Business excellence frameworks

Business excellence frameworks is often described as exceptional business practices in managing the organisation and achieving results, all based on a set of fundamental concepts or values. These practices have evolved into models for how a world-class organisation should operate. These models have been developed and continue to evolve through extensive study of the practice and values of the world’s highest-performing organisations. On this note, at a recently concluded Confederation of Indian Industry (CII) session at Pune, industry leaders throw light on how frameworks have helped them to achieve success, why it is customer first and how productivity and profit are linked to each other. Panellists for the session were: Naga Subramanian, Consultant, RSB Transmissions (Session Moderator); Manish Sharma, Senior Counsellor, VLFM and Rahul Arora, Assistant General Manager, Business Excellence at Godrej & Boyce Mfg. Co. Ltd.

Manish Sharma

Manish Sharma: I am Manish Sharma from CII and I am from the Navroji Godrej Centre for manufacturing Excellence from the centre of excellence of CII and I head one of the programmes called visionary small and medium enterprise known as VSME.

If you want to have 10 -12% of the productivity improvement we all have to go with the Kaizen or traditional approach but if you want 300% to 500% jump then obviously you have to go with the breakthrough approach which is VSME. Which I will talk about today

There is a gentleman called Prof. Shoji Shiba who started this whole initiative in CII. He is one of the persons who is teaching in MIT and TQM expert and he started this initiative in India along with the incorporated as a programme which is part of CII and JICA (Japan International Corporation Agency and this is how he started his programme in 2004. He started a learning community and started searching what kind of initiatives Indian business should have to be competitive in the global world.

In 2006, we put this proposal to the Government of India and the Government of Japan which was finally approved. Then we started this programme. This is how the programme become a national programme in 2006. We have a CII consultant, JICA from the govt of Japan, then we have IIM (Kolkata), IIT Kanpur and IIT Madras and Government officials.

We started in 2004 and now we are moving towards the Indian way of management. This is basically the four branches, four programmes initiated under the umbrella of VLFM which is essentially referred to as Visionary Leaders For Manufacturing.

The first programme is say, Opportunity A, which is a senior management programme which is going on. Opportunity B programme is conducted by IIM Kolkata, IIT Madras and IIT Kanpur with their intense exams and I am talking about the opportunity D programme, which is visionary small and medium enterprises.

• Opportunity A : Senior managers’ course
• Opportunity B : Middle level managers’ course
• Opportunity C : Visionary CEO course
• Opportunity D : Visionary SME programme

"Produce or deliver what the customer is requesting from you and produce what you are delivering to your customer. Purchase what you actually produce. Synchronise all these three flows, otherwise situation will be very tough"

- Manish Sharma

After starting in 2009, until now we have completed 1120 plants across India. This is what the core of this programme is. The Global market environment has changed, this triggered the change in customer behaviour and if you see the condition before and after, we had a lot less variety on products we talk about, and then demand is constant, and delivery is very flexible within week or month is normal. Now customer behaviour has changed a lot and now we are looking for a lot of varieties in each and every product. The demand is always fluctuating. Everybody is looking for a quick and immediate delivery. How to sustain this environment with still having a profit that is what this programme is all about. You still have this condition, as you cannot change the market condition but with this programme you can still have 100% delivery—your productivity will go up as I said to 300% to 600%, which will make the profit increase.

What we are saying, here is the information and material flow, which we have to optimise across the organisation and then we have to get this the efficiency of material flow, if you increase, it will automatically increase the efficiency of the machine and so that is our focus point and key point takeaway. This is the average result which we achieved in the last eight years. Delivery performance is ranked 100%; productivity on an average it went like 220% and then highest we achieved was 540%, now we are achieving 620% and obviously, as an end result, we have a yearly reduction, which is 62%, which automatically happened without any intervention and this is what we are talking about. This is a breakthrough. If you want quality in your organisation after a certain point of time, you will realise your quality is not improving at all, unless and until you take materials flow and integrate it, you will not be able to improve the quality that is what the overall concept of this programme.

This is what we are saying, first, you have to focus on your quality and then focus on the material flow, obviously-when you increase the flow a lot of conflicts will come and that will again increase your quality prospects. Otherwise, if you take care of only one column then it is very difficult for the quality to go up after a certain point of time that is what happened with most of the Indian industries.

