Introduction to Total Quality Management

BUS 433 Note

2.1.1 Evolution of Quality Management Practices

Prior to the industrial revolution of late 1800s and early 1900s, quality was in the hands of

individuals (Laframboise, 2002). This assertion was due to the fact that from the middle age

through the eighteenth and nineteenth centuries, individual craft men had consistently

pursued quality in their trade, goods and services to meet the expectation of customers and

other stakeholders.

Modern QMPs origin can be traced to 1949 when the Japanese Union of Scientists and

Engineers (JUSE) formed a committee of scholars, engineers and government official

devoted to improving Japanese productivity, and enhancing postwar quality of life (Powell,

1995). Walton (1986) notes that the committee was influenced by Deming and Juran to

develop a course on statistical quality control for Japanese engineers, and the spreading of

Deming’s philosophy among manufacturing firms. According to Powell, American firms

began to take serious notice of TQM around 1980, when some US policy observers observed

that Japanese manufacturing quality had exceeded US standards. Productivity trends

supported this, leading to prediction that without a radical change in American manufacturing,

Japanese and other Asian countries would soon dominate world trade and manufacturing

sector.

Given the above scenario, Powell noted that some high-profile American firm like Ford,

Xerox and Motorola were easily convinced, having lost market share to the more efficient,

higher quality Japanese producers. According to him, these firms under the guidance of

Deming and other quality consultants, benchmarked Japanese practices and were among the

first American TQM adopters. Base on their publicized performance success, other

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manufacturers joined and at the end of 1980s a significant proportion of the US large firms

had adopted TQM (Little, 1992). Others joined the quality train due to pressure from

customers across the globe.

2.1.2 Definition of Quality

Although researchers have not agreed on a universally accepted definition of quality, Deming

(1986) sees quality as multidimensional to produce a product and/or deliver a service that

meets the customers’ expectations and ensure satisfaction. Juran (1988) defines quality in two

ways- as comprising features of product that meets customers’ needs and satisfaction; and

that it is associated with customers’ requirements and fitness to measurable product’s

characteristics. Crosby (1979) adds that quality is about product conformity to requirements.

TQM is an integrated approach to achieving and sustaining high quality output, focusing on

the maintenance and continuous improvement to process and defect prevention at all levels

and functions of an organisation, so as to achieve or exceed customers’ expectations (Flynn,

Schroeder and Sakakibara, 1995). Judging from the above, a quality product or service

should be able to meet customers’ needs, satisfy customers, and conform to the standard of

regulating authority’s standard.

Moreover, from the customers’ point of view, quality is often associated with designing and

producing a product to meet customers’ needs. In the early 1900s, it meant inspection. All

finished products were inspected to determine their consistency or otherwise, with the set or

acceptable standard. Pioneers of the statistical quality control developed the idea that any

production process was subject to certain level of natural variation. It was the job of the

quality control managers to discover this level through statistical methods and ensure control

of the production process (Shroeder, 1993).

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In the 1960s, ‘quality’ was extended outside of production to include all other functions using

a concept of total quality management. With total quality management, the entire

organisation is mobilised to produce quality products. According to Schroeder (1993), the

meaning of quality is now expanded to include zero defects, continuous improvement, and

customer focus.

2.1.3 Quality Service

High quality service helps to generate customer satisfaction, customer loyalty, and growth of

market share by soliciting for new customers, improving productivity and financial

performance (Lawis, 1993; Anderson, Fornell, & Lehmann, 1994). Hack, Scharitzer and Zuba

(2000), substantiated their position by adding that customer satisfaction is a pre-requisite for

customers’ retention and Loyalty. Corbitt, Thanasankit, and Yi (2003), investigated the

effect of trust on customers loyalty in the telecommunication sector and found that trust has a

strong effect on customers loyalty.

Service quality has been conceptualised as the difference between customers’ expectation

regarding a service to be received and perceptions of the service received (Gronroos, 2001;

Parasuraman, Zeithaml & Berry, 1988). In another study, service quality has been referred to

as the extent to which a service meets customers’ needs or expectations (Lewis & Mitchell,

1990; Dotchin & Oakland, 1994). These studies agreed to the fact that effective service to

customer by firm leads to customer loyalty, and customer loyalty improves corporate sales

and profitability which are major ingredients for measuring performance of a firm. Effective

service can only be guaranteed if employees are effectively trained.

