Total Quality Management in Sumak Motors - Case Study Example

Total Quality Management Name: University: Course Title: Instructor: Date: Executive Summary This report examines how Total Quality Management (TQM) will be applied in Sumak Motors so as to enable it reduce costs and ensure market leadership. The report assumes that the macro environment playing field is same for all and there is high competition at industry level. Moreover, Sumak Company has equal capacity to compete as others. The problem is that it is not doing that. At internal level the company has streamlined its internal operations with the only problem being inability to compete as result of not adopting TQM. The report identifies that if the proposed TQM four measurable benefits that can be used to indicate that the firm has implemented TQM. The first is ease in decision making as all employees are involved in the process and identification of points of variation. This leads to reduction to defects. The benefit of it all is a perfect output. The second one is improved quality that if well combined with other factors leads to customer satisfaction and thus increased sales. The third evidence would be in terms of cost saving which can then be transferred to customers. The argument is that TQM help cut production as a result of efficiency and few defects. The fourth exhibit would be improved employee performance since the process necessitates team work and communication. The last section identifies seven steps that will be followed in implementing TQM. These include creation of awareness among employees, realignment and injection of new thought, definition of the scope of commitment to the organisation as a whole, analysis and identification of major variables that exist in the product and in the production process, actualisation of statistical process and evaluation. The subsequent outlines these points into details this include issue, objective, strategies of addressing them, actors, time frame and milestones for measuring the process. Contents Executive Summary ii Contents iii 1.0 Introduction 1 2.0 Assumptions 1 2.1 At macro level 1 2.2 At industry level 2 2.3 Internal level 2 3.0 Proof of TQM Implementation 3 3.1 Ease of problem solving in production process and reduction of defects 3 3.2 Quality product, customer satisfaction and increased Sales 5 3.3 Cost saving and improved profitability 5 3.4 Improved team work and employee’s morale 6 4.0 Steps in Implementing TQM 7 5.0 TQM Implementation Action Plan 8 6.0 Conclusion 11 7.0 Recommendations 11 References 13 Total Quality Management 1.0 Introduction Any business organisation seeks to make profit and gain market leadership by offering value to customers so as to lock them in. for any success, a firm must craft business strategies or corporate strategic plan that is in sync with market trends. According to Darwin cited in Tung (2001:41), it is not the strongest that survives, but those able to adapt to change. Goldratt in his theory of constraints and systems view notes that an organisation is strong as its weakest links (Dettmer, 1997:7). This means that organisation should function as a whole with each semi independent parts contributing to its wholeness. While total quality management do not necessarily turn out to increase business competitiveness, if well combined with other best practices it can lead to an organisation gaining a significant market share and thus, translated to market leadership (Lakshman, 2006:42). The necessary ingredients which can support the same include continual improvement, leadership based management, team work and strategic human resource management (Lakshman, 2006:43). TQM is a key tangible resource that acts as an organisation’s strength thus, allowing it to compete effectively if only an organisation embraces demand/customer driven total quality management (Malik et al., 2006:26). This report explores how TQM can be implemented to guarantee reduced cost and market leadership. 2.0 Assumptions 2.1 At macro level At macro-economy level, there is a level playing field for all motor dealers. Apart from pricing, most customers want vehicles with guaranteed performance in terms of speed, safety, comfort, fuel consumption and those that last as measure of value and standard benchmark for evaluating cars. 2.2 At industry level The market is highly competitive with numerous players each adopting different strategic positioning in terms of market segment, pricing and value. Sumak Motors have adopted the strategy of value at a competitive price. The industry is dynamic with numerous innovations. Sumak Motors is able to keep abreast with these developments by taking the lead or through reverse engineering. The firm engages in to business to business marketing model. 