"You have to focus on your quality and then focus on the material flow obviously when you increase the flow a lot of conflict will come and that will again increase your quality prospects"

- Manish Sharma

Produce only or deliver only what the customer is requesting from you; only produce what you are delivering to your customer. Purchase what you actually produce. Synchronise all these three flows, otherwise situation will be very tough. Today, we are seeing there is a slowdown in the automobile industry because you have a lot of inventory and there is no customer to buy; what is going to happen then? Now, this is not the only parameter we have, this kind of breakthrough will come too many times in our industry nowadays. We have to take care of this otherwise, it is very difficult to survive in this competitive world.

In today’s Indian scenario if you see there is an OEM Tier 1 and Tier 2, there is always a tendency that OEM will push cost or productivity or whatever target he has to Tier 1 and same Tier 1 will push it to Tier 2-that we are facing it and realising it now. But what’s happening is that Tier 1 and Tier 2 are not that much of resourceful the way OEM is. For example, the big OEM will push the warranty cost to the Tier 1, which is very difficult for Tier 1 to absorb it. It is very difficult and that is what is happening in the Indian industry

We are isolating OEM Tier 1 and Tier 2 whatever situations in terms of quality cost, delivery or material cost or whatever is there, it should be kept it at the OEM level only. Tier 1 will not decide on this kind of purchase that is the core of this programme.

We have five modules in this programme which is one-year long programme and it says mindset change because we have to change our mindset from local market to the global market as now we are in global market. We have to change our mind as customer expectation is very high. Demand is fluctuating all the time and the varieties are very high so how to deliver that is what mindset change concept programme is all about.

Then we have VLFM 1 and we have a Heijunka planning and control. Heijunka is a concept wherein you have a lot of variety and a lot of customers and then you have to deliver it fully so that you should have a very high productivity and then the profitability will be very high at the same time and that is what the concept is all about. Then extemporise work, again, is reworking your plant according to the customer and not according to your manufacturing capability. Mostly, we have a plant which has a welding shop separate, pan shop separate and workshop separate, which is good for our thinking but according to the customer, it is not advisable, as the customer is looking for a material flow which will flow from weld shop to paint shop, a lot of different varieties are there. We have to design our manufacturing plant according to the customer. That is the concept.

"Excellent organisations achieve and sustain outstanding results that meet or exceed the needs and expectations of their stakeholders"

- Rahul Arora

Rahul Arora: I will talk about the topic of business excellence framework. Manish Sharma spoked about various kinds of frameworks, Malcolm Welch, Deming, how leadership, technology and strategy, all these things were discussed. But how all these things are related. That is not indicated, there is more value in knowing things individually. I will be touching upon a few excellence models. I will also talk about EKF excellence model which we at Godrej operate, and how it is helping us, what challenges we have faced and how it can benefit other organisations also.

What are business excellence models? Many theories suggest that these are improvement models. But the models say that they are not improvement models. They are diagnostic models when you are applying the model in business, you are doing a self-assessment. It is like going to a pathology lab when you come to know that whether you are a diabetic or not, you get to know that you have high cholesterol, or something other. But the pathology lab will not give you a solution. Similarly, with the business excellence frameworks, they are just like pathology lab, only diagnosis. They will identify if you want to achieve that vision, what is required, whether your management is not proper, whether your strategy management is not proper, where your customer focus is lacking. So they just give you the indication where you are wrong. What you need to do, you need to visit the doctor. Then you need to apply the tools which are available in the market, for example, six sigma, TUC, TPM etc. For different types of problems, you have to use different types of solutions.

Second, these all excellence frameworks are very holistic. They are not just talking about the customer, they are not talking about only supply or only talking about technology. It is like seeing the business from the bird’s eye view. How business is interconnected, what will the impact of one element, if it is not doing right, what will be the impact on other elements. If it is not doing right what will be the impact on all other elements.

Third and most important. They are not developed by one person, they are all internationally recognised. I will talk about some of the excellence frameworks, EFPM, it is not developed by a single individual. It is developed by around 300 scientists, academicians and industry experts. So, it is well proven. If we deploy post excellence framework in your organisations, the success is definite but there are some challenges, we will talk about that.

What does this excellence framework talk about? We know that in an organisation, the most important thing is your product quality. We know that in an organisation or a company most important is your product knowledge and departments are there in which you are managing the quality of your product like SPCY. All these things are only to ensure the product quality so this was the old concept and now organisations are getting mature from product quality to now they are doing process quality.

When we talk about the process quality, they mainly talk about the assurance about the process… whatever product that is coming out of the process it will give you the good results so the ISO systems, Quality Assurance-all these things are part of this process quality but as you move forward your products are good; your processes are good but most importantly if you want to sustain your business profitability if all this is covered then the most important is the management quality. It is not that I can say that I have a very fantastic product, my processes are running well but the way my whole processes are managed in an organisation and if they are not good, profitability will not be sustained. So, all these excellence frameworks we talk about is management quality so it’s like going from certification to the product maturity. All these product certifications, process certification we all know but all that the excellence framework talks about is the maturity of the processes or the quality of the management.

