Quality Management has been instrumental role in building the competitiveness of the developing economies of the new EU member states. By introducing measurable, international standards for improving all aspects of business performance, quality standards have provided the perfect tool for building business competence, confidence and performance. Dr. Pál Molnár, President of Hungarian National Committee for EOQ writes of four companies’ experiences.

Hungary has emerged as a European success story with growth occurring even during the recent worldwide recession. Dramatic improvements in quality at the four featured companies required a complete transformation from authoritarian to participative decision making. Social and environmental responsibility are important components of the quality efforts.

Burton-Apta

Burton-Apta’s 230 employees make refractory ceramic products and complete systems used in kilns that produce other ceramics. The company has worked to improve the operational quality of its systems and processes since the early ’70s and initiated its operative quality regulation system in 1976. The emphasis was on the connection between quality control (of production and product) and technological development.

A breakthrough occurred in 1986 when Shoji Shiba, a Japanese professor (lecturer in MIT, and author of Integrated Management Systems; Professor Shiba has gone on to play a very active role in the development of quality management in Hungary, giving his name to the national award) brought the concept of total quality management (TQM) to Hungary. Burton-Apta learned about quality concepts and tools and established a quality council.

By 1993, it had won the IIASA-Shiba Award, which is similar to the Deming Award in Japan. Another giant step in 1993 was made with ISO 9001 certification. While preparing for the registration audit, Burton-Apta formulated 26 procedures to cover its entire operation. a year later, the Hungarian government announced the European Union/EFTA PHARE Quality Award, which is based on the European Foundation for Quality Management (EFQM) business excellence model.

In 1997, assessors also honored Burton-Apta with the first Hungarian National Quality Award in the mid-sized business category. It was a European Quality Award (EQA) finalist in 1998 and was the first company from Europe’s new democracies to win the European Quality Prize in 1999. Finally, it won the European Quality Award in 2000.

In 2002, Burton-Apta became certified to ISO 9001:2000. No longer eligible for the EQA award (winners can’t reapply), Burton-Apta decided on a self-assessment exercise would keep it on the road to continual improvement. Four principles were formulated:

1. The procedures should render the management of the processes possible, and execution should be connected to the quality management system (QMS).
2. Processes should have measurable parameters and target values.
3. Target values should be set by breaking down strategic targets.
4. Achievements should be measured and evaluated regularly.

Using these principles, Burton-Apra constructed a new integrated QMS to accomplish the following:

1. The level of integration should be at the highest possible leadership level.
2. A process performance indicator system and aims should be reviewed yearly.
3. The procedures should be set up so plan-do-check-act (PDCA) theory is applied to the organization, processes, functions and operations.
4. QMS controls should be on four levels: quality handbook, procedures, directorial instructions and work instructions.
5. Comprehensive measurement should be integrated in a self-assessment exercise within the framework of the QMS.
6. The self-assessment method should produce an objective and holistic view of performance and create improvement action based on management consensus.
7. Education and training should be increased.

Continual Improvement

Self-assessments resulted in improvements in many areas of Burton-Apta’s operations, including management commitment, strategy and planning, human resources, resources and processes, customer satisfaction, employee satisfaction and social impact.

• Management commitment. Initial feedback showed insufficient evidence of management’s acting as a role model. But managers today act as role models, systematically disseminate best practices from all over Hungary and abroad and have widened training topics to cover methods such as balanced scorecards and quality function deployment.
• Strategy and planning. Initially, assessors said there was no evidence of any employee input into the business plan. After continual improvement, assessors described a well-defined planning process, with the opinion of all stakeholders considered.
• Human resources. This is the area that was the most backward. Now a career and recruitment plan includes evaluation of managers by themselves, employees and outside experts, a performance evaluation system for all employees, studies of employee empowerment, a more efficient suggestion system and an internal quality award.
• Customer satisfaction. Measurement of customer satisfaction started as a novelty, making trends difficult to recognize. But by 2000, Burton-Apta had established those trends and was able to make reliable comparisons to its competition. The result is improved customer service, production planning, and product development, quality and durability, making the organization a market leader with customer loyalty.
• Employee satisfaction. Improvements in safety, decreases in workload, improved technology, increased compensation and other employee benefits and recognition resulted from efforts in this area.
• Social impact. Burton-Apta’s influence on its surroundings exceeds that of other mid-sized enterprises in the region. Special emphasis is placed on the environment.
• Business results. One of the organization’s most important quality indicators is production loss, with the decrease in the linear trend. Another significant business results indicator shows that Burton-Apta increased its market share, despite the recent economic downturn.

