School of Business Administration, Gebze Institute of Technology, 41400 Kocaeli, Turkey
Received 24 April 2013; Revised 20 September 2013; Accepted 1 January 2014; Published 16 March 2014
Copyright © 2014 Esin Sadikoglu and Hilal Olcay. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Previous studies reported mixed and ambiguous results of the relationship between TQM practices and performances. This study investigated impacts of TQM practices on various performance measures as well as the reasons and the barriers of the TQM practices of firms in Turkey. We used a cross-sectional survey methodology in this study, and the unit of the sample was at the plant level. The sample was selected from the member firms to Turkish Quality Association and the firms located in the Kocaeli-Gebze Organized Industrial Zone. We obtained 242 usable questionnaires, with a satisfactory response rate of 48.4 percent. We conducted exploratory factor analysis and multiple regression analysis. This study has shown that different TQM practices significantly affect different performance outcomes. Results revealed that primary obstacles that the firms in Turkey face were lack of employee involvement, awareness and commitment of the employees, inappropriate firm structure, and lack of the resources. It is recommended that firms should continue implement TQM with all variables to improve performance. Firms should improve employees’ involvement/commitment/awareness to TQM, enhance firm structure, and provide resources to overcome the barriers that prevent effective implementation of TQM practices.
Total quality management (TQM) is a firm-wide management philosophy of continuously improving the quality of the products/services/processes by focusing on the customers’ needs and expectations to enhance customer satisfaction and firm performance. There are mixed results about the relationship between total quality management practices and performance [1–3]. Table 1 presents a summary of relationships between TQM practices and performance. Although most of the results of the previous studies were positive, some of the results were negative or nonsignificant [2, 3]. The reasons of the mixed results can be as follows. The previous studies used different methods, different TQM variables, and different performance measures in their research models. They were performed in different contexts such as different countries and different industries. The barriers to TQM practices might have caused to the mixed results in different studies.
Table 1: A summary of the hypotheses and the related literature showing positive relationships between TQM practices and performance.
Research with appropriate analytical methodologies and measuring tools can significantly contribute to investigating work on TQM which analyzed reasons of the relationship between TQM practices and performance. The aims of this work are finding the impact of TQM practices on various firm performances, investigating the reasons and difficulties of implementing TQM practices by firms in Turkey, and using appropriate analytical techniques and statistical analysis methods to investigate the relationship between TQM practices and firm performances. The paper is organized as follows. Section 1 explains the importance and purpose of the research. Section 2 reviews TQM practices and summarizes the results of the relationships between TQM practices and various performance measures reported by the previous studies. Section 2 also includes the proposed research model and the hypotheses related to the relationship between TQM practices and performance measures. Section 3 explains the reasons and the barriers of TQM practices. Section 4 gives the research methodology, including population and sample, the survey instrument, data collection procedures, and statistical analysis. Section 5 provides findings obtained from the data analysis, the explanatory factor analysis, tests for reliability and validity of the constructs, and the multiple regression analysis. The final Section, Section 6, presents discussion, managerial implications, future research implications, research limitations, and conclusion.
2. The Relationships between TQM Practices and Performance
2.1. Overall TQM Practices
Most of the previous studies report that overall TQM practices have positively been related to productivity and manufacturing performance [4, 5], quality performance [6–9], employee satisfaction/performance [3, 7], innovation performance [3, 9, 10], customer satisfaction/results [5, 7, 11, 12], competitive advantage [13, 14], market share , financial performance [7, 13, 16–18], and aggregate firm performance [1, 3, 11, 14, 19–23]. However, some authors have found negative or insignificant results [15, 24, 25]. Based on the literature reviewed, we propose the following hypothesis.H1:TQM practices are positively related to performance.
Leaders in a TQM system view the firm as a system; support employee development; establish a multipoint communication among the employees, managers, and customers; and use information efficiently and effectively. In addition, leaders encourage employee participation in decision-making and empower the employees. Top management commitment and participation in TQM practices are the most important factors for the success of TQM practices. Managers should demonstrate more leadership than traditional management behaviors to increase employees’ awareness of quality activities in TQM adoption and practices [26, 27].
Previous studies have found that leadership improves operational performance [28–31], inventory management performance , employee performance [29, 31], innovation performance [30, 32], social responsibility and customer results , financial performance , and overall firm performance [35–37]. Based on the literature reviewed, we propose the following hypothesis.H2:Leadership is positively related to performance.
2.3. Knowledge and Process Management
Effective knowledge management ensures that employees obtain timely reliable, consistent, accurate, and necessary data and information as they need to do their job effectively and efficiently in the firm. Only in this way, the expected benefits from TQM practices can be achieved. Process management emphasizes activities, as opposed to results, through a set of methodological and behavioral activities. It includes preventive and proactive approaches to quality management to reduce variations in the process and improve the quality of the product (cf. ). Knowledge and successful process management practices monitor data on quality to manage processes effectively. In this way, turnover rate of purchased materials and inventory can be improved. Errors or mistakes in the processes can also be figured out and corrected on time. The processes are improved by means of controlling the processes periodically and monitoring data on quality continuously. Effective knowledge and process management design minimize the negative effects on the environment. Furthermore, as the processes become prevention oriented, costs are reduced and profit of the firm increases.
Previous studies have found that knowledge, process management, and statistical control/feedback improve operational performance [8, 30, 38], inventory management performance , innovation performance [30, 32], social responsibility , customer results , competitive advantage , financial performance , and overall firm performance [35, 37, 40]. Thus, we propose the following hypothesis.H3:Knowledge and process management are positively related to performance.
TQM firms should give necessary training to all their employees to improve their proficiencies in their tasks. Effective training in management and improvement in quality bring success for the firms. Employees’ effective knowledge and learning capability will provide sustainability of quality management in the firm. Furthermore, learning organizations adapt rapidly to the changes and develop unique behavior, which distinguishes them from other firms and enables them to obtain better results. Quality does not begin in one department or function; it is the responsibility of the whole firm. Training should be given to all employees based on the results of the training needs assessment [26, 27].
With effective training, employees know the industry and the structure of the firm. In addition, effective training will improve employees’ loyalty to the firm, motivation, and work performance. If employees are trained on producing reliable and high quality products and/or services, their full participation in the production stage would be more fruitful. Thus, customer satisfaction will increase and customer complaints will reduce.
Some studies report that training is positively related to operational performance [1, 30], inventory management performance , employee performance [7, 41], innovation performance [30, 32], customer results [12, 30], market and financial performance , and aggregate firm performance [41, 42], while others report negative/insignificant results . Based on the literature reviewed, we propose the following hypothesis.H4:Training is positively related to performance.
2.5. Supplier Quality Management
Supply chain management in TQM implies reducing and streamlining the supplier base to facilitate managing supplier relationships , developing strategic alliances with suppliers [45, 46], working with suppliers to ensure that expectations are met , and involving suppliers early in the product development process to take advantage of their capabilities and expertise [48, 49].
Inputs from suppliers constitute the first phase of producing the products and/or services in a firm. High quality inputs provide high quality products and/or services. Therefore, the suppliers should adopt TQM and be involved in this process. Effective supply management practices enable the suppliers to adopt quality management and deliver reliable and high quality products and/or services timely.
Previous studies have found that supplier quality management positively affects operational performance [28, 30, 50], inventory management performance, innovation performance [30, 32], and overall firm performance [36, 40]. Thus, we propose the following hypothesis.H5:Supplier quality management is positively related to performance.
2.6. Customer Focus
TQM firms focus on serving the external customers. They first should know the customers’ expectations and requirements and then should offer the products/services, accordingly. By the aid of successful customer focus efforts, production can be arranged with respect to the customers’ needs, expectations, and complaints. This encourages firms to produce high quality and reliable products/services on time with increased efficiency and productivity. When customer expectations are met, their satisfaction will be increased, and the firm’s sales and the market share will increase.
Previous studies have found that customer focus positively affects operational performance [28–31, 51–53], inventory management performance , employee performance [29, 31, 51], innovation performance [30, 32, 40], customer satisfaction/results [30, 38, 51, 52], sales , and aggregate firm performance [40, 54]. Based on the literature reviewed, we suggest the following hypothesis.H6:Customer focus is positively related to performance.
