2. Policy Management
1. Overview including history of PM
2. Principle
3. Policy Management process
a. Policy setting
b. Policy Deployment
c. Policy review & effectiveness
4. Relation between PM & DM
5. Summary
6. Case Study
2
Agenda
3. 3
Mid 1990
Annual Business
Planning
•Management by
objective (MBO)
framework
•Monitoring the
performance vis-à-vis the
targets
1997-2005
ABP + Balanced
Score Card
•Linking targets with
activities
•Alignment of the
organization towards
overall company
objectives
•Dashboard for
monitoring performance
at company and
divisional levels
2006- 2008
ABP + Policy
Management
•Greater focus on the
‘process (activities)’ for
achieving the targets
•Emphasis on cause -
effect relationship
•Focus on vital few items
1. Overview: Strategy Planning & Deployment
Integrated PM with ABP
•Integrated framework for
business planning.
•Plan for check.
•Assessment of business
planning.
•Coverage of all divisions
and corporate functions.
2009 on wards
4. 4
1. Overview: Definition of Policy Management
Activities that are conducted with the cooperation of
the entire company to establish and efficiently achieve
mid-term and long- term business plans based on the
fundamental management policies
Source: JUSE
5. 5
Daily Management
CEO
Future Direction
Current Ongoing
Direction
Policy
Management
staff
Cross-Functional
Management
line
QC Circles Activities
N. Kano et. al. (1983) “Conduct Thoroughly Daily Management”,
1. Overview of Policy Management: Boat Model
Line Employee
Initiative
Middle
Managers
Initiative
Upper Level
Managers Initiative
Staff Initiative
6. 6
Year 0:
Current
Year 1:
Future
Trend line indicates performance levels
required if additional ‘stretched’ targets set by
management are to be achieved.
Trend line indicates performance
levels if existing processes are to
continue
Daily
Management
Policy
Management
Performance
Time
Target Set by Management
1. Overview: Policy Management & Daily Management
7. 7
1. Overview: Two components for managing business
Policy Management is strategic
•Running or sustaining the business
Daily or routine management
• Changing the business or a new
framework
Policy management
8. Policy Management
1. Overview including history of PM
2. Principle
3. Policy Management process
a. Policy setting
b. Policy Deployment
c. Policy review & effectiveness
4. Relation between PM & DM
5. Summary
6. Case Study
8
Agenda
10. 10
Management cycle
PDCA is an important management concept and methodology. At Tata
however, the PDCA cycle is centered on results and its operation is
still at the level of traditional Management by Objectives (MBO).
If a result is found to have fallen short of the objective, it is necessary
to examine the process itself for the cause of failure.
However, Tata is inadequate when it comes to this approach.
Consequently, its action plans are often superficial. Generally
speaking, the company’s understanding of how to repeat the PDCA
cycle, the basis of management, is inadequate.
Source: TQM Diagnosis 2005
2. Principle of PM: Feedback from Deming Examiners on PM
11. 11
ACTACT
CHECKCHECK
PLANPLAN
DODO
1a. Set Up Objective / Target
2a. Preparation Work,
Training of People
3a. Check whether
Target Achieved or Not
4a. Conduct Immediate Remedy
1b. Clarify Process for
Achieving Objective / Target
2b. Implement Process
3b. Check whether Activity
Is Conducted along with
the Process or not.
4b. Analyze why it is not achieved
because the activity is not done along with
the process, or, it is not achieved
although the activity is done along with
the process P⇒ reventive action
2. Principle of Policy Management – complete PDCA cycle
12. 12
“The basic notion of PDCA is
so simple that when I first heard it I felt I
understood it in five minutes.
Now, more than a decade later,
I think I might understand it…..
….some day”.
The PDCA wheel is a simple, flexible model
that has been adapted to a broad range of situations.
2. Principle of Policy Management - PDCA
13. 13
2. Principle of Policy Management - PDCA
Plan
•Policy Setting
•Policy Deployment
Do
•Policy Implementation
Check
•Evaluation of Implementation
Act
•Feed-forward to next year’s PM
14. Policy Management
1. Overview including history of PM
2. Principle
3. Policy Management process
a. Policy setting
b. Policy Deployment
c. Policy review & effectiveness
4. Relation between PM & DM
5. Summary
6. Case Study
14
Agenda
15. 15
What is a Policy?
A policy contains:
direction to which an enterprise is going,
target (goal, level) to be attained in future,
strategies on how to realize it .
