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Examination Paper of Quality Management
IIBM Institute of Business Management 1
IIBM Institute of Business Management
Examination Paper MM.100
Total Quality Management
Section A: Objective Type (30 marks)
This section consists of Multiple Choice questions & Short Answer type questions.
Answer all the questions.
Part One questions carries 1 mark each & Part Two questions carries 4 marks each.
Part One:
Multiple Choices:
1. If the amount of energy available for the intended function be ‘a’ and the amount of energy wasted be ‘b’ then Signal to noise ratio will be,
a. a/b
b. (a-b)/b
c. b/a
d. (a+b)/b
2. The number of orthogonal arrays added by Taguchi to the original work of Sir R A Fischer, was
a. 3
b. 2
c. 1
d. 4
3. If the α for each t test be 0.2 then for 4 ‘t’ tests the probability of a correct decision will be
a. 0.0008
b. 0.0016
c. 0.0002
d. None
4. This is not a rapid prototype technique
a. Stereo lithography
b. Solid ground curing
c. Solid ground searching
d. None
5. The multiplication of importance of customer, scale up facture and sales point is called
a. Relative weight
b. Absolute weight
c. Weight of scale
d. Weight of sales
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6. In documentation Pyramid all documentation moves from one level to next in
a. Ascending order
b. Descending order
c. One down one up fashion
d. Two down one up fashion
7. The quality system other than ISO 9000
a. PS 9000
b. CS 9000
c. AS 9000
d. LS 9000
8. In the 5 S methodology for workplace organization, ‘Seiton’ stands for
a. Proper arrangement
b. Orderliness
c. Personal cleanliness
d. Discipline
9. The basic plan-do-study-act (PDSA) cycle was first developed by
a. Deming
b. Shewhart
c. Juran
d. Fleming.
10. One of the best approach having three components, can be used for process improvement, is
a. Loran trilogy
b. Turan trilogy
c. Sudan triology
d. Juran triology
Part Two:
1. Write a note on ‘Kano model’ of customer requirement.
2. Define Herzberg’s two factor theory.
3. Write a note on Pareto analysis.
4. What do understand by Benchmarking?
5. Define “Degree of freedom”.
END OF SECTION A
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Section B: Caselets (40 marks)
This section consists of Caselets.
Answer all the questions.
Each caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Caselet 1
Philips India Ltd. previously called Pieco Electronics Ltd., a MNC has Dutch parents and its major plant in Calcutta. The company is having a very sound corporate image in India for its electronic products, namely TVs, Radios, transistors, battery cells, electric bulbs, electric tubes, two-in-ones, etc. Indians love to have Phillips products, which are more costly than various Indian electronics products brands, as they maintain a better quality. Philips operates through forward integration with its own authorized dealer’s network in India. The company has maintained its corporate image and reputation in Indian market over the years. The labour trouble started in 1990. The company had its ancient production system in its main plant at Calcutta. Labour unions started agitations for salary hike and asked for a number of incentives and facilities to establish parity with other competing electronic giants. “There was a political clout of the labour unions which lead to increased militancy” says the Chief Executive Officer of the Phillips India Ltd. The situation of labour trouble took such an ugly turn that the Dutch parents of the Philips India decided to get out of India by closing the plant. In 1995, however, managers refused to give up and implemented TQM. The first step was total employees involvement. The management adopted the strategy of managing people through involving, empowering and motivating. The management re-established its future vision to be an international design and production center and decided to benchmark with international quality system standards ISO 9000. The main weakness of the company during 1990 started converting into strength when labour unions started participating intensively. A number of self-directed and self-directed and self-managing mini, micro and mega-teams were formed and assigned responsibility and accountability under dynamic leaders. By 1995 the Calcutta plant of Philips India became a model factory for its major competitors to envy-its operations and turnaround. The R&D section took the leading role for spearheading the company with its smart people and well equipped laboratories. The posters claiming “quality” were exhibited in the premises and all working areas. All this made the Calcutta plant a showpiece of Philips. It became the company’s best bet for an international manufacturing center. The progress due to teamwork and quality orientation was so impressive that it led the company to achieve the internationally most coveted- The European Quality Award. The company also obtained certification of Environmental management system EMS 14001 which gave it a further boost in improving its sagging image during the previous 4-5 years from 1990 onwards.
