Hansani Chathurika Dassanayake a a University of Peradeniya, Sri Lanka. Abstract

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1 Reshaping Management and Economic Thinking through Integrating Eco-Friendly and Ethical Practices Proceedings of the 3 rd International Conference on Management and Economics February 2014 Faculty of Management and Finance, University of Ruhuna, Sri Lanka An Investigation on Practicing Principles of Total Quality Management in Apparel Industry in Sri Lanka: With Reference to ISO 9000 Quality Management Principles H.C. Dassanayake Hansani Chathurika Dassanayake a a University of Peradeniya, Sri Lanka. Abstract Total Quality Management (TQM) is one of the key approaches towards realizing the goal of meeting customer satisfaction, hence it is extensively adapted by organizations and, among them apparel industry occupies a prominent position. This paper relates to a study conducted with the objective of identifying the most accepted practicing principle of TQM amongst eight principles presented by ISO 9000 standard, in apparel industry in Sri Lanka. Further, it investigated whether practice of TQM principles are significantly different among small scale, medium scale and large scale garment factories as well as garment factories that have won quality awards and that have not won quality awards. A structured questionnaire was used in gathering data from sample of 35 garment factories. Descriptive statistics, ANOVA test and independent sample test were used for data analysis purposes. Findings of the study revealed that leadership is the most accepted practicing principle of TQM in apparel industry in Sri Lanka. A significant difference in practicing customer focus, leadership, process approach, system approach to management, continual improvement and mutually beneficial supplier relationships principles was identified among small scale, medium scale and large scale garment factories. Similarly, a significant difference in practicing leadership, involvement of people, process approach, system approach to management and continual improvement principles was identified among garment factories that have won quality awards and that have not won quality awards. Keywords: apparel industry; ISO 9000 standard; TQM 1. Introduction To be successful in the market, each and every part of the organization along with the top management and all the employees must work properly towards the same goals and objectives established concerning the organization as a whole, recognizing that each person and activity affects and in turn affected by others. To improve competitiveness, organizations are looking for higher level of efficiency and effectiveness in all the business functions and adapting Total Quality Management (TQM) as a strategy. Regardless of the nature of the industry or type of product or service, organizations are adhering to different principles and guidelines of TQM, which are presented by scholars, professional bodies, and governing institutes. Among them ISO 9000 standard specifies eight principles which are practiced by the organizations that are adhering to TQM. Those eight principles include customer focus, leadership, involvement of people, process management, system approach to management, continual improvement, factual approach to decision making and mutually beneficial supplier relationships. As a concept with wide acceptance, TQM is extensively adapted in the apparel industry all around the world. Even though, TQM, apparel industry and quality principles of ISO 9000 standard have gained significant interest in the research field and among scholars, there are no research work combining these three aspects and investigating which of these principles are practiced by garment factories around the world, par- Proceedings of the 3 rd International Conference on Management and Economics, (February 2014). Oral Presentations. pp Faculty of Management and Finance, University of Ruhuna. ISBN

2 H.C. Dassanayake Oral Presentations ticularly in Sri Lanka. Therefore, this study was carried out to bridge the gap existed in the knowledge base with the objective of investigating the most accepted practicing principles of TQM in apparel industry in Sri Lanka concentrating the eight principles of TQM presented by ISO 9000 standard. Accordingly, the statement of problem of the study can be presented as What is the most accepted practicing principle of TQM in apparel industry in Sri Lanka? By making the research problem as the basis, the study attempted to answer four research questions as What is the most accepted practicing principle of TQM in apparel industry in Sri Lanka? What is the most accepted practicing principle of TQM in large-scale (LS) garment factories, medium scale (MS) garment factories and small-scale (SS) garment factories in Sri Lanka? Is there a significant difference in practicing the principles of TQM among LS, MS and SS garment factories in Sri Lanka?, and Is there a significant difference in practicing the principles of TQM among garment factories that have won quality awards and that have not won quality awards? Particularly, this study is significant due to its economic value. Since Sri Lanka is in a rapid development phase after thirty years of