TQM and Six Sigma Assignment

Comparison of Business Excellence Models

(Japanese, American and European)











Submitted By:
Group X14
U113045 Shatajupa Mishra
U113080 Chinmay Mohapatra
U113118 Taru Vaid



Xavier Institute of Management, Bhubaneswar
Contents
Introduction to Business excellence Models ........................................................................................... 3
Baldrige Criteria for Performance Excellence ........................................................................................ 3
The Malcolm Baldrige National Quality Award framework .................................................................. 4
Malkolm Baldrige (MB) or American Model for Business Excellence.................................................. 4
Japanese Model of Business Excellence ................................................................................................. 7
European Model for Business Excellence .............................................................................................. 9
Comparison of the business excellence models .................................................................................... 11
Award Descriptions for the various business excellence models: ........................................................ 12
Common Award Criteria for the various business excellence models: ................................................ 13
Scoring Pattern and guidelines .............................................................................................................. 14
References ............................................................................................................................................. 15



Introduction to Business excellence Models
Key practices in business excellence applied in an enterprise include continuous and
breakthrough improvement, preventative management and management by facts. Examples
of some of the tools used are the balanced scorecard, Lean,Six Sigma statistical tools, process
management, the Baldrige Criteria for Performance Excellence and project management.
A large number of these (Malcolm Baldrige National Quality Award, EFQM Excellence
Model ,Common Assessment Framework )concepts have been widely adopted within the
public sector as these organisations strive to provide "value for money".

For example the users of the EFQM Excellence Model and Malcolm Baldrige National
Quality Award Criteria, do so for the purposes of self-assessment, strategy formulation,
visioning, project management, supplier management, & mergers.
When used as a basis for an organization's improvement culture, the business excellence
criteria within the models broadly channel and encourage the use of best practices into areas
where their effect will be most beneficial to performance.
When used simply for self-assessment, the criteria can clearly identify strong and weak areas
of management practice so that tools such as benchmarking can be used to identify best-
practice to enable the gaps to be closed.
These critical links between business excellence models, best practice, and benchmarking are
fundamental to the success of the models as tools of continuous improvement.
Baldrige Criteria for Performance Excellence
History : In the early and mid-1980s, many U.S. industry and government leaders saw that a
renewed emphasis on quality was necessary for doing business in an ever-expanding and
more competitive world market. But many U.S. businesses either did not believe quality
mattered for them or did not know where to begin.The Malcolm Baldrige National Quality
Improvement Act of 1987, signed into law on August 20, 1987, was developed through the
actions of the National Productivity Advisory Committee, chaired by Jack Grayson. The
nonprofit research organization APQC, founded by Grayson, organized the first White House
Conference on Productivity, spearheading the creation of the Malcolm Baldrige National
Quality Award in 1987. The Baldrige Award was envisioned as a standard of excellence that
would help U.S. organizations achieve world-class quality. In the late summer and fall of
1987, Dr. Curt Reimann, the first director of the Malcolm Baldrige National Quality
Its the systematic use of quality management tools & principles in business management. It
has the goal of improving performance based on the principles like customer focus,
stakeholder value, & process management.
Use of Business Excellence models
Self-assessment
Areas of
strength
Strategy for
future
Identify improvement
opportunities
Organizational
development
Program, and his staff at the National Institute of Standards and Technology (NIST)
developed an award implementation framework, including an evaluation scheme, and
advanced proposals for what is now the Baldrige Award. In its first three years, the Baldrige
Award was jointly administered by APQC and the American Society for Quality, which
continues to assist in administering the award program under contract to NIST.
The Malcolm Baldrige National Quality Award framework
(also known as the Baldrige framework, the Baldrige Criteria, or the Criteria for Performance
Excellence), is an integrated management framework that considers an organization's entire
system, including its


Performance Excellence is the trademarked term used in the Baldrige Criteria as an integrated
approach to organizational performance management.
Malkolm Baldrige (MB) or American Model for Business Excellence
The application of this model, in a short time helped the American economy to oppose the
Japanese competition, to significantly reach the level of competitiveness in the world market
and to establish as the world's leading industrial power. In 1987, the model initiated by U.S.
was used as the basis for winning the national Malkolm Baldrige (MB) Quality Award. The
prize is traditionally awarded each year by the President of the USA at a special ceremony in
Washington. The award is being given as an annual tribute to the American companies for
excellence performance of their products / services. The award may be granted to
manufacturing companies; service companies & enterprises which deal with small
businesses.


leadership
strategic planning
customer focus
measurement, analysis, and
knowledge management
workforce focus
operations focus
results
Core Values of the concept of MB model



Basic elements of the model that is based on MB:
Carry and deliver strategic and operational plans, design and implementation of an
information gathering system and analysis of results. Strategic and operational plans
represent a set of requirements at the level of the company within the short-term and long-
term plan, which must be achieved for the company's strategy to succeed. The strategic and
operational plans are guide-lines for all resources and measures for all business units in order
to ensure satisfaction of the buyer / user, as well as to achieve business success.

