Quality as a Differentiator for Growing the Business - Manoj Belgaonkar New Delhi, June 13, 2014

is Quality easily misunderstood

Quality is compliance to standards Confirm / Review Compliance Internal Standards: Process standards defined in QPMs, procedures, work instructions External Standards and Regulations: Management system requirements e.g. ISO 9000, ISO 14000, Product standards e.g. IS / IEC, Weight and Measures, BIS Enable / Measure Performance Processes, interfaces: Adequacy and effectiveness of relevant processes e.g. Customer Perception gathering, Interfaces between processes, Continuous improvement projects Resources: Adequacy of resources required Controls: Effectiveness of controls

Quality is related to products Value for money User friendly Reliable Robust People Competent Innovative Efficient Process Effective Optimised Perfect / Dependent

Quality is for shop floor people A modern approach needs a holistic view across functional departments A cross-functional approach generates new perspectives for optimization Establish broad understanding of principles and methods among the employees Sustainability needs a sustainable culture change

Quality offers intangible benefits / contributions

Quality contributes to more than cost reduction Reduce costs by 10% -10% Optimise product design Use economical sourcing Increase productivity / FPY thru process improvements Optimise overhead costs Reduce extra cost Improve % profitability Improve turns by 20% +20% Reduce lead time Deploy Lean manufacturing principles Better management of receivables Increase inventory turns Zero defect Improve no. of turns Increase Sales by 40% +40% Increase extraction from existing customers Win new customers Introduce New Products / services Launch Innovative products Grow 2x times the market

Quality does lowers costs 100 15 5 Capital 10 10 5 Personnel 20 Material substitution Alternate suppliers 5 5 Muda Six sigma Just in time Lean Zero defects Outsourcing Material 70 Simpler processes Lean Kaizen 5 S Contract manufacturing Total costs Cost reduction Productivity improvementsProductivity improvements Optimised capital Effective cost baseEffective cost base

Quality can also contribute in Sales 11 12 13 14 15 16 17 18 19 20 No. of offers How can we increase our participation? How do we reach our customers? 1 2 3 4 5 6 7 8 9 10 Lost orders How do we move beyond “price based selling” ? How do customer’s perceive our products? How easy it is to do business with us? 1 2 3 4 5 6 7 8 9 10

Quality contributes to more than cost reduction Wastage reduction Non conformance cost management Supplier Quality Management Capital Employed PBT = = Sales PBT Capital Employed Sales X RoCE Better delivery lead times - Lean implementation Reduced receivables -Zero defects Lean implementation Zero defects Claim management

Quality is one of the top buying criteria

Quality can open many doors Quality is one of top 3 buying criteria - Price, Delivery, Quality There are more than 2 suppliers for 60 – 70% of purchasing volume There are different criteria to have multiple suppliers

Quality needs to be planned across value chain Does not meet requirements Not as per confirmed date Not as per agreed terms Order lost e.g. Order Won/loss Analyse the process Meets requirements Order won As per asked date As per agreed terms Products Offer Order Delivery Collection e.g. Complete delivery Missing processes

Quality has significant contribution towards Brand

Quality Vision: Siemens stands for world-class quality Vision and Principles Quality Vision: Siemens stands for world-class quality Our vision is based on these principles Quality is determined by our customers Quality means understanding and exceeding customer expectations Quality starts at the top Quality is a value of all employees Quality needs to be integrated into products and processes at an early stage Quality is a matter of measurement and transparency Quality needs continuous improvement 1 2 3 4 5 6 7 Source: CQM

Vision and Principles Our Quality Strategy focuses on continuous improvement based on our Mandatory Elements Siemens Quality Strategy Mandatory Elements “Implementation of the Mandatory Elements of Siemens Quality Management and continuous improvement of people, process and product quality.” Source: CQM

Vision and Principles The Mandatory Elements have been derived from a global benchmarking project QM Benchmarking Project Lufthansa Technik, Frankfurt St. Paul (Minnesota) Tokyo St. Leon-Rot Armonk (New York) Valenciennes (France) Esslingen Yokohama Source: CQM

The Mandatory Elements are divided into four categories Vision and Principles The Mandatory Elements are divided into four categories Categories of Mandatory Elements Methodology oriented Culture driven Excellent processes for quality Customer integration Quality standards in processes and projects Consistent supplier management 1 2 3 Quality controlling Business-driven quality planning Focused quality reporting 4 5 Mandatory Elements Quality mindset and outstanding capabilities Comprehensive qualification for quality Continuous improvement 6 7 Leadership for quality Spirit by management involvement Control and support role of the quality manager 8 9 Focus Area FY 13 Source: CQM

Quality can be a differentiator.. .. to Grow business Quality needs holistic approach 1 Quality does offer tangible benefits 2 Quality is one of the top buying criteria 3 Quality helps in building brand - Reason “to be..” 4

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