In a nutshell, five beliefs helped the management in its revival. These five beliefs are: (i) mission statement, (ii) revolve around valuing, (iii) trusting and creating trustworthiness, (iv)respecting the people and using their brainpower in teams, and (v) continuously motivating them. A few other things which helped the company are: propagating employee ship. TQM was used to bring about the much needed culture change, open communication, sharing information, sharing problems openly, and an appeal to labour unions to uphold the pride of Calcutta. Moreover, the company started operating in 3 shifts instead of only general shift over the previous time period. The continuous improvement through structured Kaizen activities was adopted as a way of day-to-day work improvement in assignments. A suggestion scheme was introduced which started getting a record
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number of practical and implementable suggestions. Cross-functional groups and small group improvement activities did a wonderful job. Rewards and recognition system was introduced. Regular surveys on employee motivation were undertaken to know and further boost the employees’ morale and participation in decisions of the company. Focus on customer and their delightment was increased by customer surveys, defect tracking, undertaking defect repairs, meeting the warranty claims, making after sales service better, customer helpline documents, promptness in delivery, etc. Internal customer satisfaction was improved by strengthening internal supplier-internal customer chain with self-appraised vendor services. The inputs from the internal customers were obtained regularly for carrying out performance appraisal of the officers. The practice kept the officers on their toes. “Today. The company has not only recovered from its previous labour trouble but also has counted has counted itself amongst the few world-class companies: It has obtained recognition the world-over by winning the most coveted award- The European Quality Award”, says the Chief Executive of the company. “Philips India Ltd. has become a benchmark for various competitors in India and abroad”, the CEO of the company adds further.
1. Discuss the various labour troubles which compelled the company management and its Dutch parents to decide to wind up the Calcutta plant. What were the problems?
2. How would you apply the Phillips India policy to help other electronics companies in India to implement TQM?
Caselet 2
Siemens is a short and simple word. But Siemens is at the top. Top covers a vast gambit. The patent for a miniaturized hearing aid is TOP. Futuristic business and technology roadmaps are Top. Shareholder returns are also top. In Germany, a new performance-linked management ranking system is Top. In Turkey, process time optimization is Top. In India, Taguchi methods for quality monitoring are Top. Value chains are Top. Top means different things in different countries, companies, business and even divisions. But today, what began as an acronym for time-optimized processes has become a term applicable to any management initiative-in R&D, human resources, shop floor management, communication, organizational restructuring. The movement, as it has become today, spans the Siemens, worldwide network though it is at various stages of implementation and development in different countries, and is not implemented uniformly across divisions. The Top movement started about three years ago by Siemens AG as increasing costs of production and a stagnating European market forced this German multinational to take a close look at itself. The Top movement is based on a simple model: productivity, innovation, and new markets are the pillars; the base is corporate culture; and the Top of the temple is customer-orientation and profit ability. According to Heinrich Von Pierer, President, Siemens AG, the Top initiative is not about re-engineering or cost-cutting, the core theme is growth through innovation. “The motor driving the Top initiative is cultural change-we must focus on our customers,” he says. However, Top is not only about encouraging cultural change. In 1996, in the course of three years, it has achieved cost savings of DM 20 billion. The Top innovation initiative is made up of eight modules: mobilization, communication, idea initiatives, teaching of operational skills, and cooperation with non-industrial research, patent initiatives, white space projects, and strategic innovation projects. The viewpoints and business objectives are different at different places. For instance, in high-wage Germany, Top is an integral part of Siemens AG’s human resources and management motivation exercise. The central unions are also involved. It was also an integral part of the company’s R&D drive. Siemens AG spends DM 7.3 billion on R&D every year. “A company’s innovative strength ultimately determines its long-term competitive viability,” says Claus Weyrich, member of the managing board, Siemens AG. For instance, the company has announced the ‘Siemens Inventor
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Prize’. The 12 German recipients of the prize in 1996 hold 400 patents among them. Starting from 1997, the prize has gone international. The aim is that Siemens AG’s annual total of 2,500 patents goes up. As a precursor to complete internationalization, Siemens had launched an international ‘innovation competition 1997’, with a special category for young innovators whose innovations may not have yet achieved practical applicability. Forty winners from regional centers will be feted at Siemens’ 150 years celebrations next year. The fact that Siemens take its Top initiative very seriously. Indeed it is apparent from its system of implementation through Top champions. Top champions are senior managers who work full times as Top coordinators. Internationally, the Top movement is coordinated through a Top center in Munich, which even has a home-page on the Internet to interact and coordinate with Top manager across the world. All this is besides annual international conferences held within and outside Germany. At Siemens India Ltd, Ranjeet Dalvi is a full-time General Manager in charge of the Top program. Besides, the company’s 13 divisions each have at least one Top champion - a senior manager with a large circle of influence, who is the divisional Top coordinator, and reports directly to the divisional head. The resonance between Top champions or divisions in various countries with each other and with Germany also differs.
