In this assignment, I hope to achieve a thorough understanding of Total Quality Management to which such companies need to abide by in order to remain ahead of competitors, while also providing an excellent, efficient service to customers, across all business sectors.
Moreover, I aim to analyse the in-depth tools and techniques utilised by a familiarised organisation in order to demonstrate the importance of improving and adapting. This will highlight show how crucial such practices are for any business to avoid complacency, and, hopefully, how easy they are to adopt.
‘Quality’ is essentially the end goal for businesses in creating their products but the meaning behind the word is not as simple as it appears. The Oxford Dictionary defines the word as: “the standard of something as measured against other things of a similar kind; the degree of excellence of something.” Of course, this is a simply generic meaning, which does not specifically venture into business.
It would be easy to think the word has fallen into disrepute, given it has become a clichéd adjective used in any great number of situations. ‘Quality’ can be used to describe literature like Homer’s Iliad, the food in a local restaurant or the performance of an athlete in the Olympics and, although it is used in a relative sense in comparing to past events, it has taken on a new life of subjectivity.
When relating to an actual product manufactured in some way, the business-tailored definitions of quality are much more pertinent and useful.
Gurus and specialists early in the 20th century brought the concept of quality to the modern age, which has laid the foundations for many and inspired and even more. Even with the word rife with ambiguity, there are several definitions from experts which give a clearer understanding:
- “Meeting customer needs and wants” – Deming
- “Conformance to requirements” – Crosby
- “Fitness for use” – Juran
- “The ongoing process of building and sustaining relationships by assessing, anticipating, and fulfilling stated and implied need”
Even with many great minds giving their personal definitions of quality, it remains an incredibly ambiguous even in business. One sector’s interpretation may be noticeably different to another’s – even if they make roughly the same product.
Business backdrop
In today’s busy, technologically-advanced world, customers have a greater range of selection to choose from, resulting in companies having to refine the quality of their goods and services in an ultra-competitive market. In essence, this is true democracy in the very etymological meaning of the word: demos-kratos meaning ‘power to the people’.
Technology has given customers the advantage – or rather, an even bigger one – in that it is easier to be swayed by others’ views on a company or product, rather than either one of the two speaking for themselves. Reviews and simply bad experiences can have dire, irreparable consequences.
Epitomising this is, of course, the Internet. Simple e-commerce marketplaces like eBay are often cultivated by independent small-to-medium enterprises (SMEs), yet products can be crippled by reviews, typically in the form of a broad, unforgiving five-star ranked system.
Moreover, independent review sites put increasing pressure on companies to not ‘slip-up’ so to speak. Common sense dictates a consumer is more likely to go to the effort of uploading a review condemning a business, rather than praise it. While a good many criticism can be perceived as outlandish and, quite frankly, fake, it can have devastating ripple effects for the future of a business. The biggest user-generated recommendation site, Yelp, are claimed to have a sizable influence regarding the success of businesses, boasting well over 100 million reviews.
Harvard University’s Professor Michael Luca (2011) wrote an entire paper on the effect Yelp has on businesses in the food industry, finding a one-star increase in average reviews resulted in a 5-9% upsurge in revenue for independent restaurants in the Washington State area.
Naturally, in today’s growing world, small businesses have been one of the first to be swallowed up, taking massive hits on a daily basis, despite making up an unfathomable 99.9% of companies in the private sector – the quintessential backbone of the economy. By and large, this is attributed to being undercutted for price. Customers flock to big, renowned businesses like Asda or Primark, automatically assuming big brands are superior to their lesser kin.
With the advancements of technology ever-increasing, Globalisation is now an unavoidable and growing process in today’s society, meaning businesses are no longer contained to their own country or region, but rather integrated across borders. In France, Emmanuel Macron has attempted to build his presidency on Globalisation by inviting more foreign investors into the country in an attempt to boost the economy. This has sparked outrage among small business owners, who have protested against the rise in taxes of selected goods in which they sell on, and, with the rise of the Gilet Jaunes protest, Macron has seen his plans dampened. Knight (2000) describes Globalisation as “the growing interdependence of national economies,” citing consumers, producers, suppliers and governments as the main influencers. However, while some see the process as a tool to favour the wealthy and big businesses, Aisbett (2007) strongly believes such criticism is exaggerated and inaccurate – stating Globalisation, in actual fact, exposes previously powerful national organisations to fierce, foreign competition, while requiring greater transparency in government policy-making. While boundaries which once limited businesses become less relevant every year, it is true the market becomes far more competitive, but while Aisbett lists this a benefit, Dunning (1993) states SMEs are destined to fail due to the lack of market power, capabilities and all-round resources multinational enterprises (MNEs) have in abundance.
