Impact of IT on TQM in an Organization - Research Proposal Example

Impact of IT on TQM in an Organization Introduction What is IT? IT or Information technology is basically the use of computers and software to manage information in an organization (Schneider). In some companies it is referred to as Management Information system (MIS). The basic job of any IT department in an organization is to set up systems to process information, ensure data security, create information storage and retrieval mechanism and ensure error free flow of information to the relevant stakeholders. IT as an integral function of an organization Early use of IT was as simple as computing the totals of the sales done by a merchant in a day. However, with growth of technology companies have been using IT more rigorously for better accuracy and speed of an activity. The growth of IT in organizations started first with the use of computers and later went on to the use of communication systems. With the growth of networking, organizations strived to implement these so as to achieve maximum efficiencies. IT today is a vehicle for making substantial changes in organizations, markets and the economy (Lucas, 2001). The basic purpose of any organization is to either manufacture a product or to provide a service to its customers. An organization is divided into various functions as per the task they perform to achieve the organizational goals. The organizations use various technologies for achieving this goal. However, IT is different from these technologies. Figure 1 below describes the role of IT as per Harold Leavitt. As per this model, IT is the central link between all parts of an organization (Lucas, 2001). It has a separate existence from the other technologies used by the firm. Thus, we can see that IT has taken a central role in today’s organization. Figure 1 Examples of role of IT in organizations Some very big organizations have been pioneers in using IT to revolutionize the way processes are run. Chrysler is one such example. The company is an excellent example of ‘lean’ production, a methodology of production that has revolutionized the manufacturing industry. This production system required the company to work with approximately 1600 external suppliers that shipped materials to 14 car and truck assembly plants in North America (Lucas, 2001). The key to lean production is Just-In-Time (JIT) inventory system. The company used IT to set up Electronic Data Interchange (EDI) for efficient running of JIT mechanism. This meant electronically linking all the suppliers to the company through the EDI and eliminating any manual or paper transactions (Lucas, 2001). The major transactions involved were – ordering parts, scheduling and rescheduling deliveries and payments (Lucas, 2001). The EDI enabled high speed communications between the various parties and also helped in handling huge transactions which would have been impossible to handle manually. Thus, IT helped the company in implementing lean manufacturing which eventually saved $1 billion worth of inventories by reducing the inventory turnaround from 5 days to 2 (Lucas, 2001). Using IT, Chrysler has devised a unique way of avoiding excessive billing transactions. Through the Pay-as-Built program, Chrysler keeps track of the number of cars built each day and then works out the number of parts of a particular supplier that would be required. Based on this analysis, the computers automatically pay the vendor for the material used through wireless payment transaction (Lucas 2001). TQM By definition TQM or Total Quality Management is the process of continuous improvement within an organization with involvement of all those who are associated with it to achieve complete customer satisfaction. The key principles of TQM involve: Involvement of all departments and stakeholders of the organization in TQM process. This requires team work building among the employees and good communication between them. Reduction of waste by removing the need for inspection (Rawlins, 2008) Prevention of faults by detecting them as they occur and rectifying them at the point of occurrence. This not only helps in improving quality but also helps in waste reduction as the product or service would have otherwise been rejected at the end of the production / service cycle. Continuous improvement – This requires that all processes are evaluated on a continuous basis with the aim of improving them at every step. Development of a competitive strategy after analyzing the competition (Rawlins, 2008). This means that all strategies should be backed by adequate data gathering and analysis and not be based on intuition. Development of measures of performance is the key to continuous improvement as it helps in evaluating performance of the processes. Relationship with external stakeholders like suppliers. And finally, complete customer focus. The main aim of any TQM process implementation in an organization is achieve complete customer satisfaction. Hence, all the processes need to be defined to achieve the end result. After having discussed the basic principals advocated by TQM, it has become clear that to achieve success in an environment which is becoming increasingly global in competition, one needs to implement those principals rigorously. This is because they help in achieving the following goals for a firm’s survival (Ergulen, 2009): Production cost reduction by increasing productivity and eliminating waste. Increase in profitability Complete customer satisfaction by providing the customers good quality products