The system consists of six categories that
define the organization, its
operationalization and results.
All shares in the company lead to business
results from customer satisfaction to
financial and nonfinancial
performance, human resource development
and social responsibility.
Information and analysis of the system are
critical values in creating effective
management companies and business systems.


Criteria for performance excellence conveyed through this model are:
1. Leadership: What does the establishment of the system of leadership denote, (values,
expectations and the company's social responsibility).
Quality is being defined by customers / users;
Strong leadership;
Continuous improvement and learning;
Employee participation and development;
Quick response to the needs;
Creating quality and prevention;
Long term orientation towards the future;
Management based on facts;
Development partnerships;
Social responsibility of companies;
Focusing on results.
2. Strategic Planning: Effectiveness of strategic and business planning, development or
performance plans by focusing on customers and operational performance
requirements.
3. Focus on customers and market: The way in which companies determine the
requirements and expectations of customers and market, but also the way in which
they established the relationships and assess their satisfaction.
4. Information and analysis: Effectiveness of the information and analysis in the
direction of achieving excellence and market success.
5. Human resources development and management: Performance in an effort to
create a full human potential that will enable the creation of high-performance
organization.
6. Management processes: Effectiveness of the system and processes for ensuring the
quality of products / services.
7. Business results: Trend results and performance comparison with competitors in key
business areas (customer satisfaction, finance and market products and services,
human resources, suppliers, partners, and operations).
8. Grading system - there are two types of evaluation with three dimensions of
grading, as
follows:
Access - classification that applies to the first six criteria;
Access - results which apply to the seventh criterion and determines outputs in
achieving the objectives set out in the criterion, and determining what results should
indicate the level of performance and their trends.
Advantages of this model:
1. customers are continuously being delivered an enhanced value to the product / service
as a result of the success of the market
2. improving all the performance and capabilities of companies.
3. helps in improving the performance of companies;
4. has a major role in achieving the competitiveness of the American companies in the
market .
5. enables communications and dissemination of information about best among all types
of organizations in the united states;
6. is used as a method for understanding and managing the planning, training and assessment
companies.
Program Impacts
The ratio of Baldrige Program benefits for the U.S. economy to program costs has been
estimated at 820 to 1 (Economic Evaluation of the Baldrige Performance Excellence
Program, December 2011)
95 Baldrige Award recipients (including 6 two-time winners) serve as national role
models.
Median growth in revenue for two-time Baldrige Award winners is 92.5%.
Median job growth for two-time Baldrige Award winners is 65.5% (compared with 2.5%
for a matched set of industries and time periods).
20102013 Baldrige Award applicants represent 470,403 jobs, over $77 billion in
revenue/budgets, and about 434 million customers served.
The value of services donated by 482 national Baldrige examiners in 2013 is $7.3
million.
The value of services donated by state Baldrige-based examiners in 2013 is $30 million.
A study by Truven Health Analytics links hospitals that adopt and use the Baldrige Criteria to
successful operations, management practices, and overall performance.
65% of hospitals are likely to use the Baldrige Criteria for Performance Excellence as a
systematic framework for performance improvement or as an internal assessment tool
by 2018, according to survey results reported in Futurescan 2013.
According to the same survey, 41% of hospitals are likely to submit an application for the
Baldrige Award or a state-level Baldrige-based award by 2018.
Japanese Model of Business Excellence
In the middle of the last century, Japan promoted its first Quality Award, as a Japanese model
of perfection. By the application of this model a high growth of the Japanese industry and its
overall economy is being reached. Such results in the last centurys seventies of the
represented a threat to both the American industry and economy.
Japanese Society of Engineers and scientists (JUSE) today is being managed by the granting
of this award. In the early fifties, (1951) Demings Quality Award is being established in
Japan by applying the concept of total quality control (Total Quality Control).
Unlike MB (American) and EFQM (European) model of excellence, the Japanese model is
not sufficiently transparent by itself. The effects of the Japanese Prize present identification
of a company that is a model for the application of TQC (Total Quality Control) as well as an
inspiration for others to follow it.

