quality audit of a private organization [may 2009]

May 20, 2009 LMDA- QITC FINAL EXAM: QUALITY AUDIT

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CASE: CENTRE FOR ADVANCED STUDIES IN ENGINEERING

ENGINEERING MANAGEMENT

COMPANY: LEADERSHIP AND MANAGEMENT

DEVELOPMENT ASSOCIATES

SUBMITTED TO: DR. ALI SAJID, PhD, TI CEO, LMDA

SUBMITTED BY: FAHAD MAHMUD MIRZA

SP-09-CE-124

SECTION – II

DATE OF SUBMISSION: 20

SPRING 2009

QUALITY IMPROVEMENT IN TECHNICAL CONCERNS

QITC FINAL EXAM

QUALITY AUDIT

TH MAY, 2009


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IN THE NAME OF ALLAH; THE MOST GRACIOUS, THE MOST MERCIFUL

PREAMBLE

This audit is a part of QUALITY IMPROVEMENT AND TECHNICAL CONCERNS

course of Masters in Engineering Management, conducted by Dr. Ali Sajid, PhD, TI.

The conducted audit is purely based on staff interviews, observations and getting an in-

depth view of the company’s stature.

No assumptions or guesses were made in this audit.


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TABLE OF CONTENTS

INTRODUCTION 4

PART – A: APLICATION OF DEMING’S 14 POINTS 7

PART – B: CUSTOMER-RELATIONSHIP MANAGEMENT 10

PART – C: LEADERSHIP AND STRATEGIC PLANNING 12

PART – D: INTERNATIONAL QUALITY STANDARD 14

PART – E: WORK SYSTEM FOCUS 15

PART – F: REDUCE WASTE AND SCRAP 17

PART – G: EFFECTIVE PERFORMANCE 19

MEASUREMENT SYSTEM

PART – H: COST OF POOR QUALITY 21

PART – I: FOCUSING ON CULTURAL 22

TRANSFORMATION

PART – J: 7QC IMPLEMENTATION 23

CONCLUSION 24


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INTRODUCTION

LMDA (Leadership and Management Development Associates) is a management

training and consulting firm with fully integrated capabilities in Total Quality Management,

Manufacturing Management, Human Resource Development, Business Process improvement,

Project Management, Supply Chain Management, Business Strategy and Strategic Planning and

Soft Management issues impeding the progress of corporate or any business entity. LMDA helps

clients around Pakistan define more ambitious strategies, build more effective organizations, and

shape more successful futures. With a proven track record and over 18 years of training and

consulting experience, LMDA team members have been an innovator in developing

improvement systems for a wide variety of business applications.

LMDA prides on being able to create a training solution in partnership with everyone,

allowing choosing the correct development program and methodology that is totally company

focused to suit the company’s specific needs. They provide consulting, coaching and training

interventions firmly tied to the company’s initiatives and business objectives. They assist any

forward looking organizations willing to bring about change by developing strategies and

methods for thinking and doing things differently–with more creativity, teamwork, productivity

and speed.

LMDA gives a platform to choose world level trainers under one roof for all the training

and development needs. LMDA experts have been instrumental in training in various parts and

cities of Pakistan including Islamabad since 1995 and they worked with managers and staff at all

levels in organizations, across all types of industry and business, and with a significant number

of private sector and public sector clients. During last 13 years, their strength lies in their

relationship with clients and in their design and delivery of services. The main objective has

always been the pursuit of the excellent and the avoidance of the average.


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Focus:

• “Total system improvement” in the light of Total Quality Management Philosophy.

• Especially organizational culture – adapting to the opportunities of the environment

while enhancing organizational integrity and integration.

• When LMDA works with an organization, they operate on the assumption that most

of the wisdom and expertise needed already exists in the people of that organization.

Their job is to help them draw on that competence; possibly expand the range of

information they are looking at; and offer ways to understand and act on the

information and wisdom they have. Too many organizations spend significant energy

and time putting together the “best” plan, only to have that plan put on the bookshelf

or in a drawer. Too many grab hold of the latest management fad. Too many see a

“best practice” in another organization and try to use it in their organization without

considering that their organization may be in a very different context or have a culture

in which that “best practice” doesn’t work. LMDA helps figure out what is the “best

practice” for the company. Including –

• Vision and direction – goals, core values, “ownership” of vision”.

• People – competence & commitment, working style, job satisfaction.

