Role of total quality management IT BPO industry

Role of total quality management IT BPO industry About Services and Quality: Services lie at the hub of economic activity. They touch the lives of each individual in this world. Today firms differentiate themselves in the market place by offering their customers a service guarantee. Every organisation has their operations and they would involve in outsourcing the business function operations to a third party service provider. In turn every organisation would have a business process outsourcing unit. In this competitive world, service providers are having different strategies to sustain in marketplace. Every organisation would appeal to their customers to distinguish themselves from their competitors maintaining the important characteristics called as Quality. It must be the key goal in the operations functions as well as all other parts of the company. Quality is vital in determining the economic success of companies (Curkovic et al., 2000; Garvin, 1988) every world-class company gains competitive edge and has greater market share through extraordinary levels of performance by providing quality services with competitive prices as required by demanding customers. However according to Sila (2003) the definition of quality have been debated for many years by quality management researchers and a number of definitions have emerged. However, there is still no universal agreement on these definitions. As far as the definitions of quality are concerned, some of the quality pioneers coined the following terms: Feigenbaum (1951) and Abbott (1955) defined quality as value, Levitt (1972) as conformance to specifications, Juran et al. (1974) as fitness for use, Crosby (1979) as conformance to requirements, Taguchi (1981) as the losses a product imparts to the society from the time the product is shipped, and Gronroos (1983) and Parasuraman ct al. (1985) as meeting and/or exceeding customers expectations. Today, the most widespread definition of quality is the extent to which a product or service meets and/or exceeds a customers expectations (Reeves and Bednar 1994), which rellects a shift in focus to customer satisfaction. Companies implement various management, controlling as well as planning tools and management insists that these would have a greater effect on the company performance (Tanninen, 2010). It is very essential for any industry to sustain their competitive advantage. To achieve this, companies have to maintain their quality in service delivery. There exists some quality tools used by various organisation are ISO 9001, TQM, Sig sigma, CMMI. Global firms are exploiting the nation specific returns with the help of sourcing the important services from various different vendors across the globe that are capable of delivering good quality or cost advantage over the local domestic suppliers (Friedman 2005). Most of the basic outsourcing services would be listed in the experience services or goods (Nelson, 1974). In case of services or goods the judgement on the quality can be made only once it is consumed or purchased. However the companies would face a challenge in setting target in case of quality and productivity and particularly in case of vendor selection, manager faces information asymmetry problem. Quality is considered as everybodys responsibility and prerogative whether it is a service line of the staff function in any organisation. Various authors have defined quality in different ways. The highest priority is given to the product quality that satisfy customer. The customer would have the win-to-win situation and has value for money. Customer satisfaction is considered as the main objective along with maximum profitability to an organization and including the service and everything in an organization that contributes to making a service requires quality (GROVERY et al., 2006). Total Quality Management (TQM) Total Quality Management(TQM) means achieving quality in terms of all functions of the enterprise. This includes interaction between all the components of the organisation as well as the components themselves. TQM aims to achieve an overall effectiveness higher than the individual outputs from the sub-systems, such as design, planning, production, distribution, customer focus strategy, quality tools and employee involvement (HAFEEZ,2009).The introduction of total quality management (TQM) has played an important role in development of contemporary management. Quality, considered a key strategic factor in achieving business success, is more than ever required for competing successfully in todays global market place (Dean Evans, 1994), and it has become the key slogan as organisations strive for a competitive advantage in markets characterised by liberalisation, globalisation and knowledgeable customers . aims and Objectives The aim of this research is to focus on the implementation and challenges of Total Quality Management (TQM) in IT Business Process Outsourcing (BPO) industry and also recommends how to improve the TQM process. To explain about why the organizations implement and do not implement TQM as their quality improvement tool. To understand how TQM can be implemented in an organisation To identify what are the different gaps/barriers in the implementation process of TQM and would