2.7. Strategic Quality Planning
Strategic quality planning includes vision, mission, and values of the firms. They are formed by taking into account the quality concept. With effective strategic quality planning efforts employees are taken as an input in developing the vision, mission, strategies, and objectives. This facilitates acceptance and support of strategic quality plans by the employees. Successful strategic quality planning efforts also take into account the possible side effects of the plan to the environment prior to the production. This will manifest and improve social responsibility of the firm.
Previous studies have found that strategic quality planning is positively associated with operational performance, inventory management performance [30, 55], society results , customer results, and market performance . However, strategic quality planning is not statistically related to perceived performance in the computer industry . Thus, we propose the following hypothesis.H7:Strategic quality planning is positively related to performance.
Figure 1 shows the proposed research model of the relationship between TQM practices and performance measures including hypotheses.
Figure 1: The proposed research model of the relationship between TQM practices and performance measures.
3. Reasons of and Barriers to TQM Practices
The reason of implementing TQM practices is improving customer satisfaction, quality of products and/or services, productivity, capacity of the production line, employee performance, quality-of-work-life, market share, and competitive position. Another reason is reducing production development time, waste of inventory, work in process, cost, delivery times, employee turnover, and complaints [3, 11, 27, 40, 57]. Table 2 gives the barriers to TQM practices (cf. ).
Table 2: Barriers to TQM practices.
4. Research Methodology
4.1. Measurement Instrument
We decided on leadership, knowledge management, training, supplier quality management, customer focus, strategic quality planning, continuous improvement, employee involvement, and process management as the factors of TQM practices based on the literature review. We also included multiple performance factors, namely, operational performance, inventory management performance, employee performance, innovation performance, social responsibility, customer results, and market and financial performance, to cover all aspects of firm performance. Furthermore, the TQM index, which was developed by Sadikoglu and Zehir , was used as a composite variable of TQM practices. We adopted the items of the questionnaires of Ahire and Ravichandran , Bou-Llusar et al. , Chong and Rundus , Claver et al. , Conca et al. , Cua et al. , Das et al. , Kaynak , Prajogo and Sohal , Rahman and Bullock , Rungtusanatham et al. , Samson and Terziovski , Sila , Tari et al. , and Zu et al.  for both the TQM and performance measurements. The items of the questionnaires of Anderson et al. , De Cerio , Flynn et al. , Fuentes-Fuentes et al. , Saraph et al. , and Taveira et al.  were adopted for the TQM items, and the items of the questionnaires of Benson et al. , Kannan and Tan , and Terziovski et al.  were used for the performance measurement items. We inserted repeating items in each page of the questionnaire to figure out respondent bias and carefulness. The initial questionnaire included 51 TQM items and 29 performance items, respectively. Thirty-one items for the TQM practices and 27 items for the performance measures remained after exploratory factor analysis (EFA) and reliability analysis (appendix). The items included a five-point Likert-type scale anchored from strongly disagree to strongly agree, which indicates respondents’ disagreement or agreement with each item, respectively. Only the items of the reasons of and the barriers to TQM practices and the reasons of being ISO certified were open-ended questions.
4.2. Population and Sample
We used a cross-sectional survey methodology in this study, and the unit of the sample was at the plant level. The sample was selected from the member firms of Turkish Quality Association and the firms located in the Kocaeli-Gebze Organized Industrial Zone. The members of the Quality Association were more likely to excel in TQM practices and to have ISO certification. We sent questionnaires to 500 firms in 2010.
4.3. Data Collection Process
We refined the questionnaire based on the comments taken from the company representatives (respondents), managers, and academicians. We also revised the questionnaire after conducting a pilot study and taking feedback from the respondents to make it simple, clear, understandable, and easy-to-follow. We asked the respondents about their firm’s performance data based on the last three years’ period with respect to their major competitor in the industry. We promised confidentiality, and we did not ask for the names of the respondents to improve accuracy of responses and response rate. Furthermore, we agreed on sending the final firm profile to the firms that participated in the survey, on request, to obtain a high response rate. We administered the questionnaires with the guidelines of the follow-up stages given by Saunders et al.  in order to increase response rate. Specifically, we administered the survey as follows. First, we informed recipients about the survey and questionnaire by email, telephone, or face-to-face conversation. Second, we sent the survey with a cover letter on Monday morning, when the recipients were likely to be receptive. Finally, we sent the questionnaire to all recipients one week later to increase the response rate. We thanked the early respondents and reminded nonrespondents. We could not post a second follow-up because we did not know which firm responded to the survey. We sent two questionnaires to each firm, and we used the average of them to reduce common method bias. We obtained the responses via email, fax, or face-to-face meeting. We obtained 242 usable questionnaires, with a satisfactory response rate of 48.4 percent.
4.4. Statistical Analysis
We conducted EFA to establish factorial validity and to confirm whether or not the theorized dimensions emerge. EFA analysis showed that the factors were logic and reflected accurately what was intended to be measured. We used principle components extraction with varimax rotation to identify factors with eigenvalues of at least one in order to obtain more easily interpreted factor loadings. We performed a bivariate correlation analysis to identify the correlation of TQM factors with each other and with the measures of firm performances. We used multiple regression analysis for each performance measure to figure out the relationship between TQM practices and performance. The TQM index equals the aggregate of all TQM factors . We classified the reasons of and the barriers to TQM practices of firms in Turkey according to frequency distribution of the sample.
5.1. Sample Demographics
Table 3 presents the demographics of the sample. As clearly noticed in the table, most of the 242 firms (91.2%) were private firms; 75.5 percent of the firms were international or global firms; 74.7 percent of the firms were manufacturing firms; 53.0 percent of the firms were large firms, who had more than 250 employees. Most of the respondents were quality managers (44.0%) and middle level managers (53.9%). Most of the firms (92.2%) were ISO certified, 64 percent of the firms had a quality award, and 84 percent of the firms did not get a firm award.
Table 3: Demographic profiles of the respondents.
5.2. Results of the EFA, Reliability, Descriptive Statistics, and Correlations
We performed EFA for TQM practices and performance measures separately. After EFA and reliability analysis, the final measurement instrument included 31 TQM items and 27 performance measurement items. As clearly noticed from Tables 4 and 5, the TQM items explained 65.14 percent of the total variance, and performance measurement items explained 75.63 percent of the total variance, with the eigenvalue of more than one, respectively. Specifically, leadership included three items that explained 6.74 percent of the total variance, knowledge and process management included seven items that explained 13.22 percent of the total variance, training included five items that explained 9.72 percent of the total variance, supplier quality management included five items that explained 11.27 percent of the total variance, customer focus included six items that explained 12.29 percent of the total variance, and strategic quality planning included five items that explained 11.90 percent of the total variance. The items of continuous improvement and employee involvement were eliminated after EFA. Also, the items of knowledge management and items of process management fell into one variable named as knowledge and process management. Table 5 shows that operational performance had three items that explained 9.46 percent of the total variance, inventory management performance had two items that explained 7.42 percent of the total variance, employee performance had five items that explained 12.80 percent of the total variance, innovation performance had five items that explained 13.12 percent of the total variance, social responsibility had five items that explained 13.83 percent of the total variance, customer results had three items that explained 6.89 percent of the total variance, and market and financial performance had four items that explained 12.11 percent of the total variance. The final items of the questionnaire were given in the appendix. The factors had content validity since their items were adapted from the previous studies in the literature.
Table 4: Rotated factor matrix of the TQM practices.
Table 5: Rotated factor matrix of the firm performances.
Table 6 lists descriptive statistics, Cronbach’s alpha values, and Pearson correlations for the variables in the research model. All factor loadings were greater than 0.50 thresholds. This means that unidimensionality and construct validity of the measures were satisfied. Cronbach’s alpha values of the factors were between 0.77 and 0.90, which surpasses the 0.70 threshold. This showed that all TQM and performance scales had acceptable reliabilities.
Table 6: Descriptive statistics, Cronbach’s alpha, and bivariate correlation for the variables in the research model*.
As presented in Table 6, the mean values of TQM practices were greater than four. This means that the firms that participated in the survey, in general, have implemented TQM highly with the Lai et al.  definition. The study has found that all factors are positively correlated with each other at the significance level of . The measures have face validity because we refined the questionnaire with respect to feedback from the managers and academicians and the results of the pilot study. The bivariate correlations among the TQM factors range from 0.53 to 0.66. The correlations between the TQM practices and performance measures range from 0.23 to 0.60. The correlations among the performance measures range from 0.34 to 0.66. The measures have discriminant validity since the correlation coefficients between the TQM practices and performance measures are lower than the reliability coefficients. There is a strong criterion-related validity since the bivariate correlations of the TQM practices with performance measures are statistically significant.
