Total Quality Management - Term Paper Example

?Running head: total quality management Total Quality Management The present dis is an evaluation of TQM and its application in manufacturing, service and non-profit organizations through various operations management activities that these sectors deem important for their respective businesses. For this purpose, well-known firms from each of these categories such as Toyota, Starbucks and Progressive Aseda, respectively, are examined through careful study of literature. Based on the findings, analyses are drawn with respect to respective operations management strategies used in these firms and their impact on the firms’ overall business outcomes. Introduction Quality assumes a multidimensional facet of business outcomes and activities. Various meanings attached to quality include conformance to specifications, performance, reliability, promptness, consistency, meeting customer expectations, hygiene etc. Organizations attach one or more of these attributes to their meaning of quality and thus strive towards achievement of all through Total Quality Management (TQM). TQM has been viewed in many ways by different scholars. A comprehensive definition would include what Hellesten and Klefsjo (2000) had used to describe TQM as, ‘a management system consisting of core values, techniques, and tools with the aim of increasing external and internal customers’ satisfaction with reduced resources. It aims at establishing a culture based on core values, and choose techniques, which support the values and tools suitable for the chosen techniques (as cited in Fredriksson, 2003; p.226). An evaluation of total quality management through operations management strategies in manufacturing, service and nonprofit industrial sectors will be presented along with a general and critical review of these practices. Background: In the manufacturing sector, TQM concept was, in fact, revolutionized by the giant automotive company, Toyota, which was originally a Japanese native but currently a multinational setup. Daft (2008) candidly states, “Toyota is a model what happens when a company makes a strong commitment to total quality management,” (p.468). Although TQM was a concept that originated in the United States, its popularity and promising philosophy was grounded in quality management only after Toyota displayed its success from Japan. This was accomplished through steady performance over the years unlike other automotives of the West that ruled the market for short time; yet, Toyota’s success still remains, and is attributed to its TQM principles. Significance of Toyota’s way of working was realized by the rest of the world during 1990s through its highly efficient and fast design systems, most reliable and cost-efficient products and highly paid labor (Liker, 2004). Liker (2004) asserts that Toyota’s way of operations management, popularly referred to as the Toyota Production System, is a result of its quality management that goes beyond one’s belief along with congruent culture, referred to as the Toyota Way. A well-known service firm that attributes its success to TQM philosophy is Starbucks, the coffee shop that promises a delightful experience to its customers. Starbucks was started in 1971 at Pike Place Market, Seattle. More often, the name of this famous coffee place is accompanied by Howard Schultz, the salesperson that was instrumental in Starbucks’ immense success and later assumed the role of Starbucks’ CEO and Chairperson. Starbucks has recorded steady growth in the field of food and beverage industry during last 3 decades through its fierce competition, unmatched quality, delightful customer experience, cost-oriented operational strategies and the best human resources management practices. Starbucks is often quoted for its Total Quality Management practices and has been an example for many other entrepreneurial initiatives. Pahl (2009) highlights, “from a single store in Seattle, Starbucks has grown to operate more than 15000 stores across the world and employs more than 172,000 people,” (p.1). Immense competition backed by globalization did not absorb Starbucks through these years. Starbucks was able to successfully meet all growing demands from customers’, markets’, employees’, and shareholders’ perspectives. These, Starbucks achieved by adopting a comprehensive business strategy that provided a framework to address each and every aspect of the business including customer satisfaction, operational effectiveness, marketing and sales performance, employee management, stakeholder expectations, supplier relationships, inventory management, and environmental sensitivity. Application of TQM philosophy in the non-profit sector has been controversial ever since non-profit sectors started to gain significance (Stockmann, 2008). Non-profit organizations are very different from the commercial and public sectors in terms of their business policies, hierarchies, organizational structure and systems, employee relations etc. While TQM is meant to enhance competitiveness and profits, non-profit organizations are focused towards community and societal development and do not work for competitive gains or profits. Yet, the potential contained in adopting TQM as a management philosophy cannot be disregarded. The notion of applying TQM to non-profit organizations was overturned by the Swedish non-profit organization formed by a community, Aseda, which stands out in exemplifying application of TQM principles (Fredriksson, 2003). This project was named ‘Progressive Aseda,’ which aimed at improving the general health of this community by involving local residents, government and traders. Progressive Aseda experienced a variety of new initiatives, based on TQM, and resulted in improved life styles and health statuses of the community members. Further, this project helped in reinforcing collaboration between companies, government officials and local citizens thereby increasing work opportunities and better activities for the local citizens. Findings from literature: Many businesses have flourished beyond imagination after employing TQM principles; however, employing TQM in business models and operations is highly challenging and extremely cumbersome, especially in large