Total Quality Management

Total: Involvement of all levels in the organization

Quality: Conformance to agreed upon requirements
Management: 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

Decreases Increases
Defects Sales
Overall Costs Revenue
Returned Goods Capacity
Employee Turnover Employee Satisfaction
Customer Complaints Customer Satisfaction
Owner & Mgmt. Stress Market Share
Competitive Edge
Personal Time Away
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
Effects
• 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.
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 Strategy
Phase 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
Two Phase Strategy
Phase 2: Packaging Change and Communication
(January – March 2004)
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
• 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’.

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
 Cost of uality
• PREVENTION
Design Quality Progress Reviews
Requirements Documentation
Quality planning
Supplier capability surveys
• APPRAISAL
Unit Testing
Regression Testing
Automated Test Tools
User Interface Reviews

• INTERNAL FAILURE
• EXTERNAL FAILURE
Rework
Product Recall
Scrap
Liability Costs
Re-inspection
Help Desk/Warranty Claims
Defect Tracking & Reports
Lost Sales/Market Share
Requirement Changes
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