1. science
2. social science
3. philosophy

How to overcome the gap between ISO 9000: 2000
and Total Quality Management - exemplified at a medium sized
production company
Alexander Fliess
Mini research report
presented in partial fulfilment
of the requirements for the degree of
Master of Business Administration
at the University of Stellenbosch
Supervisor: Mr Konrad von Leipzig
Degree of confidentiality: A
Graduation: December 2007
ii
Declaration of own work
Herby I, Alexander H. Fliess, declare that this study project is my own original work
and that all sources have been accurately reported and acknowledged, and that this
document has not previously in its entirely or in part been submitted at any university
in order to obtain an academic qualification.
Alexander Fliess
29 October 2007
iii
Abstract
Globalisation has changed markets significantly. In order to maintain and improve
competitiveness it is generally agreed among executives that the quality of products
and services is essential (Omachonu & Ross, 1994: iii). In order to strive for higher
quality, organisations have chosen different paths to achieve this goal. Several years
ago on of the most discussed topics was the DIN EN 9001 certification. Thousands of
organisations have taken this step towards quality management and are certified
today. The DIN EN 9001 became the global standard, and there are markets were
companies are not abele to operate without this certification anymore. Some
companies have profited greatly from the introduction of ISO 9000, because for the
first time a quality management system (QMS) was introduced. It initiated significant
restructuring
programs.
Consequently,
processes
were
streamlined
and
organisations became more transparent.
But many companies still do not “live” the concept, but instead and only show
relevant paperwork to the external certification body in order to obtain the certificate.
Even more particularly companies, which live the QMS face the question of which
concepts are suitable to not only further improve quality and productivity but also to
generate long-term sustainable business success. For these companies Total Quality
Management (TQM) can be a very promising concept.
Although the concept of TQM already dates back several decades it became very
popular recently. TQM is a concept that puts quality in the centre of all aspects. Its
principles encompass the involvement of all employees, and it strives for long-term
customer satisfaction. TQM is based on continuous improvement and focuses on
sustainable achievements. The objectives of this approach are not only long-term
business success but also benefits for the individual employees and the society.
Therefore TQM can be considered as one of the most far-reaching quality concepts
existing today.
The Fliess Company is a medium sized production company for welding wires. In
2001 Fliess introduced the IS0 9001: 2000. It has taken the company several years
to fully live the QMS, after it mainly introduced it only to satisfy customers’
requirements of the certification. Today the processes are aligned in accordance with
ISO 9001: 2000 and the company lives the QMS. But as a producer of very
iv
specialised premium products, management realised that it needed continuing on in
order to maintain the competitive advantage. Therefore Fliess is busy at present
implementing TQM. There are various areas of applying TQM at Fliess. The main
focus
lies
on
further
improving
customer
satisfaction
through
continuous
improvement and special attention is paid to the involvement of the individual
employee. But TQM needs to be implemented in a very careful way to prevent a
failure. Organisational changes must be supervised closely by top management. If
top management is not fully committed and does not fully support the implementation
in both the short and long term it can be very frustrating for the employees, and the
implementation will not only fail but might even have negative effects, too.
v
Opsomming
Globalisasie het markte geweldig verander. Ten einde kompeterendheid te behou en
te bevorder is bestuurders dit eens dat hoë kwaliteit van produkte en dienste
noodsaaklik is (Omachonu & Ross, 1994: iii). Maatskappye volg verskillende roetes
in die strewe na hoë kwaliteit, en hierdie ondersoek fokus op hoofkonsepte rakende
kwaliteit en kwaliteitsbestuur.
’n Tydjie terug was die bespreking van “sertifisering” hoog op die agenda van enige
kwaliteitsforum. Maatskappye het groot baat gevind met die bekendstelling van
ISO 9000, waar daar vir die eerste keer ’n kwaliteitsbestuur program ingestel is. Dit
het tot grootskaalse maatskappy verandering en proses herstrukturering gelei, en
maatskappye in geheel het meer deursigtig geword. Duisende maatskappye het die
stap geneem en is vandag gesertifiseer. Die DIN EN ISO 9000 het die globale
standaard geword, en daar is markte waar maatskappye sonder diè sertifisering nie
langer besigheid kan beoefen nie. Daar is egter steeds maatskappye wat nie regtig
die stelsel “uitleef” nie, maar bloot sertifisering soek omdat kliënte dit vereis – nie
omdat hulle self dit wil toepas nie.
Selfs maatskappye wat die stelsels ten volle inkorporeer het staan egter voor die
uitdaging van hoe hulle kwaliteit verder kan verbeter en op langtermyn ’n suksesvolle
onderneming kan verseker. Vir baie van die maatskappye is Totale Kwaliteitbestuur
(Total Quality Management - TQM) ’n belowende konsep.
Alhoewel TQM konsepte reeds ’n hele aantal jare terug ontwikkel is, geniet dit
huidiglik ’n nuwe oplewing. TQM plaas kwaliteit in die middelpunt van aktiwiteite,
insluitende die volledige betrekking van werknemers en langtermyn kliënte
tevredenheid. TQM is baseer op kontinuë verbetering en fokus op volhoubaarheid.
Die doelwitte sluit in nie net langtermyn besigheidsukses in nie, maar ook voordele
vir individuële werknemers en die samelewing in geheel. Dus kan TQM gesien word
as een van die mees omvattende kwaliteitskonsepte wat huidiglik bestaan.
Die ontwikkeling en toepassing van die konsepte soos bo beskryf word in hierdie
verslag voorgestel en uitgelig aan die hand van die Fliess Maatskappy, ’n medium
grootte vervaardigingsmaatskappy van sweisdrade. In 2001 het Fliess die
ISO 9001:2000 standaard begin implementeer. Dit het ’n hele aantal jare geneem
vi
voordat die stelsel volledig benut is, nadat dit aanvanklik bloot op grond van
kliëntevereistes ingestel is. Vandag kan daar met trots gesê word dat alle prosesse in
lyn is met die sertifiseringsvereistes, en die maatskappy “lewe” die ISO 9001:2000
standaard. Bestuur besef egter die noodsaaklikheid om verder te ontwikkel en aan te
pas in die hoogs kompeterende omgewing ten einde hulle kompeterende voordeel
nie net te behou nie maar uit te bou. Daarom is Fliess besig om TQM beginsels
verder uit te brei en in verskillende areas te implementeer om sodoende kliënte
tevredenheid te verhoog – dit word gedoen deur veral deurlopende verbetering en
die betrokkenheid van elke individuële werknemer.
vii
Table of Contents
Page
Declaration of own work
ii
Abstract
iii
Opsomming
v
Table of Contents
vii
List of Figures:
ix
List of Tables:
ix
List of Appendices:
x
Chapter 1: Introduction
1
Chapter 2: Total Quality Management
3
2.1
History of Total Quality Management
3
2.2
Definition of Total Quality Management
4
2.3
The Principles of Total Quality Management
6
2.3.1
Quality Orientation as main company objective
6
2.3.2
Commitment of the Top Management
9
2.3.3
Leadership Development
10
2.3.4
Employee Involvement
11
2.3.5
Customer Orientation
13
2.3.6
Supplier Integration
15
2.3.7
Continuous Improvement (Kaizen)
16
2.3.8
Benchmarking
19
2.3.9
Lean Production
21
2.3.10
Preventive Measures
22
2.4
Management of Process Quality
24
2.5
Quality Cost and TQM
26
2.6
The European Quality Award
29
Chapter 3: Quality Management Systems
31
3.1
International Organisation for Standardisation
31
3.2
ISO 9000: Series
32
3.2.1
ISO 9000: 2000
33
3.2.2
ISO 9001: 2000
34
3.2.3
ISO 9004: 2000
34
viii
3.2.4
Scope of ISO 9000: 2000 Series
35
3.3
Reasons to implement ISO 9000 Series
35
3.4
Quality Management Principles in ISO 9000 Series
36
3.5
Structure and Requirements of the QMS Standard
37
3.5.1
Management Responsibility
38
3.5.2
Resource Management
39
3.5.3
Product Realisation
39
3.5.4
Measurement, Analysis and Improvement
40
3.6
Limitations of the ISO 9000 family
41
Chapter 4: TQM based on ISO 9000: 2000
43
Chapter 5: The Company
45
5.1
Company Description
45
5.2
Reasons to implement ISO 9000 Standard
46
5.3
Implementation of ISO 9001: 2000
47
5.4
Possible fields of development within the area of TQM
48
5.4.1
Quality awareness
49
5.4.2
Commitment of Management
50
5.4.3
Leadership Development
51
5.4.4
Employee Participation
52
5.4.5
Customer Orientation
53
5.4.6
Supplier Integration
57
5.4.7
Continuous Improvement (Kaizen)
58
5.4.8
Benchmarking
59
5.4.9
Lean Production
60
5.4.10
Preventive Measures
61
5.5
Management of Process Quality
63
Chapter 6: Implementation of TQM at the Fliess Company
64
6.1
Potential drawbacks of TQM
64
6.2
Improvements
65
Chapter 7: Conclusion and Recommendations
67
List of Sources
69
Appendices
72
ix
List of Figures:
Figure 2.1:
The old attitude
Figure 2.2:
The New Attitude
Figure 2.3:
Leadership Style
Figure 2.4:
The Customer / Supplier Network
Figure 2.5:
Relationship between suppliers processes and customers
Figure 2.6:
P.D.C.A. Cycle
Figure 2.7:
Example of Isikawa / Fishbone Diagram
Figure 2.8:
Total Quality costs
Figure 2.9:
The EFQM Model
List of Tables:
Table 3.1:
Overview of ISO 9000: 2000 family
x
List of Appendices:
Appendix A:
Schematical Illustration of the Production
Appendix B:
New Fliess Box
1
CHAPTER 1
INTRODUCTION
In recent years internal and external general condition in businesses have been
strongly characterised by globalisation tendencies. The globalisation of businesses is
influenced by a better education level and improved technology, which opened
communication, transport and travel to everyone (Levitt, 1983: 92). This has changed
markets significantly and resulted in increased competition for most of the
organisations. Therefore in today’s globalised and fast changing and consequently
highly competitive business environment, organisations focus on customer
satisfaction in order to gain a competitive advantage. Under these conditions, topmanagers search for new methods to break up existing structures and to take future
demands into account. In today’s business environment the competitive situation of
organisations is highly influenced by the strategic implication of quality. Therefore
one major strategic change that takes place is that organisations consider achieving
higher customer satisfaction through an emphasis on the quality of products and
services (Magd & Curry, 2003: 244).
Among other concepts Quality Management Systems (QMS) and Total Quality
Management (TQM) are the most commonly accepted approaches to improving
quality.
Without any QMS in place it is nearly impossible for companies to determine how
well or badly they perform. The QMS takes the whole organisational structure into
account
and
encompasses
all
quality
relevant
documentations
including
measurement and analysis. Currently the ISO 9000: 2000 family is perceived as the
established global standard for an effective QMS (Beckford, 2002: 221). This
standard can be certified by recognised external parties.
The Japanese inspired Total Quality Management is a special approach to improved
effectiveness of company performance. The fundamental thought is that quality
cannot only be seen as a mechanistic process but has to be accepted as a company
pervading system. Companies using TQM to search for a high level of quality,
consider the customer as the key element. They realise that they have to offer the
highest possible quality level of products and services in order to achieve and exceed
2
customer satisfaction. TQM provides various techniques, which secure the
acceptance of this philosophy within the entire organisation and facilitate the
necessary changes of behaviour and mentality.
This thesis focuses on the theoretical background of the ISO 9000 family and TQM
and points out the relationship between both. Particularly the move from an
implemented ISO: 9000 series to TQM is examined and exemplified at a medium
sized production company that implemented ISO 9000: 2000 in the year 2001.
3
CHAPTER 2
TOTAL QUALITY MANAGEMENT
2.1
History of Total Quality Management
The term quality dates back more than 2000 years. The Latin word “qualitas” already
means the characteristics of an object (Stowasser, Petsching & Skutsch, 1980: 376).1
Therefore the discussion of its connotation is as old as the term. The movement of
companies towards quality in the sense of Total Quality Management (TQM) dates
back to the early twenties century when Dr Shewhart firstly introduced Statistical
Process Control in order to monitor quality in the manufacturing of mass products
(Magd & Curry, 2003: 246). As global business conditions changed significantly after
World War II, the issue quality prevailed more and more. Companies tried not only to
obtain customer satisfaction but also to exceed customer’s expectations. In order to
achieve or maintain competitiveness, TQM as a philosophy and respective concepts
have been developed (Eom & Stought, 1995: 28).