A policy refers to:
strategic matters
but not daily operational matters
PDCA3a. Policy Setting
16. 16
POLICY = WHAT + HOW
What: Direction & Target
How: Strategies or Means
PDCA
How’s:
Can be ‘A’ or ‘B’ type strategies.
Challenging and ISS
Green & Brown Strategies
3a. Policy Setting
17. 17
1. Category A:
Strategy + Administrative decision making involving usually few members of
the leadership team. Examples: Organization restructuring, purchasing,
mergers and acquisitions, major asset (facility) addition, new IT system etc.
Usually investment intensive
2. Category B:
Strategy + Company wide efforts (people engagement) to get effective
outcomes. Usually involves many people at many levels across the company.
Examples: Problem solving teams, quality improvement teams, shop floor
condition (equipment) improvement teams, Synergy after mergers and
acquisitions. Usually requires no or less investments
Both categories may result in improvements and there can be overlaps
3a. Policy Setting: Two categories of Strategies w.r.t.
involvement
18. 18
3a. Policy Setting: Two types of Business Strategies
1. Challenging Strategies: Usually Business improvement and
growth strategies (eg. Increasing skin panel production- Mix
enrichment, Reducing defectives, Enhancing capacity of
Steel melt shop etc.)
2. Infrastructure Strengthening Strategies: Absence of which
will make implementation of challenging strategies difficult
(eg. Safety, Environment, HR, IT related strategies etc.)
19. 19
Candidates
for Policy
P1………
P2.
P3.
P4………
Deep
Analysis
based on
data
Relevant Top
Management policy
directions
Final Policies
1.
2.
.
.
Check whether
The means are necessary and sufficient
to accomplish the Policies
Prioritise
Means
PDCA
Vision, Long Term Business Objectives/
Plans that must be implemented during
the current year.
Directional
Deep understanding of business
environment, competitiveness,
capability, customer needs &
expectations and Benchmarking.
External Environment
What are our current problems? i.e.,
deep understanding of current
situation.
* Last Year's Review of Policy items
* Last Year's Review of Daily
Management items
Internal Issues
3a. Policy Setting
20. 20
PDCA3a. Policy Setting: Feedback from Deming
Examiners on Policy Management
It is praiseworthy that in the process of developing and deploying
policies, the company has deployed its business objectives into
specific strategies and actions so that its plans can be monitored for
progress.
However, it is uncertain whether or not the company has means to
check the feasibility of its strategic initiatives at the stage of
planning.
Necessary & sufficiency check
Source: TQM Diagnosis 2005
21. 21
Candidates
for Policy
P1………
P2.
P3.
P4………
Deep
Analysis
based on
data
Relevant Top
Management policy
directions
Final Policies
1.
2.
.
.
Check whether
The means are necessary and sufficient
to accomplish the Policies
Prioritise
Means
PDCA
Vision, Long Term Business Objectives/
Plans that must be implemented during
the current year.
Directional
Deep understanding of business
environment, competitiveness,
capability, customer needs &
expectations and Benchmarking.
External Environment
What are our current problems? i.e.,
deep understanding of current
situation.
* Last Year's Review of Policy items
* Last Year's Review of Daily
Management items
* Deming feedback
Internal Issues
3a. Policy Setting
22. 22
CSI LPFP E&PSS
CP RMH
OTHERS
Unsafe act
SOP Non
Compliance
Corporate LTIFR
with Fatal (F).
Works RM Other Locations
Works Division
LTIFR
Works Location
Max no. of LTI’s
Major Factors
P:1.25 A:2.55
P:1.05 A: 0.47
1 F
P:0.89 A:1.15 P:0.70 A:1.12 P:0.85 A:2.10 P:0.20 A:0.22 P:0.31 A:0.88
P: 0.62 A: 0.97
5 F
P: 0.42 A: 0.60
0 F
13 09
Example : Safety – Red Spots
LTI coverage
RM Works
Out location Others
EPA/SY/M&S
Existing
Facilities
Brown
Field
Green
Field
Capability-Safety Excellence Consequence Mgmt
Road Others
Data of FY’09
(till Feb’09)
P: Plan A: Actual
Works
RM
EXAM
PLE
23. 23
1. Strengthening consequence management
2. Develop capable contractors through Six Steps Contract Management Process
3. Implement focused FRCP (Fatality Risk Control Programme)
1. Implement best practice of RM at Works
a. Section Modeling Approach
b. Job Cycle Check
2. Overall assessment through Integrated Safety Audit
3. Bring about behavioral change through training module involving psychologist
4. Exploit group synergy on safety excellence process
5. Develop in house capabilities and strategy in safety excellence for green field projects
Example : Safety – Strategy Vehicles
MIS / Action Points:
a. Monitoring of safety violation cases escalated beyond departmental level
b. Review of compliance to training calendar for front line supervisors, contractor supervisors
c. Surprise visits by senior management (COO, VPs) to CSI & LP
d. Monitor PSRM implementation
EXAM
PLE
24. 24
1. Explicit focus on quality. Corporate metric:
o Cpk?
