Research Objectives and Hypothesis

The evaluation of quality management practices in this study is based on the identification of eight critical factors of total quality management including: product/service design, process management, supplier quality management, training, employee involvement, quality data reporting, role of quality department and role of management leadership. This study has three objectives: (a) to examine the extent to which the eight critical factors of quality management are practised in ISO 9000 certified companies; (b) to study the impact of these critical factors of quality management on a company's quality performance; (c) to identify the areas for managerial action vital for integrating the ISO 9000 standard with Total Quality Management. To examine the impact of these eight critical factors of quality management on a company's quality performance, the following hypothesis was formulated and tested in this study:


There is a significant improvement in the quality performance of ISO 9000 companies and there exists negative correlation between each critical factor of quality management and the level of scrap/defect and customer complaints.

Sampling Strategy

The sampling strategy of this study solicited the participation of 60 crossfunctional managers from 20 companies distributed across the state of Karnataka, India. All these companies were selected at random from the Directory of ISO 9000 certified companies of India (1995). Of the 20 companies approached, 16 companies agreed to participate in this study. Atotal of 56 managers representing 16 ISO 9000 certified companies completed the survey instrument. Table 1 lists the sample companies and the number of responses received from each company.

The questionnaire and interview methods were used to collect the primary data in this study. Site visits were arranged to review the questionnaire results, collect additional data and conduct interviews with managers in cross-functional areas. Simple descriptive statistics were computed to analyse the extent of current practice of eight critical factors of quality management in ISO 9000 companies. Astatistical analysis of responses were carried out by using SPSS (Statistical Package for Social Sciences) (Hull & Nie, 1981).

The Research Instrument

The research instrument developed by Saraph et al. (1989) for measuring the manager's perceptions of the eight critical factors of quality management was chosen for the present study. Saraph et al. constructed their survey instrument from the writings of quality management scholars and professionals, and tested the instrument in 20 service and manufacturing companies in the Minneapolis/St. Paul area.

Table 1. Responses received by type and size of the company, and type of managers

Type/Size No. of Responses Percentage
A. Company type
(a) Manufacturing 53 94.6
(b) Service 3 5.4
Total 56 100

B. Size of the Company
(a) Large (>500 employees) 29 51.8
(b) Small (<500 employees) 27 48.2
Total 56 100

C. Type pf managers
(a) General managers 12 21.4
(b) Quality managers 16 28.6
(c) Production managers 14 25
(d) Human Resource managers 14 25
Total 56 100

Respondents of this study were asked to indicate the extent or degree of current practice of quality management in their organizations using a five-point Likert-type scale ranging from ‘Very Low (ó1) to Very High (ó5)' permitting rational interpretation of scale scores. Ahigher scale score indicated a high extent of current practice of quality management, while a lower scale score indicated a low extent of current practice of quality management. To study the impact of eight critical factors of quality management, two measures of quality performance—scrap/defect levels and customer complaints—were used in the present study. Each manager was asked to rate on a five-point Likert-type scale, the quality performance of their company for the past three years ranging from ‘Major Deteriorationó1' to ‘Major Improvementó5'. Ahigher scale score indicated a major reduction in scrap/defect levels and customer complaints, while lower scale score indicated a major increase in their levels.

Reliability and Validity

The internal consistency method (Nunnally, 1978) was chosen to assess the reliability of the research instrument used in the study. Using the SPSS reliability programme (Hull & Nie, 1981), an internal consistency analysis was performed separately for the items of each critical factor of quality management.

Table 2. Results of reliability analysis

Critical factors of quality management No. of items Mean S.D.
1. Product/service design 6 3.63 0.61
2. Process management 10 3.62 0.46
3. Supplier quality management 8 3.5 0.64
4. Training 8 3.23 0.78
5. Employee involvement 8 3.22 0.7
6. Quality data and reporting 8 3.42 0.66
7. Role of the quality department 5 3.87 0.59
8. Top management leadership 13 3.84 0.51

Table 2 presents the reliability coefficients associated with the eight critical factors of quality management. The reliability coefficients ranged from 0.80 to 0.93. Accordingly, the scales (measures) used here were judged to be reliable. The multiple correlation coefficients were computed for the eight critical factors of quality management (collectively) and two measures of quality performance (scrap/defect levels; customer complaints). The multiple correlation coefficients of the two measures of quality performance i.e. scrap/defect levels and customer complaints and eight critical factors of quality management were 0.53 and 0.64 respectively, indicating that the eight measures have criterion-related validity.


It appeared that all the respondent companies practised eight critical factors of quality management, although not to the same degree. The mean implementation rate for the eight critical factors is above the midpoint value of three on the fivepoint scale. Among the eight critical factors, respondents indicated a heavy reliance on the role of the quality department for managing product/service quality, followed by the role of management leadership. The results of Pearson's product moment correlation analysis between the mean values of the eight critical factors of quality management and the mean values of two quality performance measures (scrap/defect levels, and customercomplaints) were used to test the hypothesis. Table 3 reports correlation results. The correlation coefficients of scrap/defect levels and customer complaints were negatively related to all eight critical factors of quality management (independent variables) indicating a decrease in the levels of scrap/defect and customer complaints (dependent variables). Most of the correlation coefficients were statistically significant and thus supported the hypothesis. However, there were two exceptions. The correlation coefficients of the quality data and reporting and the role of management leadership were negatively—but insignificantly— related to scrap/defect levels.