Although the new quality concepts from the 1950s and 1960s were firstly developed
in the USA, they did not find broad acceptance and were not put in practice in the
USA (von Ahsen, 1996: 22). At that time Japanese industry desperately needed an
improvement of product quality. Deming was the first to introduce TQM in Japan.
Deming convinced Japanese leaders that the country could compete on world
markets within five years (Kemp, 2006: 179). The Japanese economy adopted some
of these new ideas and achieved competitiveness within five years (Kemp,
2006: 181). Only in the 1970s America learned from the Japanese and the
knowledge was re-imported due to the impressive success of the Japanese economy
(von Ahsen, 1996: 28). The Americans focused on quality concepts in the 1980s and
soon other Western industrial countries also realised that the Japanese factories
were organised in a far more efficient way than it was usual in the Western world
(von Ahsen, 996: 46). At this time the Japanese were able to offer high quality
products at a favourable price and exerted pressure on the international market.
Therefore concepts like training programs in quality control were built up and
1
Latin translation into German: „Beschaffenheit eines Gegenstandes“ eng.: condition of an object
4
continuous quality improvement projects were established in the 1980s and 1990s
(von Ahsen, 1996: 48).
Total quality management as we understand it today dates back two decades but is
still primarily based on the core ideas of W. Eduard Deming, Joseph Juran, Philip
Crosby, [Feigenbaum], and Kaoru Ishikawa (Sousa & Voss, 2002: 91).
2.2
Definition of Total Quality Management
Before defining TQM an overview of the definitions of quality will be given.
The concepts and vocabulary of quality are numerous and quality is interpreted
differently by different people (Omachonu & Ross, 1994: 97).
The norm ISO 8402: 1994, which has been replaced in 2000 by the Norm ISO 9000
defines quality as “the totality of features and characteristics of a product or service
that bear on its ability to satisfy stated or implied needs”. Nevertheless there are
several definitions, which have been made by various writers pre-dating the ISO
Norm (Fox, 1994: 4):
“Quality is fitness for purpose or use” (Juran).
“The total composite product and service characteristics of marketing, engineering,
manufacture and maintenance through which the product and service in use will
meet the expectation by the customer” (Feigenbaum).
“Conformance to requirements or specifications” (Crosby).
Fox (1994: 5) further suggests considering the definitions together as they are
complementary. Each one emphasises a particular point that is only implicit in the
others. Juran underlines the totality of quality considerations. They together satisfy all
the needs. Feigenbaum mentions the key divisions of organisation that play a critical
role in the achievement of quality as well. Further he mentions the customer, whose
needs should be addressed. Crosby’s definition implies the possibility of
5
documenting and measuring. Today these definitions must be seen as a historical
development and the basis of topical definitions.
Nowadays the focus on quality goes far beyond the finished product. In order to
reach the desired level of quality for products and services a systematic approach of
TQM is followed by many companies. TQM is considered as a concept and a chance
for sustainable improvement of products and services. Dean and Bowen (1994: 393)
have given a broad definition of Quality Management as “a philosophy or an
approach to management made up of a set of mutually reinforcing principles, each of
which is supported by set practices and techniques”. Further Jeffries, Evans &
Raynolds (1996: 15) define TQM more precise as “a comprehensive and integrated
way of managing any organisation in order to meet the needs of the customers
consistently and achieve continuous improvement in every aspect of the
organisation’s activities”.
From this definition the objective criteria of TQM can be derived, which are customer
and co-worker satisfaction, benefits for society, quality, time and costs. TQM is the
most comprehensive strategy a company can apply. Therefore it is indispensable to
formulate quality principles, which provide a guideline and secure a uniform
proceeding.
Total Quality Management is a management strategy, which influences the entire
organisation with all its activities, employees and its environment. The application of
this tool helps to determine customer orientated quality goals.
Over the past few decades, quality “gurus” such as Deming (1986), Juran (Juran and
Gryna, 1993), Crosby (1979), Feigenbaum (1991), and Ishikawa (1985), the primary
authorities of total quality management, have developed certain propositions in the
field of TQM, which have gained significant acceptance throughout the world. Their
insights provide a good understanding of the TQM philosophy, principles, and
practices.
6
2.3
The Principles of Total Quality Management
The identified concept of TQM is based on the works from quality “gurus”. Their
propositions are the foundation for understanding the concept of TQM. In theory
these “Gurus” provide different solutions on the first sight when it comes to the
improvement within organisations. However, Professor John Oakland, who also can
be seen as an authority in the field of Total Quality Management, deals with the
different approaches by suggesting “they are all talking the same “language”, but
they use different dialects” (Oakland, 2003:).
The following subsections present the main principles and practices of TQM
proposed by these quality “gurus”.
2.3.1 Quality Orientation as main company objective
The attitude towards quality has changed significantly throughout the time.
Hereinafter the different approaches – the old and the new attitude – will be
highlighted.
The old attitude
In the past the majority of companies focused only on product quality. Therefore the
output of the system was controlled. At this late stage inspection could only find
variations and nothing could be done to correct the variation, as it had already
occurred (Omachonu & Ross, 1994: 96). The whole quality development process
was not taken into account. It was also a widespread belief that quality represents a
counterpart to productivity. Higher quality was related to a lower level of productivity.
7
Figure 2.1: The old attitude
QUALITY
PRODUCTIVITY
Source: Hummel & Malorny, 2002: 11
The new attitude
In contrast to the old attitude of product inspection the modern philosophy
concentrates on process control (Omachonu & Ross, 1994: 97). The new attitude
assumes that better quality of the processes means less repairs, less waste, fewer
mistakes and thus higher productivity. The new direction concentrates much more on
the quality of the processes and assumes that high product quality is always a result
of excellent process quality. This implies that all processes have to be controlled
consistently and have to work without any defects. In order to match process
definition with the concept of TQM, Omachonu & Ross (1994: 97) suggest that the
process shall begin with the concept of a product idea, enclose the whole life-cycle
and even take the phase out into account.
Quality is the key to productivity, and a higher quality level means less costs. The
traditional conflict between quality, cost and time is removed. The new thinking
clarifies that quality is the key to productivity. Higher process quality brings about
(Hummel & Malorny, 2002: 12):
8
•
Higher machine load factor
•
Shorter material throughput times
•
Lower inventories
•
Higher product quality
•
Less scrap and rework
Figure 2.2: The New Attitude
Source: Hummel & Malorny, 2002: 12
Costs, time and quality are no longer contradictory. As cost and time have become a
characteristic of quality, the conflict between the three former objectives does not
exist any more. With the removal of the contradiction between cost, time and quality,
quality can be considered as the highest strategic objective of the company.
9
This new attitude has to be dispread within the entire company and it provides the
basis for all other principles.
2.3.2 Commitment of the Top Management
The introduction of Total Quality Management is a strategic decision, which leads to
a change of the entire organisational structure of an organisation. In order to avoid
uncertainty and resistance of employees and executives, the necessary changes
have to be directed and pushed by top management. The management has to
perform its executive function and has to support the changing process by an
exemplary behaviour and activities, which are recognised throughout the company. It
is essential that top management demonstrates the commitment to quality
(Omachonu & Ross, 1994: 32 - 33).
The basis for the implementation of TQM can only be built up if the management
strives in the strongest possible way for quality and supports this with consequent
proceeding. All changes have to be initiated by the senior management. It is
important that employees in leading positions are not able to prevent or slow down
necessary actions and support the dedication to TQM.
This principle goes along with the theory of Philip B. Crosby, who assumes that
within the management a core of quality specialists has to be created in order to
spread the quality improvement approach throughout the organisation. This “TopDown” approach is strongly supported by Crosby. Consequently senior management
holds the entire responsibility for quality insurance (Crosby, 1984: 68–75).
For realising TQM, top management has to play a central position. Without
management’s commitment no far reaching changes can be implemented. The issue
of quality therefore cannot be delegated to a TQM-coordinator or manager, because
they do not have the required authority or acceptance within the organisation
(Hummel & Malorny, 2002: 18). It is important that the whole top management is
convinced and that they do not act contradictory to each other.
Therefore top management has to communicate and assist the implementation of the
company’s vision and mission actively, they develop the fundamental values and
10
systems and in times of change they act in a constant manner in order to achieve the
aim (Zink, 2004: 76).
2.3.3 Leadership Development
TQM is a management method, which is based on the co-operation of all members of
an organisation. Leadership has to be created in a way that gives everybody the
possibility to be actively involved in the company (Hummel & Malorny, 2002: 33).
It is the individual person who achieves quality objectives, it is not the organisation
itself (Omachonu & Ross, 1994: 26). Therefore, it is the duty of the leaders to
develop an effective work environment that encourages the creativity and the
productivity of all employees. A central core culture with a sound basis of values
must be established (Omachonu & Ross, 1994: 32).
In order to use the full potential of all employees, teamwork is essential. Leaders
must be prepared for this kind of co-operation. Social competencies like
communication skills, empathy, creativity, personality and an exemplary behaviour
become the core of leadership (Hummel & Malorny, 2002: 25).
The organisation should introduce an executive development program that improves
the methodical and the social competences of quality-orientated leadership. It is
essential to offer learning opportunities, which are especially directed towards quality
techniques and quality management systems. Additionally proficiency in group
presentations and discussion management should be further developed.
11
Figure 2.3: Leadership Style
Source: Hummel & Malorny, 2002: 30
The aim is to form leaders with an excellent quality understanding (methodical
competence) combined with social leadership competences.
2.3.4 Employee Involvement
Every single member of staff is a significant potential for creativity and problem
solving. Consequently a work environment has to be created, which allows to
leverage the full potential.
According to Kamiske, the following points build the foundation for a successful
implementation of TQM (Kamiske, 1996: 50):
The preventive quality strategy of TQM requires the commitment of all people, who
are involved in the process. Only then, possible mistakes can be realised and
eliminated in an early stage.
The orientation of all members of staff on quality and continuous improvement builds
the core element of all activities.
12
Flexibility and adaptability concerning customer demands can only be reached with
the help of good trained employees who are able to think entrepreneurial.
All members on all levels of the organisation have to acquire a basic knowledge of
the main TQM principles. This can be done with the help of training facilities.
Additionally employees should work in teams and develop an appropriate application
of the principles in their work area.
Methods of involving employees are for example team building, employee suggestion
systems and quality cycles.
Team Building
For the objective “Quality”, employee involvement in teams influences the results
positively due to motivation and productivity. Simplifying the theory of motivation, it
can be shown that the membership of a team is an effective motivational device that
can lead to improved quality (Omachonu & Ross, 1994: 169). The productivity in
teams rises because of better motivation, better communication and fewer overlaps
(Omachonu & Ross, 1994: 169).
In order to support group work, the strict division of labour has to be abolished. New
work contents have to be created and groups with a high degree of self-responsibility
have to be formed. Particularly cross - functional teams allow a systematical
approach that includes objectives of the company and the team (Omachonu & Ross,
1994: 170).
Employee suggestion system
An employee suggestion system can be a very useful tool within TQM. It must be
designed in a way that individual employees or teams are encouraged to improve
quality. The system must rather be an improvement system than just a collection of
proposals. It must support improvements immediately. The suggestion system
13
becomes a service station that picks up ideas and allocates the appropriate
resources immediately (Hummel & Malorny, 2002: 39).
Quality Circles
Quality circles are groups composed of workers who regularly meet to discuss ways
of improving the quality of their work. Normally this takes place on a voluntary base
during working time or after work. Improvements in safety, product design and/or in
manufacturing process are typical topics (Juran, 1992: 396-397). Engagements in
quality circles exposes circle members to valuable experience, which is reached by
the communication with colleagues, collective problem solving and sharing the
findings not only within one cycle but also among cycles (Kemp, 2006: 255).
2.3.5 Customer Orientation
A key factor in TQM is a focus on the customer throughout the whole organisation.
This
has
to
include
the
internal
and
external
customers
alike
(Omachonu & Ross, 1994: 166).
External customer
In order to achieve or maintain competitiveness, a company must continuously
determine the requirements of the customer, the eventual buyer of the product or
service. Therefore customer focus seems to be obvious although many companies
are still focused on the quality of the products in the most basic term. They try to
make the product work (Wadsworth, Stephens & Godfrey, 2002: 90).
