Total Quality ManagementTotal: Involvement of all levels in the organizationQuality: Conformance to agreed upon requirementsManagement: Best use of available resources to achieve total

quality

TQM is the process where everyone involved within the organization working on continuous improvement in all products/services/processes along with structured methodology.

Benefits of Improved Quality

IncreasesSalesRevenueCapacityEmployee SatisfactionCustomer SatisfactionMarket ShareCompetitive EdgePersonal Time Away

DecreasesDefectsOverall CostsReturned GoodsEmployee TurnoverCustomer ComplaintsOwner & Mgmt. Stress

Cost of Quality

• WHAT IS IT ? A term widely used – and misunderstood. Refers to cost associated with poor quality product or service. • WHY IS IT IMPORTANT? Research Shows that the costs of poor quality can range from

15%-40% of business cost

Finding & correcting mistakes consumes an inordinately large portion of resources

• In India, Cadbury began its operations in 1948 by importing chocolates.

• Cadbury India operates in four categories viz. Chocolate Confectionery, Milk Food Drinks, Candy and Gum category.

• Cadbury enjoys a value market share of over 70% - the highest Cadbury brand share in the world!

• Since 1965 Cadbury has also pioneered the development of Cocoa cultivation in India

• Leading Global confectionery company with an outstanding portfolio of chocolate, gum and candy brands

• Employ around 50,000 people and have direct operations in over 60 countries

• After 60 years of existence has five company owned facilities at Thane, Pune, Gwalior, Bangalore and Himachal Pradesh

• 4 sales office – New Delhi, Mumbai, Kolkata and Chennai• The brand name 'Cadbury' is synonymous with chocolates in

India

Cadbury India operates in four categories:1.Chocolate Confectionery (Cadbury Dairy Milk, 5 Star, Perk, Éclairs and Celebrations)2.Milk Food Drinks (Bournvita)3.Candy (Halls)4.Gum category (Bubbaloo)

• Market high quality & Superior value products• Continuously improving and exceeding consumer’s expectations. • Commitment to quality and safeguard the reputation of Cadbury. • Maintain a “right first time” culture that consistently embraces quality and food safety.• Operate Audited quality management systems that continually improve the processes • Work with our supply chain and business partners to assure compliance with our quality policy and systems ensuring quality throughout our supply chain

• Worm controversy hit Cadbury in Oct 2003

• Fungus layer on portions of its chocolates

•A swarm of tiny white worms crawling out of the chocolate nuggets

•State Food Laboratory at the Public Health Institute said“ the chocolates were insect-infested and unfit for eating’’

•Food and Drugs Administration (FDA) began seizure of the chocolate not only from all outlet across the state but also from the Talegaon Plant

• FDA also ordered inspection of Stock at company’s Mumbai Plant

•Peak Season Sale and outsourcing model affected due to controversy

• The heat of negative publicity melted Cadbury's sales by 30 per cent, at a time when it sees a festive spike of 15 percent.

• Net profit in 2003 dipped 37 per cent to Rs 45.6 crore as compared to a 21 per cent increase the previous year.

• Retailer stocking and display dropped, employee morale especially that of the sales team was shaken.

• The Company had to shelve its plans of becoming a major sourcing hub for British Chocolates and beverages giant Cadbury Schweppes.

• The largest impact on sales has been seen in Mumbai, Pune and Nagpur in Maharashtra, Cochin in Kerala, Bangalore and Hyderabad.

Effects

Reasons• Aggressive marketing by Company while neglecting on

the Quality of Retailers

• Lack of efforts to Educate Retailers and ensure adequate hygienic storage conditions at retail outlets

• Poor quality in packaging of product

• Issues related to transportation of product

• No Norms in terms of Storage for Chocolates

Two Phase StrategyPhase 1: Presenting Cadbury’s view

(October-December 2003)• the agency set up a media desk to

ensure that no media query went unanswered.

• the Cadbury’s Managing Director addressed consumer concerns

• Project Vishwas (Trust)

• Editorial Outreach Program with 31 media editors across affected cities

Packaging:• New ‘purity sealed’ packaging ( Jan 2004) - investment of Rs 15

crore on imported machinery• Metallic Poly-Flow was costlier by 10-15% but Cadbury didn’t hike

the Pack Price• Investment of millions of Dollars leads to achieve a production

process in 8 weeks, that would normally take 6 months.

