THE IMPACT OF QUALITY CONTROL TECHNIQUE ON THE PROFITABILITY IN MANUFACTURING ORGANIZATIONS
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Introduction
Total Quality Management (TQM) is a philosophy and a set of guiding principles that represent the foundation of an excellent organisation and to ensure survival of industrial organisations in the competitive economy of today (Besterfield, 1999). Total Quality Management is a technique that underscores the continuous improvement of product and service quality to satisfy customers and enhance productivity. The emergence of Total Quality Management has been one of the most significant developments in the United State of management practice. The focus on the development of Total Quality Management(TQM ) systems in the U S appears to have begun around 1980 in response to Global competition and stiff rivalry in the U S manufacturing subsector arising from Japan(Easton and Jarrell, 1998). In the last three decades, Total Quality Management has become pervasive and widely accepted in manufacturing, services, government, healthcare and banking subsectors of the developed economies(Fotoponlam and Psomas,2009; Freng et al (2008), Kaplan et al (2010). Al-swadi et al (2012) and Temtime(2003) assert that continuous attention has been given to TQM in the industrialised countries but researchers investigated quality practices in the developing countries in the last ten years. According to Moballeghi and Moghaddam (2011), there is a growing awareness that a well-designed and wellexecuted Total Quality Management process is one of the most effective routes to increase product and service quality, productivity and profitability. However, many organisations are still mired in “quality confusion”. This scenario is a common phenomenon in Nigeria. Quality of products has been identified as one of the critical determinants affecting the performance of most organizations in Nigeria. In response to the poor quality and substandard products in wide circulation alongside the attendant adverse effect on the lives of the citizens and the economy, Nigerian government established the legal and the institutional framework to curb the ugly trend and menace in the country. The Government of Nigeria set up regulatory agencies such as Standard Organisation of Nigeria (SON), National Agency for Food, Drug and Administration Control (NAFDAC), Nigerian Drug and Law Enforcement Agency (NDLEA) and Consumer Protection Council to safeguard the unsuspecting public against unethical practices and improve the quality of goods and services produced by business organizations. Consequently, the study is to ascertain as to whether product quality improvement policy drives by the government and the adherence of manufacturing firms to TQM practices have impacted on the industrial performance in Nigeria
2.2 CONCEPT OF TOTAL QUALITY MANAGEMENT (TQM)
Total quality management (TQM) is a business philosophy that embodies the belief that management process must focus on integrating the idea of customer-driven quality through an organization (Aluko et al, 2004). In the view of these scholars, it means that all organizational activities initiated by the management of entities should be targeted at satisfying customers with high quality products and services. This is to ensure the attainment of competitive edge in the market place. TQM underscores the continuous improvement of product quality and service delivery. According to Hinton and Schaeffer (1999), TQM is a disciplined approach to keep the attention and actions of organizational members on task towards providing greater customer satisfaction. This stresses that all efforts of employees and management of organizations must have the customer in focus. TQM is composite word which integrates the team “quality” and “management”. In TQM thinking, management is seen as providing impetus and the prime mover for making total quality the guiding principles of the organization. In view of the postulates of the total quality management philosophy, the nitty-gritty of TQM is customer satisfaction, continuous improvement of quality and productivity. According to Ross (1995) TQM means thinking about quality with respect to all functions of the enterprise. It is a system’s approach that considers every interaction among the elements of the organization. Total quality management is a proactive and prevention-based approach that focuses on organizational members and processes with customer driven leadership (Arora, 2006). TQM is unique and a philosophy that has a cutting edge over the traditional reactive approach of quality control because it brings about quality improvement by focusing on the processes, employee involvement, customer satisfaction, leadership and continuous quality improvement. Jarrel and Easton (1998) contend that what constitutes total quality management is a subject of debate. However, the management scholars articulate that total quality management consists of process focus, systematic improvement, companywide emphasis, customer focus, management by fact, employee involvement and development, cross functional management, supplier performance and supplier relationship, and recognition of TQM as a continuous competitive strategy. Implementation of total quality management in the Nigerian Manufacturing sector is not encouraging. According to Chikodili (2010), one of the fundamental challenges of the Nigerian Manufacturing Industry is the implementation of a holistic management that improve competitiveness in the global economy. As a result, the products and services of Nigeria cannot favourably compete with foreign products and services. In view of the perspectives of scholars on TQM, implementation of total quality management in Nigerian requires conscious and concerted effort of the leadership and all employees in consideration of the constituents of TQM as highlighted by quality gurus.