2.3 Internal level As per its level the firm has enough tangible and intangible resources to implement its strategic plans. Moreover, the firm has a willing top level management which is based on leadership. The company had streamlined most of its internal operations. The best practices adopted include producing at a lower cost compared to its competitors and it has after sales service. The firm has an innovation culture. The problem is that they are not synchronised. From 2009, sales have not expanded instead it is dropping and consequently return since the firm has not adopted TQM. This means that the firm is not performing not because it is not competitive, but because of non-guaranteed integrated quality where each department is operating single handed without synchronising customer needs. Moreover, the firm has not embraced system approach to management and lean management in form of Just-in-Time production so as to produce and sell cars when needed according to demand. The company has embraced strategic human resource planning. In this scenario, the company is engaged in total reward and talent management based on the premise that it is a key factor for success. This allows it to attract and retain qualified personnel. The company practices performance management and other human resource management best practices. Apart from creation of value and selling at competitive price, the company is engaged in relationship marketing as a customer retention strategy. In a nutshell, at internal level the firm has tried to implement all best practices be it at production, finance, marketing, supplies management and innovation. The only problem is lack of systems view in quality management. This means all departments are not involved in guaranteeing quality leading to disjointed processes. 3.0 Proof of TQM Implementation 3.1 Ease of problem solving in production process and reduction of defects According to systems view, an organisation is strong as its weakest link (Dettmer, 1997:7). This means organisations should synchronise all their operational departments right from supplies and procurement department, finance, production and marketing. In a nutshell, all departments are integral in the success of that organisation. This is what is lacking in Sumak Motors. In this company all departments are working effectively. However, the lacking ingredient is the synchronisation of all of them so as to work as one unit with common purpose. The essence of TQM is to engage all employees at all level in quality management (Joiner, 2006:624). One benefit that will be derived so as to guarantee this desired quality is reduction of defects as result of performance gap that exist since the process is not seamless (Rani, Duhan & Deshwal, 2012:13). The hope is that once our products will have fewer defects, the company will be able to compete effectively in the market since it will have improved brand image in terms of quality (Bon & Karim, 2011: 13 & 14). The firm will adopt the sigma six approach where product will be produced to perfection (99.9%) as causes of defects will be removed from start to end. This will be driven by plan-do-check-act cycle. The second evidence would be the ease of problem solving. Currently, the organisation faces challenges in tracing where the problem emanated during production process. This is because all employees will engage in collaborative effort (Ghobadian & Gallear, 2001: 344). The main control tool that the firm will employ is Statistical Process Control (SPC). The strength of this approach is that it allows for analysis of variance or correlation in the production processes. This equally helps address achievement of quality that makes value to customer by reducing defects. The essence of doing variation test is to ensure all parts look alike. The next approach that would be utilised is failure analysis. This will enable the employees to know areas that are prone to single point failure thereby interfering with quality. This is a reliability process that will guarantee performance in terms of speed, comfort, clearance & traction and fuel consumption. The look alike process would also be attained at 99.9% by the end of the year. 3.2 Quality product, customer satisfaction and increased Sales Customer satisfaction is an important factor if a company wishes to gain market leadership. This can only be attained by creating value for the end customer (Subedi & Maheshwari, 2007:56). TQM if integrated with other approaches is recipe for success. The customer satisfaction will be guaranteed since this is customer oriented process where the business will engage in feedback survey about our products so as to highlight areas that can be improved. This is one way of addressing customer retention strategies. It is expected with reduced defects, ease of decision making, reduced production cost and improved quality which will translate to improved value as the process is customer oriented, the sales will increase (Subedi & Maheshwari, 2007:57). It is estimated that this year the sales. The firm engages in business to business marketing model. With the current base of 250 customers, it is projected once reliability, torque and clearance is improved on the base will reach 1,000. This is because their numerous enquiries about our motor vehicles, but there have been some hitches. In terms of sales, it is estimated that the sales will move from 30, 000 units to 100, 000 units. This then guarantees improved revenue for the organisation in terms of sales as the units sold will increase. 