StudyCorgi Business & Economics

Total Quality Management in the Oil and Gas Industry

Introduction

Total quality management is essential to the success of most organizations. The course focused on three core principles of TQM: benchmarking, Six Sigma, and just-in-time (JIT). When applied in practice, these principles can assist organizations in minimizing costs and increasing the quality of their products, thus making companies more efficient. The present paper will seek to reflect on these principles of TQM and describe a process for their application in the oil and gas industry.

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Core Principles

Benchmarking

Benchmarking is one of the key strategies used for quality improvement. As evident from the course, it can be applied to a variety of companies and industries. For instance, benchmarking can be used by healthcare organizations to improve customer service, as well as by manufacturing plants to ensure high quality of products. Benchmarking is usually defined as the process of evaluating industry leaders to determine best practices and set performance goals (Rolstadås 4). Thus, benchmarking uses information about well-performing businesses and their work processes to improve organizational performance.

There are several critical features of benchmarking that were discussed in the course. First, benchmarking should be a continuous process. Companies should seek to collect and evaluate information about industry leaders regularly to react to changes in methods and standards. For instance, if a market leader implements a new production tool or technique, the company would benefit from using the same tool or technique to enhance performance. This can help organizations to be more competitive and facilitate innovation.

Other essential features of benchmarking are its flexibility and focus. Benchmarking is a flexible practice in a way that any organization can tailor it to its needs or goals. Depending on the organization’s aims, benchmarking can also focus on specific companies or processes. For example, competitive benchmarking can be used to track the performance of the leading competitors. It helps the company to remain in a favorable competitive position by reacting to market changes quickly. Benchmarking can also be used to evaluate a particular work process based on the organization’s needs. If a company struggles with achieving customer satisfaction, it would be useful to research industry leaders’ approaches to improving customer service (Rolstadås 97). Thus, benchmarking contributes to total quality management by providing information about best practices and enabling the organization to set clear performance goals.

Six Sigma

Six Sigma includes a set of tools and practices that can be used by companies to enhance business processes. The principal goal of the Six Sigma methods is to “advance an organization’s products, services, and processes by continually eliminating defects and reducing variations” (Patyal and Maddulety 1026). This approach was initially implemented by Motorola in 1986 and has since been used by many companies, including Texas Instruments, Sony, and General Electric (Patyal and Maddulety 1026). Similarly to benchmarking, Six Sigma can be used by all types of companies, although it is primarily applied in manufacturing to improve the quality of products and reduce the incidence of errors.

The five core elements of the Six Sigma approach to quality management are customer orientation, leadership engagement, dedicated improvement, structured methods, and metric focus (Patyal and Maddulety 1038). The method thus offers a comprehensive program for improving quality, which targets all performance outcomes within the organization. For instance, customer orientation enables to enhance customer satisfaction, whereas leadership engagement assists in improving morale and motivation, thus leading to better employee and team performance.

As learned from the course, Six Sigma offers two different methodologies for improving quality: DMAIC and DMADV. The DMAIC approach stands for define, measure, analyze, improve, and control and can be used for existing processes that require improvement. The DMADV approach, on the other hand, targets new processes to ensure smooth implementation and better outcomes. It also includes five steps: define, measure, analyze, design, and verify. As the sequence of stages required for process improvement is identified, organizations can implement Six Sigma rather quickly and efficiently. The use of Six Sigma has been proved to influence the performance variability of projects, the frequency of errors, as well as the employees’ commitment to quality (Patyal and Maddulety 1037). Thus, Six Sigma is a useful addition to organizations’ total quality management efforts.

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Just-in-Time (JIT)

The course also presented a helpful overview of the just-in-time method used for quality management. The main purpose of this tool is to reduce waste and promote process efficiency by reducing processing time, motion, and inventory storage. JIT is defined as “a manufacturing philosophy that aims to eliminate waste, as waste or results from any activity that adds cost to the production process without necessarily adding value to the product, such as transporting inventories from one warehouse to the other or the simple act of storing them” (Madanhire and Mbohwa 185). In the JIT approach, production is triggered by demand, and thus it also contributes to the firm’s customer orientation.

JIT involves a variety of improvement systems, including systems for inventory control, set-up time reduction, maintenance enhancement, quality control, and productivity increase (Madanhire and Mbohwa 185). Therefore, this method is less flexible than benchmarking and Six Sigma and is usually applied by manufacturing companies. Manufacturing systems operating by the JIT method have five key features. First of all, there are several separate manufacturing cells including various types of equipment used to produce a specific product (Hertati and Sumantri 183). This reduces movement across the production plant and reduces the operating time of equipment, thus contributing to time and cost savings. Secondly, workers in JIT factories are multi-skilled, which reduces the need for staff and contributes to cost-efficiency. Thirdly, organizations using the JIT approach also use other total quality management practices to reduce defects and production errors (Hertati and Sumantri 183). Total quality management is also linked to supply chain management, as the JIT approach requires suppliers that can provide the necessary quantity of materials within a given timeframe. Lastly, the JIT production systems focus on reducing the set-up time of equipment (Hertati and Sumantri 183). These features contribute to cost-effectiveness while also improving the quality of products, thus enabling the company to perform better.