provide the possible solutions to overcome the gaps. Outline of the Research The research is on implementation of TQM in a BPO service industry and the methods how it can be carried out in a service life cycle is discussed. The research is carried out in several chapters. The initial first chapter gives insight about the TQM basic concepts and its various functionalities that are currently followed by the industry. In addition to that it also discusses about the key aims and objectives that are initially proposed based on the questions that are meant for the research in the literature. Next chapter, literature review discusses about views and arguments of various authors form different academic articles and books. It is focused on the implementation of TQM in the service industry and particularly in case of life cycle of projects in BPO industry. In addition to that it talks about the changes the company would get in case of implementation and the methods for prioritizing the projects. It also discusses about the advantages of the implememntation of TQM and t he challenges faced by the management during implementation. Finally it concludes with the ways to overcome with the challenges. The chapter three of the research highlights about the research questions and the method of research carried out to conduct the research and also the structure of the research.It also introduces the study of methods that needs to be followed will be identified namely questionnaires for emails or interviews are sorted. Later, based on the initial findings of my personal observation has identified to use the qualitative research methodology in this chapter. Then it also talks about the data collection from primary means from respondents and validating the literature review to support or contradict based on the findings of the data analysis chapter. The later chapter would finalize the research with the help of valid arguments resulting from analysis and literature review with would rise to further recommendations in the same industry and also different indus tries as well. It also discusses about the further research that can be carried out from this research. The research finally gives the limitations of the study and research with valid references at the end of the research and supportive documents in the appendix which covers the questionnaire that is designed targeting the real time experts actively working on TQM projects and also includes the responses that were sent in the email. Research questions Why and how should organisations implement TQM? What are the factors for successful implementation of TQM in organisations? What are the challenges or barriers occur during implementation of TQM? How can the challenges be resolved and what are the alternatives for TQM that are being used in various organisations? LITERATURE REVIEW introduction This chapter discusses about the research questions that were outlined in the introduction to fulfil the aim and objectives of the research. Initially the first section in this chapter discusses about the origin of TQM and the different ways that TQM had provided to various problems using the traditional quality management. The next section focuses on the evolution of TQM and how TQM has changed the world. Later section deals with the reasons for companies implement TQM over other alternative quality management tools. The next section deals with the TQM methodologies and introduces various models followed by the service industry and also using this models how can the companies improve their quality standards. Then the success factors, benefits and challenges faced during the implementation of TQM are discussed. Origin of TQM The TQM started in 1920s which focused on statistical process control(SPC) (Juran,1997; Godfrey,1986). It is based on the philosophical, statistical and scientific foundation where it makes use of the knowledge to continuously improve the variations in the systems and later became major elements(SHAMS-UR RAHMAN). Process control charts was developed by Shewart to develop different strategies for continuous improvement and to understand the variation (Shewhart,1931; Juran,1997). This chart later called as Shewhart/Deming/ PDCA cycle (Deming, 1951). Shewhart had identified and succinctly defined a central quality management problem,f ormulated a mathematical model for it,and created a tool for its Solution (Kolesar, 1993:320). Later in 1950s SPC methods, behavioural concepts and also various technical methods were together termed as TQM. TQM is an approach to management that has evolved from a narrow focus on statistical process control (SPC) to encompass a variety of technical and beh avioural methods for improving organisational performance. (Dean Bowen, 1994:396). Evolution of TQM Changing from detection to prevention required not only the use of a set of quality management tools and techniques, but also the development of a new operating philosophy that required a change in the way companies were managed ( HAFEEZ et al., 2006).TQM is achieving the quality in every department and functions of an organisation, which includes the communication and interaction between all the departments and components of an organisation and also the interaction between components themselves. The overall effectiveness is more