Characteristics of Virender Textiles - Case Study Example

1 Introduction Virender Textiles (VT) is a partnership of two brothers and they are manufacturers and exporters of Apparel based in Gurgaon, near Delhi, India. They have and a small unit comprised of 200 sewing machines and accompanying machinery for cutting and finishing. They purchase gray fabric from the market and get it dyed from processing houses, while production is in-house. They sell to the US and European markets and have dedicated clients buying regularly from them. The invoicing is done in US currency. Of late the depreciation in the US Dollar vis-à-vis the Indian rupee has seen a sharp drop in realizations as a result of which they either had to suffer a loss, or steep reduction in profits on each order. The brothers are forward thinking and practical. They understand that they have no control over external factors like the depreciation of the US Dollar. They also realize that the salvation lies in cutting costs by reducing wastages, improving quality and increasing return on assets. For this they have ventured into investing in ERP software that has been designed specifically for their kind of business. Yet they are having problems in bringing about changes in their organization and to use the technology to its potential. 2 Problem Questions The question that arises is that under the prevailing circumstances how they can improve their profits with the help of high level technology. A further question is whether their current management policies are flexible enough to accept the external and internal changes that are taking place. 3 Demings Principles of Management William Edwards Deming (1900-1993) was a person of exceptional qualities. He transformed Japanese production with his management philosophy in the 1950’s and is acknowledged as a hero in Japan. Today Japan is the best manufacturer in the world because it adopted his 14 principles of management and as a result realized Total Quality Management (TQM). When applied to any given situation they offer an insight into the problems and offer practical solutions to the management. We will apply these principles to the case of Virender Textiles to find out what needs to be done in their case. i) Create constancy of purpose for improvement of products and service. It is desirable that the company has set goals and visions about where it wants to go and what it wishes to achieve. The goal of profit making is too simple and can be affected by uncontrollable factors like the depreciation of the Dollar. What is required is a vision and mission statement and VT appears not to have a clearly defined vision. Therefore the management is not able to motivate the organization towards its objectives. The message that goes out to the employees is to finish their task, but it does not carry any conviction or motivation. ii) Adopt a new philosophy: we are in a new economic age. This is an age of technology and fast communications. Companies need to think of new strategies and methods to meet new kinds of challenges. Higher productivity and Better Quality are the benchmarks that need to be set to get and retain clients. Prices are important but will have no impact if the products are not delivered on time with assured agreed quality standards. Delays and mistakes need to be eliminated. For this new systems need to be introduced and adopted over the whole enterprise. The basis of quality and productivity is availability of information at the correct place and time in order to plan and execute the activities and to evaluate results. This will enable the management to take corrective steps as soon as problems like defects or delays occur. VT has adopted an ERP but unfortunately neither the management nor the workers give it priority. Instead of using this as a 24x7 enable, they wish to use it as part time assistance, hence are unable to get and benefit out of it. iii) Cease dependence upon inspection as a way to achieve quality. Quality does not mean mass inspection of all activities. This way of looking at finding out defects and correcting them is not useful in IMPROVING quality and it only helps to detect quality. This also results in delays as materials have to be reworked or reordered to meet quality parameters. What is required is to build in quality in the work itself. Workers have to be trained to understand that when they work consciously, they produce according to quality parameters. They have to develop skills to improve productivity. Productivity is not in numbers alone. Unless there is skill involved higher productivity will not be problem free. VT needs to train its staff and employ more skilled workers to achieve this end. iv) End the practice of awarding business based on price tag. Normally in industry the practice is to pay for supplies that are the lowest quoted. This is a sure recipe for disaster. Price does matter, but only after quality and delivery schedules have been met. Getting a discount does not mean one has to buy more than requirement for cost cutting. Emphasis should be on cost controlling and not cost cutting measure. If suppliers are properly graded for schedules, quality and other parameters and if they are in turn paid as per promise, it will ensure their loyalty and increase their commitment. VT needs to fine tune this grading with the help of ERP software. v) Constantly improve the process of planning, production, and service- this system includes people. Managements are always looking for problems and shortcoming. This objective is fine as long as it is positive. When problems are found, it must never engage in the blame game or to find scapegoats. The idea should be to find solutions and to see that these solutions are accepted and followed and giving the benefits they were designed for. This must be a constant effort. There is no such thing as achieving the maximum. This maximum can always be stretched further. The management must continuously work on improvements in materials, machines and