Literature Review
In today’s enterprises, quality management is characterized by the use of simple yet powerful tools that are designed with the goal of helping organizations achieve their production objectives (Mahadevan, 2007). An example of this is observed when considering Brakes India Limited (BIL), a well-known manufacturer of braking systems. The company has built a commitment to quality management, and this is seen by the number of quality management initiatives and quality certification programs they have acquired (Mahadevan, 2007).
In keeping with their commitment to quality and the need to improve quality, the company undertook to use a tool known as Poka Yoke (Mahadevan, 2007). This tool was aimed at the prevention of defects during production as well as assisting in attaining the desired parts per million (ppm) quality levels the company had targeted. This initiative was initiated following investigation into their production procedures at one of their plants (Mahadevan, 2007). Based on this investigation, it was observed that fatigue was a likely reason for the damage of parts produced within this particular plant.
In response to this problem, the company went ahead to fully automate the procedure, which resulted in a significant reduction in defects within the plant. Following this success, the group went on to use this same procedure to identify other areas that required adjustment to improve overall performance (Mahadevan, 2007).
This above case is representative of modern-day quality management, which is characterized by the use of simple and powerful tools to improve production. It has been observed that for positive results in quality management, it is crucial that employees participate in the improvement process (Mahadevan, 2007). It has also been noted that it is wise for employees to take initiatives that assist employees in achieving improved quality in the long run. This new approach to quality management is being undertaken across the globe by several firms, mainly due to the increased competition from other firms (Mahadevan, 2007).
This case is illustrated in the late seventies by Harley Davidson, an American motorbike manufacturer. This company was selling bikes that were very costly and, at the same time, were of low quality (Mahadevan, 2007). Due to this factor, the company was unable to compete with Kawasaki, who offered bikes both of better quality and lower cost. This position forced Harley Davidson to close down operations for a three year period between 1980 and 1983 (Mahadevan, 2007). Their main objective during the period they closed down was to change manufacturing systems and management practices.
It was believed that this approach would allow them to compete with Kawasaki based on crucial factors identified between the two businesses. The resounding success of many firms in modern times is invariably linked to excellent practices pertaining to quality management (Mahadevan, 2007). Due to this position, firms such as Harley Davidson had to make critical choices to remain competitive. On the other hand, successful firms such as Kawasaki proved that there was no need to make a trade-off in relation to cost or performance in order to produce quality products (Mahadevan, 2007).
It has been suggested that much of the success of Japanese firms in the seventies and eighties can be attributed to this phenomenon (Mahadevan, 2007). It has been reported that Japanese manufacturers were the first to take advantage of the quality revolution on an international scale. Based on this, therefore, these firms were able to gain entry into established markets in the west owing to the performance gaps they created through the quality products they brought into the market (Mahadevan, 2007).
In response to the need for quality, several individuals undertook studies into approaches to improve quality management between 1950 and 1980 (Mahadevan, 2007). These practitioners played a major role in identifying the salient features that could be used to raise quality standards. One of these individuals was William Edwards Deming, who is also sometimes referred to as the father of Japanese quality management systems. His basic premise with regard to quality was that it is possible to provide good quality products and services at lower costs, while firms continue to operate profitably (Mahadevan, 2007). Based on his work, he designed a four-step cyclic process known as PDCA or plan-do-check-act. In addition to that, he also proposed a 14 point agenda for the improvement of quality.
Another guru of the quality management process was Joseph M. Juran. His approach complemented Deming’s and was based on the belief that quality problems faced by most companies are the result of constraints imposed by top-level management (Mahadevan, 2007). Juran developed an approach sometimes referred to as Juran’s trilogy, this approach focuses on three essential aspects, namely, quality planning, quality control, and quality improvement. Another of these gurus is Philip B. Crosby. He developed a quality management theory based on a theory he defined as the absolutes of quality management (Mahadevan, 2007).
Karou Isihikawa was perhaps the most prominent figure with regard to Japanese quality management. His work influenced the development of a bottom-up approach to quality management (Mahadevan, 2007). His work focused on companywide quality management and saw the creation of the quality circle within firms. The circle was given the goal of addressing organizational quality needs and progress.
Another guru was known as Shigeo Shingo. His approach was in the use of a systematic approach to understand how errors creep into any operation (Mahadevan, 2007). Following this he devised a method to totally eliminate such errors over time. This method is known as the Poka Yoke and was earlier mentioned in the case of BIL (Mahadevan, 2007). The final guru mentioned here is Genichi Taguchi whose main focus was to achieve quality by reducing variations in processes (Mahadevan, 2007). His idea was based on the notion that variations in process generally manifest as variations in production levels and quality of end product or service. His approach makes use of a loss function method to assess quality. This method measures the degree of deviation a process makes from expected target value.
Based on the variety of approaches used by the quality gurus to build quality, there are several conflicting definitions of quality. For this reason in defining quality a common approach to the consideration of dimensions of quality. It is reported that the easiest definition of quality is the conformance to specifications (Mahadevan, 2007). This definition focuses on the manufacturing process and suggests that as long as manufacturing specifications are satisfied then quality has been achieved. This definition has been found to be very useful for a manufacturing firm. This is due to the fact that workers on the floor need clear instructions to allow them maintain quality (Mahadevan, 2007).