profitable and effective than the individual outputs from the sub departments or systems, which includes design, planning, production distribution employee involvement, focus strategy and finally quality tools. (ibid). TQM aims to achieve the overall effectiveness. Customer satisfaction and continuous improvement are the key essential beliefs of the TQM philosophy as mentioned in the figure 1. Initially the inspection-based system focused on sorting the proc ess and then would take corrective action in case of error. Then it moved to quality control where the processing of performance data with full time inspection is carried out. Later moved to Quality assurance where the design of system audits and also quality planning is carried out with the process control as a target. Finally it reached TQM where involves human values and shared vision and culture. This uses a system approach to solve problems with renewed focus on the internal and external customer and also generates employee involvement. The main aim of TQM is continuous improvement of tangible work process. Figure1: Evolution of TQM Source: (HAFEEZ et al., 2006) Oakland (1989) defined TQM as an approach for improving the competitiveness effectiveness, and flexibility of an organisation. Essentially it is a way of planning organising and understanding activities and individuals at each level. However it is argued, quality management is characterised by the strategic goals that are focussed towards customers preferences, likes, tastes, and applications. Ishikawa is known for developing various statistical tools for quality problem solving and he emphasised the idea of the internal customer, the next person in the process (Ishikawa, 1990:50). According to author the basic idea of quality circles that is a small group of employees who deal with quality problems. In addition to this the companies has to focus on the quality standards on the service design stage where this happens before development stage and the changes would be easier and cost effective compared to development stage (Taguchi, 1999). The service companies have to focus on the qua lity at the earlier stages to reduce cost. Changes at the later stages would result in huge cost. To achieve this, a benchmarking tool for quality is used by the top managers to build a quality culture with in an organisation involving all the employees with an active leadership role (Kanji,1997).Zairi (1998) provided a comprehensive tool for organisations to undergo a two-stage external and internal benchmarking exercise, and stressed the role of leadership for implementing continuous improvement. Importance of TQM It has been observed that the importance of quality has been drastically increased over past two decades. Organizations are considering measures in terms of improving the quality standards across the organization and the industry that would result in increase in business and hence profits (RAHMAN, 2004). Among the quality tools TQM has growing interest over the period and also it the effective strategy for most of the companies that would result in competitive advantage (MartÄ ±Ã‚ ´nez-Lorente et al., 1998). TQM is considered as the management approach for continuous improving organizational performance that consists of both technical and behavioral aspects (RAHMAN, 2004). Moreover this is also mentioned that fact that the only quality initiatives are not possible to increase market share and profitability however, it is argued that the TQM programs lead to improved financial performance but fails to recognize other elements (Kannan et al., 1999). It is also argued that there i s no assurance that TQM would yield profits to business since it is dependent on various other factors (Montes et al., 2003). However, it is evident that the TQM has various beneficial effects on organizational performance (Terziovski et al., 1999). TQM is flexible to implement hence every organization considers TQM in different way. Firms top management has the full authority in implementing the TQM. It totally depends on the top management to implement based on their expertise and knowledge that has an effect on organizational performance and haence increase in the business. However as per Brah et al., (2002) the benefits like cost effective, increase in productivity and impact on profitability would increase the firms competitive advantage. In addition to that it is also mentioned that there exists a positive relationship between TQM and the financial performance (Handfield et al., 1998). Two processes carry this out: firstly, effective improved internal performance by the employees in the organisation would lead to reduction in waste, increase in efficiency and productivity and increase in return on assets. Secondly, increasing in customer satisfaction would result in the increase in word of mouth, loyalty and brand value. These are most effective marketing techniques and would result in increase in market share and yields high profits (ibid). Lakhal et al. (2006) reveals that there is a positive relationship between quality management practices and organisational performance.In case of human resource management along with TQM it is found that the quality performance gets affected particularly regarding the customer and employee satisfaction(Yang, 2006). To avoid