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Case Study On Total Quality Management

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Autor:  anton  14 May 2011
Tags:  Quality,  Management
Words: 4615   |   Pages: 19
Views: 1310

Introduction

As an independent consultant in Quality Improvement, I will conduct an analysis of the operations of the company `Handles and Hinges`. I will answer how the company competes in its market place, what role does В‘quality' play in its competitive strategy, whether or not I believe the company's use of statistical quality control is sensible, how a TQM approach could benefit the company's operations, and I will also apply the Gap model of quality diagnostics to the company and comment upon its relevance.

Competing in two markets

Handles and Hinges compete in two different markets, the retail market, and the construction market. In the retail market, it is much more aware of costs, and this has placed stress on the manufacturing facility at Handles and Hinges to make orthodox products of quality similar to that of the competition and at a depleted price comparative to the construction market. Consequently, the company changed all production from long lead-time made-to-order craft-based methods to batch production of made-to-stock items. In the construction market, the company's long running product line has ran against less costly competition by giving a more compactly specified and controlled quality products, with original designs in the right amount at the right time. This has pleased the two main groups in the market, the contract builders who need reliable deliveries in order to keep to construction limits and the designing architect who wants originality and quality and will be ready to buy in order to improve various projects. This market had recently gone through a recession, which is why the company looked elsewhere to recover the loss in demand.

Handles and Hinges compete in its market place by offering high quality goods to the right people at the right price. It is therefore fundamental and vital that the company does not distribute low-quality products, due to the fact that repeat purchases are needed for the company to continue being successful. The role that quality plays in its competitive strategy is huge; the most determined feature that attracts consumers to products is the promise of high-quality. Quality is a degree of excellence, and is a totality of features and characteristics that satisfies needs. These are the needs of the consumer, the most important factor any company needs to examine in order to be successful.

High Quality

To make a product `high-quality`, it needs to follow certain criteria. First and foremost is the product's fitness for use. This basically means how well the product does what it is supposed to do. Overall for Handles and Hinges it needs to make sure this is a top priority, meaning there cannot be any products coming through its production line that are not `fit for use`. The next thing a consumer will look for is its `quality of design`. This is essentially the designing quality characteristics for the product being produced. If it looks good and is fit for use, then it will appeal to buyers.

It also needs to be reliable, and considering the market place that Handles and Hinges are currently in, reliability is a huge factor. If its reliability is more then its main competitors then due to word of mouth the company will continue to gain more consumers. It will become a respected brand amongst buyers who will at some point need to re-buy, and if the reliability of the product is high, then they will come back to Handles and Hinges.

Serviceability is also another decisive factor that needs to be met in order to get `high quality` products. This fundamentally means how easy it is to get a product repaired if it is broken, how long it takes to get it repaired and how well it does get repaired. This is important because customer interest in the company can severely drop if they hear stories about how long it takes to get replacements for certain products they have spent their money on. This is also important due to legal reason also, because if a company takes too long to fix an item or does not do it to the right degree, then Trading Standards could be contacted, and not only will the company suffer the indignation of being forced by law to correct an item and apologise, it will more then likely be broadcasted on television for the whole nation to see.

The safety of the product must also be examined. Handles and Hinges must deliver an assurance that the consumer will not suffer harm or injury from a product. If they do, again Trading Standards could get involved, and again the company could get severely punished. It will also lose the respect and admiration of the public. It is therefore important that each item that is sold is not `defected` in any way that could cause harm to the public.

The courtesy that the company gives to its consumers is another thing that needs to be fully addressed. Customers need to be treated well and fairly to allow repeat custom and to also allow the continuation of the growth of the business at hand. Customers must be made to feel that their opinion is being heard at every communication point between the business and the consumer. Without courtesy and pleasantness, the business will have a reputation for being snobby, rude and arrogant, and this will not pass off well with other customers which Handles and Hinges need.

The company also needs to make sure it is easy to access, accurate with all of the products it provides and responds well to unusual situations. This is to make sure the customer does not feel agitated, aggrieved or mistreated. The customer is the most important part of any business, and to please them is the most necessary attribute in a thriving business.

In 2006, the sales for Handles and Hinges had grown to ВЈ5million per year. This was due to high quality designs. This is proof that the quality of the design is imperative for a company to succeed, which it has done up to now. However there are some failings that may affect the company in the future. Handles and Hinges are late sometimes when dealing with UK retail customers which make it difficult to keep repeat custom and happy relationships. This is bad because more custom means more money, and it's vital to keep happy relationships to keep the repeat custom alive.