NB: Burton-Apta was acquired by Imerys in 2005 and now operates under the name of Imerys Magyarorszag Tuzalloanyagyarto Kft

Herend Porcelain Manufactory

Herend Porcelain Manufacturing has been around for a long time: since 1826. It was nationalized following World War II and privatized once again in 1993.

While quality has been a concern for 176 years, a preliminary audit and SWOT (strengths, weaknesses, opportunities, threats) analysis in 1993 led to a decision to introduce a QMS based on ISO 9001:1987. Registration was achieved in 1995, but management decided to go further by developing a TQM system based on the following:

• A strong company culture as a driving force to accept change.
• A documented and certified QMS.
• Responsibility towards the Company supported by the employees as individual owners
• Commitment to profitable operations.
• Commitment of senior management to satisfying requirements and needs of both external and internal customers.
• A determination to be a regional social model.

Herend’s framework, in which improvement activities are deployed, depicts integrated quality management and is based on employee and customer satisfaction. This led to the implementation of the ISO 14001 environmental management system and the BS 8800 health and safety management system, and their integration into the existing QMS.

Herend’s integrated QMS is part of its business management system. In 2000, the quality council concluded Herend should deepen, enhance and make the management system elements more systematic by monitoring and measuring manufacturing processes. This meant all employees needed to be involved and empowered to improve such areas as professional skills, quality attitudes, environmental protection and safety, communication and problem solving skills and compliance with customer needs and expectations. Employees also needed to make continuous improvement a daily routine.

The methods used can be grouped into three categories:

1. Traditional tools: training, reports, a company newsletter, incentives, company and performance recognition.
2. Organized events: voluntary activities, including professional experience exchanges, contests and conferences.
3. Specialized approaches: exchanges of knowledge between experienced and younger craft employees and participation in art exhibitions, the 5S approach to orderliness and tidiness, and Herend’s evolving code of ethics and quality circles or teams, particularly in solving problems related to environmental, health and safety issues.

Mission, goals and monitoring
In a list of goals in Herend’s mission statement, high quality is mentioned first. Process outcomes that have the most significant effect on the basic goals have become the key manufacturing processes.

A multilevel monitoring system follows up on realization of goals stated in the mission and strategic plan. A total of 132 different indicators have been established to follow up on the goals in the data assembling and evaluation system.

The system contains the following:

• Planned and actual monitored indicator figures.
• The relationship between indicators and processes.
• The relationship between indicators and strategy.
• The characteristics and algorithm of calculating indicators.
• The period and exact time for which data are provided.
• The person responsible for providing the data.
• Formal requirements for providing data.

Data are assembled and evaluation applied to gather numerical data, while the review and assessment of approaches and process developments take place within a framework of integrated audits. Herend’s new type of internal audits goes far beyond simple certification of conformances or nonconformances to being horizontal, proactive and nonpredictive. The audits focus on:

• Assessing performance from the point of view of concerned parties.
• Determining areas to be improved in striving for excellence.
• Increasing customer satisfaction.
• Improving the effectiveness and efficiency of the organization.

Results

Herend says results prove its quality efforts are providing the desired outcomes: Failure costs have decreased faster than prevention costs. Development activity and projects have continuously increased, and Herend’s market position has strengthened. In 1996, Herend won the first IIASA-Shiba Award and the first Hungarian National Quality Award. Among its many other awards are ecology-business awards in 1999 and 2001.

