INDEPENDENT STUDY CRITICAL SUCCESS FACTORS OF TQM IMPLEMENTATION : A CASE STUDY OF THE SIAM REFRACTORY INDUSTRY CO., LTD. MR. WICHEAN JINDADAMRONGWECH

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1 INDEPENDENT STUDY CRITICAL SUCCESS FACTORS OF TQM IMPLEMENTATION : A CASE STUDY OF THE SIAM REFRACTORY INDUSTRY CO., LTD. MR. WICHEAN JINDADAMRONGWECH GRADUATE SCHOOL OF KASETSART UNIVERSITY 2005

2 Independent Study Subject Critical Success Factors of TQM Implementation : A Case Study of The Siam Refractory Industry Co., Ltd. By Mr. Wichean Jindadamrongwech Submitted to Graduate School of Kasetsart University In partial Fulfillment of Master Degree In Business Administration 2005

3 ว เช ยร จ นดาด ารงเวช 2548: ป จจ ยท ม ผลต อความส าเร จในการน า TQM มาใช ใน องค กร : กรณ ศ กษาบร ษ ทสยามอ ตสาหกรรมว สด ทนไฟ จ าก ด ปร ญญาบร หารธ รก จ มหาบ ณฑ ต สาขาบร หารธ รก จ ประธานกรรมการท ปร กษา: รองศาสตราจารย ปร ยาน ช อภ บ ณโยภาส, Ph.D. 87 หน า. ว ตถ ประสงค ของการศ กษาคร งน 1) เพ อศ กษาป จจ ยท ส งผลต อความส าเร จของการน า TQM มาใช ใน SRIC 2) เพ อน าเสนอโมเดล TQM ซ งสามารถใช เป นแนวทางในการน า TQM ไป ใช ในองค กรได อย างม ประส ทธ ผล โครงร างของ TQM ท ใช ในการว เคราะห ได มาจากการศ กษาร ปแบบท ใช ในการประเม น ให รางว ล Deming Prize, MBNQA และ JQA การว เคราะห ใช ข อม ลท รวบรวมจากภายในบร ษ ท เช น รายงานต างๆ, ข อม ล และประว ต บร ษ ท และรวมถ งเอกสาร DTQMP ซ ง SRIC จ ดท าข นเพ อ ขอร บรางว ล Deming Prize ผลการศ กษาพบว า ม ป จจ ยอย 7 ต วท ม ผลต อความส าเร จในการน า TQM มาใช ใน องค กร โดยในกรณ ของ SRIC พบว าม ป จจ ย 4 ต วท เป นจ ดแข งซ งผล กด นให TQM ประสบ ความส าเร จ ได แก ความเป นผ น า (Leadership), การวางแผนกลย ทธ (Strategic Planning), การม งความส าค ญท ล กค า (Customer Focus) และ แนวค ดและว ธ การของ TQM (TQM Concepts and Methods) นอกจากน นย งพบว า SRIC ม ความโดดเด นมากในป จจ ยความเป น ผ น าซ งช วยสน บสน นป จจ ยอ นๆ ให แข งแกร งพร อมส าหร บการน า TQM มาใช ท ายท ส ดได ม การ น าเสนอโมเดล TQM ซ งแสดงความส มพ นธ ของป จจ ยต างๆ โดยแบ งป จจ ยออกเป น 3 กล ม ได แก กล มข บเคล อน (Driver), กล มท าให เป นจร ง (Realization) และกล มสน บสน น (Support) ค าแนะน าส าหร บองค กรท ต องการน า TQM มาใช ค อ TQM ต องเร มจากผ บร หารระด บส ง โดย ก าหนดเป าหมาย และแผนกลย ทธ ในการน า TQM มาใช ให ช ดเจน รวมท งต องม งเสร มสร าง ความแข งแกร งในป จจ ยท องค กรม ศ กยภาพ ซ งจะเหมาะสมส าหร บว ฒนธรรมขององค กรน นๆ ลายม อช อน ส ต ลายม อช อประธานกรรมการ / /

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5 Wichean Jindadamrongwech 2005: Critical Success Factors of TQM Implementation : A Case Study of The Siam Refractory Industry Co., Ltd. Master of Business Administration, Major Field: Business Administration. Independent Study Advisor: Associate Professor Preeyanuch Apibunyopas, Ph.D. 87 pages. The objectives of this independent study were 1) to analyze the sources of success of TQM implementation in SRIC; 2) to construct a TQM implementation model that can be used as a guideline for the effective TQM implementation. Deming Prize model, Malcolm Baldridge National Quality Award model, and Japan Quality Award model are reviewed to create the TQM implementation framework which used for the analysis. Secondary data collected from internal reports, company profile, and DTQMP of SRIC was used for the descriptive analysis method. The study concluded that there are seven factors affect to the success of TQM implementation. From the analysis, the key success factors of SRIC were leadership, strategic planning, customer focus, and TQM concepts and methods. The utmost strength of SRIC was leadership which can drive all other factors to go for TQM and make success possible. Finally, the proposed TQM implementation model which showed the linkage of the seven critical factors was created. It consists of three groups of factors which are Driver, Realization, and Support. This study recommended that, to start implementing TQM, top management should start first with the clear goal and well defined strategies. Organization should strengthen its potential TQM factors and create its own effective style of implementing TQM which suitable for its unique organization s culture. Student s signature Advisor s signature / /