But in recent years manager became more and more aware of quality in a broader
sense and that is one of the most important product features for the customers. That
means that a product only will survive in the market, if it meets market demands and
works without any problems. It has become the customer and not the organisation
14
who defines what quality is. The customer satisfaction becomes the most important
goal (Hummel & Malorny, 2002: 42).
Customer demand can be derived from personal contacts between customers and
their consultants or by statistical research methods. These market results have to be
transferred into the company, the respective work areas and into the corresponding
processes. Customer orientation has to become part of the objective planning
process of the entire company.
Otherwise products and features of products are developed, which will not be valued
by the customer and consequently not bought.
The degree of customer satisfaction should be determined on a regular basis. The
results show the extent to which the organisation is able to determine customer
expectations and to put them into practice.
Internal Customer
In a TQM program the focus on internal customers is also very important. Internal
customers are the employees, activities or functions that are the customer of other
employees, activities, or functions (Omachonu & Ross, 1994: 120). For example
manufacturing is the customer of design and various departments may be the
customer of human resources.
The majority of people in an organisation never meet their external customers
directly. As a consequence, they often fail to realise their individual importance in
improving quality. Therefore, as Atkinson (1990: 120) says, “everybody within an
enterprise should consider the interactions between themselves and their “internal”
customers – those who are next in line”. First, if this internal customer/supplier chain
is successful, it will be possible to meet the needs of the external customer.
15
Figure 2.4: The Customer/Supplier Network
Source: Dale & Cooper, 1992: 44
But in organisations conflicts between the needs of internal customers and the need
of external customers might arise, as processes may be designed to only meet the
requirements of internal customers and not external ones. It has to be clear who the
customer is and who shall be the beneficiary of the process. Therefore the needs of
both customer groups must be in balance. Determining the real needs of both groups
and
accordingly
designing
the
underlying
process
must
be
the
solution
(Omachonu & Ross; 1994: 121).
The effectiveness of this internal relationship should be examined on a regular basis.
It builds the basis for a successful communication and cooperation with all external
customers and suppliers.
2.3.6 Supplier Integration
The degree of co-operation with external suppliers has a strong influence on quality
and competitiveness of a company. A long-term and trustful relationship with the
supplier is a key element of every quality system. Only suppliers, which also set a
16
high priority on quality goals and strive for continuous process improvements are
suitable.
According to Oakland (1992: 200), organisations should adopt an assessment
proceeding with regard to the following points:
•
Quality capability in the management system
•
Process and product quality
•
Communication capabilities
•
Loyalty, flexibility and Just-in-Time capabilities
•
Cost discipline and continuous cost control
•
Development potential
Due to the variety of assessment criteria, a company should create a team, which
elaborates and analyses the capabilities of potential suppliers.
2.3.7 Continuous Improvement (Kaizen)
Throughout many centuries societies were set up in a way to prevent change. Doing
something different was often even punished by death. In the Byzantine Greek
language the word for change also meant danger (Wadsworth, et al., 2002: 91).
For the first time in 1964 Juran documented in his book “Managerial Breakthrough” a
structured
approach
that
companies
could
use
to
achieve
breakthrough
improvements. In later years rapid change has become a “way of life” in many
organisations (Wadsworth, et al., 2002: 91).
Nowadays continuous improvement is also known as Kaizen, which is the Japanese
word for change. Within TQM, organisations have their main focus on customer
satisfaction. Kaizen can be seen as a “systematic approach to close the gap between
customer
expectations
and
the
characteristics
(Rao, Carr, Kopp, Martin, Rafii & Schesinger, 1996: 165).
of
process
output”
17
This philosophy has been developed by the Japanese and mastering this philosophy
has been a very influential factor in their productivity and global competitiveness.
Organisations are comprised of various processes and sub processes that are
interdependent to each other. Outputs of some processes may be the input for other
processes. Consequently we have internal and external suppliers and customers.
The customer of each process has requirements, needs and expectations
(Rao, et al., 1996: 165). Continuous improvement therefore does not only try to close
the gap to external but also to internal customers.
Figure 2.5: Relationship between suppliers processes and customers
Input
Internal or
external
supplier
Output
Process
Internal or
external
Customer
Source: Rao, et al., 1996: 166
These processes can be in any function or cross functional and Kaizen aims primarily
at the improvement of the involved employee – from the worker to the top
management. But particular attention is paid to cross functional cooperation
(Ebel, 2001: 62).
Identifying and eliminating useless and hindering features within an organisation will
lead to continuous improvement. Starting point is the involvement of everyone, the
analysis of processes and actions and the development of a clear plan. Kaizen has to
be seen as a continuous evolutionary process, which takes place permanently and is
never completed.
Consequently continuous improvement requires a pro-active and systematic fact
based continually ongoing approach (Rao, et al., 1996: 166).
18
Within TQM the improvement of products and processes happens in little steps that
each has only a very small likelihood to fail. The more unknown the fields of
improvements the smaller the steps should be in order to minimise the risk of failure
and related costs. Further these small steps give employees the feeling of success
and keep them motivated. If the step would be too big, it would demotivate
employees and they might resign as the task could be too challenging
(Ebel, 2001: 61).
This Japanese small scale approach of continuous improvement has often been
contrasted
to
the
typically
American
aim
of
large-scale
breakthroughs
(Rao, et al., 1996: 166).
Deming Cycle
One of the aids Deming advocates for improving quality is the “plan, do, check and
act cycle”, which is abbreviated P.D.C.A. - cycle. It is further known as the Deming
cycle (Hellriegel, Jackson & Slocum, 1999: 303). This model has become a central
model of the Kaizen philosophy. This improvement cycle outlines a way to achieve
improved processes. The process of improvement can be split in the different phases
of plan, do, check and act. First a plan for improvement has to be developed. Data
must be selected in order to clearly identify the issue that is to be revised. Intended
changes must be defined, measures and methods selected, measurable indicators
defined and obstacles discussed (plan). Secondly the measures and methods have
to be implemented (do). In the third stage (check) the effectiveness of the measures
and methods are checked using the indicators. Sound results are standardised and
deviations are analysed. In the last stage the experiences are utilised and the
process
implemented
(Hellriegel, et al., 1999: 304).
before
the
cycle
begins
anew
(Act)
19
Figure 2.6: P.D.C.A. Cycle
Source: http://www.wikipedia.org
By providing an overall plan, the improvement cycle helps to avoid the stagnation of
the improvement activities in the planning phase. Each of the four stages has to be
passed correctly in order to find the respective root causes.
This should be done by a small group of staff, a so-called quality circle, which
regularly meets on a voluntary basis to discuss quality problems in the specific work
area. The task of the circle is to develop, promote and implement the established
solutions. The result will be the achievement of a higher quality level.
Nowadays many tools / concepts help to find continual improvements. Particularly
statistical work helps to find room for improvements but also concepts like
Benchmarking, Lean Management, and Quality Controlling that are briefly described
herein after.
2.3.8 Benchmarking
Benchmarking is a tool that enables organisations to evaluate whether its manner of
carrying out particular functions and processes represent “best practices”. Here fore
20
costs and effectiveness are taken into account. Benchmarking is a continuous
process of comparing the performance of activities and processes in the value chain,
“how materials are purchased, how suppliers are paid, how inventories are managed,
how products are assembled, how fast the company gets new products to markets,
how the quality function is performed, how customer orders are filled and shipped,
how employees are trained, how payrolls are processed, and how maintenance is
performed” (Thomson & Strickland, 2003: 134).
All companies, which show an excellent performance of a particular process, product
or service, can function as a benchmark. The comparison throughout all industries
and markets is possible. But not only external but also internal benchmark may be
applicable. Generally said most types of benchmarking can be classified in the three
following categories (Pycraft, Singh & Phihlela, 2000: 656):
Internal benchmarking, which refers to a comparison between operations or parts
of operations that all belong to the same total organisation.
External Benchmarking, which describes a comparison between different
organisations that compete in the same sector.
Non-competitive benchmarking, which is a comparison of the own organisation’s
activities or processes against an external organisation that does not compete in the
same markets.
The
continuous
process
of
Benchmarking
includes
(Hellriegel, et al., 1999: 301):
1. Defining the issue to be benchmarked
2. Identifying the best performers
3. Collecting and analysis of data to identify gaps
4. Setting improvement goals
5. Developing and implementing plans to close the gap
seven
basic
steps
21
6. Evaluating results
7. Repeating evaluation
Benchmarking is not only useful to find out what determines the success of others; it
is much more a method of continuous improvement. The aim is to encourage a
systematic learning process, a learning culture, which helps to identify and improve
the own performance.
The performance differences and its belonging causes have to be analysed. The
results function as a basis to determine a new and higher performance standard and
to develop new plans, objectives and measurements. These measurements should
be put into practice by the organisation in co-operation with all members.
But benchmarking has also limitations. The process should be linked to various
sources of information, such as changing customer expectations and preferences,
too. The approach of benchmarking may not be adequate for determine the future
strategy. It does not give information about whether to retain an activity or process or
rather source it out, as it only shows the present status of how other organisations
perform in a defined issue. If benchmarking is only used to copy best practices it can
only lead to short term competitive advantages and it may also hinder the own
organisation to be creative and innovative (Hellriegel, et al.,1999: 303).
2.3.9 Lean Production
Lean Production is not only a production concept but can be also seen as an
organisational concept. The Concept has been discussed frequently in recent years
and is referred to as Lean Management, too. It uses the word lean (or fragile) in
contrast to robust and buffered and must also be seen as a holistic concept that
includes
different
functions
like
procurement,
R&D,
production
and
sales
(Zink, 2004: 20).
It supports the management following its objectives on quality, productivity, flexibility
and employee motivation.
22
The aim of lean management is to eliminate any action that does not create value.
These actions are also referred to as waste. There are different kinds of waste such
as overproduction, repeated transport, production of defective parts or waiting times
(Zink, 2004: 21). Any kind of stock or buffer, such as substitute workers for expected
absentees or temporary material stocks shall be avoided. Buffers and stocks hide
problems and build a security network for disturbances. Too often problems and
mistakes are seen as unavoidable, and a buffered production management method
is applied. Although this method compensates mistakes, it leads to unnecessary and
high costs for the used buffer. A “lean” organisation gives up the described security
network. Not the effects but the causes are removed and problems are eliminated in
the long run (Hummel & Malorny, 2002: 96).
This concept builds the basis for every just-in-time production. The product is
delivered and proceeded without any buffer in a synchronised way.
Additionally the human aspect has to be taken into account. Knowledge and the will
of the employees replace the security net of buffers. Therefore capital is substituted
by ability and mastery. In order to achieve this, co-operation between leaders and
employees are essential (Hummel & Malorny, 2004: 97).
2.3.10
Preventive Measures
Even inspecting every singly product does not increase the quality of a product.
Carrying out quality intensive product inspections implies that the processes allow
variations and specifications cannot be matched. In such a scenario failures are
expected (Hummel & Malorny, 2004: 75).
Inspections of products take place after any possible deviation or failure has taken
place and is historical action. At this stage nothing can be done to correct the
variation (Omachonu & Ross; 1994: 97).
Variations are only detected after an expense on time and material. In the context of
TQM a system should be implemented that improves the process. Moving from
inspection to process control does not necessary mean that any inspections is
abolished. But inspecting process control leads to a measurement that has a
23
diagnostic role. The aim is not to detect nonconforming products but to point out and
remove the causes of the variation (Omachonu & Ross; 1994: 97).
In order to secure quality, inspections in terms of TQM must be carried out as
preventive measures. These measurements have to set in at the early stages of the
process. As in the philosophy of TQM no activity stands alone but is interrelated with
other business functions or activities the process approach must also take this into
account. Considering and optimising a process can only encompass all activities and
the whole product life cycle.
Consequently inspections and checks that set in too late are ineffective and
expensive. Preventive actions lead to higher quality levels, higher productivity and
lower costs.
Preventive action means not to solve the symptoms of a problem but the underlying
causes. With this principle it can be ensured that problems are permanently solved
and do not arise again in the future. Moving from inspections to understanding
preventive action in the content of TQM is solving problems for continuous
improvement (Omachonu & Ross; 1994: 97). See “2.3.7 Continuous Improvement”.
