Continuous Quality Improvement A Model For A Service Organization

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CONTINUOUS QUALITY IMPROVEMENTA MODEL FOR A SERVICE ORGANIZATION
A Thesis
Presented
to the Faculty o f
California State University Dominguez Hills
In Partial Fulfillment
o f the Requirement for the Degree
Master o f Science
in
Quality Assurance
by
Alias Bin Jalaludin
Fall 1998
UMI Number: 1393850
Copyright 1998 by
Jalaludin, Alias Bin
All rights reserved.
UMI Microform 1393850

Copyright 1999, by UMI Company. All rights reserved.
This microform edition is protected against unauthorized
copying under Title 17, United States Code.
300 North Zeeb Road

Ann Arbor, MI 48103
Copyright by
ALIAS BIN JALALUDIN
August 8, 1998
All Rights Reserved
THESIS:
CONTINUOUS QUALITY IMPROVEMENT A MODEL FOR A SERVICE ORGANIZATION
AUTHOR:
Alias Bin Jalaludin
APPROVED
E. Eugene Watson, PKD.

Thesis Committee Chair
C l) lXJj
William H. Trappen, P.E.
Committee Member
**
Daniel F. Dunahay
Committee Member
In the name o f Allah, Most Gracious, and Most Merciful.

Praise be to Allah and peace and blessing be unto all his prophets.
Dedicated to my mother, Asmah. To my wife, Noraini and
to my two children, Nor Iskandar and Nurul Nadzirah
for their love and support. Thanks to all teaching
staff o f California State University
Dominguez Hills,
USA
TABLE OF CONTENTS
PAGE
List o f Tables..................................................................................................................
vti
List o f Figures.................................................................................................................
A bstract...........................................................................................................................
CHAPTER
1. Introduction.............................................................................................................
Background........................................................................................................
Definition o f T erm s...........................................................................................
Objectives o f the Study......................................................................................
Assum ptions.......................................................................................................
Conceptual Fram ework.....................................................................................
Conceptual Process M odel...............................................................................
Significance o f the S tudy..................................................................................
1
1
6
8
9
10
12
15
2. Review o f L iterature...............................................................................................
17
Continuous Quality Improvement Philosophies, Concepts, and S trategies..

W. Edwards Deming.........................................................................................
Joseph M. Ju ran .................................................................................................
Philip B. C rosby................................................................................................
Kaoru Ishikawa .................................................................................................
M asaakilmai .....................................................................................................
Other Management E xperts..............................................................................
A Summary o f the Key Ingredients o f Continuous Quality Philosophies,
Concepts, and Strategies .........................................................................
18
18
22
25
28
29
45
3. M ethodology............................................................................................................
54
The Background o f Organization A .................................................................

Organisation As Management System ............................................................
Survey R ep o rt.....................................................................................................
v
48
55
56
58
PAGE
CHAPTER
Researchers Experience as a Total Quality Management Facilitator in
Organization A ............................................................................................
Researchers Experience in Gemba K aizen.....................................................
Summary............................................................................................................
59
59
60
4. Analysis o f Findings.................................................................................................
61
Analysis o f the Management System o f Organization A ................................

Organization As Current Service Delivery System ........................................
Analysis o f Survey R eports...............................................................................
Second Survey R eport.......................................................................................
The Researchers Experience as a Total Quality Management Facilitator ....
The Researchers Experience in Gemba K aizen..............................................
A Case Study - A Continuous Quality Improvement Model for
Organization A ............................................................................................
Set the Organizations Vision, Mission, Values, and G o als..........................
Organization As Corporate G oals...................................................................
Corporate S trateg ies.........................................................................................
Process M anagement.........................................................................................
Continuous Performance M easure...................................................................
Analyze Outcomes Regularly............................................................................
Rewards and Recognition.................................................................................
Summary.............................................................................................................
61
63
65
66
70
71
74
75
76
79
81
89
90
91
94
5. Conclusion................................................................................................................. 95
Overview o f the Study....................................................................................... 95
Recommendations for Organization A ............................................................. 97
Suggestions for Future Study............................................................................ 100
References......................................................................................................................
101
Appendix........................................................................................................................
106
A: Summary o f Report o f an Interpretation o f Climate Survey Data

Pertaining to Dry Bulk Services and Tanker Services Divisions ....... 106
B: Copyright Permission from SPC Press Inc.................................................. 111
vi
LIST OF TABLES
Table 1. Comparision o f MBO Business Focus against CQI Business Focus
vii
96
LIST OF FIGURES
Figure 1. Continuous Quality Improvement A Model for a Service Organization....................................................
13
Figure 2. Production Viewed as a System ................................................................
19
Figure 3. Chain Reaction from Improvement o f Processes .....................................
19
Figure 4. Summary o f Key Ingredient o f Continuous Quality

Improvement among Quality Gurus ..................................................
49
ABSTRACT
The purpose o f this study was to propose a Continuous Quality Improvement

