THE BENEFITS OF IMPLEMENTING QUALITY MANAGEMENT IN THE X COMPANY LTD.

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1 THE BENEFITS OF IMPLEMENTING QUALITY MANAGEMENT IN THE X COMPANY LTD. Flavia FORGACIU, Dimitrie Cantemir University, Bodoni Sandor 3-5, Tîrgu Mureş, Mureş, Romania Loredana RAHAU, Dimitrie Cantemir University, Bodoni Sandor 3-5, Tîrgu Mureş, Mureş, Romania Gheorghe NEAGU-MOISA, Dimitrie Cantemir University, Bodoni Sandor 3-5, Tîrgu Mureş, Mureş, Romania Abstract: Organizations operating now face many challenges, including profitability on a fluctuating market, competitiveness with other companies, adaptability, growth and technologies. Using a proven management system combined with ongoing external validation in accordance with ISO 9001:2000, enables the companies to continually renew their mission, strategies, operations and service level. International Standards are strategic tools and guidelines that help companies tackle some of the most demanding challenges of modern business. They ensure that business operations are as efficient as possible, increase productivity and help companies access new markets.to this respect, the paper presents the main steps in implementing the Quality Management System (QMS) within a company which deals with the distribution of alcoholic and non-alcoholic beverages. The study enhances the main benefits of the implementing quality management, such as the increase of domestic sales, competitive advantages, flexibility and ability to respond to market opportunities. Keywords: Quality Management System, quality certificate, ISO 9001:2000, quality policy, quality control, quality assurance INTRODUCTION Quality, the modern engine of competitiveness, has recently become a major strategic stake for the organizations. The reputation of any company is represented by the quality of its products and services. This is gained over time through a sustained effort to provide customers those products or services that they wish, at the established standards, with a total consistency and strictness. In order to achieve an acceptable level of quality, all the organizations must develop a concept of quality control system, which includes all its functional departments [1]. In the economic chain, confidence must be accompanied by its confirmation of another third organization, named certification body. Third party certification bodies provide independent confirmation that organizations meet the requirements of ISO To achieve this, the organizations shall implement a Quality Management System, which directs and controls an organization in terms of quality, based on ISO 9000 standards. These standards are the necessary and adequate documentation that an organization, a quality specialist, a management representative or a consultant needs in order to carry out the design, implementation, certification and later the maintenance and the improvement of the quality management system. ISO International Standards ensure that products and services are safe, reliable and of good quality. Page 51

2 For business, they are strategic tools that reduce costs by minimizing waste and errors and increasing productivity. They help companies to access new markets, level the playing field for developing countries and facilitate free and fair global trade. Over a million organizations worldwide are independently certified, making ISO 9001 one of the most widely used management tools in the world today [2]. Quality management is based on the ultimate principles set out in another standard closely linked to the ISO 9001 standard, namely in ISO 9000 standard. Basically, this standard defines the fundamental principles and, in addition, a number of terms that quality management system operates with. The fundamental principles of quality management are [3, 4]: 1. Focus on the customer 2. Staff involvement 3. The approach based on facts in decision-making 4. Systemic approach of the management 5. The process-based approach 6. Leadership 7. Mutually beneficial relationships with the suppliers 8. Continuous improvement of the organization s activity The Quality system enables the organization, coordination and cohesion of different specific activities performed within the organization. The Quality system concepts are theoretical, but they can be practically applied in the company through certain procedures and methods, and they depend on the staff, on the existing facilities and on the future policies of the organization. The implementation of quality management system based on SR EN ISO 9001: 2001 applies to all companies wishing to improve their performance and competitiveness on national and international markets. This International Standard brings technological, economic and societal benefits. They help to harmonize technical specifications of products and services making industry more efficient and breaking down barriers to international trade. Conformity to International Standards helps reassure consumers that products are safe, efficient and good for the environment. For business, International Standards are strategic tools and guidelines to help companies tackle some of the most demanding challenges of modern business. They ensure that business operations are as efficient as possible, increase productivity and help companies access new markets. Benefits include [2]: Fulfillment of the organization s policy and objectives Gaining customer confidence Enhanced customer satisfaction Continuous improvement of overall performance Active and systematic adaptation to changes of the market conditions Employee Satisfaction Performance improvement Transparency and efficiency of the organization s internal processes Avoiding errors instead of correcting them Saving time and money Access to new markets Increased market share Environmental benefits The economic environment (the market) requires the implementation of the quality management system. The purpose of this paper is to highlight the importance of implementing the quality management in the services branch. Using a proven management system combined with ongoing external validation, it enables organizations to continually renew their strategies, domestic and external operations and service level. To this respect, the paper presents the main steps in implementing the QMS within a company dealing with the distribution of alcoholic beverages and soft drinks and some benefits of the registration such as increasing domestic sales, enhancing the customer satisfaction and the continuous improvement of overall performance. Page 52