A commonly used tool in Total Quality management is the cause-and-effect-diagram,
also called Isikawa- or Fishbone-diagram. This diagram can be used to identify
multiple causes for a single result. Ideally it is used in teams, where everybody
contributes in brainstorming sessions and suggests possible causes for a known
problem or error (Kemp, 2006: 150). Further it is a very powerful tool for the DemingCycle, which is described in 2.3.7.
24
Figure 2.7: Example of Ishikawa / Fishbone Diagram
In addition to new and unexpected problems, there are predictable mistakes. It
should be standard that managers use forecasting methods to analyse them and to
find ways to avoid them.
For a company it is not an easy task to switch from a correct when detect mentality to
a mentality of preventive actions. All members of an organisation have to be involved
in the process and have to learn how they individually can influence the process of
avoiding mistakes.
2.4
Management of Process Quality
For long-term planning a dynamic and process related view is essential, because
only
this
allows
a
continual
development
and
improvement
(Hummel & Malorny, 2002: 107). In order to manage the quality of processes an
adequate quality control must be installed.
Performance
data
and
external
and
internal
reporting,
as
traditionally
delivered from accounting, are good indicators for the performance and the financial
situation of a company. But they are static, focusing on past performance, and do not
necessarily contain information about future consequences. A decision may presently
be profitable but hinder the competitiveness form tomorrow. Traditional accounting
stands in contrast to long-term planning and a dynamic and process related view.
25
Since it is mainly concentrating on economic efficiency, it prevents long-term
beneficial decisions. Quality controlling does not focus primarily at the efficient
performance of an organisation but emphasises the long term competitiveness. A
quality control under TQM concentrates on processes that are used to achieve higher
quality. This process approach includes all processes of an organisation
(Omachonu, et al., 1994: 94).
Quality control is a company wide system and the term total quality control is
applicable, too. Feigenbaum encompasses this managerial and system approach
when he defines total quality control as “an effective system for integrating the quality
development, quality maintenance and quality improvement efforts of the various
groups in an organisation so as to enable production and service at the most
economical
level
which
allows
for
full
customer
satisfaction”
(Wadsworth, et al., 2002: 28). In order to operationalise, many authors stress the
importance of statistical control. Statistical principles and techniques allow studying
processes
and
the
achievement
of
continuous
improvement
(Wadsworth, et al., 2002: 28).
With quality controlling the conformity with internal guidelines is less important than
the “voice of the customer”. The clear focus lies on quality improving means, which is
determined by the customer. Therefore the core focus lies on the customer benefit
(Hummel & Malorny, 2002: 108).
In order to fulfil the requirements of quality controlling, it should according to
Hummel & Malorny
focus
especially
on
the
following
points
(Hummel & Malorny, 2002: 109-110):
Customer perspective, which can be expressed e.g. as ratios for customer
satisfaction, number of complaints, duration of the regulation of complaints, etc.
Employee perspective, which can be measured as e.g. rate of fluctuation, days of
illness, number of implemented improvements, etc.
26
Process perspective, which can be expressed as duration for the development for
new products, expenses for research and development, level of inventories and
buffers, throughput times of orders, etc.
Financial perspective that traditional includes ratios as turnover, profit, costs,
market shares, etc.
Quality controlling helps to characterise the capacity of the entire organisation. This
can be best done by a self-assessment of the company.
A useful tool for the self-assessment process is the Excellence Model, which was
developed by the European Foundation for Quality Management (EFQM, See: 2.6)
as a supportive framework for the TQM implementation. It also functions as
assessment guideline for the European Quality.
2.5
Quality Cost and TQM
Organisations have been trying to cut cost in a “conventional” way by addressing
areas such as improving methods to cut labour costs, product redesign to reduce
material costs and manufacture, increases efficiency, inventory management, etc.
(Juran & Gryna, 1988: 9.4). Therefore the traditional approach to the relationship
between quality and costs was that higher quality was in line with higher costs
(Pycraft, 2000: 741).
“Unconventional” costs that are mainly hidden in overheads were not addressed.
These costs can be differentiated between the following costs of quality
(Juran & Gryna, 1988: 9.5):
Internal Failure Costs
These costs are associated with defects that are detected before the product is
delivered to the customer.
27
External Failure Costs
These costs incurred when defects are detected before the product is delivered to
the customer.
If no defects exist both internal and external failure costs would disappear.
Appraisal costs
Appraisal costs are associated with determining the degree of conformity with quality
requirements. Examples are tests, inspections, and audits.
Prevention costs
These costs are associated with actions to keep failure and appraisal costs to a
minimum. Examples are quality planning and process control.
In the traditional way of thinking there is a clear relationship between these
categories. As failure costs would decrease, costs for appraisal and prevention
increase. As efforts for quality increase the costs for providing these activities, such
as extra quality controlling and inspections increase proportionally. Simultaneous the
costs for failure, errors etc. decreased. Consequently there was an optimum with
minimised total costs for quality (Pycraft, et al., 2000: 743).
28
Figure 2.8: Total Quality costs
TQM
rejects
this
model
of
optimum
costs
for
a
number
of
reasons
(Pycraft, et al., 2000: 744-745):
•
Failure and poor quality are not acceptable.
•
Not all costs are known and measurable.
•
Failure costs are much higher than traditionally estimated.
•
Prevention costs and cost of getting towards zero defects are not inevitably
high.
The approach of an optimum cost level does not encourage employees to improve
quality.
29
Taking theses reasons for rejecting the traditionally approach it becomes obvious
that the total cost of quality decreases with prevention. The idea of TQM is doing
things right the first time (Pycraft, et al., 2000: 747). Instead of looking for an optimum
the TQM concept tries to reduce all failure costs by preventing errors and failures
taking place. TQM stresses that putting more effort in prevention has a significant
positive effect on internal failure costs. This also results in decreasing external failure
costs and, in the long run through higher confidence in the own processes, in
decreasing appraisal costs (Pycraft, et al., 2000: 746).
2.6
The European Quality Award
Following the success of the US quality model (the Malcolm Baldrige National Quality
Award), 14 leading European companies established the European Foundation for
Quality Management (EFQM) in 1988 in Brussels to encourage European
businesses to improve competitiveness through the use of the TQM philosophy (Sun,
Sapphire & Ho, 2003: 134). The EFQM has created a holistic model, which they refer
to as “business excellence” (Zink, 2004: 56).
Since 1992 the EFQM rewards the European Quality Award (EQA) and presently
more than 800 companies are member of the EFQM (Pfitzinger, 2002: 29). The
European Model generally follows the US model. Apart from same very small
exceptions the contents of both models are the same, only the structure varies. The
European structure clearly differentiates between so called “Enablers”, criteria that
allow a successful leadership and “results”, criteria to measure the success of the
company (Pfitzinger, 2002: 30). The American model emphasises on the criterion
“Society Results”.
The main aim of the EFQM model is to support the implementation of TQM within
Europe. The intention is to strengthen and further develop the position of the
European industry within the world market. The Excellence Model is the most widely
used organisational framework in Europe and has become the foundation for most
Quality Awards. It encourages all European enterprises to put the theoretical
principles of TQM into praxis and to fit them into the managerial behaviour of the
organisation.
30
The European TQM-Model is divided into nine main criteria. The content of these
criteria are described in a relatively brief way and within the criteria there is no further
structure. This is a further contrast to the American model, which is far more detailed
(Malorny, 2002: 246).
The nine criteria are differentiated between enablers that show the capacity of an
organisation and results. Both categories account for 500 points that equal 50 %.
The following table gives an overview of the various criteria and the respective
weights within the model:
Figure 2.9: The EFQM Model
Enablers
Results
People
People
90 points (9%)
90 points (9%)
Leadership
Leadership
100 points
100 points
(10%)
(10%)
Policy and Strategy
Policy and Strategy
80 points (8%)
80 points (8%)
Partnerships &
Partnerships &
Resources
Resources
90 points (9%)
90 points (9%)
Capacity 500 points (50%)
People Results
People Results
90 points (9%)
90 points (9%)
Processes
Processes
140
140points
points
(14%)
(14%)
Customer
Customer
Results
Results
200 points (20%)
200 points (20%)
Key
Key
Performance
Performance
Results
Results
150 points
150 points
(15%)
(15%)
Society Results
Society Results
60 points (6%)
60 points (6%)
Results 500 points (50%)
Source: Zink, 2004: 70
Comparing the topics of the criteria to the principles of TQM (see: 2.3), it becomes
obvious that EFQM works within the framework of TQM. The yearly award has
reached a very high value within the European business area.
31
CHAPTER 3
QUALITY MANAGEMENT SYSTEMS
The first quality management systems (QMS) emerged in the 1940, when the NATO
developed quality standards in order to enable a degree of harmonisation. Apart from
the military standards, a variety of standard systems have been developed in the civil
world. Dominant systems are the BS 5750 (British standard) the EN 29000
(European
standard)
and
the
ISO
9000
(Beckford,
2002: 221).
However,
implemented by some 634.000 organisations in 152 countries the ISO 9000
standards represents the currently established global standard and international
reference for quality management requirements in business-to-business dealings
(www.iso.ch).
ISO 9000, as other QMS, represents a formal record of an organisation’s method of
managing the quality of its products and services. Using these standards,
organisations can demonstrate to itself, its customers and importantly to an
independent certification body that it has established an effective system for
managing the quality of products and services. Quality management systems ensure
that all product / service performance requirements and needs of the customer are
fully met (Beckford, 2002: 221). Further they should apply to and interact with all
processes within the organisation, ranging from the identification of the customer
requirements to their satisfaction including all transaction interfaces in between
(Oakland, 2003: 208).
In this chapter the author gives an overview of QMS exemplifying them by using the
most commonly accepted one: the ISO 9000: 2000 series.
3.1
International Organisation for Standardisation
The name ISO has its roots in Greek. Because the abbreviation for the International
Organisation for Standardisation would be different in various languages it was
decided to use a word derived from the Greek word “isos” which means equal
(www.iso.org).
32
ISO is a network of more than 150 national standards institutes, with a Central
Secretariat in Geneva, Switzerland, which coordinates the system. It is a
non -governmental organisation and its members are not representatives of the
respective governments. But it occupies a special position between the public and
private sectors. This is because, on one hand, some members have their roots
uniquely in the private sector, having been set up by national partnerships of industry
associations. On the other hand, some member institutes are part of national
governmental structures, or are mandated by their government. This enables ISO to
act as a bridging organisation in which a consensus can be reached on solutions that
meet both the requirements of business and broader needs of society, such as the
needs of stakeholder groups like consumers and users (www.iso.org).
3.2
ISO 9000: Series
The ISO 9000 family of international quality management standards and guidelines
has earned a global reputation as the basis for establishing quality management
systems.
The latest revision of the standards was published on the 15th of December 2000.
This was a much more substantial revision than the one in 1994. These revised
standards are identified by the "2000" in their designation. In 2000 the three
standards ISO 9001: 1994, ISO 9002: 1994 and ISO 9003: 1994 have been
integrated into the new ISO 9001: 2000. The section ISO 9004 has been adopted.
The ISO 9000 standards are comprehensive and encompass activities ranging from
the development of the product to after-sales services (Beckford, 2002: 222).
Together the series provides a coherent set of management standards to enable
better understanding across nations in international trade.
The latest revision of the international standard promotes a process approach when
developing, implementing and improving the effectiveness of a QMS, to enhance
customer satisfaction by meeting their requirements. In order to work effectively, an
organisation has to identify and manage numerous linked activities.
33
Processes are recognized as consisting of one or more linked activities that require
resources
and
must
be
managed
to
achieve
predetermined
output.
The output of one process may directly form the input to the next process and the
final product is often the result of a network or system of processes (EN ISO
9001: 2000: 11). A process approach can be described as the application of a
system of processes together with the identification of the single process its
interaction with other processes and the corresponding management.
The following table gives an overview of the names and purposes of the
ISO 9000: 2000 family of standards before they are described in more detail
hereinafter:
Table 3.1: Overview of ISO 9000: 2000 family
ISO
Name
9000:2000 QMS - Fundamentals
and Vocabulary
9001:2000 QMS - Requirements
9004:2000 QMS - Guidelines for
performance
improvements
Purpose
Describes the fundamentals and specifies the
terminology for QMS
Specifies the requirements for a QMS where an
organisation needs to demonstrate its ability to
provide products that fulfil customer and
applicable regulatory requirements and aims to
enhance customer satisfaction.
Provides guidelines that consider both the
effectiveness and efficiency of the QMS, with
the aim of improving the performance of the
organisation and satisfaction of customers and
other interested parties.