Correlation coefficients values of independent variables are less than 0.8 (Table 6). This suggests that results will be close to true value, and their multicollinearity does not have an undue effect on the regression models .
5.3. Results of the Regression Analyses between TQM Practices and Performance
Table 7 shows the results of the regression analysis between TQM index and the various performance measures. All regression models are significant () and TQM index is significantly and positively related to performance. This shows that TQM practices, in general, improve firm performance.
Table 7: The results of the regression analysis between TQM index and performance measures.
Tables 7–14 present the results of the regression analysis between the TQM practices and operational performance, inventory management performance, employee performance, innovation performance, social responsibility, customer results, and market and financial performance, respectively. In all regression tables, the regression models are statistically significant (). The coefficient of multiple determination, , shows the proportion of variation of the dependent variable accounted for by the independent variables in the regression model. values of all regression models are greater than either 0.15 or 0.35 that can be interpreted as medium effect or strong effect, respectively .
Table 8: The result of the regression analysis between TQM practices and operational performance.
Table 9: The result of the regression analysis between TQM practices and inventory management performance.
Table 10: The result of the regression analysis between TQM practices and employee performance.
Table 11: The result of the regression analysis between TQM practices and innovation performance.
Table 12: The result of the regression analysis between TQM practices and social responsibility.
Table 13: The result of the regression analysis between TQM practices and customer results.
Table 14: The result of the regression analysis between TQM practices and market and financial performance.
5.4. Results of the Reasons of TQM Practices and ISO Adoption and the Barriers to TQM Practices
Table 15 shows the frequency distribution of the reasons of TQM practices of the firms. Table 16 reveals the frequency distribution of the barriers of TQM practices faced by the firms.
Table 15: Frequency distribution of the reasons of TQM practices of firms.
Table 16: Frequency distribution of the barriers of the TQM practices.
6. Discussion, Research Implications, and Conclusion
6.1. Discussion of the Analyses
The study has found that TQM index is positively related to all performance measures. TQM practices, in general, improve performance of the firm. Moreover, the study has found that different TQM practices significantly affect different outcomes. Although leadership is not significantly related to any performance measures, knowledge and process management practices are positively related to inventory management performance, innovation performance, social responsibility, and market and financial performance.
Knowledge and process management practice is the only TQM factor that directly and positively affects inventory management performance and innovation performance (Tables 9 and 11). When a firm has an effective performance measurement system, it monitors data on quality and the processes successfully, and it gets its current performance data as needed, to appropriately manage its inventory. Thus, turnover rate of purchased materials and inventory can be improved. Errors/mistakes in the processes can be figured out and corrected; processes are improved and innovativeness of the firm is achieved via controlling the processes periodically and monitoring the quality data continuously. With effective knowledge and process management practices, the firm can also introduce innovative products/services frequently and it can increase its sales and profitability. By successful monitoring of the data on quality, special cause variation in the process can be removed, and the special cause variation can be differentiated from the common cause variation. Therefore, new product or service installment or process development can be made on time. This can trigger new product/service or process development. Knowledge about the environmental impacts of the products/services or processes can be used in monitoring and improving design of the products/services or processes such as eliminating or reducing the harmful parts/components in the products or services with respect to the environment or health of the society. Designing robust processes improves total profitability of the firm.
It has been found that training is positively related to operational performance, employee performance, and customer results. Allocating firm resources to training on quality pays off as professional employees know advanced statistical techniques, concepts of quality, basic characteristics of their industry, and the structure and processes of the firm. Furthermore, treating employees as a valuable resource increases their loyalty to the firm, motivates them and makes them proud of their jobs, improves their work-related performances, decreases absenteeism, and reduces intentions to quit. Educated employees will increase quality, reliability, and timely delivery of the products/services. With effective training, employees know the industry and the structure of the firm better. Effective training on quality also increases employees’ skills to work effectively and efficiently. Furthermore, it will improve employees’ loyalty to the firm, their motivation, and work-related performances. Employees’ training on delivering high quality and reliable products and/or services reduces customer complaints.
It has been found that supplier quality management is positively related to social responsibility. A firm cannot contribute to the society effectively without the collaboration among the supply chain partners. All partners in the supply chain should comprehend the effect of their products/services on the health of the society and environment. When suppliers have quality management systems, they are evaluated with respect to quality and delivery performance and participate in quality training, process improvement, and the new product development process. The synergy among the whole supply chain will make a sense of responsibility of the society so that each partner tries to do their best to protect the environment and reduce noise and pollution. This allows the firm to carry out social responsibility projects for the society with more effective and efficient manner.
Customer focus is the only TQM variable that significantly directly increases customer results (Table 13). It has been found that customer focus is positively related to operational performance, customer results, and market and financial performance. If a firm knows the needs and expectations of the customers accurately and on time via frequent communication with and feedback from the customers, the firm can produce high quality, reliable, and timely delivered products or services. Systematic measurement of customer feedback and its use in the product/service or process improvement can increase customer satisfaction. When a firm knows the customers’ current and future needs, expectations, and complaints accurately and on time, the firm can invest in profitable areas and improve its sales, market share, and total profitability.
It has been found that strategic quality planning is positively related to employee performance and social responsibility. If the employees’ opinions are taken into consideration in developing the mission, strategy, and objectives of the firm, the employees will support them. Thus, the employees feel like they belong to the firm and work hard with a high degree of motivation to achieve companies’ objectives. As a result, their absenteeism and intention to leave the firm will be low. Society is concerned about the conservation of the environment, and it gives credit to the firms which contribute to environmental protection. If a firm develops its strategies on quality and organizational objectives by considering its possible side effects to the environment and living standards of the society, the firm can reduce or eliminate pollution and noise, protect the environment, and gain a positive image in the society.
The results suggest that firms implement TQM for the purpose of improving operational performance, enhancing customer satisfaction and portfolio, and increasing market and financial performance which are the primary reasons of TQM practices (Table 15). Results also have shown that the reasons of acquiring the ISO certification(s) or the quality/supplier award(s) of the firms are the same as the reasons of the TQM practices. Therefore, acquiring the ISO certifications contributes to successful TQM practices. ISO certification for the purpose of advertisement and marketing gimmick prevents the firms from implementing the TQM practices resulting in insignificant or negative effects on performance of the firm . In addition, certified TQM firms can get more recognition and credibility in the market than non-ISO-certified TQM firms.
As given in Table 16, the firms in Turkey face some obstacles such as employee involvement (24.7%), inadequacy of the firm structure and lack of the firm resources (18.4%), illiteracy and unawareness among the employees (15.4%), and constraints of the industry/market (11.5%). Most of the obstacles are employee-related barriers. Firms should primarily focus on change management, employee involvement, and skill development.
6.2. Research Implications
6.2.1. Managerial Implications
The positive relationship between TQM and performance measures shows the importance of each of these practices to improve sustainability. The reasons of TQM implantations and ISO certification may guide managers on how to motivate employees in these applications in order to improve firm performance. Discovering the barriers to TQM can be used for the firms who are in the planning or early stages of TQM practices to improve awareness and understanding of its principles. They can also be used for the firms who have already used TQM for some time to assess the progress and to improve their organizations .
6.2.2. Future Research Implications
Continuous improvement and employee involvement are the major tenets of TQM practices. These factors can be included in future studies. Insignificant relationship between leadership and performance can indicate existence of indirect relationship or any other relationship that is nonlinear. Insignificant relationship between some TQM variables and performance may imply mediational relationship among TQM practices. There may also be some mediational relationships among various performance measures. Mediational or indirect relationships among TQM practices and multiple performance measures can be investigated. The relationship between TQM practices and the various performance measures can be investigated in other countries and industries. Enterprise resource planning, ISO certification, firm age, and firm size can also be included as moderating variables in future studies. The reasons of and the barriers to TQM practices and the reasons of having ISO certification may be different in other countries and industries so that a comparative study can be conducted to investigate these parameters.