2.3 QUALITY CONTROL
Quality can be defined as fulfilling specification or customer requirement, without any defect. A product is said to be high in quality if it is functioning as expected and reliable. Quality control refers to activities to ensure that produced items are fulfilling the highest possible quality. Most of tools and techniques to control quality are statistical techniques. Quality control techniques can be classified into basic, intermediate, and advance level, but there is no consensus among researchers in the classification. For example, Xie and Goh (1999) consider DoE as an intermediate level technique whereas Antony et al (1998) classified the technique as advanced. Nevertheless, the content is more important than the classification. Among the basic techniques are SPC. SPC is a statistical approach for assisting operators, supervisors and managers to manage quality and to eliminate special causes of variability in a process (Oakland, 2003). The initial role of SPC is to prevent rather than identify product or process deterioration, but Xie and Goh (1999) suggest for its new role to actively identifying opportunities for process improvement. The main tools in SPC are control charts. The basic idea of control charts is to test the hypothesis that there are only common causes of variability versus the alternative that there are special causes By continuously monitoring the process, the manufacturing organisation could prevent defect items to be processed in the next stage and to take immediate corrective action once a process is found to be out of control (Hairulliza et al., 2005). DoE and Taguchi methods are powerful tools for product and process development. Taguchi methods, for instance, aim at making product or process that robust to undesirable disturbances such as environmental and manufacturing variations. However, the application of these two methods by industries is limited (Antony and Kaye, 1995). Antony et al (1998) explore the difficulties in the application including improper understanding and fear of statistical concepts in the methods, thus propose a methodology for the implementation. Process capability study is an efficient method to examine the capability of a process to produce items that meet specifications. The method gains rapid growing interest due to increased use of quality system QS9000, where use of process capability studies is requested (Deleryd et al, 1999). The findings from capability study might require adjustment of process using other statistical technique such as SPC or DoE. Capability studies conducted by Motorcu and Gullu (2004) and Srikaeo et al (2005) show that the machine tool and process capability and production stability was evaluated and necessary steps to reduce poor quality production was carried out using other statistical techniques. FMEA is a powerful method to detect where exactly problems can occur and to prioritise possible problems in the order of their severity (Dale et al., 2003). The tool is useful to identify problems in product, i.e. design FMEA, as well as to trouble shoot problems in process, i.e. process FMEA (Xie and Goh, 1999). Six sigma is also a statistical tool for ensuring defect free products through process continuous improvement. The term six sigma originated at Motorola and many inspired worldwide organizations have set goal towards a six sigma level of performance (Breyfogle and Cupello, 2001). The application of six sigma has been mainly used in manufacturing industry. An example of the use of six sigma in nonmanufacturing industry is in software development (Mahanti and Antony, 2005). Acceptance sampling is another statistical techniques to make a decision whether to accept or reject a lot based on the information from sample. The application of acceptance sampling allows industries to minimise product destruction during inspection and testing, and to increase the inspection quantity and effectiveness. The application of acceptance sampling has been mainly used in manufacturing industry. Similarly, its application in nonmanufacturing industry is widely reported such as Thorpe et al. (1994), Gardiner and Mitra (1994) Bathika (2003) and Slattery (2005).
2.4 QUALITY IMPROVEMENT METHOD
Within this broad framework, managers, researchers, and consultants have identified several methods for ensuring and improving quality. Today most organizations apply some or all of these methods, including statistical quality control, the zero-defects approach, employee involvement teams, Six Sigma, and total quality management.
