ABZ Components: Quality Management and Excellence

Introduction

Total quality management (TQM) is a structural approach to organizational management. Among the key aspects that TQM is thought to positively impact are identifying, reducing, and eliminating errors in manufacturing, facilitating supply chain management, and increasing customer satisfaction. The philosophy of work within the TQM framework is based on the principle within which each employee is committed to the work processes and corporate goals. Employees maintain the industry’s standards and make sure that operations are undergoing constant refinement at each stage. Total quality management aims to foster ownership and accountability across the board to ensure the best quality of the final product or service. This report explains why embracing Total Quality Management would be the best decision for ABZ Components, an Aberdeen-based oil and petrol company going through a rough time.

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The Key Principles and Concepts of Quality Management

The TQM approach was created by William Deming, a management consultant who made a tangible contribution to the development of Japanese manufacturing in the 1940s. However, the history of total quality management can be traced back to the 1920s when researchers and industry players first started to apply statistical methods to gauge and control quality. Back then, due to the global industrial growth, the work processes were becoming more complicated and challenging to assess by applying traditional methods. Now the situation has evolved further, and running a large company requires even more sophisticated solutions.

This is true for ABZ Components: from the latest status reports, one can readily conclude that the company has been expanding aggressively over the course of the last ten years. However, as the saying goes, with great power comes great responsibility. After having done some troubleshooting, it seems that a great share of company structures prove to be frail and unreliable. The situation needs rectification, and in this case, Total Quality Management might as well be the best remedy. Over the last few decades, TQM theorists and evangelists have developed five fundamental principles of quality control that are up for consideration by ABZ Components’ top management:

  1. Produce quality work for the first time. The TQM approach seeks to reduce the error rate to make sure that no additional expenses emerge and interfere with the company’s plans (Ngambi & Nkemkiafu, 2015). Today, it only makes sense to be proactive about manufacturing as reactivity, i.e. dealing with consequences post-factum, is far from cost- or time-efficient. As ABZ Components is a large company that deals with oil and petroleum engineering, the cost of each mistake might prove to be quite big. By streamlining processes and adopting evidence-based approaches toward manufacturing, the company might ensure that the products meet the standards at first try;
  2. Focus on the customer. The TQM acknowledges that each party in a business relationship is a rational egoist. Companies are chasing profit and trying to set the highest prices while spending the least money possible. Customers, on the other hand, seek the best options that could display both affordability and convenience. In order to reach a balance, ABZ Components might have to shift the focus from profitability to customer satisfaction. Making sure that clients are happy is a long-term investment as it promotes loyalty and a good reputation;
  3. Adopt a strategic approach to improvement. The TQM will help ABZ Components to define improvement in their own terms, given the current goals. As seen from the company analysis, issues of different kinds and scope have long been plaguing multiple aspects at once. However, even if every department, manager, and employee set their mind on making a positive change, overall, it might not be unsustainable, as the entire system has poor internal communication. The TQM suggests that ABZ Components develop a strategy that would encompass all the problem areas and growth zones, making sure that every person who is accountable gets informed on time;
  4. Improve continuously. In the business world, maintaining the same level of activity often means lagging behind because contenders do not put their growth and development on pause. Therefore, it is essential that ABZ Components finds ways and resources to commit to continuous improvement. In the context of TQM, success, and prosperity almost always come down to the people involved (Yazdani, Ali Soukhakian & Reza Mozaffari, 2014). This does not mean that old employees need to be discarded but that each and every one of them deserves to be trained and educated in alignment with the company’s goals;
  5. Encourage mutual respect and teamwork. The TQM sees every employee not as another cog in the wheel but as a human being with personal integrity to be respected and potential to be discovered. It is unreasonable to expect the work processes to be streamlined if employees are disjointed and on bad terms with each other. The TQM advises businesses not to dismiss the human factor and ensure that the work environment is nurturing and respectful. Beheshti (2019) reports that increased employee engagement is associated with up to a 21% increase in profitability. Besides, those employees who feel heard and valued are 4.6 more likely to speak up and contribute to conversations (Beheshti, 2019).