There have also been various amounts of quality problems, which are mainly dented and scratched handles. This again is very bad as it is lowering the amount of quality that Handles and Hinges is producing, and it is again not helping with repeat custom, which as stated before, is vital to the company's well-being. It is damaging to the company's reputation, and if there were other suppliers for the consumers, then they may think about buying from them. This may come down to the fact that the company has decided to purchase material from abroad (such as Poland). These new materials are cheaper because they are thinner, which means it will not last for as long as before and maybe easy to scratch and dent. For the company to continue being profitable in the future, it can be said that they should switch back to more expensive materials, to stop defects coming through and ruining a random sample of items.

Another point that could be made is that too much time being spent on dealing with these mistakes and the correspondence that goes with it. This time could better off spent improving the quality, by researching different methods, or trying out different things. The customer will almost invariably be right about any given situation, so to discount their views and to believe that they are just `too fussy` is extremely dangerous because at the end of the day they are what is most important and their views and feelings must be seriously taken into consideration with every decision Handles and Hinges makes.

Use of Statistical Quality Control

The current way that the company checks its items in stock is through statistical quality control. Statistical Quality Control is a statistical approach to the study of the manufacturing process variation, for the purpose of improving the effectiveness of the process. The idea is that by collecting relevant data for a statistically significant sample size of something that was manufactured, you can use statistics to predict what the yield of the process will be. This data in turn can be used to improve the process.

The successful implementation of Statistical Quality Control (SQC) begins with the selection of the tools and methods best suited to the company's quality goals. Because manual charting can be burdensome and time-consuming, PC-based SQC using specialized software is preferable for routine charting and essential for process improvement studies.

In Handles and Hinges, they changed from their old quality checking system to a new, more stringent and more rigorous quality checking system. More random sampling of products coming through the production line is taking place and more checks on the machinery making the products are also taking place to ensure fewer defects in the goods that are being produced are caused in production. There are more inspectors to check more thoroughly and regularly, and certain employees are being trained with the latest Statistical Process Control measures to make them understand what to look for and how to find out what is causing each defect that may come through the production line. The company has also changed it method of production to batch, which gives more influence over how things are done.

Every part of this system needs to be look upon in great depth in order to see if it is effective or not. Inspection has quite a lot of emphasis placed onto it. When inspecting, it is important to inspect at the right times, know what exactly to look for when inspecting, and how much to inspect. With a company like Handles and Hinges, it can be said that inspection needs to occur at every new process an item goes through. This will be cost-effective in the long run and will help eliminate defects. The reasoning behind this is because high quality is a necessary factor to have for this business, and the more inspection means the more likely that every product that goes through the production-line will be defect free. It will not give a guarantee that it will stop defects, as many human errors in inspection can lead to defects also. These human errors include having too many defects in a certain run of items coming through, so if a product that is slightly less defected then the others, it may be passed as it is better, but still not hundred per-cent defect free. Another human error is tiredness/idleness from the inspector. As much as an inspector can be trained, he/she may make some mistakes also. The main thing to learn however, is that inspection will not promise high quality. It will only bring together data to comprehend and develop the processes that produce goods. Inspection is good to have so inspectors can learn to see where and how defects are being made in the production, and how to stop it from happening.

There is also more random sampling of products. Handles and Hinges use Acceptance Sampling, which is basically a sample compared to its acceptance criteria. If it passes, then it goes through the system, but if there is a couple bad then it is sent back, or reworked. This type of sampling does have its advantages, as it is cheap because it only requires a person to get a random small sample and check. It also requires less handling, as it is checked there and then, so does not need to be taken away anywhere. It reduces inspector fatigue because they then do not have to check through the whole line of production, they just need to check a sample. Finally, it proves an assessment of risk, meaning that it tells you whether or not what has been worked on is good or bad. This type of sampling does have its drawbacks also. It only detects poor quality, and does not really prevent it from happening. It does not help the company improve in anyway; it merely just tells it where it is going wrong. As it is shown here, the methods that Handles and Hinges can be both commended and doubted, but to be honest it is a bit more on the doubted side, due to the fact that it is not adding quality to the product.

It can be said, that due to the fact that the company offer an incentive bonus based scheme on effective performance against agreed standard times, this can lower quality. This is because some employees, no matter how skilled and competent they may be, effectively work for money and bonuses. If there is an opportunity to gain more money and bonuses for working faster, then employees will strive to achieve it. This will have an impact on their own quality of work, as it can result in less time being spent on situations and processes that should take much longer to do. It will result in less care being put to each item being made, and can result in more operator carelessness, which was stated before as being a big concern.

