TQM; TPM; LEAN; SIXSIGMA: What is the right strategy for organization’s business excellence journey
Posted: Jun 27, 2019
Starting Business Excellence journey is a strategic decision for any organization. Once top management decides to take this journey, the immediate question arises is what is the approach? Where and how to start?
Selection of right approach at the beginning is critical for the successful journey. Each organization is unique and challengers are unique. One solution does not fit other organizations and also same organization at different time periods. During the midway of the journey if organization realizes that the approach they are taking is wrong, they already lost lot of precious time! Also, it will confuse employees if organization changing the approach often.
A study says less than 2 % companies sustain the Business excellence journey beyond 5 years. This is because of selecting wrong strategy or using Flavor of the month approach. If key professionals and decision makers aware of various strategies and their suitability, the journey becomes very successful. In this paper we are making an attempt to provide a frame work for selection of suitable approach.1.0: The need for Business Excellence Journey?
There are four Cs which drive organization for Business Excellence.
Competition, Customer, Company/CEO Vision and Crisis. Today organizations have one or more of above reasons for taking Business Excellence Journey.
Note: Some organizations call it Operational Excellence which is according to the author is a sub-set of Business Excellence. While Business Excellence addresses the complete business environment including all stake holders, Operational excellence addresses the factors like productivity, quality, cost, delivery, morale, safety and service to customers. For Example:Operational Excellence may not cover market threats. However the scope and learning from this article equally applicable to Operational Excellence.2.0: Why selection of right strategy is very critical at the beginning of the journey?
During a conversation with one of the top management persons of a multi -national company, I understand that his organization is in business excellence journey from last 5 years. I asked him about the approach they are using for Business Excellence. He said, they started with TQM and after one year, they decided to change it to Six Sigma and later they found that lean is a better approach and currently they are using a customized method suggested by one of the leading consultant. On further probing, I understood that the overall perception about the entire journey is not good both from process and results perspective. I heard similar experience from many other professionals work for various organizations including manufacturing, process, service and healthcare industries. We should not forget that the journey comes at a cost and cost is huge.
Apart from direct costs like employee’s time and infrastructure, it also includes cost of losing competitive edge because of wrong strategies. Suppose if the above organization selected the right strategy in the beginning and stayed with it, it would have achieved greater results in 5 years. If we measure the loss in concrete terms in may run into several million dollars. We can call it COPS cost of poor strategy.3.0: How we know what right strategy is?
Before we answer this question, let us understand highlights of some of the popular business excellence strategies.
3.1: Some popular Business Excellence Strategies
3.1.1:Total Quality Management (TQM):"TQM is a set of systematic activities carried out by the entire organization to effectively and efficiently achieve company objectives so as to provide products and services with a level of quality that satisfies customers, at the appropriate time and price." – Definition by JUSE (Union of Japanese Scientists and Engineers). TQM is being practiced by many organizations from last 50 years and proven to be very powerful strategy for excellence. Its unique features are system driven approach and Total employee involvement.
3.1.2: Lean:"A strategy that focuses on relentless elimination of waste with the objective of making every step, task & activity creates value for customers".
"Lean production, also known as the Toyota production system, means doing more with less-less time, less space, less human effort, less Machinery, less material-while giving customers what they want"
In recent years, many organizations including hospitals using lean as a strategy for excellence.
3.1.3: TPM ( Total Productive Maintenance)
TPM is a strategy that focuses on improving the effectiveness of the plant, equipment and processes through the empowerment of PEOPLE. Originated from Japan and popularized by JiPM (Japanese Institute for Plant Maintenance) TPM is used by many organizations to achieve excellence. TPM is mostly practiced by organizations where machine utilization is critical however it covers other areas through its 8 pillar approach.
3.1.4: Six Sigma
Six Sigma is a powerful concept pioneered by Motorola, which is practiced by many organizations to achieve break-through improvements. Six Sigma is a best strategy to address variation. It uses DMAIC (Define Measure, Analyze, Improve and Control) for achieving Break-through improvements
3.1.5: Other Strategies
Apart from the above there are other strategies like BPR (Business Process Re-engineering) Balanced Scorecard, 5S, Quality Management Systems, Hoshin Kanri (Policy Deployment) which are either used directly or as a sub-set to one of the strategies above
3.2: Selection Criteria: What strategy best suits my business environment
One of the Business Guru said
"All Business excellence philosophies including TQM, Lean, Six Sigma, and TPM are like religions. The objective is same but approach is different".
The secret of success is constancy of purpose. Organizations should choose one philosophy which best suits its requirements and adapt other best practices under the same umbrella. Experts say less than 2 % companies sustain business excellence journey beyond 5 years. This is due to lack of constancy of purpose and not focusing on soft part like culture. Organizations who adopt "Flavor of the month" approach change the course of the Journey often and remain in the same place after several years. Whereas, organizations who follow umbrella principle continue the journey under all circumstances like leadership change, change in external environment etc…."
So the key take away from the above paragraph is, it is not the strategy you select makes the difference but the continuity of the same for longer period without changing the name of the umbrella. Nobody stops organization from adapting best principles from other strategies but the most dangerous decision is changing the umbrella itself!4.0: Example of a framework for Excellence
Below are the some customized models of Business Excellence adopted by various organizations
Example of harvesting fruits of excellence in stagesConclusion:
The reason why less than 1 % of organizations sustained business excellence journey beyond 5 years is that they did not change the strategies often but adapted best practices and tools as and when required without changing the main umbrella. The organizations using TQM strategy does not mean that they are not using Six Sigma for problem solving. Similarly, the organizations using Six Sigma as their strategic umbrella may use Quick Changeover or SMED concept to reduce time taken for changeovers.
Seven Steps Global is one of the top management consulting firms in Bangalore,India bring specialized skills and knowledge to assist companies in making the best possible business decisions.