- Statistical Quality Control
It rarely makes economic sense to examine every part, finished good, or service to ensure it meets quality standards. For one thing, that approach to quality control is expensive. In addition, examining some products can destroy them. As a result, unless the costs of poor quality are so great that every product must be examined, most organizations inspect only a sample. Looking for defects in parts, finished goods, or other outcomes selected through a sampling technique is known as statistical quality control. The most accurate way to apply statistical quality control is to use a random sample. This means selecting outcomes (such as parts or customer contacts) in a way that each has an equal chance of being selected. The assumption is that the quality of the sample describes the quality of the entire lot
b) Zero defect approach
A broad view of process quality control is that everyone in the organization should work toward the goal of delivering such high quality that all aspects of the organization’s goods and services are free of problems. The quality-control technique based on this view is known as the zero-defects approach. An organization that uses the zero-defects approach provides products of excellent quality not only because the people who produce them are seeking ways to avoid defects but also because the purchasing department is ensuring a timely supply of well-crafted parts or supplies, the accounting department is seeing that bills get paid on time, the human resources department is helping find and train highly qualified personnel, and so on
c) Employee Involvement Teams
Recognizing that the people who perform a process have knowledge based on their experiences, many organizations directly involve employees in planning how to improve quality. Many companies set up employee involvement teams such as quality circles, problem-solving teams, process improvement teams, or self-managed work groups. The typical employee involvement team consists of up to 10 employees and their supervisor, who serves as the team leader. In this role, the supervisor schedules meetings, prepares agendas, and promotes the participation and cooperation of team members.
d) Six Sigma
Applying the terminology and methods of statistical quality control and the strong commitment of the zero-defects approach, manufacturers and other companies have used a quality-control method they call Six Sigma. This is a process oriented quality-control method designed to reduce errors to 3.4 defects per 1 million operations, which can be defined as any unit of work, such as an hour of labor, completion of a circuit board, a sales transaction, or a keystroke. (Sigma is a statistical term defining how much variation there is in a product. In the context of quality control, to achieve a level of six sigma, the output of operations would be 99.9997 percent perfect.) Along with the basic goal of reducing variation from the standard to almost nothing, Six Sigma programs typically include a rigorous analytical process for anticipating and solving problems to reduce defects, improve the yield of acceptable products, increase customer satisfaction, and deliver best-in-class organizational performance
e) Total Quality Management
Bringing together aspects of other qualitycontrol techniques, many organizations have embraced the practice of total quality management (TQM), an organization- wide focus on satisfying customers by continuously improving every business process for delivering goods or services. Thus, it is not a final outcome but an ongoing commitment by everyone in the organization. Today most companies accept the basic idea of TQM that everyone in the organization should focus on quality.
2.5QUALITY CONTROL PLANS
As with the other responsibilities of supervisors, success in quality control requires more than just picking the right technique. The supervisor needs a general approach that leads everyone involved to support the effort to improve quality.
- Prevention versus Detection
It is almost always cheaper to prevent problems from occurring than it is to solve them after they happen; designing and building quality into a product is more efficient than trying to improve the product later. Therefore, quality-control programs should not be limited to the detection of defects. Quality control also should include a prevention program to keep defects from occurring. One way to prevent problems is to pay special attention to the production of new goods and services. In a manufacturing setting, the supervisor should see that the first piece of a new product is tested with special care, rather than wait for problems to occur down the line. Also, when prevention efforts show that employees are doing good work, the supervisor should praise their performance. Employees who are confident and satisfied are less likely to allow defects in goods or services.