2.1.4 Total Quality Management

Total quality management is a holistic approach to quality whereby every member in the

organisation is involved. That is, quality emphasis at all segment of an organisation, be it at

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the input level, processing and output level. At the input level, machines, material, men,

management, money, information and energy must meet the required specification of the

system. The transformation process must be effective enough with adequate control

mechanism. This makes the quality of goods and services of the system to be of standard. On

the other hand, the output of the sub-system should be of quality, otherwise the essence of the

process will be defeated. Ahire and Landeros (1995) in Laframboise (2002) define TQM as a

revolutionary approach and integrative management. Hendricks and Singhai (2001) add that

TQM practices are holistic, integrated initiatives that may take three to five years to

implement its programme. Laframboise (2002) opine that TQM practices involve the entire

organisation, and that it is a strategic design to improve performance of business. He

explained further that firms aimed at complying with different national quality award

programmes by adopting TQM practices.

2.1.5 Quality Management Practices and Competition

In response to the increasing internal and external pressure (such as customers demanding

superior quality goods and services, and the global marketplace that has become very

competitive), the adoption of various management practices such as quality management

practices, total quality management and benchmarking by organisations have become

imperative (Jaafreh & Al-Abedallat, 2013). Managers can implement TQM in any sector and

organisation to improve products and services to satisfy customers and employees, reduce

costs, improve financial performance, enhance competitive advantage and productivity

(Deming, 1986; Zu, 2009; Kaynak, 2003). Flynn, Schroeder and Sakakibara (1994) add that

organisations that adopt a quality management strategy focuses on achieving sustainable high

quality outputs using management practices as inputs and quality performance as output.

Quality philosophy is an important weapon for fighting competition and achieving improved

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firm performance. In this direction, quality management practices are a set of guiding

principles and management styles that have been adopted by managers to improve

competitiveness and achieve organisational performance (Jaafreh and Al-Abedallat, 2013).

2.1.6 Process Efficiency

A process refers to combination of machines, methods, materials, tools and people employed

in production (Jaafreh & Al-abedallat, 2013). Ahire et al. (1996) conclude that TOM works

on the assumption that the overall quality of products can be enhanced through direct or

indirect process improvement. Management can be defined as how an organisation designs,

manages and improves its process in order to support its policy and strategy and fully satisfy

and generate increasing value for its customer and other stakeholders.

Process management is essential to the achievement of goals/objectives and efficiency of any

organisation. This is because inferior quality in manufacturing process will result to high

scrap rate and rework rate which lead to the consumption of more resources to produce

quality goods (Ahire & Dreyfus, 2000). An effective process management will not only lead

to the production of quality goods and services but ensures process efficiency which leads to

firm performance efficiency. This is because reduction in process variation leads to

improvement in the quality of goods and services of a firm.

On the other hand, Laframboise (2002) measures operational efficiency through; frequencies

of On-time response, meeting of due-date or time, cycle time or elapsed time to perform an

activity and rate of machine down time. He stresses that Improvement in firm process

improves operating performance of a firm. This study believes that an efficient production

process leads to improved- products quality, reduction in operating cost, cycle time reduction,

flexibility to meet with changes. That is, having the ability to respond to changes and

improvement in inventory turnover rate. All these lead to improved firm performance.

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 Figure 2.1 Process Efficiency

Responsiveness

Process
Efficien Cycle Time
cy

Cost Efficiency

Inventory
turnover

Source: Adapted from Laframboise (2002) Relationship between Quality Practices and
Business Performance Excellence in Central Canada

2.1.7 Product Quality Effectiveness

Product quality is defined by customers as reflected in their requirements. This is because

customers can set quality requirements and state these as standards in their contract with the

supplier (Laframboise, 2002). He stated further that a firm can set its quality standard that is

geared towards meeting customers’ standard. This implies that it is customers that set quality

standard and not suppliers.

