Total Quality Management - A Strategic Initiative Gaining Global Compitative Advantage


By

Prof. Pushpalatha. V.
Asst. Professor
Department of Management Studies
Global Academy of Technology
Rajarajeshwarinagar, Bengaluru-98
 


Global competition has forced many organizations to satisfy the ever-growing demands of the customers. It's a well known fact that no business can exist without customers. Organizations need to retain existing customers while targeting non-customers as well. 

In today's business environment firms strategic priorities is to examine their business practices and to evaluate how to meet the challenges in facing competition in domestic and international market.  Quality improvement has become a pervasive element of business strategy, allowing some companies to respond to increasing competitive pressures.

Competitive strategy is concerned with how a company can gain a competitive advantage through a distinctive way of competing

Total Quality Management (TQM) is a structured system for meeting and exceeding customer needs and expectations by creating organization-wide participation in the planning and implementation of breakthrough and continuous improvement processes. It integrates with the business plan of the organization and can positively influence customer satisfaction and market share growth.

Total quality management is a management system for a customer focused organization that involves all employees in continual improvement of all aspects of the organization

Top management crafts its strategy and operations around customer needs and develops a culture with high employee participation engaging all divisions, departments and levels of the organization as well.

The Total Quality Management (TQM) concept has the potential to integrate all the improvement philosophies proposed to delight the customers and thereby gain global business advantage.

The basic principles for the Total Quality Management (TQM) philosophy of doing business are to satisfy the internal and external customer, satisfy the supplier, and continuously improve the business processes.

TQM   being a strategic tool, facilitate the companies, to edge the business competitors and thereby win the business game plan i.e gaining global competitive advantage.

TQM is a philosophy that says that uniform commitment to quality in all areas of an organization promotes an organizational culture that meets consumers' perceptions of quality

TQM IMPLEMENTED COMPANIES FOCUSES ON  9C's

    1. Commanding quality
    2. Customer driven strategies
    3. Continuous improvement
    4. Cost reduction strategy
    5. Creativity & innovation strategy
    6. Customer retention strategies
    7. Competency development
    8. Customer Value creation strategy
    9. Corporate Social Responsibility

1.  Commanding Quality : Commanding quality is the result of three critical qualities that permeate the organization: knowledge management, method and commitment of people towards Quality Improvement Teams (QIT's) and Quality improvement Projects

(QIP's) in TQM companies works wonder in solving quality related problems and strives to improve quality.

Quality Improvement Team (QIT's) Group of mutually skilled employees charged with the responsibilities of improving a production process or designing a new one.

The primary role QIT's is to:

    a) Monitoring  the performance of key processes,
    b) Selecting process improvement projects,
    c) Assigning responsibility for the improvement effort,
    d) Charter a cross-functional or departmental process improvement team
    e) Allocate appropriate resources, and
    f) Recognize accomplishments.
    g) Provide support and adequate training for process improvement teams.
    h) Facilitate the operation of the quality committee by providing data and reports on key processes.
    i) Draft charters for process improvement teams.
    j) Train and assigning team facilitators.

2.  Customer Driven Strategies - any management activity should eventually lead to increased customer satisfaction. It is a fundamental precept of modern customer management that companies should understand customers, and then acquire and deploy resources to ensure their satisfaction and retention. This is why CRM is grounded on detailed customer-related knowledge. Customers that you are not able to serve well may be better served by your competitors.

Delighting customers, or exceeding customer expectations, means going beyond what would normally satisfy the customer. You cannot really strategize to delight the customer if you do not understand the customer's fundamental expectations. You need to have deep customer insight. Continuous efforts to delight customers show your commitment to the long term relationship. Commitment builds trust. Trust begets relationship longevity.

3. Continuous Improvement : Kaizen being Japanese concept for "improvement" or "change for the better" refers to a philosophy or practices that focus upon continuous improvement of processes in manufacturing, engineering, supporting business processes, and management.

Kaizen For Small Improvement : TQM implemented Companies do have kaizen software's across the organization at all levels wherein management  encourage their employees to involve and participate in small improvements towards quality in which small change in quality improvement can bring big difference in incorporating quality systems in an organization also helps Companies to reduce the  unnecessary cost.

Kaizen means "improvement" kaizen strategy calls for never ending efforts for improvement involving everyone in the organisation.

It sets the right mindset and business environment in continuous improvement Firm(CIF)

    * Kaizen Strategies

      o Not a single day should go idle without some kind of improvement being made somewhere in the company
      o Don't just criticize, suggest an improvement
      o Think out of the box and think beyond common sense, even if something is working, try to find the ways to make it work even better.
      o Start with scarcity. It's hard to see the need for kaizen  resources are plentiful.

4. Cost Reduction Strategy:  Adding value to customer products

The long-term viability of a company's business plan depends on sustaining its Competitive advantage is usually achieved through developing new products and services that satisfy and delight customers and through restructuring and improving business processes to improve quality and reduce costs -- adding Value.

There are many examples of companies successfully using comprehensive quality improvement processes -- primarily Total Quality Management (TQM) and Six Sigma -- and Lean Thinking to restructure their products and processes.

