Fitting Quality Into Saudi Industry: The Road to Success

1. Fitting Quality IntoSaudi Industry:The Road to Success By: Dr. Tarik Al-SulimaniAdvanced Electronics Co. April 19, 2000

2. Introduction • Change in the way business is done • Competition • Product Change • Technology Impact • Information Availability and its Use

3. Background • More developing nations are advancing toward technological independence demanding for technology transfer • Change in management style • More focus on customer

4. Transition in Management Outlook Old-World Organization New-World Organization • Managers set directions, build and coach teams • Measurements and rewards related to the whole organization • Motivation related to pleasing the customer • Globalization, multinational activities • Heterogeneous multi-racial workforce working as multi-discipline teams. • Managers supervise workers closely • Measurements and rewards related to individual departments • Motivation relates to pleasing the boss • Steady customers • Homogeneous localized workforce working with respective specialties

5. Transition in Management OutlookCont’d Old-World Organization New-World Organization • Vertical-Horizontal-Geographical- External Boundaries • Moderate use of information technology • Focus on functional operations • Tending to be boundaryless • Explosion of boundless applications of IT • Focus on process

6. Changes in Corporation Explosive changes in technology Fundamental changes in how people work RE-INVENTION OF ENTERPRISE STRUCTURE

7. Increase of Competitive Pressures • Changing Technology • Fast redesign of products • Growth of high-tech countries • Growth of cheap-labor countries (China, India,..) • Increasing rate of change • Shorter windows for opportunities

8. High-Speed Enterprise FASTER PRODUCT DEVELOPMENT CompanyProductEarly 1990sNow Honda Cars 5 years 2 years Lucent Phones 2 years 6 months

9. High-Speed Enterprise FASTER PRODUCTION (from order to finished goods) CompanyProductEarly 1990sNow GE Circuit 3 Weeks 3 days breaker boxes Motorola Pagers 3 weeks 2 hours Hewlett Electronic 4 weeks 5 days Packard Testers

10. Changes in Corporation HIGH SPEED HIGH QUALITY LOW COST

11. Giants of the 21st Century • East and Southwest Asia are the world’s fastest developing regions • Japan: The most developed country in the pacific rim • South Korea now is challenging leading industrialized nations with export of consumer products

12. Success of the Giants • Major emphasis on ‘EDUCATION’ • In the US 44% of Asian-Americans hold college degrees • In Japan, 94% of students stay in schools beyond the legal age • About one-third of Korean young population goes on to universities

13. Core Ideas of Quality Customer Focus Quality Continuous Improvement Use of Data for Decision-Making EmployeeEmpowerment

14. What is TQM? • Total Quality Management is performance leadership in meeting customer requirements by doing the right things right the first time.

15. The Quality Revolution • More focus on quality approaches • Deming, Juran, Crosby, and Hammer • TQM in the Gulf, including ISO 9000 • TQM and the HR functions • Establishing company’s goal, and satisfying business needs • Concentration on employee’s satisfaction

16. Pillars of the House of Total Quality • Customer satisfaction • Continuous improvement • Speaking with facts • Respect for people • Commitment

17. Conditions for Excellence for Total Quality Total Quality Requirements Customer Customer Orientation Orientation Human Resources Training Participation Motivation Excellence Product/Process Products/ Services Processes/ Procedures Information Suppliers Leadership Planning Culture Communications Accountability Management Leadership is the Foundation of Total Quality

18. HR’S New Role • Traditionally, HR undertakes training and developing employees to be managers/leaders in their respective disciplines. • The new TQMized HR has to train itself become a functional leader in the organization. • HR is poised now to provide functional leadership in attaining quality performance by the organization in delivering goods & services.

19. TQM and HR • Development of human resources in the Gulf Organization • The need for a more pro-active HR function • TQMizing the HR function • Bringing quality for continuous improvements in HR activities • Integrating TQM with HR and making HR responsible for all TQM activities

20. TQM & HRM, A Natural Partnership • Compatible or common aspects for partnership between TQM and HRM are: • Creating corporate culture • Training and development • Company policies and functional procedures • Attainment of quality through personal • Continuous improvement in the company's products, processes, procedures and services • Customer satisfaction through employee satisfaction.

21. What does a company looksfor in its employees? • Emphasis on: • Team Player - Leadership Qualities • Strong Communication - Result Oriented • Take Ownership in Job • Principles and Values • To Act with Integrity - To be Fair • To be Socially Responsible - To have fun • Employee must have at least a Masters' Degree in Business Administration with a minimum of 10 years experience.

