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Advantages and disadvantages of implementing TQM

The topic for the study is advantages and disadvantages of implementing TQM as a precursor to ISO 9000 and vice versa. The sector taken for the study is petrochemical industries and the country chosen is UK. The paper’s scope of analysis extends to the current position of this industry and the challenges faced by it. The study has attempted to make an in depth discussion about the advantages of implementing quality concepts in petrochemical industry. The pros and cons entailing due to the implementation of TQM and ISO 9000 are also explained. Performance standard for each activity increases the overall performance of organizations in this sector. Therefore, it is essential for every organization to implement any of the quality concepts, so that it will enable it to manufacture and distribute quality products.

Introduction:

In this modern world, which fast changing, most of the organizations are coming up with new strategies to attract their customers. Nowadays, consumers have become totally aware of the quality of products and services delivered by the organizations. There was a wrong belief that the quality concerns only products but not service. But later the perspective has changed. ““managers’ perspectives on its possible effect on company performance are not positive” product quality that will be improvised after the implementation” (Costa 2004, p.1).

The customers always demand good quality for the products and services for which they pay. Due to this, the use of quality concept has become an important criterion for both manufacturing and service industries across the world. Maintaining quality for the products and services is not an easy task for all organizations. Product and service quality is the central part of all the organization that leads to the accomplishment of the organizational goals and objectives.

For sustaining quality within the organization, some quality concepts are required to be implemented. These concepts are implemented in the organization to boost the overall efficiency of the company in a qualitative manner. There are many quality concepts that can be implemented for this purpose. Among various quality concepts, the most important concepts are total quality management system and ISO 9000. Maintaining quality in the overall work progress has envisaged the petrochemical industries to emphasise more on quality of the products and services that they deliver.

Quality management system is an important criteria that have to be given due consideration in the every operation of any business. “The design and implementation of a quality management system will vary depending on the type, size and products of the organisation” (ISO 9001:2000 quality management system n.d.).

“Quality management standards promote the adoption of a process approach when developing, implementing and improving the effectiveness of a quality management system, to enhance customer satisfaction by meeting customer requirements” (Quality management systems requirements for service quality by public service organization 2005, p.2).

To recapitulate, the industries taken for the current study is petrochemical industry in UK. Due to the slowdown in the global market economy in the year 2009, there was a huge decline in the demand for the products manufactured by the petrochemical industry. “The petrochemical industry of today is an indispensable part of the manufacturing and consuming sectors, churning out products which include paint, plastic, rubber, detergents, dyes, fertilizers, textiles, and even solvents.” (Analyzing the global petrochemical industry, 2009, para.1).

The top ten petrochemical industries in the world are as follows:

“BASF (Germany)

Dow Chemical (USA)

ExxonMobil Chemical (USA)

LyondellBasell Industries (Netherlands)

INEOS (UK)

Saudi Basic Industries Corporation (Saudi Arabia)

Formosa Plastics Corporation (Taiwan)

Sumitomo Chemical (Japan)

DuPont (USA)

Chevron Phillips (USA).” (Baxter, 2009, para.7).

As far as petrochemical industry in UK is concerned, maintaining quality is an important aspect. To achieve this objective in all spheres of work processes in petrochemical industry, various quality concepts have been implemented in these organizations. Among these the concept which has created an overall progress for this sector is the concept of Total Quality Management (TQM) and ISO 9000.

TQM is considered as a holistic and systematic approach that provides quality management for the petrochemical industry in United Kingdom. It is an integrated management philosophy which continuously focuses on improving the quality performance of the products, processes and services that are delivered by the organizations to meet the customers’ requirements and enhance customer satisfaction and there y retaining their loyalty towards the organization. “TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and organizational objectives.” (Hashmi, 2009, para.4).

ISO 9000 is a group of standards which is mainly implemented in an organization to improve the overall efficiency and to effectively enable the maintenance of quality management system within the organization. In the earlier days, this was meant for only those organizations which were engaged in international trade. “ISO 9000 can help a company satisfy its customers, meet regulatory requirements and achieve continual improvement.” (ISO 9000 and other standards, n.d., para.4). 

