focus
on the elimination of waste in all forms, including defects requiring rework,
unnecessary process steps, and unnecessary movement of materials or people,
waiting time, excess inventory, and overproduction.

One of the key tools used in lean production is the 5 S’s :

Seiri – Refers to ensuring that each item in a workplace is in its proper place

Seiton – Refers to arranging materials and equipments so that they are easy to find
and use.

Seiso – Refers to a clean working area so as to reduce maintenance problems.

Seiketsu – Refers to formalize procedures and practices to create consistency and

ensure that all steps are performed correctly.

Shitsuke – Implies keeping the process going through training, communication and
organizational structures.

10. Conclusion
All types of automotive industries aim to have reduced costs, increased process
efficiency and improved quality of their products and services by working towards
achieving the needs of their customers through the application of TQM. With
growing cut throat competition, TQM has become an important aspect of the
management of automotive industry. With the implementation of the quality
principles discussed above, companies will produce profits for themselves and also
satisfy the needs of owners, employees, suppliers and society as a whole.

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