Quality Management into the Company Istanbul Deniz Otobusleri - Case Study Example

Quality Management Inserts His/Her Inserts Grade Inserts 30 April 2009 Table of Contents Bibliography Topic: Quality Management Abstract This paper examines the quality requirement of a shipping firm for attainting ISO 9001: 2000 standard and cost involved in attaining the same. In addition, it also examines the Information System for efficient management. The company selected for this study is Istanbul Deniz Otobusleri (IDO). In order to attain ISO 9001:2000 certification, the most important thing is the quality assurance at different stages till meeting the customer requirements and continuously keeping the standard by efficient quality management system. This is mainly attained by being customer oriented and with Quality Management System (QMS). 1 Introduction: The objective of any business organisation is to generate profit. Quality Management System (QMS) ensures improvement in business situation and for attaining long term growth. In the today's competitive world, quality is crucial factor for survival in any type of organisation. QMS mainly focus on ensuring Quality Assurance and Quality Control. Quality assurance focuses on overall process and to verify that it is carried out in required manner. Quality control is the accepting or rejecting the product. QC is mainly product oriented approach. QMS involves QC, QA and overall business management process. ISO 9001:2000 is a Quality Management Standard. ISO (International Organisation for Standardisation) is established to develop international standard for management or product or services. They used to conduct auditing process for acquiring ISO certification. This can be applied in all kinds of organisation irrespective to its size and type of business. In the today's shipping service sector, ISO 9001:2000 is crucial for meeting customer satisfaction and thus for ensuring profitability. ISO 9001 is the most suitable standard for quality assurance in shipping sector. Shipping sectors are pressurised to provide a proof of quality management system by their clients as well as by authorities. In addition, International Maritime Organisation (IMO) also imposes rules and regulations. The other national and international bodies also arrived with new polices and procedures along with inspection and surveys. Customer Satisfaction usually determines the growth of the company. Customer satisfaction can be attained by quality of products or services. Dissatisfaction of the customer is mainly arises due to failure in meeting their expectations and demand. IDO is providing more sophisticated services to its passengers and this reflected in their in number of customers increased over the years. Generation of profit is the main objective of shipping companies and so they mainly focused on reducing the daily operational expenses rather than providing efficient services. Cost cutting measures can be seen at everywhere but International Maritime Organisation has made rules and regulations. Cost cutting measures might affect the company in the long run. In the short run it may bring additional income. It is not practical to adopt cost cutting on customer service and maintenance of efficiency. 2 Company Profile: Istanbul Deniz Otobusleri (IDO-Istanbul Seabuses and Fast Ferries Inc.) was established in the year 1987 by Istanbul Metropolitan Municipality mainly with the emphasis on public transport by sea. Firstly they started with 10 seabuses and now they are grown into world's largest seabuses and Ferry service provider. Today they are carrying about 90 million passengers and 5 million vehicles yearly. It has been seen that they are continuously developing year by year. Seabuses are reliable and comfortable for passengers of Istanbul and Marmara Sea. Each seabuses has a capacity of about 500 passengers. In addition, they are allocating more funds for investment and development of vessels. There was tremendous increase in the number of passengers travelling over the last few years. IDO planned to increase seabuses on different routes for ensuring continuous increase in the number of passengers. They played a major role in reducing traffic problems in the city of Turkey through their sea transport. IDO has already invested 200 million dollars for new fleet and port facilities. They are very customer friendly and offer a wide range of services such as 24/7customer's services, onboard wireless internet facility, kiosks for issues of ticket etc. The accommodation deck has comfortable seating arrangement and other attractive facilities are provided for the passengers for their journey. There is efficient loading and unloading system for transportation of heavy goods. Engines and fuel efficiency is remarkable which ensure uninterrupted journey. "In April 2005 merging with City Line Ferry Services IDO became primary provider of waterborne transportation services in Istanbul and The Sea of Marmara". (IDO company profile) 3 Methodology: The various factors that are involved in ISO 9001 certification are analysed along with selected company is studied that is Istanbul Deniz Otobusleri. The financial cost involved in the process are also analysed and role of Information Technology in the company is also discussed. 