and services along with variety and reliability. Role of IT in TQM TQM requires changing the current systems and procedures and technology is the most important key to change (Ergulen, 2009). One of the key principals of TQM is quick communication. IT is the basis of all communications networks. With the advancement of IT and the growth of internet, communication has taken a very unique place as an interface with the customers. For example, most of the companies today have their own websites where customers can check the various options available. Banks and insurance companies provide complete details of the various investment options available to the customers who can directly apply to these products online. With the growth of the credit cards and electronic payment facilities, customers do not need to physically go down to the showroom or their bank branch. They can make payments online, sitting in the comfort of their homes. Thus, IT facilitates one of the most important aspects of TQM – customer satisfaction. Another example of the use of information technologies in achieving customer satisfaction, which is the hearth of the TQM and requires mass product tailored for an individual, can be given from Japan in where it is widely employed in building prefabricated houses. Seller designs a house in compatible with the request of an individual by bringing the thousands of finished pieces together in computer. Then, the designed houses are being delivered within 30 to 60 working days to the owners (Ergulen, 2009). One more facet of communication that IT helps in is internal communication. In the example of Chrysler discussed earlier, EDI helped the company in communicating to its suppliers much faster than manual communication and also facilitated huge data handling. The overall impact of this was felt in the inventory holding days and eventually the cost. Similarly software applications like PeopleSoft use web capabilities to help connect people within the organization. They provide platform for discussion forums on HR related or other departmental topics where employees can freely express their views. These forums can be used as channels for collecting information to improve internal processes. This software also provides emailing facilities where automatic emails are triggered based on hierarchy in processes like leave management or payroll (sig.nfc.usda.gov). Web facilities of PeopleSoft help in conducting surveys which facilitate process improvements. Web can also be used to dissipate information throughout the organization at the same time. Thus, IT helps in connecting to thousands of employees at the same time and hence inculcate the team culture which a very import characteristic of TQM. Through the various forums and surveys the web capabilities of IT help in increasing the employee involvement in the TQM process. This is a very important feature for the success of the TQM effort in an organization. Strategic planning is critical to the implementation of TQM. Planning requires gathering market information (also called market intelligence) and also understanding employee needs to enable smooth integration of employees into the new process built on market intelligence data. A mammoth task after gather this data is the storage and analysis of this huge data. The storage, transmission and analysis of this data can only be achieved with the help well integrated information systems. Today we have very advanced storage devices like pen drives etc. which can store huge data quantities. There are many analytical tools, like mini-tab, which help in statistical analysis of data and presentation of the data in various formats for ease of understanding. Web is another source of data gathering. It has a very unique place in terms of its reach. Surveys and other information can be sent to prospective customers at various geographical locations at a very low cost which otherwise would be much more expensive. This data can then be downloaded and analyzed in any desired format. To achieve high quality products, it is vital that the inputs that make the product are of high quality. This can be achieved by building healthy relationship with the suppliers and providing them with adequate information at the right time. In the Chrysler example, the company was able to achieve quick and transparent communication with the supplier through IT. Product development and innovation as a part of TQM cannot be easily achieved without the help of an advanced IT system. Computer Aided Designing (CAD) and Computer Aided Manufacturing (CAM) are the answers to today’s product design and innovation requirements of the organizations. Thus, we can see that all the activities of TQM are influenced by IT is some form or the other. There is no escaping the fact that IT is vital to the implementation to TQM in an organization. Changes required for implementation of TQM Implementation of TQM requires a complete change in perspective. Some of the changes that would be required are: Change in orientation from departmental functioning to processes related functioning (Ayers, 1993) – In traditional companies, employees work within departments. Hence, there is never a team spirit as everyone is trying to work for the department and not the organization. A TQM perspective requires the company to be seen as different processes with one person responsible for the profitability of a process and not a department. This process is continually changed as per changes in the environment and its performance is always measured through measurable