(CQI) model for Organization A to become a Total Quality company. This study used the
concept o f Gemba Kaizen and TQM in developing the model. The model stresses the
balancing o f quality, cost, and delivery in achieving customer and employee satisfaction,
shareholders return, and company profit and growth. The study investigated the
relationships between employees and management that play an important factor in
ensuring successful execution o f the proposed model.
This case study approach used both qualitative and quantitative research
methodologies involving interaction with the workers, the researchers own experiences,
observations, and surveys. The results o f the study show that the model is suitable for
Organization A and employees indicated their anticipation for positive changes. Some
recommendations were put forward to ensure the successful application o f the model.
Reproduced with permission o f the copyright owner. Further reproduction prohibited without permission.
CHAPTER 1
INTRODUCTION
This chapter presents an overview o f a total quality study. The researcher will
begin by exploring various studies on Continuous Quality Improvement (CQI) in todays
business world. This will be followed by definitions o f the terms and the objectives o f the
study. Several assumptions will be established together with the conceptual framework
and conceptual model. A discussion o f the significance o f the study will close this chapter.
Background
For over a decade, many newly developed business organizations struggled with
Total Quality Management (TQM) and Continuous Quality Improvement (CQI) activities
with the hope o f improving growth and increasing profits. Can a company afford to
ignore customers ever changing needs and remain in business? The majority o f top
business executives agree that the customer is the main reason for doing business. On the
other hand, do companies today face a quality problem? The answer is an unquestionable
yes. Some organizations are just getting started at TQM. Others may not be familiar
with the TQM philosophies at all. Many quality gurus such as Deming, Juran, Crosby,
Taguchi, Imai, Ishikawa, etc., have their own knowledge base and interests. This has
profoundly influenced the way their ideas have been developed. When comparing the
approaches o f these gurus the researcher found that there is a great diversity in their
2
philosophies, principles and methods. In 1992, Sea-Land Service, Inc. made a data search
before beginning their TQM journey and found that in the past ten years, 1,984 books and
more than 17,000 articles have been written with a focus on quality and the customer
(Clancey, 1993, p. 23). There are thousands o f consultants ready to guide organizations
on a quality program. The difficult problem that is faced today is trying to figure out
which approach will benefit the company, and how to implement and execute the Total
Quality approach.
In the 1980s, before new business companies tried to embark on Total Quality,
professional business watchers began to notice some changes in the focus on a quality
approach. They realized that the few organizations that had dedicated themselves to
satisfying customers and had superior customer service were achieving lucrative financial
results. These organizations proved to be making a greater financial return, keeping
customers longer, experiencing lower marketing costs, fewer upsets and customer
complaints, and had more returning business. These organizations further experienced
positive effect on their internal customers too: employee turnover and absenteeism were
lower while morale and job satisfaction were higher. Almost overnight, attention has
moved toward a focus on the customer: understanding and meeting customer needs,
caring about customers, and giving quality customer service.
The interest in TQM, Kaizen, or Customer Service has become a ticket to stay in
business and to meet customer demands for a better quality standard. To some
companies, it is a necessity out o f desperation as a way to respond to global competition.
3
It has undoubtedly become corporate management's top priority, and an unwritten
requirement used by businesses to reposition themselves and regain prominence in a global
economy. However, do these TQM concepts always work? Some business companies
enjoy the fruits o f their labor from TQM. Other business organizations have humbled
themselves to admit that they have foiled while a majority o f organizations faced with the
lack o f positive results from TQM activities keep their frustrations and disappointment
hidden.
One clear point is that quality alone is not the main ingredient for success in an
organization. A 1989 Gallup survey Quality: Executive Priority or Afterthought,
performed for the American Society for Quality Control, highlighted an amazing finding
that only 28 percent o f executives interviewed say they have achieved significant results
(defined as an increase in market share or profit) from their quality initiatives (cited in
Howe, Gaeddert, and Howe, 1995, p. 6). A Malcolm Baldrige Award winner stated that
there is no guarantee o f success -- stock prices fluctuate, product development delays, and
money losses in new ventures. In 1992, The Wallace Company, a Malcolm Baldrige
Award winner, had to file for bankruptcy. An AT&T plant that had won the Baldrige
Award in 1992 announced their decision for major employee layoffs in May, 1993.
What could possibly have gone wrong? Some organizations that tried TQM were
successful, but others failed. According to Howe, Gaeddert, and Howe (1995), too few
business executives, middle managers and employees know if all o f the money, resources,
4
and all o f the frantic activity their organizations are devoting to quality, are having a
favorable impact on business results and customer commitment (p. 7).
A study made by Svenson, Wallace, Wallace, and Wexler (1994) made three
fascinating discoveries:
First, American companies attempt to mimic the TQM approach o f the Japanese
management style was premature. The Japanese have been practicing TQM for
years, and now they have the luxury o f improving relatively minor processes
throughout the organization because they have already met their major
improvement targets. The American companies have not had that luxury, and are
trying to improve everything at once. They spend millions o f dollars in TQM
training and set up hundreds o f improvement teams. As a result, they spread their
resources too thinly, and the results are disappointing. Secondly, there is a lack o f
knowledge about prejudice against Human Performance Technology (HPT), a
discipline that would be o f great value to quality aspirants. Thirdly, many
organizations seem to be pursuing quality for qualitys sake ... There is a concerted
effort from the beginning to integrate business strategy with process
improvements, the odds are that the quality effort will not have discernible impact
on the ultimate metric for a held business or growth o f shareholder value.
(pp. 2-3)
According to Heskett, Sasser, and Schlesinger (1997) in their book, The Service
Profit Chain, there has been too much anecdote-peppered advice given by many service
5
gurus today without a context. It was not communicated that what worked in one
o rganization may not be appropriate for another. The advice was so excessively simple
that it led the managers to seek the elusive one big idea that can help them improve
performance. Heskett et al. further mentioned that many trade journal and management
m agazines gave their opinion that the quality o f service was the key to success in business.
Service quality is often defined solely in terms o f the things that contribute to process
quality such as dependability, timeliness, authority, and empathy with which a service is
delivered. Heskett et a l further discussed that customers do not just buy products or
services; they buy results. Therefore, it is important for any business organization to
design their systems to allow companies to do the job right the first time. The
organization system must focus on achieving results and having process quality for their
customers. In a 1994 study, Heskett, Jones, Loveman, Sasser, and Schlesinger (cited in
Heskett et a l 1997) stated that Service profit chain thinking maintains that there are direct
and strong relationships between profit; growth; customer loyalty; customer satisfaction;
the value o f goods and services delivered to customers; and employee capability,
satisfaction, loyalty, and productivity (p. 11). Heskett et aL also mentioned that:
The strongest relationships suggested by the data collected in early tests o f the
service profit chain, were those between: (1) Profit and customer loyalty, and
(2) employee loyalty and customer satisfaction. They suggested that in service
settings, the relationships were self-reinforcing. That is, satisfied customers
contributed to employee satisfaction, and vice versa, (p. 12)
6
The core o f service profit chain management put forward by Heskett, Sasser, and
Schlesinger is using the principal o f management-by-fact.
Definitions o f Terms
Total Quality Manapement (TOM1 is defined as a system o f managing total quality. Total
Quality here refers to a people-focused management system that aims at continually
lowering real cost. It is not a program. It is an integral part o f a high-level strategy that is
based on the scientific method which includes system and tools. The main objectives o f
TQM are: (a) striving for customer satisfaction, (b) achieving continuous improvement,
and (c) getting full involvement o f the entire work force. (Evans & Linda, 1996,
pp. 15-16)
Continuous Improvement, or Kaizen fa Japanese term! is defined in this study as activities
that bring incremental value to all areas o f the work process. Kaizen is applied to all areas
o f the business section such as cost, delivery schedules, employee safety, skill
development, supplier relations, new product development or productivity, all o f which
are aimed at enhancing the quality o f products, services, and process management o f the
firm. This process requires total commitment from all workers and managers as a way o f
work culture. Kaizen accepts small and incremental process improvements, but the
activities are practiced continually. It is a never ending search for a better output.
Quality is defined as meeting or exceeding customer expectations (Evans & Lindsay,
1996, p. 15).
7
Business Process includes all activities in an organization that consist o f logically related
tasks that take an input or use the organizations resources and add value to it in order to
provide an output to an internal or external customer that supports the achievement o f the
organizations objectives.
Customer is defined as the user o f the next business process. This study will follow the
expanded version in the classical sense o f the traditional customer, those who pay directly
for products or services that are offered, and includes the myriad o f internal customers
(employees) who may never see the end-user or final customer. Recognizing the concept
o f the internal customer helps to strengthen cooperation within the organization, helps
eliminate internal competition and helps drive out fear. However, this definition must be
validated in order to see that the specification requested by the internal customer satisfies
the organizations ultimate customers (external customers) needs and expectations. The
end-user who makes the payment for the product and service is called the external
custom er. The external customer in this study will refer to the shareholders, the end user
o f business output service, and society.
Benchmarking is the process o f measuring owned performance against other organizations
that are best-in-class, finding out how they achieve those performance standards, and
using the information as a guide to combine with the organizations own values to
formulate new organizational goals and strategies.
Gemba is a Japanese word meaning real place or work place where value is added. In
manufacturing, it usually refers to the shop floor (Imai, 1997, p. xxiv).
8
StanHflrrii7atir>n is defined as documentation o f the systematic work process as the best
way to do the job.
GeTnhutsti is a Japanese word that refers to the tangible objects found at Gemba such as
work pieces, documents, reject items, jigs and tools, equipment, and machines.
Objectives o f the Study

