January 2009 | Gayatri Kamath

Winning the Deming prize

Avneesh Gupta
Tata Steel is the first integrated steel company in the world, outside of Japan, to win the Deming Application Prize.
 
The steel giant won the 2008 prize for achieving distinctive performance improvements through the application of total quality management (TQM). Avneesh Gupta, chief (TQM) at Tata Steel spoke to Gayatri Kamath about the journey of enlightenment and the sense of responsibility that comes with winning this coveted prize awarded by the Japanese Union of Scientists and Engineers (JUSE).

What is the significance of this prize?
The Deming Application Prize is considered to be the highest award in the area of TQM. Total quality stands for not just quality of products and services, but also the processes and activities that are needed to achieve quality. In the world of quality awards, this prize is like a gold standard.
 
The prize was started in 1951 in memory of Edward Deming who was instrumental in teaching the concepts of quality to the Japanese. The Deming Application Prize tests the application of TQM within a company. The criteria include:
  • Objectives and strategies of the company and whether they are challenging and customer-focused
  • How TQM has been applied to achieve these objectives, and the thoroughness, consistency and depth of its application across the organisation
  • The outstanding effects achieved as a result of the application of TQM
The focus here is on application – what sort of systematic methods and activities have been applied to achieve our objectives and strategies and what is the effect of this. The concept is that we need to demonstrate our ability to use TQM to achieve our desired goals rather than our capability (potential).   
 
How does it impact Tata Steel's profile in the steel industry?
Firstly, outside Japan, no steel company has won this award. We are the first. Secondly, in the past many years smaller sized companies have won this prize. It’s been almost 20 years since a company the size of Tata Steel has won the award – an indication of the effort that is necessary. Thus the impact is significant and lasting.
 
What practices did Tata Steel adopt to achieve this award?
Tata Steel has been practising TQM since the late 1980s which was when the company initiated several quality activities – quality circles, ISO certification, quality improvements using Juran methods, etc. After winning the JRD QV Award in 2000, the question we faced was how to achieve the next quantum jump in performance and improvements. By going through the Deming process, we discovered the deeper meaning of TQM.
 
Tata Steel has been preparing for this prize for about four years. In 2005, we conducted a TQM diagnosis along with the JUSE team; that gave us the status of our TQM implementation and helped us uncover a lot of areas that required improvement in both our processes and culture. The TQM diagnosis gave us deeper understanding and clarity on our approach to quality: what areas should be addressed, who should get involved in what activities, etc. We specifically looked at:
  • Strategic aspects or policy management: relooking at the balanced score card, looking at areas needed to change the business, etc
  • Daily management: managing the day-to-day operations, ensuring that they are stable, looking for incremental improvements, etc 
  • People involvement: involving people in thinking about improvement activities such as quality circles, suggestion management, knowledge manthan, etc. 
What is the short term and long term impact of this initiative?
The short term impact is that this has galvanised the organisation. Our people had rallied behind the goal of winning the Deming prize and a lot of improvement activities had been further refined.
 
The long term impact is that we have been able to push forward in our excellence journey. More importantly we have put in place some fundamental approaches in the organisation which will help us to leverage them for the performance improvement of Tata Steel. We have established that TQM is necessary for achieving business goals. Our revised half-yearly (H2) plan has identified enablers that address savings and benefits for the company; many of these methods use TQM approaches – for instance, how to optimise use of consumables such as lime, zinc, etc, how to reduce turnaround or shut down times through critical chain project management, etc. Basically, what has changed is our approach, how we apply TQM to attain our business targets. We are looking at more than double the improvements we have achieved in the past years.  
 
Who were the main leaders and drivers of the Deming initiative?
It started with the top leadership and the TQM team, but later on nearly everyone in the organisation was a part of it. We were able to engage many of the front line or operating units in this; there were champions in each of the departments.
 
What were the challenges and hurdles to achieving this award? How were they overcome?
The most fundamental challenge was to create a mindset that looks at improvement activities as essential for achieving targets and goals. This is where the examiners focus. The biggest challenges lay in creating this understanding across the organisation, dealing with 35,000 employees, in explicitly stating and documenting improvement targets and how to go about achieving these in a systematic manner, in standardising approaches and creating alignment to profits and goals, and so on. Equally challenging was to bring quality to the forefront, which was addressed by formulating customer focused objectives and strategies in the various divisions and departments.  
 
The other problem was that for Tata Steel there were six examination units – the corporate unit and the five major divisions (raw materials, coke, sinter and iron, flat products, long products and shared services). Each unit had two applications – one for the overall unit, and one representing each of the departments of the division. We had to create guidelines and reference manuals to have uniformity and alignment.
 
How does the Deming award criteria differ from the Tata Business Excellence Model (TBEM)?
The difference is in the focus rather than the content. The Deming award criteria looks for application which runs vertically cutting across processes/ items, rather than looking at processes horizontally the way TBEM criteria are applied. They test the application rather than only the approach. Deming looks at applying the basic principle of TQM – the Plan-Do-Check-Act method.
 
The other key difference is the rigour of the examination process. It looks for application both in business units and the corporate functions. For us there were six examination units covering 52 departments in all. Each unit was examined for two days, so there were 12 days of examination which spread for about a month (4th of August to the 5th of September). There were 26 examiners, each having a lot of experience and expertise both in theory and application in their field.  
 
Will Tata Steel apply for the 2009 award as well?
As far as we know no company applies for this award every year. It is a very intense and time consuming effort both for the company and the examination body. Usually organisations continue to reap benefits out of one such effort for many years and put some internal diagnosis (assessment) system in place. Tata Steel will also not apply again for the Deming award in 2009. There is a next level – called the Japan Quality Medal. You become eligible three years after winning the Deming prize. We will decide in due course.

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