Quality Management is at the heart of Business Management 

Quality management provides the tools for business management

Quality management is akin to business management. The objective of both is the wellness of the organization. The words ‘quality management’ often gives the impression that it is about quality of the product, and then people think – hey we don’t have problems with our product, customers are not complaining, so what’s the big deal. However, quality management is not about product quality alone, that is only a small part of what quality management is concerned with. On the other hand, quality management is at the heart of business management, it is about quality of the business, and quality of the management processes. Quality management is really what makes an organization successful, for the present and in the longer term. Juran explained in using the concept of ‘small Q’ and ‘big Q’. Small Q is about product quality, but what matters far more to an organization is the big Q, which is about the quality of everything that we do, the quality of sales and revenue generation, the quality of operations, and of vendor management, procurement, and of the support processes. It is only when an organization successfully juggles all these components of the business, that it will be successful, and quality management provides the methods to do so.

Does Quality management pay?

I often ask this question to my audience group – what percentage of the profit that your company earns, is contributed by quality management. Take a step back and think about it. If you are making profits today, you are likely doing so in a competitive space, because that is the way the world is today. You can no longer set any price to your products, but it must be a competitive price, and if you are to make profits on that price, you have to sell more than a threshold value that covers your fixed costs, you have to manage your costs better, and you have to control any after sales effects. All of this is within the domain of quality management, and hence the answer to my question, that I expect, and surprisingly, do often get from the audience is 100%, which is what it really is.

Quality management applies to all parts of the business

You may well ask as to what quality management has to do with sales and marketing. Or for that matter, procurement. It has everything to do with it. These operations are critical to the company, and it is vital that these are done effectively. In any large organization, the sales are not a function of individual brilliance, but they are instead a result of a well laid out process. There is a process of market research, of sales prospecting, of sales management, of taking order and delivery, and so on. Each of these processes should be done in a standard way by everyone engaged in that operation, and by standard way, I mean the best way. There is also room for continuous improvement of that process. There are scientific ways of assessing the market, of market segmentation, or piloting new product launches, observing responses and arriving at conclusions on the basis of evidence. This approach of managing a process or managing a system, the sales system, is fully the realm of quality management. We once took the entire sales team of a large MNC through 10 days of Six Sigma Green belt training following which, each of the participants had to execute a project; and the typical project for a sales regional manager, was to increase sales by X percentage for the new year. I can tell you that it was a successful program for the company.

Running operations is serious business. Cannot leave it to chance.

Quality management requires discipline. It requires top management commitment, and it is not a short term fix. It calls for building a culture in the organization that values quality, and puts quality first. It believes that great organizations are built by people and securing the interest and commitment of all its people is fundamental to success.
It may be noted that quality improvement does not usually call for investment of capital. That is the beauty of this agenda. We can have quality and productivity gains often with very little or no investment in capital. What is required is the application of minds, and the engagement of the people concerned. When GE first implemented Six Sigma across the group, they recorded $17 Bn in savings from Six Sigma projects in the first five years of implementation. It is also common knowledge that the Cost of Poor Quality (COPQ) in an organization may well range between 15 to 30% in a manufacturing organization, and more in a service organization. A part of that cost could well be saved, and represents enormous potential for any organization, and its CEO.

Quality management builds future leaders

GE is an example of an organization that realized how quality management was central to the development of its leadership capability. Six Sigma and lean tools and techniques enabled its young workforce and young managers to learn the useful skills of problem solving, critical thinking and data based decision making. Projects became the proving ground for young leaders as they picked up expertise in managing the resistance to change, and the art of how to take people along as organizations made small and big changes to their processes. These experiences taught these practitioners about processes like nothing else does. Future leaders were born out of these experiences. It is no surprise that the companies that adopted these methods seriously, gained enormously in terms of human capital, and their employees became much sought after by other organizations.