Pick Meat Co.

Pick Szeged Salami and Meat Processing Co. was founded in 1869 and survived European wars, changes in political systems and nationalization to become the largest food processing company in Hungary.

Using a wide range of quality principles, tools and techniques, Pick has also won its share of awards through the years: a bronze medal at the 1900 World Expo in Paris; a certificate of merit at the 1935 World Expo in Brussels, the Hungarian National Quality Award in 1999 and recognition for excellence by the European Foundation for Quality Management in 2001 and 2002.

At Pick, good manufacturing and hygiene practices (GMP and GHP) mean well-developed plant processes, well-organized technology and detailed documentation of the processes, products and means of production. Not static regulations, GMP and GHP are a developing set of formalized rules.

Management decided to implement hazard analysis and critical control point (HACCP), quality analysis and critical control point (QACCP) and ISO 9001 at the same time, a complicated undertaking that took three years. A joint monitoring system of HACCP and QACCP seemed a rational, practical method because the two kinds of controls frequently occur during the same step or are the responsibility of the same worker. Elements of TQM, such as teams, an idea system and structured documentation of processes accessible by everyone through Pick’s intranet, were also put into practice during this time. SGS Yarsley International Certification Services registered the company’s ISO 9001 system in 1995, and the system was later improved and audited to ISO 9001:2000.

Pick uses teams—both permanent and temporary ones–extensively. A permanent team called Pick 21 is responsible for the whole TQM effort. After management became acquainted with TQM theories and tools, the use of teams began to gradually increase.

Today, everyone from the CEO to production workers participates in team activities encompassing procurement, production, sales and marketing, management systems, IT and human resources. There are also synergy teams made up of parent company and affiliate directors.

Customers and stakeholders

Most recently, Pick has made advances in gathering customer and stakeholder comments and integrating them into the systems. The plan-do-check-act (PDCA) cycle includes a company organized customer club of frequent users of Pick products to provide structured feedback.

PDCA isn’t used only for product development – however it is considered essential to business management. Pick’s house of results is built on its enablers and means not only good financial performance, but also improved market performance and good feedback from customers, consumers, employees and society.

Feedback is facilitated through surveys and pools, two-way communication, a toll-free customer service line, a three-language Internet site and feedback related to quality awards. One measure, of customer loyalty, shows 62% of Pick’s customers have been customers for more than five years. Another measure, of customer satisfaction with quality, shows significant improvement since 1997.

PICK SZEGED Co. pays special importance to, and handles as first priority, the protection of the environment and the reduction of the inconvenience associated with its operation.
Some examples show this strong commitment:

The primary task from the point of view of protecting water quality is the purification of the large amounts of meat industry wastewater containing fat. In order to increase the effectiveness of purification and to reduce the impact on the environment, a sewage pre-purifier was built and canal reconstruction was carried out in 1992-1994. It is extremely important to reduce the contaminant content of the wastewater discharged by the Company.
As a result of this investment, the fat content of the technological wastewater decreased by more than 80%. As a result of the chemical experiments and reconstruction conducted in 1997 and 1998, the company have managed to further reduce the amount of waste materials produced. Considerable decrease in the impact wastewater makes on the environment has been achieved by collecting and selling waste fat generated during fat production.

In order to preserve air cleanliness, the company has re-designed the smoke diversion system in the plant located in a densely populated area. In order to utilise the heat discharged along with the flue-gases generated in the course of energy transformation, two items of flue-gas heat utilisation equipment have been installed in two appliances, where a part of the hazardous materials contained in the flue-gases precipitates in the course of primary utilisation. In this way, the amount of discharged hazardous materials gradually decreases.

To promote noise protection, the company has started large-scale noise-reduction activities (suppression of the noise produced by cooling condensers, ventilators, and cooling aggregates).

