Why have we forgotten Management Tools?
The elixir for a healthy bottom-line.
Basics
Most of us know Quality Improvement Tools. These tools are logical and left-brain driven. They deliver incremental improvements. Examples abound in manufacturing, services, and healthcare.
Some of us have an awareness about Creativity Tools. These right-brain tools complement Quality Improvement Tools to deliver breakthrough innovations. Most organizations have been blind to this opportunity.
We all know Management Tools, such as Break-Even Point, Make or Buy, and Critical Path Method (CPM). Unfortunately, very few organizations use them even though we were all taught these tools in college. Each of them is a companion to Quality Improvement.
More Basic
Break-Even Point is very useful to pull the alarm of Cost Of Poor Quality (COPQ). After all, COPQ is hidden in fixed costs. By solving chronic problems for Quality Improvement, we can reduce the COPQ in an organization, as well as slide the Break-Even Point downwards. This is an excellent way to get upper management to own Quality Improvement. All gains go to the bottom-line.
Imagine the use of Break-Even Point in municipal corporations! Citizens will be delighted.
Make or Buy as a tool has traditionally focused on cost of product or service. Make it. Or buy it. It is recommended that the focus shift to Process Capability. Do you have capable processes for a specific purpose? How do these specific processes compare with those of other organizations? If better, you should use your own process (Make). If not better, you should outsource the process (Buy). The evaluation must also focus on joint-costing for a win-win contract with the outsourced organization. In addition, you must adopt life-cycle costing to establish reliability.
Make or Buy (Process Capability) is an approach adopted by most automobile manufacturers – Maruti, Tata Motors, Mahindras, Honda, Hyundai, Bajaj, Hero, etc.
Critical Path Method is commonly used for capital intensive projects – aerospace and defence. CPM can also be used for software development, building construction, plant construction, and public infrastructure. Any project with interdependent activities can apply this method of mathematical analysis. So where does Quality Improvement fit in? Identify chronic problems along the critical path! The critical path is the longest sequence of activities in a project plan which must be completed on time for the project to complete on due date.
Aditya Birla was famous for completing plant construction at least 10% sooner than the planned final date. This had an impact on income. Consequently, significant gains were achieved by Vikram Cement, Birla White, Indo Gulf Fertilizer, Hindalco, Thai Carbon, Pt Elegant (Indonesia), and more.
Let us adopt these three Management Tools to build the brand ‘Made In India’. We should be Faster, Better, Cheaper than any other comparable organization in the world.
Random Thoughts
- Will adopting basic Quality / Creativity / Management Tools create more jobs?
- Should educational institutions ‘Walk their Talk’ on basic Quality / Creativity / Management Tools?
- Can NGOs also apply these basic Quality / Creativity / Management Tools?
- Can we export our goods from India at a price lower than the cost to produce the same in the customer-country?
This article was originally posted at https://sureshlulla.com/recent-posts/
Consultant and Trainer (TQM implementation, Six Sigma, Process Improvements, Lean, TPM, 5S, Kaizen)
5 年Dear Sir, In all simplicity? adapting basic Quality, creativity and/or management tools definitely help in creating more employment. First and foremost, these tools help in understanding facts and data and thus making decision making better based on data. The decisions could be related to new product , new process, new market, new business or day to day operation and management of resources for improved QCDSM. This leads to better, cheaper, faster and different ( as learnt from you) product and service . Ultimately, we become competitive - stronger in " Make in India" and " Made in India". More business in the Nation ...more jobs .
instal.packages("ColombiAPI") | install.packages("OncoDataSets") | install.packages("educationR") | install.packages("crimedatasets") | install.packages("timeSeriesDataSets") | R programming language |
5 年The following video shows how to get the Break Even Point on Microsoft Excel (Spanish Speaking) https://youtu.be/vgL8snhtHSQ
Strategic Mgt Professional 40+yrs , Higher Education Institutions Faculty, 15 +Yrs in Accredited Mgt Institutions as Facilitator. Consultant, Academic Board Advisory BOG, Management Educator and Author
5 年Thank you Sir . Outstanding organizations integrate these tools into the rigor of Daily Management process and review . Top mgts reinforce the practice and behaviour as a foundation of decision making at all levels then data management and measures become an integral part of the culture. Thats the Quality of excellent Organisations an? that requires consistency .that's tough work My experience with Japanese also reinforces that rigour in data management ,analysis, review and improvement becomes the mantra for organizations in their excellence journey .
Consultant and Trainer (TQM implementation, Six Sigma, Process Improvements, Lean, TPM, 5S, Kaizen)
5 年Thank you sir. We, the quality practiceners have bigger challenge to make educational institutions walk their talk. How do we take it forward.
Leadership Experience in Banking and Life Insurance -Marketing, Sales, Tech aided Services and Quality Governance
5 年How do we build a beautiful seminar educating people on the various tools and case studies to demonstrate? That's the way ahead