TQM is a great tool for improvement, but what happens when a business tries to implement such a programme everywhere? Will it achieve a major improvement to the bottom line quickly? In the current revival of TQM there is a recognition that results must come quickly. Management will not wait years to see bottom line results; they want them now. For this reason consultants selling TQM insist on gathering ‘the low hanging fruit – to show early success. Focus is on demonstrating early success.
The problem with most TQM programmes is that they are not focused on the constraints of the business. Improvements will be made, but either they will be small or their impact will not translate into bottom line results. Only those companies that are lucky enough to attack the right problem will see big improvements. Usually the rest will give up on their TQM programme – as happened in the past.
What sort of a quality improvement do we really want? Of course those bringing breakthrough results to the bottom line. Improvements with no impact to the bottom line are valueless. In fact they probably cost us SVA by causing delays (resource availability) in those projects that do bring money to the bottom line. So where do we focus our efforts? Of course, we focus on the constraint(s). TQM must be subordinated to the constraints just like all other functions.
Measurements:
Do our measurements cause the right behaviour in our people? What sort of behaviour would we like to see? It is easy to verbalise – we want our people to behave in a way that helps the system (the business) – to meet its goal. Do we actually measure performance in this way? Of course not. It is just too difficult to measure a function based on its impact on the business. This is why many companies have metrics to measure each of its functions – manufacturing, sales, R&D etc. In some enterprises something called ‘functional excellence’ is called a best practice.
Yield (or its inverse scrap rate) is a popular measure used in manufacturing. If it becomes the prime measure – the one the plant manager’s bonus really depends on – then it will be focused on. So much so that the business will suffer.
For instance, a plant manager was told to improve yield from about 78-80% to at least 85% - or else, someone would be found who could. He did it. He did it by sacrificing machine speed to get his desired result. Unfortunately the plant was already out of capacity and the yield improvement was far less than the lost capacity from slowing down the machines. The business lost money – SVA went down.
In another similar case the plant manager simply out-sourced all the small volume products that had poor yields to a subcontractor with more appropriately sized equipment for these products. Yield went up. At the same time the plant manager’s machines often stood idle along with their operators. The fee from the toll manufacturer far outweighed the (yield) savings.
There is a lot of SVA in choosing the right measurements to get all functions to behave for the good of the business and not just the function.