ISO 9000 series is composed of ISO 9000:2005, ISO 9001:2008, ISO 9004:2008 and ISO 9004:2009. There is a specific ISO standard for every industry. ISO/TS 20091 is a specific quality management system which includes the requirements related to design, production, development, installing and delivering the services related to the products that are manufactured by the petrochemical industry.

Current scenario of global Petrochemical industries:

As the name suggests petrochemicals are certain chemicals which are obtained from cracking of petroleum feedstock. These petrochemicals are mainly used in manufacturing fields. Petrochemical industry is considered to be one of the fast growing sectors in the world. “It not only plays a crucial role in meeting the daily needs of the common man, but also contributes significantly towards industrial and economic growth of the nation” (Introduction 2008). “The petrochemical industry of today is an indispensable part of the manufacturing and consuming sectors” (Analyzing the global petrochemical industry 2009).

“Quality is defined by international standards ISO 8402 as "the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs" (Mariojouls n.d., p.1). As far as petrochemical industries are concerned, quality plays a significant role in the overall functioning. “Recession is precipitating a long-term decline in the British petrochemicals industry, with producers cutting and consolidating capacity in 2009, according to BMI’s latest UK Petrochemicals Report” (United Kingdom Petrochemicals report Q1 2010 2009).

Petrochemical industry being fastest growing industry with an estimate nearly US$2.4 trillion, there is an absolute necessity within the business to ensure and sustain customer satisfaction. Despite of many challenges from environment protection standards and high rate in crude oil prices, it is still maintaining higher rate in overall manufacturing segment. “As per industry reports the pharmaceutical segment contributes approximately 26% of the total industry output and approx. 35-40% is dominated by the petrochemical segment” (Global Scenario 2008). Commodity chemicals is said to be one of the largest segment in this industry with approximate turnover of $750 billion while fine chemicals constitute $500 billion. The major markets are widely spread all over the globe which include Japan, Western sides of Europe, North America and also Asia and Latin American countries. However, United States consumes almost one-fifth of the chemical production while Europe consumes only half of the said volume.

In petrochemical industry the process of petrochemical production consists of two stages. “In the first stage naphtha, produced by refining crude oil or natural gas is used as a feedstock and is cracked. Cracking (breaking of long chain of hydrocarbon molecule) produces olefins and aromatics. In stage two, these building blocks are polymerized (made to undergo chemical processes) to produce downstream petrochemical products (polymers, polyesters, fibre intermediaries and other industrial chemicals” (Petrochemicals 2009). The nature of the petrochemical industry is cyclical. In case of petrochemical supply industries, Middle East region is considered to be very rich in oil fields and reserves and it has been developing newer complexes for petrochemicals. The huge capacity of these countries fulfills their domestic demand. In case of demand side it is Asia, particularly China that more and more demands are coming. These two factors changed the supply-demand scenario of global petrochemical industries over the last two decades.

The US petrochemical industry has remained volatile between up and down trends in the last few years and also present situation is no different. The US petrochemical industry has traveled through different phases in their life cycle from their initial phase till the present. The US petrochemical industry faces many slumps in their production because of high feedstock prices. The rising of feedstock prices has put the giant petrochemical industry of US on back foot over other main rivalries. Because of this investment reduced in the US petrochemical industry. This caused considerable unsteadiness in the market. The result was that US petrochemical was in a stagnated position and the future of the petrochemical industry in United States seems back.

In the case of Middle East, petrochemical industries are accessing to cheap and copious feedstock and more overly they are producing larger quantities from their petrochemical industry. Besides large scale investment continues in the sector which results in favourable condition for Middle East countries. Apart from this, China being the country whose intake is quite large, the market is encouraging. Thus, Middle East did not worry about the market condition at all. Apart from this, rules, regulations and protocols present in this country are very simple which poses no problem in doing steady business. By 2015, it is said that Middle East countries will surpass the European countries in terms of ethylene capacity. “The region is estimated to account for about 20% of world ethylene capacity, against 17% share of Europe” (US petrochemical industry takes a backseat in global supply- demand 2003). Middle East is targeting China as their potential market where there is a huge demand for oil always exists. Middle East is expecting the demand of around nine percentages every year in China while comparing with other countries.