Source: Oakland, 2003: 2009
3.2.1 ISO 9000: 2000
This norm can be understood as introduction to quality management. It provides a
support in quality issues regarding definitions or basis requirements and the tasks of
a quality management system (Pfitzinger, 2002: 13). The norm itself does not
postulate any requirements but is the basis for ISO 9001.
34
3.2.2 ISO 9001: 2000
ISO 9001: 2000 is used in organisations that seek to establish a management
system, which provides confidence in the conformance of their products to
established or specified requirements. This standard specifies these requirements for
a quality management system that can be used by any organisation that needs to
demonstrate its ability to consistently deliver products, which meet customer and/or
applicable regulatory requirements and aims to enhance customer satisfaction
(www.iso.ch). ISO 9001: 2000 has been developed in a user-friendly format using
terms that are easily recognized by all business sectors. The standard is used for
certification and contractual purposes by organisations seeking recognition of their
quality management system. It is the only standard within the ISO 9000 family that
can be certified by an external agency. Within the standards the word “product” is
used, which refers to services, processed material, hardware and software intended
for, or required by the customer.
ISO 9001 determines the requirements for a QMS that can be used for internal
purposes or certification or contract purposes. ISO 9001 aims at the function of the
QMS with simultaneous customer satisfaction (Pfitzinger, 2002: 16).
3.2.3 ISO 9004: 2000
ISO 9001: 2000 and ISO 9004: 2000 are designed as a consistent pair of standards,
so that businesses that want to exceed the requirements of the ISO 9001 can use the
principles of ISO 9004 to move towards to business excellence (Boys, Karapetrovic &
Wilcock, 2004: 841). ISO 9004: 2000 has the aim of improving the performance of
the organisation and provides a respective guideline for effectiveness and efficiency
of the QMS (Oakland, 2003: 209). The benefits obtained from ISO 9001: 2000 are
extended to all parties that are interested in or affected by the business operations.
Interested parties include employees, owners, suppliers and society in general
(www.iso.ch).
ISO 9004 can be considered as a guideline for improving especially the efficiency of
the total output. In this respect this norm exceeds the aims of the QMS under
ISO 9001. ISO 9004 is recommended for organisations that want to exceed the
35
requirements
of
ISO
9001
and
rather
aim
for
continuous
improvement
(Pfitzinger, 2002: 16).
In the revised version from 2000 - contrary to the ISO 9000: 1994 - both
ISO 9001: 2000 and ISO 9004: 2000 are harmonized in structure and terminology,
which is an assistance when moving from one to the other norm. Both standards
apply a process approach rather than a life-cycle model (Wadsworth, et al, 2002: 59).
The eight Quality Management principles stated in ISO 9000: 2000 and
ISO 9001: 2000 provide the basis for the performance improvement outlined in
ISO 9004: 2000.
3.2.4 Scope of ISO 9000: 2000 Series
When an organisation needs to demonstrate its ability to provide products that meet
customer requirements consistently, the ISO 9000 series specifies requirements for a
QMS. Further it addresses customer satisfaction through the requirements for
continuous
improvement
and
the
prevention
of
nonconformity
(Wadsworth, et al., 2002: 60).
3.3
Reasons to implement ISO 9000 Series
Two main categories of reasons can be identified (Jones, Arndt & Kustin,1997: 651):
Internal and development related reasons that lead to improvements of procedures.
External and non – development related reasons that are market related.
Ad a)
In general these reasons for companies seeking for ISO 9001 certification are the
strive for improved quality and efficiency, the achievement of better communication,
competitive advantage, increasing market share, cost reductions. It is expected that
new customers and higher turnover are a result of the increased perceived quality
36
(Magd & Curry, 2003: 247). The certification shows management’s commitment to
quality which may also result in a rising share price.
More specific the implementation of the ISO standard helps companies to be valued
for their quality by externals and it provides a model and the respective process for a
continuous self – assessment against an externally recognised system.
Ad b)
The registration may be required by customers or markets or it can be a prerequisite
for tendering processes. In many sectors it has become a prerequisite for doing
business. Without the certification companies would loose enormous shares of the
market, as competitors have received the external certification and customers
perceive it as critical. Particularly in Business to Business big organisations tend to
only procure from suppliers that have a valid ISO 9001 certification and also only
acknowledge certified suppliers. Further companies may use the certification as a
marketing or public relation tool, as they belief customers may be impressed by the
achievement of the certificate (Jones, et al, 1997: 652).
3.4
Quality Management Principles in ISO 9000 Series
The quality management system standards of the revised ISO 9000: 2000 series is
based on eight quality management principles. These principles can be used by
senior management as a framework to guide their organisations towards improved
performance (Oakland, 2003: 211). The principles are derived from the collective
experience and knowledge of the international experts, who participate in the ISO
Technical Committee, which is responsible for developing and maintaining the ISO
9000 standards (www.iso.ch).
The eight quality management principles are defined in ISO 9001: 2000 and the
harmonised ISO 9004: 2000. These principles should be used to develop a QMS and
were identified to be used by top management as they lead their organisations and
37
improve performance (Oakland, 2003: 209). These principles are listed in the
ISO 9001: 2000 (Wadsworth, et al., 2002: 60):
•
Determine the needs and expectations of customers and other interest parties.
•
Establish the quality policy and quality objectives of the organisation.
•
Determine the process and responsibilities necessary to attain the objectives.
•
Determine and provide the resources necessary to attain the quality
objectives.
•
Establish methods to measure the effectiveness and efficiency of each
process.
•
Apply these measures to determine the effectiveness and efficiency of each
process.
•
Determine means to prevent nonconformities and eliminate their causes.
•
Establish and apply a process for continual improvement.
3.5
Structure and Requirements of the QMS Standard
ISO 9001: 2000 begins with an introduction, which is followed by eight sections. In
these sections the requirements are defined (ISO, 2000a: 11).
The introduction contains a general section followed by a description of the process
approach to quality management including its relationship the “plan, do, check, act”
concept (see: Deming Cycle in chapter 2.3.7 Continuous Improvement). After the
introduction the ISO 9001: 2000 deals with the relationship to other QMS standards,
in particular the ISO 9004: 2000 and the environment related ISO 14001 standard.
The first section deals with the scope of the standard, containing the application and
comments regarding requirements that may not be applicable in all situations.
38
The two following sections are “normative references” and “terms and definitions”.
The fourth section deals about some general requirements of quality management
systems. This includes requirements for identifying and managing the system.
Further general documentation requirements are discussed. General documentation
requirements include document procedures, work instructions, manuals and the
respective records and controls of these documents.
The last four sections compose the "requirements" of the standard, which are going
to be described herein after:
3.5.1 Management Responsibility
The fifth section deals with management responsibilities and its commitment to
quality. Management responsibility includes a specific responsibility for ensuring
continuous improvement and benchmarking (Oakland, 2003: 222). It stresses the
importance of a very high and visible commitment from the management to high
quality. Management does so by establishing quality policies, setting quality
objectives and establishing a system that focuses on problem prevention rather than
finding defects after they occurred. These quality related corporate policies must be
developed in line with all other corporate policies and clearly communicated to all
employees. These policies must contain a definition of good quality and the goals for
quality improvement. Quality objectives must be emphasised explicitly including the
key elements of quality. It is management responsibility as well to ensure that the
quality policy is understood, implemented as ensuring that the systems functions in
an effective way.
The
fifth
section
also
encompasses
the
appointment
of
a
management
representative, who is in charge of the operations and the quality system. This
person must be from top management or have at least direct access to top
management. The QMS must be reviewed at predetermined times to ensure
effectiveness of the system. This includes internal and external audits, customer
feedbacks, process performance, preventive actions, etc.
39
3.5.2 Resource Management
The 6th section of the ISO 9001: 2000 states the necessity of providing the respective
resources needed for maintaining the quality system. Here a clear focus lies on
human resources, particularly determining the required competencies of the task and
the match of the individual skills (Oakland, 2003: 222). Gaps must be closed by
providing training. The effectiveness of the training must be evaluated and
documented. The QMS requires that the organisation demonstrates that every
employee will be provided with the opportunity to realise the own full potential and
contribution to the organisation (Oakland, 2003: 222). A further requirement is a
proper infrastructure and work environment.
3.5.3 Product Realisation
The last two sections are the most extensive parts of the ISO 9001: 2000 and they
contain numerous subsections. Section seven deals with the product and has six
subsections. The first subsection deals with quality planning. The customer gives the
input for this planning through his requirement. The output of this process is the
designed product. This requires quality objectives for the product (or service) and the
needed processes. It has to be recorded in quality plans and tests in order to verify
the product quality have to be carried out. The requirement of 7.2 is the
determination of all customer requirements. This includes availability, delivery,
support, etc. but also aspects not specified by customers but necessary for the use of
the product. Organisations are also required to review these aspects and to ensure
that they are able to meet them.
Section 7.3. covers the design and development of a product or service. At this stage
appropriate planning activities are required in order to control the entire design
process. The design must be defined and documented in such a way that all
functional, regulatory and legal requirements are met. This should include necessary
requirements for production operations and explain how the product is used safely
and correct. All changes in the design must be controlled, documented and again
checked if they meet the requirements.
40
Section 7.4 deals with purchasing and its control. Purchased products and services
must meet the internally specified requirements. The respective criteria for selection
and periodic supplier evaluation must be defined and results documented.
The next section is entitled “Production and Service Operations”. This covers the
control of the operations that are relevant to production and services. Therefore
information must be made available regarding specifications, work instructions,
devises needed for monitoring and measuring, and instructions for deliveries and
post delivery activities. Further it is referred to special processes that only become
apparent once the product is in use and products must be traceable through the
whole production.
The last subsection covers controlling measuring and monitoring devices. All devises
must be protected from damage and be controlled, serviced and calibrated in
appropriate intervals. These activities must be documented and if deviations are
found, corrective actions must be carried out. Calibration should be made against
recognised national or international standards. For guidance purposes ISO 10012 is
referenced in this section.
3.5.4 Measurement, Analysis and Improvement
Measurement and analysis requires that an appropriate performance measurement
system is in place. This section contains five subsections. The first is a general
section stating that the organisation must define, plan, and implement measuring and
monitoring activities that are needed to ensure product improvement and conformity,
which in turn enables audits of the delivered product or service. The section
“monitoring and measurement” covers the requirement that an organisation must
measure customer satisfaction and conduct internal audits at regular intervals to
ensure that the QMS conforms to the requirements of the ISO 9001: 2000 and the
previously self defined own requirements. The QMS must be implemented effectively
and maintained. All processes and products must be monitored and measured and
respective internal audits carried out. ISO 19011 gives guidelines for internal audits.
These quality audits must contain:
41
•
Verification of the compliance with the organisation’s quality policy
•
Determination of the effectiveness of the QMS
•
A schedule with a sound frequency
•
Documentation procedures
•
Follow-up action
•
Documentation of results
This then should be shown to management and any deficiencies found must be
corrected immediately.
The third subsection covers nonconformity of products. The requirement is that
nonconforming products are identified and that corrective actions are taken. These
products must not be delivered to the customer. Further nonconformity must be
analysed and its reasons be identified and corrective actions taken.
The last two sections refer to corrective action and preventive action. Section 8.4
requires that quality related data are collected and analysed. These data include
customer satisfaction, conformity to requirements, process characteristics and
suppliers.
The last subsection requires the organisation to plan continuous improvement
through the use of the quality policy, quality objectives, audit results, analysis of the
data, corrective and preventive actions and management review.
3.6
Limitations of the ISO 9000 family
In many respects the revised QMS is a major improvement to the former version from
1994. It particularly recognises the process orientation and emphasizes on the
importance of people within organisations (Oakland, 2003: 223). It is a relatively
closed QMS that focuses on fulfilling norms. It is a traditional and expert orientated
42
system,
which
is
mainly
steered
externally
based
on
existing
norms
(Stockmann, 2002: 9).
Oakland (2003: 223) classifies the limitations into the following categories:
Despite the process orientation, it continues reflecting a static interpretation of the
organisation, it deals with the ´what` and ´how` and according to Stockmann
(2002: 9) this focus on the present situation does not reflect success criteria
sufficiently.
The standard does not explicitly address the issue of business or organisational
benefit.
The process orientation should go further and also emphasise on “special
processes”. The issue of people as the heart of quality could be stronger addressed.
