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Strategic quality management
General view of strategic quality management
Strategic Quality Management is an important part of the syllabi of a lot of business and financial management studies schools all across the world. It is considered as a very important part of the operations of a business entity too, as it focuses on finding out the weaknesses and turning them into strength in favor of a company or for a business.
Basic Objectives of Strategic Quality Management
The primary objectives of the concept of Strategic Quality Management:
Administering a proper analysis of the business strategy. This takes into account the comprehension of the prominent parts of a proper mission statement of a business enterprise.
Incorporation of strategic analysis in the Business Excellence Model. This needs to be done to find out the comparatively weaker areas in a business and to better them.
Employing the means of quality management. As part of this comes the comprehension and consequent application of the basic principles of total quality management. This process is followed by acquiring knowledge about the Business Excellence Model and then using it for the purposes of locating the particular areas in business that need to be improved.
Total quality management
An aspect of strategic quality management is the total quality management. Total quality management is a management philosophy that seeks to integrate all organizational functions such as marketing, finance, design, engineering, and production, customer service, etc. to focus on meeting customer needs and other organizational objectives. Also tqm empowers an entire organization, from the most junior employee to the CEO, with the responsibility of ensuring quality in their processes. In particular, tqm provides management with the ability to ensure quality through more streamlined and effective process-improvement channels. A great range of organizations have deployed tqm, including small companies, large companies, and government departments. Tqm is no more relevant to any one type of organization than any other; on the contrary, it is a philosophy appropriate to any situation in which quality assurance is important.
Areas of Application of Total Quality Management
The process of total quality management is applied in the following areas:
Ø Service Industries
Ø Space Programs of NASA
Ø Governmental Operations
Uses of Total Quality Management
The most basic use of this approach has to do with the fact that it can be used for the purpose of the survival of a particular business enterprise. Because It helps the business enterprises to bring down the amount of money they spend after their business operations and meanwhile maintain the standard of their services and guarantee the similar levels of customer satisfaction.
What are the benefits of a quality management system?
1. Enhancing your focus and understanding of your customers' needs
2.Improved competitive edge
3.Continually improving the efficiency of your operation
4.Reduced costs, improved profits, added growth
5.Ensuring consistency of your products and/or services
6.Strengthening communication at all levels of your company
7.Providing more sales and marketing opportunities
8.Product liability protection
The ISO 9000 approach
The ISO 9000 series is a set of worldwide standards that establishes requirements for companies' quality management systems. ISO 9000 is being used all over the world to provide a framework for quality assurance. Many countries have their own quality system standards which are equivalent to the ISO 9000 series. “It s purpose when it was first framed in 1994 was to provide an assurance to the purchases of products or services that they have been produced in such a way that they meet their requirements” (Nigel Slack 2007). The best way to do this it was argue4d was to define the procedures standards and characteristics of the management control system which governs the operation.
ISO 9000 principles:
A. Quality management should be customer focused. Customer satisfaction should be measured through surveys and focus group and improvement against customer standards.
B. Quality performance should be measured. Measures should relate both to processes that create products and services and customer satisfaction with those products and services. Furthermore measured data should be analyzed in order to understand processes.
C. Quality management should be improvement driven. Improvement must be demonstrated in both process performance and customer satisfaction.
D. Top management must demonstrate their commitment to maintaining and continually improving management systems. This commitment should include communicating the importance of meeting customer and other requirements establishing a quality policy and quality objectives, conducting management reviews to ensure the adherence to quality policies and ensuring the availability of the necessary resources quality systems.
The ISO 9000 (2000) family of quality standards is in fact four separate standards.
ISO 9000- quality management systems: fundamental and vocabulary
ISO 9001- quality management systems: requirements
ISO 9004- quality management systems: guidance for performance improvement
ISO 19011- guidelines for auditing quality and environmental management systems. (Nigel Slack 2007)
ISO 9000 is seen as providing benefits both to the organization adopting it and to customers. Some of the advantages that are claimed are:
ü Many operations find it provides a useful discipline to stick to sensible process-oriented procedures.
ü Many operations have benefited in terms of error reduction reduced customer complaints and reduced costs of quality
ü Gaining the certificate demonstrates to actual and potential customers that the company takes quality seriously. It therefore has a marketing benefit.
Customer relationship management
Another aspect of total quality management is customer relationship management. “Customer relationship management is a broadly recognized, widely-implemented strategy for managing and nurturing a company's interactions with customers and sales prospects. It involves using technology to organize, automate, and synchronize business processes principally sales related activities, but also those for marketing, customer service, and technical support” (Oakland 2007). The overall goals are to find, attract, and win new customers, nurture and retain those the company already has, entice former customers back into the fold, and reduce the costs of marketing and customer service.
