In the business world today whereby there is inevitableÂ and massive competition among themselves, companies engage in a lot of profit maximizing activities with the sole aim of gaining an edge over its competitors. What factors, methods or strategies do they employÂ in order to survive in the race for profit andÂ brand loyalty? How do they gain a competitive advantage over other Companies? What role does Total Quality Management play in a company's quest for obtaining competitive advantage? This essay will discuss in detail the various ways by which a company can gain competitive advantage using the total quality management as the focal point and hopefully provide answers to these questions taking into consideration the ultimate bargaining power of customers.
Now it is safe to ask, what is Quality? According to Crosby, Quality is regarded as "conformance to requirements" and "meeting the need and/or exceeding the expectations of the customers/clients/users at a cost that represents outstanding value" according to the Kodak definition. From this, one can safely say that the idea of quality goes beyond a company carrying out the best management practices, using the most recent technologies and even producing goods at very high or ultimately low prices. Quality is only determined or achieved when the manufactured products satisfy the needs, expectations and also conforms to the requirements given by the clients and customers. This tells us that it goes beyond organisation's abilities, to achieve quality. Managing this idea and decision to satisfy customers can be said to be the genesis of Total Quality Management.
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Total quality management evolved from the quality assurance methods that were first developed in the times of the 1st world war. The war led to huge amount of large scale production efforts that suffered poor quality. The Statistical Quality Control (SQC) practice was introduced by Dr. W.E. Deming to provide a statistical manner of regulating, analysing and inspecting quality based on sampling as a means of minimizing cases of poor quality in products. Further cases of poor quality products in Japan led to Dr. Deming being invited by the Union of Scientists and Engineers to train the people on Quality and the processes involved in achieving good quality products. Total quality management as an approach was first discussed in the 1970's and was seen as an entire organisations approach to quality control that involves all employees from upper management to the workers in quality control. And before long, non-Japanese organisations welcomed this approach based on the results seen in Japan. This new wave of Quality control was then called TOTAL QUALITY MANAGEMENT.
Now what is Total Quality Management? "Total Quality Management (TQM) is defined as a method of doing business that deals with or relies on the skills and abilities of workers as well as the organisations management in a bid to bring continuous growth and developments in the quality and long-term output of the organization by every branch and sector of the organisation being responsible and taking part in all stages of the process. Michael J Stahl defines Total Quality Management TQM as a systems approach to management that aims to increase value to customers by designing and continuously improving organizational processes. Competitive advantage can be said to be achieved or obtained by an organisation when it (the organisation) is able to create more economic value than its rivals. Economic value simply means the difference between the perceived benefits gained by a customer purchasing a company's products or services and the full economic cost of these products or services. Total Quality Management (TQM) is an approach to organisational management which seeks to establish near-perfection or zero defects in any part of an organization, and which uses teams, empowering workers and creative problem solving to achieving this objective. This approach, though originally developed for the manufacturing sector, is now available throughout organizations, with marketing, finance, production and customer support all included and majorly with the unique goal or intent of maintaining, obtaining or developing an already existing competitive advantage for a company over its rivals. The TQM approach has proven to be very useful and beneficial to various companies today and can boast of various advantages.
Advantages of the Total Quality Management approach
Always on Time
Marked to Standard
Problems are spotted and sorted quicker using control tools so there are zero defects.
With the TQM approach, workers are motivated by extra responsibility, there is team work and everyone is involved in decisions on production.
The practice of Total quality management leads to decrease in waste as fewer defective products are manufactured.
The above highlight the benefits and upsides to using the total quality management approach and a company hopes that by this, it can improve its production outcomes as regards to quality which also would help to increase and maximize profit.
Quality for Profit Purposes
There is a great deal of profit to be made by quality improvements in products and services rendered by a company, business processes and people which could in turn give such company the required and desired competitive edge over its rivals. The purpose of quality management is to setup a system and a management discipline that would prevent defects from happening in a company's performance cycle. To accomplish this, the company is advised to "act now on situations which may cause problems in the future". At the heart of TQM is the conviction that it is people to achieve defect-free products most of the time. The assertion is phrased in various ways as "right first time", "working smarter", or "zero defects". There are different ways by which a company or organisation can measure, check and maintain the quality of goods manufactured by them or other companies. These QUALITY TOOLS serve as a means of helping a company measure and monitor the performance of its workers involved in production process. One of such tools is the Pareto Diagram. The purpose of the Pareto chart is to highlight the most important among a set of factors contributing to a result. By using this tool, a company can discover, analyse and consequently resolve to fix a large percentage of their problems or defects in production that tends to affect the quality of the products. Control limits are set in order to determine the level or percentage of defects present in a company's production process. This limit indicates the standard by which a company measures its defects and quality shortcomings. This means that the control limit of a company affects the outcome and size of defects and this could vary with different companies. Arguably, the Total Quality Management approach could be seen as unreliable in this case as different companies could possibly implement a different quality control limit which in turn affects the outcome and rate of defects discovered and accounted for in the company's production process.