In India, the evolution of the Top program has been naturally different from that in Germany. The aims differ, to fit in with Siemens Ltd’s objectives: to increase its global presence substantially, and ensure that it stays ahead of opportunities in the local market. “It is no longer enough that we serve the local market. Every global competitor is here; we have to identify opportunities and adapt to them”, says AV Chindarkar, Director-in-charge of switch gear, motors, drivers, automations, power transmission and distribution. Siemens Ltd had already began an organization restructuring and business process re-engineering program, which has then called core-an acronym for corporate re-engineering. All of Siemens Ltd’s process re-engineering was an in-house exercise, largely focused on mapping and optimizing processes, using the time parameter; that by itself would ensure reduction in process costs and improvement of productivity. The aim is to: “stay fit for future”. When the Top program came along, it was integrated into the core initiative. “Top has become an umbrella for all kinds of initiatives and management changes. It has become to mean all new things it helps to create a euphoria with in the company”, says Ranjeet Dalvi. Though the Top program is still nascent at the newer divisions such as telecom and software, it is act quite and advanced stage at the traditional business. Says Dalvi, “BPR is a stage. Once you have finished re-engineering a process, theirs just so much you can do. Then you have to move on to innovation.” Chindarkar believes that Siemens India has moved into the innovation phase. “Much of the skill of indigenization that we are forced to learn in a closed economy may today become the key to grater innovation,” he says. Siemens India Ltd’s vision: to become a Siemens competence centre in South east Asia. A competence centre has been define as a Siemens arm with special competencies in specific businesses in a particular country, that in term can serve Siemens concerns in other countries.“We have to innovate many solutions that we provide, such as in automation. Existing global technologies often do not fit in local customer need.” Says Chindarkar. With Siemens AG having re-affirmed its commitment to the Asia-Pacific region, Siemens Ltd is today looking at networking itself into the global scene, through innovations and unique products. Naturally, the Top initiative will be crucial in this effort. What perhaps makes the Top program so easy to adopt and implement is its flexibility. What could otherwise become disjointed management concept or practices are united in Top’s common temple model at Siemens.
1. What is the Top initative in Siemens AG? Discuss it various aspects.
2. What are the Top eight initiatives for innovation in Siemens AG? Evaluate their impact on quality and TQM.
END OF SECTION B
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IIBM Institute of Business Management 6
Section C: Applied Theory (30 marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
1. Mechanical products such as cars do break down. Cars often are serviced by the car dealer. How can a car dealer use the service department to enhance future car sales?
2. Using trade journals, professional society magazines, periodicals, and your networking ability, identify two examples of quality by design success stories and explain there results.
END OF SECTION C
Examination Paper of Quality Management
IIBM Institute of Business Management 7
IIBM Institute of Business Management
Examination Paper MM.100
Quality Control
Section A: Objective Type (30 marks)
This section consists of Mixed Type questions & Short Answer type questions.
Answer all the questions.
Part One questions carries 1 mark each & Part Two questions carries 5 marks each.
