Globalisation of Economics and Development of International Trade - Essay Example

Introduction Globalisation of economics and development of international trade and industrial connections constantly advance the requirements of customers to the quality of products. For the confirmation of quality of products offered by different providers it must exist some international quality standards and appropriate documentation (the certificate of quality), which are accepted all over the world. Up till the middle of 1980es the role of such standards has been played by different national and international quality standards of products and services. But on the frontier of the decade the situation has changed. The customer has got an opportunity to choose from the great number of providers and to dictate own requirements to the quality of a product he/she has been ready to buy. If before customers have been satisfied just with the conformation of quality of products and services, now they would like to get the conformation that production of the things/services they pay for is organized in the way, which indeed ensure the pronounced quality. The quality has become the one of the most popular slogans at the end of twentieth – the beginning of the twenty first century. The quality of products and services. The quality of technologies and business processes related to providing of products and services. The quality, which really exists and what is even more important can be proved as it properly documented. Constant improvement of production quality is one of determinant conditions of raise of its competitiveness on the market and growth of production efficiency. Not without reason in countries with developed industry majority of firms and companies use different kinds of systems of quality management. Let us consider four stages of evolution of production quality approaches. First of them is a stage of rejection (till 20th years of the last century). According to this approach in order to provide a consumer products congruent to accepted standards, special attention should be paid to elimination of rejects. Wide spread of this concept has led to unreasonable growth of supervising personnel. Up to 40 and more percent of strength of workers involved in manufacture, that in its turn has caused irrational increase of expenses for quality management and, hence, has lowered efficiency of production. As a result in twenties the attention of managers has moved from rejection of production in the process of its yield to quality control in the process of manufacture. The most significant role of this stage was played by Mr. Shuhart, Western Electric company’s employee, who suggested to apply statistical methods (known now as Shuhart control charts), which allowed to increase qualitative products yield in the process of production. However improvement of separately taken process has been often restrained by inefficiency of other fields of companies’ activity. This problem has been solved owing to activity of Japan manufacturers who, having collided with a strong competition from the side of foreign products, have decided to take steps for improvement of quality at simultaneous decrease of net cost. They have invited American experts Deming and Juran, who worked the program consisted of 14 items, and based on improvement of entire company’s management system, on direct participation of management in all quality issues of company, and on stimulation of personnel to qualitative labour activity. It appeared a ‘Zero Defect’ concept. New approaches have led to growth of quality produced goods and decrease of expenses for their manufacturing. However the qualitative product still was understood as production being congruent with norms, established by the manufacturer, instead of by consumers. In this connection the high-quality goods sometimes did not go through. From the middle of 60th of twentieth century manufacturers were focused on better satisfaction of consumers’ demands. At this stage appeared the theory of reliability and system of the automated designing of works. As a result of analysis of industrial systems it was found out, that the reason of a better part of defects (about 80 %) is insufficient quality of design works. That is why before testing of samples in real conditions they began to conduct mathematical modelling of products and processes of manufacture properties. It has considerably raised efficiency of developmental works. Today companies use various technologies for decrease of costs, satisfaction of requirements of clients, reduction of terms of development and yield of production to the market. In order to transform consumers’ demands into technical requirements to products and their manufacture, it is often conducted the functional-cost analysis (the analysis of expenses for manufacture of a product with the purpose to decrease its cost price); the analysis of opportunities of occurrence and influence of defects of a developed product on consumers; the is functional-physical analysis (the analysis of quality of technology projects, principles of product and its components working). At this stage the quantity of concepts of quality management grows. Despite of otherness of names and used tools, they have been based on the same principles. Quality can be presented in the form of a five-pointed star, in the basis of which lays