Deeper competencies

THE QUALITY CONUNDRUM

How Indian Industry is managing quality?

With increased globalisation, the manufacturing industry needs to upgrade its competitiveness, find new ways of meeting unmet customer expectations and yet not lose focus on established practices such as TQM, JIT, TPS and so on.

These competencies need to be ingrained into the DNA of the system to deliver price, quality and cost advantages.

In the quest for innovation, many companies are losing focus on quality. Many others are so content with the rewards from quality, they are no longer value-adding to meet the invisible and unknown needs of the customer. This is where the top management needs to strike a balance. Such a balance is also necessary to achieve competitiveness on a national level.

A number of companies the world over have been able to achieve this. Research by professor Takahiro Fujimoto, an authority on manufacturing at the University of Tokyo, for instance, has revealed various reasons for national manufacturing competitiveness.

His analysis of the global auto industry and in-depth study of Toyota reveals some new insights. First, sustained performance goes beyond surface competitiveness of profitability, price, market share, quality and delivery.

Toyota has perfected over time, some 400-odd routines in manufacturing, product development and design. The company leverages these routines to operate business with meticulous precision and faultless repeatability. These deeper competencies deliver on the price, quality and cost fronts as well as ensure consistent productivity.

These competencies go beyond the notion of core competencies. Core competencies are largely tied to the industry, manufacturing technology, the segments of customers or approach to brand building and communication.

When the business domain or context change, the core competencies could become obsolete. But deep competitive advantage cuts across industries and transcends time.

These deep manufacturing and design competencies are trainable, teachable and transferable skills. At the University of Tokyo , Fujimoto personally crafts skill-transfer sessions for experienced manufacturing professionals so they can diffuse and spread the essence of deep manufacturing competencies to the service, telecom and retail industries.

There have been several instances of experienced people from Toyota moving into non-automotive and non-manufacturing industries, and orchestrating some of the powerful tools and techniques traditionally assumed to be relevant only for automobile assembly lines.

This brings us to the third insight. Competitiveness tools "" such as JIT, SMED, TOM and TPM "" used by Toyota are not independent, stand-alone techniques. The benefits multiply if these techniques get orchestrated.

This leads to the core thinking on value creation and design information flow. Fujimoto explained lucidly the concept of manufacturing as a platform where design information is transferred to different materials to finally create a physical product or service.

For instance, an external panel die in the press shop transfers the shape and style to a steel sheet to make the body of the car. We see the car and admire its styling.

Actually, it is the designers' conceptualisation and information as specifications and drawings. Manufacturing transforms this information in two stages. First, from drawings to tools and then from tools on to steel sheet to create the physical form.

That makes the car body. The creative and innovative potential of design and the effectiveness of its transfer in the manufacture of physical products create value.

So manufacturing is also an information-processing industry. Design information flow creates significantly higher value add than the traditional transaction-processing of Indian IT-enabled services. This is the essence of the new distinctive and sustainable competitive advantage.

According to Fujimoto, breaking designs into several common interchangeable components that could fit in easily to create product is a modular architecture. This is easy to outsource and assemble.

For products like passenger cars, the designs of several parts need to be closely integrated. The individual parts are less relevant. The competency lies in conceptualising and creating the entire product as a comprehensive whole.