Part One:
Multiple Choices:
1. A curve that shows the amount inspected by both the consumer and the producer for different percent nonconforming values.
a. ASN curve
b. ATI curve
c. AOQ curve
d. None of the above
2. The producer’s risk is represented by the symbols
a. Alpha
b. Beta
c. Gamma
d. None of the above
3. The International Committee of Weights and Measures revised the metric system in
a. 1970
b. 1960
c. 1950
d. 1999
4. ASRS stands for……………………………………………………………………..
5. A recent survey of retail customers by the ……………………………………………..
6. A cause-and-effect diagram was developed by ………………………………………
7. Variables that exhibit gaps are called ………………………………
8. How many techniques used to discard data.
a. One
b. Two
c. Three
d. None of the above
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9. Deviation charts are also called
a. Difference chart
b. Nominal chart
c. Target chart
d. (a), (b), & (c)
10. Dodge-Romig Tables developed by
a. H.F. Dodge
b. H.G. Romig
c. H.K. Fleming
d. Both (a) & (b)
Part Two:
1. Write short note on “Group Chart”.
2. What is “Measures of Dispersion”.
3. What is “Collection of Data”.
4. Write short note on “Binomial Probability Distribution”.
END OF SECTION A
Section B: Caselets (40 marks)
This section consists of Caselets.
Answer all the questions.
Each caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Caselet 1
It is 7:00 a.m. and the siren sounds high at Kandivli (a suburb of North Mumbai) plant of Mahindra & Mahindra’s (M&M) Tractor division, signaling the starting time of the morning shift. Hardly any workers have turned up. Reporting late on duty is a norm for the workers here. Seldom does the morning shift start before 7:30 a.m. During the day shift, it was an ominous scene to find workers stretching out under the trees and relaxing during the working hours. The union leaders hung around the factory without doing any work at all. A few days back, the workers in the night shift had beaten up a milkman for creating a lot of noise in the week hours of the morning and thus, disturbing their sleep during their working hours. Things were worse at the other plant of M&M in Nagpur. But this was all in the 1980s. M&M has come a long way since then – it has won the most coveted Deming prize for quality, and started a farming equipment assembling plant in the U.S.A. After the huge success there, the company opened a second assembly plant and a distribution centre in Georgia. Now, the company is in the process of establishing assembling units in Canada to locally produce and market a range of low horsepower cab tractors with features such as AC heater (keeping in view the cold weather conditions for the farmers there), personal stereo, and even a sun roof. It has also
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acquired Jiangling Tractors in China, which it would use to develop low cost products suited to plough deeper into the US farm equipment market. Now, the fourth largest tractor company in the world, M&M, has four tractor plants in India (Mumbai, Nagpur, Rudrapur in Uttranchal, and Jaipur). It has been maintaining its market leadership for the past two decades. During the late 1980s, the company tried to apply TQM concepts such as quality circles without getting any success. M&M was the market leader in the tractors segment at that time, but in view of the looming multinational threat in the near future, its internal situation was very fragile. During 1990-94, the company started the use of the statistical process control and tried to perform business process reengineering. Its journey towards the Deeming prize was initiated in 1994, with the appointment of Prof. Yasutoshi Washio, a Japanese expert, in the implementation of the Deeming guidelines. The same year, the company was rechristened M&M Farm Equipment Sector (FES).
