Quality Management Implementation In The Indian Automobile Industry Management Essay

To examine the success level of TQM implementation in an automobile industry by analysing the strengths and weaknesses of its critical success factors.

2. Research Questions

What are the critical success factors of TQM implementation in an automobile industry?

To what extent have the critical success factors of TQM been implemented in the automobile industry through the analysis of the strengths and weaknesses of the critical success factors of TQM?

3. Hypothesis

1. In an automobile industry there exists a critical set of success factors for successful implementation of total quality management.

2. The extent of TQM implementation is positively and significantly associated with the strengths of the Critical Success factors.

4. Introduction

“Total Quality Management is not a destination but a journey toward improvement.”

V. Daniel Hunt.

Quality by no means is a new concept in modern business. In October 1887 William Cooper Procter, told his employees, “The first job we have is to turn out quality merchandise that consumers will buy and keep on buying.” While working with Daimler Chrysler to improve its quality several decades ago, a Vice President of the United Auto Workers stated the importance of quality: “No quality, no sales. No sales, no profit. No profit no job.”

One of the key elements of Ford’s 2002 Revitalization Plan was to “Continue Quality Improvements.” The top two “vital few priorities” set by Ford’s president for North America were “Improve Quality” and “Improve Quality”.

Thus we can see that quality assurance has been an important aspect of production operations throughout history. Although initial initiatives focussed on reducing defects and errors in products and services through the use of measurement, statistics and other problem solving methods, organizations began to recognise the lasting improvement could not be accomplished without significant attention being given to the critical success factors that contribute to the quality of the management practices used on a daily basis.

The real challenge today is to ensure that managers continue to apply the basic principles on which quality management and performance excellence is based. The global marketplace and domestic and international competition have made organizations around the world realise that their survival depends on high quality.

As the business world becomes more complex, quality must be approached from a system, rather than a process perspective. Quality has transitioned from control, to assurance, futher on to management. Thus it is important to understand the various critical success factors which are responsible for the effective implementation of TQM.

5. Literature Review

5.1 Background

The roots of TQM can be traced back to early 1920s when the concept was developed in Japan in the late 1940’s and 1950’s and pioneered by Americans Scholars Freigenbum, Juran and Deming. Total quality management (TQM), in its total effect is to involve all stakeholders in organization fully in programs that will increase organizational productivity, its profitability, effective work-place efficiency, improved job satisfaction, employee morale, and continuous product quality improvement.

Quality is a term that has significant meaning to both the producer and customer. In today’s global cut-throat marketplace, the demands of customers are continuously increasing as they require improved quality of products and services.

Total quality management (TQM) has become increasingly prevalent as one of the management strategies in companies today with the objective of ensuring customer satisfaction and loyalty, besides improving products and service quality and reinforcing continuous improvement known as Kaizen. TQM is the only instrument to either maintain competitive advantage or survive competitive disadvantage (Spitzer, 1995).

Total quality management is a major factor in the business quality revolution that has proven itself to be one of the 20th century’s most powerful creators of sales and revenue growth, genuinely good new jobs, and soundly based and sustainable business expansion (Feigenbaum , 1999).

5.2 What is Quality?

In today’s business there is no single definition for quality. One of the ways quality can be defined is as” the totality of features and characteristics of a product or service that bears on its ability to satisfy the given needs” (American National Standards Institute, 1978). Quality can be defined as the process to meet or exceed a customer’s expectation.

The term Total Quality Management was developed by the Naval Air Systems Command to describe its Japanese – style approach to quality improvement and became popular with business in the United States during the 1980s. Total quality is based on 3 basic principles:

To focus on customers and stakeholders

Ensure participation and teamwork by everyone in the organization

Creating a process focus supported by continuous improvement and learning

Total quality management is one of the measurements used in the automobile industry to ensure that the cars manufactured are reliable, satisfying the consumers at large and to ensure competitiveness in the market, as well as conformance to the international standard.

All the existing automotive industries have reduced costs, increased process efficiency and strive to improve the quality of their products and services by meeting the needs of the people they serve through the application of total quality management (TQM) principles.

As the competition is increasing globally quality management is gradually becoming important to the leadership and management of automotive industry. By implementing the following quality management tools, organizations will produce benefits for owners, employees, customers, suppliers and society as a whole.