Comparison to Other Business Excellence Models

Surely, on paper, all these principles look good and make sense. Yet, the question arises as to why ABZ Components should consider Total Quality Management, out of all other modern approaches to management. A logical comparison to draw would be between TQM and Lean Six Sigma – two organizational management philosophies that originated in Japan around the same time. Today, both TQM and Lean Six Sigma have gained critical appraisal and generated an ample body of research showcasing their advantages. Nevertheless, given the situation with ABZ Components at hand, TQM seems to be a better fit.

Lean Six Sigma and Agile account for the fastest change possible while TQM implies a gradual change. Given that ABZ Components is going through a crisis that impacts several departments at once, it should not prioritize speed. One big advantage of Lean Sigma Six is its reliance on quantifiable metrics, which makes this approach data-driven and in alignment with market requirements (Rigby, Sutherland & Takeuchi, 2016).

TQM, on the other hand, seeks to assess qualitative elements of running a company, which might be just what ABZ Components need. For instance, it has been reported that employees’ satisfaction has been low for years now. It is evident that a person’s happiness with their job goes way beyond numbers and can only be gauged through personal contact. Again, addressing the human condition in corporate environments is something TQM specialists are concerned with. In summation, for now, TQM seems to be the best way to untangle the intricate problems at hand while Lean Six Sigma might be the next step once TQM has laid some groundwork for a rapid change.

Another model that has now been adopted by millions of organizations in 187 countries is ISO-9001 certification. At first glance, it seems that the philosophy of TQM and the approach offered by ISO-9001 overlap in many aspects. The latest version of ISO-9001 outlines these seven quality management principles (QMPs) to be followed by organizations seeking certification:

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  • QMP 1 – Customer focus;
  • QMP 2 – Leadership;
  • QMP 3 – Engagement of people;
  • QMP 4 – Process approach;
  • QMP 5 – Improvement;
  • QMP 6 – Evidence-based decision making;
  • QMP 7 – Relationship management.

Probably, the only differences that one may notice when skimming through the list are QMP 6 and QMP 7. As opposed to Lean Sigma Six and ISO-9001, TQM does not put that much of an emphasis on big data. QMP 7 states that every company should treat all the parties involved in a business relationship as independent actors. Not a single element in the equation should assert dominance and exploit others. While TQM does not prescribe this rule explicitly, one may say that it is something that is conclusive from the information at hand.

Now that it has become clear that the two approaches are fairly similar in their philosophy, the choice comes down to the ease of implementation. Manders, de Vries, and Blind (2014) claim that there is no general consensus as to whether ISO-9001 certification fosters or hinders growth and development. Overall, Manders et al. (2014) are convinced that evidence on the positive impact of ISO-9001 certification is contradictory.

In particular, after conducting a literature review, the researchers conclude that there is not a stable association between certification and radical or incremental innovation. However, Manders et al. (2014) assume that there might be a positive relationship if some other variables such as a company’s motivation are factored in. Other researchers such as Fonseca (2015) and Allur, Heras-Saizarbitoria, and Casadesus (2014) provide an even more critical perspective. According to Fonseca (2015), the process of certification makes a company stagger and waste resources on red tape procedures and paperwork. Overall, it is hard to generalize whether the benefits outweigh the costs of such a complicated venture as proving compliance with ISO-9001.

At the same time, some other recent studies hint at the possible advantages of ISO-9001. For instance, Psomas and Antony (2015) analyze the impact of ISO-9001 certification on the performance of large Greek manufacturing companies. Their findings show that certification has indeed improved many metrics across the board. Aba, Badar, and Hayden (2015) came to the same conclusions. Psomas and Antony (2015) argue that the success of the venture depends on internal motivation, employee attributes, company attributes, external environment pressure, and quality system attributes.