3 1. IMPLEMENTATION OF A QUALITY MANAGEMENT SYSTEM IN S.C. X COMPANY LTD. The Commercial X Company Ltd. was established in 1994 in the village Acățari, Mureş County. Its main activity consists in the distribution of alcoholic beverages and soft drinks. The company is organized in 8 regional warehouses and has 135 employees. The territorial coverage includes three counties: Mures, Alba and Sibiu. The distribution is carried out on all the channels that currently exist: retail, including all local networks, Kay Account (Kaufland, Spar, En Gros) and HORECA (hotels, restaurants, canteens). Over 18 years of experience in distribution have helped the infrastructure and the storage conditions reach the requirements of the European standards, while the staff members gained competence and a high professional experience, with proven skills in sales and management. Company X s customers are local and national major companies. The policy of the company is mainly focused on maintaining and developing the chain of customers. Implementing a Quality Management System within an organization needs to be a decision of top management. The objective of the quality system needs to be clearly defined so that the system can be effective. The design and implementation of quality management system will vary depending on the type, size and products of the organisation and should be used in conjunction with the ISO 9000:2000 standards. Implementing a Quality Management System is not that difficult as it seems, the key is planning and commitment. How complex or simple the QMS is depends entirely on the organisation and what the objectives are. It can be a simple guide to the organisation policy and procedures, or it can document every task and procedure. It really depends on how much risk is involved and how much control is required. The documentation of QMS involves: The policy to refer to quality, the objectives of quality and the book of quality (Quality Management System) Management Responsibility Resource Management Product Realisation Measurements, Analysis and Improvement The X Company from Tirgu-Mures started the design and the implementation of QMS in accordance with Romanian standard SR EN ISO 9001:2000 since Between a number of specific activities concerning implementation of QMS were developed, such as: internal and external trainings, drawing up of different documents, like quality book, system, working and technological proceedings, control and analysis plans, internal audits and corrective procedures for defective products. The quality system documentation in the X Commercial Company Ltd. is organized on a four (4) level scale: quality manual, internal procedures, working instructions and records (Figure 1). The most important document of the quality management system is The Quality Manual. The Quality Manual and the System Procedures are the required documents for any quality management system. The Quality Manual is considered to be the critical point for the successful implementation of any quality management system. From this perspective, the manual should be clear, easy to use, it should provide the necessary flexibility for the management of the company and it should bring money. The Quality Manual shall deal with the system at global level, while the Internal Procedures of the system shall describe the processes within the system (processes that take place in the organization). The magnitude of the general documentation and the internal procedures, as well as their number and complexity shall depend on the size of the organization. You can write as many procedures as the processes that take place in the organization. If there are several processes of the same way or very similar, one single procedure shall be enough for all of them. Also the other way around is possible: a process can be described in several papers. The Quality Manual and the Internal Procedures where elaborated by a designated team in the X Commercial Company Ltd., under the direction of the Head of Quality Management. The Quality Manual includes: 1. Quality Policy Statement of the X Commercial Company Ltd.; 2. Definitions and information on the Quality Manual; 3. Quality Management System; 4. Management Responsibility; 5. Resources Management. The working instructions describe the basic operations and are intended for the production operators or for those providing the direct service. These working instructions can be developed in various Page 53

4 forms, including photographs or drawings. Figure 1. The quality system documentation in the X Company Ltd. Quality plans can also be used where needed. Records demonstrating the compliance are themselves a type of documents which contain data or forms and which come as a logical consequence of the procedures. These documents are linked to the organizational structure because the staff of each department of the organization should be involved in creating them. As shown, the systemic approach, the process approach and the staff involvement are principles that have to be taken into account when writing these documents. The specific quality objectives that the X Commercial Company Ltd. wants to achieve in 2012, recorded in the submitted documents, are: Increasing the turnover Increasing the number of customers of the coverage area up to 95% Enhancing the customer satisfaction index by 3% Reducing the number of products that break down by 0.5%. Modernizing the electronic working system in Sibiu and Alba counties Increasing the sales team by 3 agents, increasing the distribution team by 3 drivers and 1 forklift Fleet renewal with 8 vans Buying lands in Alba and Mures counties in order to build new warehouses, covering an area of 2000 square meters. The development of The Quality Manual and the other documents of the Quality Management System is coordinated by a specialized team of the X Commercial Company Ltd., under the direction of the Quality Management Head which is designated as representative of the management. The implementation of the Quality Management System is a never ending process that requires a lot of changes, of which the most important are: a) assigning a key role to the labor quality which means: focusing on the costumer, preventing errors, optimizing the activities, integrating and collaborating with customers and suppliers; b) adopting a climate of continuous improvement both at management level, through formulation and implementation of the policy of quality assurance, and at employee level which means that staff members do their best to improve the quality of their work. c) responsiveness to the environment, meaning that the organization shall perform the services for its clients by selecting more carefully the product providers; Page 54