6. Concepts of TQM Philosophy

Many companies like Ford Motor Company, Motorola and Toyota Motor Company have implemented TQM in order to meet customer requirements. There are six main concepts of TQM philosophy (J Juran, G Merli):

Concept

Main Idea

Customer Focus

Goal is to identify and meet customer needs

Continuous Improvement

A philosophy of never ending improvement

Employee Empowerment

Employees are expected to seek out, identify, and correct quality problems

Use of quality tools

Ongoing employee training in the use of quality tools

Product Design

Quality should be in built in the process, sources of quality should be identified and corrected

Managing Supplier Quality

Quality concepts must extend to a company’s suppliers

Measurement &Feedback

Process performance in financial and non financial terms should be measured and feedback provision should exist.

Training &Development

Training programs along with education for the suppliers and subcontractors are covered

6.1 Customer Focus

For every company customer is the king. The automobile industry also depends on their customers and strives to meet their needs and also exceed their expectations (ISO) by providing a perfect product. It is never easy to determine what a client desires due to their changing tastes and preferences for cars. The automobile companies must constantly gather information constantly, by research groups, market studies, and meetings with clients, in order to remain close to clients’ tastes.

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Customer Driven Quality Cycle

The customer driven quality cycle provides a view of the process in which customer needs and expectations are translated into perceptions during the design, production, and delivery processes (Bruce T. Barkley, James H Sailor, 2001).

6.2 Continuous Improvement

The term “continuous improvement” means incremental improvement of products, processes, or services over time, with the goal of reducing waste to improve workplace functionality, customer service, or product performance (Suzaki, 1987).

Customer’s expectations are always shifting to a higher level due to better and better results.

When customers assess quality, not only do they compare companies to their last year’s performance but also to every other competitor that company has (B. Abohimed, 2001).

TQM is concerned with continuous improvement in all spheres of work like strategic planning and decision-making, to detailed execution of work elements on the shop floor.

Kaizen as it is referred in Japanese means ‘change’ or ‘the action to correct’ while ‘Zen’ means ‘good’ implying that Kaizen means a change for good or an action to correct something to make it better. Kaizen aims to eliminate waste by improving standardized activities and processes. One of approaches that help automobile companies is to constantly improve is the plan -do- study – act (PDSA) cycle which describes the activities a company needs to perform in order to incorporate continuous never ending improvement in its operation (Deming, 1950).

Source: Chicago Tribune

PDCA cycle’s first step is to plan. Management must evaluate the current procedures and make future measures to evaluate performance implementation plans based on any problems they find.

The next step is to Do which means implementing the plan by documenting all changes made and collecting the data for evaluation. The third step is to Check, i.e. study the data collected in the previous stage. The data is evaluated to see whether the plan is achieving the goals established in the plan phase or not. The last phase of the cycle is to Act according to the results found in the first three phases.

“Over the long run, superior performance depends on superior learning.” (Peter Senge, 1960). Continuous improvement should be a part of the daily work by being practised at personal, work unit, and organizational levels.

6.3 Employee Empowerment

Empowerment as a process of decentralizing decision making in an organization, whereby managers give more discretion and autonomy to the front line (Brymer, 1991). Continual and extensive training in quality measurement tools is provided to the workers in order to empower them to make decisions relative to quality in the production process and their contributions are highly valued.

Source: Employee Empowerment: The Rhetoric and the Reality

(Pearson, 1995)

One good strategy that enhances the feelings of empowerment in employees is expressing confidence in them as well as establishing a realistic high performance for them by creating opportunity for employees to participate in decision making and giving them the autonomy to form bureaucratic constraints. Employees are always in the best position to detect problems and impose improvements if they are equipped to take steps to make improvements (Wilkinson, 1997).

6.4 Use of Quality Tools

TQM requires the employees to identify and correct quality problems using certain graphical and statistical methods to plan work activities, collect data, analyse results, monitor progress, and solve. These are also known as the seven means for quality control which are:

Cause and effect diagrams

Scatter diagram

Flowcharts

Pareto chart

Histogram

Control charts

Checklist

6.5 Product Design

Every company should ensure that while building quality into a product it should meet a customer’s expectation which is not an easy task as customers often speak in everyday language. A product that is meant to be “attractive,” “strong” or “safe” can have different meanings to different customers. It is necessary to convert customers’ everyday language into specific technical requirements in order to produce a product that customers want.