The Benefits and Challenges of Total Quality Management (TQM)

Over the forty years that have passed since the emergence of Total Quality Management, there has been enough research showcasing its impact on work processes and outcomes. According to Kiran (2014), one of the most obvious benefits of TQM implementation is cost reduction. When applied consistently over time, the strategy has the potential of decreasing expenses, especially in the areas of discarding, rework, field service, and warranty.

Kiran (2014) argues that these cost reductions are directly associated with bottom-line profits without any extra expenses incurred. Therefore, one of the long-term effects of TQM implementation is a tangible increase in profitability. This point is especially relevant in times of political and economic volatility. The possibility of a hard Brexit is still very much alive. If it is to happen, the new financial regulations are likely to prove less transparent and attractive for foreign cadres and investors. To stay afloat, ABZ Components needs to ensure full financial sustainability and preparedness for unexpected, adverse events.

Second, a company that follows Total Quality Management principles is likely to enjoy improved customer satisfaction. As of now, ABZ Component cannot quite meet customers’ expectations regarding the quality of service. The company’s reputation has been soiled by its unreliability, bad delivery time, and product properties that were not up to the industry’s standards. According to the data provided by the portal Customer Thermometer (2019), 95% of customers who had a bad experience tell others as opposed to 87% of those who enjoyed a product or a service. It is easy to imagine how a single failure may undermine a company’s reputation.

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Besides, as the previous year’s performance report has clearly shown, the company had poor loyalty metrics. On top of that, there has been a 15% increase in the number of complaints. Each complaint takes time and effort to process and address – resources that could surely be put to better use. One of the reasons why customers keep filing complaints and showing poor loyalty rates is their perceived disregard of their needs.

Globally, 52% of clients think that companies should start taking negative feedback more seriously (Customer Thermometer, 2019). According to Sadik (2018), customers that used TQM companies’ products and services praised their quality and convenience. The implementation of TQM at ABZ Components holds promising prospects that include rectifying the company’s reputation and expanding its customer base.

Total Quality Management has also been found to be effective in improving employees’ engagement. As of now, ABZ Components provides jobs to over 500 people in Scotland and plans on hiring even more. As a big corporation that is currently going through a rough patch, ABZ Components is now discovering the employees’ plummeting job satisfaction. This tendency stems from two main factors: first, workers fear the uncertainty that Brexit is bringing to their lives. Second, in some cases, working for a big company makes one feel as if their role is confined to being another “cog in a wheel.”

This sentiment is quite dangerous for the integrity of the work team. As Cowart (2014) states in his article, employees’ low morale may be one of the primary reasons behind poor performance. It is readily imaginable how this issue can snowball when left unaddressed, leading to higher turnover rates and undesirable outcomes.

The question arises as to exactly how Total Quality Management improves corporate morale. The answer lies in the very key principles of the approach. TQM seeks to promote excellence at all levels and compels employees to refine their work even when it comes to the simplest of tasks. Besides, implementing TQM strategies requires ongoing teamwork that makes managers and employees closer. As a result, each and every worker has a chance to feel special and valuable.

There is scientific evidence in support of this idea. For instance, Al-Damien (2017) researched Jordan’s largest oil and petroleum company and discovered that the implementation of TQM positively correlated with employees’ happiness. As time goes by and TQM yields its first results, their faith in the future of the company may be restored. From the management’s perspective, heightened employee satisfaction means lower turnover rates. In turn, ABZ Component will not have to waste time and money on recruitment and retention, while enjoying a better sentiment among existing employees.

