Case on TQM Essay
Case on TQM
Using case study methodology, the authors asked quality managers about their company’s experience with ISO 9000:1994 and total quality management (TQM) implementation. The results show that initially the standard could help some companies reorganize their procedures and define responsibilities and duties. However, managers’ perspectives on its possible effect on company performance are not positive. Only product quality improves after implementation. On the contrary, TQM has improved many aspects of performance, the most influential aspects being those “soft” dimensions of leadership and human resource management. These aspects were not included in ISO 9000:1994.
After analyzing ISO 9000 as a first step toward the TQM implementation, as much of the literature advises, the authors’ findings suggest that managers consider it to be a disturbing element when implemented jointly with TQM. Their study points out that, in practice, there are two parallel quality systems in a company. To get better results, it is important to adapt ISO requirements to facilitate TQM implementation; otherwise, the only advantage of the registration is the “permission” to selling the market.
Over the last decade, ISO 9000 certification has been the subject of many articles. The phenomenon of its quick development led to a belief that it was a great advantage for a company to attain registration. In keeping with this, many researchers tried to identify the impact of ISO 9000 certification on companies’ results and management. An important group of researchers has not found any strong positive relationship between certification and results. However, there is another group of articles that points out an influence of registration on product quality.
Apart from any influence derived from implementation, some authors advocated that certification could be a good first step toward a total quality management (TQM) system, raising awareness of quality among workers and a good climate in which to implement it. Regarding this point, implementation of the standard was advised with the aim of implementing TQM in order to obtain maximum benefits from the registration (Brecka, 1994; Meegan and Taylor 1997; Huarng, Horng, and Chen 1999; Hughes, Williams, and Ryall 2000; Sun 2000; Gotzamani and Tsiotras 2002). The question is: Do companies really implement ISO certification with this aim? Is the accepted wisdom that ISO certification could “help” companies attain a TQM system true? Which aspects of ISO do that? The purpose of this research is to empirically evaluate the real contribution of ISO 9000 toward TQM implementation.
Case study methodology is best when the objective is to build theory in preliminary phases of a research study or to add new perspectives to previous research (Yin 1994). Part of this research can be considered as preliminary, because there is still little evidence on how the ISO 9000 and TQM act jointly in management. The objective of the case study is not the statistical generalization, but the analytical one. This methodology tries to generalize from case to theory; it does not attempt to extrapolate facts from sample to population. Relating to the number of cases, the lower number will allow the researcher to obtain more information (Voss, Tsikriktsis, and Frohlich 2002). However, a multiple case study increases reliability and external validity.
• Predict similar results (literal replication)
• Get different results due to predictable reasons
The authors chose a multiple case study instead of a single one to increase external validity and reliability. Fourteen companies among the biggest manufacturing companies in Spain were selected for the study. The cases were selected with the condition of being certified at least by the ISO 9000:1994. Three of them were applying TQM and two were recently certified by the new version of ISO 9000:2000. The case study protocol included two questionnaires in order to apply triangulation. One of them was used in the interview with the quality manager.
The other questionnaire was to be completed by other managers not associated with the quality area. The authors took into consideration other documents supplied by the company and direct observation through plant visits. Table 1 shows the companies participating in the study and their characteristics. Later in this article, the authors assign a number for each company in order to safeguard confidentiality of responses. The criteria used to select companies were mainly:
• Homogeneity of external factors: The authors focused on manufacturing companies since ISO 9000 was initially designed for industrial companies.
Effects of TQM on Company Performance:
First the authors classified companies according to the degree of implementation of a total quality system. They identified three companies
with high levels and experience in TQM the remaining companies had a low degree of TQM implementation. This classification was based on information about TQM dimensions such as customer orientation, work teams for continual improvement, consciousness about quality, quality planning, and so on. Managers of the three TQM companies were asked about the perceived performance improvements as a result of TQM implementation. The three managers agreed that TQM implementation had benefited the company in many ways.
Then the authors asked them to position the improvements in a set of performance measurements, explaining why the TQM system had improved every measure. Measurements were obtained from a literature review that relates quality management and performance. The richness of the case study is that the manager is able to explain at the moment of completing the questionnaire the “why” of each rate and to add evidence to the question. Table 2 shows the results along with some notes from managers. The last column shows the value of the influence on each measure based on the majority of responses (1-2=low, 3=medium, 4-5=high). In the cases where companies’ responses are very different (one of each) there is not enough evidence to affirm that TQM influences that point.
According to these managers’ perceptions, TQM influences product quality, customer service, fast response, competitiveness, customer satisfaction, employee satisfaction and motivation, rate of defects, and stock price. Regarding the customers’ claims, it is important to note that two managers indicated that this point had not improved because customers today are more demanding than before. A similar explanation is valid for warranty costs. One company also pointed out that these costs often come from a wrong use of the product and not from its quality. Exports and innovations were not tested because of the particular characteristics of the companies interviewed Financial measures were difficult to mark.
Managers agreed that they would need more information to position themselves, although they perceived that the market in general values the fact that the company has implemented a TQM system and consequently, the stock price rises. After completing the questionnaire, managers were asked to indicate the elements of TQM that are “more responsible” for company improvements. Following are their responses • Company 1: “The most important aspect is that everybody in the company, including the cleaning service, the doorman, and the accountant, is conscious and worried about quality. Before, the only people interested in quality were the quality department staff.” • Company 4: “Personnel motivation and participation. If you get this, then the complete system works.” • Company 12: “First, the general belief of the importance of quality. Second, the decision to be real leaders. Managers and staff move together towards the same aim.”