A valuable tool to translate the voice of the customer into specific technical requirements is Quality Function Deployment (QFD). QFD originated in 1972 at Mitsubishi’s Kobe shipyard site. It benefits companies through improved communication and team work between all constituencies in the value chain, such as between marketing and design, or between design and manufacturing. For example an automobile manufacturer would evaluate how changes in materials would have an impact on the customer safety requirements.

Designing Production Systems for Quality

These three are the important production system design objectives. After Ford acquired Jaguar, Jaguar’s quality improved rapidly due to production system changes. This was due to Ford adopting Toyota’s production process at the Jaguar plant which proved that production system affects quality (Smith, 2001).

Also Ford analysed incidents when defective purchased parts caused Ford to halt shipments of vehicles which made Ford conclude that ‘manufacturing problems caused 83 percent of these incidents, while design problems caused17 percent.’ (Wilson and Sedgwick, 2002)

QFD is a systematic procedure which is used to help build quality into the upstream processes and also into new product development while avoiding problems in the downstream production and delivery processes.

6.6 Managing Supplier Quality

TQM extends the concept of quality to a company’s suppliers. The philosophy of TQM extends the concept of quality to suppliers and ensures that they engage in the same quality practices. If suppliers meet preset quality standards, materials do not have to be inspected upon arrival.

With the shift in emphasis from price to quality, automobile manufacturers have had to restructure their ties with their suppliers. Spokespeople for the automobile manufacturers generally emphasize how they are trying to build more cooperative relationships with suppliers, based upon long-term contracts, information sharing, and trust (Gardner, 1993).

Some of the benefits of developing long term business partnership include:

Reduction and elimination of the inspection of supplied parts and materials.

Improved product and service quality, and delivery performance and responsiveness.

Value for money purchases

Security and stability of suppliers

Transfer of ideas, expertise and technology between customer and supplier and dissemination and implementation of best practise.

Exposure of the supplier to new tools, techniques, systems and business practices.

6.7 Measurement & Feedback

Deming has given utmost importance to the fact that all business processes should be a part of a measurement system along with a feedback structure. The feedback received should be studied by managers to identify the causes of variation at each step in a process, and then concentrate on improving that subset of processes. (Paul Arveson, 1998)

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This framework translates the ‘voice of the customer’ into measures of performance which the organization can identify and improve. It also deals with internal measures of performance, assessment of the suppliers and development of rewards and recognition.

6.8 Training & Development

Companies committed to quality and high performance invest heavily in training and education as such investments add value to organizational capabilities. The leaders in quality like Deming, Juran, and Crossby actively promoted quality training and education.

Training generally includes quality awareness, leadership, project management, communications, teamwork, problem solving, interpreting and using data, meeting customer requirements, process analysis, process simplification, waste reduction, error proofing efficiency and safety.

7. Studies on TQM

As the Indian economy is globalising, achieving quality excellence is becoming one of the basic goals of all companies specially the automobile companies. Many companies are trying their best to get their hands on the Deming Award awarded for achieving for quality standards in their manufacturing activities.

According to a few studies done around the world by a few companies on TQM, it has been found that TQM has got a positive influence on a company’s growth and success. When the financial performance of 600 quality award winner companies was analysed, it lead to the conclusion that when TQM is implemented effectively, the financial performance also improves drastically (Singhal and Hendricks, 1999). TQM also helps companies to increase their market share and improve their competitiveness as found in a study done by Mohrman and Powell in 1995. TQM is considered to be a direct factor in influencing the corporate performance of a company.

According to a study carried out on the efficiency levels of TQM in India, it was found out that TQM implementation in Mahindra & Mahindra, one of the top India automobile companies considerably improved its performance. A similar survey carried out in Larsen & Toubro concluded that TQM has a significant impact on the company’s financial performance (Singh, 2000). TQM implementation in Indian industries even though is in its growth stage, is bringing about incredible changes in the performance of the organizational work force and helps in increasing the productivity and reducing costs.

Total Quality Management has gained for itself a substantial acceptance in Indian automobile industry with the aim to raise the performance standards if Indian companies to world class level (Dinesh Sethi, Deepak Tripathy, 2006).