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7 ACKNOWLEDGEMENTS My independent study has finished with the support and assistance of many people. It is a great pleasure to offer my thanks here to all of them. First of all, I would like to thanks my older colleague at SRIC, Mr.Sathit Eiamsuwan, who encourage me to study and attain the KU International MBA program (KIMBA), even though now he was transfer to another company. I am appreciating to thanks with respected to Mr.Somyod Tangmeelarp, Managing Director of SRIC, and Mr.Somboon Uranukul, Production Manager of SRIC, for the support needs of my graduate and for the helpful information. A thousand thanks may give to my independent study advisor, Associate Professor Preeyanuch Apibunyopas, Ph.D. and independent study co-advisor, Assistant Professor Yuraporn Sutharat, Ph.D. for valuable advices and useful suggestions especially when I got helplessness. Thanks to all of my friends in KIMBA7 for the wonderful class, and very special thanks to my beloved family and my wife for every supports during my studying. Wichean Jindadamrongwech April 2005

8 TABLE CONTENTS Page LIST OF TABLES LIST OF FIGURES iii iv CHAPTER 1 INTRODUCTION Background and Problem Statement 1 Objectives of the Study 6 Benefits Expected of the Study 6 Scope of the Study 7 Terminology 8 CHAPTER 2 LITERATURE REVIEW TQM Concepts 11 TQM Definition 11 Quality Gurus Perspective 12 Quality Award Models 17 Conclusion of TQM Concepts 22 Related Research 23 Research studies about TQM implementation factors 23 Research studies about firm s performance measurement 33 Conceptual Framework 36

9 CONTENTS (Continued) CHAPTER 3 METHODOLOGY OF THE STUDY Study Design 38 Sources of Data 38 Data Analysis 38 Criteria to Evaluate TQM Implementation Factors 39 Criteria to Evaluate TQM Performance 46 CHAPTER 4 ANALYSIS OF THE STUDY AND DISCUSSION SRIC Background 47 SRIC s TQM Implementation 49 SRIC Performances 69 Source of Success of TQM Implementation 74 TQM Implementation Model 77 CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS Conclusions 79 Recommendations 81 Page REFERENCES 83

10 i LIST OF FIGURES Figure Page 1 Expanded capacity of SRIC 3 2 Prestigious achievement of SRIC 4 3 Sales revenues of SRIC 5 4 Scope of the study 7 5 Deming Prize Examination Viewpoints 19 6 Framework of the Malcolm Baldrige National Quality Award 20 7 Framework of the Japan Quality Award Conceptual Framework of the study 37 9 Vision, Quality policy and CHAMP motto of SRIC The revolution of QCD System Organization of QCD committee SRIC s strategic planning system Standard Operating Procedure and Process Control Chart QCD management system SRIC s sales revenues from 1997 to SRIC s EBITDA from 1997 to SRIC s Customer retention rate from 2000 to Employee participation in QCC activity Employees absence rate of SRIC Employees turnover rate of SRIC Proposed TQM implementation model 78

11 LIST OF TABLES Table Page 1 Summary of research study results on CSF of TQM implementation 24 2 Criteria for Element Evaluation 39 3 Criteria for Factor Evaluation 39 4 Criteria to evaluate Leadership factor 40 5 Criteria to evaluate Strategic Planning factor 41 6 Criteria to evaluate Process Management factor 42 7 Criteria to evaluate Human Resource Development factor 43 8 Criteria to evaluate TQM Concepts and Methods factor 44 9 Criteria to evaluate Customer Focus factor Criteria to evaluate Information Utilization factor SRIC s Leadership Elements Evaluation SRIC s Leadership Evaluation SRIC s Strategic Planning Elements Evaluation SRIC s Strategic Planning Evaluation SRIC s Process Management Elements Evaluation SRIC s Process Management Evaluation SRIC s Human Resource Development Elements Evaluation SRIC s Human Resource Development Evaluation SRIC s TQM Concepts and Methods Elements Evaluation SRIC s TQM Concepts and Methods Evaluation SRIC s Customer Focus Elements Evaluation SRIC s Customer Focus Evaluation SRIC s Information Utilization Elements Evaluation SRIC s Information Utilization Evaluation Summary of SRIC s Performance Evaluation 74

12 Table Page 26 Summary of SRIC s Factors Evaluation 76

13 CHAPTER 1 INTRODUCTION Background and Problem Statement In today s competitive environment, ignoring the quality issue is tantamount to corporate suicide. (Thiagaragan and Zairi, 2001: 289, refer to Shetty, 1987) There are many management approaches such as Management by Objective (MBO), Management by Result (MBR), Cost Management, Total Productive Management (TPM), Total Quality Management (TQM), Six Sigma, and Balance Scorecard (BSC). The major change of management viewpoint to focus on quality issue and customer satisfaction is lead by TQM which was first implemented in Japanese industries in the 1950s and in American industries in the 1970s. The success of many major Japanese companies is truly coming from their longterm commitment to the continuous improvement of quality, which is the main point of TQM approach (Thiagaragan and Zairi, 2001). They consider TQM as a way of managing an organization to improve its overall effectiveness and performance. The successful implementation of TQM will result to the significant change inside an organization such as the involvement of everyone to quality, the decrease of fire-fighting and rework, the greater use of fact and data to eliminate the root causes of problems, and more focus on processes and improvements (Antony, Leung and Knowles, 2002). TQM will also result to the significant improve of customer satisfaction level. According to Feigenbaum, mentioned in Thiagaragan and Zairi (2001), quality was given priority equal to price in percent of all buying decisions by consumers in 1988 which was double the figure of a decade earlier. Therefore, only low price without quality, products could not satisfy customers.

