Total Quality Management
The earlier success of capitalism can be attributed to its competency in production processes and ability to exploit labour. In the 19th and 20th centuries, Taylorism showed manufacturers how to break-up work into its simplest components and to employ cheap labour to perform as automatons in the production process.
In the late 20th century, new approaches which involve the fuller use of human potential have come into being. Such approaches have become necessary as humankind began to master production and recognized the customer as the source of value.
Total Quality Management is one such approach. It attempts to marry excellence in production with the needs of the market, while maximizing profits. This essay discusses the main elements of TQM and the changes which it brings in the context of a well-known British business, Inde Coope Burton Brewery.
Problem Identification
The UK beer market has become very competitive. Traditionally consumers relied on a few local products which were presented in limited packaging. Today they may choose from several local and imported varieties, in a number of packaging formats and from many distribution outlets. This change from a seller to a buyer-orientated market forced Inde Coope to move from a production-orientated to a market-orientated perspective.
Increased beer choice has changed consumption patterns. The product has become more fragmented, appealing to many small market segments instead one generic mass market. Product segmentation requires greater emphasis on branding, packaging and promotion, as well as finding non-traditional outlets for niche offerings.
This proliferation also complicated the supply chain, not only in product-related materials but also in packaging materials. Simultaneously, a greater investment was required in brand-building and customer-orientation. Under these conditions, quality of product is no longer a differentiator ; it is an entry-level requirement for effective competition. Traditionally Inde Coope’s system monitored quality at each stage of brewing and packaging. Now the company wanted to ensure quality at the source, in its endeavour to eliminate errors from the start. This required organizational and cultural change.
The company’s existing techniques provided statistical data which described rates of non-conformance but did not explain why defects occurred. Such “inspection-by-statistics” did not involve the direct producers sufficiently and new organizational mechanisms became necessary, to involve all in the effort for top quality. This would be essential if the company’s application for ISO 9000 accreditation was to be successful.
Company leadership recognized that the change from “quality control” to Total Quality Management would not only require statistical techniques but also teamwork across all levels of the company. Cross sectional-teams had to be created, involving workers, shop stewards and managers in order to continuously improve. Everything concerning quality could be discussed.
Beyond the company, the distribution chain had to be involved in maintaining quality and Inde Coope had to create mechanisms, to secure the loyalty of the trade, rewarding and recognizing them. A discussion of approaches follows below.
SWOT analysis
Inde Coope’s greatest strength is the willingness of its executive team to learn from anyone and adapt accordingly. The company has a tradition of measuring its successes statistically, providing a solid foundation for TQM by creating a sense of continuity.
Some weaknesses are apparent. The logistical complexity of managing 48 beers in 190 potential packaging formats is daunting. The logic of 21st century marketing is to customize products to as many segments as possible. This endless niche marketing could create overly-complex logistics for a company which produces a relatively simple product, in other words greater investment will be made in non-production activities and the organization could become “administratively heavy”.
In an established company, the introduction of cross-sectional teams may generate resistance. As all levels of employee become involved in decision-making the need for many layers of management will be reduced and some positions will become redundant. Strategies other than communication, will be required to cope with this.
Fortunately, the company has adopted an all-inclusive concept of quality, ranging from its supply chain, to production operations and to its distribution network. By strengthening external relationships, Inde Coope will entrench its own brands and maintain quality at all levels of its business.
There is opportunity to redesign its organisational structure, to become leaner and more cost-effective. The philosophy of Continuous Improvement also provides opportunities for enskilling its staff and creating career paths for them.
Inde Coope admits that “flavour” is the most difficult marketing variable to measure. This subjective factor could work in favour of competitors who are more skilled at researching and understanding consumer’s taste preferences.
Traditionally Inde Coope is a production business. If it does not develop competent marketing capacity quickly and ensure that this function is given sufficient management influence, other brands will capture potential business.
