Free «Operations and Production Management» Essay Sample

Introduction

A profit motivated organization is that which unites resources for production and supply of goods and services. There are three main types of legal organization for a business such as proprietorship, partnership or corporations. Theoretically, a business can find itself, working in a market or an industry structured as monopolistic competition, oligopoly, monopoly or perfect competition. Irrespective of the structure, as a matter of fact, in business, profits pursue motivation for the attainment of goals and to sustain the competitive advantage.  This paper explains why TQM has become an essential tool for SME’s for their survival in the competitive market. (Hertz, 1982)

Total quality management (TQM) is as a philosophy of management and a way of thinking which has helped SMEs to achieve the world class status. These organizations are capable to produce qualitative production and services which surpass needs and expectations of clients. TQM helps to create participation, culture of trust, teamwork, quality mindedness, eagerness for the continuous improvement, continuous learning process and finally, standards of work that promote success of the company and existence.

This article examines distinctions between small and large enterprises TQM adoption. It will examine various models and frameworks used as a starting point for realization. Many of these frameworks observed are not well adapted for requirements of SMEs environment. Many experts have argued that a framework more convenient for small business can be developed to deal with shortcomings.

The enforcement of TQM is one of the most difficult kinds of activities that any company may face, the main reason being that it involves a change in the standard of work and influence employees. Glover (1993) in his arguments said, a large number of organizations does not understand the complexity of organizational changes and innovations. It will be suitable if sound enforcement of a framework can be realized to confirm successful implementation of TQM in any SME. The purpose here is not to compare each of frameworks in literature, but also to give the general prospects and understanding of the main similarities and distinctions. Once achieved, it will open direction for further development of a framework for SMEs and businesses.

II. Review of Literature

Definition of Small Business

There is no unanimity while defining a small business; distinctions exist between the countries, industries and even different state authorities within one country. Many authors, such as Hertz (1982) and Bolton (1971), have argued it in depth. Small enterprises belong to the same category of SMEs and considered to be those which employ less than 250 workers.

Differences between Large and Small Businesses

Before discussing implementations of various frameworks, first it will be appropriate to characterize sector of the small business taking into account the quality performance by comparing small and large enterprises. Thus, a small business can be put in a broad view, and it will be possible to analyze, why the current enforcement of the framework is not suitable for small business.

Corman and Lussier (1996) identified a list of distinctions which exist between small and large enterprises. After a careful analysis, advantages and disadvantages were added with respect to main characteristics. Its advantages that can stimulate TQM implementation process are the following:

1. It is a short decision-making process, and “a flat structure” allows quick information flow which can modify communications;

2. Low extent of specialization results in wider outlook of problems and issues instead of narrow functional views - is better in ensuring improvement of ideas;

3.  High transparency of management and proximity to the delivery point – easy to penetrate new change initiatives; the uniform culture represents an excellent basis for change, for example, TQM acceptance; 

4. High level of innovations can develop a culture of continuous improvement;

5. People dominate together with organic behavior, instead of a bureaucratic system and help to increase chances of success for new initiatives.

From the point of view of structure, people and processes, a small business, apparently is in an advantageous position for acceptance of new changes provided that management wants to implement leadership of a change process, along with profound knowledge about it. Small enterprises can provide high quality of work in terms of participation and high level of satisfaction.

There are also characteristics which can bring into unprofitable situation. The most noteworthy is human resources and financial constraint encountered by SMEs. Some disadvantages are following:

1. Lack of financial resources, which can affect investments, into new products and processes;

2. Training and development of the personnel to be unique and small scale efforts can become an obstacle in improving efforts;

3. Owner without delegating also tried to supervise each aspect of business - can strangle teamwork and participation;

4. Wrong and inadequate systems and procedures can affect efficiency and, thus, lead to dissatisfaction in employees, for example, incompatible industrial policy between different people.

These are some illustrations connected with characteristics of SMEs and small businesses. Advantages and disadvantages owing to small can form the shape of carrying out their improvement efforts. Many problems often challenge small enterprises, e.g. financial resources and lack of time, resulting in struggling with these problems. They are not able to focus on planning, to improve or even to accept new management techniques; but they can improve by adopting proper methods of improvement techniques and tools, which finally can rescue them from money wasted, and a lot of time through inefficient processes. However, due to the lack of appropriate management and blindly copying policies of their "big brothers" can be catastrophic. Hakes (1991) summed up quite successfully when he declared that small business should not be considered as prominent business. These characteristics should be understood clearly before trying to introduce or accept new initiatives, such as TQM.