4 Literature Review Quality requirement for ISO 9001:2000 ISO 9001:2000 is specifically meant for attaining quality assurance and thus helps to maintain good relationship between service providers and customers. Organisation is compelled to implement ISO 9001 by the demand of customers and other industries. It is a fact that customer satisfaction increases sales and profitability. An important factor is that company is required to have continues progress and if any department or area of is weak means this will affect the company as a whole. Looking for ISO certification by customers or industries is common for assessing the standard. ISO certification is the criteria, which is used to take evaluation of suppliers, services or products. An ISO certified company can increase their customers without much effort and time. ISO emphasis on continuous improvement in quality and service ensures continuous growth and development to the organisation. ISO 9001 helps to have a systematic process in the organisation. Managers and employers can modify their work procedures and plans. Quality Management System QMS focused on continuous improvement in the services and meeting customer expectations. Quality Management system is the main criteria that focus on meeting the customer requirements and building trust among the customers. The main documents required for the ISO 9001:2000 consists of business process manual prepared by executive committee, Security manual created by security officer, Employee manual drafted by HR manager and quality policy manual implemented by a team of CEO and ISO management representative. QMS has become a business strategy for increasing recognition and growth. The main important factor is to understand the scope of QMS and implementing the same is crucial for getting and ISO 9001 certification. The effective QMS will surely results in ISO 9001 certification. QMS will reflect in customer satisfaction, service facilities, and operation process so on. The Main areas of QMS are explained below: Managerial Responsibility: Authority and responsibility must be clearly defined and should be implemented in effective manner. IDO is involved in maintenance and improvement of QMS. It is the manager's responsibility to ensure that the employees are well aware of national and international regulations. Managers are also responsible for improvement of strategies for customer relationship management. The main document to be drafted by managers involves business plan by executive committee, Quality policy directive by CEO, Quality objectives directive by COO, preparation of organisation chart by COO and finally Management review procedure developed by ISO management representative. ISO emphasises that top management of shipping companies are proactively involved in the organisation, maintenance and improvement of the quality management system. It aptly defines quality policy and measurable quality objectives relevant to different functions and levels. It ensures that employees are aware of the importance of complying with national and international regulations, and also in meeting their customer's needs, expectations and desired level of satisfaction. When the requirements are not met, improvement strategies have to be implemented and their results to be evaluated and conveyed to top management. This forms the basis of continuous improvement. Resource Management: Resources can be of human resource or material resources. Human resources can be properly managed by adequate training and skill development programmes. Hiring, training and development are the main three functions of human resource management. Material resources involves company's infrastructure, work environment etc. Investment in infrastructure is important for further development and enhancement. The documents required for Resource Management for ISO certification consists of resource management process drafted by COO, Human resource manual prepared by HR manager, Facilities manual created by plant manager Product or service Realisation: This is the process of providing services to the customers. It involves customer relationship management, planning, development, controlling and monitoring measures. Information Technology is very helpful in maintaining database and for customer supportive measures. Managers are required to ensure that organisational functions are carrying out smoothly. Product realisation is required to implement Product realisation process plan by Vice president of operations, Marketing and sales process manual implemented by Plant manager, Design and development standards by Vice president of engineering, purchasing manual drafted by purchasing manager, Operations manual by vice president of operations, Customer service manual prepared by Service manager, Metrology manual prepared by QA/RA manager. Customer Satisfaction: Customer problems must be identified and appropriate solution must be taken immediately. Complaints or suggestion of the customers must be concerned and should take customer friendly measures. "Satisfaction is the customer's fulfilment response. It is a judgement that a product or service feature, or the product or service itself, provides a pleasurable level of consumption-related fulfilment (Oliver, 1997). In other words, this definition means that satisfaction is the customer's evaluation of a product or service in terms of whether that product or service has met their needs and expectations".