war, it is important to identify the industries that have the potential of earning excessive foreign income. Among such industries, apparel industry occupies a prominent place due to its popularity in the world market mainly because of quality garments. Therefore, the findings of the study will provide information regarding quality management practices in apparel industry, which will facilitate the policy developers in devising policies and strategies regarding maintenance and enhancement quality of market offering. Therefore, on the economic point of view this study is significant as it provides vital information, which is based on true timely data. Even though there are ample amount of principles and guidelines of TQM, which are presented by different scholars and institutes, the main focus of the study was on the eight principles of TQM presented by ISO 9000 standard. Thus, the findings of the study were limited to these eight principles, and further data gathering was limited to 35 garment factories located in the boundaries of Sri Lanka, which can be identified as the limitations of the study. 2. Literature review The concept TQM represents the timeline of the old and new concepts of quality. In the early twenties, quality management meant inspecting a product to ensure that it met with the specification. In 1940 s, it became more statistically based, while in the 1960 s, quality took a broader meaning and the concept began to be viewed as something that encompasses the entire organization. Since the 1970 s, quality was used as a competition base, with companies focusing more on improving quality in order to be more competitive (Lozano, 1997). According to Goh and Ridgeway (1994), TQM hold that the customer is the most important factor in any organization. TQM is not merely about implementing dynamic management systems; it is also about embedding a culture of continuous improvement and customer focus within an organization. TQM is one of the most important management innovations in the 20 th century, and it has more influence on contemporary management practices than any other management movement (Kujalo, 2002). According to Lankard (1992), TQM is a concept introduced by business and industry to establish standards and techniques that ensures the quality of products leaving and reaching firms through continuous action rather than through one final inspection. Mersha (1997) viewed TQM, as an approach to doing business that attempts to maximize the competitiveness of an organization through the continual improvement of the quality of its products, services, people, processes, and environments. Accordingly, quality is the key factor in improving a company s competitiveness in local and international markets, and for long-term survival. TQM is a state of mind and a philosophy, rather than specific set of procedure or methodology. Moreover, TQM ensures that organizational performance is maximized with the sharing of knowledge within a culture of continual learning, innovation, and improvement (Mersha, 1997). Similar to the definitions and explanations of TQM provided by scholars, they have identified several 294

3 Proceedings of the 3 rd International Conference on Management and Economics (ICME 2014) principles of TQM time to time. The principles of TQM seek to satisfy the external customer with quality goods and services, as well as the internal customers. In addition, the principles are aimed to satisfy external and internal suppliers and continuously improve processes by working smarter and using special quality methods. According to Williams (1997), there are four principles of TQM as performance measurement, customer orientation, continuous improvement, employee involvement and purchasing and supplier management. According to Weiss and Gershon (2008), citing Deming (2000), there are seven principles, which are the cornerstones of TQM philosophy, namely, policy, planning, and administration, product design and design change control, control of purchased materials, production quality control, user contact and field performance, corrective action and employee selection, and training and motivation. Further, as cited in Kelce and Lee (2004), there are nine elements of TQM which can be identified, validated and established, namely, customer focus, top management commitment, quality data and reporting, training, roles of quality department, employee involvement, process management, product and service design and supplier quality management. Further, ISO 9000 standard has established eight principles of TQM. ISO 9000 is the generic name given to a family of international standards developed to provide a framework around which a quality management system can effectively be implemented. The ISO 9000 series of standards is based on eight TQM principles that senior management can apply for organizational improvement. They are, Customer focus in order to continue customer relationships, organizations should fully understand current and future customer needs, meet customer requirements and strive to exceed customer expectations at all times. Leadership leadership plays a crucial role in organizations, ensuring unity of purpose and direction of the company that allows leaders to create and