and predefined parameters. Team driven approach – This requires people to work in multi-skill teams. Thus, in one process there will be people from finance, technology, management, customer service and so on all working towards one goal – process excellence. Thus, the employees have to change their way of working and be more flexible. Employee involvement – The top management has to understand that TQM is a philosophy that requires complete commitment from employees down the line. Management can make changes, but implementation happens at the lower levels. If the leadership is not able to take the employees along they can never achieve the results. Hence, the information flow needs to be bottom up also. They need to listen to the employee perspective. Supplier relationship change – Companies need to work with the suppliers as their partners and help them achieve the required quality standards. This could be in terms of providing them with technical help or trainings. Their systems need to keep pace with the changing environment so that the requisite products can be manufactured. Continuous improvement requires frequent change in processes and technology. Problems in implementing TQM and their solutions Cost factor - Many companies feel that the cost of introducing TQM is far greater than the benefits it will produce at a later date (Murray). However, research within the industry shows that the direct and indirect costs associated with poor quality products or services are much higher than the implementation of TQM. The costs involved in implementing TQM are planned costs and involve setting up systems for maintaining predefined quality standards, setting up systems for quality audits, production system setup, systems for inspection of material coming in for production and vendor quality standard audits. However, the cost of failure or defect would include rework, wastage, loss of reputation, repairs, customer complaints and return of goods or loss of clientele. These costs are unexpected costs and are unaccounted for. They tend to be much higher costs and have a far reaching affect as they could result in eventual loss of business (Murray). To overcome this problem, the TQM driver needs to provide empirical analysis of costs of not implementing TQM verses implementing it. Lack of leadership – Without a clear direction and rigor, the TQM process cannot be implemented in full. The leaders should have a clear vision and process to follow-up on the implementation of the TQM philosophy. Employee resistance – As complete implementation of TQM requires computerization, there is always a doubt in the minds of the employees regarding their job securities. Thus, they may not cooperate in the implementation of the various changes. This situation can be avoided by ensuring that there is complete employee involvement at all levels from the beginning of the implementation phase. This would require enlightening them on the advantages (for them as well as the firm) of the change being advocated and taking their opinions on alternatives they feel best. This would help smooth transitioning into the new ways of working. Choosing the right technology – At times choice of technology can result in failure of TQM implementation. For example, choosing an MIS platform which does not have the capability of being compatible with all software types can lead to disastrous consequences in terms implementation of TQM as well as inflated cost. Hence, it becomes very important that an in-depth study of the exact requirements is done before embarking on a particular technology. Keeping pace with the technology – This is one issue which if not kept pace with can pull an organization back. Conclusion TQM is an important philosophy in today’s competitive environment. IT is the backbone of TQM. It facilitates the implementation of TQM and also provides required flexibility to the system to help it adapt to the frequently changing environment. However, technology has both positive and negative aspects attached to it. It can make processes efficient and error free on one side, while on the other, if not chosen wisely, it can lead to inflexible and expensive processes. However, with a strong vision and clear direction, the leaders of an organization can help in smooth implementation of the TQM methodology in the firm. One thing is clear – it is impossible to think of achieving total quality without the implementation of information technology in a company. Appendix Ayers, J.B, 1993, TQM and Information Technology: Partners for Profit, Information Strategy, The Executives Journal, vol. 9, no.3, pp.26-31 Ergulen, A, 2009, An empirical analysis of the contributions of information technologies to the production process in Adana, Province of Turkey, Information Technology Journal, 8, pp.231-235 Hakes, C, 1991, Total quality management: the key to business improvement: a Pera International executive briefing, Springer Lucas, 2001, Information Technology For Management, Tata McGraw-Hill Murray, M, Total Quality Management (TQM), About.com, viewed on October 31, 2010 http://logistics.about.com/od/qualityinthesupplychain/a/TQM.htm Rawlins, R. A, 2008, Total Quality Management (TQM), AuthorHouse Schneider, L, Information Technology-Definition and History, About.com, viewed on October 30, 2010 http://jobsearchtech.about.com/od/careersintechnology/p/ITDefinition.htm sig.nfc.usda.gov, 2004, Release notes for PeopleSoft Enterprise HRMS 8.9, viewed on October 31, 2010. http://sig.nfc.usda.gov/hrlob/9.0/release/HRMS%208.9%20Release%20Notes.pdf Read More