5. Creating Value to Customers:

It is important to have something unique that is not readily available anywhere else. Customer value in its most basic form is merely the difference between the benefit receive from a product and the cost associated with that product. Today's consumers are much more educated and knowledgeable to the power of the internet.

They demand the worth of their spending.

The best strategy to avoid unnecessary costs in the production process and thereby adding value to the customer products and also  quality products at affordable prices is to use the following tools which creates value to the customer product..

    1. Value analysis &
    2. Bench marking

As always, a satisfied customer is a happy customer and will be loyal.

6. Creativity & Innovation Strategies :

Does your business have a creative culture which inspires original thought so that your people can think and act creatively?

Igniting the creativity of people in an organization results in innovation

Creativity and innovation are often key to the success of a business, particularly when strategizing during strategic planning, and when designing new products and services. Creative thinking and innovation are particularly useful during Strategic planning.

Brain storming:

Brainstorming - an effective tool to generate lots of ideas on a specific issue and then determine which idea or ideas is the best solution.. If participants feel free to relax and joke around, they'll stretch their minds further and therefore produce more creative ideas.

Corporate innovation could be 4 P's

    1. People oriented innovation
    2. Product oriented innovation
    3. Process oriented innovation
    4. Planning oriented innovation

Toyota has established effective idea management systems around. Every year since the 1970s, the company has received over a million ideas from its employees. Over 80% of those ideas have been implemented. Toyota has not only created a culture which actively encourages everyone in the organization to contribute ideas, but also has got people thinking about the right kind of ideas for the company.

DaimlerChrysler is another company that has come to appreciate the value of many small ideas. In 2001, their web-based idea management system received some 69,000 suggestions which resulted in a total savings of 62 million Euro.

7. Customer Retention Strategies : identify the ideal & loyal  customers  strive to retain  them. Prioritize quality and do not give more prominence only to profit  an enterprise can prosper only if customers who purchase its products or services are satisfied.  Always strive to delight the loyal customers and automatically profit follows & flows.

Positive customer retention strategies are:

    a) Creating customer delight,
    b) Adding customer-perceived value,
    c) Creating social and structural bonds and building customer engagement.

Customer Loyalty

Retaining the existing customers is easy and cost effective than in finding new customers as it is expensive and requires lot of efforts.

Strategies to build a loyal customer base:

    1. Products that are highly differentiated from those of the competition.
    2. Higher-end products where price is not the primary buying factor.
    3. Products with a high service component.
    4. Multiple products for the same customer.

Try to market to your own customers

Do Keep all the information of your customers, Don't hesitate to ask for the next sale.

Do collect feedback about your services, Don't hesitate to use complaints o build Business

Do follow-up calls or mailing satisfaction questionnaires after the sale is made. Don't hesitate to resolve a customer's complaint, the customer might be even more likely to do business than the average customer who didn't have a complaint

Do Have a personal touch & try to reach out to your Customers!
Contact . . . contact . . . contact with current customers is a good way to build their loyalty. The more the customer sees someone from your firm, the more likely you'll get the next order. Send festive cards, see them at trade shows, stop by to make sure everything's okay.

Send a simple newsletter to your customers-tell them about the great things that are happening at.

8.  Competency development:  Companies are investing in knowledge acquisition to achieve corporate goals and this is especially true when the investments are made in employee development and training.

TQM helps strategically integrate employee learning into the company's long-term innovation and sustainable growth plans.

Strategical HRD tools Competency mapping for identifying and developing required skills for executives and Skill Matrix for identifying and developing job related technical skills for non-executives. These HRD tools for developing competencies of employees as per the requirement of ISO and TQM are benefiting organizations to have a competent workforce and obviously contributing towards quality.

Trained   employees have less error on jobs, comfortable and confident of delivering the best to the organization.

9. Corporate Social  Responsibility :

Globalization, especially in emerging markets, has changed the nature of the market from that of a local market into a wider and more competitive one. If companies are to succeed, the products and services offered must have a global competitive edge. Furthermore, if the basic market is to be expanded, it must be conditioned to ensure that it offers a favorable environment to attract further investment.

Incorporation of CSR activities within the business strategy made the companies not  only to survive, but also ensure sustainable growth. Good corporate culture and human resources capability are major determinants of a company's success or failure and CSR activities are important tools to support the company's strategy, image and reputation.

Many  corporates across the world are involved in corporate social responsibility (CSR) programmes in areas like education, health, livelihood creation, skill development, Going green environment friendly  and empowerment of weaker sections of the society.

Conclusion:  An effective TQM program has numerous benefits.  Financial benefits include lower costs, higher returns on sales and investment, and the ability to charge higher rather than competitive prices. Other strategically benefits include improved access to global market, higher customer retention levels, less time required to develop new innovations, and a reputation as a quality firm. Only a small number of companies use TQM because implementing an effective program involves much time, effort, money, and patience. However, firms with the necessary resources may gain major competitive advantages in their industries by implementing TQM.

Reference:

1.     Encyclopedia of Business
2.     Business Analysis
 


Prof. Pushpalatha. V.
Asst. Professor
Department of Management Studies
Global Academy of Technology
Rajarajeshwarinagar, Bengaluru-98
 

Source: E-mail June 22, 2010

          

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