It contains the potential limitation of bureaucracy, the disuse and association with the
former standard ISO 9000: 1994. This further limits creativity and innovation
(Stockmann, 2002: 9).
The potential advantages of the ISO 9000: 2000 family can be destroyed if the
designers of QMS continue to apply the “same procedure-focused mechanistic and
bureaucratic mindset” (Oakland, 2003: 223), which prevailed in the past.
The standard bears the risk that it is primarily compliant orientated which leads to a
bureaucratic nightmare. More and more people are required just to maintain the
system, to collect and analyses data without the intended impact on improvement.
43
CHAPTER 4
TQM BASED ON ISO 9000: 2000
Comparing both the ISO 9000 standard and TQM it is obvious that both concepts
follow the same goal, to improve quality of the respective organisation and its
products/services and achieving better business performance. Particularly with the
revised version ISO 9000: 2000 it becomes apparent that the two frameworks are
moving closer together (Hongyi, et al., 2004: 138).
Nevertheless both systems follow different approaches.
ISO 9000 implementation is more associated with line workers, while TQM is more
related to top management. Moreover, the focus of ISO 9000 is on proving
compliance and achieving certification, while TQM focuses stronger on continuous
improvement
and
achieving
and
maintaining
customer
satisfaction
(Magd & Curry, 2003: 248).
Furthermore, the concept of TQM is broader and deeper than the ISO 9000 family.
TQM is identified to be for internal organisational use and tends to go beyond
customer satisfaction, while ISO 9000 is primarily for external applications in order to
achieve customer satisfaction.
ISO 9000 is a management control procedure that reflects the company’s practices
with process documentation in respect of designing, production and distribution to
ensure that the quality meets customer requirements (Stevenson & Barnes,
2002: 696). In this respect the ISO 9000 series deals more with compliance of
predetermined standards. ISO 9000 can be considers as a system that ensures the
quality of products and services and the processes to create the output. The
emphasis lies on the unambiguousness and traceability of processes.
In contrast to this QMS, TQM primarily questions whether the right things are done.
All actions take clearly the customer and continuous improvement into account and
rather focus on business excellence (Zink, 2004: 55). TQM focuses on all
stakeholders and it is a holistic approach with the goal of business excellence. It
exceeds the approach of the ISO 9000 series as it does not focus on quality
assurance but includes leadership and all employees on all levels within the
44
hierarchy. Quality is the central aspect of all activities and TQM builds on long-term
success of the organisation. This shall be beneficial not only for the management and
employees but also the society (Pfitzinger, 2002: 5).
The basis for all quality related activities in an organisation is the determination of the
actual process structure. Once processes are transparent and the organisation is
governed along the processes, further investigations can be carried out. ISO 9000 is
a system with which the organisation commits itself to a clear structure. This structure
must not only show and correct mistakes but also prevent mistakes. On this level
ISO 9000 is a sound and systematic basis for TQM (Pfitzinger, 2002: 7).
45
CHAPTER 5
THE COMPANY
5.1
Company Description
The name of the company is HERMANN FLIESS & Co. GmbH, hereinafter referred
to as Fliess. Fliess is a medium sized production company with 60 employees (30th of
June 2007) that was founded in 1915. Since then the company is family run and at
the 1st of January 2005 the 4th generation (Alexander H. Fliess) has joined the
company. In September 2006 Alexander became the General Manager (GM) of
Fliess and Henning Fliess, the senior starts to retire. He gradually withdraws from the
operational business. In 2008 he will resign as GM and will only be present on
demand.
Fliess is a manufacturer of welding wires (welding filler materials) for mainly
automated welding processes. The raw material is wire rod that is generally drawn
down from a diameter 5.5 mm to anything between 0.8 mm and 5.0 mm.
For a schematically illustration of the production process see Appendix A.
Fliess develops and produces welding filler materials for the following welding
processes:
•
• Submerged-arc welding
•
• Gas-shielded-metal-arc welding
•
• Tungsten-inert gas welding
•
• Gas welding
•
• Electro slag welding
•
• Laser welding
The main products of the company are Gas-shielded-metal-arc wire and Submergedarc welding wire. In 2006 Fliess sold 8.200 tons of welding wire. The company
exports 60 % of its products mainly to European markets but lately China and India
46
have become significant markets, too. With its products Fliess has a market share of
4%-5% of the total consumables market in Germany and about 40% of the speciality
market, which the company is focused on.
Fliess is specialised in medium-alloyed welding filler materials for high-strength, heatresistant, low temperature and weatherproof steels. In these fields mass products
can hardly be used. Customers have very high technical demands and require
special grades often individualised for customers with a very high level of quality and
quality assurance. Due to its own development and close relationships with the steel
mills, the company is at the state of the art in its field and able to supply wire for the
various applications with highest demands. The production is semi automated which
allows a very high degree of customisation and enhances flexibility and smaller batch
sizes. The company is known for its relatively short responds and delivery lead times.
This customisation is appreciated by most customers as they do not have to buy
standardised products as offered by the big welding wire producers.
5.2
Reasons to implement ISO 9000 Standard
Fliess has always emphasised the high quality level of its products. At the time when
the first ISO 9000 certifications took place, Fliess did not even consider this step.
Customers only required superior product quality, which Fliess could supply.
At Fliess it was argued that the certification process would foster bureaucratic
paperwork and documentations without having any influence in product quality.
Fliess always had very tight quality assurance guidelines and as long as the internal
processes follow them, no further QMS would be needed. Any compliance with a
recognised QMS would be additional work with a negative impact on performance
and too much compliance related work would sacrifice flexibility. From this prevailing
attitude it is obvious that the reasons for the implementation of the ISO standard
were not internal.
At the end of the last century the pressure from customers increased dramatically to
implement the ISO 9000 series. In the welding consumables sector the first
customers started to force its suppliers to have an ISO 9000 accreditation. Some big
47
organisations in the sector of welding wires were already certified. At this stage the
ISO 9001: 1994 became a competitive advantage. For a relatively long time Fliess
managed to convince the customers that this certification was irrelevant “because the
products meet all requirements and there are no complaints from customers”. Due to
good and long lasting relations and the performance in the past, customers kept
buying although their internal guidelines did not allow this. But in 2000 / 2001 a key
customer was bought by a multinational organisation that required ISO certification
from all its suppliers and strictly applied this guideline. This was the first time Fliess
considered ISO 9000 series as the company was faced with loosing a key customer
and a shrinking market share. Not many producers had a certification at this stage
and it still meant a competitive advantage.
At this time the ISO 9000: 2000 revision had already taken place and the former
prejudices against the old ISO diminished. The new series was not merely product
orientated but also took processes and reporting systems into account. This process
approach was new to the company.
5.3
Implementation of ISO 9001: 2000
At the time of the implementation nobody at the Fliess Company had any experience
with QMS and in particular the ISO 9000 family. Therefore help of an external
consultant was needed. Together the present status of the organisation and its
quality system was analysed. It became obvious that Fliess already had a
sophisticated quality department, which carried out quality tests. But most activities
were not documented before the implementation. Apart from the product related
parts, the ISO 9000 implementation meant a clear change in the way of carrying out
operations. The attitude became more process orientated and a structured
information system was introduced. These implementations allowed analytical work
for the first time. Since the ISO 9000 implementation customer surveys are carried
out and complaints are analysed on a regular base.
At the first implementation Fliess still did not live the certification. It was something
new that was needed. Many requirements were only met on paper in order to satisfy
the external inspector from TÜV-Rheinland. From recertification to recertification the
48
company learned more and more and the series became alive. This change took
place on all levels throughout the organisation.
5.4
Possible fields of development within the area of TQM
The implementation of the ISO 9000 series has helped to streamline the
organisation, processes became more transparent and Fliess moved in the direction
to steer the company on the basis of processes. The organisation and its processes
allows much more not only to identify and abolish single defects or mistakes but also
to adopt procedures so that they are avoided in advance. The ISO implementation
has changed the company far reaching and after some years of experience the
company lives the system approach.
But although the company improved sustainable within the last 5 years and now
functions in a systematic way, the present status raises the question of how to
continue.
TQM is an approach that goes beyond the systematic structure but takes many other
aspects into account.
It has never been considered how product quality is generated. Processes are not
seen in direct relationship with the quality of the product.
But presently at Fliess a change in generations is taking place. In 2001 the technicalmanager retired and the owner and present GM withdraws gradually from operational
business.
The new technical manager (Dr. Albrecht Borner) and the new (and 2nd) GM do not
follow the traditional view of gaining superior quality. In order to successfully defend
the current market position, quality must be increased. Simultaneously costs must be
cut as competition particularly from Eastern Europe increases.
Therefore the focus has shifted from the product itself to the underlying processes.
High quality products shall be the result of excellent process quality. Further this new
approach shall be backed up by utilising information technology to a higher degree.
49
5.4.1 Quality awareness
In the field of quality awareness the Fliess Company clearly follows an old attitude
(see: 2.3.1 Quality Orientation as main company objective). The attitude is rather in
line with the ISO 9000 certification. The focus is on compliance and achieving
certifications. Relevant certifications are Deutsche Bahn (DB), TÜV, Lloyds Register,
etc. All these certifications are important for the business but only focus on the final
product. It must be in conformance with present requirements. The underlying
processes are less important. So far the traditional approach to the relationship
between quality and costs prevails. It is believed that higher quality was in line with
higher costs.
High quality has always been considered as expensive, but due to the attitude of
supplying highest quality, cutting costs in the field of quality has never been
considered. Only conventional costs were considered to be a subject of cost savings.
The existing attitude towards quality only considers the quality of the individual
finished product. Every final product must be checked before it leaves the company
(see: 2.5 Quality Cost and TQM)
At Fliess it is important that the top management changes the prevailing attitude
towards a TQM mentality. The term quality does not only include the quality of the
finished product but also of the respective processes. Excellent process quality will
decrease interferences.
Changing this mentality takes place gradually. The management allows and
facilitated discussions. These discussions try to find out causes of various points and
include questions like:
Where does the most rework take place and where is the most waste? What can be
done to prevent rework and waste? Do measures improve process quality?
•
When and why do machines stand still?
•
Can this be prevented by an improvement of material flow?
•
Are the right tools used?
50
•
How much time is spend on corrective actions?
•
How much time is wasted?
•
Has the product quality been negatively influenced at any stage in order to
save time or costs?
These topics shall help to address fields for improvement and to identify the benefit
of the new attitude. If a success has taken place this is shared with the employees in
order to create trust into the new attitude. These examples shall also help to deliver
that quality orientation is not only a theoretical approach.
5.4.2 Commitment of Management
Implementing TQM is a strategic decision, resulting in changes on all levels within
the organisation. As these changes evoke resistance with employees it is vital that
management is fully committed to quality. At the Fliess Company basically the GM
and the technical manager are perceived as management. Now both have this
attitude and agree on the importance of TQM. It is important that the management is
an example and decides unambiguously towards quality. This engagement enables
necessary changes, which could otherwise be hindered or slowed down. This attitude
gives the necessary priority to quality throughout the whole company.
Further it is the role of management to communicate the principles of TQM. It must
be paid attention that old structures do not continue only because it is of benefit for
the individual or just because “it has always been like that”.
In the initial phase of implementing TQM the priority is clear and easy to follow, but
also future management must pay attention to sustainability.
51
5.4.3 Leadership Development
TQM is a method of leading employees, which is based on involvement and
participation of the individual. Quality is determined through the commitment of the
employees. At Fliess this means creating a suitable environment and a quality
acknowledging atmosphere. This shall encourage the creativity and motivation of the
people and collaboration must be strengthened. This change requires openness and
trust.
For a company it is easier to accomplish such a change with a new management.
Throughout years decisions have mainly been made by the owner of the company,
who certainly had the most experience. He acted rather with a typical owner
mentality and controlled the company. It was not the aim to reach consensus and
employees are used to this. A rather “ask what to do than to take responsibility and
act alone” attitude prevails at Fliess. This culture of rather mistrust must be converted
into a culture of trust. People must take more responsibility and start to act on their
own initiative.
The new generation at Fliess also means a change in leadership. This is a good
opportunity also to move to TQM in terms of leadership.