Importance of TQM and ISO in petrochemical industries:

      TQM and ISO 9000 are two very important topics in connection to quality of a product. The idea of TQM is based on a transformation from the management process based on outcomes to a management process based on the improvement of quality. ISO 9000 is very important in determining the quality of a product. TQM is concerned with making sure that the company does the right thing and ISO 9000 deals with whether all the things are done right in the company. Researches had shown that TQM and ISO 9000 concepts are used in most of the petrochemical industries.

      TQM is important because it enhances the existing methods of business. It also improves the product and service quality which will be help in the existence of the product for a long time. TQM is now used not only in manufacturing activities but also it is used as a general management tool. Total quality management decides the level of quality of the things in the petrochemical industry. It determines the characteristics of a thing. The quality of the products in the industry will attract customers towards it. “TQM is not only limited to product quality improvement but also widely cover aspects of quality in service sector too. TQM in India more than manufacturing, it is the service sector that took its time to recognize the importance of TQM” (Managing quality in organization 2010). TQM is focused on improving the quality of products in the petrochemical industries. The companies can fully take actions to the customer’s hopes with the help of TQM.

      ISO 9000 standard determines the quality of a product. Standards like ISO 9000 are important for the success of any organization. Petrochemical organizations have recognized the importance of ISO 9000 certification for the growth of their business. The standard is important because of the benefit of it in marketing and sales, due to its value etc. “ISO 9000 is important in the first instance because it gives organizations some guidance on how to manage for quality. Secondly, mechanisms exist by which an organization can be certified for conforming to ISO 9000 specifications” (Rada 1994). Its characteristics are different from the other standards of engineering. In other words ISO 9000 is unique. These standards can help in the progress of the business processes of a company. It also helps to add value to the business. The sales of the industry can be increased by attaining ISO 9000 standards. It meets the requirements of the customer which leads to customer satisfaction. ISO 9000 helps the petrochemical industry to react to the needs of the customers in agreement with the standards and costs. The rules of ISO 9000 offer a complete model for the management of quality. It can make the petrochemical industries competitive. The motivation of the staffs can be improved with the help of ISO standards. It can encourage trade at the global level. It is also a method to add profits to the industry. The productivity of the industry is increased with the help of ISO 9000. The petrochemical industries can use it as a standard that will help to evaluate the effectiveness of its quality. A petrochemical industry with ISO 9000 can sell its products at an improved rate. It can claim that their products have been the outcome of a procedure that frequently examine for quality. ISO 9000 standard helps the petrochemical industries to attain the quality standards that are accepted all over the world.  Since the standard is accepted internationally, for the industries doing international business consider it as a reasonable option. It will also be a good option for customers who want products of international quality. By using ISO 9000, industries can recognize the cause of the difficulties and hence discover a solution for it. A reliable supply chain can be produced using ISO 9000. The importance of TQM and ISO 9000 has encouraged the petrochemical industries to apply them in their business.

Problem 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 this product 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 the major source of economic growth, the industry is facing some problems regarding quality management and quality assurance. 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” (Grote, 2001, para.5).

During the production process they are not fully utilizing the resources and they are not aware about the recycling of the waste products. The rate of manufacturing the petrochemical products is very high; so the wastage of resources is causing great loss of profit for them. The petrochemical industry like BP did not implement the latest technology and methods to improve the activities in the production procedure and to improve the performance of the workers. Due to lack of the latest technologies, they could not increase the quantity and quality of products and also could not provide the customer’s requirements properly. So, in order to overcome such problems, they introduced quality management techniques like TQM and ISO 9000 standard.