5 d) improving the working environment by implementing a climate of confidence, stimulation and motivation, based on the respect of fundamental rights, but also willing to sacrifice for the interest of the organization, if necessary. The employees awareness of their contribution to the company s prosperity is a goal of management excellence, difficult to achieve, but which brings profound satisfaction to all the stakeholders in the organization (shareholders, managers and operators). 2. THE BENEFITS OF QUALITY MANAGEMENT SYSTEM IMPLEMENTATION IN THE X COMMERCIAL COMPANY LTD INCREASING THE TURNOVER AND BUSINESS DEVELOPMENT By implementing the QMS, the X Company registered only positive changes in the evolution of the turnover, due to a proper management and a better control of its internal processes. It is a steady increase in sales. The ISO 9001:2000 certification has provided a good image and reputation for the company, thus maintaining a quality management system and creating a competitive advantage. By writing "ISO 9001:2000 Certificate" on top of all official documents it was intended to certify the quality of distribution services. Unlike the previous years, sales have almost tripled in 2011, thanks to the benefits brought by the implementation of ISO 9001:2000 certificate. Thus, the turnover of X Company at the end of 2011 was 116,240,217 RON. The company reached a capital of about 26 million Euro. Figure 2. The turnover s evolution in the X Commercial Company Ltd. between 2004 and 2011 So far, the X Company has made only positive changes in the evolution of its turnover, due to a welldeveloped management. Figure 3. The equity s evolution in the X Commercial Company Ltd. Page 55

6 This performance was possible due to the use of ISO 9001:2000 standard, which is the basic document of the quality implementation in the X Commercial Company Ltd. Nowadays, the X Company has a staff of 135 employees and it possesses 8 regional warehouses and a fleet which includes 108 cars and trucks INCREASING THE NUMBER OF CUSTOMERS In 2011, the X Company managed to reach a total of 3,500 customers, of which 94% are legal entities (shops, bars, hotels, restaurants and so on), while the territorial coverage includes three counties: Mures, Alba and Sibiu. Figure 4. Increasing the number of customers of the X Commercial Company Ltd. Each year, the management of the X Commercial Company Ltd. sets the quality objectives regarding each service and the activities. The quality objectives are consistent with the policy of quality and take into account the requirements that the products and services must satisfy. The organization is based on the management structures, which are created by establishing the responsibilities and the procedures, by evaluating the necessary resources. During the system quality management analysis, the steps needed to achieve the initial goals are being analyzed, then new objectives are being set out. The constant quality improvement is the responsibility of the staff members of X Commercial Company Ltd. The Quality Management officer coordinates the activities regarding the continuous system improvement THE EVALUATION OF CUSTOMER SATISFACTION The main goal of X Commercial Company Ltd. is the clients satisfaction. The measurment and monitoring of customer satisfaction is annually realized through questionnaires like Satisfaction Assessment, which is one of the feedbacks in the relationship with the clients. These questionnaires analyze the degree of customer satisfaction through a set of questions regarding the quality of the services, staff members, communication and so on. All the data coming out of this measurment process are analyzed in the meeting on the quality management system, thus helping the company to continuously improve the quality of its services. The determination of the product requirements is realized within the designated sectors. These establish the customer requirements regarding the product, services, packing and delivery, functional requirements of performance, requirements defined by different standards and legal requirements regarding products and services. These requirements once identified shall be used as internal data for quality planning. The analysis of the product requirements: the management of X Commercial Company Ltd. ensures that the procedure necessary to analyze the contracts and the associated activities is set, developed, documented and implemented. Before the submission of an offer, the acceptance of a contract or an order, X Commercial Company Ltd. carries out an analysis of the supply, of the contract or order, to make sure that Page 56