6.2.3. Research Limitations
The study used subjective measures of performance which may not give accurate information to test the hypotheses. However, we compared the firms in different industries by using subjective measurements. Furthermore, the study asked for perceived data about actual TQM practices and performance measures, but the respondents might have given desired data, which made their firms look good. About 7 percent of the respondents were nonmanagers, who might not understand and answer the questions accurately. In addition, the firms were the members of Quality Association and/or located in the Marmara Region. This would raise concerns about generalizability, reliability, and validity of the study. On the other hand, we did not ask for the names of the firms and respondents which caused which firms belong to which sector. Anonymity of the firm and respondent in the survey may improve accuracy and completeness of the responses. We used average of two responses for each firm to reduce common method variance. Also, none of the repeating items in the questionnaire of the responses were different than . Because the model exceeded the required threshold values, common method bias would be expected not to cause a serious problem in data evaluation.
TQM is a holistic and ethical approach of the firms to continuously improve their products/services or processes involving all stakeholders in order to satisfy their customers and to improve performance and sustainability. The results give that overall TQM practices improve all performance measures. Leadership does not affect performance. This is supported by the results of Choi and Eboch  and Kannan and Tan . Knowledge and process management practices improve inventory management performance, innovation performance, social responsibility, and market and financial performance. Successful training improves operational performance, employee performance, and customer results. It has been found that successful supplier quality management enhances social responsibility. Effective customer focus efforts increase operational performance, customer results, and market and financial performance. Effective strategic quality planning efforts improve employee performance and social responsibility of the firm.
It can be concluded that TQM practices improve various performance measures in the firms. All aspects of TQM practices should be effectively managed in a firm because each factor in TQM practices improves different aspects of firm performance. The synergy among the TQM factors brings about exceptional or crucial improvements in the firm performances. Firms should improve employee involvement/skill and firm structure and allocate sufficient resources to implement TQM successfully.
A. Measurement Scales, Survey Items, and Their Sources
Only the items that remained after the reliability tests and EFA are given in the appendix. The sources of each item in the questionnaire are given in the parenthesis at the end of the related item.
A.1. Total Quality Management
Organizational top management (senior executives and supervisors) views improvement in quality as a way to increase profits [65, 70].
Organizational top management has objectives for quality performance [37, 58, 70].
Organizational top management is evaluated for quality performance [37, 58, 63, 65, 68, 70].
A.1.2. Knowledge Management
Our firm has an effective performance measurement system to track overall organizational performance [24, 37].
Quality data (error rates, defect rates, scrap, defects, rework rates, cost of quality, etc.) are available [37, 58, 65, 70].
Timely firm performance data are always available [37, 43, 59, 63, 65, 68, 71].
A.1.3. Process Management
We design processes in our firm to be “mistake-proof” to minimize the changes of errors [24, 37, 42, 61, 62, 65, 67, 68, 70].
We make extensive use of statistical techniques to reduce variation in processes [24, 37, 43, 63, 65, 66, 68].
We give clear, comprehensive, and standardized documentation about work methods and process instructions to employees [24, 31, 37, 43, 59, 65, 67].
A large amount of the equipment on the shop floor is currently under statistical process control [37, 43, 63, 67, 68].
Training in advanced statistical techniques is given to the employees who need training [12, 70].
Our employees possess sufficient knowledge of the basic aspects of our sector [42, 62, 69].
Our employees understand the basic processes used to make our products/services [42, 62, 69].
Managers and supervisors participate in specialist training [12, 42, 61, 62, 70].
Resources are available for employee quality training in our firm .
A.1.5. Supplier Quality Management
Our suppliers have an effective system to ensure quality of their products and/or services [64, 65].
We emphasize quality and delivery performance rather than price in selecting suppliers [42, 58, 61–63, 65, 68, 70].
Our suppliers are involved in our quality training .
We work closely with suppliers to improve each other’s processes [24, 31, 42, 61, 62, 64, 65, 71].
Our suppliers are actively involved in our new product development process [64, 68].
A.1.6. Customer Focus
We frequently are in close contact with our customers [24, 68].
We actively and regularly seek customer inputs to identify their needs and expectations [12, 24, 31, 60, 68].
We inform customers’ current and future needs and expectations to our employees effectively [24, 31, 37, 65].
Our customers give us feedback on quality and delivery performance [37, 68].
Customer complaints are used as input to improve our processes [12, 31, 65].
We measure customer satisfaction systematically and regularly [24, 64].
A.1.7. Strategic Quality Planning
We have a mission statement which has been communicated throughout the firm and is supported by our employees [24, 31].
We develop and implement our strategies and plans based on data concerning customers’ requirements and the firm’s capabilities [42, 62].
The management communicates its strategy and objectives to the staff [42, 61, 62].
Customers’ needs are taken into account when establishing objectives .
Our quality strategies affect all organizational areas and managerial activities .
A.2.1. Operational Performance
Quality of our products/services is high [50, 60, 63, 65].
Reliability of our products/services is high [24, 58, 79].
We deliver our products/services on time to customers [31, 63–65, 79].
A.2.2. Inventory Management Performance
Purchase material turnover is high in our firm [1, 80].
Total inventory turnover is high in our firm [1, 80].
A.2.3. Employee Performance
Our employees’ organizational commitment is high .
Our employees’ job performance is high .
Our employees’ absenteeism is low [59, 65].
Our employees’ morale is high [31, 60, 64].
Our employees’ turnover rate is low [59, 65].
A.2.4. Innovation Performance
The number of successful new product/service introductions of our firm is high [24, 60, 65].
The use of latest technological innovations in our new product is high .
The technological competitiveness of our firm is high .
The speed of new product development of our firm is high .
The number of our new products that are first-to-market is high .
A.2.5. Social Responsibility
Protection of environment in our firm has developed [42, 59, 61].
Noise levels caused by our firm have decreased .
Pollution levels caused by our firm have decreased .
Our firm has a positive impact on society .
Our firm is actively involved in the community [42, 61].
A.2.6. Customer Results
Customer satisfaction has improved [12, 31, 37, 42, 43, 59, 61, 62, 64, 72].
Customer retention has improved [12, 65].
Customer complaints have decreased .
A.2.7. Market and Financial Performance
Return on assets of our firm has increased [1, 12, 37, 50, 65, 80].
Market share of our firm has improved [1, 12, 37, 59, 65, 80].
Profits of our firm have grown [1, 37, 42, 59, 61, 62, 65, 80].
Sales of our firm have grown [1, 37, 59, 80].
Conflict of Interests
The authors declare that there is no conflict of interests regarding the publication of this paper.
During the recent years the world of business has changed vastly. We the people of different walks of life cannot be able to imagine that what is going to be the future picture if this change continues rapidly like this speed. Today there are very much competition in-between them and for that reason each and every business organization are trying to offer competitively better facilities for their customers better than the competitors.
We have learn much about the Introduction to Cost and Managerial Accounting. But don’t know how they are applied in the real lives. To find this out i.e. how they are applied in the real lives we were given this project. We tried our best to fetch all the possible information and include them in a relevant manner.
Management systems are usually implemented in response to current conditions. Such systems and the terms to describe them change with time and use in new contexts. Much of the current management literature, in education and other industries, focuses on systems that can be described under the umbrella term, Total Quality Management, or TQM. TQM contains a mix of original ideas and those with historical antecedents. The following is a brief overview of TQM and how it is being applied in community colleges.
TQM is a management system- a philosophy, set of tools, and organizational models. It is known by names other than Total Quality Management, including: the Deming Management Method; in the United States Total Quality Improvement and Total Quality Commitment; in Japan- Total Quality Control, Company- Wide Quality Control, and kaizen, which in Japanese means gradual, unending improvement, doing little things better, setting and achieving ever higher standards.
The components of TQM are a blend of ideas developed by three major theorists. W. Edwards Deming applied statistical thinking to the control of variation of work processes. He is best known for his fourteen points. J. M. Juran added insight into managing for quality and describing the quality trilogy: quality planning, quality control, and quality improvement. Philip B. Crosby developed ways to motivate and organize for quality. His less technical approach is based on the ideas of “zero defects” and “conformance to requirements”. Most quality improvement programs follow the ideas of one or more of these theorists.
01.02 Historical Review
The history of quality control is undoubtedly as old as industry itself. During the Middle Ages, quality was to a large extent controlled by the long periods of training required by the guilds. This training instilled pride in workers for quality of a product.