But implementation of TQM is not an easy task. Many companies still do not commit themselves to its implementation whole heartedly (Downs and Mohr, 1980, Miller, 1993). One of the major success factors for implementation of TQM is a strong level of organizational commitment.

Four more indispensible questions required for each company to answer for the successful implementation of TQM are:

1) Is there a presence of top management involvement?

2) Does the company face opposition from workers’ organizations?

3) Is the middle/upper management involved and interested?

4) Does there exist an organizational quality culture?

A Total Quality strategy is effective only through the long-term commitment and devoted appliance by the top and middle management. The top management is held responsible for setting goals, strategically planning and allocating resources to aid implementation of all plans and initiatives. (Deming, 1982 & Oarvin, 1987).

Another important aspect for successful TQM implementation is employee participation promoted at all levels. Individual responsibility can be discharged only if power is delegated in different degree at all levels across the organization. Also the mission, vision and policies of a company should be consistent with those of TQM. Visionary leadership of the top management and complete involvement of the middle management along with the support of employees results in TQM being a successful endeavour in the company.

It is has been found out that 62% of the Indian automobile sector believes to follow TQM as a guiding philosophy while 38% has still not adopted TQM as a guiding philosophy (Caravatta, 1997, Sharma, 1997, Agrawal, 1999). It is estimated that 70 % of the India automobile sector promises on time delivery more than 80 % of times. According to the world standards, Indian automobile industry is lagging behind. Only 52 % of the automobile companies are working towards achieving a cost reduction of more than 5% while shockingly still 48% of the organizations do not consider cost reduction as an important aspect.

Unfortunately only 10-15% Indian automobile companies are using quality cost as measure of their quality performance thereby loosing an opportunity to spot critical areas for improvement (Harrington, 1997)

8. Six Sigma

Motorola pioneered the concept of Sex Sigma as an approach to measuring product and service quality in the year 1987. Six Sigma provides an outline for implementation of a total quality system. The word “Sigma” in Six Sigma implies process performance. Six Sigma acts as a differentiator between world class and average manufacturing companies with benefits in scrap and rework costs, reject rates, achieved through teamwork and by removing organizational boundaries.

It is a statistical unit used for measuring a unit’s quality, with not more than 3.4 defects per million opportunities which imply achieving a quality standard of 99.99966%. Six Sigma covers the whole organization, including suppliers and customers (Quality Times, 1998).

Six Sigma approach focuses on reducing variability and achieving excellence by working on three key strategies:

Process optimization, standardization, and control

Part standardization and certification of supplier

Following a design for Manufacturability

Six Sigma Conversion Table

Source: Journal of Management Research, 2006

Six Sigma has been applied in product development, new business acquisition, customer service, accounting, and many other business functions. It is not possible for all processes to operate at a Six Sigma level. The appropriate level depends on the strategic importance of the process and the cost of improvement relative to the benefit. It is generally easy to move from 2 Sigma or 3 Sigma level to 4 Sigma levels, but moving beyond that requires much more effort and sophisticated statistical tools (James Evans, 2008).

The problem solving methodologies used by Six Sigma are:

DMAIC – used for projects aimed at improving an existing business process.

DMADV – used for projects aimed at creating new product or process designs.

8.1 DMAIC

Source: wordpress.com

Define – The first step while implementing Six Sigma is to define the problem in operational terms to facilitate further analysis. A good problem statement identifies customers and the Critical to Quality (CTQ) factors that have the most impact on product or service performance and identify the performance metrics and the cost implications of the project along with defining what is to be done by whom and when (Thomas Bertels, 2003)

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Measure – This phase of DMAIC process focuses on how to measure the internal processes that affect CTQs. This requires an understanding of the relationships between process performance and customer value.

Analyse – This stage focuses on why defects, errors, or excessive variation occur. Finding the answers requires identifying the key variables that are most likely to cause errors and excessive variation – the root causes. One of the tools of identifying the root cause is the 5 “Why” technique which forces one to redefine a problem as a chain of causes and effects to identify the source of the symptoms by asking why five times (George Patterson, 2003).

Improve – Once the root cause of a problem is understood, the team needs to generate ideas for removing the problem and improve the performance measures and CTQs. Some of the techniques used to facilitate idea generation are brainstorming, checklists, etc (Osborn, 2003).