Table 3. Results of correlation analysis

Critical factors of quality management r p-value r P-value
1. Product/service design -0.283 0.035* -0.527 0.000**
2. Process management -0.365 0.006** -0.469 0.000**
3. Supplier quality management -0.365 0.006** -0.469 0.000**
4. Training -0.301 0.024* -0.643 0.000**
5. Employee involvement -0.302 0.024* -0.503 0.000**
6. Quality data and reporting -0.210 0.121 -0.468 0.000**
7. Role of the quality department -0.377 0.004* -0.493 0.000**
8. Top management leadership -0.180 0.184 -0.395 0.003**
**correlation is significant at the 0.01 level (2-tailed)
*correlation is significant at the 0.05 level (2-tailed)

Product/Service Design

Product/service design is crucial to the quality of an end product/service. Statistically significant correlation coefficients for product/service design to scrap/ defect levels (-0.283) and customer complaints (-0.527) revealed that this critical factor had resulted in improving quality performance in ISO 9000 companies. The important critical sub-factors of product/service design consideredin this study include: design review, coordination, clarity of specifications, etc. In most companies, new product/service design reviews were conducted to ensure reliability, maintainability, safety and producibility for achieving an optimum design. Concurrent engineering was practised by these companies, which emphasized the cooperative relationships throughout the product/service design. Representatives from manufacturing, marketing, purchasing, and quality, as well as external suppliers met with design department representatives to articulate the details of product/service design. This team also examined the producibility of product design by focusing on simplifying a design to make it more producible. The value engineering technique was practised for the costeffectiveness comparison of alternative designs. Thus, companies emphasized design quality to achieve waste reduction through building quality into products and services. They also realized that costs of preventing problems at the design stage are usually much lower than costs of correcting defects that occur downstream.

Process Management

Process management emphasizes conformance to customer requirements by means of defect-free output in the most efficient manner. The key aspects of process management examined in this study include process design, preventive equipment maintenance, inspection, and automation. Most of the companies reported that they had created a ‘foolproof' process design, which minimized the chances of employee errors, ensured a stable production schedule, and a high clarity of work instructions. Accordingly correlation coefficient for process management to scrap/defect levels (-0.362) and customer complaints (-0.573) are statistically significant.

The companies under study hardly practised preventive equipment maintenance. One company that claimed implementation of total productive maintenance was met with little success in the absence of total employee involvement. All companies reported that they had relied on statistical sampling inspection for incoming materials. If defects were found, inspection then expanded to a larger number of units. To facilitate incoming inspection, most of the companies had been using acceptance sampling extensively. Companies used in-process inspection as part of statistical process control to identify trends before nonconformities actually occur. The last opportunity for the manufacturer to verify the product's overall compliance with the customer's requirements is the final inspection. Evidently, all the companies accorded priority to the final inspection. Automation that would have increased efficiency and transparency in inspection were not fully used in process management, and in inspection.

Supplier Quality Management

Statistically significant correlation coefficients for supplier quality management to scrap/defect levels (-0.365) and customer complaints (-0.469) showed that this critical factor had resulted in improving quality performance in ISO 9000 companies. The five key aspects of supplier quality management—selection of suppliers, number of suppliers, long-term relationships, supplier rating system and supplier development—were examined in respondent companies. Without adequate measures of quality, business drifts to the lowest bidder, low quality and high cost being the inevitable result. Because of this, the companies in this study reported that suppliers were selected on the basis of quality at the most economic price. Materials and parts can be purchased from multiple suppliers or from a single supplier. Most of the companies under study did not depend entirely on a single supplier. However, a clear trend has emerged: they significantly reduced multiple suppliers for the same material or part, to a
few dependable suppliers and they maintained long-term relationships with them. A supplier can be innovative and develop economy in his production processes when he can look forward to long-term business with a purchaser. Thus, choice of a single supplier for a given material may be wise. An effective supplier rating system was practised mainly for the purpose of identifying the reliable suppliers

as well as to motivate them toward continuous improvement of quality. To some extent, a supplier-rating system is incompatible with the idea of a long-term relationship between purchaser and supplier. The buyer adopts a position of superiority related to the supplier. Care should be taken so that a rigorous supplier-rating system should not harm the trust and long-term relationship with suppliers.

Supplier development is an important activity for providing a strong base for the continuous supply of quality material and building mutual trust. Supplier development requires investment of time, money, and manpower by the purchaser. However, Indian companies accorded lower priorities to a supplier's education, technical assistance and supplier's involvement in the product development process.