Initially, Prof. Washio was skeptical about the Indian companies and workers. He felt that the Indian companies are more like the American companies, which feel that results are important. On the other hand, for the Japanese, the process is more important. Moreover, he had serious doubts about the attitude of the Indian workers with respect to teamwork – a Deeming prerequisite – as he felt that Indian were individualistic. He has proved wrong by the M&M workers. In his own words, ‘The Indians can be good team workers, much better than the young in Japan today and, in that sense, perhaps, Deeming is better suited to Indian companies’. In the initial few years of interaction with the management of FES, Washio found himself isolated due to disagreements on various fronts. Washio had major difficulties in making most of the Indian companies understand the importance of implementation over creating a perfect framework. In his own words, ‘Indians are very good with framework and the big picture, but are poor with implementation. The kaizen is weak.’ Kaizen means gradual, orderly, and continuous improvement in work processes. It took a while for Washio to make the FES personnel understand that good kaizen hinges on implementation, so there is no need to spend too much time creating a perfect framework. Once you start implementing these, the rest will happen automatically. The FES created a team to implement the team to implementing the Deeming guidelines. The team identified eleven key areas to be fulfilled:
1. Top management leadership and involvement
2. Creating and maintaining TQM frameworks
3. Quality assurance
4. Management system
5. Human resource development
6. Effective utilization of resources
7. Understanding TQM concepts and value
8. Use of scientific method
9. Organizational power
10. Relationship with stakeholders
11. Enabling the unique TQM activities
In addition, there is another Deming must-do: eliminate dependence on inspection to achieve quality by building quality into the product in the first place. The system at FES earlier was that at the end of the assembly process or at the customer’s place, there used to be a final inspection. If a product showed serious flaws then, it was sent again to the shop floor. This wasted a lot of time and effort, and it did not add to the improvement in the quality of the manufactured product. In order to change this system, computers were installed on the shop floor for showing the standard operating procedure (SOP) of a particular process to make the workers understand the various steps in a process. This reduces the chances of human error and acts as a natural check. At the end of every complete process, a check is performed by a trained worker, who also follows an SOP. Employee involvement is the first step in ensuring the success of any quality initiative. At FES, the workers would dictate terms to the shift supervisor by saying that they would not do different tasks on many machines. The
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management took time to conceive them by giving them examples such as: if your wife can do multiple tasks of cleaning the house, feeding the children, and washing the cloths, why can’t you do the same? The workers were explained the multinational threats looming large. They were told that, if they did not mend their ways, the company might shut down the factory, or even worse, a multinational may take it over and would invariably lay off all the problem creating workers. Examples of companies shut down in Mumbai due to the changed scenario were given. The entire programme was termed ‘Ashwamedh’ and analogies were drawn from mythology and the current competitive situation. This brought a complete transformation in the workforce that was now willing to perform multiple tasks, double their productivity, and maintain shift discipline by reporting on time. The workers were informed by the management about every difficulty faced by the company in beating the competition in the market place. Some of the workers were sent with the marketing staff to meet the farmers using the company’s product and facing problems. This was called ‘Operation Hamla’. The workers came back chastised and sobered when they realized that a small mistake on the shop floor could cost a farmer his season’s crop. The company even sent some of the union leaders for short training courses in the USA and UK.
This sustained effort on part of the company has paid rich dividends. Costs are down by 15% and the market share has risen by one percent to 27.3% (10% higher than its closest competitor), despite an overall decline in the tractor demands. The break-even point for a new model of a tractor has decreased to 30,000 -32,000 from the 54,000 tractors three years ago. The worker productivity levels have increased by 100%. Tractor exports from the company have increased 100% over the past 10 years, with 70% to the USA alone. The quality of tractors has improved drastically with the number of complaints per 1000 tractors dropping from 228 to 90. The rejection rate for components bought from vendors, rejection and rework in machining, and rejection at final testing have all been brought down to near zero levels. FES has introduced 15 new models in accordance with the requirements in the international markets. The journey to world-class quality is not over yet. The company now aims at matching the world benchmarks in productivity and quality to establish a cost leadership in the Indian industry.
1. If you were a part of the top management at M&M FES, how would you have involved the workers in the Deming programme?
2. Do you think that M&M FES has a strategic quality management system in place?
Caselet 2
In 1965, a Yale University undergraduate student Frederick W. Smith wrote a term paper about the passenger route systems used by most airfreight shippers, which he viewed as economically inadequate. Smith wrote of the need for shippers to have a system designed specifically for airfreight that could accommodate time sensitive shipments such as medicines, computer parts, and electronics. In August 1971, following a stint in the military, Smith bought controlling interest in Arkansas. While operating his new firm, Smith identified the tremendous difficulty in getting packages and other airfreight delivered with in 1 – 2 days. This dilemma motivated him to do the necessary research for resolving the inefficient distribution system. Thus, the idea for Federal Express was born – a company that revolutionized global business practices and now defines speed and reliability. Federal Express was so named due to the patriotic meaning associated with the word ‘federal’, which suggested an interest in nationwide economic activity. At that time, Smith hoped to obtain a contract with the Federal Reserve Bank and, although the proposal was denied, he believed the name was a particularly good one for attracting public attention and maintaining name recognition.