• Dynamics — managing change and stability, trust development, conflict.

• Structures & Processes — adequate resources, physical setting and technology,

workforce structure (degree of self management, teams, etc.) parallel systems

decision making processes

• Leadership – strategic management, people development, self-differentiation

• Environment – seeking opportunity in the forces and trends external to the

organization that impact the organization

• Alignment – seeking a “fit” between the organization’s strategy for success in its

mission & primary task and the organization’s culture, processes and structures.


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Typical Business Concerns Addressed through TQM & OD at LMDA. The organization's

ability to reach its destination (to achieve results) is affected by many factors. LMDA can help

you address any or all of the typical factors given below:

1. Application of Total Quality Management Philosophy (Dr. Deming’s Theory)

2. Customer Focus Organization

3. Development of Mission and Vision Statement

4. Application of Cost of Poor Quality

5. Quality Though Leadership

6. Organizational Culture (its Transformation and impact on performance)

7. Leadership Development

8. Productivity Engineering & Management (including Time & Motion Study)

9. Total Quality Management

10. Supply Chain Management & Logistics

11. Human Resource Management

12. Project Management

13. Business Strategy Formulation and Management of Change

14. Manufacturing & Production Management

15. Total Productive Maintenance

16. Process and Performance Management & Improvement

17. Business Process Improvement

18. Safety Engineering & Management

19. International & WTO Complaint Standards


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PART – A: APPLICATION OF DEMING’S 14 POINTS

Introduction-

The Deming’s 14 points are the fundamental indicators for any organization to improve

quality structure and culture. These points are:

1. Constancy of Purpose

2. Establishing Quality Philosophy

3. Cease Dependence on Inspection

4. Cease Selecting Suppliers on Basis of Price Alone

5. Improving Constantly and Forever

6. Institute Training on the Job

7. Institute of Leadership

8. Drive-out Fear

9. Breaking down Barriers between departments

10. Eliminate Slogans and Targets

11. Eliminate Numerical Goals

12. Remove Barriers to Worker Pride

13. Institute Program of Education

14. Put Everyone to Work to Accomplish Transformation

Current Scenario-

On dealing and correlating the Deming’s 14 points with the current company’s stature,

these are the observed and recognized results to show how important this application is for the

company.


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The application of the Deming’s points needs to be flourished on the basis of the defined

outcome below:

1. No consistency in the over-all system: processes are not well-defined and not followed

correctly if defined (-1).

2. Internally professed quality in office working is not up to the desired level due to the lack

of training among staff (-1).

3. Stuck heavily in the inspection section: development of the staff is not to the mark, so the

manager is dependent on the inspection (-1).

4. The current issue of cost forces the company to sacrifice quality over quantity, and

vendors are especially selected on the basis of price due to funds (-1).

5. Till the date of 18th

6. Minimal training of the employees is incurred, but the option is there if someone wishes

to follow on-the-job training (-1).

May, 2009, the company faced losses due to the partial failure of the

courses, due to the internal weaknesses and recessionary issues. No improvement or

recovery procedures undergoing to educate the staff about showing resistance to failures

in future. Improvements are very necessary in this sector (-1).

7. As far as no formal institutionalization is conducted, the leadership is not very effective

(-1).

8. The operation in this section is based on personality-over-command, imposing one’s own

perception and aptitude. If one drives out the fear, the second forces it (-1).

9. As such no proper departments focusing on training and deployments; and forecasted

barriers are personality based (-1).

10. No slogans defined by the company (+1).

11. No such numerical goals defined for the company (+1).

12. No barriers among workers and defined pride: empowerment is highly formalized (+1).

13. No formal education institutionalized within the company; yet all is being catered for

informally (-1).

14. The prerequisites of transformation processes are weak, but good thing is the issues are

taken seriously and proper suggestions are provided (-1).


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If there ever was a Deming Quality Level, LMDA would stand out to be -11, on summing

up all the points allotted on performance. These are the indicators and parts where serious action

needs to be implemented, besides the points as no such slogans or numerical goals are defined

and no barriers to the workers’ pride are beneficial for the company’s stature. Still, the other

eleven parts are severely in critical situation. Proper and effective implementation of Deming’s

14 points in these sections can result highly advantageous and favorable for the company’s

business development and excellence.


