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INDONESIA QUALITY CONVENTION Bench-marking Conference

Keynote Address

by

Ginandjar Kartasasmita Minister of State for National Development Planning/Chairman of Bappenas

Presented at “Seminar Manajemen Puncak Konvensi Mutu Indonesia” Jakarta, 4 November 1997

Distinguished guests, members of the Indonesian Quality Management Association, Quality Circle Practitioners, ladies and gentlemen:

It is a pleasure to be with you today. I appreciate the opportunity to share my thoughts about the role of quality with you.

Policymakers in Indonesia and around the world are concerned with achieving the best for their people. We often think of this as synonymous with raising productivity since higher productivity increases competitiveness and consequently production, wages and income. Government strategy is then aimed at raising this productivity through investment in infrastructure, improving the institutional base, increasing societies ability to mobilize and allocate capital, and raising the education, skills and health status of people.

Some, although a decreasing share, of these decisions are under the direct control of the government, however most are not. It takes the investments of millions of people, workers, and entrepreneurs in continuing their education, raising their skills, and improving their products and services for us as a whole to improve productivity and raise our standard of living.

To my mind it is the philosophical commitment to continuously improving “quality” that ought to form the core of these decisions, whether it be on the part of the government, businesses or individuals. For many of us it is the search for quality rather than quality itself that is important.

This commitment to a process of continuous improvement or “quality” is something governments, firms and individuals must keep in mind as they undertake investments in infrastructure and physical plant, in designing the qualitative aspects of our organizations or even individuals as they take decisions on investing in their skills and education.

I believe that the demand for products and services embodying the quality approach has been rising rapidly. One of the most obvious sources of rising demand for quality is the changing perception of consumers. For example, as we look around we can see the rapid change in Indonesian society. People’s incomes and education levels are rising rapidly, and sophistication and therefore tastes are changing. While still short of developed country standards it is also clear that consumer information on the quality of products and services is also growing rapidly. Much of this reflects the growth in information availability in Indonesia.

These processes in Indonesia are part of an even broader process of globalization. As you are aware, we have been preparing ourselves for this globalization by steadily opening up the economy to international competition and foreign investment. Current difficulties notwithstanding, this policy has been paying off. The payoff is found in increased exports and improved products on the domestic market. We now have multi-billion dollar exports in many non-traditional areas, from textiles and garments to furniture and electronics, and new

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industries are arising continuously. However, in many ways it may be the increased competition to provide quality products and services in the domestic market that is the key to future growth. At 200 million people, Indonesia is a very large market and even low estimates put the number of middle-class consumers at between 15 and 20 million already larger than many countries in the world. This is already an attractive market and will only become more so.

The combination of improved incentives for competition, rising income and education, and improved information have combined to raise the demand for higher quality goods and services across the entire world. At the same time increased trade based on these same information and transport technologies has increased the supply. In one fashion or another being competitive in trade and domestic competition is the key to success.

However, trade and commerce are not war. Improving quality, whether it be through lower cost, safety, better packaging or marketing is a good in its own right and one of the fundamental determinants of improved productivity and competitiveness. In a world without trade a focus on quality would be no less important.

However we do live in a world with rising trade and awareness between regions and nations. Therefore, it is even more imperative that we undertake investment in improved quality practices. Each of us, whether government or private sector, must look at our internal organization and practices with an eye to improving efficiency and creating an atmosphere of heightened awareness to increasing quality in our products and services. With improved information and trade there is not just a local standard anymore but rather a global standard, of world-class quality that must be met.

It is, however, not enough to reach world-class quality. Consumers, of either end-products or industrial products want assurance that quality standards have been met in production as well. This proof is often achieved by demonstrating that you have been able to meet the ISO 9000 standard. While the ISO group’s mission is to develop industrial standards that facilitate international trade I am convinced that these standards, in addition to existing and arising domestic standards, will be increasingly important in our own market as well. For example, currently more than 500 Indonesian companies up from 150 at the end 1995 have already received ISO 9000 certification and I am sure that this trend will continue. The process of achieving ISO 9000 has an added benefit of introducing increased quality awareness more generally.

There is an axiom that people move from knowledge, to attitudes, to practice. Thus increased knowledge leads to changed attitudes and improved practice. Knowledge means understanding and accepting.

Understanding and accepting are rarely theoretical constructs and this is where bench-marking is critical. We need to know what best-practice is, where it is found and how it was achieved. Only with such bench-marks we can really know where we stand in achieving quality in product and service performance and where we need to go.

Let me than return to my earlier point on the social contribution to an improved approach to quality in society. We believe that over time the market should provide rewards and punishments that direct private sector behavior. However, the goal of development, and leadership generally, is to accelerate this process when possible. Thus it is important that we carefully consider the shortcomings in existing policy to improve incentives for the private sector, and the government to invest in continuous quality improvement. Let me deal first with those policies designed to improve the environment for improved quality in the private sector.

Effectively implementing a quality focused management approach seems to me to require a sense of responsibility and commitment to improving the process of production or marketing of a product or service. This in turn requires a commitment to meeting the consumer’s demand. It is a cliche, but nevertheless true that the real consumer is often the

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person at the next desk. If we all work to improve the quality of what we are doing and pass a quality product to the next person then our overall organization will improve as well.

The pressures that arise from globalization and opening the economy will certainly continue, and carry with them pressures to improve the quality of everything we do. The Government of Indonesia will continue to open our economy in line with our commitments to AFTA, APEC and the WTO. This facilitates technology and information transfer and this will serve to provide the discipline that rewards a commitment to quality in the workplace. At the same time we will continue to work together with the private sector to provide more and improved infrastructure in telecommunications, transportation, and electricity to make these services cheaper and more dependable.

However our most important goal is to provide our manpower with more and better education. This is the key focus of the current long term plan and the most concrete measure is to make the first nine years of schooling mandatory. However, there are numerous other measures designed to improve quality all the way from primary grades to university. We are working to streamline and improve curriculum across the board and will shortly be opening university education to increased competition and English instruction.

The other important area for reform is the delivery of government services. We don’t have time to dwell extensively on this and introducing improved procedures in government is difficult in Indonesia as elsewhere in the world. However, this is another area where the concepts behind working toward quality have had an impact. Successful Indonesian companies have to be supported by the effective administration of government goods and services. To achieve this we need to accelerate efforts to de-bureaucratize the provision of services. In the middle term many government goods and services may be more effectively provided by the private sector. We need to determine carefully where this is the case and move as far in this direction as practicable. For the remainder of government services we need to work toward developing incentives that effectively reward government staff and institutions that improve public service in the widest sense.

Achieving quality requires the involvement of everyone responsible for any segment of making and presenting a product or service to the public. Everybody must be committed to achieve quality which is why we need to rapidly improve our human resource development efforts. For your part quality circles at the firm level seem to have been effective in increasing worker’s input to while raising satisfaction and productivity. This method, developed by Mr. Demming in the United States, was implemented successfully in Japan from where it spread. It has now become one of the key tools designed to raise overall corporate performance and is widely implemented around the world. A number of companies in Indonesia have implemented their own quality circles and already seen improvements in quality and productivity.

Making the pursuit of quality a way of life, is the key to raising productivity for everyone. As experienced managers and practitioners in the field of quality management I am sure that this bench marking conference, and the rest of the program on implementing and improving quality will prove useful to you in your businesses and organizations and also to us, the governments and the nation. Again I am pleased that those of you with experience in quality improving programs will share your experience and ideas with us and I wish you the best.