14 TQM has become the major business strategy in the 1990s (Antony, Leung and Knowles, 2002). The level of quality awareness has increased and become a top priority in many corporate strategies, both in manufacturing and service organizations, due to the globalization of world trade and the competitive pressure brought about by consumers who want better products and services (Thiagaragan and Zairi, 2001). In the past, TQM was utilized by the developed countries including Japan, America and Europe. Nowadays, TQM has growing its importance and spreading to other regions of the world, especially in the South East Asia region (Thiagaragan and Zairi, 2001) due to the fierce competition with the global players from developed countries. In Thailand, many organizations had implemented TQM in 1990s. Some companies are successful such as Siam Refractory Industry Co. Ltd, Toshiba Consumer Products (Thailand) Co. Ltd, and Read-Rite (Thailand) Co. Ltd (Krasachol and Tannock, 1999). However, some failed even though they had been implemented for many years. The Siam Refractory Industry Co. Ltd (SRIC) is a wholly-owned subsidiary of Siam Cement Group (SCG), Thailand s largest industrial conglomerate (SRIC, 2003). It produces refractory products to supply both domestic and export markets. Although SRIC was registered as a company in 1993, it had been founded since 1953 as a division in SCG to serve internal demand of refractory in the group. With the increasing demand of refractory from inside and outside SCG, SRIC expanded its production capacity from 12,000 ton per year in 1953 to 75,000 ton per year in 1991 and continued growing to 125,000 ton per year in SRIC has become the largest refractory producer in South-East Asia. About 330 people are employed in its facility which is located in Saraburi province.

15 Capacity (Ton) Expand Basic Plant Cap 125,000 ton/y 1994 Expand Monolithic Plant Cap 86,000 ton/y 1991 Established Basic Plant Cap 75,000 ton/y 1988 Set up Low cementcastableplant Cap 55,000 ton/y Economic Crisis Set up Kiln Furniture Plant Cap 35,000 ton/y Set up 1984 with ton Figure 1 Expanded capacity of SRIC Source: Company Profile, SRIC, 2004 SRIC started implementing TQM since 1993, as one of the four pilot companies in SCG. At that time, TQM in SCG was called Total Quality Commitment (TQC) which means that all employees at all levels are expected to commit themselves to continuous improvement to satisfy their customers. The TQC implementation program was started by training executive management and establishing TQC promotion manager to promote TQC within the company. Furthermore, to implement TQC effectively, a Japanese consultant, Dr. Noriaki Kano, has been used to guide the company in terms of strategy and a medium-term plan as well as consulting the use of problem-solving tools and techniques. In 1994, the second year of TQM implementation, SRIC has achieved the ISO Quality Management System certification. One year later in 1995, it has achieved Thailand Prime Minister Award for outstanding performance in Quality Management. When SCG Award was established in 1996, limited to give to the subsidiaries of SCG that excellent in using TQM approach, SRIC got two awards, Golden award for Problem

16 solving and Silver award for Policy management which then later achieved Golden award in After ten years of TQM implementation, SRIC had achieved the Deming Prize JUSE. It is the Japanese award given to an excellent organization that is successful via TQM approach. T h e S i a m R e f r a c t o r y I n d u s t r y C o., L t d. We offer world class quality refractory products Prestigious awards achieved 1994 ISO-9002 certification 1995 Prime minister award for Outstanding Performance in Quality Management 1996 SCG Award (Quality Management Award, Siam Cement Group ) Problem Solving - Golden Award Policy Management - Silver Award Award of honor for outstanding safety performance, National Safety Council 1997 SCG Award (Quality Management Award, Siam Cement Group ) Policy Management - Golden Award QCC - Silver Award 1998 ISO certification ( TISI, Thai Industrial Standards Institute ) 2000 ISO/IEC Guide 25 certification ( TISI, Thai Industrial Standards Institute ) 2002 TIS certification ( MASCI, Management System certification ) ISO/IEC certification ( TISI, Thai Industrial Standards Institute ) Award of honor for outstanding safety performance Award of best practice of labours relation management Award of drug free plant 2003 Deming Prize ISO 9002 No.QMS00027/109 ISO No.EMS00012/027 ISO/IEC TESTING NO TIS No.OHS02021/092 Figure 2 Prestigious achievement of SRIC Source: Company Profile, SRIC, 2004 The business result of SRIC in financial terms is shown in Figure 3. Sale revenues dramatically increased after passing the economics crisis in 1998 and broke the old records before the crisis in 2000.

17 Sales Revenues of SRIC (Million Baht) Figure 3 Sales revenues of SRIC Source: DTQMP, SRIC, 2003 As mentioned above, SRIC is considered as a successful company. The evidence of this argument are its performance of operation and its achievement in many quality management awards. There are many key factors of the firm s success, for example; top management leadership, clear objectives and targets, and employees involvement. All of these factors can create the success for firms in TQM implementation. This study will analyze the sources of success of TQM implementation, which leads SRIC to be a successful company.