‘Quality control begins with education and ends with education', said Ishikawa (1985). He added: ‘QC is a thought revolution in management, therefore the thought processes of all employees must be changed. To accomplish this, education must be repeated over and over again'. Analysis of training in this study includes four key aspects: technical training, statistical techniques training, quality-related training and top management's commitment to employee training. Technical training is intended to meet the needs of a high performance at the workplace, as it affects employee efficiency and safety. Depending upon the nature of the company's work and the employees' responsibilities, ISO 9000 certified companies in India had imparted technical and vocational training to all employees for reinforcement of knowledge and work skills. Employees need to be trained in statistical techniques for better quality management. The statistical training programme of the companies under study focused more on basic tools and less importance was given for training in advanced statistical techniques. Quality-related training is also needed to develop appropriate attitudes and values relating to quality. Typically, it covers the strategic importance of quality, respect for customers, belief in the fact that the next process is a customer, problem solving, teamwork, waste reduction etc. This implies implementation of a total quality management system. Many ISO 9000 companies attempted to impart training in Total Quality Management, but only at the managerial level. It needs to be cascaded down to every employee in the organization. Since quality management is a company-wide concept, it requires substantial investments in both time and money. This is one of the first steps of management's real commitment to pursuing a path of meaningful quality improvement. The respondents ranked commitment of the top management to employee training as high. However, the same was not reflected in making the resources available for employee training. The data collected from these companies indicate that the average number of man days of training given per employee per year during

1996-97 to 1998-99 ranges from 0.91 days to 6.48 days in different companies. By contrast, the corresponding average man days of time spent during the same period for training in quality control in different companies ranges from 2.4 days to 27.5 days in Denmark; 14.7 days to 32.5 days in Japan; and 12.7 days to 50.8 days in Korea (Dahlgaard et al., 1990). This conclusion is also supported by a weaker, although significant, negative correlation between training and scrap/ defect levels (r-0.301), and customer complaints (r-0.463).

Employee Involvement

Statistically significant correlation coefficients for employee involvement to scrap/defect levels (-0.302) and customer complaints (-0.503) showed that this critical factor had resulted in improving quality performance in ISO 9000 companies. The workforce is the primary producer of the output for customers. Their cooperation and personal commitment are essential. By personal involvement in quality activities, employees acquire new knowledge, see the benefits of quality management, and obtain a sense of accomplishment by solving problems. One such mechanism for employee involvement is the concept of quality circles. Quality circles are a people-building, rather than a people-using, approach (Crocker et al., 1986). They aim at making every worker a decision-maker concerning his own work. Many ISO 9000 certified companies attempted to implement quality circles with the help of the Quality Circle Forum of India, a not-for-profit organization engaged in promoting quality circles in India. These companies, however, relied heavily on the knowledge and skills of first-line supervisors and middle-level managers to understand and solve quality-related problems on the shop floor. In many companies, the degree of participation in quality decisions by employees was low, since decisions on whether a process should run or stop, and whether a product conforms to specifications or not, were made by managers. However, in one company, the concept of self-inspection by production workers was successfully practised and production workers made product-conformance decisions. In practice, many managers have the conviction that they dare not delegate the decisions of process or product conformance to workers. As a result, employee involvement and empowerment had taken least priority in practice. Recognition and rewards play an essential role in inspiring employees on quality. Employees in ISO companies were recognized and rewarded individually for their superior quality performance, not collectively as a team. The main barriers of employee involvement were lack of top and middle level management commitment to employee empowerment, and the prevailing adversarial relationship between management and unions.

Quality Data and Reporting

Quality measurement and reporting is a matter with which management at all levels is frequently preoccupied. Established criteria of measuring overall quality performance of an organization are scrap/defect levels, cost of quality, customer complaints, and so on. Defect levels in manufacturing are a fundamentally crude measure of effectiveness, yet a measure that has attracted a lot of attention in recent years, with the popular zero defect approaches to quality improvement (Tannock & Earl, 1990). The criterion of scrap/defect levels in manufacturing is useful because it is easily understandable by all, and requires little analysis. Almost every company collected the quality data in the form of inspection and test reports, in-plant scrap and defect levels, and customer complaints, and used them to manage quality. Defect levels are usually expressed as a percentage of total production. An alternative adopted when defect levels are low is to express the defect level as parts per million (ppm). As actual defect levels were high, none of the companies under study expressed their defect levels in parts per million.

Cost of quality is yet another criterion of measuring quality performance. ‘Quality is measured by the cost of quality, which is the expense of nonconformance—the cost of doing things wrong' (Crosby, 1980). These costs are divided into prevention, appraisal, and failure categories. Most of the companies used a conventional accounting system that did not help them to measure cost of quality effectively and, moreover, many costs associated with quality activities found their way into manufacturing or general overheads. Quality data were available to the managers and supervisors, as they were considered part of the quality management team. Utilization of quality data to evaluate managerial performance was comparatively low. Quality policies, quality objectives, and quality slogans were extensively displayed on the shop floor. However, the display of quality data was very low due to lack of information sharing with workers. Ineffective quality data and reporting were supported by insignificant negative correlation with scrap/defect levels (r-0.210). However, quality data and reporting were significantly, and negatively, related to customer complaints (r-0.468).

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