Module 4 – Modern Practices in Management
Contents:
• Total Quality Management (TQM)
• Kaizen, Lean Management (Evolved from TQM)
• Business Process Re-engineering
• Open Book Management
Contents
Introduction ...................................................................................................................... 2
Quality dimensions .......................................................................................................... 2
I Total Quality Management .......................................................................................... 3
Definition ......................................................................................................................... 4
Three facts of TQM .......................................................................................................... 4
Principles of TQM ............................................................................................................ 5
Benefits of TQM ............................................................................................................... 6
Drawbacks of TQM .......................................................................................................... 6
II Kaizen............................................................................................................................. 7
Definitions ........................................................................................................................ 7
Features of Kaizen ........................................................................................................... 7
Objectives of Kaizen ......................................................................................................... 8
Elements of Kaizen .......................................................................................................... 8
Principles of Kaizen ......................................................................................................... 9
Stages of Kaizen implementation .................................................................................. 10
PDCA cycle and Kaizen ................................................................................................. 10
Benefits of Kaizen .......................................................................................................... 11
III Lean Management .................................................................................................... 11
Definitions ...................................................................................................................... 12
Types of waste in Lean management (8) ....................................................................... 12
Muda Mura Muri ........................................................................................................... 14
Features of Lean management ...................................................................................... 15
Objectives / benefits of lean ........................................................................................... 15
Principles of Lean management .................................................................................... 16
5S in lean management ................................................................................................. 17
IV Business Process Reengineering ........................................................................... 18
Definitions ...................................................................................................................... 18
Signals to start BPR ...................................................................................................... 18
Features of BPR ............................................................................................................. 18
Stages of BPR ................................................................................................................. 19
Benefits of BPR .............................................................................................................. 20
V Open Book Management ........................................................................................... 21
Definitions ...................................................................................................................... 21
Three importance of OBM ............................................................................................. 21
Employee engagement improvement ............................................................................ 21
Stages of implementing OBM ........................................................................................ 22
Benefits of OBM ............................................................................................................. 23
Drawbacks of OBM ........................................................................................................ 23
Introduction
This module focusses on the new practices in management which comprehensively
contribute to quality improvement and customer satisfaction. It aims to reduce the
cost of the company and improve efficiency and overall development of all the
aspects of the company.
Quality dimensions
• Performance: - The performance level of a goods or service determines
the quality. For example, the clarity of the picture on the television,
the clarity of the sound on the radio, etc., ensures the level of performance.
• Features: - Features inherent in goods or services also contribute
to quality. Such as - disc brakes on motorbikes, automatic arrangements,
etc.
• Reliability: - Trust and reputation towards the goods or services also helps
to ensure quality.
• Conformance: - The uniformity or similarity established in the structure,
texture, etc. of the goods or services determines the quality of the goods or
services.
• Durability: - Quality is determined on the basis of durability and sales of
a goods or services in the market.
• Service ability: - If the goods or services can be used through proper repair
and maintenance, such goods or services are considered quality.
• Aesthetics: - Goods and services that can attract more consumers are also
tends to be good quality.
• Perceived quality: - In relation to goods or services, the quality should be
maintained as expected by the customer, consumer or service recipient and
such customers should also have experienced the quality.
I Total Quality Management
What is TQM?
TQM is the enhancement to the traditional way of doing business.
It is a proven technique to guarantee survival in the world-class competition.
TQM is for the most part common sense.
Analyzing three words (TQM):
Total—Made up of the whole
Quality—Degree of excellence a product or service provides
Management—Act, art, or manner of handling, controlling, directing, etc.
Therefore, TQM is the art of managing the whole to achieve the excellence.
Definition
TQM is defined as both philosophy and a set of guiding principles that represents
the foundation of a continuously improving organization.
It is the application of quantitative methods and human resources to improve
all the processes within an organization and exceed customer needs now and in
future.
TQM integrates fundamental management techniques, existing improvement
efforts, and technical tools under disciplined approach.
Three facts of TQM
• All are accountable: Total quality management meaning refers to an
approach wherein each employee at every level in a business is accountable
for evaluating products and services per quality standards and customer
needs.
