August 07, 2006	Monday	Rajab 11, 1427

WHILE support from the government is required to help boost exports, there is much that needs to be done internally to make the industry internationally competitive. This piece focuses on the quality of the internal environment to build competitive advantage in the international market place.

And competitive advantage is based not just on the quality of the product, cost competitiveness and ability to respond to the dynamic environment but also on all those internal factors that feed into the above bases of competitive advantage.

The criteria for international quality awards, therefore, include quality of human resource, of work climate, of management, and of leadership. Only then can quality be built into the products that will sell internationally and will help penetrate the global markets.

Efforts to build quality should graduate much beyond quality control of the inspection or the statistical process control type or even quality assurance through quality processes to building an organisation-wide quality philosophy through total quality management (TQM).

TQM is a company-wide effort supposed to build quality into outcomes and outputs through intense involvement of the workforce who should remain engaged in continuous improvement of products and processes due to the high level at which they should be operating in the needs hierarchy.

Managerial challenge, therefore, lies in enabling the workforce so that it operates at this high a level of motivation and fulfillment. Unless an organisation-wide effort is made to build and sustain competitive advantage, external players such as the government can do little to sustain growth in exports.

In Pakistan, the general belief is that acquisition of ISO-9000 & 14000 certification also certifies international competitiveness. This may not be true especially if the above is viewed as the only sure-fire source for international competitiveness. While the certification facilitates entry into the international marketplace, building competitiveness is a continuous process, especially when this is how the competitors compete in the world markets.

In one export-oriented industry that was surveyed, 90 per cent responding firms were ISO-9000 certified. However, the modal value that occurred most frequently for both the rates of rejection and rework was above five per cent of output. Only one-third respondents relied on modern technology.

And, while all relied on the basic quality control of the inspection type, only about one-third had even reached the stage of quality control of the statistical process control kind. Also, about one-third had reached the stage of quality assurance. Only about five per cent were striving to reach the TQM stage.

Another export-oriented industrial sector had only about 50 five per cent ISO-9000 certified firms and only about six per cent responding firms that were reaching the TQM stage. About 12 per cent responding firms were in the TQM stage in another export-oriented industrial sector surveyed that had only about 41 per cent firms that were ISO-9000 certified. In both these industrial sectors though, the modal value for the rate of rejection and rework was between 5—2 per cent of output.

With the world trying to approach or even better Motorola’s “Six Sigma” which means only one defect per million units produced and with Japan striving towards zero-defects, the above rates of rejection and rework in Pakistan’s export-oriented industry present an outlook that requires transformational remedial action.

For, these are not only an adverse reflection on the quality of process and output but these add to costs thereby further eroding competitive advantage.

In yet another export-oriented industrial sector surveyed that had almost two-third firms that were ISO-9000 certified, 57 per cent firms had graduated to quality assurance and about 27 per cent firms claimed to have even reached the TQM stage.

However, the modal value for both the rates of rejection and rework was between 5—2 per cent of the total output. So, it is not just the prima facie stage of quality management that matters but its effective translation into competitive advantage is what should matter and count.

The above indicates that the road to international competitiveness of export-oriented industry is a long and arduous one. While all players appreciate the significance of quality, the road to this goal is not too clear yet.

For, they started off with ISO-9000 certification viewing it mostly as an entry-level requirement when actually it is a recipe for improvement of quality of processes and products. The goal of ISO-9000 acquisition will remain unfulfilled for as long as the underlying quality philosophy is not internalised.

Then, they are introduced to the jargons of quality assurance and TQM again without absorbing their true meaning. For, some of those surveyed claim to be using TQM without appreciating the concept of “Kaizen” that means continuous improvement. Some others claim to be using “quality circles” without appreciating the meaning of TQM.

So, even though they try to improve quality through the deployment of jargon, it may not work not until the concepts are appreciated and acted out in the true sense. This essentially requires goal alignment. That is, congruence of personal goals with the goals that should be of the organisation and then getting them to see their long-term personal goal fulfillment through the attainment of organizational goals on a sustainable basis.

Emphasis needs to shift away from short-term financial goals as it obfuscates attempts at long-term organisational development.

And, emphasis needs to shift towards long-term business goals of customer satisfaction from which should flow financial results as a business outcome which relationship the export sector should be able to appreciate. For, long-term financial gain of the shareholders can only be secured through a strengthened competitive position. The above can be communicated through the following steps.

It is very important for export-oriented industries to get to see and understand what the international environment looks like and what Pakistan’s place is in the global arena.

In this knowledge economy, they also need to know the paths that the world leaders tread to achieve the competitive as well as financial position they have acquired over time.

These paths will demonstrate that there has to be a handle on both the external and the internal organisational environment. Focus has to be balanced between the external inducements and the internal strengths which must be strengthened and weaknesses that must be overcome.

A comparative study of successful global players in contrast with those not-so-successful should highlight the gaps we need to plug to make our internal micro-level operations strong. It is the minds that need to be opened up to be receptive towards another mode of internal operations and working with the key stakeholders of employees, suppliers, environment, government, and customers. This new mindset alone will make a difference.

It is this process of intellectual transformation that needs to be facilitated in a way that the industrial sectors begin to own it as a business purpose and mission. Industry should feel as they though they are doing it themselves. Only then will they take pride in the process of change which will be followed by strong commitment and delivery.