How business excellence could help an organisation this is a question being asked to all professionals like us who are into this quality profile as well as the excellence profile. Is there any value regarding these concepts? Are we getting any impact on our turnover or our profits? What will happen to our working capital if we deploy it overseas? Otherwise, it is a waste. Every business leader will ask about all these things. Yes, we cannot give one to one direct decision but through this business excellence concepts, so many things can be improved. Same things happen with an organisation, there are multiple functions, multiple roles are played-some are in marketing, some are in sales, some are in manufacturing, technology. If you ask someone what is your business-we have found cases that understanding of our business is quite important.

The next thing is that it is the holistic view of the business operations so it is everyone defining the results in their own way. Just like the elephant story, everyone sees the elephant from different angles, and they think that is how the elephant does look in reality, but that is not the case so business excellence has to understand and allocate that elephant is an elephant and not any other animal.

Third thing is that many of the heroes we have found, especially from the business leaders we find that if the review is happening, it is happening only on one or two elements, they are focussing on one or two stakeholders like all our stats and reports will be on finance.

The business excellence concept talks about balanced setup; one should not only focus only on finances. Yes, it is very important and a must for the business but you must have a balanced set when you are reviewing, you should take all the areas into your stakes, you must talk about the customer focus, technical focus, so that it gives a balanced set of results.

Next point is again ensuring all the initiatives are going towards one goal. In a business you have multiple coaches, you have multiple initiatives which are going on sometimes you are saying we are running those initiatives or we are running those businesses so business excellence tries to focus on all the initiatives towards a common goal which is vision and mission combination. Why were are doing this and if we are doing something which is not knowing, we should not do it.

The last one is checking the linkages between enablers and results. Generally, business excellence favours equal weightage to the processes and the results. And I was talking to some sales cadres, how many times your boss has asked you that why are you not getting sales, he said never ask why are you not getting sales. If the processes are right, the results will come so these are the few benefits of business excellence.

And we know that in a world there are many excellence results but in general, there are only three broad very popular business excellence models. One is from the West called Malcolm (Malcolm Baldrige Quality Award Model (also commonly known as the Baldrige Model).

Tatas in India are the biggest adopter of this model (Malcolm) they have this Tata Business Excellence Model which is based on Malcom Baldridge Model then we have something from the East which is Delhi Price and they talk about that how they have taken this model from Japan and third is basically when the East is there, the West is there why not Europe. From Europe, there is an excellence model which is known as EFQM (the European Foundation for Quality Management). All three business models preach more or less the same. The objective of all the business model is the same, to make business an excellent business.

So I will be talking about EFQM excellent organisation in the European framework. Most important thing is that all these frameworks like in every religion, you will find that there is some difference. Similarly, this is a bible (EFQM) for us it talks about how to become an excellent organisation. And as far as EFQM is concerned is the definition of excellence is ‘Excellent organisations achieve and sustain outstanding results that meet or exceed the needs and expectations of their stakeholders’. The statement line looks very simple and that every time you read a shloka of Geeta, you will find a different meaning every time it, you read you will find a new meaning, basically talks about in an organisation there are multiple stakeholders and each stakeholder has their own needs and expectations.

First of all, capture those general needs and expectations and based on those needs and expectations identify the gaps improve your processes, improve your systems, achieve those results and sustain that and go back to your stakeholders and ask are you happy with the results? It looks very simple but, it’s extremely tough. We know how much focus we give to all stakeholders, definitely, the shareholders and the customers are of prime importance but how much care do we give to our suppliers, society, the employees, so this model talks about focussing on all the stakeholders.

So, this excellence framework, I will not talk it in detail on how it is deployed but this excellence model has three elements one is called a fundamental concept, next is the main framework, the third is called the assessment called RADAR.

I will give a small analogy to explain how this model deployed can deny the fundamental concept of excellence, it says adding value for your customers-can I come back and say that I will not add value to my customers? That is done by an excellence model. So, these are the fundamental concepts adding value to the customers, creating a sustainable future, all these are fundamental concepts. This has been deployed through this framework and this framework talks about two areas one is enablers and the other is results.

Why we go through all the temples because we want some results. Somebody is having some problem with their family, somebody having wealth problems, somebody has some health problems. So, how are we using this RADAR? (Results Approach Deployment Assessment and Refinement). Every process is being put into that RADAR, it will give you where there are gaps, whether your approaches are not right, whether your results are not right, whether your deployment is not perfect or you are not refined or you are not processing properly.