Further arguments maintain that focusing on the quality of products and performance alone could cause a company to neglect other key aspects and factors considered in production or project management such as; Cost and Labour. The cost of achieving near perfect quality of products could be high and this would surely affect the cost of the products when finished and made available to customers. The concept and idea of customer loyalty can be the only way out here but also it should be considered that there exists customer choice as to what and which company to patronize when cost seems too high. Just as it has its advantages, the TQM approach has its disadvantages.
Disadvantages of the Total Quality Management approach
The cost of training workers and building up more effective performance is high.
There can be a negative effect to disrupting current production methods whilst TQM is being implemented.
The benefits of practising total quality management may not be seen for several years.
Workers may be reluctant and resistant to change and may end up feeling disenfranchised when various changes are implemented.
Maximising and constantly improving the quality of products may have an effect on the price of the products which could receive negative response from customers.
The above proves that this approach could be said to be a "blessing and a curse" as it has various downsides. The advice to TQM operators would be to progress carefully as the cost of Quality can be higher than expected and beyond affordability to their intended customers.
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To achieve competitive advantage in today's world, a company or organisation must operate a smooth and well balanced approach method of quality management. Meaning that in addition to quality, all other factors that can affect or prevent a company from gaining competitive edge over its rivals should be put in place. The total quality management philosophy of doing business emphasizes lowering costs by reducing waste, helping suppliers provide quality products and satisfying the customer with quality goods and services. Companies that can produce goods at lower costs than their competitors, while delivering quality products that satisfy their customers, will have an advantage over those companies that do not duplicate those features. Implementing TQM can help a company gain a competitive advantage in their business. There are various factors, methods or strategies a company can employ in other to secure its future in the market or gain competitive edge over its rivals and the TQM approach is one such strategy. A company manufacturing products like any other company or its rivals but at lower cost while maintaining the products quality would satisfy their customers more than others. Cost reduction in total quality management simply means making products more affordable to the customers and/or end consumers without affecting or reducing its quality. This can be achieved in various ways.
Supplier Partnership: Various companies have formed alliances with their suppliers, such that they are able to purchase goods at a discount that their competitors cannot achieve. The result is that these companies are able to offer products at such low prices with the same or even higher quality.
Helping Suppliers: A company's workers and suppliers provide the input that determined the cost and quality of the products being made. The company that empowers its workers and suppliers and helps them achieve these goals will have a competitive advantage over the company that browbeats its workers or suppliers.
Comparing one company's performance or market standing with that of another is a reflex of Total Quality Management. Competitive benchmarking is a continuous management process that helps firms assess themselves and their competition and use the knowledge obtained in creating an effective strategy to achieve superiority or otherwise called competitive edge in the business market.
From the chart in Fig.1.1 (see Appendix), various points can be deduced:
The more Quality improves, the faster sales will increase because customer satisfaction carries its own acceleration.
As a company's quality reputation grows, marketing can emphasize increasing customer satisfaction as a major element in advertising and other promotions.
The long-term effect will be to reduce the expenses incurred in advertising in order to maintain competitive advantage.
Total Quality Management has come a long way in aiding a company to satisfy its customers, develop its market standing and obtain, maintain and secure competitive edge by maximising profit. The measurement and control of quality standards of products vary amongst different companies which are as a result of the different quality measurement tools and techniques the companies employ. For a company to gain competitive edge over its rivals, a major factor to be considered is the quality of its products and services as it has been seen to maintain the company's growth and increase profit. Total Quality Management approach thus plays a very vital role to this effect as it constantly looks to upgrade and improve quality of products, involving everyone in an organisation and this in the end plays a key role in a company's quest for competitive advantage.
John, B. 2000. "The Essence of Total Quality Management". 2nd Edition, England.
Evans, J & Lindsay, W. 2005. "Management and Control of Quality". 6th Edition, USA.
Barney, B & William, H, 2008. "Strategic Management & Competitive Advantage". USA.