foster an effective internal environment. This in turn allows employees to become fully involved in achieving the company s objectives. Involvement of people as the most valuable resource within any organization, involvement of employees at all levels is the essence of the company. Full employee involvement ensures that each person s abilities can be used for the entire organization s benefit. Process approach another critical component of any quality management strategy, the anticipated result is achieved more competently when related resources and tasks are managed as a process within the company. System approach to management in order to implement a system approach, it is essential to identify, understand and manage interrelated processes for a specific objective to increase the organization s efficiency and abilities. Continual improvement striving for continual improvement should be a primary objective of any organization, to consistently perform tasks and duties at the highest level of efficiency at all times. Factual approach to decision making to ensure that all decisions are made fairly and effectively, decisions need to be based on the analysis of data and information rather than an emotional level or unproven hypothesis. Mutually beneficial supplier relationships a company and its suppliers are mutually dependent, which means that a favourable relationship augments the capacity of both supplier and company in order to create value and foster quality management within the workplace. Several scholars have attempted to identify the practice of those TQM principles through their empirical studies. According to the study conducted by Quek Eng Eng and Sha ri Mohd Yusof (2003) on TQM Practices on Malaysian Electrical and Electronic Industry, leadership the most accepted TQM principle or the TQM principle with the highest level of implementation in electrical and electronic industry in Malaysia. Continuous improvement system and education and training were ranked as the second and third highest practicing or implemented principles of TQM respectively. Supplier quality management was ranked as the 295

4 H.C. Dassanayake Oral Presentations least implemented TQM practice in the industry. Rohaizan (2008) has conducted a study on the Practice of TQM among ISO 9000 Certified Companies. The objective of this study was to identify the most important factor for the implementation of TQM. The results found that process management is the most important factor among ISO 9000 certified companies. It also reflected that certified firms must develop their people orientation and make continuous improvement to achieve a higher extent in TQM. Some principles and practices of TQM may differ among firms and industries, but there in unanimous agreement as to the importance of leadership by top management when implementing TQM. This requires management actively to participate in quality transformation. Managers have to outline quality goals, quality policies and quality plans so that employees are constantly reminded that the customer, not the product, is the top priority (Besterfield, 1995; as cited in Quek Eng Eng and Sha ri Mohd Yusof, 2003). Accordingly, leadership has identified as one of the most important practicing principles of TQM. 3. Methodology This is an explanatory study which followed the quantitative research approach in achieving the research objective. Survey method was used to gather primary data which was the main source of information. In order to facilitate the survey, a structured questionnaire was designed and developed after a rigorous literature review. Eight instruments were developed in order to capture the eight principles of TQM. Questionnaire consisted of two sections where section one captured the demographic information of individual garment factories whereas section two consisted of 37 question items related to the eight instruments. For scoring purposes, a 5 point Likert scale was employed with the score of 1 relating to strongly disagree and 5 meaning strongly agree. Since the study focused on apparel industry in Sri Lanka, all the garment factories located within the boundaries of the country belong to the survey population. Due to practical difficulty in investigating all the elements in the population, a representative sample of 35 garment factories were selected through simple random sampling technique. The sample consisted of 12 LS, 12 MS and 11 SS garment factories which are located in Western, Central, Southern and North Central Provinces of Sri Lanka. Pilot test was conducted and thereafter questionnaires were distributed and period of one month was given to return the questionnaires back. In order to facilitate data presentation, graphical data presentation methods as tables were used. Internal consistency of instruments in the questionnaire was measured using Cronbatch s Alpha coefficient. Data analysis consisted of two sections. Initially, practicing principles of TQM, which are related to the first and the second research questions were analyzed using mean value and standard error. As the next step, two hypotheses with eight sub hypotheses each were tested. These two hypotheses were developed with respect to the third and the fourth research questions. H1 0 : There is no significant mean difference in TQM practices (on each of the eight principles) among LS, MS and SS garment factories in Sri Lanka. H1 1 : There is a significant mean difference in TQM practices (on each of the eight principles) among LS, MS and SS garment factories in Sri Lanka. H2 0 : There is no significant mean difference in TQM practices (on each of the eight principles) among garment factories that have won quality awards and that have not won quality awards. H2 1 : There is a significant mean difference in TQM practices (on each of the eight principles) among garment factories that have won quality awards and that have not won quality awards. 296