The ability of hotel organizations to provide consistent recognition and differential treatment for individual customers requires than an appropriate technological infrastructure be in place to facilitate the collection of and the access to customer information. “Data collection and maintenance has been identified as a critical component of CRM” (Adrian Palmer 2005). The key issue in terms of technology deployment is the integration of enterprise-wide systems including property point of sales and central reservation systems to provide a single view of the customer within and across hotels and distribution channels. For example Hilton Hotels Corporation has invested in customer relations management systems and data warehouse technology to provide “central repositories for customer data and data mining capabilities that facilitate targeted marketing campaigns and personalized communications with customers” ( Inge 2001) . Moreover Hilton hotels develop targeted promotions as part of its CRM strategy, offering specific customers discounted rates to increase capacity utilization during periods of low demand.
To illustrate marketing as a systematic process of customer asset building, consider the example of Hilton hotels. The introduction of a frequent guest program about a decade ago has allowed Hilton to manage its network of hotels as a demand chain cultivating the loyalty, and hence the asset value, of a relatively small proportion of the 18 million guests who stay in its hotels each year. The Hilton hotel, commanding a larger pool of committed customers than the independent properties, can operate at above break-even occupancy if they manage the pool efficiently. Given this industry structure, programs to cultivate relationships with high-value customers are central to marketing management. The head of Hilton Hotels Corporation's guest rewards program calls them, “the industry's most important marketing tool.” Despite the fact that each member belongs to an average of 3.5 hotel loyalty programs, management is optimistic that they can be used to cultivate loyalty. Membership constitutes permission for the chain brand to build a customer profile for each member, assess the potential value of each member, and to measure marketing's efforts to realize the potential value. One way that the hotel group can realize the potential value of these high-potential customers is to protect them in the event of a service failure. Diskin the senior vice president of Hilton's customer service explains, “In a sense, the loyalty program is a safe haven for the guest. If there is a problem and it is not taken care of at the property level, the guest can contact our customer service team. It's a mechanism to make sure we hear about those problems. We also do outbound after-visit calling, and we call Honours members because they're the best database, and the most critical guests we have. They have the most experience; and the highest expectations. We do feedback groups with members in addition to focus groups and quantitative research. We invite members in the hotel down for dinner, and we say we want to talk about a subject. I get calls from people that are lifelong loyalists, not because of any changes we've made, but because once we invited them and asked them their opinion. People care about organizations that care about them.”
More generally, however, the loyalty programs allow a hotel group to identify a small group of customers whose cultivation will have disproportionately large consequences for the customer asset base. Of the 18 million guests who stay with the chain annually, 12 million are “group” guests who do not choose their own hotels and whose rates are set by negotiation with convention and conference organizers or tour organizers. These rates are discounted and they contribute less to profitability than the rates charged to loyal customers. Loyal customers also enable chains to economize on customer acquisition spending. Hotels like Hilton spend about $750 a year per room on advertising and promotion to acquire guests for properties, a cost that is significantly less for members. Loyalty programs also economize on retention costs because the many of the incentives for increased patronage such as room upgrades are awarded only if they would otherwise have been unused.
To conclude Total quality is a description of the culture, attitude and organization of a company that aims to provide, and continue to provide, its customers with products and services that satisfy their needs. The culture requires quality in all aspects of the company's operations, with things being done right first time, and defects and waste eradicated from operations. TQM have achieved either significant or even tangible improvements in quality, productivity, competitiveness or financial return. As a result many people are sceptical about TQM. A successful TQM environment requires a committed and well-trained workforce that participates in quality improvement activities. Such participation is reinforced by reward and recognition systems emphasizing the achievement of quality objectives. On-going education and training of all employees supports the drive for quality. Employees are encouraged to take more responsibility, communicate more effectively, act creatively, and innovate. Their knowledge and skills are respected by management.
Without a TQM approach, Engineering and product development are usually carried out in a confliction atmosphere with individual departments reacting to problems. Changes, scrap, delays, work-around, waste, and rework are seen as normal behaviour. Management focuses on supervising individuals. Fire-fighting is necessary and rewarded.
In a TQM environment, Engineering and product development are customer-driven. They are focused on quality and on preventing problems rather than reacting to them. Teams are process-oriented, and interact with their internal customers to deliver the required results. Management's focus is on controlling the overall process, and rewarding teamwork.
1) Adrian Palmer (2005) principles of services marketing 4th edition. Mc Graw-Hill Companies
2) John S. Oakland (2003) TQM text with cases 3rd edition. Elsevier
3) Nigel Slack et al.(2007) operations management 5th edition. Prentice Hall