o Strike rate?
o PPM?
o COPQ?
o Rejections?
o TRD/ DDP?
1. Company wide quality assurance system (with integrated customer complaint
management process)
2. Focus on NPD
Example : Quality - Strategy Vehicles
MIS / Action Points:
1.Monitor delta premium earned over next best competitor
2.Monitor premium lost on account of down grading of prime material
BACK
EXAM
PLE
25. 25
Candidates
for Policy
P1………
P2.
P3.
P4………
Deep
Analysis
based on
data
Relevant Top
Management policy
directions
Final Policies
1.
2.
.
.
Check whether
The means are necessary and sufficient
to accomplish the Policies
Prioritise
Means
PDCA
Vision, Long Term Business Objectives/
Plans that must be implemented during
the current year.
Directional
Deep understanding of business
environment, competitiveness,
capability, customer needs &
expectations and Benchmarking.
External Environment
What are our current problems? i.e.,
deep understanding of current
situation.
* Last Year's Review of Policy items
* Last Year's Review of Daily
Management items
* Deming feedback
Internal Issues
3a. Policy Setting
26. 26
Example: Directional Inputs
Vision 2012 Corporate Objectives Mid Term Policies
Goals 2012
Value Creation:
•Increase our ROIC to 30% from
the current 16%
Safety:
•Reduce LTIF to 0.4 compared
to the current 1.7
Environment:
•Reduce CO2 emissions to 1.5
Tons / ton of liquid steel
compared to the current 1.8
T/tls
Employer of Choice:
•Across all industries – top
quartile
Automotive
Become most preferred
supplier to domestic
automotive customers by
becoming best in class on
Quality, Delivery, Design &
Cost parameters
Steel Roofing
Maintain Market leadership
in Steel Roofing
segment in India
General Engineering
Become most preferred
supplier among small CRCA
customers in the attractive
segments
27. 27
Candidates
for Policy
P1………
P2.
P3.
P4………
Deep
Analysis
based on
data
Relevant Top
Management policy
directions
Final Policies
1.
2.
.
.
Check whether
The means are necessary and sufficient
to accomplish the Policies
Prioritise
Means
PDCA
Vision, Long Term Business Objectives/
Plans that must be implemented during
the current year.
Directional
Deep understanding of business
environment, competitiveness,
capability, customer needs &
expectations and Benchmarking.
External Environment
What are our current problems? i.e.,
deep understanding of current
situation.
* Last Year's Review of Policy items
* Last Year's Review of Daily
Management items
Internal Issues
3a. Policy Setting
28. 28
Example: Capturing Inputs from External Environment
Customer Competition Key Factors
• Customer Satisfaction
Survey - CSI
• Customer meet
• Customer Service Team
• Focus Group Discussion
• Value Management – CR
& GP
• Complaint Management
(CCMP)
• Customer Visit Reports
(CVR)
• Top Management
Interaction
• FIBRES – (Facts
Information Based Reverse
Engineering Strategy)
• Industry Association
• Field Monthly Market
Report
• Customer Satisfaction
Survey
• Cost Model
• Macro Economic
Environment
• International Market
• Government Policies
• Steel Industry
• Steel consuming
sectors
• Export / Import
• Duty Structure
• Raw Material Contracts
29. 29
Steel companies have invested in Auto-Specific Facilities…
1 vertical
caster
Steel
Making
H S M COLD ROLLING GALV
TECHNICAL
TIE-UP
In TSCR CRM-Bara • NSC
RH, V/Caster
Scarfing
ROT Length
for HT gr
Dedicated
HRPO/SPO
ECL CAL Auto Galv Line
Auto Specific
tie-up
In New
conv.HSM
• Thyssen
Existing
HSM
• Kobe
No RH or
Vert cast. • Sumitomo
No vertical
caster
New CRM
in Bokaro
New CGL in
Bokaro • None
Auto Specific
facilities
Not availableAvailable Partially availableIndex
1 vertical
caster
1 vertical
caster
EXAM
PLE
30. 30
Product & Service Offerings – A Comparison (TMT & WR)
Product JSPL JSW SAIL RINL TATA STEEL
-ve tolerance ++ ++ + + ++
Coil weight
(MT)
2.4 1.3(SISCOL)
2.5( BELLARY)
1.5 1.35 1.5
Presence in
Structural
Yes (mainly
heavy)
No Yes (full range) Yes (light &
medium)
No (plans in
future)
Services JSPL JSW SAIL RINL TATA STEEL
Distribution
Network
Nascent Nascent Professional
design but still
developing
Trade channel Well
developed
Customer
Relationship
Transactional Transactional Transactional (supply & credit
based lock in)
Partnership
based on value
propositions
(CST)
Supply Chain
capability in
LP
Developing Developed
(synergy with
FP)
Well developed
across India
Developed;
strong in
South
Developed;
well leveraged
EXAM
PLE
31. 31
Candidates
for Policy
P1………
P2.