3.3 Cost saving and improved profitability The one thing that has been realised is with reduced defect there is improved reliability. The other expected benefit and exhibit for implementation of TQM is reduction of production cost. The essence is that once the production process has been optimised so as to achieve efficiency, the production and operation cost will be reduced (Yaacob, 2010: 1845). Moreover, once all departments are synchronised, unwanted delays and performance gaps are eliminated. This results into efficiency and thus, reduced costs. The benefits of reduced cost are that it can be transferred to ultimate customer. This low cost production strategy enables the firm to lock in customers while locking out the competitors (Yaacob, 2010:1846). The lock in applies since the firm will be able to sell a vehicle of the same value as other competitors at reduced price. This then will translate to increased profitability. The other strategy that will be pursued under reduced cost is to sell the same value at the current price. This means there will higher marginal difference leading to increased profitability. From the current profitability of $ 1, 000, 000 it is estimated it will improve to $3,000, 000. 3.4 Improved team work and employee’s morale Since the process is collaborative it reduces infighting and counterproductive issues. Human resource forms one of the critical components of any organisation. The success of any organisation is tied on how well the management relate within itself and with its employees (Joiner, 2006:618). Employees are the epicentre of idea creation and implementation of strategic management plan of an organisation so as to achieve strategic positioning and market leadership. Teamwork is the main reason behind the success strategy of any organisation, because responsibilities and development stages are shared among organisation team (Joiner, 2006:624). One way of improving teamwork is through communication management. Communication management, between different departments of the company and externally such as customer and suppliers, is an essential for all types of organisation. Communication allows for smooth flow of ideas from one point to another and thus, translates to a cohesive team. 4.0 Steps in Implementing TQM Creation of awareness among employees and all level of management so as the whole organisation can be energised. This is a visioning stage that all human resources is directed towards one goal. Realignment and injection of new thought so that new culture can be created. The culture to be created is of inclusion of employees and customers in the company’s process. Definition of the scope of commitment to the organisation as a whole. Analysis and identification of major variables that exist in the product and in the production process. Actualisation of statistical process control so as to address the key variables identified. Evaluation of the quality improvement in the organisation (Stamatis, 1994: 49 & 50). 5.0 TQM Implementation Action Plan Action Objective (s) Actor (s) Strategy (s) Time frame Milestone (s) Creation of quality awareness To inform all employee about the need and the importance of TQM in streamlining internal operation by reducing barriers to performance and enhancing value delivery to end client. To psyche all employees so that their energies can be directed to the same for increased synergy. To help reduce any friction and phobia for change in the next stages. Top level/ corporate managers. Line managers and head of departments. Supervisors. Engineers. Have circular about the intended process. Training of mid level manager and supervisors on TQM so that they can act as key resource people. Have daily meeting at departmental level by key resource persons. Their function is to teach other employees using case examples and theoretical constructs. Biweekly meeting with top level management. 4 months Reduced tension and resistance to new approach. Improved communication at horizontal and vertical level Initiation of new organisation culture To make TQM an integral culture and key competency in Sumak Motors All 3 levels of management The CEO to create the sense by employing various soft/ interpersonal skills through transformative leadership. All other levels of management to support the same through transformative leadership. Continuous More employees identifying with the TQM process Increased productivity Definition of the scope of commitment to the organisation To make employees to be more committed to the organisation in line with the new organisation culture All Initiate reward management. Initiate performance management. Retraining of employees Continuous Increased productivity and reduced performance gap. Identification of points of variation in the process and product To identify points of weaknesses in the production process that results into product variation thereby not achieving the objective of sigma six goal Supplies department, production and marketing