Committed to society, the company supports foundations, cultural events, museums, conferences, healthcare, etc. Many prizes and awards emphasises this activity, from the local “Pro Urbe Prize” to international ones. As an example from the USA, PICK SZEGED Co. was granted the Crystal Crown Award at the International Festival organised in Birmingham, Alabama, US, in 2001. The award is granted to companies that -besides achieving economic success- assume responsibility for the society and re-invest a considerable share of their profit in culture and sport.

Pick’s EFQM European Quality Award feedback reports demonstrate Pick is doing the right things during its quest for continuous improvement and performance excellence.

Westel Mobile Telecommunications Co.

Founded only 10 years before, Westel Mobile Telecommunications Co. Ltd merged with T-Mobile to become the leading provider of Hungarian wireless telecommunications service, employing more than 1,700 people at its Budapest headquarters and at switching centers and national retail and service outlets. Westel can provide service in nearly the entire country.

Westel uses self-assessment to appraise the performance of the organization and its overall leadership. It started in 1994 by using the Malcolm Baldrige National Quality Award criteria and a U.S. consultant. In 1995, Westel became Hungary’s first telecom provider to achieve ISO 9001 certification.

In 1996, 25 managers participated in Westel’s first EFQM self-assessment. Criterion owners were appointed, each responsible for ensuring areas for improvement were prioritized and improvement plans developed, built into the business plan and implemented.

Also in 1996, Westel became the first organization in Hungary’s service sector to win the Hungarian National Quality Award. This was followed by the European Marshall Award for business achievement in 1998 and the Hungarian Innovation Award in 1999.

After applying for the EQA in 1999 and receiving a site visit and becoming a finalist in 2000, Westel won the prize in 2001. ISO 14000 certification came in 2001, followed by implementation of the balanced scorecard system in 2002.

After developing a vision, mission, values (including external best practices) and company culture, Westel has continuously developed its management system. Based on assessment and review, the system is focused on ensuring delivery of the vision and mission via policies, strategies and processes that deliver stakeholder satisfaction.

Processes and Customer Satisfaction

During Westel’s start-up phase, documentation of processes was minimal. But from the beginning, managers used sound process design principles, including identification of required results and inputs, design of the sequence of steps in the process and of how each step would be performed, and identification of responsibilities and in-process performance indicators.

The framework of Westel’s main processes is related to the company’s policy and strategy. All main processes break down to five to10 operating processes.

Westel operates in an industry sector with both expressed and latent customer and market needs and expectations. Latent needs, or those customers do not express because they are unaware of the possibilities, are typical in an industry with ever-changing technological advances.

Many different surveys and other methods are used to determine customer retention capability, needs, buying factors and current levels of satisfaction. Software to monitor the market is augmented by sophisticated data mining software to help evaluate and design new products and services.

The market attribute, survey and customer data is held in a data warehouse, which not only provides information on customer habits, needs and characteristics but can also be used to develop new strategies for customer retention, satisfaction improvement and optimization of company resources.

A key requirement of customers is access to help when they need it. A toll-free telephone service operates 24/7.

Society and the Environment

As is true of Hungary’s other quality award winners, Westel strives to be a role model for other companies. In fact, the company’s newest mission and vision aim for Westel to be trusted and relied on by all stakeholders. Society, which includes the general population, peer and key people, the press, authorities and regulatory bodies, is included in the list of stakeholders.

Westel meets its societal obligations through direct employment, job creation, and sponsorship of and donations to such programs as a technical university program, the Hungarian Olympic Committee, the Budapest Festival Orchestra and other performance art endeavors.

Westel impacts the environment through its towers, battery and energy use. A substantial portion of the equipment and structures of the base stations, including their batteries, can be recycled, thus reducing energy consumption. Clients are also encouraged to protect the environment by placing their batteries in special bio waste bins. The environmentally friendly base stations follow environmental requirements and those related to historical monuments.

In fact, Westel has cooperated with Hungary’s other two mobile telecom carriers to build a growing number of joint base stations.

Westel says quality has been the inspiration driving all managers and employees to exceed performance levels. But the more Westel does, the more convinced it is that there is ample room for even more improvement.

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This article first appeared in Made in Europe magazine. All rights reserved.