P3.
P4………
Deep
Analysis
based on
data
Relevant Top
Management policy
directions
Final Policies
1.
2.
.
.
Check whether
The means are necessary and sufficient
to accomplish the Policies
Prioritise
Means
PDCA
Vision, Long Term Business Objectives/
Plans that must be implemented during
the current year.
Directional
Deep understanding of business
environment, competitiveness,
capability, customer needs &
expectations and Benchmarking.
External Environment
What are our current problems? i.e.,
deep understanding of current
situation.
* Last Year's Review of Policy items
* Last Year's Review of Daily
Management items
Internal Issues
3a. Policy Setting
33. 33
Head Objective Target
Environment Reduce stack emission at FPPC mg/Nm3 <100
Market share in % 18
Premium(Rs/T) 1200
Non Conformance in ppm(Product
related)
1300
Non Conformance in ppm (Service
related)
600
Internal Defects in % (of FPPC Prodn.) 2.75%
Improve employee productivity at FPPC tcs/man/year 2444
Drive continuous improvement through TQM
promotion.
%
100 (of
selected
group)
Conversion cost in Rs/t 7300
Margin in Rs crs 731
Working capital in days sales 30
Customer Service (Quality)
Improve product performance at customer's
end.
Employee Education &
training
Value Creation
Maximise margins and optmize working
capital.
Customer Service (Market
Share)
AUTOMOTIVE :
Become most preferred supplier to domestic
automotive customers by becoming best in
class on Quality, Delivery, Design & Cost
parameters
Market Share in %
CSI (Ratio)
41 (revised
target)
1.08
GP Distribution :
Achieve market leadership in GP OE
segment through a unique offering
Safety
Achive LTIFR of 0.85 with Zero Fatality and
permanent disability
Loss Time Injuries Frequency Rate
(ratio)
1.07
KPI
EXAM
PLE
Example: Business Objectives for FPPC
34. Policy Management
1. Overview including history of PM
2. Principle
3. Policy Management process
a. Policy setting
b. Policy Deployment
c. Policy review & effectiveness
4. Relation between PM & DM
5. Summary
6. Case Study
34
Agenda
35. 35
Policy
VP Level
Means 1
Means 2
Means 3
PolicyattheChiefLevel
Means at the
Chief Level
M1.1
M1.2
M1.3
.
.
.
Note: Only the relevant Means get cascaded
Company Direction/
Policies
PDCA3b. Deploying the Policies
Means 4VP LP
policy
COM LP
policy
Chief WRM
policy
WRM sectional
activity plan
Copyright, N.Kano, January, 2007
36. 36
Example: Deploying the Policies
Head Objective KPI Target Strategies Target
Implementation of PSRM in FPPC 100%
50 % reduction in LTI due to procedure violations. 1
Environment
Reduce stack emission at
FPPC
mg/Nm3 <100 50% reduction in stack emission from ladle furnaces. 100
Design
Achieve capability to service 36KT of skin panels sales by
end of FY10.