The objective o f this study is to propose a road map to help Organization A plan
and negotiate its route toward becoming a Total Quality company. However, it does not
give directions or tell the best route to take. Instead, it provides the organization with an
understanding o f ail the different options that they can take to get them to the various
destinations. This study hopes to provide them w ith ways to make sense out o f aQ the
different quality-related tools, concepts, and approaches. It may or may not follow some
o f the quality gurus' philosophies, but the bulk o f the road map is aimed at improving
organizational capability and m anaging their operating unit on a continuing basis through
TQM, Kaizen and CQI philosophies. This study will also use some o f the steps mentioned
by Heskett, Sasser, and Schlesinger (1997), which include: (a) measuring across operating
unit, (b) communicating results o f self-appraisal, (c) developing a balanced scorecard,
(d) designing efforts to enhance performance, (e) tying recognition and rewards to
measures, (f) communicating results, and (g) encouraging internal Best Practice
exchanges (pp. 34-37).
Organization A 's current emphasis on ship expansion does not seem to be in line
with the increased number o f experienced staff leaving the corporation. Marketing has
much more o f an impact on the customers perception o f their organization than most o f
the operation activities. Just think about the possible losses the organization can suffer
because market forecasts are bad, because the customers products are damaged before
reaching the market place, or because the organization is having high personnel turnover
rates. This is the researchers greatest concern. This study win look into the feelings and
perceptions o f the employees towards current management styles, monetary factors, and
job and career advancement opportunities. The study will also touch on front-line
manpower issues faced by Organization A. These are important factors that must be
considered before starting a Continuous Quality Improvement process model. Failing to
recognize these will only bring failure to the implementation o f the process model in
Organization A.
Assumptions
The model is based on the following assumptions:
1. Quality improvement is a continuous process o f inculcating the whole
organization in enhancing corporate values. This effort should begin with a
firm commitment from management, and full support by the various
improvement teams and by all employees.
2. Effective customer satisfaction measurement is a continuous effort.
3. A thorough explanation o f managements intention in terms o f CQI efforts
must be made to all employees.
4. Rewards and recognition play an important part o f motivating employees to
continuously buy-in to the quality improvement process.
5. Continuous improvement is a perceptual journey.
10
6. The study is also limited to Organization A.
7. The survey data used in this study only refers to Organization A, unless
otherwise mentioned.
Conceptual Framework
The conceptual framework o f this model is mainly based on the concepts and
philosophies o f W. Edwards Deming, Joseph M Juran, and Philip B. Crosby. Other ideas
used are based on Imais (1997) book, G em ha Kaizen. The model begins with corporate
vision, mission, and values. The vision, mission, and values provide a focus for Total
Quality Service that will help lead directly to the identification o f corporate goals.
Deming first point is to: C reate constancy o f purpose to improve production or service
(Aguayo, 1990, p. 124). The model as a whole emphasizes continuous quality
improvement as a means o f reducing a companys costs, improving quality, and ensuring
fast delivery. This is following Demings fifth point in which he states that organizations
must aim for continuous improvement o f the system o f production and service in order to
improve productivity and quality, and to decrease costs (Aguayo, 1990). Demings first
and fifth points are important here as they are crucial to the CQI model. However, some
o f Demings other points do not clearly layout the plan o f action and methodological
principals that the researcher can readily put into his model. Since there is no clear
Deming method, the researcher will use the concept o f Gemba Kaizen as put forward
by Imai (1997).
11
The researcher agrees with the concept o f putting the customers needs and
meeting their satisfaction first, as recommended again and again by quality and business
experts. Juran (1988) in his explanation o f methods far implementing quality through
quality-planning road maps, did mention the need to identify the customers (internal and
external), determine the needs o f those customers, translate those needs into our language,
and develop a product and service that can serve those needs (p. 14). The model is
designed mainly towards meeting customer needs and satisfaction, and to improve
customer service all o f the time. Quality service and equipment are vital here and must be
presented with lower costs (and also with a reduction o f wastage)in order to stay
competitive, and to deliver the service to customers as fast as possible. All these are part
o f the researchers suggestion for Organization A in developing their goals.
After planning the corporate goals, suitable corporate strategies are also presented.
The strategies involve employee commitment, the customer service system, market
assessment and research, benchmarking, Gemba Kaizen, and TQM concepts and
philosophies.
Process management o f the model will involve all activities that need to be done so
that the goals are achieved. This includes participating in visible management, training,
management-by-fact, problem solving skills and tools, cross-functional project teams,
facilitators, measurement o f customer satisfaction, activity based costing, supplier rating
and partnership, empowerment, manuals and procedures, and effective communication.
12
The model will not be able to sustain performance and maintain standards if there
is no continuous performance measure. Performance measure processes encompass
customers feedback, check-lists or check sheets, updating o f manuals and procedures,
auditing, and display charts and graphs showing the progress o f process performance to
employees and team competitions. The model suggests that Organization A should
proceed to analyze the outcome o f performance measures and compare them with their
corporate goals. Any review o f strategies and process management will be done after this
stage. This is to ensure a continuous progress. The rewards and recognition stage will
only happen once the goals have been achieved. This rewards and recognition program
will be for suppliers, employees, various project teams, shareholders, and external
customers. Without rewards and recognition, the cycle will have slow after-effects and
may create negative results.
Conceptual Process Model

Figure 1 is a CQI Process Model of significant variables and how they relate to
each other. An arrow going from one group variable to another indicates that the variable
on the receiving end is related in some way to the variable from where the arrow
originates. The process model is focused toward the customer. This simply means that
the model is focused on meeting customers needs and satisfying them. This can be
achieved through high quality equipment, products, and an effective customer service
system. It would also mean providing the service with competitive prices and a quick
service delivery. As many quality experts have pointed out, there is little use in producing
R eproduced with permission o f the copyright owner. Further reproduction prohibited without permission.
Corporate
Vision
Mission
&
Values
Corporate Coals;
Corporate Strategie s ;
- Customer Loyalty
-Meeting Customers
Needs and Satisfaction
- Employees' Satisfaction
- Quality Customer Service
Delivery and Equipment
-Improve Growth & Profit
- Fast Deliveries
-R educe W astage
-Total Commitment from

Management & Employees
-Training & Motivation
- Measure Customer
Satisfaction
-Market Research
- Benchmarking
-G em ba Kaizen
-Continuous Awareness
of Quality & Customer
Service
- TQM concepts & Philosophy
-Establish Quality Councils
and Various Improvement
Teams
Rewards & Recognition:

- Suppliers
- Employees
- Teams
-Customers' Appreciation
-Return to Shareholders
Process Management;
-Visible and Participative
Management
-Management by Facts
-Tools & Problem Solving
Skills
- Empowering Cross Functional Teams
- Cost of Quality
-Activity Based Costing
- Manual and Procedures
-Supplier Rating or Partnership
-Effective Two-Way
Communication
-Kaizen
- Standardization
- House Keeping
-W aste Elimination
J
Measures:
Analyze Outcome:
-Compared with Goals
- Review Corporate
Strategy When Needed
Figure 1. Continuous quality improvement - a model for a service organization.
-Self-Appraisal Internal Measures

-Customer Feedback
- Check Lists and Sheets
-Update Manual
-Audit the Process
- Display Charts and Graphs
Performance to Employees
- Team Competition
14
a quality product or service that customers do not want. Companies who are trying to
adopt quality improvements need to make a lot o f effort in order to convince employees
that a total customer focus is not simply a requirement, but a foundation o f the business.
The change will require time, clear goals, careful planning, knowledge, persistence, total
commitment, and determination.
The route for this model must start with a clear organizational vision, mission, and
values. These preconditions act as the guiding targets from members o f the board to all
employees in the organization, subsidiaries, and suppliers for the organization. From here
the top management will begin planning their corporate goals. Suitable strategies will be
developed and these act as a road map in ensuring the achievement o f corporate goals.
Process management steps act as the journey itself where organization starts to move
toward accomplishing their goals with the necessary tools and techniques in conducting
the business. These process management activities will be carried out in daily work
activities until it becomes a new corporate culture. All o f these activities will undergo
performance measures on a continual basis. This stage is important in order to secure
consistency o f purpose, and to ensure process management is moving toward corporate
goals and strategies.
The process model does not stop here. The performance measures results will be
evaluated and compared with the corporate goals. If the goals are not achieved, then the
strategies and process management will have to be reviewed. The process o f continuously
15
checking and reexamining this cycle will go on as the organization continues to inject
additional strategies to elevate new goals, standards, and achievements.
Significance o f the Study

This study will encourage Organization A to shift their company from a
Management By Objective (MBO) Focus to a CQI Focus in terms o f improving contact
with their customers and potential customers as well as in the areas in which they invest
large amounts o f money. The process model is a low-cost approach that does not require
major restructuring.
The study recommends that Organization A cut wastage and poor-quality costs, as
this is the biggest opportunity in starting to improve the bottom line and to further
improve organization business processes. In many business companies, management can
make more profits by cutting poor-quality costs in half than by doubling revenue. This can
be accomplished without hiring new personnel or building a new ship, or finding new
customers. This study will also encourage management to empower their lower-level
management personnel and employees to do a Business Improvement Process (BIP)
through various improvement teams to eliminate errors; minimize delays; promote
understanding; improve documentation; improve customer relations; response time and
adaptation to customers needs; and reduce excess employees.
It is the researchers hope that the process model will be used in the fixture to bring
changes in organizations, not only by improving employee morale, but also to increase
employee productivity, create effective cost management, refocus and improve customer
16
relationships, and improve profitability. Improving profitability and morale will help to
accomplish the organization goals o f increasing employee loyalty, customer satisfaction
and loyalty, having higher shareholder returns, and better community satisfaction.
This study is organized into five chapters. The second chapter contains the
literature review, chapter three will focus on the methodology, chapter four describes the
case study, and chapter five will conclude the study.
CHAPTER 2
REVIEW OF LITERATURE
This chapter begins by reviewing the literature on continuous improvement or

