Middle East is a bright spot for growth in quality and process excellence methods
Middle Eastern companies poised to make leap from "pockets of excellence" to enterprise-wide deployment
Companies in the Middle East are perhaps as bullish about the prospects for Process Excellence as they are for their economies. As oil prices begin to stabilize and developed economies pull out of their prolonged slump, economic growth prospects in the Middle East are looking up, according to the IMF’s most recent predictions for the region, with GDP growth of 3.5% expected this year.
However, warns the IMF report, "weak confidence, high unemployment, low competitiveness, and in many cases, large public deficits will continue to weigh on economic prospects in the region."
One of the ways that both companies and politicians within the region are helping to move the economies away from dependence upon high oil prices and create a more diverse and competitive economy is by focusing on improving quality and efficiency.
Process improvement methods such as Total Quality Management (TQM), Statistical Process Control (SPC), Business Process Reengineering (BPR), Business Process Management (BPM), Lean, Six Sigma and perhaps a whole litany of other methodologies have long practiced by companies in North America, Europe and parts of Asia. The premise of these methodologies is that by focusing on improving processes (i.e. how you do things) you can improve quality and efficiency thereby increasing business performance and competitiveness.
That’s why it’s not surprising that increasingly, companies and politicians in the Middle East are turning to proven these process-focussed methodologies.
Dubai has been one of the leaders in this arena.
The kingdom formally committed to improving quality and efficiency in 2004 when General Sheikh Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai, and other high profile dignitaries, signed the Burj Al Arab Quality Declaration – a commitment to promote a "knowledge-based economy for sustained business performance."
Then 2006 saw the launch of the Middle East Quality Association, set up to join the ranks of other established regional quality associations (the American Society for Quality [ASQ]; European Organisation for Quality [EOQ]; Asia Pacific Quality Organisation [APQO] and Japanese Union of Scientists and Engineers [JUSE]).
"No nation has embraced Total Quality Management, e-commerce and e-government with greater enthusiasm than Dubai," prominent businessman and CEO Abdul Aziz Al Ghurair is said to have said. "Such innovations have given Dubai a competitive edge and an accelerated growth rate that few could match."
And companies in the Middle East do appear to be investing in the methods with gusto, compared to their global counterparts, according to the latest PEX Network "State of the Industry" survey (conducted globally in June 2013).
More than 50% of survey respondents from the Middle East reported that the number of people employed full time in process excellence will increase in the year ahead (globally the average was around 30%).
Chart 1: Will the number of people employed full time in process excellence increase, decrease or stay the same? (Comparison of responses from the Middle East with global results).
Additionally, nearly 30% of Middle Eastern respondents reported that the budget for process excellence at their organization was expected to increase in the year ahead, versus 22.6% of companies globally (although there was also a slightly higher percentage of Middle Eastern respondents than global respondents reporting that budgets were expected to declined (28.6% versus 23.60%).
Chart 2: What impact is the economy having on the budget for your process excellence program? (Comparison of responses from the Middle East with global results).
So what methods are they using? As elsewhere, companies may employ a range of methodologies and tools that fly under the banner of process or operational excellence. In the Middle East, Lean Six Sigma and Business Process Management were cited as the top methodologies (coming in with over 30% each).
Chart 3: Which process excellence methodologies and tools are you currently using in your organization?
Business Process Management (BPM) is described as a "holistic management approach" for continually improving and optimizing processes. It is often associated with process mapping and automation, but practitioners say that "real BPM" is about more than just automation.
Meanwhile, Lean and Six Sigma methodologies have been around since the 1980’s. Six Sigma focuses on using statistical methods to identify the root causes of variation in a process and aims to reduce this variation (thus improving consistency/quality) while Lean focuses on the concept of "continuous improvement" and employs different tools to remove "waste" (i.e. unnecessary steps or materials) from processes.
Many companies in the Middle East are now beginning to realize the true potential of Six Sigma and Lean. EQUATE Petrochemical Company, for instance, implemented Six Sigma in 2006 and said in 2011 that the method had helped it save over US$43 million through various projects.
"Since EQUATE started implementing this methodology in 2006, over 35% of EQUATE’s employees are involved in Six Sigma projects. In addition, Six Sigma has been applied across all departments at EQUATE, not only production units," EQUATE senior executive for business development Tareq Jafar was quoted as saying in ArabianOilandGas.com. http://www.arabianoilandgas.com/article-8979-six-sigma-utilisation-sees-equate-saving-43m/
Additionally, a further 23.8% of Middle Eastern survey respondents said that they plan to implement Lean Six Sigma in the year ahead.
Chart 4: Which process excellence methodologies and tools do you plan to implement in the year ahead?
But how can companies realize the real benefits of these process methodologies? For some, the answer lays in establishing a "quality culture".
A policy and strategy roundtable hosted by Hamdan Bin Mohamed University in 2011, for instance, looked at how to spread a quality culture to increase competitiveness in the Arab World.
Citing a quote from author Jeffrey Pfeffer in his Competitive Advantage Through People: Unleashing the Power of the Work Force, the whitepaper summarizing the results of the roundtable said that the quality movement is "fundamentally a way of using language and ideas to mobilize actions that are often talked about but not as frequently implemented. It provides people with a model, social support, and powerful language – and the evidence is that it works."
Perhaps that’s one reason why 19% of Middle Eastern respondents indicated that "Employee Attitude Change" was the primary measure of success of their process excellence programme – on an equal footing with cost savings (although behind improved customer satisfaction).
Globally, organizations were more likely to select cost savings, improved customer satisfaction and increased efficiency/throughput as key measures of success.
Chart 5: What is the primary measure of success for your process excellence program? (Comparison of responses from the Middle East with global results).
*Percentage shows combined results of two survey answers "Customer Satisfaction" and "Improved Customer Satisfaction [e.g. Net Promoter Score or other measure].
It also appears that many companies within the Middle East are poised to make the leap from using process excellence within a specific department towards a more global, enterprise wide focus. Approximately 50% of survey respondents report that the current scope of their programme is limited to one or more business units and only 18.8% reporting that they’ve made the leap to an enterprise-wide focus (globally 35.2% of practitioners report that their process excellence program has made that leap).
Chart 6: What is the scope of your process excellence program? (Comparison of responses from the Middle East with global results).
It’s a difficult transition to make as organizational politics, departmental silos and the complexity of managing larger process improvement projects across the business challenge the skills and ability of process practitioners. But it means fertile ground as Middle Eastern companies seek to improve their competitiveness and business performance in the years ahead.