BEST PRACTICE CASES

Belgium (INRCT/NOVA): Productivity and Working Conditions
Denmark (DTI): Company Flexibility - the Key to Efficiency
Finland: Competitiveness, Quality and Productivity
France: Managing through Competences/Skills
Germany (RKW): Productivity and Employment
Productivity and Employment: Tony Hubert
Hungary (HPC): Productivity & Competition and Quality
Ireland (IPC): Productivity & Partnership
Italy (CPV): Productivity and Innovation and Technology
The Netherlands (TNO Work and Employment): Productivity and Work Organisation and Learning Organisations
Productivity and Environmental Protection: Tony Hubert

Hungary (HPC): Productivity & Competition and Quality

The connection

Being competitive is an essential requirement for a company not only to survive but to be able to develop. Competition means generating profit at the same time as serving the customers. This is not an easy job today. Prices are set by the market, and the quality of the end product is no longer a question - it has to be on a very high level, and delivery time has to be kept. Profit is the basic element of the future development of the company - ensuring its continuous ability to compete depends on its income and operating costs. To increase income, customer satisfaction and time to market are critical factors. Operating costs of labour, machinery, materials and energy consist of two components: necessary and unnecessary costs. Productivity means effectively handling these items, or in other words putting the customer at the centre of company-wide thinking and shortening the development time of the products and services, on the one hand, and reducing the necessary costs and eliminating the unnecessary costs, on the other.

As is stated in the European Quality Policy (which has been developed with the European Commission as a facilitator):

"(The policy) was designed in cooperation with the various stakeholders (including European and national quality organizations, trade organizations, chambers of commerce and national authorities), to develop a favorable environment in which companies and public administrations in Europe aim to achieve excellence in terms of theirs outputs and internal organization for the benefit of society as a whole."

To achieve excellence in terms both of the output and the internal organization means a very close relationship between quality and productivity.

To enhance productivity requires continual improvement of internal efficiency by developing the company culture in a balanced way by fully integrating quality and productivity into the whole business system.

Good practice examples

1. Knorr - Bremse Brake System Ltd. was founded in 1990 by the Knorr - Bremse SfN GmbH (Münich/Germany) in Kecskemét, Hungary. The company established an R&D basis in Budapest and Kecskemét in 1995 and has been awarded the KNORR - BREMSE Total Quality Award in 1997. General management and all employees are committed to development and continuous improvement. The main target is to recog-nize, and fulfil customer demands to reach world class product quality, high level and effective communication, and maintain their environment. The company won the Na-tional Quality Award in 1998, and was able to enlarge the production area in the Kec-skemét site and open a new R&D centre in Budapest in 1999. The company employed 598 people in 1998 and 624 people in 1999, with sales of €18m in 1998 and € 22m in 1999, itself producing €15,5m worth in 1998 and € 17m in 1999, and having an R&D expenditure of €1,8m 1998 and €2,5m in 1999.
   Applied tools: All employees undergo 3 days training in TQL and are acquianted with the TQ tools (Tree-diagram, Pareto-diagram, Histogram, Ishikawa-diagram, Decision matrix, etc.). On average 15 problemsolving teams are launched each year. The company is developing its knowledge through cycle time reduction techniques (TQS). The introduction of Benchmarking, Poka-Yoke, 5S, Kaizen, TPM and Kanban methods is on-going.
2. Oracle Hungary Kft. was established in 1993. After introducing the ISO 9002 quality assurance system, the company implemented the self-assessment system in 1997 and received the National Quality Award in the same year. The self-assessment method has become an integral part of management practice. The most important factor is top management's active participation and the selection of the appropriate self-assessment method through the involvement of all participants.
   The company has 200 employees, a revenue of €6,2bn in 1997, €7,1bn in 1998 and €9,2bn in 1999.
   Applied tools: The most important conditions for the development of the TQM ap-proach is precise and regular data collection and decision-making based on the collected data. Statistical methods, such as the 80/20 analysis, can be used effectively for the process of performance indexes, employee and customer satisfaction survey. The Balance Scorecard accurately indicates the results; its introduction has started at the branch of business level. (www.oracle.com)
3. Herend Porcelain Manufacturing Company Ltd. was established in 1826. Since 1993 it has been 75% employee-owned and 25% state-owned. The company won the IIASA-Shiba Award and the 1st Hungarian National Quality Award in 1996.
   The "Industria Pro Integritate Naturae" gold medal was awarded to the company for out-standing achievements in the field of industrial environmental protection and management in 1999. The Quality Policy, the Environmental, Health and Safety Policy determine the main frame of the Integrated Quality Management System as well the objectives and targets. The Policies have been prepared and given to the employees in an elegant form which becomes the traditions and character of the Manufactury. The Integrated Management System of the Herend Porcelain Manufactory will be achieved by linking up the Integrated Quality Management System to the production system.
   The company has 1591 employees, net sales revenues of € 24m, and pre-tax profit of €7m. Its environmental and health & safety investments in 1997 amounted to €0,16m, in 1998 to €0,2m and in 1999 to €0,4m. Applied plumbiferous paint/applied paint with reduced lead content 408% in 1997, - 288% in 1998 and 270% in 1999.
   Applied tools: Self-assessment activity performs an internal assessment which results in an effective and efficient improvement managed by a solid and consistent team of colleagues. The tools used by the teams include SWOT analysis, 7 step of problem solving, analysis of quality costs, FMEA method, benchmarking and surveys of employee satisfaction and customer satisfaction. (www.herend.com)
4. Pick Szeged Salami Factory and Meat Processing Co. This company celebrated its 130th anniversary in 1999. In addition to being dedicated to preserving tradition, the company stresses quality by introducing and maintaining a quality assurance system which is compliant with the ISO 9001 standard and based on good manufacturing practices (GMP) and good hygienic practices (GHP). In order to promote health and consumer safety , the HACCP system was introduced as part of the ISO system as early as 1995. As a result of the efforts aimed at quality development and excellence in business, the company received the National Quality Award in the large enterprise category. Self-assessment provides an impetus for the company to improve quality and allows it to determine key factors and opportunities necessary for development. TQM appears to be a methodology that is highly suitable for the assessment of the economic and social consequences of the decisions that should be made.
   The company has 4654 employees, net revenue from sales of €198m, and pre-tax profit of €15,4m in 1999.
   Applied tools: the TQM procedures applied on a regular basis include PDCA development, SWOT - analysis, etc. Their application is regularly evaluated in the framework of collaboration performed in teams. (www.pick.hu)

Tools

The quality awards like the European Quality Award or the Malcolm Baldrige Award or the Deming Prize help to develop the competitiveness of the enterprises through using benchmarking and self-assessment tools, and implementing the continuous improvement process. The European Quality Award is based on the EFQM Excellence Model. (www.efqm.org www.benchmarking.org)

Company-wide management systems such as TQM, TPM, JIT based on the problem solving methods and teamwork. (www.jipm.or.jp)