The financial crisis for the past few years has affected the running of the petrochemical industries. Increase in the price of the resources decreased the production of these industries. Moreover as they are aware of recycling the waste resources there is vast wastage of the resources. The petrochemical products are used for a number of purposes therefore the lack of quality decreases the sale of their products. This has totally caused to the financial status of the petrochemical industries. The resources for the production of the petrochemicals products are not available in sufficient manner. The chemical plants are been abolished due to environmental contamination like pollution, smoke stacks etc. usage of the traditional methods in the production process decreased the quantity and quality of their products. It is taking more time for the production process as they are following the traditional methods. According to the invention of the latest technologies these organisations did not implemented the latest technologies in their business activities. Therefore they fail to reach with the other petrochemical industries in other nation. Proper training is not given to the employees to improve the performance of the employees moreover they are aware in handling the latest tools and techniques. The decrease in quantity of the petrochemical products does not accomplish the need of all the customers so this is affecting the whole reputation of these industries. Deficient in attaining the customer satisfaction of their products they are not able to compete with the petrochemical industries in other countries. For the achievement of success of any business there need a good relationship with the other countries in order to increase the sale of their product. But in the case of petrochemical industries this country is not keeping a good relationship with the outside world therefore the sale of their products has decreased.

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.

Implementation model:

(Implement- from quality to organisational excellence, n.d., p.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. The statements should be clear and spontaneous.

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 analyzing of the past data and the modification to be done in implementing the new standards. 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.

Core process:

The core business processes are the profit rearing segments of the business and they consist of suppliers, process and the customers. 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.

Defining of the business opportunity:

Quality implementation is done mainly for increasing the reputation of the company. 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.

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. 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.

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 9000 and ISO14000 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:

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.” (Exhibit: An introduction to ISO 9000 & TQM, 1999, p.2).

There are many advantages in implementing TQM as precursor to ISO 9000 and vice versa in petrochemical industries. These two topics have got a good exposure and encouragement. The petrochemical industries find it very important to obtain them. This has grown popularity due to its advantages. The ISO 9000 is considered as a quality model. The implementation of TQM creates a competitive advantage. The implementation will also improve the participation and dedication of the employees in the petrochemical industry. The employees work as a team for the implementation activities and thus cooperation increases. The implementation of TQM and ISO 9000 helps provide quality to the customers. It helps in meeting the needs of the customers. Assessing the quality can be done by quality standards like ISO 9000. It determines whether the work is done in an efficient way or not. Total quality management can be implemented through ISO 9000. Implementing ISO 9000 as a precursor can be of advantage to the implementation of TQM, because it will help increase the profit and thereby keep their regular customers. ISO 9000 can be used as a tool to TQM in petrochemical industries. 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 for the petrochemical industries because it helps to improve productivity. It helps in organizing the process of production. It also helps in improving the performance of the company.

The advantages can be listed as follows;

It improves the productivity of the organization from top to bottom.

It is s systematic and well structured approach that can be used for enhancing customer satisfaction.

It is an improvement method by which the deviations can be reduced.

It helps in delivering the product and services t the required quality expected by the customer.

It helps 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 petrochemical can be increased by the implementing ISO 9000.  

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

In petrochemical industries, ISO 9000 and TQM are the integral components of the successful running of every organization. When a petrochemical industry is considered there exist a lot of difficulties regarding the implementation of TQM as a precursor to ISO 9000 and vice versa. Petrochemical industry plays a major role for the economic growth of a country. Nowadays petrochemical products are used for several purposes of our day to day life. 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. 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. But, 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 the 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. it is difficult to alter the practice of the longtime workers to the TQM procedures and ISO 9000 procedures. while the organization are running smoothly with their existing functional procedures as the customers 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” (ISO 9000 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” (Nurre, Gunaman & De- Almeida 2000, p.5).

Conclusion and Recommendations:

The concepts of TQM and ISO play a significant role in improving the quality management system within an organization. It is evident that the adoption of these two concepts has enabled the petrochemical industries to overcome all the problems they were facing before their implementation. The challenges faced by the petrochemical industries can be solved effectively by implementing these concepts. The issues related to the product or service quality must be handled by the experts in the organization.

The overall performance of this sector can be improved by framing a standard for each activity that are carried out in an organization, so that the deviations occurring in each activity can be identified easily and appropriate measures can be taken in time.

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