Another definition of quality can be traced to customer needs. For example in the design of a scooter, based on the above definition if the manufacturing specifications are satisfied then quality has been achieved. However, it has been noted that this definition may not be true if the customer desires a lighter product. In this case an appropriate definition would requirement meeting specifications and customer needs. This brings in the aspect of considering how to meet specifications as opposed to merely following instructions (Mahadevan, 2007). Considerations such as material used will now play a major role in defining quality of the end product.
Another definition of quality can be based on fitness for use. This definition requires that the organization understands the preferred methods of use of prospective clients (Mahadevan, 2007). This understanding will require the organization to build customer relationships as well as the design and manufacturing processes. It has been observed that a variation of this definition is minimizing loss to society (Mahadevan, 2007).
Based on the variations existing within firms quality can also be defined based on dimensions (Mahadevan, 2007). One such dimension is performance and is based on customer performance expectations (Mahadevan, 2007). Another dimension is that of features which refer to additional attributes that add quality. Another dimension is that of reliability and is related to the ability to perform satisfactorily for a given period of time. Another dimension is related to conformance and this reflects on specifications. Other essential dimensions that may be used in definition of quality include serviceability, aesthetics and safety. These focus on the endurance, feel good factor and hazards (Mahadevan, 2007).
In relation to services it has been established that the provision of quality is a slightly more complex affair given the intangible nature of services (Chary, 2009). However, there are specific managerial considerations that have been outlined that can ensure the delivery of quality service. The first is the assurance to provide basic service, which suggests that the basic requirements of the service must be provided. For example it expected that a hotel should provide clean bed linen (Chary, 2009). In addition to that is the aspect of reliability with regard to service delivery. It is very important that the organization can reliably provide what it promises especially since services are more of a social interaction. This suggests that in such situations, building trust and credibility play a very significant role in the business agenda (Chary, 2009).
Another aspect that can ensure provision of quality in relation to services is based on communication. This communication of what to expect between an organization and a customer plays a major role in building trust and credibility between organizations and clientele (Chary, 2009). Given the intangible nature of services the evaluation of quality is also a fairly difficult task. For this reason several tools have been developed to assist in the task. Some of these constructs include checklists, cause-and-effect diagrams, histogram, Pareto chart, trend chart, scatter diagram and the process flow chart (McMahon & Yeoman, 2004). These methods are often referred to as the seven tools of quality control and are used at all levels within organizations (McMahon & Yeoman, 2004).
In motivating business organizations towards achieving excellent performance several countries have initiated quality awards. One of the earliest awards instituted in relation to quality management is the Deming prize (Mahadevan, 2010). Though awards may differ in selection criteria they all have similar key components such as a scoring system to rate performance of applicants. In addition to awards the provision of quality can be motivated through the issuance of quality certifications. These certifications are based on national or international standards bodies mandated to provide quality guidelines to be used within various industries (Mahadevan, 2010).
In relation to the discussion on quality management a trend based on customer satisfaction has emerged known as total quality management (TQM). TQM is not about quality in the traditional sense which suggests conformance but is more about total organizational excellence. The process is focused on turning all processes, products, services and people into profits for the organization (Chary, 2009). Based on this therefore, when a single task is done the entire energy of the organization is put into its execution.
This process is based on the satisfaction of both internal and external customers. This is significant because it has been observed that the ability to serve external customers relies heavily on an organizations ability to satisfy internal needs (Chary, 2009). For this reason it has been suggested that customer satisfaction must begin internally. The achievement of such broad changes suggests that there may be need to consider the organizational culture and observe whether it meets the future organizational goals.
Application of this Quality and Productivity Management in UAE
It has been reported that the current UAE President is committed to building on the economic model initiated by his predecessors (Al Abed, Vine, Hellyer & Vine, 2006). These efforts which included widespread economic reform and liberalization were widely applauded by the major international organizations such as the IMF (Al Abed et al., 2006).The development in this region is mainly financed by the strong oil sector but efforts are being made to diversify industry within the country.
The UAE diversification program is mainly focused on specific key areas identified including aviation, port facilities, tourism, finance and telecommunications (Al Abed et al., 2006). Among some of the strategies that have been used within the nation to assist in the diversification is the introduction of free trade areas. These areas allow foreign companies 100% ownership and have been used to encourage inward investment in the country (Al Abed et al., 2006). Through the use of this approach the country is able to attract investment and initiate technology transfer.
In addition to the free trade areas it has been noted that the regions strong financial governance reputation promises to allow the region continue providing quality financial services (Al Abed et al., 2006). As mentioned earlier in the report in service industries reputation is everything and must be built through credibility (Chary, 2009). Based on the World Bank rating of financial governance effectiveness the region is highest rated among Middle Eastern countries (Al Abed et al., 2006).