outputs, maintenance, training and retraining. The VT management needs to introspect and to find time to devote to this aspect of management. vi) Institute training on the job. There are two methods of training; internal and external. Internal involves senior people from within the organising training the juniors and in case of external training consultants are hired to train for existing or new work processes. In both cases it is necessary that the management is involved in planning and supervising the training sessions. The HRD department should make periodic evaluations to find gaps and to organize training for both batches and in some cases for individuals. Sadly, this element is ignored in VT and needs to be introduced as a priority measure. vii) Institute improved supervision (leadership) Managements need to concentrate on finding solutions to problems. Most production problems occur on the shop floor and the best person to give hands on description is the supervisor. The supervisors should be told to come forward with their problems, and further encouraged to offer solutions as they are closely involved in production. They should also report on maintenance and other issues as smooth production is central to quality production and productivity. This hierarchy is not properly defined at VT and apparently the supervisory staff is reluctant to come forward to participate for fear of reprisals from other stakeholders. viii) Drive out fear. The main reason for not participation or non-involvement of all employees and management in improving conditions stems from the absence of a vision statement. But even if a vision exists, fear of being ridiculed or taken lightly or even fear of being misunderstood hold back important information and suggestions. This indeed is a loss for the company. It must be understood that in an organization every individual has an important role to play hence they should act as a team and all team members should come forward to contribute freely to the improvement. This trust needs to be developed at VT. ix) Break down barriers between departments. Teamwork is the essence of any activity and a recipe for success. Teambuilding efforts demand open and uncluttered communications. A company consists of many departments. VT also has several departments and in case of problems the departments cooperate with each other with information and cooperation. However they always need to go through the management and here the communications breakdown. The barriers between the departments need to breakdown and the management ought to allow this direct communication. x) Eliminate slogans/targets asking for increased productivity without providing methods When there is a vision statement, there is no need to send out frantic messages or slogans or raise posters, asking the workforce to fulfil targets in time. These activities are depressing as they indicate absence of planning, short term burst of energies that die as quickly as they are raised and show that the situation is out of control. This amounts to sending SOS signals under threat of failure. Instead there should be methods and systems that need to be put in place so that the workforce is able to achieve set targets using these aides and tools of productivity. It is the management’s job to provide these to the employees and then it can expect compliance. VT has installed the ERP system towards this end and using it would convey the expectation to the employees and the result is evaluated by the software enabling the management to take informed decisions based on facts. But the use of the system is essential to produce results. xi) Eliminate numerical quotas. It is a general practice to put numbers for evaluating any work. While the importance of numbers cannot be denied, this is not enough as it conveys the simple outcome. What about quality and other parameters that are vitally important. It must be noted that a number only indicated quantity but quality, productivity, wastages saved or incurred and costs are all equally important. The figures must necessarily include all these elements to become meaningful. It is advisable that when work is allotted it should be done with all parameters fully described so that the person working on it is aware of exactly what is expected out of him. This also holds true for suppliers. They too must know fully well that their supply is just not submission of quantities but timely delivery and agreed quality standards are of equal importance. xii) Remove barriers that stand between workers and their pride of workmanship. All workers take pride in their work. Basically they work for money but lately it has been understood that the worker is different from a machine. Unlike a machine it has emotions and emotional satisfaction leads to greater out put as well as better quality. Therefore appreciation of the work is equally important to improve productivity and quality. Appreciation at times can be verbal but from time to time it must be expressed in financial rewards. This works as an important incentive for reaching and crossing targets. If there are barriers or roadblocks that deter the workers they should be removed and they should be assured that their efforts will receive the attention and rewards they deserve. xiii) Institute programs for education and retraining. No one can claim to be a perfectly knowledgeable worker. New venues of expanding knowledge are being discovered daily and there is constant need by all types of employees to upgrade themselves. This is not only for financial rewards but for self satisfaction as well. The greatest motivator is raising one’s esteem in the yes of the superior. The company should encourage this habit by instituting regular programmes to enhance the workers knowledge as well as skills. This brings about loyalty and devotion. The resulting commitment is far greater that any other motivation slogan that the management can think of. Indeed by empowering the employee the management is assuring higher productivity and quality. This important feature needs to be introduced at VT immediately. xiv) Put all emphasis in the company to work to accomplish the transformation.   