Implementation in the Oil and Gas Industry

Benchmarking

To implement benchmarking in the oil and gas industry, a company should follow several key steps. First of all, it is critical to identify the focus of benchmarking, whether it is a particular process or the overall performance. Secondly, the organization should define its position in the market, as well as the competitive landscape. This would enable the management to identify the key competitors and industry leaders. Then, it is essential to establish a continuous process of data collection and analysis. For instance, if the company focuses on competitive benchmarking, it should gather information about its competitors, such as financial reports, operations management data, or other relevant figures. The fourth step includes the comparison of the company’s performance or processes to those of its competitors or market leaders. Once the differences are identified, the company should develop a plan for implementing changes aimed at improving performance. In this process, the company can apply the Six Sigma approach, as this would allow yielding the best results.

Six Sigma

The Six Sigma method can also be implemented in the oil and gas industry. However, before beginning to improve processes using the Six Sigma approach, the management should identify the focus of the program. For instance, if a new process is being developed and introduced, it would be best to apply the DMADV steps. However, if the organization is looking to enhance existing processes, it should follow the DMAIC framework. After the focus of the program is identified, the company should follow the selected steps.

If the company chooses to improve an existing process, it should first define the boundaries of the project and set goals for improvement. Also, it would be useful to determine customer expectations, as it would support the company’s customer orientation (Patyal and Maddulety 1039). The goals of the improvement project should be measurable and time-bound so that it would be possible to evaluate the results. After the initial stage, the company should measure the existing process in terms of its outcomes. If the results of the process deviating from the goals of the improvement project, the company should analyze the process to determine specific sources of variations or defects. Lastly, the company should make the necessary changes to remove the variations and establish a control system to monitor the results. If the project outcomes are not satisfactory, the steps can be repeated until the goals are reached.

Just-in-Time (JIT)

Implementing JIT in the oil and gas industry would usually depend on the type of activities performed by the company. If the company only targets the production stage, the JIT methods would concentrate on reducing the set-up time and developing a framework for making products on demand. However, if the company also covers distribution, it would also be necessary to reduce the inventory and decrease the time spent on distributing the products to customers. However, certain stages would be necessary for implementing the JIT method in both types of companies.

Firstly, the company should review its production processes and form manufacturing cells that would contain equipment used to make a specific product. Secondly, it is imperative to train workers and develop a multi-skilled workforce to reduce the required number of staff per shift. Also, the management should seek to apply other TQM practices, such as Six Sigma, to reduce variations in process outcomes and improve the quality of the end product. Finally, all companies should seek to reduce the set-up time for any equipment used in the manufacturing process.

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Conclusion

Overall, the course has provided a valuable opportunity to learn more about total quality management and related concepts. Benchmarking is a useful tool that can be used by all types of companies to achieve better performance outcomes. Similarly, Six Sigma can help organizations to increase cost-efficiency by eliminating errors and reducing process variations. Lastly, the JIT method can be successfully applied in the oil and gas sector to decrease waste and improve financial performance by cutting the time needed to set up equipment, manufacture products, and distribute them to customers. By using all of these tools, companies can achieve their performance goals and enhance profitability, thus becoming more successful and maintaining a competitive position.

Works Cited

Hertati, Lesi, and Rumbiandini Sumantri. “Just In Time, Value Chain, Total Quality Management, Part Of Technical Strategic Management Accounting.” International Journal of Scientific & Technology Research, vol. 5, no. 4, 2016, pp. 180-191.

Madanhire, Ignatio, and Charles Mbohwa. “Application of Just in Time as a Total Quality Management Tool: The Case of an Aluminium Foundry Manufacturing.” Total Quality Management & Business Excellence, vol. 27, no. 1-2, 2016, pp. 184-197.

Patyal, Vishal Singh, and K. Maddulety. “Interrelationship Between Total Quality Management and Six Sigma: A Review.” Global Business Review, vol. 16, no. 6, 2015, pp. 1025-1060.

Rolstadås, Asbjørn, editor. Benchmarking—Theory and Practice. Springer, 2013.

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StudyCorgi. (2020, December 9). Total Quality Management in the Oil and Gas Industry. Retrieved from https://studycorgi.com/total-quality-management-in-the-oil-and-gas-industry/

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"Total Quality Management in the Oil and Gas Industry." StudyCorgi, 9 Dec. 2020, studycorgi.com/total-quality-management-in-the-oil-and-gas-industry/.

1. StudyCorgi. "Total Quality Management in the Oil and Gas Industry." December 9, 2020. https://studycorgi.com/total-quality-management-in-the-oil-and-gas-industry/.


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StudyCorgi. "Total Quality Management in the Oil and Gas Industry." December 9, 2020. https://studycorgi.com/total-quality-management-in-the-oil-and-gas-industry/.

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StudyCorgi. 2020. "Total Quality Management in the Oil and Gas Industry." December 9, 2020. https://studycorgi.com/total-quality-management-in-the-oil-and-gas-industry/.

References

StudyCorgi. (2020) 'Total Quality Management in the Oil and Gas Industry'. 9 December.

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