The company also uses Statistical Process Control in the wrong way. There is no clear understanding of what exactly the problems are which the tool has been introduced to help solve. The only way to use Statistical Process Control in the right way is to halt the process currently being used into separate operations. This will then lead to a more up to date, structured strict sampling method, which should then be obligatory. It seems as though it has only been added to try and give the company a boost in the quality department, but mainly due to the fact that it has not been introduced in the right way, it makes the point that Handles and Hinges is not using Statistical Quality Control sensibly.

Alternative theories/systems

There are plenty of systems and theories that could be used to help better the company as a whole. One of these approaches is called Total Quality Management. Total Quality Management is a management strategy aimed at embedding awareness of quality in all organizational processes. Total Quality Management has been widely used in manufacturing, education, government, and service industries, as well as NASA space and science programs. It can be said that it is more of a `culture` or `philosophy`.

There are many key principles of Total Quality Management. It is heavily customer-orientated, which as stated before is vital to the success of any company, let alone just Handles and Hinges. It is high on strategic planning, so this again will help its quality when dealing with how to solve dilemmas such as too many defective items going to the consumer. Every employee has some sort of responsibility. This is beneficial because not everyone will know about every problem, it is unlikely that Dave Phillips, the Chief Executive Officer, will know about a problem with the machinery and be able to solve it straightaway. With the involvement of as many people as possible, problems can get solved more quickly and efficiently. This will lead to more time being spent on the needs of the customer, which again was stated before as a priority in order to gain high quality.

Total Quality Management implies that effective leadership from the managers is vital, and can help the organisation do the right things, right at the first time. They should be doing things such as identifying critical success factors and critical processes in the company. This will allow for employees to concentrate on what is important in the company. They should also be using empowerment with their employees. If they can encourage effective employee participation then it will make the job of finding and solving faults in the business a lot easier and productive. Total Quality Management also believes that all employees must be trained in the basics of disciplined management. They must evaluate the situation and define their objectives, plan to achieve said objectives, implement the plans, check that objectives are being reached and take corrective action if they are not. Total Quality Management believes in this particular factor because it will lead to constant improvement in the area of work each employee is in. Total Quality Management needs to have the full commitment from the manager of a company in order to fulfill all these needs.

Total Quality Management involves various `tools` to help reach its goal in a company. Flow Charts, Scatter Charts, Histograms, Cause and Effect Diagrams, Check Sheets, Pareto Charts and Control Charts are all used and each is extremely advantageous to any company. If Total Quality Management was to be established in Handles and Hinges, then Control Charts could easily be used to help the company prosper. The control chart is a tool to determine whether a manufacturing or business process is in a state of statistical control or not. If the chart indicates that the process being monitored is not in control, the pattern it reveals can help determine the source of variation to be eliminated to bring the process back into control. A control chart fundamentally determines whether a process is in control using data that is being recorded at the time of production. It involves higher and lower limits that the process should not be in excess or shortage of. If the process is in control, it will be within the control limits. Any observations outside the limits, or systematic patterns within, suggest the introduction of a new (and likely unanticipated) source of variation, known as a special-cause. Since increased variation means increased costs, the control chart "signaling" the presence of special requires immediate investigation. This means that it can help Handles and hinges find out if a process in production is going wrong, where it is going wrong, and how the company can try and overcome it. This is better than the constant inspections they use currently, because they do not add quality, whereas, given time, this method of quality-checking, will increase quality, and save time and money. Other tool as such as check charts and Pareto diagrams could also be used to help Handles and Hinges with problems that stem over time.

Overall Total Quality Management can bring about strong leadership, clear and decisive goals, clear operational plans and policies, and also gives a good mechanism for feedback. The emphasis of the `philosophy` is to make prevent faults and have no defects, which as stated before would be an extremely handy feature to have in Handles and Hinges currently.

Six Sigma

Another system that Handles and hinges could undertake is called Six Sigma. This is a set of practices that help to systematically improve processes by eliminating defects. It is a process for developing and delivering near perfect products and services. It is very similar in ways to Total Quality Management, in that it believes in continually trying to improve processes in a business, or continually reduce variation in key processes. Again similarly with Total Quality Management it thinks that manufacturing and business processes can be measured, analyzed, improved and controlled, and that succeeding at achieving sustained quality improvement requires commitment from the entire organisation, particularly from top-level management. It basic difference from Total Quality Management, is that it is more specialised in dealing with defects. It measures how much a process deviates from perfection. The term "Six Sigma" refers to the ability of highly capable processes to produce output within specification. In particular, processes that operate with six sigma quality produce at defect levels below 3.4 defects per one million opportunities. Six Sigma's implicit goal is to improve all processes to that level of quality or better.