18 Objectives of the Study The objectives of this independent study are: 1. To analyze the sources of success of TQM implementation in SRIC 2. To construct a TQM implementation model that can be used as a guideline for the effective TQM implementation. Benefits Expected of the Study The expected benefits of this independent study are: 1. Organizations which are implementing TQM can use the proposed model as a guideline for their implementation. 2. Management of implementing organizations can focus on the critical success factors and can efficiently plan and allocate their resources. 3. As a case study, general readers can apply for success TQM implementation in their organizations.

19 Scope of the Study The scope of this study will focus on the TQM implementation success factors from Deming Prize model, MBNQA model, JQA model, and some prior studies to analyze the TQM implementation of SRIC, as a Thai organization case study. Due to limitation of sources of data, which is based on SRIC s internal reports, the period of analysis will be limited at the end of SRIC (Case Study) Successful Implementing TQM TQM Implementation Factors TQM Success Indicators Figure 4 Scope of the study

20 Terminology CSF stands for Critical Success Factor. DTQMP stand for Description of TQM Practices. It is the documents submit to JUSE when an organization wants to challenge the Deming Prize. The documents consists of all information regards the TQM activities of the organization that JUSE will consider and verify them in the examination. JQA stand for Japan Quality Award. JUSE stand for Union of Japanese Scientists and Engineers. It eventually introduced an annual award for the best proponent of Total Quality Management in Japan, and to recognize the contributions of Deming, they named this award the Deming Prize. MBNQA stand for Malcolm Baldrige National Quality Award. It is a competition to identify and recognize top-quality U.S. companies. This award is given by the United States National Institute of Science and Technology. It was established by the Malcolm Baldrige National Quality Improvement Act of Public Law and named for Malcolm Baldrige 1. The program aims to reward quality in the business sector, health care, and education, and was inspired by the ideas of Total Quality Management. QCC stand for Quality Control Circle. It is a group of employees unify to resolve their work problems. QFD stand for Quality Function Deployment. 1 Howard Malcolm Baldrige (October 4, 1922 July 25, 1987) was the 26th United States Secretary of Commerce during the Reagan administration from 1981 until his 1987 death in a rodeo accident.

21 Quality refers to the desirability of properties or characteristics of a person, object, or process. In manufacturing, quality of product is the concept of making products fit for a purpose and with the fewest defects. SPC stand for Statistical Process Control. It is a method for achieving quality control in manufacturing processes. It was pioneered by Walter A. Shewhart and taken up by W. Edwards Deming with significant effect by the Americans during the World War II to improve aircraft production. Deming was also instrumental in introducing SPC techniques into Japanese industry after that war. SRIC stand for the Siam Refractory Industry Company. TQM stand for the Total Quality Management.

22 CHAPTER 2 LITERATURE REVIEW This chapter discussed the fundamental concepts of TQM and firm s performance measurement. The review of TQM concepts starting with its definitions, then studies the TQM perspectives from quality gurus and, finally, quality award models are reviewed. The result of this first section is the critical success factors of TQM implementation. Next, related research studies are reviewed. Research studies about TQM implementation factors are reviewed to specify the required characteristics of each factor. Research studies about firm s performance measurement are reviewed to scope the TQM performance criteria. Finally, TQM framework is introduced for the analysis of the example company in chapter 4. The structure of literature review is summarized as follow, 1. TQM Concepts 1.1 TQM definition 1.2 Quality gurus perspective 1.3 Quality award models 2. Related Research 2.1 Research studies about TQM implementation factors 2.2 Research studies about firm s performance measurement

23 TQM Concepts TQM Definition What is TQM? TQM stand for Total Quality Management. It is one of the most successful management approaches in this day. There are a number of TQM definitions proposed by a number of authors such as: Feigenbaum (1991) described TQM as an effective system for integrating the quality development, quality maintenance, and quality-improvement efforts of the various groups in an organization so as to enable production and service at the most economical levels which allow for fulfill customer satisfaction. Talha (2004) gives the meaning of TQM as TQM is a broad set of management and control processes designed to focus an entire organization and all of its employees on providing products or services that do the best possible job of satisfying the customer. The Deming Prize Committee (2004) proposed that TQM is a set of systematic activities carried out by the entire organization to effectively and efficiently achieve company objectives so as to provide products and services with a level of quality that satisfies customers, at the appropriate time and price. Although each of the above definitions has its own distinctive meaning but there is some common points which are mentioned including the involvement of all employees (Total), the quality product and service to fulfill the customer satisfaction (Quality), and an integrated system (Management). Thus, in conclusion,

24 TQM is an integrate management system focus on process and the involvement of all people in organization to provide quality products and services to satisfy customers Quality Gurus Perspective TQM concept from the quality gurus perspective is essential, notably W. Edwards Deming, Philip Crosby, and Joseph M. Juran. They had slightly difference definitions of what quality is and how to achieve it. The following sections present the main ideas proposed by these quality gurus. 1. Deming s Quality Management Approach Dr. W. Edward Deming is widely accepted as the pioneer in quality management who encouraged Japanese companies to improve their products quality after the World War II period. Meanwhile, industrial leaders in Japan invited Dr. Deming to teach them his methods. Deming urged them to find out what their customers wanted, then study and improve the design and production processes until the quality of their product was unsurpassed. He urged a new style of management that shifts the focus from profit to quality. He reasoned that employees could learn how to monitor, control and continually improve their work processes and systems with the application of a scientific approach, so they are better able to produce products that meet customer expectations. With total quality control (TQM), decisions are based on data gathered with scientific tools and approaches. Products and services are improved by improving how the work gets done (the methods) instead of what is done (the results). Deming emphasized that the responsibility of top management is to take the role of leading in changing processes and systems. He believed that management is responsible for 94% of quality problems (Deming, 1986). Management should give employees clear standards for what is considered acceptable work, and provide the