5.73
Delivery
Implement VMI for 30% of auto volumes by Fy10 end
13%
Market share in % 18
Launch of branded offer in attractive consumer segments
and convert 50% of GP sales to branded sales
35%
Premium(Rs/T) 1200
Improve distributors capability to serve attractive segments
and increase the processing of the volume thru certified
service centers to 70%
59%
Non Conformance
in ppm(Product
related)
1300
a. Reduce non-conformance in General Engineering
segment by 62%
b. Reduce non-conformance in CRCA distribution by 42%.
615
Non Conformance
in ppm (Service
related)
600 Achieve 50 % reduction in non-conformance due to rust. 600
Internal Defects in
% (of FPPC Prodn.)
2.75%
Reduction in surface defects by 13% and metallurgical
defects by 6%.
2.64
Improve employee
productivity at FPPC
tcs/man/year 2444
Implement 4Q model for skill upgradation and
improvement in work practices.
0.6
Drive continuous
improvement through TQM
promotion.
%
100 (of selected
group)
Develop and implement plan for training on TQM tools. 17.8
Conversion cost in
Rs/t
7300
Achieve average FPPC conversion cost of Rs 7239/t by
FY10 end
7300
Achieve volume exploitation benefits of Rs 391 crore. 92.8
Realise Rs 51 crores as non price benefits from SFS and
marketing initiatives.
13.0
Working capital in
days sales
30 Reduce FPPC gross working capital by 15% over Fy09 1394
Margin in Rs crs 731
Customer Service
(Quality)
Improve product
performance at customer's
end.
Employee
Education & training
Value Creation
Maximise margins and
optmize working capital.
Customer Service
(Market Share)
AUTOMOTIVE :
Become most preferred
supplier to domestic
automotive customers by
becoming best in class on
Market Share in %
CSI (Ratio)
41 (revised
target)
1.08
GP Distribution :
Achieve market leadership
in GP OE segment through
a unique offering
Safety
Achive LTIFR of 0.85 with
Zero Fatality and permanent
Loss Time Injuries
Frequency Rate
1.07
37. 37
FPPC Objective FPPC Sub-strategy KPM
Base
Level
Fy09
Targe
Fy'10
Activity Plan Owner KPM
Base
Level
Fy09
Target
Q1 Fy'10
Implement brand awarness
campaigns (Nos) amongst all
stakeholders (FY10 : 5)
NA 0
Drive key customer (KACs)
orientation in OE distributor's
organisation-No of KACs (FY10 :
138)
NA 30
Implement customer intimacy and
training pragrammes for KACs-No
of Programs : 2 nos.
NA 0
Implement action thru
VMGP in 6 key OE markets
Channel
Manager
Shaktee
No. of New customer Acquisition
(FY10 : 6)
37 6
Channel
Manager
Shaktee
&
Respecti
ve CSMs
No. of New Distributors appointed 20 22
Channel
Manage
r
Shaktee
Total no.of trained Sales force NA 12
Appointment of
distributors & sales force
Product
Manage
r
No. of certified service centres
(FY10 : 17)
2 7
Processing tie up with L-II &
L-III level of service centres% Processing
thru certified
service centres
(FY10 : 70%)
23 59
% Sales to the
attractive
segments
39 70
Improve distributors
capability to serve
attractive segments
and increase the
processing of the
volume thru certified
service centers to 70%
Implement Customer
relationship programmes
Channel
Manager
Shaktee
Brand
Manager
Shaktee
Launch Segment specific
Grades(Nos)
NA 10
35
Launch differentiated &
branded products
GP Distribution :
Achieve market
leadership in GP OE
segment thru a unique
offering
Launch of branded
offer in attractive
consumer segments
and convert 50% of GP
sales to branded sales
% Sales of
Branded GP
(FY10 : 50%)
NA
Example: Deploying the Policies
38. 38
How can I
maintain my
correct weight?