With the new generation this change is much more likely to take place. The style of
leadership is not dominated by experience in the field of welding wire and it will be
easier to involve people in the business instead of telling them what to do. The new
quality orientated leadership can be classified in two fields:
•
Creating a quality enhancing company strategy and structure
•
Creating social relationships and an environment that encourages learning
52
5.4.4 Employee Participation
In the concept of TQM the participation of all employees is an important part. At the
Fliess Company the participation of employees, particularly workers, is minor. If the
participation would be strengthened, employees would work more independent and
take on more responsibility. It is the management task to create an environment that
empowers the individual worker to cooperate more in groups and to give input.
Instead of external control theses groups should be more self controlled. This way
group orientated improvement activities can emerge.
Both kinds of groups, cross-functional and within functions, would help to better
understand the work of the others and to find ways of improvement.
Usually employees have been working at one position for a long time and are very
familiar with their work. For them it is easy to identify working problems, to explain
the causes and to develop a solution.
Presently no employee suggestion scheme is implemented but the management is in
close contact with the employees and tries to find out areas of improvement in
personal talks. But probably there are far more issues known to the individual worker
that will not be disclosed in personal talks. Therefore implementing a systematic way
that encourages each worker to disclose ideas will move the company to higher
process quality. This implementation will take place in the context of TQM.
With the introduction of ISO 9000 job rotation in a structured way has taken place for
the first time. At the beginning of 2006 the system of job rotation has been an issue
to the management. So far only similar works have been subject to rotation, but this
has been changed. It is the aim every worker can work in three different positions.
This is backed up by internal training.
Further team building will help to break down the division of work. Particularly in the
drawing shop this division is very obvious. Every worker has mainly “his” machine.
Here a possibility would be not to allocate the work to the individual worker but to the
department and the workers must organise the jobs themselves. The aim should be
that every worker will be able to carry out every task and is able to work at any
machine.
53
Fliess has started to join employees from different departments that do related work.
This first “quality circle” is composed of 4 employees, 2 from the drawing shop and 2
from the spooling department. Both works cannot be seen independently as the
drawing shop is the internal supplier of the spooling department. The first objective is
to identify cross-functional production problems and to improve general operations.
This small cycle meets for about one hour every first Tuesday each month. The first
finding was that even very small variations in diameters have direct impact on
precision-layer spooling. So far Fliess controlled the diameter of the wire down to
1/100 mm. Any variation smaller than that was neglected. It was only made sure that
the diameter was within the norm. But variations of some 1000 mm have a strong
impact on precision layer winding. For the drawing shop it was easy to set the
tolerances to 3/1000 mm, which ensures that the spooling department can work far
more efficient as they do not have to interfere manually.
5.4.5 Customer Orientation
The Fliess Company has a very strong customer orientation. The sales department,
as the interface between customer, production and forwarding department,
determines the production plan in the factory. Therefore this department does not
only have external but also internal customers. These two dimensions are described
in more detail hereinafter:
External Customer
Within the welding industry Fliess` portfolio does only cover a small but specialized
spectrum. Fliess produces mainly very specialised welding consumables for a few
industry sectors. The company is mainly serving high demanding industries such as
the energy sector with power plants, oil and gas pipelines, off-shore platforms and
also pressure vessels and mobile cranes. Fliess has only about 200 customers.
The main customers are big welding houses that are not able or do not want to
manufacture these specialities. For most products the global demand is very small
and steel mills melt the products only in casts of 100 to 150 tons. Therefore Fliess
54
buys the casts and delivers the finished product already packed in the individual
boxes of the various welding houses. This way the big companies do not have to buy
the casts themselves, which would lead to very high inventories as single casts
would last for years.
The second big group of customers are independent regional operating specialised
dealers. Both groups usually sell the whole range of welding equipment and welding
consumables and allow a sophisticated technical service, which is essential in the
welding industry.
Only about 20 % of the customers are final customers that actually weld. These are
for example leading pipe mills or mobile crane manufacturer. These companies are
usually technical leaders within their sector. Fliess is involved in the welding
development of these companies. Due to this very sophisticated technical support
Fliess has a very strong technical knowledge in its field.
Most of the customers are visited once a year by the management of the company.
The rest of the time the sales department is the only contact to the customers and
takes the orders. This department is comprised of four women, one of them is the
head of the department and three employees are working at the back office. The
head of the department usually does not meet customers personally and only if
technical issues are raised the technical manager gets involved.
This business practice rather follows the approach of ISO 9000 series than of TQM.
For the customer availability of the company is very important. The sales department
organises the delivery of products in compliance with the order. But it is very difficult
to determine the requirements of the customer. This aspect only gets addresses
when management personally visits the customer. But due to the increasing global
export this cannot be done in a sufficient manner. Due to the fact that the customers
normally distribute the wires themselves the contact to the final customer is very
limited. Only some strategic customers allow the insight in the welding process itself.
In order to further develop a TQM approach within this field it is important to get to
know the customer better. Presently all operations are controlled by the sales
department. This ensures that the company produces exactly to the customers order.
But customer orientation should be taken a step further, since the customer of an
55
organisation determines the success of an organisation at the end of the day
(Zink, 2004: 71). This can be present and / or future customers who should become
loyal customers. Due to long co-operations with existing customers long lasting
partnerships have been build. But as contact persons of the customers fluctuate and
new customers are usually totally unknown cooperation must be emphasised.
At Fliess this means that the top management must spend more time with customers.
This includes particularly the technical manager. In the past he was only involved in
customer contacts, when critical questions came up. Usually visiting customers was
not part of his job. Due to present reorganisations at the company the production
manager will not be involved in the machine scheduling any more but will be in
charge of more technical issues. Previously this was in the responsibility of the
technical manager, who now will have more time to build relationships with
particularly technical demanding customers. Fliess is about to create a plan for
customer visits. The plan has two sections one domestic and one international. All
visits will be carried out by either the technical manager the general manager or both
together. For some customers the head of sales will join, too.
Further Fliess is still quite unknown among the final customers as the products are
mainly sold with different brands that are not related to Fliess. Products sold to
dealers and final customers were sold in neutral packing (until April 2007).
Particularly for dealers it becomes increasingly important to sell products with a
superior physical appearance and a strong brand behind the product. This way the
final customer becomes more loyal to the specialised traders and consequently they
become more loyal to the producer. Therefore a new packing was introduced in April
2007, which replaced the old brown boxes (Appendix B).
Internal Customer
In order to underline the strive for excellence, it must not only be focused on external
customers. It is as crucial to focus on the internal customer / supplier relationships.
Due to the structure of the Fliess Company, only few employees have direct contact
to customers. For most employees it is therefore difficult to imagine which value the
individual input adds to the product. They do not see the external customer at the
56
end of the chain, they just have contact to the next person within the process.
Presently there is no awareness of the concept of internal customer / supplier
relationship. For a TQM approach this awareness must be created.
The Fliess Company has several of these internal customer / supplier relationships.
They can be differentiated between production and administration, although there are
many interrelations between production and administration.
The sales department is in close contact with the customer and hence initiates any
production.
Due to the production process there are many “internal customer / supplier
relationships”. The rough drawing is the supplier of the fine drawing, unless the wire
is sold directly in bulk units. The fine drawing is the supplier of all spooling and
cutting departments. Ready spooled or cut wire is the input for the packing
department. Nearly all departments are also customers of the department for quality
assurance.
It is the objective of the top management to further emphasise on the importance of
these customer relationships. In individual talks the needs of the individual person or
function has to be pointed out. In combination with the knowledge of the market, the
real external and internal customer needs must be determined. Consequently the
processes can be re-evaluated and if necessary be redesigned.
With these talks, several findings have already been made. Particularly the
department of quality assurance was not fully aware of the individual needs of the
other function. Therefore they sometimes supplied much more than was necessary.
Particularly in terms of conformity and its documentation a lot of redundant work was
found. By addressing the topics with all people that are involved redundancies were
pointed out and corrected.
57
5.4.6 Supplier Integration
Both the ISO 9000 series and TQM have a focus on suppliers. In the content of
ISO 9000 series the focus lies more on supplier evaluation in terms of conformity,
whereas TQM considers a long-term and trustful relation to suppliers as even more
critical.
At Fliess supplier relationships have always be seen as vital as customer
relationships. Although in terms of ISO 9000 series the evaluation of existing
suppliers, particularly steels mills is quite rudimental, it has always been appreciated
that the quality of the own product is significantly influenced by suppliers. Further
building new relationships is very difficult. In the field of supplier integration Fliess
has always had an approach that was very close to the ideas of TQM. Following the
main relationships will be briefly described:
For Fliess several suppliers are essential and influence the quality of the final welding
wire significantly. This are primarily the steel mills with its rolling mills, and annealing
and pickling companies as they cover parts of the value chain that Fliess cannot
cover. In these parts it is essential to have reliable partners as the condition of the
final product is strongly predetermined.
The steel mills melt the casts according to Fliess specifications. Therefore Fliess
always have to buy whole casts. Depending on the partner mill, casts have a size of
up to 150 tons. The chemical analysis of the wire cannot be changed at any later
stage. Together with the steel mills and customers Fliess have determined over 60
different specifications that are sold presently. Particularly in the field of speciality
welding wire not many steel mills are able to deliver within the narrow set of
specifications. A long term and solid partnership with a few steel mills has always
seen as fundamental. Just because some analyses could have been bought cheaper
somewhere else, Fliess did not change its supplier.
Fliess is not able to draw all analysis directly to all diameters. Therefore for some
grades further annealing or pickling becomes necessary. This is done by other wire
drawing companies that do not operate in the same sector. For a long time Fliess
worked together with only two companies. Although the relationships were very
58
sound in 2006 Fliess started to work with a third company as capacities might
become scarce.
Fliess works together with only a few companies as key supplier. To them Fliess has
historically a very good relationship, sometimes over several generations. This
concentration on few suppliers enables a very good collaboration and has additional
advantages in contrast to “supplier hopping”. They are mainly time and cost related:
•
The search for new suppliers is very time consuming.
•
The framework of cooperation does not have to be newly defined, which is
also time intensive and may involve costs as layers might set new framework
agreements.
•
Costs for quality assurance are much lower as standards are already agreed
on.
•
Long-term co-operations give a good understanding of the other company, its
strengths and weaknesses.
•
Long-term co-operations enhance communication between the employees
and many things can be done in a quite informal way.
•
Good partnerships are a good basis for cutting buffer inventories.
•
Splitting the demand only among a few suppliers allows each supplier to
produce more economical.
•
Higher volumes at one supplier allow better prices.
5.4.7 Continuous Improvement (Kaizen)
Although changes have taken place at the Fliess Company, it is essential to
understand that it must be a continuous process without an end. With the established
ISO 9000: 2001 the focus is more on the QM-system than on continuous
improvement. In order to move further in the direction of TQM Fliess must establish
the understanding that once an improvement has taken place, it still needs to be
59
monitored and may still be an issue to be addressed. Employees must get a more
positive attitude towards changes. Particularly the logic of the PDCA-Cycle must be
promoted among the employees. At Fliess the fields for this improvement process
can be classified into employee related and group related Kaizen. On the level of the
individual workplace minor changes can have a positive impact. Here an emphasis
on cleanliness is part of the continuous improvement.
Improvements on group level are more difficult as more than one area is involved. An
example for Kaizen on this level is the introduction of quality circles.
The stronger focus on processes also takes internal customer-supplier relationship
into account. This process orientation considers the value chain throughout the
organisation and emphasises the customer orientation. This is also an essential
contribution to continuous improvement and hence TQM.
5.4.8 Benchmarking
Benchmarking is a process that supports continuous improvement. ISO 9000 series
does not emphasise on continuous improvement and hence does not deal with
benchmarking. In the content of TQM this improvement process is an essential part
and hence benchmarking as a tool for improvement is an important issue.
At the Fliess Company presently no benchmarking takes place. But benchmarking is
a very powerful tool that should be quite easy to be used.
As the company is quite small it does not have many different operations that can be
considered as reference for benchmarking. But it should be focused on an external
benchmarking. It will be very difficult to get information from companies that draw
welding wire. But there are many companies around, that draw wire for different
purposes. Therefore the production process is similar but there is no competition on
the market. Fliess already works together with three wire drawing companies as
Fliess is not able to anneal and pickle wire themselves. With these companies a
trustful relation already exists. Therefore the first step of identifying appropriate
companies for benchmarking is very simple. The only disadvantage is that Fliess
cannot judge whether these companies have a leading position within their markets.
60
Further the subjects for benchmarking must be defined. As the production processes
(drawing wire) are similar, this process should be addressed. The participating
companies must define ratios that shall be measured in the same way.