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Company Growth
Though the company did not show a profit until July 1975, it soon became the premier carrier of high-priority goods in the marketplace and the standard setter for the industry it established. In the mid-1970s, Federal Express took a leading role in lobbying for air cargo deregulation that finally came in 1977. These changes allowed Federal Express to use larger aircraft (such as Boeing 727s and McDonnell-Douglas DC-10s) and spurred the company’s rapid growth. Today FedEx express has the world’s largest all-cargo air fleet, including McDonnell-Douglas MD-11s and Airbus A-300s and A-310s. The planes have a total daily lift capacity of more than 26.5 million pounds. In a 24-hour period, the fleet travels nearly 500,000 miles while its couriers log 2.5 million miles a day- the equivalent of 100 trips around the earth. The company entered its maturing phase in the first half of the 1980s. Federal Express was well established. Competitors were trying to catch up with a company whose growth rate was compounding at about 40% annually. In the fiscal year 1983, Federal Express reported $1 billion in revenues, making American business history as the first company to reach that financial hallmark inside 10 years of start-up without mergers or acquisitions.
Overseas Expansion
Following the first several international acquisitions, intercontinental operations began in 1984 with service to Europe and Asia. The following year, FedEx marked its first regularly scheduled flight to Europe. In 1988, the company initiated direct-scheduled cargo service to Japan. The acquisition of Tiger International, Inc. occurred in February 1989. With the integration of the Flying Tigers network on 7 August 1989, the company became the world’s largest full-service, All-cargo Airline, Included in the acquisition were route to 21 countries, a fleet of Boeing 747 and 727 aircraft, facilities throughout the world, and Tigers’ expertise in international airfreight. Federal Express obtained authority to serve China through a 1995 acquisition from evergreen International Airlines. Under this authority, Federal Express became the sole US-based, All-cargo carrier with aviation rights to the world’s most populous nation. Since then, the company’s global reach has continued to expand, resulting in an unsurpassed worldwide network. FedEx Express today delivers to customers in more than 210 countries.
Evolving Identify
The first evolution of the company’s corporate identify came in 1994 when Federal Express officially adopted ‘FedEx’ as its primary brand, talking a cue from its customers, who frequently referred to the company by the shortened name. By that time, customers used the term as a verb, meaning, ‘to send an overnight shipment’. It did not take long for the meaning to catch on, and today it is common terminology to ‘FedEx’ a package. The second evolution came in 2000 when the company was renamed ‘FedEx Express’ to reflect its position in the overall FedEx Corporation portfolio of services. This also signified the expanding breadth of FedEx Express – specific service offerings as well as a FedEx that was no longer just overnight delivery.
FedEx Firsts
Throughout its existence, FedEx has amassed an impressive list of ‘firsts’, most notably for leading the industry in introducing new services for customers. Federal Express originated the Overnight Letter and was
the first transportation company dedicated to overnight package delivery,
the first to offer next-day delivery by 10:30 a.m.,
the first to offer Saturday delivery,
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the first express company to offer time define service for freight, and
the first in the industry with money-back guarantees and free proof of performance – services that now extend to its worldwide network.
Being a ‘first’ company resulted in many firsts for awards and honors, too. In 1990, Federal Express became the first company to win the Malcolm Baldrige National Quality Award in the service
category. It also received ISO 9001 registration for all of its worldwide operations in 1994, making in the first global express transportation company to receive simultaneous system-wide certification. Today, FedEx Express is the largest operating company in the FedEx family, handling about 3.2 million packages and documents every business day.