Kaizen and TQM, as put forward by quality gurus such as Deming, Juran, Crosby,
Ishikawa, Imai, and other quality experts. This chapter ends by summarizing the key
ingredients commonly used by the gurus, which will be applied as a basis in developing the
modeL
The researcher will begin by examining Demings approach in order to honor his
contribution in making quality issues an important part o f todays business process and for
being partly responsible in assisting Japan in its remarkable turnaround since 1950.
Ironically, W. Edwards Deming was not well known in America before NBCs program ,:
If Japan C an... Why Cant W e?, which aired on June 24, 1980. Indeed, many American
viewers were surprised to learn that the success o f the Japanese companies had less to do
with a cultural affinity for quality than with methods o f quality production taught to them
by an American statistician (Kilian, 1992, p. 17). It came at a time when American
industries were stagnating and the GNP had fallen from first to seventh place in the world
(Kilian, pp. 14-15). NBCs program was the turning point that marked the beginning o f
an aggressive quality movement that changed America to what it is today.
17
18
Continuous Quality Improvement Philosophies,
Concepts, and Strategies
W . E dw ards D em ing
Deming began examining quality improvement in the 1940s with a focus on

statistical sampling techniques. He used W. A. Shewharts control charts, later known as
Statistical Process Control (SPC), as a means o f recognizing the "special cause and
"common causes o f a production process. Special causes are assignable to individual
machines or operators. Common causes are those shared by operations and are
managements responsibility. In recognizing this, the root causes can be identified, and
necessary actions to remove variability can be done accordingly (Deming, 1982, p. 88).
The core o f Demings teaching was about the obligation o f management, their
responsibilities, and their methods for improvement o f quality. Quality begins at the top
(Kilian, 1992, p. 22). Deming showed the Japanese a new production system which they
had never seen before (see Figure 2). This system showed the Japanese the importance o f
the customer as part o f the production-line. Demings new production system also
showed the role o f suppliers; processing receipts and testing o f raw materials; production
and assembly that requires constant tests o f processes, machines, methods, and costs;
inspection; distribution; consumers; consumer research; and the process o f a closed loop
with design and back to redesign. Deming also illustrated a chain reaction from
improvement processes (see Figure 3). Improvement processes and products will bring
the costs down, and this will then capture the market w ith a better quality at a lower price.
Design
Consumer
and
^ -----------Research
Redesign
Suppliers of
Materials and
Equipment
Receipt and
i
Test of
Materials
Production Assembly inspection
C
D
S
Figure 2. Production viewed a s a system.
Source: " The World of W. Edwards Deming," 2nd Edition
Copyright 1992 by Cecelia Kilian.
Used by permission of SPC Press. Inc., Knoxville, TN
All Rights Reserved.
Improve
Processes
and
Costs Product
Decrease
Capture the
Market with
Better Quality
and Lower Price
Figure 3. Chain reaction from improvement of processes.

Source: " The World of W. Edwards Deming, " 2nd Edition
Copyright 1992 by Cecelia Kilian.
Used by permission of SPC Press. Inc., Knoxville, TN
All Rights Reserved.
20
The chain does not stop there. Better product quality in the market at a lower price
will help the company stay in business and finally this creates jobs and more jobs. Deming
also used Shewharts systematic approach to problem-soIving techniques, Le., using Plan,
Do, Check, and Act (PDCA). Plan refers to planning a change or a test aimed at
improvement. D o refers to the activity o f carrying the change or test (preferably on a
small scale). Study refers to studying the results, Le., what did we leam? What went
wrong? A ct refers to the adoption o f change, or abandoning it or running through the

cycle again, possibly under different environmental conditions (Kilian, 1992, pp. 22-27).
All those new philosophies later became a guiding principle o f the Japanese Kaizen
concepts.
In his book, Out o f The Crisis. Deming (1982) mentioned that he saw that some
American companies are rigid, bureaucratic and unresponsive to the customers o f the
organization. He also saw some o f them as poor in motivation, leadership and training.
Difficulties were also found in standards o f practice, and companies were too heavily
reliant on technology rather than on people. He further outlined five deadly diseases to be
avoided in order to start the journey toward quality improvement. They are: (a) a general
lack o f constancy and purpose, (b) too much emphasis on short-term profit and annual
budget cycles, (c) a lack o f or unsuitable evaluation o f performance, merit-rating, or
annual review, (d) Management that is too mobile, (e) Management decision-making that
readily relies on quantitative data without paying due consideration to less tangible or
hidden factors (pp. 97-98). He also underlines the importance o f managements role
21
ahead o f technology, leadership, and motivation o f employees, and the importance o f SPC
as a tool to measure performance. Deming further stated fourteen points that he believed
can tackle the deadly diseases mentioned earlier. These fourteen points can be summarized
as follows:
1. Create constancy o f purpose by improving both products and service through
innovation, research, continuous improvement, and maintenance.
2. Adopt a new philosophy in which shoddy work and poor quality are
unacceptable.
3. Cease dependence on mass inspection that occurs after errors are already
made. Quality ensues from improvement o f the process.
4. End the practice o f awarding business on a price tag alone, which seeks only
the lowest-priced vendor. A long-term relationship should be established with
a single vendor who provides quality supplies o r services.
5. Continuous improvement must go on forever and is not a one-time effort.
Management must look for ways to reduce waste and improve quality
continuously.
6. Institute training so that all employees are trained properly.
7. Institute leadership that consists o f helping people do a better job and o f
learning by objective methods who is in need o f individual help.
8. Drive out fear so that employees feel secure to ask questions, take positions,
and take risks; this security will lead to mistakes that are part of a learning
process.
9. Break down barriers between staff areas so that departments and units are not
competing with each other or have conflicting jobs.
10. Eliminate slogans, exhortations, and targets for the work force because they do
not help anybody do a good job.
11. a) Eliminate work standards such as quotas on the factory floor. Substitute
leadership.
22
11. b) Eliminate management by objective. Eliminate management by numbers or
numerical goals because numbers do not guarantee quality and workers often
meet quotas at any cost.
12. Remove barriers to pride in workmanship such as misguided supervisors, faulty
equipment, and defective materials.
13. Institute a vigorous program o f education and re-training so that management
and the work force can be educated in the new methods including teamwork
and statistical techniques for process improvement.
14. Take action to accomplish the transformation. This requires a plan o f action
from a top management team. (Deming, 1982, pp. 23-24)
It is unfortunate that Deming did not provide a clear plan o f action and
methodological principals that can be readily put into practice. He has nothing to say
about intervention in situations that are political and coercive, even though Deming
explicitly recognizes this dificult area in his philosophy.
Joseph M. Juran
Juran (1989) indicated that the bulk o f the responsibility for success or failure in
getting quality right lies within management. Introducing quality efforts must begin at the
top. In his quality trilogy, there are three basic managerial processes through which we
focus on quality. This trio logy was derived from financial control and financial
improvement. This translates to quality planning, quality control, and quality
improvement. Quality planning provides the operating forces with the intention o f
producing products or services that meets customer needs. The steps to achieve this can
be summarized as follows:
1. Determine who the customers are.
2. Determine the needs o f the customers.