this, the customer and employee satisfaction and streaml ined process would produce effecive and positive operational and financial results that would lead to improvements in business and yield profits( Vora, 2002). In addition to that the TQM is also concerned with productivity, timeliness and flexibility as well as profitability along with quality (Pegels, 1994). It is observed that adopting the TQM philosophy and practices would result in positive growth in any organization or industry (Hides et al., 2000). However according to Ford Evans (2006), there exist many conflicting results and also opinions on the effects of TQM. Additionally the random effect Meta analysis is used to study effects of TQM (Shenawy et al., 2007). He also suggested a model for TQM that has five components: top managemnt commitment and leadership, teamwork, organization and work culture, training and education and finally the process. Each of these components would result firms in competitive advantage (ibid). In the present competitive world the where customers have various choice of services and hence they become automatic focus for success in business. The potential of just in time or total quality control in developing nations laid the foundation for future quality and productivity (Ebrahimpour and Schonberger, 1984). TQM is viewed as an organization-wide philosophy requiring all employees at every level of an organization to focus his or her efforts to help improve each business activity of the organization (Mehra et al. 2001). The aim and objective of TQM is customer satisfaction and achieves incremental improvements and that involves full participation of all the stakeholders and employees in the organization (Tigineh 1997).In addition to that Saad and Siha (2000) have viewed TQM as a revolutionary concept in different phases of quality evolution from inspection to quality control to quality assurance to TQM. Every author has their own definition for TQM, over many years the TQM is redefined as Managing the attributes that affect the subsystems quality in any organization that helps in achieving planned and desired goals and fulfilling the challenges in terms of time and cost. The desired benefits of TQM are unarguable. Organizations adopt TQM not only for the stated reasons but also for the offshoots of the benefits, which are referred to here as implied reasons. However, preparation for realizing the fruits of TQM is challenging. Referring again to the proposed definition of TQM, to achieve the above goals, quality in each subsystem of an organization is required. TQM methodologies in Service Industry: According to Zairi et al. (1994), TQM is only a license to practice. According to Hoogervorst et al. (2005), successful implementation of TQM and the benefits obtained by using the approach and would depend upon various factors such as organization structure as well as culture and also management practices particularly involving human resources. This approach should align with the corporate strategy (Fuentes et al., 2006). One of the most important dimensions of TQM and a critical success factor of TQM implementation is a proper performance measurement system (Bititci et al., 1997; Brah et al., 2002; Mehra et al., 2001; Neely et al., 1995). It is mentioned that the existing traditional performance measurement systems that are developed from accounting and costing systems and these are not considered in TQM environment and are not suited (McAdam Bannister, 2001). Any organisation could be placed on a continuum of sustainability as implied by the sustainability model shown in Figure 2, which links the goals, drives, and strategies and performance of TQM initiatives. Figure 2: Model of sustainable TQM and performance Soure: (Zairi, 2006) The model is based on the following assumptions: TQM is an integrative and holistic approach for analysing the current status of continuous improvement within an organisation. TQM is not a quick fix, and thus has to be approached from a long-term perspective. Prajogo and Sohal (2003a) investigated the relationship between TQM and organizational performance by exploring six TQM practices proposed by Samson and Terziovski (1999). These practices are divided into two groups: mechanistic elements and organic elements. Mechanistic elements include customer focus, process management, strategic and planning, information and analysis, while the organic elements are leadership and people management. This categorisation was based on Krugers (1998, 2001) proposition that TQM should include a combination of both people (soft element) and technical systems (hard element). The mechanistic elements (customer focus, process management, and so forth) could be considered the hard aspect and the organic elements (that is, leadership and people management) represent the soft aspect. Kruger (1998) emphasised the human aspect of TQM, because only the humanistic orientation of TQM towards organizational analysis will allow successful TQM in actual practice. Acc ording to Prajogo and Sohal (2003a), justification for using Samson and Terziovskis model (1999) is that this model constitutes the criteria of the Malcolm Baldrige National Quality Award (MBNQA) that has been accepted to represent TQM strategy by several scholars such as Evans and Lindsay (1993), Juran (1995) and Ahire, Landeros, and Golhar (1995). The relationship between TQM and organisational characteristics in Service Industry The relation between TQM and organizational characteristics is considered to be important. Many previous studies have been publishes that directly examined the relationship. The organizational characteristics would include the organization size, ownership, industry type and TQM practices that result in innovation of new ideas. It has been identified by many studies that the organizational characteristics are considered as variables that moderate the relationship between TQM practices and organization performance (Choong, 2004). 