(Analysis of customer Satisfaction) Failure to meet needs and expectations is assumed to result in dissatisfaction with the product or service. ISO stresses on maintaining some features and attributes for customer service in the shipping sector. That is the expectation and perception of their customers must be understood in advance for providing better services." Gronroos (1984) service quality model comprises of two dimensions. The first of these is technical quality and it relates to what customers receive as a result of their interaction with the firm. The second dimension is functional quality and it is concerned with how the service is delivered. "Functional quality reflects consumers' perceptions of their interactions with service providers. Gronroos's model compares the two dimensions of service performance to customer expectation, and eventually each customer has an individual perception of service quality".( Review of customer Service Quality) "The SERVQUAL method from Valarie A. Zeithaml, A. Parasuraman, and Leonard is a technique that can be used for performing a gap analysis of an organisation's service Quality performance against customer service quality needs". (Comparing service quality) This was based on a series of focus group interviews in service and retailing organisations using five service categories namely: appliance repair and maintenance, retail banking, long distance telephone, securities brokerage and credit cards. Ten determinants of service quality were originally identified and labelled as tangibles, reliability, responsiveness, competence, courtesy, credibility, security, access, communication and understanding. The authors subsequently (1988) recast the ten determinants of service quality into five components-tangibles, reliability, responsiveness, assurance and empathy. Internal Audit: Internal audit is required to verify the fulfilment of requirements of QMS in organisation. Audit is helpful in taking corrective measures in the required areas. Internal audit helps to implement planned programs at correct time at planned arrangements. It helps to conduct audit based on the importance of process or areas. It is helpful in maintaining records and making steps towards QMS. Internal audit is very effective in overcoming undue delays and elimination of problems. Internal audit helps to maintain quality management system. Audit is helpful in finding out conclusions and for information. This can be used for the analysis of data. Measurement and Continuous Improvement: QMS ensures continuous development and steps towards improvement in all organisational activities. The documents are required for ISO certification. The documents for Monitoring and measurement control plan prepared by Vice president of operations, Auditing manual prepared by QA/RA manager. In addition other documents such as Nonconforming product procedure, Statistical analysis manual, corrective and preventive actions procedures based on customer complaints are all prepared by QA/RA manager. In the certification procedure, organisational operations are thoroughly verified by ISO to see that the organisational and customer's requirements are fulfilled or not. Completing of audit procedures is essential for applying for the registration for ISO 9001 certificate by showing that company met the requirement. For getting an ISO certification requires identifying the gap and fulfilling the same. It requires time, effort and resources. Organisation is required to ensure continuous delivery of high standard of services for attaining long term growth. ISO certification is granted by third party after satisfied with their auditing work. Advantages of QMS in shipping sector Reduction in unforeseen expenses as a result of reduced accidents and casualties Reduction in delays and detentions as a result of Port Control inspections Reduction in number of deficiencies and non-conformities raised by classification society and flag states Reduction in the number of cargo claims and disputes with charterers Ease of compliance associated with vetting inspections of oil majors Reputation and competitiveness in the fulfilment of long-term contracts 5 Scope of ISO 9001:2000 The organisation and its members along with management must understand the scope for ISO 9000. They must design quality management system based on the requirement of ISO 9001.Before starting an external audit by ISO team, it is essential to conduct internal audit to assess the documents and procedures. The organisation process for delivery of services and all other related activities comes under for ISO assessment. Scope of the ISO certification must be drafted by the company before applying for the ISO registration. Auditor is having major role for see whether the company fulfil the requirement for ISO certification. The scope of ISO refers to the organisation processes, departments, services or products etc. It is also important to verify to see if there is any misleading information. Top officials of the company are required to understand certain essential factors before applying for ISO certification. Top officials are required to conduct gap analysis, further requirements, documentation process, implementing best practices, conducting training and finally support for certification process. ISO 9001: 2000 ISO is an International Organisation for Standardisation established with the aim of standardisation of activities worldwide. ISO 9001:2000 is mainly focus on Quality Management