3. Develop product features that respond to customersneeds.
4. Develop processes that are able to produce those product features.
5. Transfer the resulting plans to the operating forces. (Juran, 1989, p. 20)
Quality control emphasizes the prevention o f quality problems and taking the
necessary corrective action. This is done by having a simple feedback structure as
follows:
1. Evaluate or measure the actual quality performance o f the process.
2. Compare performance with set goals.
3. Take action on the difference for the next planning steps. (Jinan, 1989, p. 21)
Quality improvement is the process o f looking for opportunities to improve quality
before a problem arises. Jurans quality improvement here means making improvements
on the work processes, which the researcher listed below:
1. Establish the infracture needed to secure annual quality improvement.
2. Identify the specific needs for improvement.
3. Establish a project team with clear responsibility.
4. Provide the resources, training, and motivation needed by the team. (Juran,
1989, p. 21)
Jurans quality planning road map extends across issues and has to be related to
customers and their needs. The customers are not just consumers (external customers),
but also include the internal customer (employees o f the company), and anyone to whom
24
we are providing a service or product. In order to understand the customers and their
needs, Juran provides ten steps toward quality improvement, which are summarized as
follows:
1. Ensure that all employees are aware o f the need for quality improvement. This
requires a good leadership.
2. Set clear and specific goals for continuous improvement o f quality in all areas
and activities.
3. Establish an organization to support the process o f achieving the goals.
4. Make sure that all employees and upper management are trained and
understand their role in quality improvement activities.
5. Set-up problem-solving teams to eliminate quality problems and avoid future
problems from happening.
6. Ensure that the quality improvement progress is monitored.
7. All outstanding contributions by employees to quality improvement are
recognized.
8. All results, progress, and outstanding contributions are publicized.
9. All processes and improvements must be measured.
10. Make sure that quality improvements and strategies are incorporated into the
management systems o f the company. Rewards and recognition must be based
on results achieved. (Juran, 1988, pp. 270-271)
On the other hand, Juran has undervalued the role o f employees ability to
contribute ideas, thus rejecting the principle o f bottom up initiatives from workers
contributions. He stresses managements responsibility for quality but foils to support it
with the literature on motivation and leadership. Cultural and political issues are not
managed meaningfully.
25
Philip B. Crosbv
The roots o f Crosbys (1984) philosophy can be summarized in five points: (a)
quality is defined as conformance to requirements (p. 60), (b) there is no such thing as a
quality problem (p. 58), (c) it is always cheaper to do it right the first time (p. 59), (d) the
only performance measured is the cost o f quality (p. 85), (e) Performance standard means
zero defects (p. 84). In order to make quality certain, Crosby (1979) proposed four pillars
o f quality:
1. Management participation and attitude: Participation here refers to active
involvement in quality as opposed to support. Management attitude means
managements attitude towards quality is very important to the process
because employees perform to the standards o f their leaders.
2. Professional Quality m anagem ent: This refers to the establishment o f a quality
council to monitor and measure quality outcomes and to execute education and
training.
3. Original programs: This refers to customizing quality implementation designs
based on the industry and the organization.
4. Reward and recognition: This is vital for employees in order to maintain
quality improvement results. (Crosby, 1979, p. 7)
Like other gurus, Crosby (1984) has come up with his own 14-step program for
action, which the researcher condensed as follows:
1. Establish management commitment the management personnel must
personally commit to and be fully involved in participating in the programs to
ensure visibility and to provide constant support.
2. Form a quality improvement team representing each department.
3. Establish how to measure quality throughout the company for each activity.
26
4. Appraise the cost o f quality.
5. Maintain employeesquality awareness through training, supervision, and
communication via booklets, films, and posters.
6. Do corrective action by encouraging employees to identify and put right
defects, or pass on defects to the next supervisory leveL
7. Plan for Zero Defect and get the customers, union members, or even someone
who represents the city such as mayor to show that people outside the
company are interested in the activity and the result o f the quality
improvement.
8. Educate employees with proper training that relates to Quality Improvement
Programs.
9. Hold a Zero Defect Day to get management to stand up and make its
commitment, and to show their seriousness in front o f employees. It is also
time for employees to sign a commitment to improve quality work.
10. Establish goal setting for each team; the more the better. The ultimate goal o f
course, is Zero Defects. In the interim, however, intermediate goals move the
company in that direction. Minor goals should not be accepted.
11. Communicate error-cause removal among employees. This is done by asking
people to state the problems they have so that something can be done about it.
It is not a suggestion system in which people have to come up with the answer.
12. Celebrate employees with recognition after meeting goals (non-financial)
through award programs.
13. Establish and hold regular meetings o f the Quality Council. This Quality
Council consists o f quality professionals meeting together, setting a mission to
design the improvement process, letting them learn from each other, and
supporting the quality improvement process.
14. Do it all over again. (Crosby, 1984, pp. 101-120)
It is only here that quality experts begin to hear about Quality Councils. Quality
Councils also play a role in developing guidelines, establishing educational modules,
27
measuring progress, and assisting in implementation. Members o f this team are
responsible in the overall monitoring and guidance o f the business quality program.
Crosby (1984) introduced Quality Vaccine for an organization against nonconformance.
These vaccines contain the following ingredients:
1. Integrity: Everyone is dedicated to make sure that customers receive what is
promised.
2. Systems: The system must be dedicated to measuring conformance to
requirements, measurement o f company service, financial measurement and
quality training.
3. Communications: Sufficient supply o f information to all levels with regard to
recognition programs, identification o f problem, waste, and missed
opportunities.
4. Operations: Help to educate suppliers, examine all procedures continuously,
and conduct regular training, etc.
5. Policies: Policies should be clear and unambiguous, (pp. 8-9)
The above vaccine is administered through: (a) determination, (b) education, and
(c) implementation.
Nevertheless, Crosbys philosophies have some weaknesses. The philosophies
have the tendency to insinuate that employees are responsible for quality problems. This
can mislead the management team to believe that managements own effort contributed a
small fraction to the quality problems. This lack o f responsibility for quality problems on
behalf o f the management team can lead to a failure o f quality programs. Crosbys
14-steps are management and goal orientated. Zero Defects can be wrongly perceived by
employees and encourage them to avoid risk-taking, and thus can lead to a lack o f
28
creativity among em ployees- The philosophy also makes an assumption that employees
are always prepared to work in an open environment.
Kaoru Ishikawa
Ishikawa was involved in the Japanese post war resurrection in the 1950s. His
philosophy for organizations is based on company-wide quality activities. These require
good communication and cooperation, both vertical and horizontal, between managers,
supervisors, and employees. The system o f horizontal cooperation involves the suppliers
and customer service. These philosophies stress the importance o f training, especially in
key tools that were taught by Deming, such as using control charts, histograms, scatter
diagrams, and Pareto Charts. Ishikawa was famous for his fish bone diagrams
(cause-and-effect diagrams). Ishikawa (1982) is also renown for his advancement o f
employee participation concepts, particularly the introduction o f Quality Control Circles
(p. in). This circle involves a small number o f volunteer employees from a unit or a
department. The circle can involve anyone, and does not necessarily need to include the
supervisor. The circle team will meet regularly, discuss their tasks, and find solutions to
the problems faced. The circle can go ahead and implement the ideas and any lack o f
resources will be referred to management. Management is expected to respond, listen to
and act upon the circles proposals. Ishikawa (1982) combined the concepts o f team
effort with statistical tools, and enhanced the evolution o f TQM (p. 18).
Ishikawas philosophies have some weaknesses too. The fish bone diagrams are
excellent in organizing thoughts, but they do not show the interrelationships between
29
causes. They do not show how cause and effect can provide feedback to each other. The
quality control circles, on the other hand, expect the management to listen to their ideas.
Ishikawas philosophy, like those o f other gurus, will be difficult to implement in an
environment o f political pressure and force.
Masaaki Imai
Imai wrote two books related to continuous improvement. The first was Kaizen:
The Japanese kev to Japans competitive success (1986), and followed by fipmha KaizpnA common sense, low-cost approach to m a n a g e m e n t n997Y According to Imai (1997),
Kaizen is the Japanese word for continuous improvement. It can be applied both in
services and in manufacturing business. Kaizen involves everyone from CEO to floor
workers, suppliers and distributors. Although improvements under Kaizen are small and
incremental, Kaizen processes will brings about dramatic results over time (Imai, 1997,
pp. 1-2). Kaizen processes are believed to have contributed greatly to Japans competitive
success. The researcher found that the concept o f Gemba Kaizen is the easiest and most
practical method to follow, and that it is indeed a low-cost approach to quality
improvement. Therefore, the explanation o f his approach, as given below, will be
developed in more detail than the other gurus approaches.
Kaizen. According to Imai, there are differences in CQI or Kaizen in terms o f
western and Japanese management styles. The following is the researchers summary o f
Kaizen as explained by Imai (1997): Western management adores innovation,
re-engineering, down- sizing, and reorganization. All o f these processes incur high costs,
30
require major changes, disrupt operation, require technological breakthroughs, and are
often dramatic. They can also be a one-shot effort, often have problems, and require a
large investment, high risks, and may scare employees and customers. Kaizen, on the
other hand (from a Japanese perspective), requires changes that are undramatic and subtle.
The process o f Kaizen uses common sense tools, check lists, and techniques that do not
cost much money. This, assures incremental progress at a low risk. Kaizen does not
require sophisticated technology and complex procedures, or expensive equipment.
Kaizen fosters process-oriented thinking among employees and encourages group
learning, something that is lacking in most organizations throughout the world today
(Imai, 1997, pp. xvi & 1-4). According to Johnson, Chairman o f Fidelity Investments,
Kaizen is different. Its not a fed. It helps us focus in a very basic way on how we do
our work (Quoted in Imai, 1997, p. xiii).
According to Imai (1997), managers who want to practice Kaizen need to