7 all the requirements have been identified and well documented, that the differences between the initial requirements and those of the the contract have been solved, and that any details or requirements that might be incomplete or missing have been clarified and well documented. The demands which are verbally communicated shall be confirmed before the formal acceptance of the contract or order. Before the submission of an offer or the acceptance of a contract or an order, X Commercial Company Ltd. carries out analyses to determine its ability to meet customer requirements. In November 2011, the management of the company assessed almost 3000 loyal customers (stores, bars, retail chains, restaurants, hotels, casinos and so on). The result of this evaluation which reflects the customer satisfaction regarding the X Commercial Company Ltd. services is shown in Figure 5. As it can be seen, more than half of the surveyed customers, 1522 clients respectively, consider that the services provided by X Commercial Company Ltd. rise up to their expectations. Best Good Satisfactory Weak Insufficient Figure 5. The level of customer satisfaction with the services provided by the X Commercial Company Ltd. The responsibility for communicating with the customer about the information regarding products and services, general requirements, stage of orders and contracts, possible changes to existing contracts, customer complaints, out of line products and customer feedback are all defined and included in the following procedures: The analysis of product requirements, Handling customer complaints and Out of line product control. In 2011, 32 complaints were registered at Customer Complaints Department within X Commercial Company Ltd. Of all these complaints, 8 had to do with broken products, 5 referred to incomplete order delivery, 5 cases of wrong order, 6 cases of delay, 3 problems with the validity and other 5 troubles (Figure 6). Figure 6. Percentage of complaints registered at Customer Complaints Department Page 57

8 Most of the problems (87.5%) have been solved within 48 hours after their registration. In the other 12.5%, which means four cases, customers were later compensated. Thus, not a single complaint remained unsolved. CONCLUSIONS Quality management is what organizations practice in order to provide products and services according to their clients requirements. An ISO 9001:2000 certificate proves that the quality management system meets all the requirements of this international standard and it demonstrates the company s commitment to quality and customer satisfaction. Confidence in the ability of an organization to produce quality is the basic prerequisite for a fruitful cooperation. Continuous improvement of quality within the company, focusing on the customers and descovering their needs, compliance with the working procedures implemented by ISO 9001:2000 certificate, sales training courses, initiating the employees, all these function and develop within X Commercial Company Ltd. The implementation and maintenance of a quality management system, thus achieving a better satisfaction of customer requirements, has led to a grater loyalty of the existing clients and to the possibility of gaining new ones, through the growth of this company s prestige. Also, the implementation and maintenance of a quality management system has offered an advantage over the competition by simply mentioning on the header of all official documents ISO Certified. In order to achieve all its goals, the company has set several conventions: establishing efficient criteria of operation and control of all the processes in the company, from the supply to the delivery of the products; ensuring an operational organization for quality, which allows continuous monitoring and an effective control of the products quality; providing human resources and materials necessary to increase customer satisfaction and quality of the delivered products; supervising, controlling, analyzing and self-assessment of the deviations from the established processes or from the quality of the delivered products, as well as the implementation of corrective actions that eliminate the causes of constant deviations. BIODATA - Flavia FORGACIU is Associate professor PhD. at Dimitrie Cantemir University, Bodoni Sandor 3-5, Tîrgu Mureş, Mureş, România. - Loredana RAHAU is Lecturer PhD.Candidate at Dimitrie Cantemir University, Bodoni Sandor 3-5, Tîrgu Mureş, Mureş, România. - Gheorghe NEAGU is Assistant PhD.Candidate at Dimitrie Cantemir University, Bodoni Sandor 3-5, Tîrgu Mureş, Mureş, România. REFERENCES 1. Juran, J. M. Planificarea calității, Bucureşti, Editura Teora, Itul, L.; Dorogan, F. Avantaje ale implementării şi certificării Sistemelor de Management al Calității. Tribuna calității nr. 9, 19-22, Olaru, Marieta; Isaic-Maniu, Al.; Lefter, V.; Pop, N.Al.; Popescu, S.; Drăgulănescu, N.; Roncea, C.; Roncea Luminița. Tehnici şi instrumente utilizate în managementul calității, Editura Economică, Bucureşti, Olaru Marieta; Schileru, I.; Pamfilie Rodica; Purcărea Anca; Negrea, M.; Atanase Anca; Stanciu, C.; Fundamentele ştiinței mărfurilor, Editura Economică, Bucureşti, Onete, B. Modelarea în ştiința mărfurilor, Editura ASE, Bucureşti, Păunescu Carmen. Marfa şi globalizarea pieței, Editura ASE, Bucureşti, Page 58

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