Requirement. It focuses mainly on controlling aspects, customer satisfaction and continuous improvement in the organisation. ISO certification is granted only after successful completion of the audit by ISO representative. There are documents to be maintained on quality manual, quality objectives, process procedures, management reviews and plans. QMS at Istanbul Deniz Otobusleri Istanbul Deniz Otobusleri has achieved ISO 9001:2000 certification. Their QMS and customer oriented approach has resulted in ISO certification. They have proved that they are taking effective measures for continuous improvement of their activities and process, which resulted in increase of customers over the years. They are mainly concentrated on investment and development activities that are crucial for maintaining ISO certificate. Istanbul Deniz Otobusleri has proved that they met the customer requirements, managerial responsibility, proper resource allocation and utilisation, and continuous improvement. QMS can be implemented only with the responsibility of each members in the organisation are fulfilled. Istanbul Deniz Otobusleri has achieved QMS with their efficient process as well as by their service provisions. The scope of IDO is to support sea transportation and quality service maintenance for their clients. Services can be expanded mainly by increasing the routes of journey by increasing seabuses and ferries. Focus must also give to the customer satisfaction and for improvement. In all these aspects, IDO is proved as successful. They are continuously expanding their operations along with their customer supportive measures. 6 Financial Cost involved in attaining ISO 9001:2000 Standard: Trading Income: Trading income can be generated only by incurring some cost for the same. Operating expenses are involved in maintenance of ISO 9001:2000 standard. IDO is engaged in sea transportation and is required to follow the clauses mentioned in ISO 9001: 2000. Performance of the IDO can be determined by analysing trading income, operating expenses and cash flow. Trading income is the income derived from the business activity. IDO's trading cost involves income from the passengers and vessels after deducting the expenses for generating the trading income. According to the ISO 9001: 2000 standard, it is the manager's responsibility to generate trading income by resource management, product realisation, monitoring and improvement. Trading income refers to the income generated by the commercial activity of the vessel, such as freight income, charter hire or passenger revenue less the costs directly related to earning that income. These costs include brokerage commission, port and agency costs and when trading on a voyage basis, bunker costs and costs of preparing and surveying the cargo holds or tanks. ISO 9001:2000 standard requires ship operators to monitor trading income. Operating cost The cost associated with operating expenses includes cost of manning, maintaining, storing, providing insurance for the vessel and having it ready in all respects to commence trading. Costs associated with a vessel's technical management are commonly referred to as Running Cost( RC)RC is universal measure of a vessels operating costs and generally includes expenses involving crew, deck stores, engine stores, cabin stores, surveys, victualling, provisions, hull and machinery. P& I, spare parts, lubricating oil, repair, maintenance, communication and management. These operating cost are explained below: Crew cost: This involve cost for incurring resources for making provisions. Creating competence, making awareness and training cost involved in work environment are all comes under this category. It is essential to provide suitable work environment for the employees. Training is the ongoing process, which must be provided to the employees. Repair and Maintenance cost: It is important to mention clearly the responsibility and authority for undertaking repair and maintenance. Infrastructure development is important. Control of production and service provision are to be maintained. Validation of process for production and service provision is required. Identification of defect and repair the same. Controlling and monitoring cost in system maintenance. Other cost involved in devices maintenance such as control of nonconforming product. Purchase is the area where cost can be reduced if proper evaluation is established on selected suppliers. It is also essential to ensure that stock is adequately purchased and proper records are maintained along with proper storage system. Stores and spare Cost: It mainly involves cost involved in purchasing process, keeping purchase information, verification of purchased product identification and traceability cost. Purchasing process involves documentation procedures that are mention in the purchase manual by purchase manager. All materials purchased must be inspected for quality assurance. Victualling and Pantry Cost: It involves cost in purchasing process and purchase information. It is usually mentioned in the purchase manual of the organisation. Insurance cost/Franchisee and Uncovered average: Determination of requirements for the insurance related to the product. Reviews of requirements related to the products etc. Dry-docking Cost: Specifying responsibilities and authority to the staff. Maintaining appropriate infrastructure, which is suitable for the