25 methods to achieve it. These methods include the appropriate working environment and climate for work - free of faultfinding, blame or fear. Deming also strongly promotes employee participation. These are set out in his 14 points called Universal Fourteen Points or guidelines for managers (Deming, 1986). The 14 points put forward by Deming are detailed below. 1) Create a constancy of purpose to improve products and services Top management must commit to quality. 2) Adopt the new philosophy of quality - Everyone, from top management to the lowest employee, must accept the quality challenge that defective products never reach the customer. 3) Cease dependence on mass inspections to achieve quality - The purpose of inspections is for improvement of processes not just to find defects. 4) End the practice of choosing suppliers based solely upon price - Organizations should concern minimizing total costs not just only material cost. 5) Identify problems and work continuously to improve the system - TQM never end; it is a continuous process. The phrase "continual improvement" must become common language within the organizations. 6) Institute modern methods of formal training, especially for new hires - Training also involves educating external customers as to what the organization is trying to achieve. This helps when the organization later seeks input on quality from these external customers.

26 7) Teach and institute leadership - Leadership is a learned skill, so organizations must train their managers to be good leaders. 8) Drive fear out of the workplace - Employees should not be afraid of bring up new ideas and the organization should tolerate failures when employees are experimenting new ideas so that all employees may work effectively for organizational improvement. 9) Break down barriers between departments - Upper management should build teamwork between departments, not competition. 10) Eliminate exhortations from the workplace - Management must provide workers the methods to achieve targets and improve productivity, not just using slogans of targets. 11) Eliminate work standards and numerical quotas for production - Upper management should focus on achieving service quality rather than quantity. 12) Remove barriers to pride of workmanship - Firms should abolish merit rating systems and not blame employees for system failures that are beyond their control. 13) Institute and encourage vigorous programs of education, retraining, and selfimprovement - Training the workforce with the statistical vision of the organization and then broaden it to include extended process training. Extensive follow-up training should then be used to maintain the organization s vision. 14) Act to accomplish the transformation - Put everyone in the organization to work to accomplish the transformation. Transformation is the job of every employee, not just management.

27 2. Crosby s Quality Management Approach Crosby defines quality as conformance to requirements. The requirements of a product need to be defined and specified clearly so that they are properly understood. His philosophy is that higher quality reduces costs and raises profits. He considers traditional quality control, acceptable quality limits and waivers of sub-standard products to represent failure, so his concepts of management are Do it right first time and Zero defects. This requires an emphasis on prevention rather than after-the-fact inspection. Management must make a clear goal of quality and must take a full responsibility for quality problems. Crosby (1984) claims Mistakes are caused by two factors: lack of knowledge and lack of attention. Education and training can eliminate the first cause, and a personal commitment to excellence (zero defects) and attention to detail will cure the second. Crosby provides 14 steps to quality improvement (Crosby, 1979, 1984). The 14 steps are listed below. 1) Management commitment - to make clear that the management commit to quality. 2) Quality improvement team - form cross-functional team with representatives from all departments. 3) Quality measurement - Assess and evaluate the quality awareness and concern of employees. 4) The cost of quality - to define the ingredients of the cost of quality and explain its use as a management tool. 5) Quality awareness - to provide a method of raising the personal concern for quality felt by all employees.

28 6) Corrective action - to provide a systematic method for resolving problems identified. 7) Zero defects (ZD) action - preparatory activities for ZD program launching. 8) Employee education - define the type and extent of supervisor training. 9) Zero defect day - popularize ZD philosophy and raise quality consciousness. 10) Goal setting encourage employees to establish improvement goals for themselves and their teams. 11) Error-cause removal - develop a method for employees to communicate with the management regarding error-cause removal. 12) Recognition of good work in the quality process - to appreciate employees with superior performance. 13) Quality councils - brings together the professional quality staff for a planned communication on a regular basis. 14) Do it over again - emphasize that quality improvement never ends and is a constant effort.

29 3. Juran s Quality Management Approach Juran defines quality as Customer satisfaction or Fitness for use. He developed the idea of Quality Trilogy which consists of three basic processes: quality planning, quality control, and quality improvement (Juran and Gryna, 1993). Like Deming, Juran believes most quality problems are due to management, not employees. He also states that the distinction between chronic and sporadic problems is essential because there are two different approaches to handling the problems. Sporadic problems require the principle of control, while chronic problems require the principle of breakthrough or quality improvement. 1) The sporadic problem is detected and acted upon by the process of quality control. 2) The chronic problem requires a different process, namely, quality improvement. 3) Such chronic problems are traceable to an inadequate quality planning process. Quality Award Models There are several Quality Awards in world-wide which give an honor to the successful deployment of quality management organization, such as Deming Prize and Japan Quality Award in Japan, the Malcolm Baldrige National Quality Award in the United States of America, and the European Quality Award in Europe. Each award is based on a perceived model of total quality management. They do not focus only on either product or service perfection or traditional quality management methods, but consider a wide range of management activities, behavior and processes which influence the quality of the final offerings also. They provide a