• Quality assurance: TQM emphasizes that quality assurance is a shared
responsibility that affects all aspects of a company or organization.
• Many benefits: Guaranteed customer retention, increased productivity,
enhanced stakeholder relationships, improved organizational culture, etc.,
are some of the benefits of adopting and implementing TQM.
Principles of TQM
1. Focusing on the customer
The customer determines the level of quality. If customers are happy,
improvements are effective.
2. Employee participation
All employees (all roles at all levels) are involved in the organization
objectives and the continuous improvement.
3. Process oriented
Focus on business processes including all individual work steps and
persistent monitoring.
4. Integrated system
Vertically structured departments relate to the horizontal business
processes.
5. Strategic and systematic approach
Combination of strategic and systematic approach to realize the visions
and objectives of a company.
6. Fact-based decision making
TQM requires that an organization continuously collects and analyses
data to increase decision accuracy, build consensus, and make predictions
based on the past.
7. Communication
Effective communication for maintaining morale and motivation of
employees at all levels. Communication thus involves strategies, methods,
and always up-to-date information.
8. Continual improvement
Continual improvement drives a company to be both analytical and
creative to become more competitive and more efficient in meeting
stakeholder expectations.
Benefits of TQM
• Profit increases: Greater profitability and productivity
• High customer satisfaction: Enhanced customer orientation and
satisfaction
• Happy employees: Strengthened employee loyalty and accountability
(each employee is valuable)
• Better performance: Strengthened competitive position via improved
performance across the organization
• Dynamic performance: Adaptability to shifting or emerging market
conditions, environmental or government regulations
• Predictability: Increased consistency and foreseeable results
Drawbacks of TQM
• Lack of management commitment
• Company culture cannot change
• Plans are not well thought out.
• Poor measurement techniques
• Lack of teamwork.
• Focus on short term profits
• High employee turnover
• Management does not reward success
• Employees are fearful of losing their jobs.
II Kaizen
What is Kaizen?
Kaizen is an approach to creating continuous improvement based on the idea
that small, ongoing positive changes can reap significant improvements.
✓ Cooperation
✓ Commitment
It is the base for lean management
It was developed in the manufacturing sector to lower defects, eliminate waste,
boost productivity, encourage worker purpose and accountability and promote
innovation.
Definitions
Kaizen is a Japanese term meaning change for the better or continuous
improvement. It is a Japanese business philosophy that concerns the processes
that continuously improve operations and involve all employees.
Kaizen is a compound of two Japanese words that together translate as "good
change" or "improvement." However, Kaizen has come to mean "continuous
improvement" through its association with lean methodology and principles.
Kaizen was first practiced in Japanese businesses after World War II, influenced
in part by American business and quality-management teachers, and most notably
as part of The Toyota Way.
Features of Kaizen
• Improve: Kaizen is a Japanese business philosophy that focuses on
gradually improving productivity and making a work environment more
efficient.
• Change: Kaizen supports change from any employee at any time.
• Better: Kaizen translates to change for the better or continuous
improvement.
• Type of change: Kaizen's small changes can involve quality control, just-
in-time delivery, standardized work, the use of efficient equipment, and the
elimination of waste.
• Small change; Big impact: The Kaizen methodology underscores that
small changes now can have big future impacts. supports.
Objectives of Kaizen
• The kaizen objective is the continuous improvement in the product and
process quality by eliminating waste from the process or services by
identifying values and involving everyone.
• Continuous improvement in product and process quality by
identifying values.
• Eliminate Muda or Waste.
• Lower rejection/defects and cost.
• Increase Productivity.
• Promote Innovation.
• Increase worker’s morale and accountability through effective
participation.
Elements of Kaizen
1. Teamwork
All employees, from shop floor operators to a company’s CEO, should have a shared
continuous improvement mindset.
2. Personal discipline
Kaizen heavily emphasizes the person responsibility of all employees. It requires
everyone to be high-performing at work and insists that employees are punctual,
diligent, and attentive.
3. Improve morale
Morale should be and stay high among employees. This means that management
should provide them with the right workplace conditions and facilities to make
workers feel happy.