The concept of specialization of labor was introduced during the Industrial Revolution. As a result, a worker no longer made the entire product, only a portion. This change brought about a decline in workmanship. Because most products manufactured during that early period were not complicated, quality was not greatly affected. In fact, because productivity improved there was a decrease in cost, which resulted in lower customer expectations. As products became more complicated and jobs more specialized, it became necessary to inspect products after manufacture.
In 1924, W. A. Shewhart of Bell Telephone Laboratories developed a statistical chart for the control of product variables. This chart is considered to be the beginning of statistical quality control.
In 1950, W. Edwards Deming, who learned statistical quality control from Shewhart, gave a series of lectures on statistical methods to Japanese engineers and on quality responsibility to the CEOs of the largest organizations in Japan. Joseph M. Juran made his first trip to Japan in 1954 and further emphasized management’s responsibility to achieve quality. Using these concepts the Japanese set the quality standards for the rest of the world to follow.
In 1960, the first quality control circles were formed for the purpose of quality improvement. Simple statistical techniques were learned and applied by Japanese workers.
Emphasis on quality continued in the auto industry in the 1990s when the Saturn automobile ranked first in customer satisfaction (1996). In addition, ISO 9000 became the worldwide model for a quality management system. ISO 14000 was approved as the worldwide model for environmental management systems.
Total Quality Management
02.01 Total Quality Management (TQM) defined
Total Quality Management (TQM) is an enhancement to the traditional way of doing business. It is a proven technique to guarantee survival in world‑class competition. Only by changing the actions of management will the culture and actions of an entire organization be transformed. TQM is for the most part common sense. Analyzing the three words, we have
Total ‑ Made up of the whole
Quality‑ Degree of excellence a product or service provides.
Management‑ Act, art, or manner of handling, controlling, directing, etc
Therefore, TQM is the art of managing the whole to achieve excellence. The Golden Rule is a simple but effective way to explain it: Do unto others as you would have them do unto you.
TQM is defined as both a philosophy and a set of guiding principles that represent the foundation of a continuously improving organization. It is the application of quantitative methods and human resources to improve all the processes within an organization and exceed customer needs now and in the future. TQM integrates fundamental management techniques, existing improvement efforts, and technical tools under a disciplined approach.
02.02 TQM; Basic Concepts
While there are significant differences among the theorists and their approaches to implementation, they share basic concepts that are the foundation of TQM.
02.02.01 Continuous Improvement of Quality. Fundamental to all TQM systems is improving the quality of the products and services provided by an organization. Such quality improvement results in greater productivity and enhances the ability of an organization to remain vital, employ people, and serve customers. A focus on continuous quality improvement helps an organization do things right.
02.02.02 Central Focus on the Customer. Also central to all TQM is a focus on the customer, the internal and external recipients of an organization’s products. Their needs and desires define quality for the producer whose job it is to meet or exceed the customer’s needs and expectations. A focus on customers helps an organization to do the right things.
02.02.03 Systematic Improvement of Operations. All work occurs in processes that begin and end somewhere. These work processes account for 80- 85 percent of the quality of work and productivity of employees. Management is responsible for systems within an organization; therefore, managers, not employees, must shoulder blame when something goes wrong with the system.
TQM calls for studying work processes quantitatively, using individuals or teams, to find places that breakdowns or unnecessary complexities occur in processes, and then to identify solutions that prevent them in the future. Study of work processes helps to reduce costs while ensuring that quality is built into a service or product since quality cannot be inspected into it at the end of the processes.
02.02.04 Open Work Environments. Continuous quality improvement requires an atmosphere for innovation where suggestions for improvement are solicited and respected and where supervisors and managers are open to disagreement, conflict, and challenge. Activities for the improvement of work processes, especially when teams are involved, help to break down barriers that occur between departments or between supervisors and those supervised.
02.02.05 Long- Term Thinking. TQM is also characterized by long- term thinking which helps mold the future by understanding the consequences of current actions. Such thinking requires decision making that is based on data, both hard and soft, and related to real problems, not symptoms. It requires time. It shies away from quick fixes arrived at by discussion and intuition. Long- term thinking works best in organizations where managers plan to stay, and thus have a stake in the consequences of their decisions.
02.02.06 Development of Human Resources. Organizations that follow TQM principles are organized to help people do their jobs; they are seriously committed to employee learning and development. Such development begins with a thorough orientation to the organization, including its mission, values, and information about where the job fits into the organization. It involves educating people to perform to the quality standards of a specific job before requiring them to work independently.
TQM expects managers to respect the ability of well trained employees to know the work they do better than anyone, and therefore, to be the best at improving it. Human resource development includes providing the training to learn the communication, quantitative, and team- participation skills required in an open, quality improvement work environment. Development programs provide extensive education to help individuals keep up- to- date on their jobs and to prepare themselves for new responsibilities.
02.02.07 Management Responsibility for TQM Leadership. Managers need to lead the transformation of the organization to the new culture of continuous quality improvement. They must accept personal responsibility for continuous quality improvement and be dedicated to empowering others in the organization to accept personal responsibility for it, too. This approach taps the collective genius of the organization to identify and solve problems. The leader’s focus is on policy, structure, and systems to sustain continuous quality improvement. Within this context, quality is the first among equals of the organization’s functions. Quality is at the top of the agenda for every meeting, every communication. The leader’s goal is to help people, things, and machines do a better job; the leader’s role is that of facilitator, catalyst, and coach.
As previously stated, TQM requires a cultural change. Table I ‑I compares the previous state with the TQM state for typical quality elements. This change is substantial and will not be accomplished in a short period of time. Small organizations will be able to make the transformation much faster than large organizations.
02.03 New and Old Cultures
|Quality Element||Previous State||TQM|
|Priorities||Second to service and cost||First among equals of service and cost|
|Procurement||Price||Life‑cycle costs, partnership|
|Manager’s Role||Plan, assign, control and enforce||Delegate, coach, facilitate and mentor|
An organization will not begin the transformation to TQM until it is aware that the quality of the product or service must be improved. Awareness comes about when an organization loses market share or realizes that quality and productivity go hand‑in‑hand. It also occurs if TQM is mandated by the customer or if management realizes that TQM is a better way to run a business and compete in domestic and world markets.
Automation and other productivity enhancements might not help a corporation if it is unable to market its product or service because the quality is poor. The Japanese learned this fact from practical experience. Prior to World War 11, they could sell their products only at ridiculously low prices, and even then it was difficult to secure repeat sales. Until recently, corporations have not recognized the importance of quality. However, a new attitude has emerged‑‑quality first among the equals of cost and service. To sum it up, the customer wants value.
02.05 Implementing Total Quality Management Concepts
Since World War 11, the Japanese have been very successful using the American ideas for total quality improvement they learned from Deming and Juran. In the late 1970s Americans became interested in the success of Japanese firms and discovered that their management processes were the cornerstone of that success. Some American companies adopted TQM and applied it successfully, notably Ford Motor Company, Hewlett Packard, Campbell Soup Company, and the Paul Revere Insurance Company. Others were less successful, largely it seems, because they were unable to accomplish the cultural and organizational changes required to implement TQM principles.
The TQM implementation process begins with senior management and, most important, the CEO’s commitment. The importance of the senior management role cannot be overstated. Leadership is essential during every phase of the implementation process and particularly at the start. In fact, indifference and lack of involvement by senior management are frequently cited as the principal reasons for the failure of quality improvement efforts. Delegation and rhetoric are insufficient involvement is required.
Senior management needs to be educated in the TQM concepts. In addition to formal education, managers should visit successful TQM organizations, read selected articles and books, and attend seminars and conferences. The next step is for senior management to develop an implementation plan.
Timing of the implementation process can be very important. Is the organization ready to embark on the total quality journey? There may be some foreseeable problems, such as a reorganization, change in senior management personnel, interpersonal conflicts, a current crisis, or a time consuming activity. These problems may postpone implementation to a more favorable time.
The next step is the formation of the quality council initiation of these duties is a substantial part of the implementation of TOM. The development of core values, a vision statement, a mission statement, and a quality policy statement, with input from all personnel, should be completed first.
The active involvement of middle managers and first line supervisors is essential to the success of the TQM effort. They are accountable for achieving many of the organization’s performance goals and objectives, and they form enduring links in the communication chain from senior management to the front line workers. Without middle management’s early and active support, the TQM effort could fail. Senior management needs to ensure that managers at all levels have an opportunity, as soon as possible, to develop ownership in the TQM effort and a chance to acquire the insight and skills necessary to become leaders. One way to accomplish this concept is to have a retreat. The retreat will focus on TQM training, leadership skills, and active involvement in the development of the organization’s statements.