30 useful audit framework against which organizations can evaluate their quality management methods, the deployment of these methods, and the end results. 1. The Deming Prize The Deming Prize was established in 1951 by the Board of Directors of the Japanese Union of Scientists and Engineers (JUSE). Its primary purpose was to spread the quality management approach throughout the Japanese industries by recognizing performance improvements issuing from the successful implementation of company-wide or total quality control based on statistical quality control techniques (Ghobadian and Woo, 1996). There are ten primary factors of TQM in the Deming Prize model as shown in Figure 5. This model consists of two parts, TQM Frameworks and TQM Aims. TQM Frameworks consists of eight factors but can be categorized into four groups which are Top management leadership, Management system, Infrastructure, and Fundamental concepts and methods. It provides a systematic activity for effective and efficient management of the entire organization. For TQM Aims, it is clearly that customer satisfaction is the main objective of TQM approach in Deming Prize model. It consists of the remaining two factors; the Organizational powers which aim to use the competitive advantage to achieve high level of customer satisfaction and contribute to the corporate objectives, which is the last factor.

31 Figure 5 Deming Prize Examination Viewpoints Source: Mann and Nishide, 2001

32 2. The Malcolm Baldrige National Quality Award (MBNQA) In 1987, the US Congress passed the Malcolm Baldrige National Quality Improvement Act, and thus established an annual quality award in the USA. The aim of the award is to stimulate American organizations to improve quality, satisfy customers, and improve overall company performance and capabilities. The model framework may be used to assess an organization s current quality management practices, benchmark performance against key competitors and world-class standards, improve relations with suppliers and customers. The model framework is consisted of leadership, Strategic planning, human resource development, processes management, customer focus and satisfaction, information utilization, and operational result. Figure 6 Framework of the Malcolm Baldrige National Quality Award Source: Ghobadian and Woo, 1996

33 3. The Japan Quality Award (JQA) In Japan, besides the Deming Prize, there is also Japan Quality Award which gives an honor to the outstanding organization in TQM. In fact, JQA used the MBNQA model as the framework (Mann and Nishide, 2001), but it rearranged factors and their scores appropriate for Japanese companies. The JQA framework version 2000 is shown in Figure 7. It categorized into five sections; driver, system, result, customer and market, and information utilization. There are eight factors in this framework, which is as same as seven factors in MBNQA model except the customer satisfaction. Another difference is the score for each factor. JQA give higher score to customer factor, 250 points compared to 210 points in the MBNQA model (Mann and Nishide, 2001). Figure 7 Framework of the Japan Quality Award Source: Mann and Nishide, 2001

34 Conclusion of TQM Concepts After a comprehensive review of those TQM concepts, it is obvious that TQM definition and the quality gurus perspective provide the meaning of TQM philosophy while the quality award models provide a universal framework for evaluating aspects of quality management practices in an organization. Although each model has its own unique categories and emphasis, there are some common areas which are the primary factors in TQM implementation as follow, 1. Leadership 2. Strategic planning 3. Process management 4. Human resource development and management 5. Customer focus 6. Information utilization 7. Business results However, there is one factor exists in Deming Prize model but not stated in MBNQA model, the TQM concepts and methods. Deming Prize model identify it as the basic factor in TQM implementation and, thus, it can not be forgotten. Therefore, this factor is added to the framework. Even though the Business result is a factor in many TQM award models, it is not a factor of TQM implementation. It should be the result of business performs and depend on the management approach which an organization uses. Otherwise, it should be in the TQM performance measurement part.

35 In conclusion, there are seven critical success factors in TQM implementation as list below, 1. Leadership 2. Strategic Planning 3. Processes Management 4. Human Resource Development 5. TQM Concepts and Methods 6. Customer Focus 7. Information Utilization Related Research Research studies about TQM implementation factors There are a lot of research studies relating to TQM implementation factors. Antony et al. (2002) quoted in his study that Saraph et al. (1989) is the pioneered researcher who investigated CSFs of TQM implementation. He developed an instrument for studying CSFs of quality management in Minneapolis, USA. The instrument consisted of 66 elements to describe eight critical factors, which are: top management leadership, role of quality department, training, product design, supplier quality management, process management, quality data reporting, and employee relations. Furthermore, several similar research studies had been identified the TQM success factors. For example, Anderson et al. (1994), Black and Porter (1996), Tamimi (1998) and Zhang et al. (2000). Although the number of elements often varies, as do the terms used to describe each factor, the actual constituents of these elements remain more or less similar. Table 1 below summarized some result of prior research studies.