Effects of ISO 9000 on Company Performance:
Quality managers were also asked about the influence that ISO 9000:1994 registration has had on the same aspects of company results that were considered for TQM. They were asked to give a score from 1 to 5 (1=no influence, 5=very strong influence).
The global influence that ISO 9000:1994 has had over each variable, evaluated according to the majority of responses, is presented in the final column of Table 3. As can be seen, the only aspect that clearly improved from the date of certification was product quality. One manager said this was because they had to create procedures and reduce variability in the production process because of ISO implementation. All of them agreed that the product was the same as before certification. The only difference was that after ISO implementation it was more controlled.
The defect rate had consequently decreased as well. The effect on both customer satisfaction and competitiveness was medium. It is worth explaining that when the quality manager considered that certification could improved these variables, he always explained that “customer satisfaction” was derived from the accomplishment of a previous requirement from him: to attain certification. Some other managers pointed out that this satisfaction could be due to improvement in claims management. When ISO 9000 was first created, being a certified company was a competitive advantage.
Today this advantage has disappeared and it has become a requirement to compete in the market. The effect on customer service was also medium. In this sense, ISO 9000 certification has been useful to organize the claims management system. Each claim must be registered and evaluated. There must exist a procedure to
solve claims. Regarding the employees, the ISO 9000 system improved their productivity and their interest in quality problems. Improvement in productivity is again explained by better procedures and work instructions.
However, many managers have confessed that employee satisfaction worsened because of the bureaucracy of the system. The documentation needed to sustain the system increased their workload. The remaining variables are not considered to have any impact on results. Note that the financial measures were not influenced by the implementation of the standard. When managers were asked about the main advantages and disadvantages of certification, they agreed that certification is helpful to organize the production system through procedures and work instructions. The paperwork generated was identified as the most negative consequence. After asking if certification was profitable, the majority answered that “it had to be,” pointing out that nowadays it is a basic requirement. “If we did not have it, we couldn’t sell,” they affirmed.
ISO 9000 and TQM:
If data on the companies that had implemented TQM are analyzed, it can be seen that certification had less impact on nearly all results. The first company shows higher marks in some variables. This company was the only one that started the quality journey by implementing ISO 9000 first and then TQM. It would explain the fact that the ISO standard could help managers organize the production process when quality management was at an initial stage. In fact, the manager of this company stated that formalization was useful for learning and for having criteria for future comparisons. The other two managers of companies applying TQM did not find any impact, although they suggested that the certification could help in some cases when companies had problems regarding process management.
Finally, as an interesting note, one of the managers was worried about the new version of the standard, ISO 9000:2000. As explained before, managers try to establish minimal requirements in the quality manual to avoid what they believe as disturbances in their normal work. In his opinion, the new
version represents a higher level of a quality system, is more demanding, and tries to incorporate some points more in line with the TQM system. It would mean that the auditor should have access to new fields in his or her company, and they would have to allow him or her to interrupt many aspects of the process. It could mean that the company worked less well than before.
The authors asked quality managers of 14 companies about their experience with both ISO 9000:1994 implementation and TQM. Only three of the 14 companies had implemented TQM. Those companies have had improvements in performance as a result. These were mainly in product quality, customer and employee satisfaction, and competitiveness. When asked about the most important dimensions of TQM for getting these better results, managers agreed on leadership and employee participation.
Regarding ISO 9000, the results show that the only clear improvement is in product quality. Managers agree that certification was useful in the initial stages of quality system implementation, mainly because they improved their production process through the development of work procedures, creating an atmosphere in which quality played an important role and defining responsibilities and duties. Initially, ISO 9000 certification was a competitive tool because it was still a novelty. However, today, certification is no longer a competitive advantage, but a prerequisite to play in the market.
The authors have detected that companies that are applying TQM have fewer improvements in performance when ISO 9000 was implemented than the others. One of them presents slightly higher values, and, by coincidence, it is the only one that was ISO 9000 registered before implementing TQM. This could give the impression that the standard could be a good first step toward TQM implementation n. However, a more in-depth interview with managers changed the authors’ point of view. The managers point out that the ISO standard can be an obstacle when implemented jointly with a TQM system, interfering in the normal operation of the business and allowing the auditor to “inspect” too many aspects of the quality system and slowing it down.
The solution to this problem provided by some of the Spanish managers interviewed was to completely separate implementation of a TQM system from the ISO 9000 system. Within other business culture contexts, the solution could well be different. Those companies that decided to apply the ISO regulation more strictly introduced all those aspects related to GCT in the manual. Then, the auditor will have a more important role and his or her understanding of what TQM is will be more important in these cases.
Therefore, the effect of ISO 9001:2000 on company results will also depend on two factors: 1) the managers’ fulfilment of norms, and 2) the auditors’ understanding of TQM. Differences among countries due to different management cultures will then be a cause of differences in ISO 9001 effects and an interesting topic of analysis. The new version of the standard is closer to a TQM system. In particular, it tries to improve human resource management, customer focus, and leadership. According to managers, and supported by the conclusions of previous authors, the “soft” variables of TQM are responsible for the improvement in results derived from TQM implementation. It is an opportunity for companies to achieve better performance by applying the new version adequately. This new standard could also be a good first step toward a TQM system. Further research in this sense would be interesting to help managers attain more benefits from certification.