However, regulatory authorities or agencies also set quality standard, which is also targeted at

fulfilling customers’ expectation and requirements. Meeting the expectations and

requirements of customers is a major yard-stick or criterion for measuring product quality

effectiveness. Uzumeri (1997), states that a system of standard establishes a desired quality

level of a product and standards which improves process. In Nigeria, standard organisation

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of Nigeria (SON) is an example of an organisation responsible for setting quality standards.

The performance standards for measuring product quality include defect rates, error rates,

rework cost and scrap cost (Saraph et al.,1989). This study believes that product quality

effectiveness can be measured through– improvement or otherwise in productivity, reliability

of product, defect rate and product conformity with customers’ and regulatory agencies’

standard or expectation. Product quality effectiveness of a firm leads to customer satisfaction,

trust, repeat purchases and loyalty. Again, customer loyalty improves market and financial

performance of a firm.

Figure 2.2 Product Quality Effectiveness

Productivity
Productivity

Product
Quality
Reliability

Defect Rate

Conformance

Source: Adapted from Laframboise (2002) Relationship between Quality Practices and
Business Performance Excellence in Central Canada

2.1.8 Employee Focus

An employee relation is another important factor that improves quality performance.

Workforce management that improves firm performance should be encouraged through-

teamwork, employee training and involvement of employee in quality decisions (Saraph et

al.1987; Kaynak, 2003; Prajogo & Sohal, 2003; Powell, 1995; Black & Porter, 1996; Sila &

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Ebrahimpour, 2005). Kelada (1996), adds that no quality activity can be carried out in an

organisation effectively except the employees are willing and able to be involved. Employees

must perceive quality initiative as mutual benefit between them and the organisation were

they work. This has become necessary because the success or failure of any quality

programme by an organisation is a function of the attitude, skill and the level of motivation of

employees of an organisation.

Kelada (1996) adds that the success of a company is dependent on the skills, motivation, the

degree of participation in decision-making and the level of workers’ empowerment. In this

direction, Ahire et al. (1996), concludes that employees can make timely and responsive

decisions to customers that have positive impact on customers’ relations through access to

information and vital resources. This according to them will have positive effects on firm

profitability and overall performance.

Furthermore, empowering employees to be involved in continuous improvement in skills and

goal accomplishment require organisationwide employee training programme (Kaynak, 2003;

Anderson et al.1995; Flynn et al.1995; Rao, Solis & Raghu-Nathan, 1998). Booms and Mohr

(1994), opine that front-line employees are critical sources of information about customers.

Employees modify their behavoiur on the basis of feedback from customers. Employee

satisfaction has been found to drive productivity, employee loyalty to firm and linked

positively to customer satisfaction (Heskett et al., 1994).

In addition, since customers’ needs and wants are so diverse and dynamic, organisation has

no choice than to train and empower employees to change along with customers who are the

sources of failure or success of a firm. It is the believe of this study that when employees are

empowered with the necessary skills, training and the right aptitude, they will not only be

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functional, but will develop positive attitude to ensure that customers are better served. This

again can be used by firm to improve customer loyalty and performance.

Moreover, Marks et al. (1986) in Laframboise (2002), found employee participation in quality

cycle to have led to improvement in productivity and a reduction in absenteeism rate. The

distinction between performing and non-performing organisations is not in the area of

technology and other physical assets, but in quality of human resources (assets) of an

organisation and how they are put to use in the process of pursuing organisational objectives.

On this premise, Laframboise (2002), concludes that firms must ensure that the learning

employees and organisation are related issues because not only will trained employees be

more productive, satisfied and loyal to the firm, but serve customers better, and make them to

be satisfied and loyal to the firm’s products and services.

This study has support for effective employee relations as agent for improving firm’s

performance. This can be achieve through employee training and participation in decision-

making (empowerment), which leads to employee satisfaction, a reduction in absenteeism

rate and turnover rate. These factors are major ingredients for achieving customer

satisfaction, loyalty and firm operational, market and financial performance.