business organizations, like Starbucks and Toyota; even smaller units, like Aseda are not free from challenges. Yet, these organizations have adopted specific practices, policies and strategies that facilitated achievement of TQM, which are worthy of study. Operations management identifies 10 main strategies namely, goods and service design, quality, process and capacity design, location, layout, human resources management, supply chain management, inventory, scheduling, and maintenance. A few strategies like process and capacity design, human resources management, supply chain and inventory are briefly explored from literature. For instance, Toyota infuses TQM in every activity of its operations and business. Production of high-quality reliable products requires usage of high-quality raw materials and other components. As most of the manufacturing firms rely on external supplies of various components and raw materials, ensuring high quality of these products depends upon the suppliers that they engage with to procure these resources/components. Toyota’s supply chain management necessitates that its suppliers are TQM certified, a practice referred to as ‘keirestu’. Toyota establishes strong relationships with its suppliers in order to ensure its supplies are of high quality. Toyota sources most of its automotive components from external suppliers that are located across various other parts within Japan (Miwa & Ramseyer, 2006). Role of human resources is vital to any business. At Toyota, every single employee is said to produce greater value every single day and through every single action (Liker, 2004). Their integrated HR business strategy, which is holistic, incorporates practices and policies for continuous learning, involvement in critical decision making, improving employee commitment, encouraging recognition of employees etc. From human resources perspective, Toyota believes in employing people that are most suitable to their business objectives, rather than employing people with the best talent or highest expertise. With such employees, HR-business strategies work best in bringing out their employees’ best. Most of the other organizations criticize Toyota’s employment practices as these practices, at prima facie, lay lesser emphasis on employee development, learning and growth (Kearns, 2009). However, studies have indicated that employees of Toyota are the most satisfied lot because their values were similar or in line with Toyota’s objectives. Capacity planning is one of the critical activities of production management. Excess or reduced capacity planning can result in loss to the company, and hence must be appropriate for efficient production and avoid work overload. Toyota’s capacity planning is annual activity; however, capacity is reviewed before new product introduction or model change. Toyota performs an annual forecast of its production and plans capacity accordingly. Toyota also prepares for fluctuations in demand and supply in every department including facilities, assembly lines, production plants, HR department etc. Toyota employs temporary staff during peak times if the demand for production goes beyond planned capacity. Facility, equipment, components and tools are also assessed at regular intervals to meet demand and are procured just-in-time (JIT) through cross docking with subcontractors. Even these subcontractors, which Toyota refers to as partners, are well trained to safely transport Toyota’s components at no additional costs (Liker, 2004). Suppliers are well capacitated internally to meet external demands imposed by Toyota; further it links its purchasing and production control with their supplies; thereby, Toyota manages its suppliers’ capacity by establishing strong business relationship in order to avoid any issues in production operations because of supplies. Toyota adopts mix- planning strategy to manage dealer-level product demand to manage global and regional demands, which also helps in focusing on high quality, cost reduction, using kaizen and providing higher value to its customers (Iyer, Sheshadri & Vasher, 2009). In service industry, these operations management strategies adopt different practices of working. At Starbucks, operations strategies are closely linked with its corporate strategy and strive to build customer-driven firm (Krajewski, Ritzman & Malhotra 2007). Like Toyota, Starbucks also acquires its raw materials, mainly coffee beans, from quality-certified suppliers. In most regions, Starbucks is tied up with farmers and provides training to produce coffee beans of premium quality; in turn, Starbucks offers premium prices for coffee beans in order to improve the farmers’ living. By doing so, Starbucks is not only ensuring high-quality raw material for its products but also contributing to the environment by encouraging its suppliers to use best methods of growing coffee, through the Coffee and Farmer Equity program (C.A.F.E) (Benzaken, 2007). From operations perspective, managers in operations department work closely with other departments such as marketing and sales, finance, inventory and supply chain. As Starbucks operates in multiple locations across the globe, its capacity requirements also vary as per the location and time, thereby greatly dependent upon demand fluctuations. Capacity planning at Starbucks is a day-to-day activity and focuses on service utilization as well as service quality. Moreover, Starbucks employs highly efficient operational practices such as arrangement of service representatives, equipment and tools, which would aid in fast service and avoid any wastage of time. This arrangement is uniform across all Starbucks outlets. Starbucks also uses the JIT approach to order beverages instead of stocking up in advance; this helps in keeping the beverages fresh as well as in saving space at the outlets. Human resources management at Starbucks is unique and HR strategies are closely aligned to Starbucks vision and mission through core values that foster implementation of practices in line with the organization’s vision and mission. For instance, Starbucks emphasizes creation of great work environment and providing respect to every member; it encourages diversity to improve business; empower its employees to make the