understand and implement the following concept, as summarized below:
1. Kaizen and manapement. Under the Kaizen concept, management has two
major functions. They are: (a) maintenance, and (b) improvement.
Maintenance refers to activities that are directed toward maintaining current
performance, technology, operating standards, managerial skill, and upholding
such standards through training and discipline. Management will have to set
the standard operating procedure (SOP) so that everyone can follow and
ensure that performance is maintained and consistent. This requires the use o f
the Standard-Do-Check-Act (SDCA) cycle for maintenance o f the current
standard. This is done because the process could be unstable in the beginning.
The team will have to check whether the abnormality occurs because they do
not have the standard, or whether it is because the standard is not adequate.
Once the current process is stabilized, the team can act to standardize the new
procedures to prevent recurrence o f the original problem.
31
2. Tmprnvpment involves the process o f Kaizen and innovation. The activities are
directed tow ard elevating the stabilized standards to a new level. Innovation is
only a small part o f the managements role. This is where Kaizen emphasizes
worker efforts, training, morale, teamwork, communication, involvement, and
self-discipline. The process o f improvement will make use o f the
Plan-Do-Check-Act (PDCA) cycle.
3. Process versus result. The team must plan for improvement. Management sets
the target. Although Kaizen aims at making small improvements, its impact
may be limited if everyone is engaged in Kaizen for Kaizens sake without any
aim. That is why management must establish clear targets to guide everyone.
These targets can be built into an organizations vision, mission, and policy
deployment. The long-term target must further be broken down into
medium-term and annual-term targets. Top management must have a plan to
deploy an organizational strategy, and to pass it down through subsequent
levels o f management until it reaches the work floor. As these plans cascade
down to the lower level, they should include specific action plans and activities.
For example, to reduce cost by ten percent, the plans can be translated into
activities o f reducing inventory, rejects, and improving line configurations.
Once the plan is made up, the team will start the PDCA cycle to make
improvements. If this is achieved, the standard will be elevated to a higher
leveL The SDCA cycle will again take over the process o f maintaining this
new level. This process o f both PDCA and the SDCA cycle will continue as
the organization progresses.
4. Putting quality first O f the primary goals o f quality, cost, and delivery, quality
should always have the highest priority. The customer is always looking for
quality no m atter how attractive the price and delivery terms offered. If quality
is sacrified among management and employees, the future o f the company will
be imperiled.
5. Speak with data. This refers to the process o f collecting data as the starting
point in improving activity. Problem-solving by means o f hunches and gut
feelings will never reveal the root cause. Only with properly gathered and
analyzed data, can the problem be properly understood and solved.
6. The next process is the customer. This refers to the internal and external
customers. All work is a series o f processes, and each process has its supplier
as well as customer. The next process should always be regarded as a
customer, (pp. 2-7)
32
To realize the above Kaizen concepts in an organization, Imai (1997) suggested
that the organization use the following strategies:
1. TQM.
2. Just-in-time production system.
3. Total productive maintenance.
4. Policy deployment.
5. Suggestion system.
6. Small-group activities, (p. 7)
Gemba. Imai (1997) introduced the word Gemba which means the work place
or real place (p. 13), where value is added to the products and services before passing
them to the next process where they are formed, where customers come into contact with
the services offered, and where telephone operators are working in their switchboard
room (p. 13). Thus, Gemba is everywhere. It spans a multitude o f office and
administrative functions. Some o f today's managers seem to overlook the work place as a
means to generate revenue, and they usually place too much emphasis on financial
management, marketing and sales, and product development. When management focuses
on Gemba, they discover opportunities for making the company for more efficient, saving
costs and eliminating waste, which then results in a more successful and profitable
business (p. 14).
33
Imai underlined three important pillars for organizations that want to practice
Gemba Kaizen. According to Imai (1997), management and employees must work
together to follow three pillars, which the researcher summarized as follows:
1. H ousekeeping. This is a process o f managing the Gemba or w ork place
conduciveness for improvement purposes. Do the processes become more
complicated? Are there too many forms used and red tape? Is the improvement
interfering with the level o f satisfaction in the company? Are the work documents
easy to fill out, and does the system require contracts be signed-off by three
people? To ensure proper housekeeping entails five steps or five-S:
a. Seiri (Sort): Separate out all the unnecessary items in Gemba and
eliminate them.
b. Seiton (Straighten): Arrange the essential things in an orderly manner
after seiri so that they can be easily accessed.
c. Seiso (Scrub): Keep machines and working environments clean.
d. Seiketsu (Systematize): Make cleaning and checking a routine practice.
e. Shitsuke (Standardize): Build self-discipline and make a habit o f
engaging the last four steps above by establishing standards.
Some o f the benefits o f employees o f practicing the five S are as follows:
Creats cleanliness, sanitary, pleasant, and safe working environments; it revitalizes
Gemba and greatly improves employee morale and motivation; it eliminates
various kinds o f waste by minimizing the need to search for tools, making the
operators jobs easier, reducing physically strenuous work, and freeing up space; it
creates a sense o f belonging and love for the place o f work for the employees.
(Imai, 1997, pp. 63-73)
2. Muda elimination. Muda in Japanese means waste. Any non-value adding
activity is classified as muda in Japan. Work is a series o f value-adding activities,
from raw materials and ending in a final product in the hand o f the customer. The
resource at each process people and machines -- either add value or do not add
value. Therefore, muda (waste) elimination will cover a wider scope and is
summarized as follows:
34
a. Muda o f overproduction. Overproduction arises from fear o f a
machine's failure, rejects, and employee absenteeism; employee may
feel compelled to produce more than is necessary just to be on the safe
side. Unfortunately, trying to get a head o f production can result in
tremendous waste, consumption o f raw materials before they are
needed, wasteful input o f manpower and utilities, additions o f
machinery, increased burdens in interest, additional space to store
excess inventory, and added transportation and administrative costs.
b. Muda o f inventory. Final products, semi finished products, or part
supplies kept in inventory do not add any value. Rather, they add cost
o f operations by occupying space, requiring additional equipment and
facilities such as warehouses, forklifts, and computerized conveyer
systems. Warehouses further require additional manpower for
operation and administration. Excess items stay in inventory and gather
dust (no value added), and their quality deteriorates over time. They
are even at risk o f damage through fire or disaster. Just-in-time (JIT)
production system helps to solve this problem.
c. Muda o f repair or rejects. Rejects interrupt production and require
rework. More often than not, having rejects ends with a great waste o f
resources and effort. Rejects will increase inspection work, require
additional time to repair, require workers to always stand by to stop the
machines when default items emerge, and increase paperwork.
d. Muda o f motion. Any motion o f a persons body not directly related to
adding value is unproductive. Workers should avoid walking, lifting or
carrying heavy objects that require great physical exertion because it is
difficult, risky, and represents non-value added activities. Rearranging
the workplace would eliminate unnecessary human movement and
eliminate the requirement o f another operator to lift the heavy objects.
Analysis o f operators or workers leg and hand motions in performing
their work will help companies to understand what needs to be done.
e. Muda o f processing. There are many ways that muda can happen in
processing. For example, failure to synchronize processes and use
plastic materials to avoid scratches on part, create muda and can be
eliminated by redesigning the assembly lines.
f. Muda o f waiting. Muda o f waiting occurs when the hands o f the
operator are idle; when an operators work is put on hold because o f
line imbalances, a lack o f parts, or machine downtime; or when the
35
operator is simply monitoring a machine as the machine performs a
value-adding job. Watching the machine, and waiting for parts to
arrive, are both muda and waste seconds and minutes.
g. Muda o f transportation. In gemba, one notices all sorts o f transport by
such means as trucks, forklifts, and conveyors. Transportation is an
essential part o f operations, but moving materials or products adds no
value. Even worse, damage often occurs during transport. To avoid
muda, any process that is physically distant from the main line should
be incorporated into the line as much as possible.
h. Muda o f time. Another common type o f muda is time. Materials,
products, information, and documentation sit in one place without
adding value. On the production floor, temporary muda takes the form
o f inventory. In office work, it happens when documents or pieces o f
information sit on a desk or in trays or inside computer disks waiting to
be analyzed, or for a decision or a signature.
Engineers in most industries tend to apply latest technology, and are eager
to find a chance to employ them. Such a mentality defeats the requirements o f
gemba. Engineering design must avoid complex structures if the same job can be
done through a simple solution that is readily available. In utilizing resources, Imai
introduced the word less, which is a very familiar word in the five Ms. They
are:
a. Man (look-less, walk-less, search-less, and block-less);
b. Machines (airless, conveyer-less, air cut-less, and air press-less);
c. Material (bolt-less, burr-less, wait-less, and stop- less);
d. Methods (bottleneck-less, and stock-less);
e. Measurement Quality (reject-less, careless mistake-less, and
nonstandard-less). (Imai, 1997, pp. 83-84)
Because eliminating muda costs nothing, muda elimination is one o f the
easiest ways for a company to improve its Gembas operations, (pp. 75-86)
3. Standardization. Standards are set by management, but they must be able to
change when the environment changes. Once the standards are in place and are
being followed, if there are any deviations, the workers know that there is a
problem. Then the workers will review the standards and either correct the
36
deviation from the standard or advise management regarding changing and
improving the standard. It is a never-ending process o f the PDCA cycle. All
feedback refers back to the companys Quality Assurance diagram or Quality
Function Deployment (QFD) diagram, which provide a birds-eye view o f the
Total Quality Assurance System within the company. Standardization processes
have few key features. They:
a. Represent the best, easiest, and safest way to do the job,
b. Offer the best way to preserve know-how and expertise,
c. Provide a way to measure performance,
d. Show the relationship between cause and effect,
e. Provide a basis for both maintenance and improvement,
f. Provide objectives and indicate training goals,
g. Provide a basis for training,
h. Create a basis for auditing or diagnosis, and
i.
Provide a means for preventing recurrence o f errors and minimizing