Quality is customer satisfaction and vice-versa
“The customer is always right” is a mantra that is repeated on a daily business emphasising importance on staff prioritising customer satisfaction. Nevertheless, this is a far more difficult task than a simple phrase implies. To satisfy the needs of a customer is a complicated process which requires a great deal of thought. If organisations are to be successful in approaching customer satisfaction, a thorough procedure is required to cover all the bases and all types of customer (in the sector), while simultaneously being versatile and adaptable enough to surviving changes in customer attitude as to not be rendered obsolete on account of such customer fickleness.
Few organisations are able hold themselves to such impossibly high standards, if any. The general aim of companies is to meet the customer satisfaction levels of quality on an economic-driven basis, in lieu of seeking as close to perfection as is realistically possible which can be expensive. In other words, businesses must strike a balance between customer satisfaction and thorough quality while maintaining the costs to do so do not become expensive (Kiran 2017).
Even with fulfilling the demands of customers, it is often difficult for organisations to pinpoint their quality management to precise detail. The clothing retail business has taken a steep decline with their goods. No longer durable like several decades ago, it has become common practice for stores to sell clothing with a relatively short lifespan, as a result of cheap fabric, poor stitching, etc. This shortcutting is then amplified when in use or even being washed, resulting in premature wear.
Of course, this is facilitated by the constantly changing fashion trends in society to which the public support. This ‘planned obsolescence’ means top management intentionally design a product with a limited useful life, so that it will inevitably be rendered obsolete. After that, the customer purchases a replacement of the same product or a ‘new’ version in a constant cycle.
Logically, organisations want to improve their service quality to appease customer satisfaction. Reichheld and Sasser (1990) bluntly state the service sector had fallen well behind other industries focused on quality management, suggesting it looked to the manufacturing industry as guidance. Specifically, importance was stressed on the service sector to focus on its own defection – “zero defections” in which the belief was simply that companies should aim to keep every customer they can profitably serve. For this reason, the paper Therefore, reducing customer defection (sometimes known as customer attrition) increases customer loyalty, meaning profits exponentially increase. Reichheld and Sasser’s paper reported significant effects in this respect for financial organisations, like banks and insurance brokers, just by minimising their customer defection rate by approximately 5%.
For the MNE organisation Apple, customer satisfaction appears to somewhat defy the zero-defection principle. Specifically, it is their mobile product, the iPhone, which has drawn the most scrutiny, having been accused of implementing planned obsolescence. Though Apple admitted older models at the time were deliberately slowed down via software updates, in December 2017, albeit to preserve battery performance, the company’s stock actually increased following the release of newer models. iPhones have been accused of lagging performance issues – particularly, slowing down – yet sales continue to boom, despite the overwhelming cases and fierce competition in the market.
As customer service is at the forefront of businesses, irrespective of size, staff must be trained, or possess the necessary attributes, to deliver an appropriate service. Taylor and Baker (1994) conclude satisfaction generally moderates the relationship between service quality and purchase intention “in models of the formation of consumers’ intentions”. Despite being published over twenty years ago, the paper also recommends ‘marketers’ explore moderating effects in the future development of customer decision-making models regarding service.
As briefly mentioned earlier, technology has shifted considerable power to the consumer side – but that does not mean there are no benefits to reap for businesses themselves. Collecting data is a crucial step to staying in line with customer opinion and does not necessarily require a great deal of resources or time to be carried out. These can range from simple questionnaires in everyday public places to surveys displayed on the company’s site or even YouTube before accessing a video.
This is especially helpful towards adhocracy-structured businesses, whose success can pivot on external focus and public opinion. This offers invaluable outside perspective to certain aspects of the business, including the product, processes, structure and even the staff themselves. All this, and more, at such a low use of resources allows for companies to reflect and improve, while also possibly ascertaining preferences of the customers themselves for future use.
However, it is also of paramount importance to not overstep and breach customers’ privacy as Facebook were severely reprimanded for in mid-2018. Following the Cambridge Analytica scandal, Facebook’s stock worth has been on a downward trajectory as more controversy comes to light.