documented, the formalized organizational system of quality management consisting of functions and processes. It is a ground for construction and improvement of efficient relations between suppliers and consumers, and systems of motivations and training of a company’s personnel. Process Management in Design to Distribution LTD The point is that activity of any company is a continuous process consisting of a chain of interconnected and interdependent sub-processes of closed character. It allows reducing to elements any process, which is carried out by a company within the frames of its activity, and to management quality of each element. Now let us evaluate the approach to process management adopted by D2D, in relation to the company’s concern for customer care (high levels of quality and reliability, excellent service levels, etc). Until 1996 the company was owned subsidiary of International Computer Ltd. Celestica International Holdings Inc. announced on January 7, 1997 about the purchase of Design to Distribution (D2D) Limited from International Computers Limited (ICL). Let us observe the company’s experience in process management, which has become a pattern for many other companies. “Changes in D2D’s manufacturing operations included development and investment in products lines, facilities and staff, accompanied by significant improvements in productivity and efficiency. There was a strong commitment to total quality”1. Total Quality Management as an approach of organizational improvement has already more than once demonstrated its efficiency. The practice of D2D has shown that constant attention towards quality issues has given the company the possibility to improve the quality of company’s products/services, to reduce variability of production processes, to intensify a company’s customer orientation, and to ensure customers’ satisfaction, and hence to have an edge in perfect competition. Quality in this case can be defined as D2D ability to answer to up-to-date expectations of customers. In D2D they have understood that the company’s activity is nothing else than the system of relative operations. Each processes is a chain of operations, executed by different process owners. The main aim of these processes is a products/services supply to internal and external customers. One of the most efficient approaches used by D2D is quality training. It has been very important to provide all company’s employees with the understanding that all of them are the most valuable part of a supplier-process-customer chain. There is no doubt that in contemporary business environment it is really necessary to know your customers. It is necessary to make a study of individual requirements of a customer. Herewith not only external but also internal customers should be taken into consideration, as if company is not able to satisfy its internal customers it will for sure fail in satisfaction of external ones. That is why all the employees in D2D have been trained to measure the level of customers’ satisfaction. The point is that employees of different departments and units are suppliers and customers with respect to each other. Any employee of the company supplies something to his/her colleague. Accordingly one acts like an internal supplier and the other - like an internal customer. Such an approach has helped to facilitate more tight communication between departments on the one hand, and has let employees the opportunity to understand customer’s needs better. There have been two significant issues to realize in the course of quality training: All processes of the company look towards customers’ satisfaction; All component of supplier-process-customer chain are relative and interdependent. The other efficient method used by D2D is identification and measurement of all processes. The processes were identified and critically evaluated by employees on the basis of strategic and business reviews and vendors and customers’ appraisal. Here we may see the example of identified list of critical processes, and the related success factors. Critical processes Related success factors Prospective customer/strategic partner identification Organizational capability Process improvement review Process quality Self-assessment Technical capability Deployment All success Factors So we see that “D2D quality training, given to everyone, defined a process as a mechanism whereby inputs provided by suppliers are changed into outputs provided by customers. Every process had a performance measurement, targeted to ensure continuous improvement”2. The secret of D2D success has laid in understanding by company’s leadership and employees that it is impossible to save extant and to attract new customers without providing products and services that fit the bill. In case products and services will not meet the demands of the customers, the company will just lose the customers and accordingly will lose all profit. D2d has used the following methods in order to know customers’ needs: Scorecard reviews Delivered quality audits Customer surveys to continuously measure internal business process performance Meetings of Customer Services, salespeople, senior designers and manufacturing managers and deliverers Customer Service feedback Prevention-based feedback loops Delivery phone calls Customer reply cards A bi-annual customer survey As Oakland correctly stated “investment in