For all its advantages, Total Quality Management is not the easiest strategy to adopt. ABZ Components should expect the transition process to be rather slow and gradual, which, however, can yield extremely good results. According to Cătălin, Bogdan, and Dimitrie (2014), there are three common barriers to TQM implementation that ABZ Components should be aware of:

  1. Ineffective or inappropriate TQM models. TQM does not provide an explicit roadmap as to how to overcome an internal organizational crisis and lead a company to success and prosperity. This is hardly the theory’s limitation, even though it might be seen as such by some researchers. Every entity and institution has unique needs and struggles, which requires the customization of TQM principles and approaches;
  2. Ineffective or inappropriate methods for the implementation of TQM. ABZ Components need to find a balance between two components: corporate culture and principles (mission and vision) and techniques and instruments (statistical tools for quality assurance) (Mohammad Mosadeghrad, 2014). If the strategy is skewed toward one pole, the other aspect may be suffering;
  3. The wrong environment for the implementation of TQM. One of the reasons why TQM requires a slow transition as opposed to a leap forward as proposed by Lean Sigma Six is because the corporate environment needs to be well-prepared. If employees and managers see the new philosophy as nonsensical, they will not be as engaged in the process of transformation (Boyatzis, Rochford, & Taylor, 2015).

In summation, the critical success factors will include customization of the model, choosing the right strategy, and communicating the new vision.

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The Case of ABZ Components: Practical Implications

Now that the philosophy of TQM is clarified, the question arises as to what exactly ABZ Components needs to do to successfully implement it. Below is a roadmap that is obviously subject to change but that describes the main steps that the company needs to take:

  1. Clarifying the vision. The larger the company gets, the harder it might be to come up with an all-encompassing philosophy that would sit well with each and every person involved. Yet, as TQM proves, it is nothing insurmountable, though needs time. We suggest that the top management of ABZ Component hold a series of meeting with the purpose of revising the past and building a vision for the future. It is advised that both experienced and new managers show up. The former know a lot about the company to draw conclusions and use past experiences as a point of reference. The latter can provide fresh ideas about how a company can undergo the big change;
  2. Defining success. The vice and virtue of the TQM approach is its flexibility and lack of concreteness (Talib & Rahman, 2015). The strategy does not dictate exactly what results would be the best benchmarks of success. Therefore, ABZ Components needs to decide for itself what deliverables it is to have in the near future. From the information at hand, the deliverables might be better employee engagement, customer retainment at least 75% and 10% annual growth;
  3. Engaging everyone. ABZ Components seem to have rigid hierarchical structures that stifle employees’ potential. If the environment itself does not change for the best, the implementation of TQM might be perceived as another top-down decision by employees. Thus, the company needs to run internal research to pinpoint exactly what might be spoiling employees’ experience and try to address the issues (Yang, 2018). As of now, it seems that the most stressed-out department is customer care, so it can be where the new, more democratic strategies could be tested;
  4. Defining further problems and planning an approach. ABZ Components needs a plan that would unite measures impacting the following three aspects: customer service, employee satisfaction, and reputation. It is advised that the different departments collaborate on this one task to make sure that communication is maintained at all times;
  5. Act on the plan. After the strategy is defined, ABZ Components need to realize it while logging results. After each cycle of implementation, results need to be analyzed for further systematization.

Conclusion

ABZ Components is a successful Aberdeen-based oil and petroleum company that is currently going through a rough patch. From the case analysis, it has become clear that the company is ridden with issues present in almost all aspects and departments. As of now, the most influential and detrimental to growth and development are poor reputation, customer dissatisfaction, and employee disengagement. In this time of trouble, the Total Quality Management (TQM ) approach might be just what the company needs.

As compared to Lean Six Sigma, TQM offers a roadmap for a slow, gradual change and improvement of qualitative measures. ISO-9001 certification shares a similar philosophy with TQM and might be the next step after the initial issues are tackled. The critical success factors for TQM implementation include internal motivation, nurturing the corporate environment, and application of effective models. To ensure these, ABZ Components needs to work on a shared vision, develop a strategy, test it and systematize the results.

Reference List

Aba, EK, Badar, MA & Hayden, MA 2015, ‘Impact of ISO 9001 certification on firms financial operating performance’, International Journal of Quality & Reliability Management.

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Kiran, DR 2014, Total Quality Management: key concepts and case studies, Butterworth-Heinemann, Leiden.

Mohammad Mosadeghrad, A 2014, ‘Why TQM programmes fail? A pathology approach’, The TQM Journal, vol. 26, no. 2, pp. 160-187.

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