The [Noriaki] Kano Model helps evaluate this ‘voice of the customer’ (VOC), classifying it into several attributes for analysing:
- Performance – proportional relationship between more desires and satisfaction
- Attractive – unexpected desires resulting in a graphic spike of satisfaction
- Indifferent – desires register little to no satisfaction response
Consequently, customer satisfaction is a process which must be carried out with great thought in order for the business to succeed, acting as a strong link towards service loyalty, superseding service quality for management (Caruana 2002). By numerous accounts, customer satisfaction is also not as advanced generally, meaning those who focus on it have an advantage in the market.
Evolution of Quality Management
During the time of the Industrial Revolution, quality control was in its infancy and not near as sophisticated as today. However, it was not until the 20th century when the concept took its first meaningful steps. JC Penney introduced the notion of Total Quality Management in 1913, proposing ideas outside of the product itself. The next decade, statistical theory surfaced and was incorporated into the work of Shewhart to make the first quality control chart, as to ensure a manufacturing process was stable. Deming went on to further his predecessor’s work, bringing about the notion of Statistical Process Control (SPC), but it wasn’t until the late 1940s when this was used in manufacturing.
Following WWII, Japan planned to kickstart their devastated industrial network, incorporating the help of Deming, Juran and Feigenbaum. Throughout the 1950s quality control became a recurring theme and, a decade later, became common practice. The “reverse-engineering” school of thought placed Japan ahead of the struggling West in manufacturing.
Feigenbaum coined the term “total quality” with scope for improving management in the areas of planning and organisation, among other ideas. Ishikawa focused on total quality control, believing all levels of staff and employees in an organisation must have good knowledge of quality control itself.
Quality control built on statistical theory
This stage was set prior in order to reduce the need for inspection. Quality control looked at the processes (mostly production lines) in an effort to detect and reduce defects in unfinished products. As briefly mentioned earlier, Shewhart’s invention of the control chart introduced a statistical approach to production. Variation in processes results in variation in the product, be it different dimensions or angles. Consequently, carrying out tests at different stages in the production resulted in cutting down on process variation and more products fell within the acceptable quality range. Deming, Dodge and Romig went on to develop this school of thought.
Quality assurance – striking issues at the root
ISO 9000 defines ‘quality assurance’ as: “a part of quality management focused on providing confidence that quality requirements will be fulfilled.”
In other words, quality assurance extrapolated the management process further and was carried out at the beginning of a project – focusing on the planning, documenting and finalising on a set of rules or guidelines to further quality. Considering the executive decisions, this was often carried out by those a level above production workers, though such input is necessary.
Throughout the 1980s and 90s, the new era of management and quality control had commenced. Japan’s economic success from implementing revolutionary quality ideas shocked the West into incorporating such beliefs. Since then, TQM has become a recognised and integral part of businesses throughout the world, with the boundaries and research constantly being pushed.
Dale et al (2004) bluntly state what makes up TQM is heavily ambiguous, with no clear definition of the system applicable on a universal basis. Regardless, there are several fundamental key elements for which a company must recognise in order to successfully enact TQM. Padhi (2010) divided these into four parts:
I. Foundation – It includes: Ethics, Integrity and Trust.
II. Building Bricks – It includes: Training, Teamwork and Leadership.
III. Binding Mortar – It includes: Communication.
IV. Roof – It includes: Recognition.
With the complexities associated with TQM, building the philosophy in stages can go a long way to easing it into an organisation. The underpinning of all this comes in the form of ethics and integrity, where employees at all levels must comply with a set of written and unwritten guidelines. Moreover, a collected sense of ethical behaviour reflects well on the organisation as a whole, which is seen as essential from a customer point of view, both internal and external.
“Teamwork makes the dream work,” goes the famous phrase, “but a vision becomes a nightmare when the leader has a big dream and a bad team.” Teamwork has endless benefits for an organisation operating under TQM, ranging from improving processes (efficiency, defects), to problem-solving. Employees are the engine of a small business (Ghobadian et al 1997) and teamwork can cover individualistic weaknesses. Padhi suggests there are three types of teams involved in TQM: Quality improvement teams, problem-solving teams, natural work teams.
Proper training and education in the area of TQM ensures all employees are competent in the quality concepts, as well as honing skills to do so. Goetsch (2013) believes this allows everyone in the organisation to understand on another, to a certain degree. Training may be basic in nature, as some employees may not be educated as well as others, but must always promote self-development. This is often focused towards factory workers as supervisors are charged with implementing TQM.