Change
lifestyle
Increase
activity
Change
diet
Cut down on
drinking
Go to bed
early
Set regular
mealtimes
Reduce
caloric intake
Get more
exercise
Set time aside
to exercise
Change to small bottles
Institute “dry” habits
Cut mahjong to once a
month
Turn the TV off at
10;00 pm
Play ping pong at noon
hours
Start going to a sports
gym
Get up early and jog
Don’t ride elevators
Walk outdoors at noon
hours
Don’t eat after 10:00
pm
Don’t put sugar in
coffee
Don’t skip breakfast
Give up snacks
Eat more vegetables
1. Set basic objective
-Plan development type
( how to do something)
-Factor search type
(why something is the case)
2. Think of 1st
level means
3. Think of 2nd
level means
5. Go back and make sure
that the higher level means
are suitable in terms of the
lower
Level means
4. Carry on the development ,maintaining the relationship between
Objective and means, through the 3rd
or 4th
levels , or as far as is practicable
System Diagram
To search systematically for the best way to
achieve objectives
PDCA
Copyright, N.Kano, January, 2007
39. Policy Management
1. Overview including history of PM
2. Principle
3. Policy Management process
a. Policy setting
b. Policy Deployment
c. Policy review & effectiveness
4. Relation between PM & DM
5. Summary
6. Case Study
39
Agenda
40. 40
PDCA
At year-end management policy reviews, only financial
performance has been discussed in the past. Little has been
examined regarding actions that have brought about the
performance.
It is suggested that the processes of policy management
be analyzed and reviewed in depth at the end of each year.
Source: TQM diagnosis 2005
System chart indicating PM activities is incomplete as a
system. System from Policy formulation to deployment
follows the flow chart uniformly across the company but the
system for the activities to carry out implementation, checking
and year end review of policies is inadequate
Source: Deming Feedback Corporate 2008
3c. Policy Review & Effectiveness: Feedback from Deming
Examiners on PM
41. 41
PM Review consists of Review of Cause & Effect
Effect- The Policy Targets
Cause- The relevant Means
3c. Policy Review & Effectiveness PDCA
42. 42
3c. Policy Review & Effectiveness
Analyse what were the reasons for successes
Analyse what were the reasons for failures
PDCA
43. 43
Four Student Model
In the evaluation Management by Policy, check whether
objectives are achieved as well as the methods by which they are
achieved. The evaluation can be categorised into the following
four cases
Student A
Student B
Student C
Student D
Target
OK
OK
Fail
Fail
Method
OK
No Good
OK
No Good
Comment
Very Happy
God Blesses the Company
Very difficult
Still Hopeful
Exam Attendance
3c. Policy Review & Effectiveness:
PDCA
44. 44
3c. Policy Review & Effectiveness: Objective of 4 Student
Analysis
1. It is the ‘Check’ part of the PDCA of Policy Management based on which actions are
taken for the next cycle
2. The primary objective of 4 student analysis is to review both the process and the
target and to provide actionable points for better performance in the next cycle.
3. It segments the targets and their related means into four categories (4 students).
4. It provides a direction of investigation and/or improvement for each these categories
(students).
5. Each of the four students have a distinct approach towards analysis.
1. It should not be used for performance comparison between two departments or
divisions
2. It does not judge the distribution of students (percentage of A, B, C and D) as
good or bad.
What it is…..
What it is NOT…..
PDCA
45. MEANSPOLICIES
45
3c. Policy Review & Effectiveness: How to do 4 Student
Analysis ?
1. Maximize margin
2. Become most preferred
supplier among small
CRCA customers in the
attractive segments
1.2 Achieve volume exploitation
benefits of Rs 391 crore.
1.1 Achieve FPPC conversion
cost of Rs 7239/t
1.3 Achieve non price benefits of Rs 51 Crs from
SFS and Marketing programs
2.1 Increase Steelium sales
through exclusive retail outlets
2.2 Acquire new customers to migrate
volumes to value added product mix
2.3 Value thru RR offer
2.4 Increase coverage of prime Steelium sale on TOC replenishment
and extend Reliability/ Rapid Response (RR) offer to all distributors
2.5 Enhance Service Centre capabilities at Distributor’s organization
1.1 Achieve FPPC conversion
cost of Rs 7239/t
1.3 Achieve non price benefits of Rs 51 crores
from SFS and Marketing programs
2.1 Increase Steelium sales
through exclusive retail outlets
2.4 Increase coverage of prime Steelium sale on TOC replenishment
and extend Reliability/ Rapid Response (RR) offer to all distributors
2.5 Enhance Service Centre capabilities at Distributor’s organization
1.2 Achieve volume exploitation
benefits of Rs 391 crores.
2.2 Acquire new customers to migrate
volumes to value added product mix
2.3 Value thru RR offer
1. Maximize margin
2. Become most preferred
supplier among small
CRCA customers in the
attractive segments
A
A
B
C
C
C
D
D
PDCA
46. The four student analysis should not be
stopped at the level of categorization of
4 student (A,B,C&D)
The “essence” of 4 student analysis is
subsequent action planning for next
cycle based on the conclusions from the
4 student analysis
46
3c. Policy Review & Effectiveness: Essence of Four
Student Analysis PDCA
47. 47
Student A – Policy is achieved and means are also achieved
Check : Benchmark the target level of the policy i.e. best in Tata Steel, best in
Tata Steel Group, best in Steel Industry, best in world.
