Total quality management: two successful cases in Brazilian electrical companies
TOTAL QUALITY MANAGEMENT, VOL. 11, NO. 4/5&6, 2000, S631-S635
Total quality management: two successful cases in Brazilian electrical companies
(Escelsa and Enersul)
JOSÉ AILT0N B. SILVA
ESCELSA Quality Office, r. Sete de Setembro 362, Vitória, Espírito Santo, Brasil, CEP 29015-000
Since 1986, some Brazilian institutions have been involved in quality conceptual research and studies abroad. Amidst all learning efforts, an institution that has been in an outstandmg position is certainly the Fundação Christiano Ottoni (FGO), of the Engineering College of Universidade Federal do Estado de Minas Gerais. FCO could count on the support of the Japanese Union of Scientists and Engineers (JUSE), which sent Japanese consuitants over to Brazil and hosted Brazilian professors in Japan.
In 1990, the Brazilian Government launched the Brazilian Quality and Productivity Program (PBQP) (Finance Ministry, 1990), which comprised electrical sector companies, by then formed by Eletrobrás holding and its associates and subsidiaries.
Escelsa’s quality management history
By the time PBQP was launched, Escelsa was a mixed economy company, controlled by Eletrobrás and based in the state of Espírito Santo (46 184 km2). The launching of PBQP and the engagement of Eletrobrás and its controlled companies represented an opportunity for Escelsa to get started in quality management.
The Company’s Board of Directors settled a number of initial procedures to be carried out by a group of employees so as to comply with recommendations of both the Federal Government and Eletrobrás. This group~ of employees contacted other organizations with different views concerning quality management, took part in courses, lectures and seminars, and studied a wide range of specialized publications on the matter. Discussions with consultants and specialists, mainly from the FCO, went deeper and deeper, which allowed Escelsa’s proposal of a quality and productivity program (PEQP). Such a program should be based on concepts and methods of an administrative system identified in Japan as total quality control (TQC).
PEQP comprised the following points:
• integrate PBQP;
• get the upper management team involved;
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• contribute to dissemination of quality and productivity methodology and concepts;
• be fast and objective;
• promote integral participation of all areas.
In 1992, Escelsa quit using the term PEQP for two main reasons:
(1) The term ‘program’ implies a time-limited activity having start, development and final phases well defined, which did not suit the situation, for a permanent quality management action was intended by then.
(2) The term ‘productivity’ conveyed an idea that the company intended to improve only its financial results, which was not true, for we aimed to improve all results
Thus, we started using the term QE—Escelsa Quality—and consequently defined the following items:
• QE is a management-administrative system, based on the active participation of all company areas and all employees in studying and carrying out quality control on all acquired, processed or sold services and products.
• QE has incorporated experience and elements from several sources and tried to respect Escelsa’s cultural and administrative aspects.
Between 1993 and 1995, efforts were taken towards preparation of an implementation plan and routine management.
Since FCO consultants would work following the Japanese philosophy, spread worldwide by JUSE, Escelsa strongly concentrated on techniques and tools made available, sending a Quality Coordinator to several courses in Brazil and to a technical mission in Japan. Knowledge then acquired was passed over to employees by means of courses and consulting services to all areas involved, which simultaneously helped form several internal multipliers. Such procedure contributed to a significant cut down of consulting costs.
By acting this way, Escelsa has carried out the main part of the process, that is to say, has implemented methodology and mastered Japanese quality tools.
FCO, as a research, instruction and technical assistance providing institution, has transferred knowledge, trying from the very beginning not to make the Company dependent. As an integral part of the contract, Escelsa has, on the other hand, contributed to facilitating the participation of the Quality Coordinator as an FCO instructor to give courses and lectures in congresses and seminars held by other companies of the electrical sector.
Aiming at increasing and diversi1~ing its knowledge on quality, the Coordinator associ¬ated with American Society for Quality in 1994, thus integrating the Quality Management Division. Thus, the Company could now count on receiving all publications on a regular basis, buy related books and take part in seminars in the US. This has also allowed the Company to make use of US techniques in the everyday routine of quality services. Always searching for the best way to work with quality, the Coordinator began from 1995 to attend congresses and forums of the European Foundation for Quality Management (EFQM) in several European countries and took part in the 2nd World Congress for TQM in Sheffield, UK. The contact with these three realities (Japanese, US and European) has allowed Escelsa to make the most of the several approaches and to create a pragmatic method to work with quality. With all this, company results have been given great potential.