If there is a union, there should be early discussions with the representatives on TQM. Managers should involve union leaders by sheling with them implementation plans for TQM. As the quality effort progresses, managers and union leaders should work together on quality improvement activities.
At this stage of the implementation process, it is important to communicate TQM to the entire organization. Communication is important throughout the implementation stage. Communication is necessary to create TQM awareness interest, desire, and action. Everyone needs to be trained in quality awareness and problem solving. This training is conducted when the employee is placed on a project team or the work group is ready for the training.
Customer, employee, and supplier surveys must be conducted to benchmark the attitudes of these three stakeholders. Information from these surveys provides ideas for quality improvement projects. The quality council determines the quality improvement projects. In addition the council establishes the project teams and work groups and monitors their progress. The organization has to be patient and not rush the teams for solutions that don’t eliminate the root causes. There is often a tendency to rush the implementation process. TECSTAR, a small business, was able to achieve savings of more than $3 million the first year of its TQM program. On the other hand, Karlee, a Malcolm Baldrige
Implementation of TQM is described in the next chapter, on leadership. This section gives information concerning the obstacles associated with implementation.
Many organizations, especially small ones with a niche, are comfortable with their current state. They are satisfied with the amount of work being performed, the profits realized, and the perception that the customers are satisfied. Organizations with this culture will see little need for TQM until they begin to lose market share.
Once an organization embarks on TQM, there will be obstacles to its successful implementation. The first eight most common were determined by Robert J. Masters after an extensive literature search and the last obstacle added by the authors They are given below.
- Lack of Management Commitment
- Inability to Change Organizational Culture
- improper Planning
- Lack of Continuous Training and Education
- Incompatible Organizational Structure and Isolated Individuals And Departments
- Ineffective Measurement Techniques and Lack Of Access
- Paying Inadequate Attention To Internal and External Customers
- Inadequate Use of Empowerment Arid Teamwork
- Failure to Continually Improve
02.07 Benefits of TQM
According to a survey of manufacturing firms in Georgia, the benefits of TQM are improved quality, employee participation, teamwork, working relationships, customer satisfaction, employee satisfaction, productivity, communication, profitability, and market share.
TQM is a good investment as shown by a ten‑year study by Hendricks and Singhai. They showed that there is a strong link between TQM and financial performance. The researchers selected a group of 600 publicly traded organizations that had won awards for effectively implementing TQM. They then selected a control group similar in size and industry to the award winners. Performance of both groups was compared during the five years prior to the award and five years after winning the award. No difference was shown between the two groups prior to the award. However, as shown below the award group far outstripped the control group during the five‑year period after the award.
|Growth in Operating Income||43%||91%|
|Increase in Sales||32%||69%|
|Increase in Total Assets||37%||79%|
The study also showed that stock price performance for the award winners was 114% while the S&P was 80%. In addition, the study showed that small organizations out performed larger organizations. Recent studies have shown that only about 30% of manufacturing organizations have successfully implemented TQM.
Some Related Topics and Explanations
There is no universal definition of leadership and indeed many books have been devoted to the tonic of leadership). In his book Leadership, James MacGregor Bums describes a leader as one who instills purposes, not one who controls by brute force. A leader strengthens and inspires the followers to accomplish shared goals. Leaders shape the organization’s values, promote the organization’s values, protect the organization’s values and exemplify the organization’s values. Ultimately, Bums says, “Leaders and followers raise one another to higher levels of motivation and morality … leadership becomes moral in that it raises the level of human conduct and ethical aspiration of both the leader and the led, and thus has a transforming effect on both.”‘ Similarly, Daimler Chrysler’s CEO Bob Eaton defines a leader as “. . . someone who can take a group of people to a place they don’t think they can go.” “Leadership is we, not me; mission, not my show; vision, not division; and community, not domicile.” As the above illustrates, leadership is difficult to define in anything other than lofty words.
The Malcolm Baldrige National Quality Award has a more grounded definition of leadership in its core values. As stated in its core values and concepts, visionary leadership is-
“An organization’s senior leaders should set directions and create a customer focus, clear and visible values, and high expectations. The directions, values, and expectations should balance the needs of all your stakeholders. Your leaders should ensure the creation of strategies, systems, and methods for achieving excellence, stimulating innovation, and building knowledge and capabilities. The values and strategies should help guide all activities and decisions of your organization. Senior leaders should inspire and motivate your entire workforce and should encourage all employees to contribute, to develop and learn, to be innovative, and to be creative,
Senior leaders should serve as role models through their ethical behavior and their personal involvement in planning, communications, coaching, development of future leaders, review of organizational performance, and employee recognition. As role models, they can reinforce values and expectations while building leadership, commitment, and initiative throughout your organization.”
Leadership can be difficult to define. However, successful quality leaders tend to have certain characteristics.
03.01.01 Leadership Concepts
In order to become successful, leadership requires an intuitive understanding of human nature the basic needs, wants, and abilities of people. To be effective, a leader under‑
- People, paradoxically, need security and independence at the same time.
- People are sensitive to external rewards and punishments and yet are also strongly self‑motivated.
- People like to hear a kind word of praise. Catch people doing something right, so you can pat them on the back.
- People can process only a few facts at a time; thus, a leader needs to keep, things simple.
- People trust their gut reaction more than statistical data.
- People distrust a leader’s rhetoric if the words are inconsistent with the leader’s actions.
03.01.02 Role of TQM Leaders
Everyone is responsible for quality, especially senior management and the CEO; however, only the latter can provide the leadership system to achieve results., For instance, in the 1980’s, General Electric’s CEO, Jack Welch, instituted leadership training courses at all levels of the organization. The General Electric training courses taught leadership approaches and models and provided the opportunity for teams to develop solutions to real business problems. Many of the solutions the teams developed were implemented. Jack Welch supported the development of a leadership system whereby quality control leaders were developed at all levels in all functions of the organization, including research, marketing, manufacturing, sales, finance, and human resources. Senior managers need to be provided with the skills to implement quality control techniques and actively participate in the quality council.
Senior management has numerous responsibilities. Senior management must practice the philosophy of Management by Wandering Around (MBWA). Management should get out of the office and visit customers, suppliers, departments within the organization, and plants within the organization. That way, managers learn what is happening with a particular customer, supplier, or project. MBWA can substantially reduce paperwork. Encourage subordinates to write only important messages that need to be part of the permanent record. For example, Kinko’s executives perform normal operating duties for two or three days at one location. This approach is an excellent technique for gaining firsthand information.
The idea is to let employees think for themselves. Senior management’s role is no longer to make the final decision, but to make sure the team’s decision is aligned with the quality statements of the organization. Push problem solving and decision making to the lowest appropriate level by delegating authority and responsibility.
Senior managers must stay informed on the topic of quality improvement by reading books and articles, attending seminars, and talking to other TQM leaders. The leader sends a strong message to subordinates when that leader asks if they have read a part ocular book or article.
Se Managers must find time to celebrate the success of their organization’s quality efforts by personally participating in award and recognition ceremonies. This activity is an excellent opportunity to reinforce the importance of the effort and to promote TQM. A phone call or handshake combined with a sincere “thank you for a job well done” is a powerful form of recognition and reward. One of the duties of the quality council is to establish or revise the recognition and reward system. In particular, senior management’s incentive compensation must include quality improvement performance. Also, provisions must be made to reward teams as well as creative individuals.
Senior managers must be visibly and actively engaged in the quality effort by sending on teams, coaching teams, and teaching seminars. They should lead by demonstrating, communicating, and reinforcing the quality statements. As a rule of thumb, they should spend about one third of their time on quality.
A very important role of senior managers is listening to internal and external customers and suppliers through visits, focus groups, and surveys. This information is translated into core values and process improvement projects.
Another very important role is communication. The objective is to create awareness of the importance of TQM and provide TQM results in an ongoing manner. The TQM message must be “sold” to personnel, for if they don’t buy it, TQM will never happen. In addition to internal efforts, there must be external activities with customers and suppliers, the media, advertising in trade magazines, and interaction with the quality community.
