Should Indian govt mandate continuous improvement practices in industry?

  • Articles
  • Aug 04,22
Total Quality Management (TQM), which began in 1950, is one of the key movements that shook the global industry. With the advent of the Sustainable Development Goals (SDGs), there is a need to drive TQM harder and deeper through government mandate, says R Jayaraman.
Should Indian govt mandate continuous improvement practices in industry?

The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. These goals describe the outcomes which will ensure that the planet will still exist for our children and theirs. Enablement of these goals or achieving them is not easy, but neither is it impossible. Soon after WW II, the situation seemed hopeless. However, the world overcame the ravages, picked up the pieces and started the rebuild process. That has been accomplished quite well, except that, what has been done, needs to be undone, at least to some extent, so that what needs to be done can be done. 

One of the key movements that shook the global industry began in 1950. Total Quality Management. Or, TQM, for short. This new paradigm addressed the newly emerging world after WW II, with customer satisfaction as the new age mantra. Signifying the birth of a ‘Buyer’s Market’. Lean Management, a by-product of the Toyota Production System, revolutionised industrial efficiency and effectiveness, by reaching products to customers to create and maintain high satisfaction levels. It led to quantum jumps in improved performance, as shown in the Table 1



Over the next seventy years, the TQM movement grew larger and larger in size and more and more varied in practices. The benefits have been huge, both, in the areas of ‘enablement’, and, ‘outcomes’. Systematic way of working, which is the underlying fundamental of TQM, is a process orientation, which enables mass producers to consistently produce products and services of high quality as per customer needs. The several methodologies, which have become a part of the TQM literature, include Quality Circles, Quality Function Deployment, the Kano Model for Customer Delight, the Hoshin Kanri etc. All these and more, like the Business Excellence or Performance Excellence Models, like the Malcolm Baldrige Model or the EFQM, have enabled companies and other types of organisations, like educational institutions, hospitals and financial institutions to produce goods and services with minimum waste and use of resources. Thus, TQM is a systematic way of working to achieve continuous improvement to drive incrementally higher performance. Many companies have adopted this methodology, mainly due to market needs, nevertheless, voluntarily. However, with the advent of the SDGs, there is a need to drive TQM harder and deeper through government mandate. 

One may give an illustration as to why ‘Continuous Improvement’ should be mandated by the government. Let’s take the case of a company manufacturing chemicals and dyes. Let’s say that the effluents are X grams per Kg of final output. Sustainability demands that the level of effluents should be progressively brought down. For the company, there are two dimensions to this. One, the ‘per capita’ effect; and, the other, the ‘aggregate effect’. In order to achieve both, continuous improvement is essential. 

In the ‘per capita’ effect, one measures the effluents per Kg of output. With a 10% reduction in this metric, the company has contributed to the sustainability goal. The ‘aggregate’ dimension is the TOTAL effluents per annum, obtained by multiplying the per capita number by the total volume of output. Let’s say that, for the current year, it is 100. Hence the annual TOTAL effluent discharged will be reduced by 10%. However, in the next year, the company strategy is looking to increase the sales volume by 10%. In such a case, the company has to again reduce the ‘per capita’ effluent by another 10%, over and above what was achieved last year. Only then, in the next year, the TOTAL effluent level will be the same as this year. Only then, can sustainability be maintained. 

It is to be noted that, even with a 10% reduction at the ‘per capita’ level, the company is still only at last year’s performance level. This means that the ‘per capita’ reduction should be more than 10%. Just imagine, the false sense of achievement of many companies in the corporate sector when cost reduction of 10% has been achieved. But, at the aggregate level, the total cost could still be higher, thus leading to a lower profit level. Similarly, as the population of communities around company operations keep increasing, the ‘per capita’ benefits do not hold, and, UNLESS a ‘continuous improvement’ paradigm, which works at both the aggregate and ‘per capita’ levels, is in place, sustainability will never be achieved. 

In India, this scenario is true of large corporations as well as small companies, called SMEs and MSMEs, variously. In these companies, running continuous improvement movements is difficult to sustain as the owners and operators do not find the conditions optimum. Hence, in all such cases, it is better to run centralised movements, with the help of consultants who are available with organisations like the CII, FICCI, banks, etc. However, as on date, even with sincere efforts from these organisations, the coverage and depth of practices leave a lot to be desired. Hence, it is important to facilitate the practices through a government funded and directed efforts. 

There are already many government organisations, like, the Productivity Council of India, many institutes, privately run organisations like CII, FICCI, PHDCCI and others who can all be tasked with running these movements, with their own organisations, but funded appropriately. However, what is important is that the government must mandate, that, each and every company must display a certificate attesting that TQM is being practiced in the company. Laws must be included in the company law and the laws governing MSMEs, to mandate that an annual filing on the status of the TQM movement should be given, which will be audited through the aegis of government appointed agencies like BVQI, BIS, etc. This movement should be monitored by the Minister of Industries at the apex level, and parliament should be kept aware of the benefits towards the SDG goals which are being pursued and achieved. 



About the author:
R Jayaraman is the Head, Capstone Projects, at Bhavan's S P Jain Institute of Management & Research (SPJIMR). He has worked in several capacities, including Tata Steel, for over 30 years. He has authored over 60 papers in academic and techno economic journals in India and abroad. Jayaraman is a qualified and trained Malcolm Baldrige and EFQM Business Model Lead Assessor.

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