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Total Quality Management has recently become a fundamental criterion that many world-class software organizations are pursuing excellence in software development as well as analyzing and assessing both qualitative and quantitative data that are relevant for the business. The Total Quality Management has been considered to be an effective managerial strategy that can help a business achieve its goals and gain competitive advantages too. The seven tools of Total Quality Management has gained reasonable attention from various researchers and management experts as it can be used for identifying organizational procedures, ideas, cause and effect matters and business statistics that are related to the business organization.
This piece of research work is an attempt to examine the relevance and organizational significance of Total Quality Management with relation to the case of Financial Collection Solutions and Services (FCSS). This paper identifies most appropriate TQM tools that can help the company develop its software based business of credit cards and other payment solutions.
Total Quality Management: Overview
The concept of Total Quality Management and its importance in the business and economy have dramatically increased in recent years because it has been considered to be an effective strategy that can help managers to become accustomed to the changes in both technology and changing customer attitudes as well customer demands. When the business contexts continue changing and are challenged by innovative and technological advances, the business must be able to adjust with changes and to provide goods and services according to the changing business contexts. Customers, competitors, employees and stakeholders all are putting maximum pressure on managers to quickly innovate and change the business route. Total Quality Management is one approach that has emerged to meet these changing forces. This approach also has been termed as Continuous Quality Improvement (CQI) and Leadership Through Quality (LTQ) (Brown and Harvey).
One of the very basic tasks and objectives of the management is to achieve quality in the business. According to Peter F Drucker, a business must be able to create a customer in a way that it can satisfy him by providing some product or services that he wants (Burril and Ledolter, 1999). A business can be said to have achieved the required 'quality' when it provides excellent products or services with required attractiveness, with no defects, and with reliability and long term dependability. Customers demand high value and high quality goods or services and they are never ready to accept those services that are failing to offer a reasonable quality (Bateman and Snell, 2003)
Total Quality Management is a method of managing in which everyone in the organization is committed to continuous improvement of his or her part of the operation (Bateman and Snell, 2003). The Total Quality Management is a comprehensive approach that aims at improving product and service quality and thereby to achieve maximum customer satisfaction. Brown and Harvey emphasized that "Total Quality Management is an organizational strategy of commitment to improving customer satisfaction by developing procedures that carefully manages output quality" (p. 400).
According to Ross and Perry (1999), Total Quality Management is thinking of quality in terms of all functions of the business organization and it is a start-to finish process that integrates interrelated functions at all levels. This system approach considers every interaction between the various elements of the organization. The result and output of the TQM can be summarized that the overall effectiveness of the system is higher than the sum of the individual outputs from all the functional areas and subsystems within the organization.
Fundamental Concepts of TQM
Wadsworth, Stephens and Godfrey (2002) identified Customer focus, Continuous improvement and the value of every associate as the fundamental concepts of Total Quality Management. A major challenge being faced by many of the organization is its understanding of the customers' requirements. Many of the organizations like Xerox have recently found that understanding the prevailing customers' requirements and changing need and thus keep goods and services according to their requirements is better than finding new customers.
According to Wadsworth, Stephens and Godfrey (2002), organizations must seek continuous improvement in order to achieve the quality in the business. The continuous improvement relates to maintain ongoing improvement of both goods and service qualities, improvement in the performance of the workers and management and improvement in the overall productivity as well as profitability of the firm. They considered the value of every associate as highly important in the concept of Total Quality Management. All planners, managers and engineers in the business have their roles and all they must be provided of the opportunities wherever they have to perform decision making and other managerial activities.
How Relevant is TQM to FCSS
This part of the research work aims at drawing an analysis on the relevance of the Total Quality Management to FCSS, a low-cost swipe card service provider that has potential for greater opportunities in the market.
FCSS has developed electronic bill payment solution to the customers and also flexible payment solutions in order to compete with the prevailing market leaders like Visa, Master-card credit cards. It is able to beat the competition through flexible payment systems and by concentrating on price and quality of the customer services to be provided. FCSS has experienced managing and maintaining with clients of different levels and employees. The company has been on its success path as it has been developing further from each year by expanding the total customer base as well as number of employees working in the organization. The management has been looking effective strategies that can bring further competitive advantages in the swipe and credit card markets.