In a nutshell, this RADAR is the same as having a concept, having fundamentals, put some structure behind that, review those structure through RADAR then it is business excellence. This is the gist on business excellence framework.

So in Godrej we applied this excellence framework somewhere around 2004 and at that time there was only one business which adopted this model and then we moved to phase two from 2009 to 2016, all the businesses were on this journey and now we are into the phase three, wherein we are getting benefit out of this process. This process is not very easy and takes a lot of time to adopt all these process and after doing all of it now we have coined our internal framework which is known as Naoroji Godrej Award For Business Excellence (2019), which is based on EFQM model. And we are developing more key people towards that and for us, it is a top management’s commitment to this model, without top management support, a company cannot drive all these initiatives.

"The business excellence concept talks about balanced setup; you must talk about the customer focus, technical focus, etc. so that it gives a balanced set of results"

- Rahul Arora

What are the challenges that we have faced in developing and implementing the model? One is the commitment from senior-level executives, yes, the top management is very committed. But, not all, and there were divergent views, there were different priorities, so this was the biggest challenge for us. Then, this is common I think many of you will relate to that. We have too many initiatives we are taking, DSO, ISO, PMO, TCM, IOP etc., we are doing everything and finally, we are saying we will do excellence also.

So, this is the problem we faced, where to focus-then inclusiveness, many people are talking about different things, many people say everything involving in plant functions and not corporate functions. So, this was one another problem then capability and competencies, when you come with an excellence concept you need to have a lot of facilitators and assessors, which is very crucial. And finally, everyone says that because Godrej is into diverse business everyone says I am different-this is applicable to those types of industry and not applicable to me. That was again one more challenge.

How do we address those challenges – first of all, we will clear that business and business excellence are not two different things. Doing business in an excellent way is business excellence. So don’t think that these are separate initiatives, it is an integral part of your business. Second is how we enabled our businesses to get gain more excellence, first is education, next is know your business (know your company), we do KYC for our customer likewise do the KYC for the employees know your company.

We did a lot of workshops on that, process conjuring to get focus, comprehensive results and not just focussing on one or two results but then comparison and benchmarking. Then we started small and straight, we identified one or two areas, we experimented there, got some success and then moved forward so from 2005 we had one business and now we have 15 businesses aligned o the excellence model. Then involvement of corporate functions slowly, we are involving corporate functions too. Our assessments are becoming more robust and rigorous and we are focussing on improvements and maturity of process and what not if you go for an award, definitely you will get the award but on the other hand, we also know that we will not be able to sustain the processes and sustain the business except the area of improvement and take help wherever necessary. So, benefits and alignment are there in the organisation, the focus is more on stakeholder engagement, improved communication form the leadership, adoption of triple bottom line strategy, improve employee engagement and finally, this is also very important; we are very happy to share that we have two organisations from our Godrej and Boyce Godrej Locks and Godrej Interior who have been awarded this excellence award. You see the past 55 years, only 11 winners are there and out of which two are from Godrej and we are expecting third one this year and so we will be equal to TATA who too have three on that.

Finally, what we are doing. First of all in any business what is the most important, what is your business context. If you are in automobile what is your context? Why are we doing the business, to get business, of course, to get profitability, to get sales, working capital, value, volume, how to get all these things, you must have a strategy, without strategy you cannot get the results—so how do we develop the strategy?

We take some external analysis, what is happening in the outside in the world. Then, we take some internal analysis of what are our strengths our business areas and then we develop our strategy and based on that strategy we deploy that strategy. Where do we have to deploy all the strategies, we need to deploy in our core areas, in product development, in marketing, in the supply chain, in a customer relationship; you deploy your strategies there and when you have deployed the strategy, you definitely will get some results!

What are your customer performance results definitely, you will take feedback from your customer which will give you a customer perception results. But to deploy all these things, you need some resources. The first resource is the human resource. You need people, plan, need their competencies, their alignments, rewards and recognition, communication all these are very important and so when you deploy all these things you definitely will get some people performance indicators what is the competency level, what is the attrition rate, what is the satisfaction level and all these things and you also get the perception of the people also apart from people we need some other resources too like a partnership, we cannot do everything alone you need partners and supplies, you need finance, you need assets, you need technology.

All these are again resources and how all these resources are working efficiently, we track under these performance indicators, and also, through all these things we need a very strong process management. Knowledge base is very important, everything is indicated in business excellence as per the model and don’t think we are doing anything different yes, we need to take the extra effort to make your processes more diverse, and more mature.