TVS group company Sundaram Clayton Ltd has become the first Indian company to bag the Deming prize for total quality management (TQM).
Sundaram Clayton's brakes division won the Deming award for 1998 for having "achieved distinctive performance improvements through application of company-wide quality control."
The company is only the fourth non-Japanese company in the world to have won the Deming prize. It is also only the second Asian company outside of Japan to achieve this honour.
The Deming prize is awarded in honour of Dr William Edwards Deming, who is acknowledged as the father of statistical quality control for his work in the theory and application of statistical sampling. Over the last 46 years, 147 companies have won this prize.
"We are happy to have got the highest stamp of quality awarded by the Union of Japanese Scientists and Engineers,'' Venu Srinivasan, managing director of Sundaram Clayton told reporters in Chennai today.
"During the last few years, the implementation of TQM has brought down our defect rate to 2,500 parts per million (PPM). During 1992 we had a defect rate of one lakh PPM,'' Venu Srinivasan said.
"The Deming prize only proves that we have world class processes. We are still not showing world class results. To be among the best in the world our defects have to come down to 150 PPM. We hope to be there in three years time,'' he said.
The implementaion of TQM has enabled Sundaram Clayton increase its profitability by 4.8 times on a 3.7 time increase in sales. Customer line rejection has been brought down from 0.6 per cent to 0.3 per cent. Warranty claims have dropped from 0.3 per cent to 0.15 per cent.
"TQM has helped us reduce the lead time for new product introduction from about three years to about 12 months,'' Venu Srinivasan said.
Sundaram Clayton had started work on TQM in 1988 at a time when the entire automobile industry was reeling under a recession. Responding to the current recession Venu Srinivasan said the company was still making money despite a 40 per cent drop in volumes. This is because of TQM, he said.
"TQM has helped us to bring down our break even point to 50 per cent," he added.
Having won the Deming prize Sundaram Clayton is now aiming for the prestigious Japan Quality Medal.