Problems Faced By Petrochemical Industry

Quality plays a significant role in the development and success of any organization or product. UK is recognized as a core of the creation of petrochemical and other associated products of petrochemical. There is high demand for petrochemical products all over the world; so quality assurance and quality management are very important in petrochemical industry in order to exist in the global economy. There are many petrochemical industries in this country and millions of people are working in these industries. Even though this sector is one of the major sources of economic growth, the petrochemical industries are facing some problems regarding quality management and quality assurance (Grote, 2001). The main challenges faced by the petrochemical industry are

“the need to manage the commercial environment better – and as a minimum to stop worsening the industry’s inherent cyclicality

the need for further restructuring in order to improve underlying performance

and the need to improve relationships with the outside world because crucially these relationships increasingly will determine the scope for success in our industry” (ibid).

In terms of long term challenges, petrochemical industries in the UK are facing number of challenges that need careful planning. These challenges are firstly, the increase of demand (BP, 2010). This increase in demand is caused by the increase in population in the UK and around the world which will put petrochemical under pressure to follow the demand. Another problem is dealing with petrochemical suppliers it will be possible to survive the prices that are caused the changing in petrochemical raw material (oil and gas) in global market (ibid). For example, in 2008 the oil prices raised to record value over $138 for barrel. Thirdly, they need to find more resources to cope with demand increase (ibid). Finally, they are going to face a problem of where should they make investments and train their workforce (ibid). The investment should not be on only finding new oil field but “It’s about discovering new technologies and pioneering new methods; developing the best equipment and equipping our teams with the right skills” and be more innovative to become even more environmental friendly (ibid).

Some petrochemical industries in the United Kingdom have problems in utilizing their resources in best way. This causes a great loss of profit for them since in higher demand season they need to increase the capacity by hiring skilled workforce or buying needed products from competitors which needs extra costs. Others have problem recycling there products or some kinds of product or even recycling of the waste product. This also causes a big loss to the company because if a product has a defect, it’s not necessary mean that all material integrated in the product cannot be recovered. Implementation of the Latest technology and train the workforce on it is necessary as it recommended by TQM and ISO 9000 in system improving point.

The pressure which making solving these problems even more difficult come from the financial crisis for the past few years that has affected the running of the petrochemical industries “2008 saw crude oil prices rise to record highs and then follow the financial markets to unexpected lows” (BP, 2010). Increase in the price of the resources decreased the production of these industries or if the production doesn’t change, the profit will decrease. The petrochemical products are used for a number of purposes and the number of competitors has increased recently; therefore, leading in quality and clearing the company brand guarantee the survival in this competition.

Implementation of TQM as a precursor to ISO 9000 and vice versa:

The petrochemical industries are those involved in the manufacturing of toxic chemicals and organic compounds which can affect the people when not maintained properly. Quality assessment and quality standard implementation should be done from the start-up of production to the final despatch of the product for customer satisfaction and for the maintenance of quality system. The petrochemical industry should also comply with the requirements of occupational health and safety management systems which deal with the precautions on health and environmental factors. This is applicable to all chemical industries.

In Diagram 1, the implementation of quality factors starts with the vision and mission of the company, the vision are the future view of the company; the mission are the goals in terms of quality products, customer satisfaction and the profit which they want to achieve (DTI, n.d., p2). The statements should be clear and spontaneous (ibid).

CSF/KPI:

The critical factors for successful implementation are the building blocks for the success and those identified factors that affect in the implementation by analysing of the past data and the modification to be done in implementing the new standards (DTI, n.d., pp2-3; Oakland and Marosszeky, 2006, p363). They identify the key performance indicators like the employees, resources like plant and machinery, innovation etc. Encouraging new ideas and technology, discarding obsolete ones etc. contribute to the success in the implementation; they monitor the performance and report the progress and the feedback for the organization’s well-being (ibid).

Core process:

The core business processes are the profit rearing segments of the business and they consist of suppliers, process and the customers (DTI, n.d., pp3-4). The quality implementations create a major impact on the core process and the competitive advantage when the implementation of the TQM is done in the business process (ibid).

Defining of the business opportunity:

Quality implementation is done mainly for increasing the reputation of the company which leads to increase in profit. The company must be against the acceptance of any kind of compromise in the product quality which affects the company and its reputation in the market. To make the situation at an ease and conducting a review to identify the particular need and the specification of the customer and the company and the analyzing whether the required standard is met or not, this becomes the method for getting a better business opportunity (DTI, n.d., p6).

The ISO 9000:

This is an important tool for the implementation of TQM. This is a general name given to the list of quality standards. The main aim of these quality standards is to provide the company with the standard products and to make the company a profit oriented and highly reputed.

The brainstorming of the ideas is given a good place for the implementation. They help in several ideas generated by the people and the product analysis and the performing of the functions according to the effectiveness of the customer satisfaction and the major role in the quality assessment criteria and to enhance the company position, reputation and profitability (Karakas and Kavas, 2008, pp.8-11). Decision making by the management and the implementation to be done by the different standards and the performance of them are monitored continuously, and the demerits in the performance are identified and continuous improvement is done by providing adequate training and development (Maddalena, 2007, pp.71-72).

ISO 9000 series is a quality management system that has to be maintained in an organization.

This means what the organization does to fulfil:

“the customer’s quality requirements, and

applicable regulatory requirements, while aiming to

enhance customer satisfaction, and

achieve continual improvement of its performance in pursuit of these objectives” (ISO, 2010).

The idea of improvement in implementing TQM by the companies is to have the accreditation, proper dealing with the customer for the certification for the business and exports to be done to other countries and also to increase the position and profit of the company.