manufacturing technology and development and use of state-of-the-art systems had given D2D a world-class capability, which enabled customers to maintain their competitive edge in an extremely turbulent market place, and resulted in showcase facilities, which customers and equipment suppliers used as role models3”. Due to these changes and powerful customer-care concern Celestica today a world-class company with enormous profit. “Celesticas global solutions provide unparalleled business value to our diverse original equipment manufacturer (OEM) customers – improving your time-to-market, profitability and competitive edge”4. Now let us discuss links between the use of SPC, process capability and process ownership in D2D. Statistical methods based on use of mathematical statistics, are the effective tool of gathering, analysis, and interpretation of the information on quality. Implementation of these methods does not demand greater expenses and at the same time allows with the set degree of accuracy and reliability to judge about the state of the investigated phenomena (objects, processes) in system of quality management, to predict and solve problems at all stages of life cycle of production, and on the basis of it to make efficient administrative decisions. According to ISO 9000, statistical methods are considered as a uniform set of highly effective means of maintenance and improvement of quality on the basis of objectively received and interpreted facts. Speaking about statistical methods of quality monitoring, it is necessary to emphasize, that it is tools of knowledge. Their basic purpose is the control of proceeding process and providing the process owner with the facts for updating and improvement of process. Statistical Quality Control (SQC) and Statistical Process Control (SPC) represent the actions directed towards excluding of deviations of process parameters from standards and finding already occurred deviation. It should be stated that one of the reasons of D2D’s success is that all processes have been owned by employees, who have been really responsible for the quality of processes they perform. “Ownership of a process was given to a person agreed by appropriate management and employees as having the best ability, based on training, skills and experience, to optimise and maximize the performance of that process”5. The company’s employees have been trained in process identification and measurement, using the method of monitoring, controlling and improving a process through statistical analysis, Statistical Process Control (SPC). As it was mentioned above the majority of productive processes are variable. In order to be able to control these variability process owners in D2D have used the control charts. “Using control charts, the process owner can act on the signal by attempting to identify the nature of the assignable cause and then by taking countermeasures to prevent or reduce the likelihood of future occurrences. Once the assignable causes have been eliminated, the process is reduced to unassignable or common causes and can be said to be in a state of statistical control. This function-obtaining control is known as the operation of SPC”6. But in D2D they have understood that it is insufficiently just to identify, to measure, and to control a process. It is necessary to know how a process performs. “It is for this reason that statisticians have come up with methods for expressing the behaviour or capability of process distributions in terms of single numbers known as process capability indices”7. Moreover senior and local management teams have reviewed the majority of D2D’s processes, using customers, employees, consultants, and suppliers input. All these processes were accompanied with the Plan-Do-Check-Act cycle. Conclusion It is obvious that the majority of contemporary customers are concerned with quality of products/services they pay for, but not in the less degree they seek for the dealing with companies, which show much attention to their customers, promptly respond to their appeals, are able to listen for individual demands of customers and satisfy these demands immediately. It means that in the twenty first century only the companies, which gained perfection in all aspects of their business, and especially in the sphere of customer care, will have assured success. Critical response to the articles Nowadays the new concept of quality management ‘Six Sigma’ has come into existence. Motorola Company has worked it out. In January 1987 it has started the realization of brand-new strategic initiative of its management aimed to have substantial improvement of its production quality. As a result of its realization for the period from 1987 to 1997 of the company managed to lower its expenses for 13 billion dollars and to raise labour productivity many times. Let us try to define what is Six Sigma and what accomplishments it has. Pande, Neuman & Cavanagh state ”the term “Six Sigma” is a reference to a particular goal of reducing defects to near zero, Sigma is the Greek letter statisticians use to represent the “standard deviation of the population”8. Six Sigma in corporate management is a hi-tech technique of production processes control, applied with the purpose to minimize probability of occurrence of defects in operational activity. The planned index is only 3.4 defects per million opportunities for each