Based on this high rating it has been noted that there is plenty of confidence in financial regulation and based on this there has been marked growth in the country’s young and vibrant stock markets (Al Abed et al., 2006). This has led to a pattern of unprecedented growth that has seen the opening of the Abu Dhabi securities market, Dubai financial and more recently the International financial market.
In addition to building confidence in the financial sector the good regulations record has also played a role in improving the banking industry within the country. Based on this improved quality aspect of banking services within the region, it is reported that in 2004, there were 21 locally incorporated banks, while foreign banks had 25 head offices and 87 branches within the region (Al Abed et al., 2006). In total it was reported that there were 50 representative offices of foreign banks within the region in that year. These efforts with regard to quality have not gone unnoticed and were noted in the 2005 World Economic Forum report (Al Abed et al., 2006).
In this report three quality pillars were identified namely the quality of the macroeconomic environment, state of the country’s public institutions and the level of its technological readiness (Al Abed et al., 2006). After considering this the Growth Competitive Index (GCI) is calculated using available hard data. The 2005 GCI rated UAE at position 18 globally with a high score of 4.99 (Al Abed et al., 2006). It should be noted that the UK and Germany were ranked thirteenth and fifteenth globally. Based on this analysis it can be assumed that the UAE is making significant effort with regard to building quality.
In addition to that it was noted that the region was also assessed using the World Bank Business Competitiveness Index (BCI). This index specifically measure two areas in relation business namely, sophistication of company operations and strategy and the quality of the national business environment (Al Abed et al., 2006). The BCI performs this analysis with special reference to relation to the transparency of the environment, level of bureaucracy and the strength of financial markets within a region. Based on this index the UAE was ranked 33, again high on the list of developing countries and topping the list of GCC countries (Al Abed et al., 2006).
The rating further puts the UAE region 36th in relation to company operations and strategy and ranked 33rd in quality of the national business environment (Al Abed et al., 2006). This suggests that the region’s administration is making some serious headway with regard to quality management within the region and the world. In addition to those two rankings it was also noted that the Technology Index (TI) ranked the region 33rd globally. The region was again first among GCC countries with its closest competitor being Qatar at position 40 (Al Abed et al., 2006). This index is established after the measurement of internet access to schools, frequency of interruptions, government priority in ICT, personal computer and internet users per capita (Al Abed et al., 2006). This information can be taken to mean that technological absorption at a company level was significantly high.
The region has also made significant progress with regard to attracting foreign direct investment. The amount of foreign investment in country is reported to have grown fivefold in the period between 2000 and 2004 (Al Abed et al., 2006). It is reported that in 2004 about US$ 9 billion was invested in the country and it is projected that in 2005 the figure should surpass US$ 10 billion (Al Abed et al., 2006). In achieving this it has been noted that business opportunities and incentives alone are inadequate and as such attention has focused on creation of a good business environment that adopts best practice methods.
In addition to that the state is privatizing a number of state owned corporations to improve service delivery within and outside its borders. The region is also undertaking efforts to improve the local business environment by assisting in the clustering of similar businesses within various locations in the region (Al Abed et al., 2006). The state has also made efforts to promote the use of modern technology with the result that a large number of local businesses have established e-commerce activities to support commercial activities (Al Abed et al., 2006).
Personal Perspective
In relating the above reading to the UAE case one point that appears to be especially relevant is the fact that a large percentage of the GDP relies on oil and gas exports. Based on statistics from the region it has been observed that non oil related industries contribute almost 71% to the regional GDP (Al Abed et al., 2006). This position clearly shows that almost 20% of the regional GDP can be attributed to oil and gas exports. This becomes an issue when we consider the fact that Dubai’s oil reserves are limited and may not last long into the future. However, regions such as Abu Dhabi still have significant oil reserves and may therefore serve as an essential support mechanism for the regional economy for the future (Al Abed et al., 2006).
Given this position it is clear to see that the region should take urgent steps to identify alternative sources of income to continue to support economic growth. One approach that should be given due consideration in the region is to consider taking urgent steps to improve both quality and operations management within the region. This point comes to light based on the fact that the Japanese managed to enter Western markets and provide stiff competition to Western products taking advantage of the quality revolution (Mahadevan, 2007). It has already been noted that their main advantage in achieving this was by taking advantage of performance gaps that arose due to their ability to produce cheap high quality products (Mahadevan, 2007).
Using examples such as this one based on the current Japanese role in international business and others from regions such as India, the leadership should take action to allow the region benefit from the remaining oil resources. This is due to the fact that the region has already managed to do a lot of work with regard to diversification of industries.
References
Al Abed, I., Vine, P., Hellyer, P., & Vine, P. (2006). United Arab Emirates Yearbook: 2006. London: Trident Press Ltd.
Chary, S. N. (2009). Production and Operations Management. New Delhi: Tata McGraw-Hill.
Mahadevan, B. (2007). Operations Management: Theory and Practice. New Delhi: Dorling Kindersley (India) Pvt. Ltd.
Mahadevan, B. (2010). Operations Management: Theory and Practice. New Delhi: Dorling Kindersley (India) Pvt. Ltd.
McMahon-Beatie, U., & Yeoman, I. (2004). Sports and leisure operations management. London: Thomson Learning.