2.6.1 Organization size and TQM The organizational size is considered as the important factor for TQM. According to Terziovski and Samson (1999) the significant differences between TQM and the performance of the organization, considering the company size in case of a new service delivered. The larger organization is benefitted more compared to the smaller organizations in terms of TQM. It is also considered that there are no operational differences in terms of organizational size in the process of TQM implementation and is applicable and also firms delivering high quality services either large or small companies implement TQM equally (Ahire and Golhar 2001 cited in Hoang, 2010). However according to Haar and Spell (2008) the importance of organizational size in identifying the TQM adoption rates and to predict this rates there exists some factors such as workplace autonomy, performance standards, usage of the work teams and collective problem solving and in all these factors company size is considered as a moderati ng variable. The authors also mentioned the factors are applicable to larger companies than smaller companies. Moreover it is also demonstrated that the smaller firms have challenges such as limited access to market and have low market share, and inadequate resources and lock of expertise in management. However they have advantages as well such as flexibility due to les constraints and would have full freedom for generating innovative ideas that lead to successful implementation of TQM as effectively compared to larger organizations. 2.6.2 TQM and ownership In an organization, the successful factor responsible for growth is culture. The relation between employees and the nature of work and the working environment are considered as crucial. The organization culture is influenced by the nature of corporate ownership (Yavas Rezayat, 2003; Hui, Au, Fock, 2004). In this case the management should have the thorough understanding of implementation of TQM strategy. This would result in implementing effectively. The cultural differences have to be balanced by he management. Implementation of TQM varies as per the culture in many countries. There exist many cultural differences between countries. The organizations having global footprint formulates a TQM strategy where it is common to all the countries. All the teams follow it across the globe in those firms. This would result in successful implementation of TQM. For instance, it is found no evidence that involvement of employees influences culture in Chinese based firms and considered to be th e TQM practice (Pun, 2001 cited in Hoang, 2010). IT is also found that the values in Chinese firms are abasement, addictiveness and harmony with people and with universe, interdependence and respect for authority are the main factors that influence the dimensions for TQM (Noronha, 2002).Regarding the culture , the experience of firms in Australia and Singapore is compared with respect to the TQM multidimensionality and the relationship of TQM with the quality performance and innovation (Feng et.al., 2006). It is very important to link cultural values that are influenced by the ownership to TQM practices and also business results. This would result in successfully implementation of TQM. 2.6.3 TQM and Industry type TQM is started with the manufacturing industry and was applied to many firms. The successful implementation of TQM in manufacturing resulted the practitioners in exploring the possibilities of applying the TQM to the service industry (Hoang et.al., 2010). Even though the industries are different and the development of TQM is different in service literature compared to manufacturing the core TQM concepts or principles are related or relavent to the service sector (Silvestro, 1998). In addition to that the there are the principles of TQM are also called as soft side. The investigation of soft side of TQM resulted in nine principles namely Total Employee Involvement, Continuous Improvement, Continuous Training, Teamwork, Empowerment, Top-management Commitment and Support, Democratic Management Style, Customer/Citizen Satisfaction, Culture Change ( Psychogios, 2007). Additionally, it is also stated that the service sectors that are also called as mass service has a similar process to man ufacturing industry that is applicable for TQM practices (Woon, 2000). The author also found that there was no significant difference between manufacturing and service companies in the implementation of soft TQM elements. Prajogo (2005) suggested that, with the exception of people management, there is no significant difference between manufacturing and service firms