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The Titanic, crude oil and Tiger Hill
posted by
Suresh Lulla
18 Jul 2008, 17:38
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labels: quality management, cost of poor quality, leadership, efficiency
When there is a change in the economic, political or business environment, it is best to question every assumption you have been working with. Currently, in India, we are confronted with all three changes, namely, global oil piracy, political realignment in New Delhi, runaway inflation, and, a BSE and NSE crash. These changes are real and here to stay for months to come. They are the updated assumptions for strategic planning. As we are all aware, assumptions are required to address uncontrollable variables.
In recent history, India has not been confronted by a cumulative challenge of such enormity. Consequently, business leaders must articulate what stands between them and the perennial corporate goal of stakeholders-delight. According to me, there are two important Tiger Hills that leaders must conquer:
- Chronic waste in their business processes resulting in some cost of poor quality (COPQ)
- Chronic waste in their partners’ business processes, also resulting in high COPQ for their business operations
Typically, the chronic waste in our business processes have been blissfully legitimized through the budget. Examples of chronic waste that translate to COPQ include scrap, rework, inventory, accounts receivable, warranty, breakdown maintenance, to name a few. Our partners mirror the same. This applies to processes of suppliers, warehouses, transporters, distributors, and BPOs. We pay for their chronic waste. Collectively, the COPQ of our operations and that of our partners adds up to approximately 25 per cent of total costs.
I believe, organizations in the manufacturing and service sectors (large and small) have the potential to halve their COPQ in two years. Doing so can double their profits without capital investment. Qimpro has facilitated this transformation in India, Thailand, Indonesia and Pakistan. Cumulatively, it has saved its clients over Rs 10,000 crore. Contrary to common belief, I am of the view that uncontrollable variables are only an irritant. Survival is possible. But then, survival is not mandatory!
Given an opportunity, I would appeal to Prime Minister Manmohan Singh to entrust iconic business leaders such as Mr R C Bhargava, Dr J J Irani, Mr Suresh Krishna, Mr Deepak Parekh, and Mr Chandra Mohan to help pay for India’s crude oil bills by eliminating chronic waste in our industry and governmental institutions.
And a word of caution to all industry: Please don’t consume your time straightening the deck chairs when the Titanic hits an iceberg.
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