The only constant in life is change. Like individuals the company is always in a mode of change. Change is enhancement, empowerment, advancement and performance. Change should not be taken lightly. It cannot happen by itself otherwise it could result in harm instead of gain. Change has to be planned, executed and monitored. It has to be well thought out. Change management also involves changing the culture or sub-culture of a company. Culture of the company means the sum total of the manner or way the entire company works or executes its functions. With every adjustment there is some change that is required in the culture of the company. Change means giving up the status quo, it means willingness to try new things for improvement, it also means giving up certain current practices that are to be replaced by new and improved methods. The change agent or person responsible for change needs to plan activities for the management and employees that will show them the benefits of change. The employees and management must be both willing to accept changes. The biggest change that is required is in attitudes. The attitude must be a willingness to give up old habits for new ones and not to be afraid of them. This will change behaviour. Once the behaviour is changed, the Change Management can be considered a success. 4 Change Management It has been observed that VT is not following the 14 point principles of management suggested by Deming. Therefore there is a need for an Implementation Programme that will cover these in a given time frame. This will then enable the company to transform itself into a dynamic organization that will embrace the new technical support offered by the ERP software. To begin with a three month Implementation is suggested for Change Management on following lines. Motivation Topmost in handling change is to motivate the people to achieve the purpose of the change. This means highlighting the glorious future and contrasting it with the disgraceful past. However it has to be conveyed positively with rewards accompanying results. Effective communication will be required to generate support and participation at all levels. Teamwork and togetherness is the core issue here. Some amount of pressure is to be built up for this to show the benefits of change. To bring about active involvements in the procedure the employees have to be given a vision of the future. Creating a Vision The vision requires standing up for fair practices with genuine efforts backed by world class products and to inform the customers that they could depend upon quality products that measure up to the best standards in the world. The objectives are the values the vision creates and the value features are the consistent commitment to quality and service to be provided to the customers. Developing Political Support For the change to be effective and for the realization of the company vision it is imperative that all the stakeholders support the various steps all along the way. The attempts have to be genuine and in common interest for benefits all round. The primary requirement is to have the knowledge of all sources of power in the company and to harness them and motivate them to work for a common goal. The ideal is to get them to agree on and obtain a consensus to avoid sudden conflicts of interest midway between initiatives. It is often possible by straight talk and sincerity is the best method; but often the goals are to be achieved through use of social networks or by adopting certain circumventions and this aspect needs a constant and effective open communication channel to overcome any roadblock during the transition period. Managing Transition In continuation of the change policies the change manager needs to plan activities that will involve the stakeholders to see through the transition period. These activities have to include training sessions in which each department will be trained initially to be followed by individual training wherever required. An implementation of ERP will also achieve this purpose as that will install a work-flow system aimed at dissemination of working data throughout the company. Sustaining Momentum In order to finally achieve the targets momentum of change efforts need to be sustained and it is the management’s job to provide the financial, human and technological supports to keep it going. These are vital inputs that enable the teams and individual to rise up to the occasion, perform and deliver. Often emotional and psychological supports are also required to maintain or increase the morale and timely appreciations or rewards go a long way to motivate people. On the way people develop new skills and reach higher competency levels and both should be recognised early and suitably compensated. This will bring a radical change in the behaviour of the people and when this happens, finally the change can be considered to have been achieved. 5 Conclusion If the Implementation is followed through on the prioritized basis as described above, the immediate calculable result will be that VT will have transformed itself into a vibrant company with a positive attitude. They would be using quality and productivity as tools for cost cutting and will be able to absorb the depreciation of the dollar to a large extent. On the other hand with better quality and assured deliveries they might even be able to negotiate better prices with their buyers as ultimately the buyers also look for a reliable supplier that is conscious of their needs. Even the buyers are inclined to pay a few cents extra to support their own supply chain. The biggest positive effect will be felt by HR as they will find cooperative workforce eager for recognition and financial rewards for their efforts. The management would do themselves a favour by adopting these change management efforts without delay. Read More