- Standard Setting and Enforcement
If employees and others are to support the quality-control effort, they must know exactly what is expected of them. This calls for quality standards. In many cases, the supervisor is responsible for setting quality standards as well as for communicating and enforcing them. These standards should have the characteristics of effective objectives: They should be written, measurable, clear, specific, and challenging but achievable. Furthermore, those standards should reflect what is important to the client.
c) Using Control Chart Control chart is the most populated quality tool. The main reasons of their popularity are
i. A proven technique for improving productivity.
ii. Effective in defect prevention.
iii. Prevent unnecessary process adjustment.
iv. Provide diagnostic information.
v. Provide information about process capability.
vi. Problem Statement A spur gear manufacturing company in Khulna wants to test their quality and productivity and wants to find the most effective way of their quality testing.
2.6 HOW TO IMPROVE PERFORMANCE MEASUREMENT SYSTEM USING INDICATORS LIKE PRODUCTIVITY AND QUALITY AND PERFORMANCE EVOLUTIO
The process of evolution in any organization cannot be completed without its performance not being optimum, which is not possible without measuring it. Organizations are mainly mission oriented and goals are assigned according to the time constraints (delivery time). The performance is measured with reference to time, material labor and resource allocation. While discussing productivity, in fact, we are actually looking at the more general issue of performance (Thomas and Baron, 1994). Although strongly related, performance is a much broader term than productivity. Cost is a central part of performance, but it also involves almost any other noncost objective of competition and manufacturing excellence such as dependability, flexibility, quality and speed, while productivity is a fairly specific concept related to the ratio between output and input. Different performance objectives often have a signifcant impact on the productivity of an operation (Slack et al., 2001): i) Excellent -quality operations do not waste time or effort having to re-do things, nor are their internal customers inconvenienced by flawed service. ii) High speed operations reduce the level of in-process inventory between micro operations, as well as reducing administrative overhead. Products can also be delivered earlier to the customer. Performance should be described at a broad spectrum other then productivity for all concepts that consider the success of organization and its activities. Nevertheless, the overall performance of companies is a complex phenomenon and the type of performance that a particular company strives to fulfill is usually very case specific. In order to be able to measure the overall performance of a company, one must therefore first consider the company’s strategic objectives.
2.7 EVALUATION PROCESS OF PRODUCTIVITY IMPROVEMENT
a) The major deficiencies which have not been covered include delay in supplies, equipment, and management routine flaws e.g. lack of coordination between subsections, particularly when one section is customer and user of one another of same organization.
b) Policies that create bureaucratic blockade e.g. project director’s policies not in line with top management; this creates delay in decision making and line and skill worker remain in fluid stage on shop floor. The absence of reward and recognition: - workers will not feel like doing their best and will settle for mediocrity when they feel that their employers’ policies in terms of reward and recognition are lacking. People will not give their best.
(I) Dead-end jobs. Demotivation is created when work does not offer opportunities for growth and promotion; this is one of the greatest reasons for employees’ demotivation and non-commitment. A recent study carried out by “ The Loyalty Institute “ of AON consulting in USA found out that jobs which deprive employees from selfdevelopment and growth opportunities lead to high dissatisfaction and employees’ disloyalty. i) Some of the salient features, which have already been covered in above study but again highlighted in point form. ii) What are the techniques to evaluate, plan, implement, manage and maintain improved results with lower cost.
c) Controlling input and improving throughput to enhance output Find status of your departmental performance through question survey.
2.7 EVOLUTION PROCESS OF QUALITY IMPROVEMENT
a) By merely understanding the definitions of quality is not enough because implementation phase is always difficult and should be practiced to get result. The losses are always caused by substandard quality. Efficiency is always possible when quality should be Job no
1. Quality Improvement should always be prime impotence. Importance should be given to customer surveys and quality scorecards quality Gurus like Deming’s TQM approach should be kept as role model. Some of the points are given as follows;
i) No work should be beyond the workers control
ii) Causes of complaints should be found and recorded with remedial actions.
iii) Control charts to monitor progress e.g. ‘Puerto Charts’
iv) Importance of setting standard to identify and imitate best practices
v) Techniques in training workers to develop an eye for detail
vi) Steps to solve major defects.