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PART – B: CUSTOMER-RELATIONSHIP MANAGEMENT

Current Scenario-

The one sector where LMDA excels at corporal level is the action and proper application

of the customer satisfaction procedures, yet these procedures are based on the past experience of

the original staff honing from working at CASE-PDC and NUST, especially the company’s CEO

teaching and informally training the staff. It is required to formally educate and train the team by

educating them the bits and bytes of Customer-Relationship Management; on the basis of

marketing, sales, course programs, after-sales services and customer care services.

Currently, the scenario of CRM application is as follows:

• Accessibility & Commitment

o Extensive implementation of customer focus, with everyone having faith over

customer comes first. The loyalty with customer is thoroughly focused and

cleared, but it’s necessary to be educated about customer satisfaction parameters.

One issue of commitment is acknowledged, but once the edification is provided,

the customer satisfaction results will be four-fold.

• Customer contact Requirements

o E-support and newspapers, forums and community portals are used for accessing the

company personals and services inquiries. Similarly, the databases with detailed contact

information about the customers are registered. In one way, the contact requirements by

the company are satisfactory to access the customers as well.

• Effective Complaint Management

o Not a proper system, but the problem is seriously tackled and provided a proper solution

at any time.

• Strategic Partnership and Alliance

o Neat and good strategic partnership and alliance is focused.


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The customer requirements are thoroughly and appropriately fulfilled as per needs and

concerns. This one field obviously excels and is monitored directly by the CEO and every

working person within the company.


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PART – C: LEADERSHIP AND STRATEGIC PLANNING

Current Scenario-

Leadership Review:

Leadership is the ability to positively influence people and systems under one’s authority

to have a meaningful impact and achieve important results. Leaders develop and seed in the

motivation within the employees. In short, leadership is an influential process applied to people

so that they will strive willingly and enthusiastically towards the achievement of goals.

In this context, leadership plays its part to some extent of motivation but not up to the

desired level. As witnessed, the zeal, interest and energy shown during the meetings engaged by

the staff and directors is very high. After meeting’s dismissal, the same self-controlled and

created routine flowers back. The staff comes by their own time, works by their own interest and

the results are in front of everyone. Although the concept of leadership is there, and its impact is

at least driving the staff to work, but the culture is not there.

Strategic Planning:

Core projects at LMDA are corporal trainings, and also minor focus in consultancy. For

that reason, the team is supposed to thoroughly work on developing techniques and strategies for

marketing, promotion and innovative business development methods. Founding members

and founding group surely have a decent strategic thinking with proper timelines and consistent

focus, but the strategies are verbal, noted as minutes and not documented formally.

Market Penetration conducted through bulk mails and letters, newspaper

advertisements, and extensive personal contacts of Dr. Ali Sajid, CEO, LMDA (initially). Now it

is all performance based, after the successful course conduction at starting of LMDA, and the

initial marketing and business development measures were conducted through the previous

platform of CASE-PDC, using the contacts on that basis. Now the perceptions and awareness

among the people is pretty high, and the references are used heavily through contacts.


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The competitor is one whose platform is used for business making. The strategic think-

tanks need to be developed to come up with extensive planning for business making.

Most importantly, No strategies are being devised and conducted to rectify the actions

leading to failure of the two courses conducted recently. This is a fundamental reason of

evolution of TQM in the corporal world, but still not applied in LMDA.


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PART – D: INTERNATIONAL QUALITY STANDARD

Current Scenario-

An International Quality Standard is a certification, or we can say an assurance of proper

quality, of any service or product provided. Different products and services can have different

types of certifications. General public is truly inclined towards these standards before buying or

utilizing a service under these quality standards, so it is not just a responsibility but a necessity

for customer attraction and satisfaction.

LMDA is not following any quality standard at the moment, which may have some

resulting consequences for business development and customer preservation. When asked by the

LMDA official, the statement was that, “a Quality Standard has no dealing or dependency on

the organizational processes; it is just a cover-up or formality we can say”. It is hard to believe

how one can satisfy the customers by making this statement. This scenario is not meant to have

any merit.

De merits:

No recognition or strength of the certificate issued to the trainee. The platform NUST-

PDC used was NUST itself for business promotion and bases for the training certification and

standard. Similar was the scenario with CASE-PDC. LMDA comprises neither any standard nor

a university benchmark that quantifies the utility of the certificate. The competitive advantage of

the competitors on LMDA is certification and a standard at the start. This is a huge set-back for

LMDA currently.