4. Quality circles
A quality circle is a group of employees that regularly meet to discuss ideas for
improving a business. It is important that all sorts of employees are involved
5. Suggestions for improvement
A system should be in place where employees can give feedback and share their
ideas about improving the business.
Principles of Kaizen
Good processes create good results.
At its core, kaizen is concerned with continuous improvement by reducing waste
in processes, guided by the key belief that good processes lead to good results. In
manufacturing, this means that reducing waste in a process adds value to the
customer.
Improvements are based on small change
Rather than wait for a major change to be implemented begin improving, change
should be approached in small, incremental steps. This increases the speed to
improvement and reduces the pressures of implementing a major change. In
addition, small changes are often less costly and therefore less risky.
Improvements must be measurable, standardized, and repeatable
In kaizen, it’s important to “speak with data and manage with facts.” In order to
evaluate improvements objectively, existing procedures must be standardized and
documented. Improvements should be standardized, and all employees should
be trained on new procedures associated with these improvements.
Empowering the Employees
Kaizen places emphasis on the value of employees at every level of an
organization. Employees who are closest to the problem are the best-equipped
to solve them. Further, engaging team members to identify problems and suggest
improvements in their work areas encourages a sense of ownership over their
work, which can improve overall motivation, morale, and productivity.
Stages of Kaizen implementation
Get the workers involved: Involve the workers and get their ideas or
suggestions through the kaizen suggestion system.
Identify the problem: Collect the list of ideas/suggestions in order to identify
the issues or problems.
Analyze the problem: Analyze the problem by observing the present
process/condition and investigate the probable root cause.
Develop the solution: Identify the alternate solutions/ideas and select the best
solution after validating all identified solutions.
Implement solution: Implement the permanent solution/action against the real
identified root cause.
Analyze the result: Monitor the effectiveness of the implemented solution.
Standardize the solution: If the result found effective then do the horizontal
deployment of the implemented solution at other areas/workplaces/machines etc.
PDCA cycle and Kaizen
PDCA cycle was popularized by Dr. William Edwards Deming, renowned engineer
and statistician in 1950s
Plan: Recognize an opportunity and plan a change.
Do: Test the change. Carry out a small-scale study.
Check: Review the test, analyze the results and identify what you’ve learned.
Act: Take action based on what you learned in the study step: If the change did
not work, go through the cycle again with a different plan.
Benefits of Kaizen
1. Builds teamwork and collaboration
One of the most obvious benefits of Kaizen is the fact that it builds teamwork and
collaboration. By solving problems together as a team, this strengthens the
bond between employees. Most Kaizen teams include different members from
multiple departments of an organization. This is because most processes flow
into one another.
2. Increases efficiency
Because Kaizen encourages everyone to always look for ways to reduce and
eliminate waste from all current manufacturing processes, this ensures
efficiency across all departments. Additionally, this simplifies work processes,
making it easier to minimize potential errors and further increasing efficiency.
3. Improves employee satisfaction
Employee satisfaction can significantly impact things such as employee
engagement, productivity, efficiency, quality of work, and retention rates. So, by
listening to and valuing employees’ suggestions for improvement, especially
if it’s their area of expertise, this increases their sense of satisfaction and worth.
4. Improves safety
Another benefit is the improvement of safety on the shop-floor. Elimination of
unwanted transportation and movement helps reduce chance of accidents.
Organized and clean workspace improves safety on the shop-floor, and
minimizes the risk of workplace accidents.
III Lean Management
It is a set of management practices to improve efficiency and effectiveness by
eliminating waste. The core principle of lean is to reduce and eliminate non-value
adding activities and waste.
What is lean management?
Lean or Lean management is a business approach for maximizing customer value
while minimizing waste.
✓ Improve efficiency and effectiveness
✓ Reduce time on non-value added activities
It is closely related to Kaizen
The Lean concept is successfully applied to any business or production process,
from manufacturing to healthcare, engineering, and software development.
Definitions
Lean Management is a management and work organization method aimed at
improving a company’s performance and, more specifically, the quality and
profitability of its output.
Lean management is a business methodology that's designed to increase quality
and efficiency by eliminating wasted resources like time, money, and effort. It
also is sometimes referred to as lean production or lean manufacturing.