22. The Industrial Blast in Saudi Arabia • Tremendous focus on industrialization • Dependence on foreign expertise • Private sector is still saturated with non-Saudi workforce • The need for the development of the know-how

23. Industrial Scenario in KSA 1. Over 2,100 Factories; Production worth SR 30B +Export over SR 40B 2. No. of industries 2,000+; Total capital SR 120B. 1,300 industrial projects under study 350 projects implemented in 1992, joint ventures with foreign countries 3. Investment in basic industries in billions non-oil downstream industries SR 97B up to 1990 4. Chemical industries 320 factories, investment SR 60B building materials next @SR17B, absorbing 38,000 laborers (25% of total industrial labor)

24. Quality Approach • Religion as a way of life • Stimulate industrial diversification beyond oil • Develop an advanced private market economy • Focus on local industries • Focus on education

25. Failure of Quality • Lack or ignorance of objectives • No clear vision is established for the organization • gap in the management hierarchy • More focus on quick profit and less focus on services • No policies and procedures exist • No feedback on customer needs and requirements • No feedback on customer satisfaction • Cultural handicaps • Limited competition among companies • No understanding of quality (TQM or BPR)

26. Implementation of TQM • Creating a cultural base • Commitment from top management • Developing a philosophy for Quality • Training • Developing teamwork • Open lines of communications

27. Advanced Electronics Company A Successful Journey

28. AEC VISION “ It is AEC’s vision to become the regional industry leader for Total Quality Electronic Products and Services.”

29. Mission • AEC is developing a comprehensive strategy for the 21st century that defines its market • Challenging the organization to maintain an environment of continuous process improvement • Providing increased company focus on meeting customer requirements • Enhancing workforce knowledge and skills • Supplying high quality products and services • Creating Total Quality culture consistent with AEC style of management

30. Executive Steering Committee EXECUTIVE STEERING COMMITTEE Develops the vision and mission and identifies key customer issues; monitors metrics and sets goals/objectives for AEC • President & Chief Executive Officer • Chief Operating Officer • Chief Financial Officer • Sr. V.P., Prog. Magmt. & Contracts • V.P. R & D • V.P., TQM-HR

31. TQM Planning Council Develops the action plan for achieving goals/objectives set by the Executive Steering Committee, for continues improvement; sponsors and recognizes quality improvement achievements of teams and individuals. TQM PLANNING COUNTIL • Chief Operating Officer • V.P., Research & Development • V.P., Program Mgmt & Contracts • V.P., TQM-HR • Director, Facilities • Director, IMIS • Director, Quality Assurance • Director, Materials • Director, Contracts • Director, Operations • Director, HR

32. Total Quality Fitness Review • Yearly Evaluation • Identifies strength and weak areas in the organization. • Take action for improvement

33. Quality Improvement Teams 1. Procedures Improvement 2. Productivity Improvement 3. Vendor Payment Cycle Improvement 4. Motivation Improvement 5. SPC - reduction of defects to the assembly of Radios 6. Career Development Procedure

34. Quality Recognition • Certified to Mil-I-45208, Mil-Std-45662, Mil-Std-20000A, Mil-Std-1686 • Certified to ISO 90001 • Obtained highest quality rating from leading international companies, examples: • - Boeing: “Gold” Supplier • - Lucent Technologies: Grade “A” Supplier • - Lockheed Martin: “Star” Supplier

35. Transition to Total Quality • Is a culture change • Is a continuous process and will not occur overnight • Requires time and resources • Requires involvement, persistence and dedication from all of us

36. Are We Ready for the Change? • The world is going through fierce changes and advances in technology • We must prepare not just the resources of technology, but provide the appropriate culture of the changes • Our dependence on industry will be a challenge • The new generation must be ready for the 21st century

37. New Concepts of Education and Management • Increased knowledge of science and mathematics will be required to provide a scientific talented population • The university of the future must focus on more hands-on and practical experience • The gap between the university and the industry must be bridged • More focus on English training must be done to allow students to be more prepared for the challenges in the future

38. Conclusion • Challenges of the 21st century • Expectations of the coming generation of workers • Challenges for the Gulf organizations • Focus on quality for survival • Focus on HR leadership for TQM

39. Thank You