Figure 2.3 Employee Focus

Employe Training
e
Focus

Involvement

Absenteeism

Turnover
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Source: Adapted from Laframboise (2002) Relationship between Quality Practices and
Business Performance Excellence in Central Canada

2.1.9 Customer Focus

Over the past few years, there has been a heightened emphasis on service quality and

customer satisfaction in business and academics alike, to the extent that sureshchandar et al.

(2003), identify a strong relationship between service quality and customer satisfaction in

their study. Spreng and Mackoy (1996), support this view by stating that service quality leads

to customer satisfaction. Ribbink et al. (2004), also conclude in their study that a relationship

exist in e-commerce industry. Anderson et al. (1994), add by defining customer satisfaction as

the degree to which a firm’s customers continually perceive that their needs are being met by

the firm’s products and services.

Since the major objective of corporate existence is to satisfy the needs and wants of potential

and present customers, the need therefore arises to constantly involved customers in product

and service design to ensure that they are satisfied. To support this, Deming (1986), concludes

that consumers are the most important part of production line that every quality decision

should be aimed at.

Customer complaints, information and feedback are very important to quality management.

This is because through this, timely corrective measures and improvement in product quality

could be made. Therefore, the degree to which an organisation adjust to customers’

complaints and feedback about its products through products improvement, determine the

level of customer focus or orientation. In this direction, Ahire et al. (1996), conclude that

organisation needs to constantly determine customers’ expectation and adjust its operations

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towards meeting ever changing needs. Through quality product offering, organisation is able

to achieve customers’ satisfaction, confidence, and loyalty. This assists a firm directly or

indirectly to improve its operating, market and financial performance.

This study believes that a firm that adopts customer focus strategy achieves customer

satisfaction, ensures customers’ confidence and loyalty and minimises customer complaints

than rivals. This on the long run improves corporate performance.

Figure 2.4 Customer Focus

Satisfaction

Custom
er Confidence
Focus

Loyalty

Complaints

Source: Adapted from Laframboise (2002) Relationship between Quality Practices and
Business Performance Excellence in Central Canada

2.1.10 Supplier Management

The major sources of quality flaw is from the raw materials supplied for producing goods and

services to manufacturers by suppliers or vendors. It is therefore necessary to integrate

suppliers’ activities into QMPs programmes and decisions of an organisation. That is,

involving them in firm’s decisions will enable them to understand the firm’s quality

objectives and flow along, in terms of adjusting their practices in line with the objectives of

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their customers. Some scholars suggested that organisation should choose their suppliers on

the basis of quality and not price (Feigenbaum, 1991; Ishikawa, 1985). Deming (1986), adds

that price has no meaning without a measure of the quality of product being purchased from a

supplier.

However, Olabisi (2014) argue that competitive pricing through cost management techniques

should be the economic and rational consideration when consumers are choosing suppliers or

vendors.

Figure 2.5 Supplier Management

Product Quality

Supplier On-time delivery

Role

Competitive Pricing

Source: Adapted from Laframboise (2002) Relationship between Quality Practices and
Business Performance Excellence in Central Canada

2.1.11 Top Management Commitment

Top management commitment is crucially required for a successful implementation of a firm

QMPs/TQM programme. Grover, Agrawal and Khan (2006) cited in Das, Paul and Swierczek

(2008), argue that no discussion on TQM is complete without considering references on top

management involvement. Their view is important because every quality award across the

globe recognises the roles of top management of firm creating the goals, establishing the right

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value, structure and system to ensure that customer needs are achieved and firm’s

performance is enhanced (Das, et al., 2008).

Top management determines to a large extent what happen in every aspect of an organisation,

including TQM programme because they allocate enough resources to areas of their interests

and mornitor implementation towards success. In this direction, Gavin (1986), argue that high

level of firm performance and high product quality are always achievable through top

management support. Chapman and Hyland (1997), add that top management plays crucial

roles of improving organisational communication and climate towards improved performance.

Das et al. (2008), argue that top management should ensure effective quality plans,

communicate it effectively to employees, empower employees and provide adequate

resources for implementation of QMPs.

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