Enersul’s quality management history
In 1992, being a company which belonged to the Government of the state of Mato Grosso do Sul, and working with production, transmission and distribution of electrical energy for
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almost all the state (358 158 km2), Enersul volunteered itself for a new experience in development with an association of energy concessionaires. Such experience consisted of applying a management model based on quality concepts developed by the association for electrical energy distribution. This was the first contact ever Enersul would have with quality management.
In 1993, the Company began its ‘sensibilization’ process for quality, with lectures for managers, directors, the management team and employees. In addition, a 20-hour training for the management team was carried out. In 1994, due to several changes within the Company’s Board of Directors, the sensibilization program had to be discontinued.
In 1995, an internal poll was carried out about some aspects of the need to implement effectively a total quality program. The poll eventually showed positive results for the applicability of the program. Following the poll, there was a lecture for the directors and the management team on the benefits and the behavior of employees on the total quality program and also a number of lectures on basic notions of quality and 5S that were attended by 937 employees. Later, a lecture for the management team was held by FCO consultants on the importance of the implementation of total quality program, which effectively started off the quality program through 5S.
In 1996, only a 40-hour course for the management team was held by FCO consultants on the applicability of quality tools in the ‘Daily Work Routine Management’ of the Company. From then on, several areas of the Company have developed the applicability of quality tools in the sectors as a way continually to improve everyday tasks.
Parallel to the development of a quality program, from August 95 to February 96, another consultant—Fundação Getúlio Vargas—coordinated an action to survey all processes of the Company, by means of interviews and elaboration of a flowchart, aiming at resizing Enersul’s headcount. From June 96, Enersul signed a contract with FCO aimed at, by means of a monthly consulting service, following up in a standardized way the development of all tasks of the ‘Daily Work Routine Management’, comprising all the Company. Ali managers were trained on Daily Work Routine Management, applying the tools and choosing the tasks, with well-defined targets for a 3—6-month period. Monthly meetings were held in which the several areas presented their projects on the phase they were at by then, with subsequent criticism by the FCO consultant. A seminar was scheduled for November 1996 in which they would present all works with targets met and the results observed by the execution of action plans for the improvement of processes. Such a seminar was not held due to a determination from Enersul’s Board of Directors, and FCO consulting services were interrupted. From August 1997, Fundação Getúlio Vargas coordinated a process improvement program aimed at cost reduction. Efforts taken together with Fundação Getúlio Vargas towards a continuous improvement and management process did not achieve satisfactory results.
Implementation of total quality management at Escelsa
With the privatization of Escelsa in July 1995, total quality management (TQM) was adopted as management model. In order to increase upper management’s knowledge of quality man¬agement, the president, directors, assistants and superintendents studied the book TQC (Japanese Style) (Falconi, 1994). Following this period of homogenization of knowledge on TQM, upper management was urged to team up with a Quality Committee under the direct coordination of the President, and an implementation plan was prepared. From that moment on, declarations of view, mission, management fundaments, beliefs, values and principles were prepared and widely spread within the Company. Simultaneously, based on strategic planning, Management by Policy (‘Hoshin Kanri’) was implemented and the President’s goals for up
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to the year 2000 were settled, being recommended procedures for their achievement. Those goals and procedures were displayed on a matrix flowchart and extended to other levels. On each level of the organization, action plans (APs) were prepared, as 5WIH, for executable activities on that level, down to the so-.called basic management units (BMUs). Thus, each director, superintendent and manager has his own matrix flowchart and action plan. The APs allow control items (CIs) to be created, so that, from the President down to the BMUs, they can be followed up. This is carried out by a software that displays on the network all APs, CIs, Three Generation Reports, Graphics and Anomaly Analysis Reports.
In order to complete Daily Work Routine Management, the Board of Directors deter¬mined that each formally structured area should prepare a chart identifying business, product/ service, clients, suppliers, material, control items and human resources used. The purpose of such action was to raise awareness of all levels of the organization towards the conscience of business unity, so that each manager would think as an businessman. Still within the Daily Work Routine Management program, the areas prepared flowcharts of their processes and the Standard Operational Procedures (SOP) for the tasks; they also began writing anomaly reports so as to identify those anomalies that are chronic; also, problem solution practices were widely spread with the use of MASP. The 55 program was implemented as the evaluations were carried out by using the radar diagram.