Advantages of implementing TQM as a precursor to ISO 9000 and vice versa globally:

The ISO 9000 and TQM are two main subjects that are used to show the quality of an industry. Although fundamentally different – TQM ensures organizations do the right thing, while ISO 9000 is about doing things right (Williams and Buswell, 2003, p133).

There are many advantages in implementing ISO 900 as precursor to TQM and vice versa. ISO 9000 has grown popularity due to its advantages. The ISO 9000 is considered as a quality model, and it can be used as a tool to TQM. ISO 9000 helps in planning household finance because keeping records of paying bills and taxes is the first step to run a business effectively (Kurtus, 2001). ISO 9000 will help the process of production when the quality management process is at the starting stage. ISO 9000 has nowadays become a need to any organization because it helps to improve productivity (Pike and Barnes, 1996, p27). It helps in organizing the process of production, and it also helps in improving the performance of the company (ibid). The implementation determines whether the work is done in an efficient way or not, and makes sure that the system is on track (ibid). Moreover, ISO 9000 gives a great advantage to an organization to work globally (ibid). Finally, by implementing ISO 9000 first, the implantation of TQM will be more effective.

On the other hand, Total quality management can be implemented as a precursor to ISO 9000. Implementing TQM as a precursor can be of advantage to the implementation of ISO 9000 because the company can keep its regular customers which can be possible because TQM helps in meeting the needs of the customers. The implementation of TQM creates a competitive advantage, and it will also improve the participation and dedication of the employees. The employees work as a team for the implementation activities and thus cooperation increases. Besides, the implementation of TQM as a precursor to ISO 9000 will reduce the time of the registration with ISO because most of ISO 9000 requirement should be met by the organization.

The implementation of TQM and ISO 9000 helps provide quality to the customers. So, the advantages of both quality systems in an organization can be listed as follows;

They improve the productivity of the organization from top to bottom.

They are systematic and well-structured approaches that can be used for enhancing customer satisfaction.

They’re very improvement methods by which the deviations can be reduced.

Both help in delivering the product and services that required quality which expected by the customers.

Together they help in reducing a higher level of wastages.

Implementation of ISO 9000 offers a strong foundation for the efficient implementation of TQM. The implementing of ISO 9000 as a precursor of TQM helps to create an understanding of the requirements of the customers. It enhances the involvement of the employees in the TQM process. It increases the relationship with the suppliers. The profit of the firm can be boosted up by implementing ISO 9000.

Disadvantages of implementing TQM as a precursor to ISO 9000 and vice versa globally:

ISO 9000 and TQM are the integral components of the successful running of every organization. While implementing TQM as a precursor to ISO 9000, few problems arise in connection with customer satisfaction, because without the incorporation of TQM and ISO 9000 does not bring enough customer satisfaction. They consider that ISO 9000 certification is the main thing which shows the manufacturer’s ability to produce high quality products (Schoonmaker, 1997, p5). Also implementation of TQM as a precursor to ISO causes difficulties for entering into international market because ISO 9000 certification is an integral component of petrochemical industry to enter an international market. In order to get ISO 9000 systematic planning is necessary and it will help bring faith from the part of the customer and also to produce good quality products. ISO 9000 certification is the major thing which is used to compete with the international markets. Also, implementing TQM as a precursor to ISO 9000 will cause difficulties to maintain quality improvement. So, it is better to follow ISO 9000 standards before TQM in every organization.

Nevertheless, there exist few disadvantages also for this type of implementation. In order to achieve maximum profit from a business, the major thing is to fulfil the needs of the customer and TQM approach gives more consideration to customer satisfaction. So, by implementing ISO 9000 first will cause few problems regarding customer satisfaction.

Even there is quality in the products for the satisfaction of the customer ISO 9000 and TQM certification is essential. It is better to implement ISO 9000 before TQM because in the newest version of ISO 9000 it includes several features of TQM. Therefore the implementation of TQM before ISO 900 is really wastage of time and money. There are some problems regarding the implementation of TQM as the precursor to ISO 9000 and some of that problems are “Initially higher cost of production as more is recognized as rejects. Cost of training personnel, cost of implementing stages of feedback for employees” (Voters 2010). The implementation of this TQM standard requires more cost because there need to bring total changes in the organization such as for the training of the employees, implementation of the latest technologies etc (Pike and Barnes, 1996, p275). It is difficult to alter the practice of the long-time workers to the TQM procedures and ISO 9000 procedures. While the organization is running smoothly with their existing functional procedures as the customer demands for the ISO 9000 and TQM standard certification, the company owners are forced to change to these standard procedures. Even though an organization maintains quality in their products and excellent workers the customer does not agree the quality without the certification of these standards. The petrochemical products are used for several purposes so the certification of ISO 9000 and TQM for every product seems to be very difficult because sometimes the assurance of the quality of a product requires much more money than the money required for the manufacturing of that product.

There are also some difficulties in implementation the ISO 9000 as the precursor. To finish the procedures of ISO 9000 registration it takes several months. “The 1996 Quality Systems Update survey indicated that it took businesses an average of 15 months to move from the early stages of the process to passage of the final audit, and that processes of 18-20 months or even longer were not that uncommon” (Answers, 2010). It is really wastage of time and effort to the business owners moreover wastage of time to other employees in the organization. “Frequently companies will have a customer who demands that they be ISO 9000 certified to continue doing business. NOW the company has the choice of losing a customer or implementing ISO 9000. Either way money is lost in the short term” (Gunaman and De-Almeida, 2000, p.5).