in terms of TQM practices and quality performance. He even identified the service sector has having higher scores in people management than the manufacturing sector. According to (ibid), the plausible reason is that manufacturing firms essentially rely on advanced manufacturing technology to achieve high level of quality (precision) and other operational performance aspects. In service organisations, human resources play a critical role in determining the product/service quality, specifically on non-physical dimensions such as customer responsiveness, courtesy, and empathy. In addition, beyond tools and techniques, TQM now has developed into a management philosophy that comprises a set of generic core principles applied in different industries (Dean Bowen, 1994; Grant, Shani Krishnan, 1994, Sitkin, Sutcliffe, Schroeder, 1994). This argument shows a fundamental base to support the applicability of TQM in service firms that can benefit from implementing this management philosophy (Prajogo, 2005). However, it has been noted differences between manufacturing and service organisations that could limit applying TQM in services (Silvestro, 1998; Sureshchandar et al., 2001; Prajogo, 2005). Firstly, compared to the measurable, standardised characteristics of manufacturing products, the intangibility and heterogeneity of the service output makes a remarkable di fference. Secondly, the concept of service quality is dominated by non-physical components (courtesy, responsiveness, and accessibility) (Zeithaml, Parasuraman, Berry, 1990) that are more difficult to define and, therefore, more difficult to measure. Thirdly, the consumption and delivery processes in the service organisations usually take place at the same time, making it difficult to control the quality of services provided. Compared to manufacturing firms, service organisations generally use fewer quality tools and show a lower level of TQM implementation, particularly in hard TQM elements such as statistical process control, information analysis, process management (Badri, Davis, Davis, 1995; Beaumont, Sohal, Terziovski, 1997; Woon, 2000). 2.6.4 TQM and degree of innovation Innovation is the key part in any success. The organization generating innovative ideas would grow faster. In terms of TQM innovation plays a major role. Considering the relation between TQM and innovation there exists two basic concepts. Firstly, TQM supports innovation i.e., that organisations that implement TQM will be successful in innovation. Secondly, It is argued that TQM impedes innovation. The main debatable issue is whether or not the nature of TQM practices fosters innovation. The supporting perspective is based on the argument that the TQM practices, in both its human and technology dimensions, help to create an environment and culture that support innovation. One of the core components of TQM is customer satisfaction. Companies that implement TQM have to explore and find ways to serve customer needs and expectations at the best. This creates the impetus for companies to be innovative in developing and launching new products or services to match the customers needs. Several studies also identified a positive relationship between TQM and innovation in terms of the speed to market (Flynn et al., 1994), and the level of innovation in organisations (Baldwin Johnson, 1996). Terziovski and Samson (2000) tested the strength of the relationship between TQM practices (independent variables) and organisational performance (dependent variables) in a large random sample of man ufacturing companies in Australia and New Zealand. They considered innovation as a dependent variable that represents organisational performance measured by the number of new products produced, but could not confirm a significantly positive effect on innovation across the whole sample. However, when co-varied for industry type, the strength of the relationship between TQM and innovation changed from insignificantly positive to significantly positive, suggesting that the relationship between TQM and innovation is strengthened when investigated for a specific industry type. Specifically, potential clients need information on a vendors ability to deliver quality services, and vendors need to provide potential clients with some indication of their capabilities. Success Factors of TQM in Service industry: TQM is mainly related to customer satisfaction and company profitability. It also includes the intellectual property rights, services and overall quality of the product. To improve these elements, planning, structuring and following or controlling the application tools, techniques, human factors agents that are influencing and support system with ideas are some factors responsible in the improvement of TQM (Grover et al., 2004). The positive impact on customer satisfaction in case of implementation of TQM is observed in many industries. It is also mentioned that positive effect of the TQM on fast food, gaming, investment banking industries (Yasin et al., 2004). TQM is not considered as a static activity since it is flexible and adaptable according to the dynamic management activities. These activities can uide the companies to gain huge market share and become more competitive and fast growth successfully facing all the challenges and opportunities provided b