By following the preceding suggestions, senior managers should be able to drive fear out of the organization, break down barriers, remove system roadblocks, anticipate and minimize resistance to change, and, in general, change the culture. Only with the involvement of senior management can TQM be a success.
03.02 Customer Satisfaction
The most important asset of any organization is its customers. An organization’s success depends on how many customers it has, how much they buy, and how often they buy. Customers that are satisfied will increase in number, buy more, and buy more frequently. Satisfied customers also pay their bills promptly, which greatly improves cash flow the lifeblood of any organization.
Increasingly, manufacturing and service organizations are using customer satisfaction as the measure of quality. The importance of customer satisfaction is not only due to national competition but also due to worldwide competition.
Since customer satisfaction is hard to measure, the measurement often is not precise. As with most attitudes, there is variability among people, and often within the same person at different times. Often, due to the difficulty of measuring feelings, customer satisfaction strategies are developed around clearly stated, logical customer opinions, and the emotional issues of a purchase are disregarded. This can be a costly mistake.
Customer satisfaction should not be viewed in a vacuum. For example, a customer may be satisfied with a product or service and therefore rate the product or service highly in a survey, and yet that same customer may buy another product or service. It is of little benefit to understand a customer’s views about a product or service if the customer’s views about competitors’ product or service are not understood. The value customers place on one product compared to another may be a better indicator of customer loyalty. Customer loyalty can be sustained only by maintaining a favorable comparison when compared with competitors. As mentioned before customer satisfaction is not a simple concept to understand or to measure.
03.03 Benefits of Employee Involvement
Involving employees, empowering them and bringing them into the decision making process provides the opportunity for continuous process improvement. The untapped ideas, innovations, and creative thoughts of employees can make the difference between success and failure. Competition is so fierce that it would be unwise not to use every available tool.
Employee involvement improves quality and increases productivity, because
- Employees make better decisions using their expert knowledge of the process.
- Employees are more likely to implement and support decisions they had a part in making.
- Employees are better able to spot and pinpoint areas for improvement.
- Employees are better able to take immediate corrective action.
- Employee involvement reduces labor/management friction by encouraging more effective communication and cooperation.
- Employee involvement increases morale by creating a feeling of belonging to the organization.
- Employees are better able to accept change because they control the work environment.
- Employees have an increased commitment to unit goals because they are involved.
03.04 Continuous Process Improvement
Quality based organizations should strive to achieve perfection by continuously improving the business and production processes. Of course, perfection is impossible because the race is never over; however, we must continually strive for its attainment.
Improvement is made by-
- Viewing all work as a process, whether it is associated with production or business activities.
- Making all processes effective, efficient, and adaptable.
- Anticipating changing customer needs.
- Controlling in process performance using measures such as scrap reduction, cycle time, control charts, and so forth.
- Maintaining constructive dissatisfaction with the present level of performance.
- Eliminating waste and rework wherever it occurs.
- Investigating activities that do not add value to the product or service, with the aim of eliminating those activities.
- Eliminating nonconformities in all phases of everyone’s work, even if the increment of improvement is small.
- Using benchmarking to improve competitive advantage.
- Innovating to achieve breakthroughs.
- Incorporating lessons learned into future activities.
- Using technical tools such as statistical process control (SPC), experimental design, benchmarking, quality function deployment (QFD), and so forth.
03.05 PDCA Cycle
The basic Plan Do Check Act (PDCA) cycle was first developed by Shewhart and then modified by Deming. It is an effective improvement technique.
The four steps in the cycle are exactly as stated. First, plan carefully what is to be done. Next, carry out the plan (does it). Third, study the results did the plan work as intended, or was the results different? Finally, act on the results by identifying what worked as planned and what didn’t. Using the knowledge learned, develop an improved plan and repeat the cycle. The PDSA cycle is a simple adaptation of the more elaborate problem solving method discussed in the next section.
03.06 Problem Solving Method
Process improvement achieves the greatest results when it operates within the framework of the problem solving method, In he initial stages of a program, quick results are frequently obtained because the solutions are obvious or an individual has a brilliant idea, However, in the Ion, term, a systematic approach will yield the greatest benefits ,
The problem solving method (also called the scientific method) has many variations depending, to some extent, on the use; however, they are all similar. shown is the relationship to the PDCA cycle.
The phases are integrated because each phase is dependent upon the previous phase. Continuous process improvement is the objective, and these phases are the framework to achieve that objective.
03.07 Identify the Opportunity
The objective of this phase is to identify and prioritize opportunities for improvement. It consists of three parts: identify the problem, form the team (if one is not in existence) and define the scope.
Problem identification answers the question, “What are the problems?” The answer leads to those problems that have the greatest potential for improvement and have the greatest need for solution. Problems can be identified from a variety of inputs.
03.08 Performance Measures
The final concept of Total Quality Measurement (TQM) is performance measures. One of the Malcolm Baldrige National Quality Award core values is managing by fact rather than by gut feeling. Managing an organization without performance measures is like a captain of a ship navigating without instrumentation. The ship would most likely end up traveling in circles, as would an organization. Measures play a vital part in the success or failure of an organization.
Performance measures are used to achieve one or more of the following seven objectives:
- Establish baseline measures and reveal trends.
- Determine which processes need to be improved.
- Indicate process gains and losses.
- Compare goals with actual performance.
- Provide information for individual and team evaluation.
- Provide information to make informed decisions.
- Determine the overall performance of the organization.
- Few in number
- Relevance to customer:
The quality council has the overall responsibility for the performance measures. It ensures that all the measures are integrated into a total system of measures. To develop the system, the quality council will obtain appropriate information from all of the stall holders. They will utilize the core values, goals, mission, and vision statements as well as the objectives and criteria given above. With this information, the strategic measurement system is created.
An example of a system that emphasizes percent improvement might contain the functions and metrics as given below:
- Percent reduction in cost of poor quality
- Percent reduction in nonconformities
- Percent of certified suppliers
- Percent reduction in supplier base
- Percent reduction in corrective action cycle time
- Percent increase in inventory turnover
- Percent reduction in data transactions
- Percent increase in materials shipped direct to work in process by the supplier
- Percent increase in output dollars per employee
- Percent reduction in floor space utilization
- Percent reduction in cycle time
- Percent reduction in setup time
- Percent reduction in lot/batch size
- Percent increase in number of jobs mastered per employee
- Percent of processes capable of Cp = 2.0
- Percent reduction in down time
- Percent reduction in warranty costs
- Percent reduction in design changes
- Percent increase in on time delivery
- Percent reduction in new product introduction time
- Percent increase in new product sales revenue as a percent of total sales revenue
- Percent increase in new patents granted
- Customer perception as a leader in innovation
- Percent of management time spent on or leading innovation
03.09 Quality Control Circles (QCCs)
To involve employees in productivity and efficiency improvement activities, a team-based environment must be developed in which they can participate actively in improving their process, product, or service performance. One such employee participation program is quality control circles (QCCs).
QC-circle activities are usually directed towards improvements in the workplace. They focus on such areas as-
03.09.01 Case Studies: Survey by NPC, Malaysia
A 2002 survey on quality control circles (QCCs) by the National Productivity Corporation (NPC) of Malaysia revealed that the majority of the respondents were from the manufacturing (42.0%) and service (31.0%) sectors. Most of the projects undertaken were related to members’ own workplaces, work processes, service delivery, and product development. The vast majority (95.1%) of the respondents said that QCC activities had helped reduce operational costs, with savings reported ranging from US$125.00 to US$2 million, with the median of US$50,000.
Benchmarking is a systematic method by which organizations can measure themselves against the best industry practices. It promotes superior performance by providing an organized framework through which organizations learn how the “best in class” do things, understand how these best practices differ from their own, and implement change to close the gap. The essence of benchmarking is the process of borrowing ideas and adapting them to gain competitive advantage. It is a tool for continuous improvement.
Benchmarking is an increasingly popular tool. It is used extensively by both manufacturing and service organizations, including Xerox, AT&T, Motorola, Ford, and Toyota. Benchmarking is a common element of quality standards, such as the Chrysler, Ford, and General Motors Quality System Requirements. These standards, sfiptdate that quality goals and objectives be based on competitive products and benchmarking, both inside and outside the automotive industry. The Malcolm Baldrige National Quality Award similarly requires that applicants benchmark external organizations.
