Review Of Business Excellence Model

Introduction:

Technology in modern times has been one of the fastest growing industries, with its impact to overall life conditions to human being. Improvement of the existing automotives, discovery of new materials and features has leaded to introduction of different machines and electronics that is being widely used in daily basis, and life would seem to be miserable without them. Turning back to centuries ago, one may ask how the predecessors have lived and learned without the smart technique, now being part of our life. But one should not forget that it is human being who has created the “luxury” of having the technique being around to serve the requirements and make the life of us easier.

Project has been assigned to review the Business Excellence model adopted by Philips Electronics, highlighting the role of the staff and management in achieving it, known as Business Excellence through Speed and Teamwork (BEST). The abovementioned matter will be reviewed in the first paragraph, being followed by an analysis of BEST as complementary to quality model in the next one. I will shed light on the success of the model and provide comparative application of the model to the case of bp Exploration (Caspian Sea) ltd., to discuss the possible outcomes in the third paragraph, followed by conclusion on the outcomes of analysis.

1 Philips Electronics: Review of Quality Management System

Background:

The corporate slogan of Philips nowadays state “… we (Philips) aim to improve the quality of people’s lives through the timely delivery of meaningful innovations delivered with the promise of “sense and simplicity”” (Annual report, 2009). The slogan has been strong attraction of the value company provide to its stakeholder as well as the process itself keeping the control of time and delivery. The commitment of the company has been displayed in the philosophy of 4 Ds:

Delight customers – through exceeding their expectation by product and services;

Deliver great results – raising the quality of provided product and services;

Develop people – continuous learning and development;

Depend on each other – work as One Philips (Annual report, 2009).

Since 1891, the foundation period, Philips Electronics has developed from producer of carbon filament lamps into a worldwide company having business in three large sectors as Healthcare, Lighting and Consumer Lifestyle (Philips, Global Web page). Over the years company has enriched its capacity by 35,000 Registered trademarks, 56,000 design rights, 48,000 patent rights, 3 incubators, 7 research laboratories spread over Europe, North America and Asia, 127 Production sites, 100 countries with sales and service outlets (Annual report, 2009).

Besides company has been active in life of communities through its Social sustainability programs devoted to reduction of energy consumption of products and facilities, greener products to protect the environment, support to dialog on climate change and energy efficiency and healthcare at the communities (Annual report, 2009; Philips, Global web page). Overall, company has shown commitment in support of economic growth, environmental protection and social equity in the areas of operation.

Established Quality System

We have already indicated the impact of the changing customer requirements and technology development on competitive environment, making organizations to adopt necessary steps and techniques to be able to fit into the real picture and be able to satisfy customers and gain business profit. One of the philosophies being adopted in organizations as an outcome of the new idea of management and instructive principle and means for continuous improvement is Total Quality Management (TQM) (Chung et al., 2008, p.369). Knights and McCabe (1999, p.198) indicate the role of TQM in pulling continuous improvement throughout the organization “being customer and process oriented”, where Dean and Bowen (1994, cited in Knights and McCabe, 1999, p.198) enrich the description by highlighting three main principles of TQM, practices and techniques, teamwork and customer focus.

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Philips Electronics, not being different to most of the market players, also has been struggling for the comfortable place “under the Sun” to be able to earn profits from the huge business being carried out. During the decade of 1990s, Philips has gone trough reorganization of business, shaping the orientation, selling out some of the assets, as well as employee cut backs to strengthen its position in the markets (Oakland, 2003, p.456). Understanding the role of quality in the life of company and its stakeholders’ management has moved up with certification of ISO 9000 for process management and application of EFQM excellence model across the organization (Oakland, 2003, p.458).

The model been worked out has been named as BEST, standing for Business Excellence through Speed and Teamwork, summarizing the value and drive for continuous improvement through the alignment of goals and strategy, improvement of business processes by “incremental steps and breakthroughs”, achieving the excellence in performance though accelerated learning linked to the development of competence and knowledge of employees from best practices both internal and external, raising capabilities within teams and departments (Oakland, 2003, p.458).

One may ask why stress has been put on speed and teamwork? The management in Philips Electronics had clear view on the importance of timely implementation of the business processes, taking the non value adding waste off, reducing the cycle time and delivering business value, as well as the efficient teamwork, through sharing the best practices and knowledge, providing support to each other being the key in competitiveness over the rivals (Oakland, 2003, p.459).

Hsu and Shen (2005, p.358) indicate the important role of people in TQM as off by “employee contribution and involvement”, understanding of “what” and “how” in implementation of TQM initiative and feedback, individuals take the responsibility on quality of their own work, hence maximizing the outcome and business excellence. People, employees of an organization present wealthy resource with skills, knowledge and experience in certain areas and organizations cannot force them to share the knowledge until favorable conditions, where each individual is willing to do so are created (Hsu and Shen, 2005, p.358). But when people are brought together and united in the teams under relevant condition and environment for teamwork, then continuous improvement towards the set up goals is easier through sharing and proper communication among team members.

The teamwork and team spirit is one of the core values that big companies, including Philips Electronics trying to achieve through knowledge management initiative, as different cultures, backgrounds, languages spoken are best eliminated in the joint healthy teams, where people have one common goal of achieving the targets put ahead.

As can be seen the BEST model adopted in Philips Electronics covers all the areas of TQM implementation starting form stakeholder satisfaction, process and strategy alignment to performance audits and actions.