5 Proceedings of the 3 rd International Conference on Management and Economics (ICME 2014) When analyzing the hypotheses, with respect to the first hypothesis, one way ANOVA test was used and with respect to the second hypothesis, independent sample t test was used. In both situations, p value was used as the reference value to accept or reject the null hypothesis. When p value is lesser than 0.05, null hypothesis was rejected and when p value is greater than 0.05, it was failed to reject the null hypothesis. 4. Data analysis Analysis of internal consistency In order to identify the internal consistency of the instruments used to measure eight principles of TQM, Cronbatch s Alpha coefficient was used. According to statistics there is high internal consistency in all the instruments as Cronbatch s Alpha coefficient is greater than 0.7. Following table represents the Cronbatch s Alpha values of the instruments, which are used to measure eight principles of TQM. The result suggested that the instruments possessed a high degree of internal consistency. Table 1: Cronbatch s Alpha Values of Instruments Instrument Value Customer focus Leadership Involvement of people Process approach System approach to management Continual improvement Factual approach to decision making Mutually beneficial supplier relationships Analysis of demographic information of garment factories The first aspect of analysis was the demographic information of the unit of analysis, i.e. individual garment factory. The breakdown of the respondents based on the scale, number of employees, monthly turnover, number of years of operating and winning of quality awards are shown in the Table 2. Table 2: Demographic Information of the Sample Scale Winning Quality Monthly Turnover (million) Number of Employees Number of Years of Operating Awards < >200 < >500 <5 10-May >10 Yes No Large Medium Small Total The sample of the study consisted of 35 garment factories of which there were 12 LS, 12 MS and 11 SS garment factories. According to the table, all the LS garment factories are earning monthly turnover more than 200 million, whereas all the MS garment factories are earning monthly turnover between 5 million and 200 million. The turnover of SS garment factories is less than 5 million per month. Majority of garment factories in the sample have occupied employees more than 500. Among them 80% are LS whereas, remaining 20% are MS garment factories. All the SC garment factories have employees lower than % of MS garment factories have employees between 100 and 500 whereas, remaining 40% have more than 500 employees. 297

6 H.C. Dassanayake Oral Presentations Seventy seven percent (77%) of the garment factories in the sample are operating for more than 10 years. Among them majority belong to LS. 1 MS and 3 SS garment factories are operating for less than 5 years whereas none of the LS garment factory operates less than 5 years. Further, large number of garment factories in the sample (57%) have won quality awards and among them majority are LS garment factories. It is notable that 27% of SS garment factories in the sample have also won quality awards. Analysis of practicing principles of TQM Having described the demographic information of the sample, the next part of the analysis involved the analysis of practicing principles of TQM; which is the main focus of the study. Table 3 represents the mean value for the each of the instrument in the questionnaire along with the standard error. Accordingly, the overall mean value ranges from 4.29 to 4.85 where as standard error ranges from 0.05 to The highest mean value of 4.85 has occupied by leadership principle with the lowest standard error of 0.05, whereas continual improvement and factual approach to decision-making principles have occupied the second and the third highest mean values respectively. The lowest mean value of 4.29 and the highest standard error of 0.09 have occupied by involvement of people principle followed by mutually beneficial supplier relationships principle. Further, as per Table 3, in small scale and medium scale garment factories the highest mean value has occupied by leadership principle followed by factual approach to decision-making and continual improvement principles. In large scale, garment factories there are three principles that have the same highest mean value of They are leadership, system approach to management and continual improvement. Table 3: Mean and Standard Error of Practicing Principles Instrument (TQM Principle) Customer focus Leadership Involvement of people Process approach System