The checklist for assessment while applying the Japanese model for Demings award, should
follow the criteria listed below:
determining of corporate policy;
assessment of the work organization and administration;
practicing of education and dissemination of knowledge.
In addition, the following items are being assessed:
Management of the profits;
Cost management;
Management providers;
Management of production processes;
Management of primary and current assets;
Management of measuring equipment;
Human Resource Management;
Definition of labour relations;
Educational programs;
The development of new products;
Management research;
Relationship with the vendors;
Procedures for resolving complaints, grievances;
Use information from customers;
Quality Assurance;
Service for customers / users;
Relationship with the customer.
The following diagram shows the criteria for Deming Framework application with the
associated framework

Application of the Demings circle includes special assessments that should show how the
system relates to:
the collection and use of information for quality;
making analysis;
the introduction of the standardization;
management processes;
quality assurance;
how the system applies in practice;
the effects of the impact of TQC (Total Quality Control) upon the quality, service,
delivery,
costs, profits;
the future - if there is a plan for achieving TQC program.
European Model for Business Excellence
Introduced in early 1992, as the framework for assessing applications for The European
Quality Award, it is the most widely-used organizational effectiveness framework in Europe
and has become the basis for most national and regional Quality Awards.

European model of excellence has become an example and a benchmark based on the later
created national models of excellence in many European countries according to their needs
and the real level of the national economy in terms of the general European market.
The European model shows that the fulfillment of the customer satisfaction, employee
satisfaction, as well as the impact on society are being achieved through leadership that
manages the company's policy and strategy, management of staff, resources and processes.
This, again, leads to excellence in achieving business results.
Each of the nine elements of a criterion can be used to evaluate the progress of the companies
in achieving the path to perfection. The results show what the organization has achieved,
while opportunities show how these results are achieved.
It helps the organization to understand whether it is on the path of excellence, duly
identifying gaps and then stimulating solutions. The fundamental concepts are:
Result Orientation
Customer Focus
Leadership and Constancy of Purpose
Management by Processes and Facts
People Development and Involvement
Continuous Learning, Innovation and Improvement
Partnership Development
Corporate Social Responsibility
The model is based on nine criteria. Five of these are enablers and four are results. The
enabler criteria cover what an organization does. The results criteria cover what an
organization achieves. Results are caused by enablers and feedback from results help to
improve the enablers
Criteria for achieving business excellence:
Leadership: How behavior and measures taken by the top management and other managers
inspire, support and promote the TQM culture.
Policy and Strategy: The manner, in which the organization formulates, develops and
reassesses its policy and strategy as well as how it turns into plans and actions.
Management of staff: The manner in which the organization provides employment
potential.
Resources: The manner in which the organization manages the resources effectively and
efficiently.
Processes: The manner, in which the organization identifies, manages and improves the
processes.
Satisfaction of customers / users: What the organization conducts in order to meet the
customers satisfaction.
Employee Satisfaction: What is the organization doing in terms of employee satisfaction?
Impact on society: What is the organization doing to meet the needs and expectations of the
local, national and international community (voluntary steps and steps beyond the legal
obligations)? This applies primarily for the organization's view towards protection of the
environment and saving resources, the view of the company upon the quality of life and its
relation to power and institutions that govern its operation.
Business results: What is the organization conducting in terms of scheduling in order to
achieve the satisfaction of all those who have a financial interest in the organization.


Comparison of the business excellence models
Subsystem Japanese American European
Management leadership/operational
performance/continuous program elements/wall-to-wall
deployment
3 4 4
Market research/ planning design procedures/ product-
service development
1 4 4
Purchasing- procurement proiciency/ contracting
methods/supplier performance
1 2 3
Handling/labeling/storage/ safety 1 1 2
Documentation/records/ control procedures/ policies/
traceability
3 1 2
Human resources management/
training/development/education
2 4 4
Transformation and added value (production/service
process activities)
3 4 4
Process quality control/ standards/quality
results/benchmarking/auditing
3 4 4
Inspection/testing/test equipment/tagging/ corrective
action/ control of non-conforming output
4 3 4
Packaging/handling/inventory procedures 1 1 2
Marketing/distribution/delivery/ installation/operation 1 2 3
Customer service/customer satisfaction/ guarantees-
warranties
1 3 4
Codes: 0 No attention, 1 Slight attention, 2 Moderate attention, 3 Heavy attention, 4 Great
attention
Source: Technics Technology Education Management Journal







Award Descriptions for the various business excellence models:


Common Award Criteria for the various business excellence models:


Scoring Pattern and guidelines:
The seven categories of the business excellence framework have been allocated a total of
1,000 points. The overall weightage of points allocated for the driver and systems categories
is 55% and the results category is 45%












References
1. http://www.juse.or.jp/e/
2. http://www.sixsigmatqmi.com/pdf/Deming%20Prize.pdf
3. http://www.spring.gov.sg/QualityStandards/be/Documents/BE_Framework.pdf
4. http://www.texas-quality.org/SiteImages/125/Reference%20Library/Comparing%20Quality%20Awards.pdf