right choices in creating highest standards of excellence in purchasing, roasting and producing fresh coffee at all times and to all customers (Bohlander & Snell, 2009). Leadership is the key to Starbucks’ success. Schultz (2011) describes his managers as coaches, bosses, marketers, entrepreneurs, accountants, community ambassadors, and merchants. Starbucks addresses its employees as partners and considers them as a part of the legacy. Starbucks offers various employee benefits besides competitive salaries and flexible work hours (Facts About Starbucks and Our Partners (Employees), 2009). A few HR practices at Starbucks include employee empowerment, regular employee feedback through surveys, fair reward and recognition for performance, providing training and development, upholding workplace policies and respect for employee rights, and ensuring safe and healthy workplace. Its employee empowerment is achieved through practices such as encouraging its partners to keep in mind its mission statement, monitoring management decisions, submitting comments and questions if they encounter anything that runs counter to any of the six points of their mission. In the non-profit organizations sector, incorporating TQM principles in their operations strategies has been greatly debated due to lack of faith in governmental and political systems; however, TQM has also been the way marker for most of community-oriented firms (Jackques, 1999). Organizations like Progressive Aseda, however, have also given sufficient reasons to believe that TQM principles are implementable in this sector too. In the non-profit sector, mostly comprised of communities, the community is regarded as a system and issues such as waste, rework and unnecessary complexity have been targeted to improve quality of life or community (Fredriksson, 2003). In this sector, the stakeholders include community members or members of the non-profit organization, government, and the local citizens. The way work is planned and organized can be compared to capacity planning part of operations management; the people involved in the work are the human resources as well as customers; and the organizers as the managers. The main aims of Progressive Aseda included prevention of negative developments, identification of opportunities, and utilization of experiences and learning. Operations in a non-profit organization are also based on a strategic plan formed by the group of volunteers that form the organization. The beginning to Progressive Aseda was marked by formulation of core values that were in line with the Swedish Quality Award; this gave a common direction. Progressive Aseda adopted an organizational structure very similar to any other firm with a chairperson, project leader, quality group, and 12 different domain groups that were critical to the community’s development. Main operational activities at Aseda included identification of improvement activities, designing methodological solutions and taking actions according to the plans created. Simple solutions were identified for various issues in order to reach the desired state at the earliest; this contributed towards efficiency of Progressive Aseda. Supply chains at Aseda include funders of finance that supply funds for the project; in the form of ideas and suggestions collected from 2000 households through regular meetings; and other resources that might be required for the improvement work, like, new teachers, doctors, counselors, advisors, or any other equipment necessary for undertaking improvement activities. Interestingly, supply chains emerge from within the community and not necessarily from outside. When demand for human resource is high, an inventory system with record of all individuals of the community that wish to volunteer can be handy; this will not only save time but also costs of looking from outside hiring agencies. At Aseda, leadership included members from various domain groups and with varied learning and experience; however, all leaders were committed towards a common goal. These leaders also possessed basic knowledge of TQM, but not about the tools and techniques of TQM. The basic knowledge of TQM actually helped quality groups in gaining support from various domain groups. Analysis: Both Deming and Ishikawa identified certain total quality principles that are critical to TQM in an organization. The most common between both include a common purpose, continuous learning and improvement, transparency and communication, an open attitude, teamwork, respect, clear direction and leadership, and customer focus (Bender & Krasnick, 1993). Achieving holistic TQM requires application of TQM principles to all spheres of a business. Operations management forms the core sphere that can have significant impact on the entire business as well as profits. Quality of products or business outcomes majorly depends upon operations functions. Application of TQM principles in operational strategies can therefore produce major impact on total quality of the business. While practices and techniques of operational strategies differ in manufacturing, service and nonprofit industries, main goals of all strategies revolve around achieving customer satisfaction, deriving profits and reducing costs, improving employee commitment and motivation. At Toyota, TQM is embedded in its culture (Liker, 2004); its mission is “to attract and attain customers with high-valued products and services and the most satisfying ownership experience in America,” (cited in Ceja et al., 2010; p.6). Toyota employs unique practices to achieve total quality. Here, total quality refers to improved process efficiency, reduction of waste and costs, high-quality supplies, and better employee commitment. However, certain tools and techniques used by Toyota did not produce long-lasting profitability. For instance, the keiretsu actually inhibited competition for the supply networks initially, which somehow hindered innovation and continuous improvement. Secondly, numerous small manufacturers aligned all their products to one large company, which was a loss to the small suppliers in the long run. In the keiretsu group, Toyota employed at least two suppliers for a single component but later fixed to one supplier. This increased