approach to management Continual improvement Factual approach to decision making Mutually beneficial supplier relationships Mean Large Scale Medium Scale Small Scale Overall Mean Standard Error Testing hypotheses Having analyzed the first two sections, it was found that some statistical tests would be helpful to further justify the level of implementation of TQM principles among garment factories. Two significance tests were carried out to investigate whether there is any significant difference between practices of TQM principles. Accordingly two hypotheses were developed. The first hypothesis of the study, which consists of eight sub hypotheses, is concerned with whether there is a significant mean difference in practicing the principles of TQM among three scales. The resulting p values for each sub hypotheses obtained through ANOVA test are represented in Table 4. As per the Table 4, customer focus, leadership, process approach, system approach to management, continual improvement and mutually beneficial supplier relationships principles have P values which are lower than 0.05, such that null hypotheses which are related to those six principles can be rejected. Further, null hypotheses which are related to principles of involvement of people and factual approach to decision making cannot be rejected as their p values are higher than

7 Proceedings of the 3 rd International Conference on Management and Economics (ICME 2014) Table 4: P Value of Hypothesis 1 Hypothesis (Only Null Hypothesis) P Value H1 A0 There is no significant mean difference in practicing the principles of customer focus among three scales H1 B0 There is no significant mean difference in practicing the principles of leadership among three scales H1 C0 There is no significant mean difference in practicing the principles of involvement of people among three scales H1 D0 There is no significant mean difference in practicing the principles of process approach among three scales H1 E0 There is no significant mean difference in practicing the principles of system approach to management among three scales H1 F0 There is no significant mean difference in practicing the principles of continual improvement among three scales H1 G0 There is no significant mean difference in practicing the principles of factual approach to decision making among three scales H1 H0 There is no significant mean difference in practicing the principles of mutually beneficial supplier relationships among three scales Table 5: P Value of Hypothesis 2 H1 A0 Hypothesis (Only Null Hypothesis) There is no significant mean difference in practicing the principles of customer focus among garment factories that have won quality awards and that have not P Value H1 B0 There is no significant mean difference in practicing the principles of leadership among garment factories that have won quality awards and that have not H1 C0 There is no significant mean difference in practicing the principles of involvement of people among garment factories that have won quality awards and that have not H1 D0 There is no significant mean difference in practicing the principles of process approach among garment factories that have won quality awards and that have not H1 E0 There is no significant mean difference in practicing the principles of system approach to management among garment factories that have won quality awards and that have not H1 F0 There is no significant mean difference in practicing the principles of continual improvement among garment factories that have won quality awards and that have not H1 G0 There is no significant mean difference in practicing the principles of factual approach to decision making among garment factories that have won quality awards and that have not H1 H0 There is no significant mean difference in practicing the principles of mutually beneficial supplier relationships among garment factories that have won quality awards and that have not The second hypothesis of the study, which consists of eight sub hypotheses, is concerned with whether there is a significant mean difference in practicing the principles of TQM among garment factories that have won quality awards and that have not won quality awards. Resulting p values for each sub hypotheses obtained through independent sample t test are represented in Table

8 H.C. Dassanayake Oral Presentations As per the Table 5, leadership, involvement of people, process approach, system approach to management and continual improvement principles have p values which are lower than 0.05, such that null hypotheses which are related to those six principles can be rejected. Further, null hypotheses which are related to principles of customer focus, factual approach to decision making and mutually beneficial supplier relationships cannot be rejected as their p values are higher than Conclusion The increasing acceptance of TQM as a management philosophy for improving organizational competitiveness and effectiveness left the development of empirical research behind. There are ample amount of research work, which have been carried out by making TQM as the core, across the world considering variety of industries. This paper primarily focused on TQM practices in apparel industry in Sri Lanka and it attempted