Core ideology:
Produce only the best and most valuable services or products for customers and
clients at the right price.
Types of waste in Lean management (8)
1. Defects
Defects are mistakes which need additional resources, time and money to
remedy the situation. In manufacturing operations, defects may include broken
components that need to be rebuilt. Complete elimination of all defects is not
possible, but defects can be limited by applying stricter quality control and
documentation procedures such as standard work instructions or checklists.
• The lack of sufficient quality control processes
• Missing repair and documentation standards
2. Overproduction
Overproduction typically occurs when workers continue to produce blindly, even
if the output cannot be processed because receivers are not ready or do not need
the output at the given point of time. The remedy to overproduction is better
planning and work coordination.
• Just-in-case production
• Weak planning
• Long-setup and machine changeover times
3. Waiting
Waiting times happen whenever the work has to be interrupted. Reasons include
but are not limited to missing materials, waiting for approval to proceed work
or because of machine downtimes. Waiting times occur if workers have to wait
until a bottleneck is removed.
4. Non – Utilizing talent
This waste occurs when organizations separate the role of management from
employees. The employee’s role is to simply follow orders and execute the work
as planned. By not engaging the frontline worker’s knowledge and expertise,
it is difficult to improve processes. Examples: Insufficient training, not asking for
employee feedback, and placing employees in positions below their skills and
qualifications.
5. Transport
Waste in transportation includes movement of people, tools, inventory,
equipment, or products further than necessary. Excessive movement of
materials can lead to product damage and defects. Additionally, excessive
movement of people and equipment can lead to unnecessary work, greater wear
and tear, and exhaustion.
6. Inventory
Having more inventory than necessary to sustain a steady flow of work can lead
to problems including: product defects or damage materials, greater lead time
in the production process, an inefficient allocation of capital, and problems
being hidden away in the inventory. Excess inventory can be caused by over-
purchasing, overproducing work in process (WIP), or producing more products.
7. Motion
The waste in motion includes any unnecessary movement of people, equipment, or
machinery. This includes walking, lifting, reaching, bending, stretching, and
moving. Tasks that require excessive motion should be redesigned to enhance the
work of personnel and increase the health and safety levels.
8. Excess Processing
Using a higher precision equipment than necessary, using components with
capacities beyond what is required, running more analysis than needed, over-
engineering a solution, adjusting a component after it has already been installed,
and having more functionalities in a product than needed.
Muda Mura Muri
It is another classification of waste in Lean and Kaizen
Features of Lean management
• Waste Reduction: Lean management aims to minimize waste in processes,
such as overproduction, excess inventory, and unnecessary waiting
times, to enhance efficiency and cut costs.
• Continuous Improvement: It encourages an ongoing culture of
improvement, where employees at all levels regularly identify and
implement small, incremental changes to processes and workflows.
• Pull System: Instead of pushing products or services based on forecasts,
lean employs a pull system, where production is driven by customer
demand, reducing excess inventory.
• Just-In-Time (JIT) Production: Lean promotes JIT production, ensuring
that items are produced exactly when needed, reducing carrying costs
and waste.
• Kaizen: Kaizen is a key feature of lean management, emphasizing the
importance of continuous, small improvements made by all employees
to enhance overall productivity and quality.
• Respect for People: Lean management values and empowers employees
by involving them in decision-making, providing training, and
recognizing their expertise in improving processes.
Objectives / benefits of lean
• To Improve Quality: Enhance product or service quality by identifying
and eliminating defects and errors.
• To reduce cost: Achieve cost savings by streamlining processes, reducing
inventory, and minimizing non-value-added activities.
• To increase productivity: Boost productivity and output by optimizing
workflows and resource utilization.
• To deliver fast: Reduce lead times and response times to meet customer
demands more promptly.
• To boost Customer Satisfaction: Focus on meeting customer needs by
providing higher quality products or services and reducing lead times.
• To improve employee Engagement: Foster a culture of improvement and
employee involvement in problem-solving and decision-making.
• To ensure Sustainability: Promote sustainable practices by reducing
resource consumption and minimizing environmental impact.
• To boost Profitability: Ultimately, the goal of lean management is to
improve overall organizational profitability by achieving all of the above
objectives.