36 Table 1 Summary of research study results on CSF of TQM implementation Author Saraph et al. (1989) Anderson et al. (1994) Flynn et al. (1994) CSF of TQM implementation 1. Top management leadership 2. Role of the quality department 3. Training 4. Product design 5. Supplier quality management 6. Process management 7. Quality data reporting 8. Employee relations 1. Leadership 2. Continuous improvement 3. Internal/external cooperation 4. Customer focus 5. Learning 6. Employee fulfillment 7. Process management. 1. Quality leadership 2. Quality improvement rewards 3. Process control 4. Feedback 5. Cleanliness and organization 6. New product quality 7. Interfunctional design process 8. Selection for teamwork potential 9. Teamwork 10. Supplier relationship 11. Customer involvement

37 Table 1 (continued) Author Black and Porter (1996) Ahire et al. (1996) CSF of TQM implementation 1. People and customer management 2. Supplier partnerships 3. Communication of improvement information 4. Customer satisfaction orientation 5. External interface management 6. Strategic quality management 7. Teamwork structures for improvement 8. Operational quality planning 9. Quality improvement measurement systems 10. Corporate quality culture 1. Top management commitment 2. Customer focus 3. Supplier quality management 4. Design quality management 5. Benchmarking 6. SPC usage 7. Internal quality information usage 8. Employee empowerment 9. Employee involvement 10. Employee training 11. Product quality 12. Supplier performance

38 Table 1 (continued) Author Tamimi (1998) Joseph et al. (1999) Zhang et al. (2000) CSF of TQM implementation 1. Top management commitment 2. Supervisory leadership 3. Education 4. Cross functional communications to improve quality 5. Supplier management 6. Quality training 7. Product/service innovation 8. Providing assurance to employees 1. Organizational commitment 2. Human resources management 3. Supplier integration 4. Quality policy 5. Role of quality department 6. Quality information systems 7. Technology utilization 8. Operating procedures 9. Training 1. Leadership 2. Supplier quality management 3. Vision and plan statement 4. Evaluation 5. Process control and improvement 6. Product design 7. Quality system improvement 8. Employee participation 9. Recognition and reward 10. Education and training 11. Customer focus

39 Table 1 (continued) Author Gotzamani et al. (2001) CSF of TQM implementation 1. Leadership 2. Strategic quality planning 3. Quality data and analysis 4. Human resource management 5. Process management 6. Suppliers relations 7. Customers relations 8. Product quality design Later on, there have been many researchers contributing to TQM implementation case study. Their objectives are to learn how the best practice organizations implement their TQM and to investigate their critical success factors. Dessler and Farrow (1990) study the quality improvement program which was instituted and implemented in Florida Power and Light Company (FPL). As the best practice, FPL could overcome its crisis by using TQM and won the Deming Prize in Dessler and Farrow (1990) concluded the implementation guidelines based on FPL s experience that, the company should institute a quality circle program, training techniques of problem analysis and statistics, assessing customer needs, reward to encourage employees to think of quality, encourage team effort, and management must start first. Krasachol and Tannock (1999) studied three companies in Thailand which are successful implementing TQM, though they have adopted TQM in different styles due to the different ownership types; Thai, Japanese, and US-owned companies. The author concluded that Thai culture has many of the social qualities which support the effective implementation of TQM approaches. Furthermore, the result of the study come up with the important common characteristics of successful TQM implementations in Thai companies which are top management commitment; good communications; effective

40 use of problem-solving tools and techniques; group activities, employee training and development. From the above review, the characteristics of each TQM factor that required for the effective implementation are specified as detail below, 1. Leadership Kano (1989) proposed Quality Sweating Theory to explain the process of introducing TQM in an organization. The theory consists of two alternative approaches: Crisis consciousness and Leadership make people sweat for quality and vision, and Leadership encourage people to sweat for quality. It is obvious from both approaches that TQM is arisen by leadership. The Deming Prize and MBNQA recognize the crucial role of top management leadership in creating the vision, missions and strategies to guide the pursuit of continuous performance improvement. The argument of gurus of quality such as Deming, Juran, and Crosby is that strong commitment from top management is vital. By definition, commitment is an intellectual characteristic that can t be mandated or imposed from outside. Garvin (1986) reports that high quality performance was always achieved by the commitment to quality goal; high product quality did not exist without strong top management commitment. Top management must believe in it and be committed to it. Top management must belief that quality improvement is the way to increase profit rather than yields or volumes. Moreover, as the commitment, top management and department heads must accept their responsibilities for quality performance and participate in the quality improvement process. That is the first step. The second and equally important step is to demonstrate the belief to all level in the organization. Clear and consistent of quality goals and policies are understood within the organization.

41 Moreover, supervisors must lead in a way that is consistent with the aims of the quality goals (Antony et al., 2002). Many empirical studies have also found that top management support for quality was a key factor in quality improvement such as arranging adequate resources for employee education and training which is not a short-term benefit but it will support long-term business success. 2. Strategic Planning Zhang (n.d.) argued that Vision and plan statements are very important elements for an organization to implement an effective total quality management. Vision statement, which describes beliefs and long-term goal of the company, is a powerful motivating force which can be used to drive a process of change forwards (Kanji and Asher, 1993). Strategic plan is developed from vision, policy and missions of top management which must be cleared and effectively encourage employees' commitment to quality improvement. Vision statement is usually cascaded down to mission statements which detail short-term site aims or departmental aims. In order to realize the vision, a strategic plan has to make systematically linkage to the missions. Then, strategic plans are cascaded down to implementation plans for execution. Zhang et al. (2000) argued that employees from different levels should be involved in the process of creating strategies and cascading plans. This will create the effective strategies, and also the effective way to communicate vision and plans to the lower level employees. All employees should be able to realize how they can contribute to the vision. 3. Process Management Process management is a key part of any total quality strategy. Process refers to some unique combination of man, machine, methods, and materials engaged in production (Juran and Gryna, 1993). Process management focuses on managing the manufacturing process so that it operates as expected,