to find out practicing principles of TQM in apparel industry in Sri Lanka among eight principles presented by ISO 9000 standard. For the study purposes a sample of 35 garment factories were selected using convenient sampling technique. Subsequent to the methodical data analysis following were identified as the findings. Leadership is the most accepted principle of TQM while involvement of people is the least accepted principle in apparel industry in Sri Lanka. In SS, MS and LS garment factories in Sri Lanka, leadership can be identified as the most accepted principle of TQM. In MS and LS garment factories involvement of people is the least accepted principle of TQM whereas in SS garment factories mutually beneficial supplier relationships is the least accepted principle. There is a significant difference in practicing customer focus, leadership, process approach, system approach to management, continual improvement and mutually beneficial supplier relationships principles among SS, MS and LS garment factories in Sri Lanka. There is no significant difference in practicing involvement of people and factual approach to decision making principles among SS, MS and LS garment factories in Sri Lanka. There is a significant difference in practicing leadership, involvement of people, process approach, system approach to management and continual improvement principles among garment factories that have won quality awards and that have not won quality awards. There is no significant difference in practicing customer focus, factual approach to decision making and mutually beneficial supplier relationships principles among garment factories that have won quality awards and that have not won quality awards. Since this study attempted to identify the practicing principles of TQM, the findings can be used as the foundation for further research. The main finding of the study revealed that leadership is the most accepted principle of TQM, hence future studies can concentrate on impact of leadership on TQM in apparel industry. Further, it is possible to investigate how far the success of TQM dependent upon leadership or the style of leadership. The least accepted principles, i.e. involvement of people and mutually beneficial supplier relationships, provide another aspect of further research. Studies can concentrate on investigating the reasons behind their low acceptance and come up with suggestions to enhance their acceptance. Similarly, the reasons for practicing the principles among different scales of garment factories can be another possible future study on the same subject matter. This study is merely focused on eight principles presented by ISO 9000 standard. Since there are array of TQM principles and guidelines presented by other scholars and professional institutes, it is possible to adjoin such principles and make the investigation much profound concerning the same industry. Further, rather than confining to available TQM principles, using the case study approach it is possible to investigate a 300

9 Proceedings of the 3 rd International Conference on Management and Economics (ICME 2014) single garment factory and identify TQM practices, which are unique to the organization in interest. References Besterfield, D. H. (1995). Total Quality Management. New Jersey: Prentice Hall. Bradley, M. (1994). Starting total quality management from ISO The TQM Magazine, 6(1), doi: ? Goh, P. & Ridgway, K. (1994). The implementation of total quality management in small and medium sized manufacturing companies, The TQM Magazine MCB University, 6(2), doi: / Gotzamani, K. D. & Tsiotras, D. G. (2001). An empirical study of the ISO 9000 standards contribution towards total quality management. International Journal of Operations & Production Management, 21(10), doi: /EUM Kelce, A. & Lee, C. (2004). TQM in small manufactures: An exploratory study in China. International Journal of Quality & Reliability Management, 1(2), doi: / Kujalo, J. (2002). Total quality management as a cultural phenomena a conceptual model and empirical illustration (Ph.D. thesis, Helsinki University of Technology). Retrieved from https://aaltodoc.aalto.fi/ Lankard, B. (1992). Total Quality Management in vocational education, Eric Digest.com. Retrieved August 13, 2012 from Lozano, R. (1997). ISO 9000 and quality management models. Library Management, 18(3), doi: / Mersha, T. (1997). TQM implementation in LDC s: Driving and restraining forces. International Journal of Operations & Production Management, 17(2), doi: / Quek, Eng Eng. & Yusuf, Sha ri Mohd. (2003). A survey on TQM practices in the Malaysian electronic and electrical industry, Total Quality Management, 14(1), Rohaizan, R. & Tan, P. Y. (2011, March). The practice of TQM among MS: ISO 9000 certified company. Paper presented at the 3 rd International Conference on Information and Financial Engineering, Singapore. Retrieved from Weiss, H. & Gershon, M. (2008). Total quality management principles observed in operation management, Scribed.com. Retrieved September 14, 2012, from -Quality- Management. Williams, Nathan. (1997). ISO 9000 as a route to TQM in small to medium sized enterprises: Snake or ladder?, The TQM Magazine, 9(1), doi: /

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