Benchmarking is the systematic search for best practices, innovative ideas, and highly effective operating procedures. Benchmarking considers the experience of others and uses it. Indeed, it is the common sense proposition to learn from others what they do right and then imitate it to avoid reinventing the wheel. Benchmarking is not new and indeed has been around for a long time. In fact, in the 1800s, Francis Lowell, a New England
03.10.01 Reasons to Benchmark
Benchmarking is a tool to achieve business and competitive objectives. It is power and extremely effective when used for the right reasons and aligned with organization strategy. It is not a panacea that can replace all other quality efforts or management processes. Organizations must still decide which markets to serve and determine the strengths that will enable them to gain competitive advantage. Benchmarking is one tool to help organizations develop those strengths and reduce weaknesses.
By definition, benchmarking requires an external orientation, which is critical in a world where the competition can easily be on the other side of the globe. An external outlook greatly reduces the chance of being caught unaware by competition. Benchmarking can notify the organization if it has fallen behind the competition or failed to take advantage of important operating improvements developed elsewhere. In short, benchmarking can inspire managers (and organizations) to compete.
In contrast to the traditional method of extrapolating next year’s goal from last year’s performance, benchmarking allows goals to be set objectively, based on external information. When personnel are aware of the external information, they are usually much more motivated to attain the goals and objectives. Also, it is hard to argue that an objective is impossible when it can be shown that another organization has already achieved it.
Benchmarking is time and cost efficient because the process involves imitation and adaptation rather than pure invention. Benchmarking partners provide a working model of an improved process, which reduces some of the planning, testing, and prototyping effort. As the old saying goes, Why reinvent the wheel?
The primary weakness of benchmarking, however, is the fact that best in class performance is a moving target. For example, new technology can create quantum leap performance improvements, such as the use of electronic data interchange (EDI). Automobile makers no longer use paper to purchase parts from suppliers. A computer tracks inventory and transmits orders directly to a supplier’s computers. The supplier delivers the goods, and payment is electronically transmitted to the supplier’s bank. Wall Mart uses bar code scanners and satellite data transmission to restock its stores, often in a matter of hours. These applications of EDI save tens of thousands of worker hours and whole forests of trees, as well as helping to meet customer requirements.
For functions that are critical to the business mission, organizations must continue to innovate as well as imitate. Benchmarking enhances innovation by requiring organizations to constantly scan the external environment and to use the information obtained to improve the process. Potentially useful technological breakthroughs can be located and adopted early.
Organizations that benchmark, adapt the process to best fit their own needs and culture. Although the number of steps in the process may vary from organization to organization, the following six steps contain the core techniques.
- Decide what to benchmark.
- Uaderstand current performance
03.11 Quality Management Systems
The International Organization for Standardization (ISO) was founded in 1946 in Geneva, Switzerland, where it is still based. Its mandate is to promote the development of international standards to facilitate the exchange of goods and services worldwide. ISO is composed of more than 90 member countries. The United States representative is the American National Standards Institute (ANSI)
The ISO Technical Committee (TC) 176 developed a series of international standards for quality systems, which were first published in 1987 new standards (ISO 9000, 9001, and 9004) were intended to be advisory and were developed for use in two party contractual situations and internal auditing. However, with their adoption by the European Community (EC) and a worldwide emphasis on quality and economic competitiveness, the standards have become universally accepted.
03.12 TQM Concept in Japan
TQM, also known as Total Quality Control (TQC), is a management tool for improving total performance. TQC means organized Kaizen activities involving everyone in a company – managers and workers – in a totally systemic and integrated effort toward improving performance at every level. It is to lead to increased customer satisfaction through satisfying such corporate cross-functional goals as quality, cost, scheduling, manpower development, and new product development. In Japan, TQC activities are not limited to quality control only. Elaborate system of Kaizen strategies has been developed as management tools within the TQC approach. TQC in Kaizen is a movement aimed at improvement of managerial performance at all levels.
According to the Japan Industrial Standards, “implementing quality control effectively necessitates the cooperation of all people in the company, including top management, managers, supervisors, and workers in all areas of corporate activities such as market research and development, product planning, design, preparation for production, purchasing, vendor management, manufacturing, inspection, sales and after-sale services, as well as financial control, personnel administration, and training & education. Quality control carried out in this manner is called company-wide quality control or total quality control (TQC).” Quality control in Japan deals with quality of people. It is the fundamental concept of the Kaizen-style TQC. Building quality into its people brings a company a half-way towards producing quality products.
03.12.01 Education and Training
As a natural follow-up to the concept of building quality into people, TQC starts with education and training of managers and workers. The major aim of these awareness and training programs is to implant TQC thinking in all employees.
TQC education and training is a continuous process. Separate courses for different organizational levels are organized to reach everyone in the company.
03.12.02 Seven main feature of the TQM movement in japan
- Company-wide TQC, involving all employees, organization, hardware, and software
- Emphasis on education and training for top management, middle management and workers
- Quality control (QC) circle activities by small groups of volunteers
- TQC audits
- Application of statistical methods
- Constant revision and upgrading of standards
- Nation-wide TQC promotion
03.12.03 Areas Targeted by TQM in Japan
- Product Quality Improvement
- Quality assurance
- New product development
- Improvements in the Workplace
- Cost reduction
- Productivity improvement
- Education and training
- Organizational / systems development
- Cross-functional management
- Policy deployment
- Quality deployment
- Supply, Production, and Selling Chain
- Supply management
- Meeting production quotas
- Meeting delivery schedules
03.13 TQM Concept in Community College Administration
Community colleges, too, have adopted TQM, primarily to improve their management processes. While the number of colleges that has implemented TQM systems is not large, an increasing number are experimenting with various elements of it. They have approached implementation in a variety of ways.
Perhaps the most common model is for senior leadership to become interested in TQM, to study various applications, and then, to initiate TQM practices from the top- down. At most of these colleges, TQM is first applied to leadership team processes or related administrative functions. Incorporation of TQM principles into the curriculum and academic administration may follow administrative application.
TQM has also been introduced to community colleges by mid- level managers who have come in contact with its principles through a curriculum designed and provided by the college for local business and industry. These managers begin to introduce TQM practices within their own areas. This grassroots approach often spreads laterally before upward. Other colleges have actually become involved in TQM along with a consortium of businesses in their service area. Business and college participants learn both TQM and about the challenges they have in common. The consortium then becomes a critical link with the community, as well as a source of problem solving, support, and encouragement for TQM.
It is legitimate to question why any leader would be attracted to TQM since the model demands basic changes in established management practices. However, a rationale for experimenting with TQM is not difficult to articulate. At its best, TQM can provide a focus and structure for institutional effectiveness that includes the dimensions of quality and accountability and operationalizes them throughout the college. TQM can provide a structure for involving faculty and staff in college problem solving and decision making in ways that are meaningful to them and to the college. TQM can also provide a model for transforming a stagnant college organization to a new level of fitness.
Even more fundamental is the fact that the values espoused by TQM are the values of community colleges: commitment to quality, respect for people, focus on process, and the expectation of continuous learning.
Limitations of theStudy
The subject Introduction to Cost and Managerial Accounting is a vast one and due to the in short supply of time we could not complete many of the major portions. If we have had as much as necessary time and given apposite information, it was for sure that we could have industrial a much better report on this topic.
Actually the business organizations of Bangladesh are not stressing too much on the practice in total quality management rather they are practicing traditional management approach in their organization.
Another problem that we have to face in one of the well known organization we had to go for almost two times to fix an appointment with the manager. Finally when we met him, he was not willing to give us information not even the company profile which has nothing to maintain secrecy. At last we decided to drop the study on their organization.
This was not at all an easy project to complete. Gathering information was also a difficult task. What ever the limitations were, we made our best effort to overcome them and anchor safe.No matter how good we do in designing the project but it’s the knowledge that we gather that remains us till the end and satisfies us. At last, we hope that our attempt behind this project is a successful one and will surely bear the expected fruit.
- Course materials provided by course instructor Mr. Quamrul Islam
- Besterfield, Dale H. ; Besterfield, Glen H. ; Total Quality Management
- Edgeman, Rick L.; On Leaders and Leadership
- Fredendall, Lawrence D.; Robbins, Tina L. Journal of Managerial
- Juliette, Jandel-Leavitt; TQM Case Study
- Microsoft ® Encarta ® Reference Library 2005
- Needham, Robbie Lee; Total Quality Management