Quality as a Differentiator for Growing the Business

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

2. is Quality easily misunderstood

3. Quality is compliance to standards • 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 Confirm / Review Compliance • 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 Enable / Measure Performance

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

5. 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

6. Quality offers intangible benefits / contributions

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

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

9. No. of offers 11 12 13 14 15 16 17 18 19 20 1 2 3 4 5 6 7 8 9 10 Lost orders Quality can also contribute in Sales • How can we increase our participation? • How do we reach our customers? • 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

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

11. Quality is one of the top buying criteria

12. 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

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

14. Quality has significant contribution towards Brand

15. 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

16. 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

17. 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

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

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

20. Questions ?

21. Thank you