product. Heres a simplified one-to-six sigma conversion scale: Six Sigma conversion table Long Term Yield (basically the percentage of successful outputs or operations) % Defects Per Million Opportunities (DPMO) Process’s Sigma 99.99966 3.4 6 99.98 233 5 99.4 6,210 4 93.3 66,807 3 69.1 308,538 2 30.9 691,462 1 The method is based on six base principles: 1. Sincere interest to the client; 2. Management on the basis of data and facts; 3. Orientation on process, management of process and improvement of process; 4. Proactive management; 5. Cooperation without borders (efficient communication); 6. Aspiration to perfection plus condescension to failures; Six Sigma has two key methodologies: DMAIC and DMADV. DMAIC (define, measure, analyse, improve, control) is used to: 1. Define purposes of the project and demands of consumers; 2. Measure process in order to define current implementation; 3. Analyze and define radical reasons of defects; 4. Improve the process, reducing defects; 5. Control of further process, ensuring that any variances are corrected before they result in defects. According to Chapman “DMADV is am alternative/substitute abbreviation to DFSS (Design For Six Sigma), and like DFSS DMADV is central to Six Sigma initiatives”, which “more specifically describes a method comprising linked steps; Define, Measure, Analyze, Design, Verify, for ensuring that products and processes are designed at the outset to meet Six Sigma requirements”9. Kerri Simon claims that, the DMAIC methodology, instead of the DMADV methodology, should be used when “a product or process is in existence at your company but is not meeting customer specification or is not performing adequately”, and on the contrary the DMADV methodology, instead of the DMAIC methodology, should be used when “a product or process is not in existence at your company and one needs to be developed, and the existing product or process exists and has been optimised (using either DMAIC or not) and still doesnt meet the level of customer specification or six sigma level”10 As any other approach Six Sigma has both followers and opponents. Quality Digest magazine has published the article written by Ramberg in favour of the concept and next to it the article written by Stamatis in opposition. Stamatis in his article ‘Who Needs Six Sigma, Anyway?’ claims that Six Sigma approach has variety of disadvantages. He argues that For Six Sigma concept the question of vital importance is not the satisfaction of customers demands, but the question “How much can be saved by implementation of some improvement?” Six Sigma is just a measurement instrument, which has nothing to do with problem prevention. The majority of ‘black belts’ confess that the 90% of improvements are achieved with the help of only 20% of received training. Six Sigma approach is efficient only within the companies with a high leadership culture (‘black belt’ leaders state that they spend up to 60% of time for data capture and accounting). Corporate client training in Six Sigma academy costs up to 1 million dollars. So it is reasonably only for huge companies. Six Sigma concept does not use Deming system and does not presuppose changes in company’s organizational culture, which is why this concept is just a regular fancy dementia, which bears fruits to those who sell it. Let us do not make any categorical statements. Much more important is to get a full representation and image of the new quality concept and to study it far and wide. Let us remember Tribus who claimed that all initiatives in the sphere of quality management (ISO 9000, TQM, various quality awards) might achieve their goals, and might not. It depends on to what extent their implementation is accompanied with understanding of system of deep knowledge and appropriate transformation of organizational culture. The same may be referred to Six Sigma concept, which has been originated as a simple statistical initiative for the decline of losses, and then has overgrown in program of company’s reconstruction. A fundamental principle of Six Sigma is that the people close to the work are often best equipped to improve it11. But anyway we should understand that Six Sigma is not a nostrum. Any company should define own way of implementing it in a more efficient way taking into consideration own peculiarities and specific features of production. We may agree with the words of Tennant, who wrote, “Six Sigma alone is absolutely no guarantee of success”12. Bibliography: Bibliography: 1. Chapman, A. Six Sigma training, history, definitions. Six Sigma glossary. 2005. 12 March 2007 URL: http://www.businessballs.com/sixsigma.htm. 2. "Celestica \\ Integrated Services." 2004. Celestica Inc. 17 Mar. 2007 . 3. Kerri,S. DMAIC Versus DMADV. 2000. 15 March2007. URL: http://www.isixsigma.com/library/content/c001211a.asp 4. Liberatore, Ralph. "Teaching the Role of SPC in Industrial Statistics." Quality Progress 34(7)((2001)): 89-94. 5. Oakland, John S. Total Quality Management: Text with Cases . Elsevier, 2003. p. 433. 6. Pande, P.S. & Holpp, What is Six Sigma?. 2001. 7 p.42 7. Pande, P. S., Neuman, R.P. and Cavanagh, R.R.. The six Sigma way team fieldbook: An Implementation Guide for Process Improvement Teams. 2001. 8. "SPC - Statistical Process Control." 2003. SiliconFarEast.com. 17 Mar. 2007 . 9. Tennant, Six Sigma: SPC and TQM in Manufacturing and Services.2001. p.79 Read More