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PART – E: WORK SYSTEM FOCUS

Current Scenario-

Parts-

• Work & Job Design

o Proper design and implementation to carry out a job or project is not specifically

drafted, but collaborated vocally and instrumentally. The communication is pretty

loud so as even a customer may find out the whole project process being carried

out.

• Employee Involvement

o Actively involved, show full participation even at any level they can work. No

one can differentiate between the manager and the employee or even an internee.

• Empowerment

o LMDA focuses on employee empowerment to extreme, as every single employee

feels like a senior executive and treats LMDA like home organization (from

bottom to top). This part has both positive and negative traits as well, as the

extreme level of this phase can cost heavily.

• Recruitment & Career Development

o Career development at LMDA is highly acknowledged, as every new potential

student is given a sparkling chance to improve his/her skills in the field of

business; but it is noticed that proper training for the employees is still required

for business development.

• Training & Education

o Training is all vocal and informal. No formal, conservative training is carried out

so as to properly teach and educate the staff with basic corporal knowledge and


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skill enhancement. The staff is learning on its own, through various masses.

• Health Safety & Employee Welfare

o No such formal policy is issued.

• Motivating employee

o Employees are motivated by the CEO weekly on end-week meetings scheduled.

But due to the lack of leadership within the official culture at LMDA, employees

tend to work with their own reasoning and intentions.

• Performance appraisal

o On behalf of every successful project carried out, with good customer satisfaction

level, the working team is rewarded by the CEO satisfyingly.


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PART – F: REDUCE WASTE AND SCRAP

Current Scenario-

Wastage is present in both blue-collar and white-collar. Effective and productive actions

should be catered to improve the followings in the system of processes. Few elaborated wastes

are defined as follows:

• Timings

o Punctuality in attendance and working hours utilization

• No awareness on waste of stationary

o Staff not capable of effectively using the office stationary

• Delays in responses

• Non-productive outputs for days

• No public dealings department

o Anyone visiting the office can find out about the projects and working capacity of

LMDA within 15 minutes; which can be favorable for competitors

• No recovery activity for failures

o A set plan of actions to make sure the failures resulted once don’t occur again;

again favorable for competitors

• Recruitment is not up to the mark

o Experimental hiring is turning LMDA to a chemistry laboratory where newly

recruited staff can carry out tests in their own ways on business development


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• Wasting the workforce capabilities

o By not educating a competent employee, as all are, their energies are being

wasted and resulting in non-productive results

• No competitive-scenario analysis

o No such charts or graphical representations of competitive scenario in Islamabad;

a Pareto analysis setting up competitors (NUST, CASE, CISCOM etc) or Scatter

Plots of performance (marketing, training popularity, customer satisfaction etc).


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*Improving Corporate Governance through Corporate Social Responsibilities using Analytical

Methodologies (2009), by Fahad M. Mirza, H. M. Umer Arfi, 12th QMOD Conference, Italy, 2009.

PART – G: EFFECTIVE PERFORMANCE MEASUREMENT

SYSTEM

Current Scenario-

Besides being extensively critical towards LMDA and neglecting the traditional excuse

of LMDA being new born, a performance measurement system should be devised to present and

express the evaluation system of processes taking place. From the scratch, and using the

Corporate Governance- Spiral Model of Success (CGSMS)* to identify initial performance

parameters of LMDA, following Ten (10) indicators for developing an early performance

measurement system to be effective are devised. Let’s name this model as LMDA IIP-Model.

Initial Indicators of performance (IIP) from Top to Bottom:

1. Customer Feedback

o Primary indicator of performance

2. Training Results

o The outputs of courses conducted

3. Promoter’s Role

o The marketing strategies and business enhancing effects

4. Director’s Role

o The effective planning and operations measures with results

5. Quality of Workmanship

o The outputs of the staff to compare the previous and current quality of work

6. Decision-makers Role

o Taking effective decisions for nurturing and development of business forecasts

7. Deming’s Quality Level

o Relating the company with Deming’s points and improve the standings

8. Values and Data for Analytical Modeling

o Registering and concluding numerical data stated for graphical representations

covering all the necessary aspects of processes conduction


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9. Competitive Analysis

o Establishing a relationship with competitors graphically to see the current

standings

10. Proper Reporting and Auditing

o Day by day reporting of work completed and accountability should be forced


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PART – H: COST OF POOR QUALITY

Current Scenario-

The Cost of Poor Quality (CoPQ), is cost of not doing the work right at first time. For a

certain period of time, poor quality of visiting cards, brochures and certificates resulted in heavy

losses for the company. And in near future, poor quality of web-design and features may result in

loss as well, being unappealing and not reflecting a core business-type web design. Failure of

two courses (supply chain management) resulted in heavy loss for the company because of

quality of conduction. Before discussing the tangible losses, the intangibles are Customer

requirements and company status. LMDA works for utmost satisfaction, and data is gathered for

customer feedback but translation of the feedback is not up to the mark, which may result in

the future business loss. Secondly, LMDA is only registered as a firm, no certification in process.