department. Head of procurement, head of production, logistics and sales to work in collaboration to identify cause of variation. The essence is to engage engineer, scientist and plant operators to pinpoint exact areas of weaknesses. This involves implementation of sigma six so that in long run the organisation can attain a perfection of 99.9% 6 months Implementation of statistical process control To implement statistical implementation process to ascertain if sigma six is being met All Adoption of variance and correlation analysis strategies so as to show how they can used to measure performance 6 months Reduced defects Improved quality Incorporation of improvement processes and activities in the organisation To implement the actual process through sigma six All Actualise the process in all company operations and production process 3 months Improved reliability Products with little defects and variations. Reduced operation cost. Customer satisfaction and retention. Increased sales and revenue. Evaluation of quality improvement process in the organisation To prove if the TQM is working as intended by making the firm be competitive so that it can lock in consumers through sustained value creation and increased returns to the firm All All departments to present quarterly reports on progress about TQM. Engineers to take random samples to be tested for variation. Continuous Sustained continual improvement and system approach. Sustained increased sales and returns. Continued customer loyalty Production without variations 6.0 Conclusion In the face of stiff competition like in auto world there is need for companies to review their competitive strategies and key success factors. At many times organisations tend to do continual improvement in the field of quality management, but is seclusion. TQM is an integral competitive tool if well combined with other best practices and internal competencies. From the above discussions, TQM is a critical tool in enabling a firm to lock in customers by reducing production cost and increased quality due to reduced variations. This then creates value to the customer and thus a customer retention strategy and guaranteed sales. Apart from this, the process is critical in reducing performance gaps and improved horizontal and vertical communication. However, the ultimate realisation of this lies on other internal factors like leadership, organisation culture and demand driven/customer oriented process that enables a firm to adapt to change. 7.0 Recommendations For Sumak Company to realise the benefits of TQM the following have to be adhered to: Management must be totally committed to the process at all level in terms of tangible and intangible resources. There has to be a change in the organisational culture so as to orient all employees toward TQM. The management has to put in place proper planning mechanism to augment the TQM process since in can’t succeed in standalone approach. Management and human resource department has to ensure continuous training and education of employees about the same. The organisation structure has to be re-organised so that it can be in sync with TQM aspirations, principles and goals. The process should be customer oriented and demand driven. References Bon, A. T. & Karim, N. (2011). Total productive maintenance application to reduce defects of products. Journal of Applied Research Science Vol. 7, No. 1, pp. 11-17. Dettmer, H. W. (1997). Goldratt’s theory of constraints: a systems approach to continuous improvement. Wisconsin: ASQ Quality Press. Ghobadian, A. & Gllear, D. (2001). TQM implementation: an empirical examination and proposed generic model. Omega – International Journal of Management Science Vol. 29, No. 4, pp. 343-359. Joiner, A. T. (2006). Total Quality Management and performance: the role of organisation support and co-worker support. International Journal of Quality & Reliability Management Vol. 24, No. 6, pp. 617-627. Lakshman, C. (2006). A theory of leadership for quality: lessons from TQM for leadership theory. Total Quality Management Journal Vol. 17, No. 1, pp. 41-60. Malik, A. S., Iqbal, Z. M., Shaukat, R. & Yong, J. (2006). TQM practices & organisational performance: evidence from Pakistani SMEs. International Journal of Engineering & Technology IJET-IJENS Vol. 10, No. 4, pp. 26-31. Rani, S., Duhan, K. R. & Deshwal S. (2012). Study of implementation of total quality management for defect reduction in manufacturing industry. IOSR Journal of Mechanical and Civil Engineering (IOSRJMCE) ISSN: 2278-1684 Vol. 1, No. 3, pp. 11-14. Stamantis, D. H. (1994). Total quality management and project management. Project Management Journal Vol., No., pp. 48-54. Subedi, D. & Maheshwari, S. (2007). Impact of total quality management (TQM) on profitability and efficiency of Baldridge Award Winners. Delhi Business Review Vol. 8, No. 1, pp. 55- 62. Tung, R. L. (2001). Learning from world class companies. London: Cengage Learning. Yaacob, Z. (2010). Quality management as an effective strategy of cost savings. African Journal of Business Management Vol. 4, No. 9, pp. 1844-1855. Read More