42 without breakdowns, missing materials, fixtures, tools, etc., and despite work-force variability. Statistical process control (SPC), sampling, and inspection are effective methods for process control (Zhang, n.d.). Input material is one of the main sources of quality variation (Flynn et al., 1994). The output product quality will vary depending on input materials if other factors hold stable. Thus inspection and sampling of input materials is necessary. SPC is an effective process control of processing materials which use by operators. It can easily detect the abnormality arise in the process and hence, allow operators to do the countermeasures. The output products should be inspected and sampling statistically to decision whether the whole lot should be accepted or rejected. In order to minimize the likelihood of operator error, good process management must involve the standard operating procedure (SOP) which contained instructions for machine operation and set-up posted at each work station (Zhang, n.d.). One aspect of process management is equipment maintenance, which ensures that variation is kept within acceptable bounds and manufacturing process is running smoothly. 4. Human Resource Development Most TQM success companies regard employees as valuable long-term resources that are worthy of receiving education and training throughout their career. Many research results reveal that education and training are one of the most important factors in a successful implementation of total quality management (Zhang, n.d.). There should be a plan for education and training to ensure the ability of employees to work for quality and to enhance their ability for the future. Moreover, the organization can concretely provide a budget for this task. All of the management, supervisors, and employees should accept quality education and training. Quality education and training should include quality awareness education and basic quality

43 management methods, such as statistical process control, problem solving methods, basic tools and techniques, and advance techniques if necessary (Zhang, n.d.). 5. TQM Concepts and Methods All employees, from top to bottom of an organization, should have proper education and training to ensure that their general awareness and understanding of quality management concepts, skills, and attitudes are appropriate to the continuous improvement philosophy; it also provides a common language throughout the organization (Dale, n.d.). Fundamental concepts of TQM including Total, Market-in, PDCA, Process oriented, Fact and data, Standardization, and Prevention. Total concept means everyone in a firm must be involved in the management by TQM approach. Market-in concept means customer requirements are taking into consideration and be the source of specification. PDCA or Plan-Do-Check-Act concept is the cycle for effectively doing the improvement process. Process oriented concept means a good quality product will only come from a good process. Fact and data concept encourage people to make a decision based on fact and analyzed data, not based on their feeling. Standardization concept means operation should have a procedure to produce the same quality products all the time. Prevention concept aims to focus on prevention of problems rather than the correction. To support and develop a process of continuous improvement an organization will need to use a selection of TQM methods or tools and techniques within a problemsolving approach. The use of tools and techniques as the means will help to get the process of improvement started: employees feel involved and make a contribution, then quality awareness is enhanced, and behavior and attitude starts to change (Dale, n.d.). TQM methods for process control and improvement include 7-QC tools, 7-New QC tools, statistical techniques, and other techniques.7-qc tools such as histogram,

44 control chart, pareto chart, cause & effect diagram, and check sheet, are the basic tools which effectively use by QC circle to resolve ordinary problems. For more complicated problems may require higher tools especially the statistical techniques such as regression, and hypothesis tests. 6. Customer Focus It is essential to know what customers want to provide products or services that meet their requirements, quality is achieved when customer need is met (Ishikawa, 1985). A successful TQM organization usually commits to satisfy customers. It recognizes the need to put the customer first in every decision made. Customer s needs and feedback are the necessary information to determine products quality in the customer s view and to improve it. Organization should allow customer to be involved in the product design and development process. With inputs at every stage of the process, there is less likelihood that quality problems will occur once full production begins (Flynn et al., 1994). In order to improve customer satisfaction, customer complaints should therefore be treated with top priority. Warranty on sold products should also be provided. Methods that can be used for customer focus efforts include collections of customer complaint information, market investigations, and customer satisfaction surveys. 7. Information Utilization TQM activities are related to quality information system (Zhang, n.d.). The analyzed data is necessary for the decision making of management. It is also serves as a foundation for performance management and is critical to ensuring the effectiveness of the organization (McDonald et al., 2002). Therefore, information is an important factor of TQM success. Organization should have an accurate and efficient data-base that provides information on customers and internal operations including quality and cost. To utilize

45 information, data must be analyzed statistically and carefully selected important issue and themes for the improvement. Statistical methods should appropriateness use for the analysis and, then, the result must be actually utilized with properly action taken. The accessible of information is also important. Managers, supervisors and operators should be available to access the quality data they accounted for. Research studies about firm s performance measurement McAdam and Bannister (2001) argued that Western companies are driven by profit, but in companies with TQM approach, profits come from customer satisfaction. This emphasis on profit is due to the demanding of shareholders, who usually valuate the company in monetary terms. However, the emphasis in the softer measures such as attitudes and team working, may lead it to improving financial performance. They also concluded that the current lagging financial performance measurements are inadequate in the context of the modern business environment. The financial reporting process remains anchored to an accounting model developed over centuries, still applicable to circumstances which are largely irrelevant in today s information age. McAdam and Bannister (2001, referred to Johnson and Kaplan, 1987) concluded about the financial reports that:...today s management accounting information, driven by the procedures and cycle of the organization s financial reporting system, is too late, too aggregated, and too distorted to be relevant for managers planning and control decisions. The traditional financial accounting model should have been expanded to include the valuation of a company s intangible and intellectual assets, such as quality