The ideas generated are then evaluated and the most promising ones are selected, confirming that the proposed solution will positively affect the key process variables and the CTQs.

Control – This part of DMAIC focuses on how to maintain the improvements, which includes putting tools in place to ensure that the key variables remain within the maximum acceptable ranges under the modified process. Controls might be as simple as using checklists or periodic status reviews to ensure that proper procedures are followed or employing process control charts to monitor the performance of key measures.

8.2 DMADV

The DMADV project methodology, also known as DFSS (“Design for Six Sigma”), features five phases:

Source: SixSigmaTraining.net

Define design goals that are consistent with customer demands and the enterprise strategy.

Measure and identify CTQs (characteristics that are Critical To Quality), product capabilities, production process capability, and risks.

Analyze to develop and design alternatives, create a high-level design and evaluate design capability to select the best design.

Design details, optimize the design, and plan for design verification. This phase may require simulations.

Verify the design, set up pilot runs, implement the production process and hand it over to the process owner(s).

In India, only 5% of Indian automobile companies seem to implement the Six Sigma rule due to which they have not been able to achieve steady level of quality based on ±3 Sigma limits around the specified target value. Six Sigma is a tool for continuous improvement making an organization to concentrate on the requirements of customers, process alignment, and timely well planned execution (Skaria, 1995). Thus to be able to compete internationally Indian automobile sector should follow Six Sigma program in order to install the TQM philosophy. This would in turn help them to map their performance overtime and to take required prior measures.

Although automobile sector in India implemented Six Sigma to gain competence in its quality aspect, it still failed to implement it in the right direction. This was due to a number of reasons like:

Absence of top management involvement & commitment

Practising an authoritarian behaviour and a hierarchical thinking.

Lack of adequate education and training for the employees.

No strategic goal setting and a weak system of monitoring.

Inadequate knowledge in the field of Six Sigma and its related tools.

Lack of passion to be the best in quality.

No building up of the practise of Kaizen, the culture of continuous improvement.

Not paying enough attention to the needs of the customers.

Impatience to develop a new strategy to achieve quality and thus resorting to a quick unreliable way of fixing things.

Lack of collaboration, integrity, excellence and respect for each other.

During the 1970s and early 1980s there were not many automobile manufacturers in India the growth of this sector was slow. But in 1983 a dramatic change in the scenario occurred when Maruti was taken over by the Indian government and Maruti entered joint venture agreement with Suzuki (Japan) which stirred a revolution in the Indian automobile industry.

With the adoption of the policy of economic liberalization by Indian government in 1991, major car manufacturer companies such as General Motors, Fiat and Honda, got a chance to set up their manufacturing bases in India.

Even after two decades gone after implementing TQM in the automobile sector, India is still a very small player in the world auto market production. The overall economy of India is a direct factor influencing the growth of the Indian automobile sector and still lot is required to be done by the companies to implement TQM tools like Kaizen, Six Sigma, 5S and TPM. Since growth of automobile in any country is an indication of overall economy, thus lot need to be done by the automobile sector in implementing TQM quality tools particularly 5S, Kaizen, Quality Function Deployment and Business Process Re engineering.

9. Lean Organizations

Lean production was a concept developed by the Toyota Motor Corporation to focus on the elimination of waste in all forms, including defects requiring rework, unnecessary process steps, and unnecessary movement of materials or people, waiting time, excess inventory, and overproduction.

One of the key tools used in lean production is the 5 S’s :

Seiri – Refers to ensuring that each item in a workplace is in its proper place

Seiton – Refers to arranging materials and equipments so that they are easy to find and use.

Seiso – Refers to a clean working area so as to reduce maintenance problems.

Seiketsu – Refers to formalize procedures and practices to create consistency and ensure that all steps are performed correctly.

Shitsuke – Implies keeping the process going through training, communication and organizational structures.

10. Conclusion

All types of automotive industries aim to have reduced costs, increased process efficiency and improved quality of their products and services by working towards achieving the needs of their customers through the application of TQM. With growing cut throat competition, TQM has become an important aspect of the management of automotive industry. With the implementation of the quality principles discussed above, companies will produce profits for themselves and also satisfy the needs of owners, employees, suppliers and society as a whole.


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