When the benchmarking process has started and data can be compared, the deficits
must be disclosed and causes identified. The following aspects then need to be
addressed:
•
The size of the deficit.
•
The reason why the other company is better.
•
What are the methods and / or tool this company is using to achieve this
result.
•
The applicability of these methods / tools at the Fliess Company.
This benchmarking process will not only be beneficiary for the Fliess Company but
can have also great value to the other partner.
5.4.9 Lean Production
Under ISO 9001: 2000 Lean Production is not required. But for TQM it is a vital
aspect to have a “lean” production. The objective of Lean production is to minimise
stocks and buffers as they cover problems and give a security net, which is capital
intensive and often not necessary. The inventory at Fliess is composed of more than
60 different analyses that are usually bought in batches of 100 to 150 to. Normally
material is stored as wire rod (50 %), pre-drawn wire that just has to be spooled and
packed according to the orders (40 %) and as finished products (10 %) that cannot
be customized any more. This determines predominantly the fast delivery. Even if the
wire has not been pre-drawn a delivery lead time of up to two weeks can be
guaranteed. Most of the time this is less than half the delivery time of respective
competitors. Often they even need to order the material at the steel mill. In this case
the delivery time may be up to 5 month. As most of the competitors do not have such
an extensive inventory (ca. ½ of the yearly turnover), Fliess is very often the only
company able to deliver. Therefore particularly Fliess is well known in its sector for
61
the extreme high level of inventory as it allows a very good delivery performance.
This delivery time is a clear competitive advantage of Fliess.
As most of the customers work project orientated it is very difficult to forecast the
demand. But this is definitely an area that contains many security buffers that needs
to be addressed. Lowering the inventory level and simultaneously maintaining the
performance will be an issue to be addressed in a quality cycle on group level.
5.4.10
Preventive Measures
Due to the stronger focus on conformity than on continuous improvement, preventive
actions are merely part of the TQM philosophy. Preventive actions shall ensure the
quality of the product, without the elimination of final inspections. They can be
considered as continuous examinations. In this chapter the main inspections at the
Fliess Company are examined and it is questioned in what aspects a move from
inspection towards process control in combination with preventive actions is possible.
At Fliess inspections are most significant as they ensure that the delivered product is
free of defect. Therefore they encompass several fields. The most important fields
are material mix up and correct packing and labelling. Consequently in these two
fields the most comprehensive inspections take place.
Material mix up is a very serious issue, as the welding wire almost always looks alike
and cannot be differentiated visually. Even if the final product is welded it is very
likely that the welder (or roboter) does not realise a mix up. The mix up may only
become visible after years as the welded seam does not have the life expectancy as
predicted. As Fliess is mainly supplying high demanding industries, this can have
catastrophic consequences, e.g. if an oil pipeline 3.000 m below see level cracks.
Therefore inspections start with every incoming wire rod that becomes chemically
analysed. These are approximately 5.500 rods a year. Inspections continue through
the production by checking every bulk spool (approx. 14.000) with resistance
measuring. For both checks a piece of wire must be cut off and be analysed in the
quality department. A chemical analysis is more complex and determines the
chemistry of the wire rod very precisely whereas further inspections are only
62
resistance measurements. Resistance measurements only allow telling whether it is
the right wire or not.
Presently steel mills are not able to eliminate material mix up totally. Every year
Fliess identifies approx. 10 incoming wire rods that have been mixed up. Further the
chemical analysis is used to determine whether the casts are within the purchase
specification. As a mix-up at this stage cannot be excluded, further inspections must
be carried out.
The wire rods as they come into production are not individually identified; they are
considered as part of a cast. Only the first produced bulk unit gets weight and gets a
unique number. This is the stage where every bulk unit is further inspected. This
ensures that the worker has taken the correct wire rod and whether the copper
surface is up to quality standard.
The two testings are in some way redundant. Presently the company develops
organisational changes. If the weight of each incoming wire rod were known the
traceability would include the wire rode. Then it will be possible to eliminate in-house
mix ups and further resistance check would not be needed. This will be a big step
away from inspections towards process control. The time limit set for this is the end
of 2007. The biggest problem is the variety of the different data sources (steel mills)
and the respective data transfer.
The second important field for inspection are correct packing and labelling. Due to
the enormous product variety nearly every order gets packed and labelled differently.
For packing no further inspection takes place. The labels contain many different
information. Most of the time the labels include the following information: the brand,
grade, cast number, diameter, weight, CE-Mark and approvals, barcodes, etc. But
this information varies from customer to customer. Most of them have their own
brand, each grade has an own trade name, cast numbers get different codes, CEMark and approvals always depend on the brand and whether the company is
allowed to carry them.
In the past every customer had pre-designed labels and the information were
manually written into the label. A sample of every label was given to the quality
department that had to approve the label.
63
In 2006 for the most important customers all relevant information were written in a
data base and the sizes of the labels standardised. Since the end of 2006 the master
label and the content cannot be changed by the operator any more.
The data content for these customers comes out of a database. The quality
department is responsible for the layout of the “master label” and the content of the
database. No further inspections take place for these customers. Progressively more
and more customers will be included in this database. In the field of labelling a big
improvement takes presently place. The workflow moves from all manually including
inspections to a controlled process. A big improvement in quality has already become
visible. In the past labelling was a fulltime job. The aim is to cover this position with a
part-time job. The new perspective focuses on cutting failure costs due to fewer
mistakes and less work. Particularly appraisal costs are addressed.
5.5
Management of Process Quality
For Fliess process quality is another field to move form the implemented
ISO 9001: 2000 to TQM. Therefore particular quality control must be considered as
basis for a respective management. Presently reliable data are delivered from
accounting. These data mainly concentrate on the financial situation and the
economic efficiency of the company. They mirror the past and present, but they do
not allow a process view as required by TQM. The topical reporting system is
unsuitable for predictions of the future competitiveness of the company. It is very
difficult to base strategic decisions on this system. The philosophy of TQM requires
that quality is the superior objective of the organisation. In order to achieve this Fliess
must adjust the reporting system in a manner that quality orientated decisions are
supported. The system must include dynamic and process related information.
In order to determine the relevant data, Fliess will carry out a self assessment. The
criteria catalogue from the EFQM will support the determination. It is essential to
identify non value adding activities and to point out improvement potential.
64
CHAPTER 6
IMPLEMENTATION OF TQM AT THE FLIESS COMPANY
The basis for the implementation of the TQM is the existing quality system
ISO 9001: 2000. The organisational structure is in line with this system and adequate
to the size of the company. The initial ideas of introducing TQM came up during the
MBA program of the author and this thesis is the starting point of the TQM. Due to
the retirement of leaders in the Fliess Company (Technical Manager and Operations
Manager) younger people took over these positions. Particularly these two persons
are very open for changes and it was not difficult to convince them of TQM.
The TQM implementation at Fliess starts with the existing QMS as it functions as
basis for further steps. Within this framework no second structure for TQM is
introduced. The technical manager and the junior GM take the responsibility for the
project. This way the implementation will not lead to an additional structure and TQM
becomes part of the organisation. Enhancements that result from TQM activities are
included in the existing quality management documentation. This way the creation of
a second “TQM-Documentation” in addition to the existing ISO documentation can be
avoided.
Using only one central documentation increases the acceptance of TQM among
employees. Using the existing structure ensures that the organisation stays lean and
no further overheads are added. This would also be very difficult to communicate as
at the same time other non-productive parts are cut.
6.1
Potential drawbacks of TQM
Aligning a company to the philosophy of TQM can have a great potential to improve
its performance. But this implementation also bears risks that have to be considered
carefully.
TQM covers a long-term project therefore it is essential that the company stays on
course. Particularly the management must not give up and set priorities to ensure the
long-term benefit.
65
The orientation towards TQM has the objective to ensure the company's continuance
as a going concern. TQM does not promise breakthrough short-term improvements,
as the main changes are changes of the attitude of the employees. Therefore it might
become possible that employees start questioning TQM as no big improvements take
place at once. And if a project like this fails, the motivation of the individual may be
worse than before TQM. This will have a direct negative impact on customer
satisfaction.
6.2
Improvements
So far various fields of improvement have been addressed in “5.4 Possible fields of
development within the field of TQM”. In this section different improvements that
have already taken place and will take place and the respective effects are briefly
addressed.
Since the first ideas of moving from ISO 9001 to a more quality orientated thinking,
as TQM can be understood, several changes have been initiated. The most
significant one is the shift in attitude, which is underway along with a change in
generation (new appointments), namely the General Manager and the Technical
Manager. Now senior management has the awareness of all of the requirements of
TQM, and in a top down approach changes can be implemented. But adopting this
awareness by the whole organisation is surely a long-term objective. As the
awareness of TQM is lived by management, it will hopefully be adopted by all
employees. This would result in improved processes and therefore also in increased
quality of the product as purchased by the customers.
Several changes have already taken place, and short-term improvements became
visible. In the following paragraphs some of these changes will be highlighted. These
have not only had a positive impact but also contributed towards adopting the TQM
mentality throughout the company and all employees.
The short term improvements of the already implemented job rotation are the
exposure of individual employees to a variety of jobs. It is a real learning experience
that helps to develop different skills. Less monotony and the feeling that they are of
66
better use for the company are the benefits for the worker. The benefit for the
company is to determine where each worker performs best and if necessary to
change his / her position. Further it gives the company more flexibility. If more work
has to be done in one department and less in another one, workers can easily be
moved. The same is applicable for holiday replacements.
The first quality circles have already led to cross-functional discussions and the
diameter of the wire has been slightly modified in order to guarantee a better
spooling process.
These few changes already had some positive effects on the employees and the
company. Employees get the feeling that they do not only have to do what they are
told. Their opinion is important and everybody has the opportunity to initiate change.
Encouraging and listening to the individual will also increase identification and loyalty
with the company in the long-term.
Improved working processes and better cross-functional understanding are the
benefits for the company.
67
CHAPTER 7
CONCLUSION AND RECOMMENDATIONS
Due to the increasing globalisation of markets and the rapid development of
telecommunication and transport systems, today’s organisations are faced with
stronger competition than ever before. Consequently organisations increasingly focus
on customer satisfaction as a means of securing a competitive advantage. One way
to achieve sustainable competitiveness is an emphasis on quality products and/or
services. Quality has emerged as a strategic competitive tool for organisational
success and organisations have come up with several quality concepts
(Magd & Curry, 2003: 244). In this thesis TQM and the ISO 9000 series have been
discussed in the context of a medium sized production company. The historical
developments of both have been very different. The philosophy of Total Quality
Management goes back to the first concepts that have been developed by the so
called TQM gurus. The concepts are still very much the same and applicable today.
The ISO 9000 series has been subject to various adjustments. The latest revision
gets closer to the concept of TQM. But it is a QMS with an external certification,
whereas TQM is a philosophy. As the ISO 9000 has adopted some of the aspects of
TQM, the latest revision can serve as a basis for TQM implementation.
At the beginning the Fliess Company was not prepared to implement ISO 9000, but
as the market pressure became inescapable it had to be done. Throughout the years
the company more and more adopted the QMS mentality. In 2006 the decision was
made to move even further and to implement TQM. The existing norm-conform QMS
was the basis, and the company started to adopt the philosophy of TQM. This project
is initiated by the top management that also stays in charge of the realisation.
Obviously the size of the company plays an important role for the implementation of
TQM. In big organisations the distance between top management and the
operational level is much bigger than in small companies. Due to the size of the
Fliess Company the implementation is easier than at a larger enterprise. All aspects
regarding leadership, employee participation, etc. can be implemented easier.
Management is in contact with the operational level and hence can strongly influence
the process throughout the whole company. So far a number of improvements have
already been implemented and show the first positive results.
68
But TQM is a very complex and fragile model. When it is implemented correctly it will
help organisations to gain sustainable competitive advantages as it reduces costs,
enhances professionalism and facilitates a new business culture. In order to pursue
these results, organisations must not give up but need to have an agenda for this
long term objective.
Should such an objective not be realised, the danger of demotivating employees is
very high. But as competition is increasing the focus on quality will become even
more important than it is today. Consequently, organisations can no longer neglect
the topic of quality, and TQM is a very powerful philosophy that creates winning
organisations. Fliess will therefore continue with the implementation of the TQM
philosophy at all levels of the organisation.
69
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Appendix A:
Schematical Illustration of the Production
73
Appendix B: New Fliess Box