requirements. Cost involved in identification and tracing of infrastructure. It also involves cost of control of monitor and measuring device and cost of control of nonconforming product. Classification and Survey Cost: It involves cost of defining authority and responsibility. Allocating suitable mangers is costly. Identifying the infrastructure that the organisation is required and ensuring product requirements is costly procedures. Identification of problems and making solution is a essential. Control of monitoring and measuring devices are important to ensure that they are effective. Cost of control of nonconforming product and analysis of data is essential for smooth functioning of the procedures. Luboil cost: Purchasing process cost, purchasing information cost and cost involved in verification of purchased cost are the major cost associated with this. Communication Cost: Customer focus, internal communication and customer communication are the communication area. Establishing good customer communication arrangements and implement the same is essential for customer satisfaction. Ensuring of appropriate internal communication process is required to be implemented in the organisation. Internal communication must be free of prejudice and chaos. Management Cost: Management cost involves cost involved in documentation requirements, responsibility, authority and communication. Management is also required to review output with appropriate data. Monitoring, measurement and improvement cost are also involved in effective management. Cash flow: Cash flow refers to the cost involved in owning a vessel. If a vessel is financed by a bank loan it includes loan interest and depreciation (on a profit and loss accounting basis) or loan interests and loan instalments (on a cash flow basis). In addition, cash flow includes the monetary difference between trading income and operating expenses. Managerial responsibility and resource allocation has major effects on cash flow. Continuous improvement of quality can be achieved by monitoring the efficiency of technical and commercial aspects of business. 7. Establishment of suitable information system for efficient Management: Information Technology is playing a major role in IDO's operation. They have made all provisions to access their information through internet and e-ticketing. They also introduced kiosks for ticket issuing in certain areas, which is comfortable to the customers. IT has enabled them to provide quick services and effective operation of their work. Today management information system is playing a crucial role in organisation. MIS helps to maintain accurate information in a ready available manner and backup of crucial information for the future reference. MIS manager is responsible for designing and implementation of Information Technology in the organisation. He plays a crucial role in controlling the day to day office work ad backup systems of the departments. Utilisation of internet and intranet are essential for documentation and for data sharing along with communication. Customer relationship management and supply chain management can be made effectively with the utilisation of modern wireless network technology. Sophisticated software can be used for customer supporting and enterprise resource planning. 7.1 Recommendations for IT operations: IDO is mainly depending on Information Technology for their operations. So it is essential to implement the software for monitoring and controlling purposes. Information technology must ensure that the following functions are taking place smoothly: Maintenance of records and checklist Data maintenance and timely information Avoiding data redundancy Customer Relationship Management Communicating role for both internal and external 8 Conclusions: ISO 9001:2000 certification is mainly based on the implementation of Quality Management System in the Organisation. IDO- Istanbul Deniz Otobusleri has achieved ISO 9001:2000 certification and has proved that it helps them to increase their profitability and growth. They have developed highly sophisticated information technology for their routine job process and for meeting the demands of the customers. Customers are the base of any type of business organisation. Customer tastes and preferences are to be considered while implementing the investment and development programs. With the implementation of customer friendly measures by IDO results overall increase in the customers for the last five years. IDO is required to concentrate for maintenance of existing QMS and making further investments for increasing their seabuses, ferries and providing more routes for journey. IDO has already adopted these measures and now they need to concentrate on implementing the same successfully. This will surely increase their customers, profitability and growth. ISO certification is essential for increasing profitability, competitive advantage, acquiring customer confidence, clearly defined authority and responsibility. In addition, it helps to have well defined systems, quality and better opportunity for growth and development. Bibliography Company Profile. (2008) [Online].IDO.Last accessed 30 April 2009 at: at:http://www.ido.com.tr/en/index.cfmpage=SubPage&textid=62&kapsam=56&ln=en The Analysis of Customers satisfaction toward Service Quality in PT RST Indonesia: Introduction (2009). 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