People-Service-Profit
Federal Express’s ‘people-service-profit’ philosophy guides management policies and actions. The company has a well-developed and thoroughly deployed management evaluation system called SFA (survey/feedback/action), which involves a survey of employees, analysis of each work group’s results by the work group’s manager, and a discussion between the manager and the work group to develop written action plans for the manager to improve and become more effective. Data from the SFA process are aggregated at all levels of the organization for use in policymaking. Training of front-line personnel is a responsibility of managers and ‘recurrency training’ is a widely used instrument for improvement. Teams regularly assess training needs and a worldwide staff of training professionals devices programs to address those needs. To aid these efforts, Federal Express has developed an interactive video system for employee instruction.
An internal television network, accessible throughout the company, also serves as an important avenue for employee education. Consistently included in listings of the best US companies to work for, Federal Express has a ‘no lay-off’ philosophy, and its ‘guaranteed fair treatment procedure’ for handling employee grievances is used as a model by firms in many industries. Employees can participate in a program to qualify front-line workers for management positions. In addition, Federal Express has a well-developed recognition program for team and individual contributions to company performance. Over the last five years, at least 91% of the employees responded that they were ‘proud to work for Federal Express’.
Service Quality Indicators
To spur progress toward its ultimate target of 100% customer satisfaction, Federal Express recently replaced its old measure of quality performance-percent of on-time deliveries – with a 12 component index that comprehensively describes how customers view its performance. Each item in the service quality indicator (SQI) is weighted to reflect how significantly it affects the overall customer satisfaction. Performance data are gathered with the company’s advanced computer and tracking systems, including the SuperTracker, a hand-held computer used for scanning a shipment’s bar code every time a package changes hands between pick-up and delivery. Rapid analysis of data from the firm’s far-flung operations yields daily SQI reports transmitted to workers at all Federal Express sites. The management meets daily to discuss the previous day’s performance and tracks weekly, monthly, and annual trends. Analysis of data contained in the company’s more than 30 major database assist the quality action teams (QATs) in locating the root causes of problems that surface in SQI reviews. Extensive customer and internal data are used by cross-functional teams involved in the company’s new product introduction process. To reach its aggressive quality goals, the company has set up one cross-functional team for each service component in the SQI. A senior executive heads each team and assures the involvement of front line employees, support personnel, and managers from all parts of the corporation when needed. Two of these corporate-wide teams have a network of over 1,000
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employees working on improvements. The SQI measurements are directly linked to the corporate planning process, which begins with the CEO and the COO and an executive planning committee. Service quality indicators from the basis on which corporative executives are evaluated. Individual performance objectives are established and monitored. Executives bonuses rest upon the performance of the whole corporation in meeting performance improvement goals. In the annual employee survey, if employees do not rate management leadership at least as high as they rated them the year before, no executive receives a year-end bonus. Employees are encouraged to be innovative and to make decisions that advance quality goals. Federal Express provides employees with the information and technology they need to continuously improve their performance. An example is the digitally assisted dispatch system (DADS), which communicates to some 30,000 couriers through screens in their vans. The system enables quick response to pick-up and delivery dispatches and allows couriers to manage their time and routes with high efficiency. Since 1987, overall customer satisfaction with Federal Express’s domestic service has averaged better than 95%, and its international service has rated a satisfaction score of about 94%. In an independently conducted survey of air-express industry customers, 53% gave Federal Express a perfect score, as compared with 39% for the next-best competitor. The company has received 195 of nearly 600 businesses and organizations have visited its facilities.
1. What lessons can Indian companies take from FedEx?
2. What are the factors that have gone against India and why did FedEx not start its operations here?
END OF SECTION B
.
Section C: Practical Problems (30 marks)
This section consists Long Questions.
Answer all the questions.
Each question carries 15 marks.
1. An electrician testing the incoming the voltage for a residential house obtains 5 readings: 115, 113, 121, 115, 116. What is the average?
2. A single sampling plan is desired with a consumer’s risk of 0.10 of accepting 3.0% nonconforming product and a producer’s risk of 0.05 of not accepting 0.7% nonconforming product. Select the plan with the lowest sample size.
END OF SECTION C
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