Principles of Lean management
Stages / Steps in lean management
Step 1: Specify Value: Define value from the perspective of the final customer.
Express value in terms of a specific product, which meets the customer’s needs at
a specific price and at a specific time.
Step 2: Map: Value stream mapping is all about picturizing the stages from raw
materials to finished products, including time taken for each stages, design,
procurement etc.
Step 3: Flow: Make the remaining steps in the value stream flow. Eliminate
functional barriers and waste in the process that dramatically improves lead-time.
Step 4: Pull: Take the required resources as per needed, instead of pushing it
unnecessarily.
Step 5: Perfection: There is no end to the process of reducing effort, time, space,
cost, and mistakes. Return to the first step and begin the next lean transformation,
offering a product which is ever more nearly what the customer wants.
5S in lean management
1. SORT
The goal of the sort phase is to eliminate everything in the workspace and
department that is not needed. By doing this in the factory and office, it will
create more space as well as reducing any potential time wasted trying to find
things amongst items of no use.
2. SET
The Set phase ensures that there is a place for everything and everything is in
its place within your workspace. The set phase must ensure the workplace is
visual, so it is clear to everyone if an item is not where it should be.
3. SHINE
The shine phase is about initially doing a deep clean of the area/ department and
then maintaining it through daily cleaning and maintenance activities.
4. STANDARDISE
The standardize phase is about implementing effective policies, procedures and
routines to ensure the sort, set and shine phases are continually achieved. In this
stage we will review all SOPs.
5. SUSTAIN
The final stage is the sustain phase. This is ensuring the successful integration
the 5s workplace mindset amongst our teams. It is also about making
improvements, preventing fallback to old ways, reviewing the improvements and
then making further improvements. This is the continuous cycle of 5s.
IV Business Process Reengineering
What is BPR?
Business Process Re-engineering (BPR) is a management strategy aimed at
improving organizational performance by re-designing and optimizing
business processes.
✓ Improving quality, efficiency, customer satisfaction
✓ Change in business process
Definitions
“Business Process Re-engineering (BPR) is the radical redesign of business
processes to achieve dramatic improvements in critical aspects like quality,
output, cost, service, and speed”.
Business process reengineering (BPR) aims at cutting down enterprise costs and
process redundancies on a very huge scale.
It is a systematic, disciplined approach to reducing organizational costs and
redundant business processes involving the analysis of existing human and
automated workflows.
Signals to start BPR
• Customer complaints and refund requests are rising.
• Staff stress, disputes, and turnover are high.
• Chaos reigns after experienced employees depart or go out on leave.
• Profitability is falling.
• Sales leads are not being followed up quickly.
• Corporate governance has been lacking.
• The company has struggling cash flow.
• The inventory levels are rising.
• The company can't fill customer orders quickly enough.
Features of BPR
• Radical Redesign: BPR goes beyond incremental adjustments by
advocating a radical overhaul of existing processes. It encourages
organizations to challenge conventional thinking, question established
norms, and envision entirely new ways of performing tasks.
• Process Focus: BPR adopts a holistic view, considering organizations
as interconnected processes rather than isolated departments or
functions. It places emphasis on analyzing end-to-end processes,
identifying inefficiencies, and finding opportunities for optimization.
• Customer-Centricity: BPR places paramount importance on
understanding and meeting customer needs and expectations. It
emphasizes aligning business processes with customer requirements to
deliver exceptional value and ensure high levels of satisfaction.
• Simplification and Elimination: BPR advocates for simplifying
processes by eliminating unnecessary steps, reducing complexities, and
removing redundant activities.
• Technology Enablement: It encourages organizations to leverage
innovative technologies, automation, and digital solutions to
streamline operations, enhance data analysis capabilities, and facilitate
real-time decision-making.
• Performance Measurement: BPR stresses the importance of
establishing robust performance metrics and measurement systems to
assess the effectiveness of process improvements.
• Cross-Functional Collaboration: BPR fosters a culture of
collaboration and teamwork across different functions and
departments encouraging open communication, and promotes cross-
functional collaboration to improve the flow of information.
• Change Management: BPR acknowledges the significance of effective
change management in successfully implementing process changes.