Inde Coope wishes to be close to the market but no single player will have sufficient resources to do so, in all locations. Smaller niche players could compete in markets which are “below Inde Coope’s radar”, thereby increasing the competitive intensity in the beer market.
Quality and Total Quality
Total Quality Management is fairly new to Inde Coope Burton Brewery.
Japanese and American corporations are foremost champions of quality. For over 35 years the Japanese integrated quality into all company operations ; American companies established separate quality control departments. Over the past twenty years TQM (Total Quality Management) became formalized through accredited systems such as ISO 9000, which cover every aspect of operations from receipt of raw materials to product delivery.
“Total Quality” is a multi-disciplinary, strategic approach to management. Its implementation depends on identifying the primary problem, which in turn influences the performance of the organization as a whole. Different perspectives can be applied to thinking about total quality. Human-resource managers emphasize employee autonomy, organisational redesign and cultural change whereas production managers emphasize the supply chain, rework or wastage issues.
TQM requires alignment of thinking between different business functions, as expressed in shared vision and a comprehensive implementation plan. TQM cannot be imposed on an organization; instead it enables the employee to work flexibly and to improve quality within his immediate control. This eliminates external policing. Typically therefore, TQM involves flatter organizational structures, reduced processing time lower inventories and wastage, and reduced inspection costs.
Different organizations have different definitions of TQM. Most include continually improving the quality of products (and services) through internally-driven learning, delivering what the customer wants and analysing data to improve systems. Cross-sector work teams meet regularly to find solutions. Everyone is taught to use basic improvement tools such as process flows, various charts, histograms and scatter diagrams. Teams are also enskilled with analytical, presentation and thinking skills.
TQM intends to improve the business’ competitive position. Some companies compare their performance to the market leaders. Such benchmarking requires the support of senior management who help to set higher goals.
Managing Change – Why Change? How do you approach Change? Use tools or models
Kotter writes that change is necessary because of a “more challenging market environment” (1995 p. 59) or a “declining competitive position” (1995 p.60).
Technological change creates more efficient processes but also creates opportunities for competitors. Opportunities for organisational renewal should be directed towards competing more effectively. Failure to effect internal changes in accordance with competitive conditions reduces financial returns.
Kotter offers an eight-step model for driving organizational change:
Establishing a sense of urgency
Creating a coalition of managers/leaders
Creating a vision with implementable strategies
Communicating the vision and plans
Empowering others to act on the vision flexibly
Create short-term wins which are visible and rewarded accordingly
Produce further change from consolidated improvements
Institutionalising consolidated changes
Top managers should champion this process, to visibly show their support for a TQM mission. These values should be expressed in changing operating systems, improving working conditions and creating a learning organization which strives for better performance. Further explanation is offered below.
Resistances to Change – How to overcome resistances
The implementation of a quality programme inevitably threatens jobs. Long-standing employees often see no need for change; they may become rigid and inflexible.
In her survey of 350 American companies, Thornburg found that “72% of the respondents believed that flexible programmes positively affect the organization, only 49% believed they affect the bottom line.” (1994, pp. 46)
TQM involves eliminating non-value-adding activities, typically removing management/supervisory layers and some jobs. Retrenchment, early retirement or redundancy are options in any change process and resistance will always be encountered. Skilled management of the process however, can ease the transition to a quality environment.
Employees focus on productive outcomes rather than on the number of working hours when companies genuinely implement the values of freedom, trust, responsibility and respect. TQM depends on these values. Research has found that companies are more effective when there is a high level of shared meaning high involvement in decision-making and ability to adapt to external conditions consistently (Denison & Mishtra, pp.214-216)
Leadership plays an essential role in implementing change through two-way communication, listening to the organization and implementing workable suggestions. Redundancies should always be handled diplomatically and in a manner which maintains morale amongst remaining employees.
Company executives will require an “ambidextrous” style which makes tough decisions while enabling a more flexible environment.
Tags: automatons, cheap labour, elements of tqm, human potential, maximizing profits, packaging materials, production processes