Total Quality Management will be a very effective strategic tool for the management of FCSS in order to develop its market and increase the productivity as well as the value it aims to provide to the customers. Achieving superior value of the services has been a dream, but Total Quality Management can make it a success. Wadsworth, Stephens and Godfrey (2002), have identified basic concepts and components of the Total Quality Management that are customer focus, ongoing improvement and value of every associate. Through flexible and simple payment solutions, FCSS has been aiming to beat competition on price and quality of customer services.
Identifying the customer plays vital role in the 'customer focus' as part of Total Quality Management strategy. Only when customers' need and changing attitude are better assessed and identified, the business can be said to have focused on its customer. Collecting customers' profile and personal data are considered to be effective ways to understand the customer. Many large companies have extended their data base including customers details, personal profiles, customer demographics, their responses and feedback towards certain goods and services etc. these data have been used by management as strategic step for identifying the customers and to determine market trends (Foss, 2001). The example of FCSS shows that it has been on the service filed of swipe and credit cards and it must have sufficient customer profiles and details. These can help the business formulate effective customer focus plan and thus to move towards Total Quality Management.
There has been ongoing development in FCSS, but, still, by focusing on Total Quality Management, it can have further improvement in almost all aspects of the business. As discussed earlier, continuous improvement refers to the continuous and overall improvements in almost all functional areas of the business like service quality, customer satisfaction, market extent, employee performance and productivity of the business.
Needs for TQM
As far FCSS is concerned, by implementing Total Quality Management, it can reduce the costs of credit and swipe cards services as well as costs for online payment solutions, increase revenues from its prevailing markets plus its proposed markets of Europe and United Arab Emirates, to have delighted customers and to have empowered employees. These are the benefits the FCSS can enjoy by implementing the strategy of the Total Quality Management (Wadsworth, Stephens and Godfrey, 2002).
Higher quality in the business performances can result in lower costs by reducing errors, re-works and non-value added works associated with online payments, pay-per-use individual entertainment systems and pay-as-you go methods of payments that are used by FCSS. When FCSS is able to achieve higher quality, it can as a result gain more satisfied customers from UAE, Canada and Europe, premium prices and increased market share for the cards and payment solutions (Wadsworth, Stephens and Godfrey, 2002),.
When FCSS focuses on Total Quality Management, the employees within the form can improve themselves further yet. As a result, FCSS can achieve lower costs, increased efficiency in online payment solutions, higher revenues from payment solutions and more satisfied customers (Wadsworth, Stephens and Godfrey, 2002).
Strategy for Implementation
A careful and effective planning can be a starting point. FCSS management must assess the opportunities of the Total Quality Management and thus to plan for implementing the strategy by considering various factors like risks and difficulties involved in implementing the strategy.
The basic three components of the Total Quality Management are quality planning, quality control and quality assurance. The FCSS management must take actions regarding these three components of the TQM. According to Schwalbe (2009) quality planning is the ability to anticipate situations and prepare actions that bring the desired outcomes. Quality control includes 1) acceptance decision by which FCSS management accepts or denies a proposed plan, 2) Rework, by which FCSS brings a rejected item into compliance with requirements and 3) process adjustments by which FCSS takes corrective or preventive actions. Quality assurance involves all those activities that can satisfy the relevant quality standards for FCSS services planned like pay-as-you go or pay-per-use entertainment systems.
Strategic Toolkit for FCSS
This part of the research work relates to the strategic toolkit that includes basic three tools of Total Quality Management that can be implemented by FCSS. This research paper suggests Pareto Charts, Cause and Effect diagram and Scatter diagram as the appropriate three basic tools of TQM that can help FCSS identify specific information related with various market trends.
1. Pareto Charts
Pareto Chart is a tool that shows how frequently various types of problems occur within the business and it lists out various problems that are discovered alongside the horizontal axis and the number of incidents or problem occurrences in the vertical axis.