Stages of BPR
• Step 1 - Define Objectives and Framework: Objective of re-engineering
must be defined in the quantitative and qualitative terms. The objectives
are the end results that the management desires after the reengineering.
Once the objectives are defined, the need for change should be well
communicated to the employees because, the success of BPR depends on
the readiness of the employees to accept the change.
• Step 2 - Identify Customer Needs: The process shall be redesigned in such
a way that it clearly provides the added value to the customer. One must
take the following parameters into the consideration:
• Type of Customer and customer groups.
• Customer’s expected utilities in product and services
• Customer requirements, buying habits and consuming tendencies.
• Customer problems and expectations about the product or service.
• Step 3 - Study the Existing Process: Before deciding on the changes to be
made in the existing business process, one must analyze it carefully. The
existing process provides a base for the new process and hence “what”
and “why” of the new process can be well designed by studying the right and
wrongs of the existing business plan.
• Step 4 - Formulate a Redesign Business Plan: Once the existing
business process is studied thoroughly, the required changes are written
down on a piece of paper and is converted into an ideal re-design process.
Here, all the changes are chalked down, and the best among all the
alternatives is selected.
• Step 5 - Implement the Redesign: Finally, the changes are implemented
into the redesign plan to achieve the dramatic improvements. It is the
responsibility of both the management and the designer to operationalize
the new process and gain the support of all.
Benefits of BPR
• Technology Enablement: BPR recognizes the transformative potential of
technology in optimizing processes. It encourages organizations to leverage
innovative technologies, automation, and digital solutions to streamline
operations, enhance data analysis capabilities, and facilitate real-time
decision-making.
• Performance Measurement: BPR stresses the importance of establishing
robust performance metrics and measurement systems to assess the
effectiveness of process improvements.
• Cross-Functional Collaboration: BPR fosters a culture of collaboration
and teamwork across different functions and departments encouraging
open communication, and promotes cross-functional collaboration to
improve the flow of information, leverage diverse perspectives, and drive
collective success.
• Change Management: BPR acknowledges the significance of effective
change management in successfully implementing process changes.
V Open Book Management
What is OBM?
It involves keeping complete transparency with employees, sharing data,
training employees to embrace leadership roles as well as sharing financial
statements.
✓ To create transparency & sense of ownership
✓ Improve employee engagement
Definitions
Open book management (OBM) is defined as empowering every employee of
an organization with required knowledge about the processes, adequate training
and powers to make decisions which would help them in running a business. It
is all about team work and moving forward collectively.
Open book management approach is about showing employees' the financial
statement data and making them believe that every effort of theirs is getting
reflected in the overall numbers of the company.
Three importance of OBM
Corrective action: Variances are observed, and the team can troubleshoot to
determine what accounts for the variances. Future actions are taken once the root
of these variances has been identified.
Collective opinion: Everyone gets the opportunity to keep their eye on the
company and industry benchmarks. Having people look at the benchmarks on a
regular basis ensures that these numbers are hit.
Trend and correction: Trends tell the story in a larger context and allow
everyone to see where the company is headed. If the trends are bad, it makes it
easier for everyone to rally and turn things around.
Employee engagement improvement
Status
Open-book management can be used to elevate the perceived status of an
employee by giving them the feeling that they are in a unique group and privy
to information that people at other organizations are not.
Certainty
Certainty refers to the ability to perceive what is to come. A big part of opening
the books involves forecasting future financial numbers. By giving employees a
preview of what to expect, this awareness breeds engagement and people will
make sure they do their part to hit these numbers and maintain this feeling of
certainty.
Autonomy
When people are given a sense of control, they understand that they are
responsible and can’t put the blame on others. This autonomy creates
accountability and a feeling of pride for an individual who knows they have
helped create a successful outcome.
Relatedness
Relatedness refers to shared goals. At the center of open-book management is
the idea of rallying around a common cause and everyone assessing how they
can do their part to accomplish the goal.
Fairness
Regarding fairness, open-book practitioners use transparency to open up aspects
of company operations that had previously been shrouded in secrecy. All
employees are treated alike.
Stages of implementing OBM
Benefits of OBM
Drawbacks of OBM