III. Theoretical Framework

Implementation Framework Classification

From time to time, different developments take place towards various approaches, reflecting background of authors and experience. People divide various models and frameworks research into three categories, such as Consultants/experts based, awards based and academic based.

In principle, consultants-based frameworks are as a result of personal judgment and opinion through experience in rendering consultancy to SMEs and organizations relying on the Total Quality Management. Academic-based frameworks are usually developed by researchers and consultants by their own experience and research in the field. Though awards based frameworks are for those organizations, wishing to be recognized as leaders in the field of the quality management, some authors have recommended that they can act as guidance tools for implementation, while others give an opinion that they are more a self-assessment tool.

Small and Medium –Sized Companies’ Frameworks

Small businesses reveal many characteristics in last researches.  Ghobadian and Gallear (1997) offered a ten stage proposition for TQM in small and medium-sized enterprises. The first stage includes recognizing of needs, then understanding concepts and setting goals for quality improvement processes. For example, BS EN ISO 9000, apparently, indicates a step which calls for creation of systematic procedures, the direction that these procedures can solve problems with quality in small business. In fact, it is the preventive system of ensuring quality which should be the focus of attention here. Besides, there are numerous systems such as QS 9000 and AQAP for ensuring quality which can be developed, according to company requirements. 

Ho and Fung (1994) designed a stage-by-stage realization model applicable in small and medium-sized enterprises, which they named as TQM perfection model. It offers a step by step guidance for small and medium-sized enterprises, but it is extremely perspective and is apparently technically inclined with the Japanese, such concepts as ISO 9000, QCC, 5S. Ho and Fung’s model looks quite differently and incomplete from the model presented by kanji and Dale. It does not possess other key elements such as education, motivation, training, measurements aspects and cultural issues. QCC might be suitable for a peculiar industry or even a country. It is not the patrimonial concept, but a name for improvement of activity in qualities.

Asher (1992) represents practical guidance to implement TQM in small and medium-sized enterprises on the basis of his experience as an expert. He suggested creating a structure for defining responsibilities, improvement and appointment of quality coordinator. Stressing on education and vocational training for all in the organization, he categorically divided education into principles of training and absolute quality to be implemented by techniques and tools for problem solving.  A fundamental step is planning of improvements. Improvement efforts can be obtained from the initial assessment, internal customer problems and quality cost data or by concentrating on business processes. While providing the total constancy of quality, he recommended success measurement, and also communicating and acknowledging results. His framework can be summed up in four stages, namely: diagnostic, implementation, commitment and review. The diagnostic stage is necessary for diagnosing the need for change, which can guide management and employees from where to begin. Some tools Asher offered are as below:

1. Investigating quality cost;

2. Carrying out client perception surveys;

3. Data collection about perception of employees;

4. Establishing procedures and systems, for example, BS EN ISO 9000.

Asher implementation framework is quite straightforward; however, he believed that a small company or medium-size company already has a built-in system of data collection, such as quality costing. Companies, which do not possess data collection system, will require before carrying out a diagnostic stage. Some small companies and SMEs need to develop a suitable system, which can measure integration aspect from the very beginning, without a necessity of developing two separate systems for diagnostics and monitoring. Thus, improvement involves finding out what to improve, measuring expected results, analyzing with expected targets and reassessment for the continuous improvement. (Asher, 1992)

IV. Significance of the Study

Conclusion

The implementation of TQM has never been an easy task for many organizations. This article begins with the review of small businesses; it offered the definition and summarizes characteristics which can affect implementation of TQM. The study throws light that some advantages inherent in the sphere of SMEs can facilitate TQM acceptance in these organizations. Nevertheless, there are factors which can be unprofitable, such, as shortage of resources which demand attention when developing a suitable framework. It means that an ordinary framework will be suitable for small businesses.

This paper also considered various implementation frameworks mentioned in this literature. By categorizing them into various categories, consultant, academic and award based, it has thrown some light on similarities, differences, strengths and weaknesses exist between them. The majority of frameworks argued were not suitable for small business. Even if they seem to be suitable, they still suffer from some problems which are not according to the peculiar characteristics described in this article. This study has shown improvements are necessary to ascertain that small and medium businesses TQM implementation will be successful. Small businesses require much simpler approach than large enterprises. Some forms of gradual acceptance of quality initiatives can become a key, instead of totally blown assess to TQM adaptation, which will promote small businesses.