Communication is the glue of an entire organisation, from top to bottom, ensuring plans from the design stage are carried out efficiently with nothing lost in translation. The more processes there are, the more crucial communication is to limit mistakes. Lines for communication must be clear and entail specific, revised information. This is bolstered by training and education, as the receiver can correctly interpret the message to a high degree.
A positive, motivated and professional mindset is the basis for continuous improvement. It embodies the true spirit of TQM in that all staff are involved with improving in their own department on a continuous basis (Dale 2014). The self-imposed quality assurance means every little detail is given attention, rather than let any such problems build-up in the future or charge any one person with dealing it.
Here, the communication in identifying defects and scope for improvement is crucial.
From suggestions to basic worker rights, all employees must be valued in an organisation. This goes hand-in-hand with communication and continuous improvement so that all ideas can be put fourth, especially if it could prove beneficial to the organisation. An adhocracy would encourage such openness and offer an opinion from different perspectives. Once more, it is important to reward work which is thought of as exemplary or commitment, so that employees feel a sense of recognition and reward in return for their pride of work.
In theory, TQM looks a sure-fire way to improve any and all sizes of organisations, focusing on all levels so every employee has a responsibility to improve in their respective department. However, the philosophy has drawn its fair share of criticism: Swiss (1992) believes Deming’s “orthodox TQM” is limited and does not work well in public sector organisations due to emphasis on products, rather than services, with government agencies mentioned in particular. Interestingly, Lewis (2005) seems to disagree somewhat claiming TQM helped SMEs in developing countries to gain competitive advantages, which then had the knock-on effect of helping said countries’ economies survive and grow.
Business Excellence Models and framework
Business Excellence Models (BEMs) have become ambrosia in modern society. Backed by research in TQM, business excellence and benchmarking, BEMs are used by hundreds of thousands of organisations worldwide to fundamentally improve organisational quality (BPIR). The Baldrige Criteria for Performance Excellence framework – the model behind the US Malcolm Baldrige National Quality Award (MBNQA) – is used as a basis for at least 70 other business excellence models. This is not the only framework utilised to examine the effectiveness and efficiency of quality control, systems, strategy development and implementation, however. Singapore, Australia and Canada each have their own main excellence models, but it is the European Foundation for Quality Management (EFQM) model which appears to get most recognition with 30,000 organisations using it across Europe alone. All these models and awards all have their ‘drivers’ or categories which they are built upon. A comprehensive study by Wilson and Collier (2007) found Leadership to be the most important driver in the MBNQA for system performance, with Information & Analysis, statistically, second. Utilising these models allows for organisations to benchmark in two different, crucial manners:
- Internal: analysing own organisation from within and setting aims based on past performances, progress and achievements
- External: analysing how own organisation compares to others in same sector or industry to get a sense of where it roughly ranks and what can be improved upon
As hinted upon earlier, BEMs are not always looked upon so favourably. To elaborate on Hendricks and Singhal (1999), many organisations who have implemented TQM to a reasonably effective degree drop the philosophy on account of it not resulting in quick returns; blaming it on a mixture of lacking patience and research, not the system itself. Beer (2003) is a strong critic, stating TQM and excellence models do not make significant change to an organisation, instead referring to it as a “fad” which, naturally, wears off after time. Specifically, Beer deduces such adaptations fail as top management’s rhetoric is distinctly different from the reality of actually implementing it in organisational “subunits”. Sebastianelli and Tamimi (2003) boiled down the struggles of BEMs in the US to five main reasons: 1) lack of human resources 2) inadequate planning for quality 3) poor leadership for quality 4) inadequate resources for TQM 5) lack of customer focus – but the paper is centred around obstacles towards success, implying these can be overcome. On a similar theme, Yasin (2004) states there is a lack of commitment towards persevering with BEMs in the researched service organisations and, for that main reason, they are lagging behind their manufacturing counterparts in regard to effective implementation. Arguably, the biggest obstacle in even considering excellence models – and TQM as a whole – is the sheer cost for implementation. For this reason, it has become a luxury in business with large organisations being able to afford it, while smaller companies the implementation supersede its financial gains (Yusof 2000). Expenditure in implementation comes by improving infrastructure, consultancy fees, team-development, but, above all, training of employees to develop the necessary skills (Mehra et al, 2001) – on top of that, continuous investment is required to ensure the excellence models remain effective.
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