According to Sashkin and Kiser (1993), a Pareto Chart is a convenient tool that is used to count and display the number of defects or problems of various types of transactions or business functions over a given period of time. The underlying principle of Pareto chart, based on the work of 19th century Italian economist Vilfredo Pareto, is that about 80% of all the problems can be traced to only 20% of the possible causes. The management should always begin by attacking those causes that are responsible for the majority of errors and quality problems.
Appropriateness to FCSS
The Pareto chart will be an effective tool of Total Quality Management for FCSS because it can be used to assess and identify grouping qualitative data including most recent errors like delays in projects, errors related to credit card payments etc. The below example of Pareto chart gives an overview of its appropriateness to FCSS.
The Pareto Chart can help FCSS to schedule over a selected period of time to trace out the errors and changes.
FCSS has, even though it has gained greater success in past years, faced various challenges like delays creeping in to projects as its clients have received the delivery of their financial solutions only after a certain period of placing the orders. There also has been gradual increase in the number of errors in the development process and all these errors are reflecting in other business activities causing major problems. These problems can be well identified with the help of Pareto Chart.
2. Cause and Effect Digaram
The second most apporpariate tool for FCSS's Total Quality Mnaagement project is casue and effect diagram. The Cause and Effect Diagram consists of a long horizontal arrow and a description of the problem. The problems and causes are shown as radial lines. The additional causes are also depicted as additional radial lines. This diagram is shown like a skeleton and therefore it is also called Fishbone digram.
Dahlgaard, Kristensen and Khanji (2005) argued that cause and Effect Diagram is extremely useful tool for hypothesizing about the causes of quality defects and problems associated with. It can be used in all departments and hence it is easy for use too. In order to draw the diagram, it is essential to understand some of the basic causes of the prevailing defects.
Sashkin and Kiser (1993) emphasized that the Cause and Effect Diagram can help an organization point out how various problems causes might interact and how each problem occurs with respect to each others.
Appropriateness of Cause and Effect Diagram to FCSS
FCSS is a financial business firm that porvides swipe cards, creadit crads and various types of payments solutions to customers in Canada and it plans for the same in Europe and UAE. It will have to face a number of challenges in its business path. The problems and challenges that FCSS may face relate to machines, materiasl, manopower and methods. For instance, it has to operate with helps of advanced software and it requires effcient personnels to perform software-assisted works. It is a cahllnge as well as problem if it cannot meet requred skilled people. A cause and effect diagram therefore will be an effective tool for FCSS to recognize various types of errors and causes and also to assess how each problem can causes another problem in the company. The following digram shows the appropriatness of the Cause and Effect Diagram for FCSS.
3. Scatter Diagram
Scatter Diagram will be another effective and useful tool for FCSS that can depicts interrelation between different variables. The horizontal axis includes values of one variable and the vertical axis comprises of values of the other variables.
Sashkin and Kiser (1993) stated that Scatter Diagram provides a standard way of showing how one variable relates to another variable. The scatter Diagram can be used to identify various tasks involved in the project, to identify the hierarchy of business structure and to identify the inputs and outputs of a particular project.
The appropriateness of Scatter Diagram to FCSS
FCSS has variables of different attributes and all these variables can be closely interrelated. For instance, swipe card payment system and credit card payment system are closely interrelated and how these are performing or responding in the finance market can be recognized with the help of scatter diagram.
Similarly, FCSS has recently projected both pay-as you go plans and pay per use of entertainment plans. Both these systems are closely related. The Scatter Diagram can help the company to identify the interrelation between these variables and to identify the potential outputs and overall results of these projects.
'Quality' is everyone's responsibility within the organization. Almost all major companies are putting greater efforts to achieve quality in the business operation with a motive to achieve maximum customer satisfaction. It can be implemented only if there are effective quality planning, quality control and quality assurance. This piece of research work suggests that TQM will be a very useful strategy for FCSS in order to have continuous improvements and achieve customer satisfaction as well. This work suggests three basic tools to FCSS that are Scatter Diagram, Cause and Effect Diagram and Pareto Charts.