Promotion, marketing and decision-making have been poorly active in this sector, which is

resulting in losses. If per course charges are Rs. 33,700/-, and due to ineffective planning and

decision-making policies along with the marketing strategy for customer attraction and retention;

the losses focused can reach more than Thirty (30) to Forty (40) times the average charge of the

course (by formulating the average people taking and not taking the course: forecasting method).

Tangible Losses:

Neglected Certificates: Rs. 15,000/-

Neglected Brochures: Rs. 12,000/-

Neglected Visiting Cards: Rs. 8,000/-

Neglected Letterheads: Rs. 1,000/-

Course Cancellation (once occurred): Rs. 80,000/-

Wasting Stationary: Rs. 5,000/- monthly

Total Loss: Rs. 120,000/-


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PART – I: FOCUSING ON CULTURAL TRANSFORMATION

Current Scenario-

The mission, vision, objectives and goals are already specified by LMDA, and no doubt

the staff and directors are striving to get there as soon as possible. But one needs to recognize the

proper road map and method to move on to the destination. According to the corporal level of

governance, LMDA stands at first step of financial phase. It is not properly even in to its

operational phase as yet to quantify the parameters necessary for applying the vast TQM

concepts and studies, along with the modeling.

One model, at this step, is catered out during the conduction of this audit as discussed

above (LMDA-IIP Model), which can be utilized as a transforming tool. The basic sections that

need to be focused are; (i) the need to apply and institutionalize leadership and training structure

within the company, (ii) Office setup and facilities should be improved and provided with proper

corporal education of the staff and trainees, and (iii) implement Deming’s 14 points properly and

executively.


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PART – J: 7QC IMPLEMENTATION

Current Scenario-

As such no measuring mechanism is present at LMDA till now, due to lack of

documentation and parameters for applying 7QC, this part will be skipped. This is only possible

when properly renowned and tabulated data values are available for each and every section, with

defined processes and sub-processes, differentiable departments, numerical data of competitive

scenario, forecasted values and fiscal stature reports.

This section needs time to be calculated as far as the proper implementation of quality

and services are defined. At this stage of LMDA, the Deming’s 14 Points should be executed as

the first step towards quality improvements. Then after that, the 7QC model will be applicable,

once the company is in smooth operational and financial phase.


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CONCLUSION

The issues discussed step by step, from application of Deming’s points to devising a

performance measurement system with defined indicators can prove to gleam and glorify the

quality aspects of LMDA. Asides, the new sector of e-LMDA has taken place which may add

complexity to business handling at the initial stages, when LMDA itself needs more business to

feed itself. But it is still theoretically believed, and practically proven that establishing the quality

culture within any organization can produce desired level outputs, from all aspects. Recognizing

the mistakes and issues are the first step towards improvements, and identifying the corrupted

sectors with effective solution makes it easier to improve the quality stature.

This audit conducted may result as an ambassador of hope for LMDA, and is not to be

taken as a negative impact for the company. Institutionalizing the education and leadership

culture within the organization should be catered as the initial responsibility by the directors.

Secondly, the competitive analysis to know LMDA’s standing in the current market scenario

should be devised. And most importantly, the accountability section should be created to conduct

regular reporting and day to day working is documented. A well and improved office setup is

necessary for the working environment, to jog the employees’ mind and boost the working

capabilities. The work system design should be improved by defining processes and measuring

the performance of each and every section on weekly. This is all possible, but only through

commitment and knowledge. And as far having a critical audit is concerned, there is a very

valuable saying of Hazrat Ali Murtaza (R.A) saying, “My best friend is the one who does not

mention me my qualities, but mentions my mistakes”.

THE END

quality audit of a private organization [may 2009]

Business

qitc final

supply chain

performance

international

measurement

corporal level

companys stature

engineering