variability.
An example o f Kaizen PDCA standardized steps will be:

a. PLAN refers to selecting the theme, understanding the current status
and setting objectives, and analyzing the data in order to identify root
causes;
b. DO is the process o f establishing countermeasures based on the data
analysis;
c. CHECK is confirming the effects o f the countermeasures; and
d. ACT is to establish or revise the standards to prevent recurrences, and
reviewing the above processes and working on the next steps. (Imai,
1997, pp. 51-61)
37
Quality, Cost and Delivery in Gemba. The ultimate goal o f Gemba Kaizen is
Quality, Cost, and Delivery (QCD). Under these concepts, managements role is to place
quality as the first priority. This involves improving quality during each process in terms
o f organizations internal customers until the process ends with external customers. This
is followed by cost effectiveness which refers to the overall cost o f designing, producing,
selling, and servicing the product or service. Delivery on the other hand, means delivering
the requested volume in time, such as practicing a just-in-time (JIT) production system.
Management also encompasses such activities as policy deployment, standardization,
training and education, and quality circle (QC). Where training is concerned, most
companies today have the tendency to put too much emphasis on teaching knowledge. In
Kaizen, group learning places great emphasis on improving the fundamental values that
are derived from common sense, self-discipline, order, and economy. Imai (1997) explains
that Quality, Cost, and Delivery are closely related subjects (pp. 37-50). This relationship
among the three subjects are summarized in the following paragraph.
Quality. Quality runs throughout the process from purchasing, developing,
designing, producing, selling, distributing, and servicing the products or services.
According to Imai (1997), jobs o f developing a new product or service, or designing a
new process, always start with paperwork or blueprints. Bugs or malfunctions can be
rectified with the stroke o f a pen and at no cost. Malfunctions that are identified later can
be very expensive to correct. The Japanese management team uses the quality assurance
system diagram or Quality Function Deployment (QFD), a powerful tool that is matrixed
38
to help identify customers requirements, convert those needs into design, engineering,
production, sales, and the after-service o f the products parameters. Upstream
management play an important role in assuring quality. The QFD diagram show the
various roles o f different departments in terms o f the identification o f customer
requirements through such stages as: (a) Product Planning (customers standpoint),
(b) Product Planning 2 (manufacturing standpoint), (c) Prototype Design and Test,
(d) Sales Activities, (e) Production Design, (f) Production Preparations, (g) Production,
(h) Customer Service, and (i) Audit. Manuals are prepared for audit purposes. Examples
o f these manuals includes outgoing inspection, service and maintenance, customer
satisfaction checklists, and handling customer returns (Imai, 1997, pp. 38-40).
Most activities in Gemba seldom reach the upstream management level.
Employees at Gemba perform quality assurance using simple methods such as
workmanship and handling the difficulties and variabilities that come up every day, like
inadequate working standards and operators careless mistakes. Workers must understand
what variability is and know how to achieve the standards set by management. Variability
is reduced by such activities as: following the established standards set by management,
creating self- discipline among employees to maintain standards, making sure no defects
are passed on to the next customer, regular use o f SPC or Statistical Quality Control
(SQC), charts and control charts posted on walls where workers can see them, and
employees knowing what their jo b function is and what the designated place is for
assembly work.
39
According to Professor Kume, there is a slight difference in approach between the
Western and Japanese when it comes to controlling the quality, and conformance to
standard and specification. (cited in Imai, 1997, p. 41). As Kume states, the West the
aims at controlling the quality and conformance to standard and specifications, the
feature o f Japanese approach centers around improving quality. In other words, the
Japanese approach is to do such Kaizen systematically and continually (cited in Imai,
1997, p. 41).
Cost. According to Imai, cost reduction in Gemba does not mean cost cutting. It
is about cost management. Cost management teams oversee the process o f developing,
producing, and selling products or services o f good quality while retaining a lower cost. A
huge waste o f resources can happen in the way a product is designed, made, and sold.
The current business competition for quality and cost is intensifying. Thus, improving
quality while reducing cost is the only option for survival. It must be cautioned that
managers are not to take cost reduction to be synonymous with cost cutting. Reducing
cost by cutting comers, firing employees, restructuring, and harassing suppliers will
invariably disrupt the process o f quality and usually ends in quality deterioration.
Cost reduction should come as a result o f better cost management. The key is to
build a management system that reduces cost while achieving quality. Cost management
encompasses a wide spectrum o f activities including: cost planning to maximize the margin
between costs and revenues, overall cost reduction in Gemba by eliminating muda
(waste), and investment planning by top management. Cost reduction through waste
40
elimination can be done through the following activities:
1. Improve quality. This refers to the process quality o f the managers and
employees work. Improving the work process quality results in fewer
mistakes, fewer rejects and less rework, shorter lead time, and reduced use o f
resources, therefore lowering the overall cost o f operations. Process qualities
include the quality of work in developing, making, and selling products or
services (the way products or services are made and delivered). Improving
quality also refers to m anaging the five Ms (man, machines, material, method,
and measurement).
2. Improving productivity to lower costs. This refers to utilizing less input to
produce the same output. Input here refers to resources, utilities, and
materials. Output means items such as products, services, yield, and added
value. Reduce the number o f people on the line; the fewer line employees the
better. Fewer employees will reduce potential mistakes, and thus create fewer
quality problems. This does not mean that we need to dismiss our employees.
There are many ways to use former line employees freed by Kaizen activities,
i.e., as resources for other value-adding activities. When productivity goes up,
costs will go down.
3. Reduce inventory. This means less space-occuping inventory that prolongs
production lead time, creates transport and store needs, and eats up financial
assets. Products and work-in-process sitting on the factory floor or in the
warehouse does not yield any added value. On the contrary, the products
deteriorate in quality and may even become obsolete overnight when market
changes or competitors introduce a new product or customers change their
taste and needs.
4. Shorten the production line. In manufacturing, a longer production line
requires more workers, more work-in-process and a longer lead time. More
workers also means a higher possibility o f making mistakes, which leads to
quality problems. More workers and a longer lead time will also increase cost
o f operations.
5. Reduce machine downtime. Machines that go down interrupts production.
Unreliable machinery necessitates batch production, extra work-in-process,
extra inventory, and extra repair efforts. A newly hired employee without
proper training to handle the equipment can consequently delay operation,
which may be just as costly as if the equipment were down. Eventually, quality
will suffer and all these factors can increase operation costs.
41
6. Reduce space. Conduct Gemba Kaizen activities, eliminate conveyor lines,
shorten production lines, incorporate separate work stations into the main line
o f production, reduce inventory, and increase transportation needs. All o f
these will improve space requirements. Extra space freed up by Gemba Kaizen
may be used to add new lines or be reserved for future expansion. A similar
improvement can also be introduced in a non-manufacturing environment.
7. Reduce lead time (throughput timet. Lead time begins when the company pays
for its raw materials and supplies, and ends when the company receives
payment from customers for products sold. Thus, lead time represents the
turnover o f money. A shorter lead time means better use o f resources, more
flexibility in meeting customer needs, and a lower cost o f operations. Muda
elimination in this area presents a golden opportunity for Kaizen. There are
many ways to cut lead time. This can be done through improving and speeding
up feedback from customer orders, having closer communications with
suppliers, and by streamlining and increasing the flexibility o f Gemba
operations (Imai, 1997, pp. 46-48).
Delivery. Delivery refers to the timely delivery o f the volume o f products or
services in time to meet the customers needs. The JIT system addresses both cost and
delivery issues, but it can only be introduced when there is a good quality-assurance
system in place. By eliminating all kinds o f non-vahie adding activities, JIT helps to
reduce costs.
The Key to the Success o f Gem ha Kaizen in Management
The success o f Gemba Kaizen management strongly depends on three factors.
They are visual management, the role o f the supervisor, and the importance o f training and
creating a learning organization.
The practice o f visual management (Imai, 1997) involves the clear display o f
gembutsu (tangible objects), charts, lists, records o f performance, so that both
management and workers are continuously reminded o f all the elements that make the
42
quality, cost, and delivery successful from a display o f overall strategy, to production
figures, to a list o f the latest employee suggestions. The following is a summary o f
techniques to solve abnormality, as suggested by Imai (1997):
1. When a problem (abnormality) arises, go to Gemba first. For example, if the
