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Online Extra: The Riches of the Orient CHINA AND INDIA -- THE NEW CORPORATE MODEL Taking A Page From Toyota's Playbook Wipro and other Indian info-tech companies are boosting efficiency by emu lating the Japanese carmaker A year ago, executives of Wipro Ltd.
During a guided tour of the factory tha t produces Corollas near their headquarters in Bangalore, India, Wipro e xecs hoped to pick up fresh ideas for their businesses of developing sof tware and handling clients' back-office operations. There were plenty of lessons to learn, but for Sambuddha Deb, Wipro's chi ef quality officer, one stands out. Deb began to take a shortcut when th e safety path painted on the factory floor made a sharp turn. The Japane se manager walking behind him reached out, took his shoulders, and gentl y guided him back onto the path. Before the Toyota tour, Wipro had been struggling to get on track in back -office services. It's not only a leader in software development but also a pioneer in business-pro cess outsourcing, where it does everything for clients from running acco unting operations to processing mortgage applications. In that business, the company was respected for its low prices and dependability, but the work was too labor-intensive. Wipro wasn't doing enough to improve the way it did its clients' business. That's one reason Wipro decided to use Toyota as a model for overhauling operations. Its aim is to make business processes as simple, smooth, and replicable as the way Corollas slip off that Bangalore assembly line ev ery 53 minutes. In an unprecedented move, Wipro took on the tricky task of translating Toyota's vaunted principles for manufacturing into the r ealm of services. "What we do is apply people, technology, and processes to solve a business problem," says TK Kurien, the head of Wipro's 13, 600-person business-process outsourcing unit. Today, Wipro's paperwork processing operations in Bangalore, Pune, and Ch ennai bear an uncanny resemblance to a Toyota plant. Day and night, thou sands of eager young men and women line up at long rows of tables modele d on an assembly line. Signs hanging over each aisle describe what proce ss is being handled there -- accounts receivable, travel and entertainme nt, and so on. Team leaders such as PV Priya, who oversees medical cla ims in Bangalore, set goals with their colleagues at the beginning of ea ch shift. Just like in a Toyota factory, electronic displays mounted on the walls will shift from green to red if things bog down. RUNNING A 21ST CENTURY COMPANY This infatuation with Toyota-like efficiency now permeates India's tech-s ervices industry. The Indian companies see a kindred spirit in the Japan ese auto maker. Like them, Toyota was forced to claw its way into a glob al business with low prices and a passion for quality. Such commitment i s the key to becoming the back office for hundreds of Western companies, hastening the transfer of many thousands of jobs offshore. "If the Indi ans get this right, in addition to their low labor rates, they can becom e deadly competition," says Jeffrey K Liker, a business professor at th e University of Michigan and author of The Toyota Way, about Toyota's le an manufacturing techniques. Think of any job that can be done remotely, by computer or telephone, and you're looking at a job that can be done by an Indian. Business-process outsourcing, or BPO, includes handling clients' call centers, accountin g, human resources, and the like. Top Indian services companies don't ju st perform these jobs well. They demonstrate how a 21st century company ought to run. They have globalized workforces, super-efficient operation s, and slavish devotion to customer service. This emerging industry is helping India along the path to building a worl d-class economy. Already it supplies relatively well-paying jobs for upw ards of 300,000. A 23-year-old can make $7,000 -- enough to afford a mot orbike, or even a Corolla, to commute in style on Bangalore's jam-packed streets. CONTINUOUS IMPROVEMENT India will only get there if it has more to offer than cheap labor. So Wipro and other Indian tech leaders, inclu ding Tata Consultancy Services Ltd.
They're automating processes to skip ma nual steps and using analytical software to mine data about their client s' customers. The goal for Wipro is to become the Toyota of business services. Toyota p reaches continuous improvement, respect for employees, learning, and emb racing change. "It's the soft stuff that makes a big impact on the hard numbers," says Kurien, a cheerful 45-year-old. To embrace Toyota's methods, Kurien last year as signed teams to examine business processes, break them into discrete com ponents, and come up with streamlined services to sell to clients. Almost immediately, Kurien spotted a surprising problem -- cubicles. They 're normal for programmers but interrupted the flow for business-process employees. So he came up with the idea of positioning people side by si de at long tables and running processes up the line step by step. Wipro also adopted Toyota's kaizen system of soliciting employee suggestions f or incremental improvements, and made The Toyota Way required reading. One discovery: It took an a verage of nine minutes for employees to regain optimal performance after water and bathroom breaks. The water coolers were quickly moved closer to people's desks. The initial response to all this "was a roaring disaster," admits Kurien. Some staffers felt like cogs in a machine, and they dragged their heels . Nandini Swamynathan, 34, who runs an employee-benefits help desk, was OK with Kurien's plans. After hearing from his middle managers, Kur ien did a reboot. He set up classes to explain the concepts and show how the methods would make their lives easier. Since the program started, the group has impro ved productivity by 43% and reduced the percentage of transactions that had to be redone from 18% to 2%. On June 14 it announced the country's first round-the-clock paperless mortgage-processing service. E-OPS had just s ix employees on Day One, and they focused solely on marketing. "It's ama zing that you can run a national company with just a handful of employee s, and Wipro does the rest," says E-OPS Chief Executive Joseph Machado. Indeed, Wipro's paperwork-handling operations run with factorylike effici ency. There are two shifts -- 8:30 am to 6 pm and 6 pm to 3 am Wh en each shift starts, the teams, which are organized by process categori es, gather with their team leaders for 10 minutes to discuss the day's g oals and divide up tasks accordingly. During a recent visit by BusinessWeek to an office in Bangalore, we follo wed the journey of a single invoice through accounts payable. The first stop was the "imaging" room, where C Venkatesh fed documents into scann ers and attached electronic copies to work-flow software, which manages each step of the process. Then HV Shivaram typed data from the invoice into the accounting software program, M Rassal checked the math, Srika nth Vittal Murthy posted the charges in the general ledger, D S Varadh arajan authorized payment, and B Ravi Sekhar arranged for a check to be cut. If the process had hit a bottleneck, a digital display on the wall would have turned red. T hat would have prompted managers to swarm the center of the room, confer , and fix the problem on the spot. Wipro's employees seem sincerely excited about their jobs -- work that wo uld likely be considered sheer drudgery by US college grads. Take 28-y ear-old Priya, who has worked for Wipro for nearly seven years. She has already submitted a handful of kaizen, and is thrilled at how quickly he r bosses respond. Empowerment on the job is spilling over into her private life. She's the first woman in her family to go to coll ege, and recently told her parents that while they are free to arrange h er marriage, they must pick a man who will not interfere with her career . It's stuff that wou ld seem corny in the US Employees who submit suggestions to kaizen box es near their desks get little rewards -- pens, caps, or shirts. Every w eek, the bosses wheel out a cake for a top performer. Murthy, a 25-year-...
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