Act : Revisit the target of policy
Student B – Policy achieved but means are not achieved
Check 1: Check if the target levels of the means were too high and/or if the target level
of the policy was low.
Check 2: Check which important mean(s) was missed out during planning which played
a major role in achieving the policy.
Check 3: Check which external influences helped you to achieve the policy
Check 4: Check which means were not implemented and why?
Check 5: Revisit the assumptions made while formulating the policy and its means
Act : Identify the policy & means (for next cycle) and state the assumptions
behind their selection explicitly.
3c. Policy Review & Effectiveness: Check & Action on 4
Student Analysis PDCA
48. 48
Student C – Policy not achieved but means are achieved
Check 1: Check if the target level of the means were low and/or if the target level of the
policy was too high
Check 2: Whether the means were meaningful or not (check the magnitude of effect for
recognizing the meaningful means)
Check 3: Which external influences prevented you from achieving the policy
Check 4: Revisit the assumptions made while formulating the policy and its means.
Act : Identify the policy & means (for the next cycle) and state the assumptions
behind
their selection explicitly
Student D – Policy not achieved and means not achieved
Check 1: Possible conflicts with other means / policy and resolve them. E.g.
Reduce CO2 generation by investment versus ROIC
Check 2: Resource sufficiency. Allocate resources accordingly
Act : Set up a rigorous review mechanism to continually monitor the means and
activities.
3c. Policy Review & Effectiveness: Check & Action on 4
Student Analysis PDCA
49. 3c. Policy Review & Effectiveness : Assessing Level of the
Target of a Policy
49
Policy Accomplishment
46 45
51
75
18 15
10
10
428 30 30
20
21
8 10 9 5
65
0%
20%
40%
60%
80%
100%
2000 2001 2002 2003 2004
Year
D D
D D
C C C
C
C
B
B B
B
B
AAAAA
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PDCA
50. 50
•World Leadership (WL): No. 1 in the World
•World Class (WC) : Comparable to World Class Companies
•Domestic Leading (DL) : Highest in Domestic Companies
•Company Highest (CH) : Highest in Company
•Company Average( CA) Average Level of Company
•Others
High percentage of student A types policies be level of
target not aggressive.
3c. Policy Review & Effectiveness
Assessing Level of the Target of a Policy
Copyright, N.Kano, January, 2007
PDCA
51. 51
46 45
18 15
11
10
28 30
21
20
8 10 6 5
52
65
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003
Student D
Student C
Student B
Student A
World Class Domestic Leading Company Highest
36%
50%
14%
Level of policy:
1%
93%
6%
3c. Policy Review & Effectiveness
Copyright, N.Kano, January, 2007
PDCA
52. 52
%
Domestic Leading
Company Highest
World ClassLPT:
46 45
18 15
10
10
428 30 30
20
21
8 10 9 5
75
51
65
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004
48%
37%
15%
6%
75%
19%
45%
38%
17%
D
D D
D
C C C
C
C
B
B
B
B
B
AA
A
AA
The student A increased to
75% in 2004 and ratio of world
class target also increased.
