Perfecting the Process
L&T Electrical & Automation (E&A) winning the coveted Deming Prize for the year 2019 for excellence in Total Quality Management (TQM) is a reflection of the company’s commitment towards continual improvement in its processes and the quality of its products and services. The leaders at E&A take us through the journey as they recount the changes implemented that made this recognition possible…
L&T Electrical & Automation (E&A), a major business portfolio of Larsen & Toubro, is into low and medium voltage switchgear products, electrical systems, energy meters and automation solutions, catering to industry, utility, building & home, infrastructure and agriculture segments.
This year, the company’s organization-wide Total Quality Management (TQM) efforts have borne fruit, making it the first switchgear company outside Japan to have been awarded the prestigious Deming Prize for quality standards in India. The Prize is an annual award given by JUSE (Union of Japanese Scientists and Engineers) to organizations that successfully implement TQM practices and is one of the highly regarded awards in the world in the field of management practices.
“TQM is a journey and with the Deming Prize we have just reached a milestone. We are happy that our team effort has received a global recognition and that L&T’s name has appeared for the first time on the JUSE quality website. That is a right feeling for us,” shares Girish Tiwari, Vice President, Head – Electrical Standard Products, E&A.
Beginning is Half Done
Although the company took to the path of TQM in 1991, the attempt took a structured form only in 2011. “We went for TQM in the early nineties in the areas including Employee Involvement, Waste Elimination, and Structured Problem Solving. The initiative in between became dormant. In 1995, we started sending our people to Japan for training programs. This was the time when we started getting influenced by the Japanese way of TQM. Meanwhile, we had Japanese gurus visiting us on different occasions and guiding us on new product development, and philosophies including Kaizen, and Six Sigma,” recounts Tiwari.
It was in the year 2011 that the team deemed itself ready to take a crack at TQM practices yet again and eventually qualify for the Deming Prize. “So, it’s been a journey of eight years,” he adds.
When the company started implementing TQM, some doubted if the methodology, which is more successful in the auto industry, would be equally effective in the switchgear segment. “We have shown and seen ourselves that basically it is an engineering industry, and TQM is an approach and a quality mindset which can be applied anywhere. It worked in the auto because all the new concepts of manufacturing generally emerge from the auto set up,” he adds.
“At a macro level, it is called macro excellence. It is not just about manufacturing; it is about process excellence across businesses,” comments Dr Hasit Joshipura, Member – Executive Committee, Larsen & Toubro and Senior Vice President & Head, E&A.
Towards Winning
The Prize has a precedent process which requires getting trained by Japanese Senseis who visit a company’s plants once a quarter. They normally spend two or three days per plant, review its various processes, reveal the current level the company is at and guide on its future course. “It’s like how a guru gauges one’s preparedness and passion, and hand holds through each step to reach a global benchmark,” explains Tiwari.
The guidance has helped the company now operate at a customer dpm level of 150-160 from 600-700 in 2014, which
is four times reduction in customer complaints.
Learnings Along the Way
Although, TQM is perceived as managing quality in general, what the company learnt in its journey was that it is also quality of management. “The key is that whatever is there to manage – inventories, cost, IT operations, customers, suppliers, employees – must be managed well. A KPI in place demonstrates if improviza-tion is on,” shares Tiwari.
There have been all-round improvements in many areas including efficiency and preven-tive maintenance. “We earlier would work on minimizing the number of breakdowns. But we were taught to understand our machines so well to be able to correct them before they break down, leading to production stoppage,” he adds. The company’s Operating Equip-ment Efficiency (OEE) which
was at 78 percent is now at 90, and the goal is to reach 95 percent.
The Deming Prize auditors assess companies to see whether they are result-oriented. “They use the phrase ‘respect for result’. We would show them our graphs where we could not get close to our targets. They taught us to scientifically decide our targets to gain the clarity needed to achieve them,” states Tiwari.
That SOPs (Standard Operating Procedures) are crucial was another lesson learnt since it releases pressure off employees. “In our case, we made elaborate user-friendly SOPs, which our employees felt made their jobs lot easier,” he adds.
Simplifying Processes
At first, E&A applied TQM to manufacturing operations for a few years before spreading to other functional departments. “In factory there are a number of issues to be tackled - quality issue, supply chain issue, supplier relations, cost reduction etc. Once we achieved results there with TQM, we were asked to apply it to the design department to continue the improvement as the saying goes that quality is built in design,” notes Tiwari.
Acknowledging Best Practices
E&A is primarily a product business whose competition is with global leaders in the field. With its own designing, production, sales and marketing, the company is self-reliant and complete as an organization. “In India, since we own the leadership position, it is both our responsibility and a business requirement to know what will be needed by the customer tomorrow. While working towards Deming, we endeavored to excel at the processes we already had in place and come up with successful products which are called Hit Products by the Deming auditors. This is known as New Product Intensity,” explains Tiwari.
The normal practice is that after having accorded a company with the Deming Prize, it is told why was it found worthy of it. The reasons are spelt out loud and clear. “One of the things that was pointed out to us was that we were doing very well with regard to New Product Intensity, which means we have been able to identify, develop and roll out products which are needed by the customer. Second, our ability to involve everyone in the process was commended. Third was our machine efficiency. Now, we have machines that are running between 90 and 95 percent OEE; customer dpms have gone down by four times; our line fill rate, which used to be 84-85 percent is running on 98 percent; and supplier satisfaction is at the benchmark level. These were the areas that indicated to them that there was an overall impact on whatever we had tried to improvize upon,” reveals Tiwari.
Offering Hit Products
The Deming audit team acknowledged four things responsible for the company consistently coming up with successful products. The first thing pointed was its sales department which is kept in total sync with systems. E&A has a system of order loss analysis. “It is easier to evaluate when you win an order than when you lose it. But we have a system of understanding the competition whenever we fight or negotiate with the customer for an order. It is such that whenever we find ourselves pressed for price or for meeting customers’ requirements, the system conveys that particular input to the marketing team. The product management takes it up to the design team. This is the way we come to know what is likely to happen in the near future,” he adds.
The second thing is its products that do CSR, which normally is done as an activity. Every new product that the company produces is compact, made faster and with less weight, which means it uses less materials such as copper and silver.
The company keeps tabs on new technologies and ensures to incorporate them in the product development. Lastly, it was acknowledged that the products get developed with total involvement of end users. “We have customer groups where we go and share with them our product samples. We take their input to ensure that the final product is very close to what our customers are looking at. These are the four ways by which we come with successful products,” he says.
Advantage Deming
The Deming Prize, considered as the Nobel Prize for the manufacturing industry, is certain to add immense value to the brand L&T. “It will definitely work in our favour. We are being asked whether it will fetch us more business or orders. I think the question has to be revised; we are doing things that can convince the industry that this company will be successful in future because it has found the premise that processes produce results. We have proven that if one has processes in place, results come,” notes Tiwari.
“It does not matter if you get the award or not. One, it rallies the entire business around a single goal, which itself is a huge gain and second, you are sure to get benefit from the improvements in your processes. The award is an icing on the cake,” says Dr Joshipura.
He further adds, “There are no parallels like this where an Indian originator competes essentially with global competition for as long as we have competed, and yet is able to retain leadership. So, you need to do things to make sure that you remain and continue to have a seat on the table.”
The normal practice is that after having accorded a company with the Deming Prize, it is told why was it found worthy of it. The reasons are spelt out loud and clear.
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