Implementation of TQM at Enersul
In November 1997, Enersul became a private company, with Escelsa as its major shareholder. By analyzing the situation of the management of the company, they carne to the conclusion that the TQM model could be adopted. Since Enersul had already tried previously to make use of quality principles, methods and tools, a TQM implementation plan was elaborated. The term ‘implementation’ was used so that the employees could see that all previous efforts had nor been overlooked. What was meant at that time was to prevent TQM possibly being seen as just a novelty, something that could eventually disappear into thin air. The 5S program was resumed in all units of the company and the follow-up procedures were systematized with the use of a radar diagram. Special emphasis was placwd on educating the -employees on quality, by offering courses to all levels. A 32-hour course called ‘Routine Management’ was attended by 300 employees. Also, the 8-hour course called ‘Introduction to Quality’ was extended lo all 1100 employees of the Company. Escelsa’s declarations of view, mission, management fundaments, beliefs, values and principles were adopted, as well as the same procedures for settling and extending the President’s goals. With the experience acquired at Escelsa, it was possible to implement at Enersul the Management by Policy and the Daily Work Routine Management throughout the year of 1998/99.
Present situation of TQM at Escelsa/Enersul
Within the Management by Policy program, the President’s Diagnostic is annually carried out: all areas of the company present their results in compliance with the goals established by the upper management. Then, all difficulties encountered are analyzed and subsidies for the improvement of the Management System are collected. All management levels carry out a Trimester Reflection, in which all positive results related lo the goals extended to each area are analyzed, establishing the alternative measures for the unachieved goals and standardizing the measures that eventually produced good results. By means of the Intranet, all standards, regulations, PO1’s, courses, internally produced papers, and summary of external seminars
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and congresses related to TQM are made available. With TQM implemented at both Escelsa and Enersul, the Quality Office proposed consolidation measures for 1999 and 2000:
(1) Establish the Quality System.
(2) Implement the Quality Auditory.
(3) Establish the TQM Evaluation System.
Such consolidation measures were displayed on a tree diagram, up to the level of executable activities, which, in their turn, were detailed in APs (5W1H). The modification foreseen for ISO 9000, awaited at the end of 1999 and eventually postponed to 2000, caused the plans for the establishment of the Quality System and for the implementation of the Quality Auditory to be slowed down. On the other hand, it also caused the works for establishment of the TQM Evaluation System to be highly advanced. After a survey and comparison of several possibilities for TQM evaluation for the companies as a whole, the adopted model was the Brazilian Quality Prize, established from the Malcolm Baldrige Prize (US). This way, a Management Report for each company (Escelsa and Enersul) was elaborated so as to show the stage they were at the end of 1999. The participation of several areas of the companies in the elabor¬ation of the Management Report brings about some preoccupation for their executives in what concern the excellence criteria. The evaluation of the company as a whole might not be enough for our purpose of identifying the areas that might require improvement iii manage¬ment. Owing to this, we have used some steps that were used before the elaboration of the Management Report. These steps consist of making use of a system made up of three levels (simplified evaluation form (SAF), level 1 and level 2) in order to evaluate the organizational units (supervisions, management and superintendence) (Gaucho Program, 1997). A course named ‘Continuous education in TQM, postgraduate level, was created, with 11 modules of 32 hours each, totaling 352 hours. At the end of the course, the students should hand m a free-theme paper in groups of as much as three components. This is a 2-year course and started off with 180 students from Escelsa and 130 students from Enersul. The instructors and lecturers are employees from the Quality Office and the Management Team of both companies, including directors and the President, who taught the inaugural class.
The companies used to hold no outstanding position in the Brazilian electrical sector in what concerns quality culture; nowadays, they have already been awarded several prizes, as acknowledgement for the major improvement of their performance indexes. Escelsa, which used to belong to the Eletrobras holding, and Enersul, which used to belong to the Government of the state of Mato Grosso do Sul, and are therefore companies with a different style in stock control, different management, different cultures and different geographical location within Brazil, carne to have different reasons to begin working with quality management. They are, however, two successful cases in the use of TQM as a management model. Such success may be apprised by the improvement of technical/operational, economic/ financial indexes, client satisfaction, internal organizational atmosphere and increase of stock value of the companies.
F1NANCE MINIStRY (1990) Política Industrial e de Comércio Exterior—Exposição de Motivos (Industrial and External Commerce Policy—Motives) (Brazil, Finance Ministry).
FALCONI (Ed.) (1994) TQC—Controle da Qualidade Total (No Estilo Japonês) (TQC—Total Quality Control Japanese Style) (FCO)
GAUCHO PROGRAM (1997) Programa Gaúcho de Qualidade e Produtividade—Sistema de Avaliação (Gaucho Quality and Productivity Program—Evaluation System) (Brazil, RS).