3c. Policy Review & Effectiveness
Policy Management
Achievement Classification by
FSM (4 Student model) and LPT
(level of policy target) with
aggressive target setting &
realistic planning to realize
them
Copyright, N.Kano, January, 2007
PDCA
53. Policy Management
1. Overview including history of PM
2. Principle
3. Policy Management process
a. Policy setting
b. Policy Deployment
c. Policy review & effectiveness
4. Relation between PM & DM
5. Summary
6. Case Study
53
Agenda
54. 54
Relationship between policy management and daily management
Management policies
Improvement activities of priority implementation items
Policy
management Priority
problems
P
DC
A
Activities carried
out through
cooperation of
entire company
to establish and
efficiently achieve
policies
Standardization
Problems
S
DC
A
Maint.Activities
Dailymanagement
Improvementactivities
P
DC
AMinor
problems
Standardization
Improvement activities to
enhance management level Current standards
Basic
business
systems
Procedures for administrative activities
Procedures for managers’ and supervisors’ job accountabilities
All activities that
must be carried out
to achieve each
individual’s job
objectives
thoroughly and
efficiently
Copyright, N.Kano, January, 2007
4. Relation between PM & DM
55. 5555
4. Relation between PM & DM: Policies derived from DM
Sourcing
Responsibility: HR
Medical ExamCall Letter Dispatch
Telephonic InterviewScrutiny
Interview
Responsibility: Line Manager Responsibility: Line Manager
Responsibility: Chief/HeadResponsibility: HRResponsibility: HR
Progressive Steel recruited about 40 – 50 people externally till FY ‘08, but due to
their expansion projects, the recruitment increased to 153 in FY’09
Process Map for External Recruitment Process of Progressive Steel
56. 5656
Chronic Problem: To be
addressed through Policy
Management
Minor Problem: Improvement
activities to enhance
management level
4. Relation between PM & DM: Policies derived from DM
57. 5757
Chronic Problem: To be
addressed through Policy
Management
Minor Problem: Improvement
activities to enhance
management level
4. Relation between PM & DM: Policies derived from DM
59. Policy Management
1. Overview including history of PM
2. Principle
3. Policy Management process
a. Policy setting
b. Policy Deployment
c. Policy review & effectiveness
4. Relation between PM & DM
5. Summary
6. Case Study
59
Agenda
60. 6060
5. Summary: Some guidelines for effective policy management
1. Limit the number of policies: Having too many policies means management focus
is unclear. Policies should indicate only the key things that need to be focused on. It
should not be a complete list of what management wants to do. Number of policies
should be restricted to around five.
2. Resources are finite: The resources (man-hours, budget, etc.) available versus the
resources needed to meet the policy targets should be mapped at the planning
stage itself. Any failure due to unavailability of resources is a failure of planning.
3. Do not set excessively high targets: Avoid setting unnecessarily high targets.
Distinguish between mandatory targets (lower limit) and desirable target (upper
limit).
4. Human capabilities are infinite: Human capabilities never stop improving, so,
management must always pay attention to the training of their subordinates and
try to develop their capabilities.
61. 61
1. Do you measure the achievement rate of annual policies? If yes, does it increase
year by year?
2. Do you benchmark your annual policies with the best practice of competitors? How
many of your policies are world class / Industry / domestic leader?
3. How do you evaluate the alignment of achievement status of target with
implementation of strategies? What are the results?
4. Did you analyze the non-achievement of H1 policies, if any? How will you
incorporate these in H2/next year’s policies?
5. How are you ensuring the efficient use of management resources to gather the
inputs which are essential for formulating the policies and strategies?
5. Summary: How About Policy Management of Your Division/
Department?
If your company is doing well for all the above five, your company is very
successful.
62. Policy Management
1. Overview including history of PM
2. Principle
3. Policy Management process
a. Policy setting
b. Policy Deployment
c. Policy review & effectiveness
4. Relation between PM & DM
5. Summary
6. Case Study
62
Agenda
63. 63
1.a1.Inputs from External
environment, Senior
Management Direction &
internal challenges, past
learning etc
1.a2.Long term & Annual plans
including contingency
planning
1.a3.Identifying means & sub
means (C&E,N&S Checks) &
contingency planning
2.a1.Cascading to individual
departments
2.a2.Setting up monitoring and
review system
1. Implement PS
& TA projects
(TOC etc) of
individual
departments
2. Imparting
Training &
education
P
D C
A
1. Corrective
action
2. Analysis of
root cause &
CAPA
Review of
1. Implementation
plans
2. Check target
achieved or not
along with
means (4
Student
Analysis)
5. Summary: Policy Management Process
1.Policy Setting
2.Policy Deployment
Policy
Implementation
Evaluation of
Implementation
Act and feed
forward the learning
to next cycle
Why not A, B why A, J what is A, J??
Category A – American – TOP Mgmt Driven – chances of failure as does not involve all
Category J – Japanese Style egs from Tata Steel – Corus, Millenium Steel, NAT Steel , etc … integrating teams
Improvement – DM / Problem Solving 3 Mt - 5mt – 10 Mt
Breakthrough – Task Achieving - out of unprofitable business’ like cement etc
Creation – Policy Management – acquisition of Corus, Nat Steel, JV with Blue Scope, Ivory Coast, Richards Bay
Objective 1 is B or A depending on whether Mean 1.2 is important or not.
Objective 2 is D or C depending on whether Means 2.2 & 2.3 is important or not