2 Comparison: BEST, Excellence Model and TQM

Many researchers have concluded the existing quality systems should complement each other to bring the desired result for continuous improvement. The statement by Adebanjo (2001, p.40) as “business excellence and quality can and need to complement each other to provide organizations with the operational and business success they aspire to and which is necessary for survival in today’s market” has been shared and accepted by many. The idea has been proved throughout of many witnesses as off Wade (2000, cited in Adebanjo, 2001, p.39) state Excellence model by EFQM has the same basis principles as off TQM. Looking deep into the essence of the thought one may see the roots being similar, as off thrive for business excellence, quality of management, stakeholder satisfaction, competitiveness through better resource and process management, hence proving the point raised.

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Coming to the matter of BEST model adopted in Philips Electronics and its role in complementing the excellence model and quality system, I would like to draw attention to the main principles of BEST to verify the point.

Ho (1999, p.87) states as part of TQM initiative organizations developing corporate culture where employees are treated as the most valuable asset, grouped in teams to bring wealth of knowledge and skills and that culture helps to achieve excellence. In BEST people are being accepted as source of knowledge and skills as well to bring wealth of experience and managing quality in each of the work being carried out. Oakland (2005, p.1056) indicates that members of an organization should work together, as off cooperation among the employees is key for quality improvement.

Attention to people / teamwork within the BEST model can be compared to enablers in the excellence model and internal stake holder in TQM, as off value being provided by those. Also another point could be the emphasis given to relevant tools to be able to monitor and control the processes, and performance, identifying the gaps and addressing those within applicable framework, within BEST model. As noted by Van Schalkwyk, (1998, p.124) the performance measurement system highlights the organizational commitment to the principles of TQM evaluating different aspects of stakeholder satisfaction, company responsiveness and process efficiency. Enforcement of four step cycle PDCA (plan, do, check, act) to review the strategic and operational development; Balanced Business Scorecards (BBS) to monitor the result drivers and facilitate faster decision making; Process survey tools (PST) allow teams’ to asses the business processes and implement improvements; PBE assessment for evaluation against the EFQM excellence model to improve process enablers and results; where headquarter audit is used for peer evaluation of business management team in achievement of excellence (Oakland, 2003, p.460-62).

Considering the abovementioned facts, I would agree that BEST is complementary to the excellence model and TQM.

3 bp Exploration (Caspian Sea) ltd: Business Excellence Model

Background

bp is worldwide oil and gas company operating in Exploration, Midstream and Downstream. In Caspian basin it represented by bp Exploration (Caspian Sea) ltd, operating in ACG and SD oil and gas fields as per Production Sharing Agreement signed back in 1994 (bp Caspian, web page).

bp Exploration (Caspian Sea) ltd has hierarchical organizational structure, with adopted quality system coordinating the collaboration. Operating Management System (OMS) is the bible of quality system of the company, presenting the “BP Way”, with all the relevant ISO 9001, ISO 14000 standards and process descriptions. Above-mentioned standards provide both process and environmental safety management framework, and applicable tools and techniques been established to be able to asses the performance of the company against the standards.

Coming to the matter of people management, company has got staff handbook and Code of Conduct – summary of behavioural culture managing the relations, staff development and problem solution.

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Over the years of operating in the Caspian basin the company has established good relations with stakeholders, communities and government institutions. bp Exploration (Caspian Sea) ltd, has been keen on the continuous improvement and has gained new contracts and project in the area.

BEST and quality system of bp Exploration ltd

As stated above bp as global oil and gas company has a history of operating 100 years dated back in 1909. Throughout the period the company has established, reengineered and re structured its organization and quality standards as well to come up with existing model.

In this paragraph, BEST model by Philips Electronics and quality system by bp Exploration (Caspian Sea) ltd., will be compared to identify the advantages and disadvantages of its adoption within bp Exploration (Caspian Sea) ltd.

Speaking on advantages of the Adoption of BEST model I may indicate EFQM excellence model for self assessment, which bp Exploration (Caspian Sea) lack of. Process survey Tools being utilised in Philips at the team level are being used in the mid managerial level, causing more bureaucracy to bring up the issues on to the desk. PBE assessment can be regarded as evaluation towards the “BP Way” of accepted standards to verify the deviations and put actions to correct.

Other aspect being regarded as advantage can be the speed of decision making or process implementation, which sometimes takes longer in bp due to natural bureaucracy and internal procedures to be followed. However, this option can also be regarded as disadvantage taking the industries the companies operate the effect of wrong decisions will be far more disastrous in exploration industry, which has been witnessed in recent Gulf of Mexico incident (BBC News).

The advantages shown above from application of BEST model into the existing quality system of bp Exploration (Caspian Sea) ltd, can also be accepted as complementing factor for business excellence, model for better results and success of a company, contributing to the thought by Adebanjo (2001, p.40).

The knowledge management in bp Exploration (Caspian Sea) ltd., can be accepted as more developed than in Philips Electronics. The reason behind is oil and gas field has more specifics requirements and knowledge databases to be shared across the players with lessons learned and peer review on each of the subject area. The knowledge management provided in the industry covers all the players worldwide, which allows to capture and learn more and increases the quality of sharing. In this case the knowledge management suggested by BEST model can be considered as disadvantage.

The rest of the model aspects are almost generic or similar to the internal process and procedures employed in bp Exploration, as off scorecard utilisation and data usage, benchmarking, auditing etc., so those have been dismissed from comparison.

Conclusion

In the project we have reviewed two different quality models been adopted in Philips Electronics and bp Exploration (Caspian Sea) ltd., identified their contribution to the preposition stated by Adebanjo (2001, p.40) and compared those mutually for identification of advantages and disadvantages if adopted in oil and gas industry. Overall TQM is considered to be a framework for organizations, being customized by all the adopters to fit their specific purposes, having the key idea of customer satisfaction and continuous improvement to be kept on top.


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