demand for that single supplier and slowly strained their relationship, which further impacted Toyota’s business. Toyota’s cost-cutting strategies in operations also closely depended upon its suppliers’ costs. Toyota’s human resource practice strongly relied on providing opportunities for continuous learning and improving. Moreover, Toyota’s culture of allowing limited involvement from employees is influenced by the Japanese culture; hence, employee commitment as experienced at Toyota is applicable only in Japanese settings, but not other cultures like the American or European cultures that are participative and individualistic. On the other hand, Toyota does emphasize continuous learning, or hansei, through responsibility, self-reflection and accountability for the actions; this was not be acceptable to the American culture and thus resulted in modified hansei (Liker, 2004). Toyota’s production processes that employ lean techniques to save costs and avoid wastage also control overproduction, reduce waiting time, avoid unnecessary transportation or movement, erroneous processing, excess inventory, and unused employ creativity. Its JIT inventory system is not suitable for regions where transportation of supplies takes longer time. This worked well in Japan due to proximity of industries owing to smaller regions, unlike that in America or Europe. To address these issues, Toyota uses cross-dock system, which was successful in the US. Yet, JIT system has improved efficiency of both manufacturing and service organizations by cutting costs incurred through accumulation of scrap; requirement for rework and inventory investment is almost eliminated; risks from damage while handling are also greatly reduced. Just-in-time delivery of raw materials or resources greatly reduces lead time and errors are easily noticed because numbers of potential sources of errors are also reduced. JIT is a sort of early caution for quality issues during production and also during procurement. Erroneous outputs or faulty products due to faulty or low-quality inputs or components can be eliminated. Lesser inventory automatically results in better quality; consistently better quality components, which can be obtainable from steady supply chain partners, will eliminate requirement for any inventory system. Total quality management in a firm like Starbucks that not only sells coffee products but also the ‘Starbucks Experience,’ is highly challenging. These challenges are tackled by choosing operational practices that facilitate achievement of Starbucks’ mission; these operational practices are directed by its core values. Starbucks’ mission is, ‘To establish Starbucks as the premier purveyor of the finest coffee in the whole world while maintaining our uncompromising principles as we grow’ (Needham et al., 1999; p.617). This mission directs Starbucks’ initiatives such as the store layout and location, JIT inventory system, C.A.F.E, employee partnering through empowerment and participation. Starbucks has thousands of stores worldwide, but its suppliers are limited and spread across fewer regions. For few locations, JIT delivery system is more expensive, but Starbucks cannot eliminate JIT owing to its commitment to provide the best quality products and services to its customers. Starbucks empowers its employees to go beyond their call of duty to delight their customers with the ‘Starbucks Experience,’ even if this means some loss. In the non-profit sector, challenges to implementation of TQM are relatively higher because this concept is still being explored. Most of the founders of non-profit organization and its volunteers are not fully aware of TQM principles and practices. Aseda’s success can be attributed to this awareness that the volunteers, at least some of them, possessed. Non-profit organizations are informal structures and do not function based on specific organizational policies; however, this was not the case with Aseda. Progressive Aseda was formed by community members and volunteers, which were further grouped based on their role in the community. Discipline, commitment, attitude, knowledge and awareness of TQM laid foundation for Progressive Aseda. However, before formation of this nonprofit group, Aseda also faced some serious challenges. Awareness of TQM was a wealth of only few corporate employees that had used TQM at their work; lack of control of various community issues was major challenge and required much effort in terms of brining people together and in instilling coordination and communication processes. Transparency was created through effective communication, regular meetings, and other activities. Progressive Aseda was committed to improving the Aseda community and hence did not have any external customer, which resulted in an element of lack of customer orientation that caused some issues at the beginning. Fredriksson (2003) asserts that the common culture of Aseda community developed a common commitment towards a common goal. Aseda was able to overcome these challenges through awareness of TQM principles at the leadership level and direction from the leadership. Although commitment is voluntary at Aseda, it strengthened through support from the rest of the group. Continuous progressive activities are often hindered by lack of training and awareness of TQM concepts, clashes between different leadership philosophies due to multiple leaders, and lack of coordination. Conclusions: Application of TQM principles in manufacturing, service and nonprofit organizations varies in terms of tools and techniques, practices and procedures. TQM is a philosophy that promises positive outcomes when applied in the right manner. For this, TQM practices, techniques and policies have to be modified in accordance with the business objectives, customers or audiences, and operational strategies. In general, success of TQM depends upon employees’ or participants’ attitude, level of participation and commitment, knowledge and awareness. Total quality management works best when adopted as an attitude and a responsibility by all employees across all levels; it survives through effective communication, whether organizational or public communication, and transparency. 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