Two Phase Strategy

Phase 2: Packaging Change and Communication(January – March 2004)

Advertisement Weapon:• Brand Ambassador to

reinforce the credibility • Amitabh Bachchan, a

legendary Indian film star, was chosen, as he embodied the values of Cadbury as a brand

Two Phase Strategy

Phase 2: Packaging Change and Communication (January – March 2004)

• Media Conference to compare the old and new packs with an innovative comparison kit

• A video news release with packaging shots and factory shots was given to television channels

• Audio-Visual ... series of sales conferences to enthuse and reassure salespersons

• The announcement of the new pack --a testimonial advertisement on TV called ‘Sincerity’.

Two Phase Strategy

Consumers respected the brand for not skirting the issue, but acknowledging it and giving a solution to the problem .

Campaign Results and Measurement• Media Coverage

– all Media reports carried Cadbury’s point of view– 378 clips in over 11 languages covering the new packaging and its

benefits• Sales

– Sales declined drastically between week 1 to week 10 of the crisis– Within 8 weeks of introduction of new packaging and

communication sales volume reached to the pre-incident levels• Image

– Upward movement in ratings amongst consumer– Media’s positive coverage and the trade’s positive pre-disposition

played a huge part in helping in Cadbury regain its reputation

• PREVENTIONDesign Quality Progress ReviewsRequirements DocumentationQuality planningSupplier capability surveys

• INTERNAL FAILUREReworkScrapRe-inspectionDefect Tracking & ReportsRequirement Changes

• APPRAISALUnit TestingRegression TestingAutomated Test ToolsUser Interface Reviews

• EXTERNAL FAILUREProduct RecallLiability CostsHelp Desk/Warranty Claims Lost Sales/Market Share

Cost of uality

External Failure Cost of Cadbury• Sales declined by 30% during festival season as compared to

previous year• In 2002 the NPAT was Rs. 72.72 cr. but after the worm

controversy in 2003 the NPAT was Rs. 45.6 cr. which was down by 37%

• Cadbury spent additional Rs. 40 cr. on advertisement to save its brand value

• Cadbury's roped in brand ambassador Amitabh Bachchan to do some heavy duty endorsement to regain confidence of consumer which cost Cadbury Rs. 15 cr.

• Cadbury hired Advertising Agency O & M to bail them out this worm crisis

Internal Failure Cost of Cadbury

• Lost Production Potential• Loss of Morale of the Sales Staff• Attrition• Rework - Rebuild• Problem Tracking• Transportation / Storage Cost

Appraisal Cost of Cadbury

There was a lack of effort on Company's part to educate Retailers and ensure adequate hygienic storage conditions, hence the Company had to incur cost on PROJECT VISHWAS•A three-step programme involving wholesalers and retailers to build awareness about storage.•As part of Project Vishwas 300 sales people to carry out checks of over 50,000 retail outlets.•Cadbury chose the Pathatrix system which allows it to test large samples of a food product at any one time for harmful bacteria

Preventive Cost for Cadbury India

The company already had an Internationally accepted HACCP (Hazard Analysis and Critical Control Points) for food safety system.

With this controversy the company had to incur cost on •Complete overhauling of packaging and spend around Rs 15 cr on Imported machinery to improve packaging of Chocolates•Double Protection Packaging of Chocolates to counter the allegations of FDA•Various levels of Quality Checks at

Its facilities and plants. Carrying/Forwarding Warehouses and Distributor

warehouses To ensure that its products are free of infestation

Conclusion

Factors that led to Cadbury’s sweet recovery from crisis-

• Brand equity• Customer’s perceptions• Media coverage • New product introduction

“An optimist sees an opportunity in every difficulty where as a pessimist sees a difficulty in every opportunity”-Winston Churchill

Suggestion

• According to other experts Cadbury was to blame for its worm crisis.

• As PR counsel Mahnaz Curmally ,Cadbury was aware that packaging needed a change, they could have made that change voluntarily than wait for something to happen.

• Cadbury continues to lead the Indian chocolate market

with over 70 per cent market share

THANK YOU