The main way Six Sigma incorporates its way in a business, is by following its own `code`. A business must first define the process improvement goals that are consistent with customer demands and enterprise strategy. They basically must see what the customer needs and wants and improve these goals. This relates to the idea of quality and giving what the customer needs. This fits in perfectly. They must then measure the current process and collect relevant data for future comparison. Then it's to analyze to verify a relationship between factors. A company would have to determine what the relationship is, and attempt to ensure that all factors have been considered. Then it must improve or optimize the process based upon the analysis. Then finally a company must control to ensure that any variances are corrected before they result in defects. This would include setting up pilot runs to see if everything is working well and thereafter continuously measure the process and institute control mechanisms. It has been stated before in this report how crucial and imperative it is for products coming from the Handles and Hinges production line to have absolutely no defects. This approach seems to guarantee that out of one million items made, only three or four would be defected. That is a huge jump from what the company is doing at the moment and that would save a lot of money in the long run from throwing out good samples, and from lost sales also. In addition, it will also keep the customer/business relationship at a good level due to less conflict between the two. This will then have an effect with customers then persuading their friends or colleagues to try out the company and increase their sales and productivity.

Of the two theories that have just been discussed in this report, it can be said that a Six Sigma approach would be more beneficial and more valuable. It has more advantages than a Total Quality Management approach, and with the added fact that it concentrates on keeping defect down to a bare minimum, it seems as though it is made for a company like Handles and Hinges, who at the moment are having trouble keeping defected items away from customers.

One of Handles and Hinges's main concerns is defining quality standards and linking them to their consumer's necessities, expectations and views. The primary problem is that conflicting markets have diverse requirements, and when consumers actually get their product, differing consumers will most likely recognise and perceive the manufactured goods in different ways. The opinion of quality needs to be appreciated from the consumer's point-of-view because a quality piece of merchandise only gains the label `quality` if it meets with the consumer's perceptions and opinions. In some cases, a `gap` may appear where consumer's views and perceptions will differ from that from which they are being given.

Gap Model of Quality Diagnostics

A `gap model` has been developed, in which four possible gaps are distinguished, which aspire to explain all differences between the customer and supplier relationship. These will help to try and overcome these problems and concerns. The first gap that can be recognised is the difference between the customer's specification and the product specification. There can be conflict here if the product itself varies from what the customer perceived it to be. The next gap is the difference between the management's product concept and the actual product specification. Management does not always include in the service specification all the quality attributes it perceives customers want. The next gap is between the product specification and the actual product quality. Sometimes there is a significant difference between what the company wants to be made, and what is actually made. The last gap to be considered is between the actual product quality and the image of the product. This is the difference between what the actual product looks like and the image that may be portrayed to customers in advertisements or catalogues.

When applying this model to Handles and Hinges, some interesting views and opinions can be made. With regards to the first gap, between the customer's specification and the product specification, the gap appears to be small. This is mainly due to the fact that both markets that Handles and Hinges compete in are well understood. The one potential flaw is the communication to the manufacturers of the product as to what quality of product is required. There has been proof that sometimes in Handles and Hinges, the communication is not at a stable level.

The next gap, which is between the management's product concept and the actual product specification, is very interesting in regard to Handles and Hinges. In Handles and Hinges, it is understood that the two markets they currently compete in need differing approaches to the merchandise being produced. The UK retail market needs an orthodox design of the merchandise at the right cost, whereas the construction industry wants a high quality, ingeniously designed product at almost any cost An understanding of the product concepts is shown in Handles and Hinges, but the communication of these by using a specification is deficient. There seems to be minor differentiation on the shop-floor to take account for the differing requirements of the markets.

The next gap is between the product specification and the actual product quality. When looking at this gap in terms of Handles and Hinges, it can be said that the gap is little here because the specification and requirements of the product is met at all costs. Not considering the significance of the specification or the price involved in keeping to it, the product will leave as it is specified. These expenses are shown by the delivery failure, the representatives' time spent smoothing out problems, the rework and scrap costs, and the increased delivery costs.

The last gap, which is between the actual product quality and the image of the product, shows most of the problems that are occurring within Handles and Hinges. The catalogue that they release shows the same examples and it shows a quality of finish which is not realisable by the manufacturing facility. This falsely adds to the consumer's picture of the product that they are expecting. It is this which is bringing about rejection by the consumer. This is the biggest gap in the company which it seems as though the company agrees with, by adding a SPC tool to help with it, but that has been incorrectly applied. Overall it seems as though this `gap model` does bring about many problems and concerns that Handles and Hinges should attend to, and that its relevance is eminent.

Conclusion

The main conclusion to be drawn from this is that Handles and Hinges do not seem to have a problem with complying with specifications but they have a problem with comprehending the specification that they are giving themselves. The majority of their outlay is connected with the impractical and misleading market specification to which they manufacture their goods by.

Bibliography

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Word Count В– 4,490



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