engine stopped, managers should go to see it immediately, and not just read the
report. According to Dr. Kaoru Ishikawa, When you see data, doubt it!
When you see measurements, doubt them! Many data are collected in the
company to please the boss and measurements are often made o r recorded
incorrectly by devices. (cited in Imai, 1997, p. 29)
2. Check the gembutsu. These can be a broken-down machine, a reject, a tool
that has been destroyed, returned goods by the customers, or even complaints
from customers. If a reject product is produced, hold it in the hand, look at it
closely, touch it, feel it, exam ine it, and then look at the production methods,
which will probably reveal the cause.
3. Take temporary counter-measures on the spot. Once managers see the
problem exists, effort must be made to take a temporary measure to stop it.
Imai gives us the example o f taking a temporary measure to solve the problem
o f a leaked machine line: the worker put sawdust on top o f an oDy floor to
prevent it from being slippery.
4. Find the root cause. This is important as finding the root cause will solve the
problem from happening again. Always ask the team or worker why five
times. With a good look at gembutsu at the site o f the problem, and the
determination to identify root causes, many Gemba-related problems can be
solved on the spot.
5. Standardize to prevent recurrence. Once the problem has been solved, the new
procedure needs to be standardized, or the current standard and SDCA cycle
invoked should be upgraded. Standardisation assures the continuity o f the
effects o f Kaizen. Without the worker following the standards in repetitive
work, the outcome will vary and this will lead to fluctuations in quality.
Management, therefore, must clearly designate standards for employees as the
only way to assure customer-satisfying QCD. (Imai, 1997, pp. 24-35)
The first principle o f visual management is to spot problems and any abnormalities.
For example, if hotel managers post a list o f the most frequent requests received from
43
hotel guests, employees will gain an awareness o f the service deficiencies that need to be
addressed in that hotel Managers, supervisors, and workers can then take corrective
action immediately. In Gemba, visual management will be applied to all the five M 's
(manpower, machines, materials, methods, and measurements). Visual management also
applied to the five S 's (seiri, seiton, sieso, seiketsu, and shitsuke.) By constantly viewing
these five S's in Gemba, management will realize that employee work outcome is better
housekeeping and making abnormalities visible. Problems can then be corrected. The five
S 's in Gemba means that as long as the machines are in operation, they are producing
good-quality products.
The second principle o f visual management is to provide performance measures.
They range from measurement o f work standards, not only the right way to do the job, but
also the managers ability to determine whether the work is being done according to
standards. Thirdly, visual management clarifies targets for improvement. This can be in
the form o f plotting on a graph their group errors in preparing invoices for customers, a
weekly updating o f the chart (to see how for they need to worker to meet the production
target), and displaying the graph or chart on the notice board. These graphs or charts
have a powerful visual impact that motivates people in Gemba to achieve quality work
output.
The roles o f managers and supervisors play a key factor. These people are the
important link between top management and workers. Top management must clearly
explain to lower management how to manage in Gemba and give them a precise
44
description o f their supervisory role and accountability. The manager's role in Gemba
Kaizen is to do maintenance and improvements to ensure maintenance is done to
continuously achieve the required standard, and to keep the process under controL
Improvement is achieved through Kaizen and innovation. Both the managers and
supervisors must elevate the standard when the process is stable. In the Kaizen process,
managers and supervisors must make sure that the input o f the five Ms are properly
managed without muda and without spending large amounts o f money in order to
achieve output.
Imai (1997) stressed the importance o f training managers and supervisors with
quality improvement knowledge as the hidden factors that ensure that Kaizen concepts are
put into practice in Gemba. Building a learning enterprise involves both management and
the work force in terms o f developing common goals and values. Learning is
synonymous with doing it. Rather than being given too much teaching, Gemba employees
should be given opportunities to leam by practicing and doing, being physically involved,
using their hands as well as their brains. In training, people leam by doing and by
practicing repeatedly. Skills cannot be acquired by reading a book or listening to a
lecture: they must practice (pp. 88-91). This is crucial in building a change o f work habits.
Continuously using the knowledge from training and applying it in daily work will change
the way employees perform their duties and work habits. This will eventually change the
organizations work culture.
45
Other Management Experts.
There are other related issues to continuous quality improvement that were
developed in the last 10 years. Many top business executives realized that their
organizations needed to seriously measure customer satisfaction. In fact, measurement is
the most talked about, but may be the most poorly implemented, improvement strategy.
Measurement is the key element in any improvement process. Without it,
managers cannot plan the improvement activities and cannot control the process. I f
managers cannot control the process, they fail to manage the organization. So, what are
managers supposed to measure? They need to measure the organizations services,
products, system and the internal support groups efficiency, effectiveness, responsiveness,
and capability o f meeting custom er satisfaction. Managers are often excited about the
improvements they made and convince their management that value added or value
enhancement activities have been done in the product or services areas. However,
managers do little to effectively document the activities and how well the value adding
efforts actually met the needs o f customers.
Traditional measurements are financially based and cannot offer a true reading o f
how work processes are being performed (Svenson, Wallace and Wexler, 1994, p. 134).
Many managers have heard o f cost o f quality, not just what the financial reports have said,
but also the ones that are hidden from poor quality activities, process, and supplies.
46
According to Campanella (1990):
To achieve the most effective improvement efforts, management should ensure
that the organization has ingrained in its operating principals the understanding
that quality and cost are complementary and not conflicting objectives....Good
quality leads to increased productivity and reduced quality costs, and eventually to
increased sales, market penetration, and profits, (p. xv)
Quality cost measurements provide guidance to the quality management
program much as the cost accounting system does for general management....
Unfortunately, significant chunks o f quality cost are normally overlooked or
unrecognized simply because most accounting systems are not designed to identify
them. As this is generally the case, it is not too difficult to understand why most
company top management is more sensitive to overall cost and schedule than to
quality. (Campanella, 1990, pp. 7 and 9)
Heskett, Sasser, and Schlesinger (1997) emphasize that the customer does not buy
products or services, they buy results (p. 17). Heskett, Jones, Loveman, Sasser, and
Schlesinger ( 1994) in their study (as cited in Heskett et al., 1997) revealed that there are
direct and strong relationships between profit, growth, customer loyalty, customer
satisfaction, the value o f goods and services delivered to customer, and the employees
capability, satisfaction, loyalty, and productivity (p. 11). However, in order for the
manager to build organizational capability and manage operating units on a continuing
47
basis, Heskett et aL, (1997) suggested the following steps which the researcher
summarized as follows:
1. Measuring across operating units. It is important also to note that consistency
is as important as the actual questions asked o f customers. Company may send
out regular surveys by mail, the time-line depending on the external customers
purchase cycle o f the service in question. Internal customer satisfaction surveys,
however, may not be a good indicator, as the internal customers (employees) have
the intention o f staying on the job. It will be better to measure sources o f
satisfaction in order to enable management to develop predictors o f employee
loyalty. These sources o f satisfaction can be in the form o f job satisfaction,
training, pay, advancement fairness, treatment with respect and dignity, teamwork,
and the companys interest in the employees well-being. Customer loyalty can be
measured in terms of:
a. Percentage o f customer purchases.
b. Amount o f purchases that each customer makes from the organization.
c. Number o f services or products purchased from the organization.
d. Depth o f relationship the number o f available related financial
services used by customers. (Heskett et aL, 1997, pp. 34-35)
e. Lifetime value o f customers. (Heskett et aL, 1997, pp. 65)
2. Communicating results o f self-appraisal. After data is collected, plot it on the
performance graphs and share the information with all the managers in order to
provide credibility for the measures, their relationships, and the importance o f
establishing performance measures based on continued monitoring.
3. Developing a halance scorecard. Kaplan and Norton (1993), reporting on
their research (as cited in Heskett et aL 1997), argued that performance
measurement based strictly on financial outcomes places too much emphasis on the
outcomes o f past decisions and fails to identify and reward outcomes that
contribute to future financial performance. Instead, they recommend a balanced
scorecard that measures both non-financial outcomes such as human resource
effectiveness, innovation, and customer satisfaction or loyalty, and as well as
financial outcomes.
48
4. Dreigninp; efforts to enhance performance. Once a balanced scorecard o f
measures is agreed upon, managers can begin to appropriately improve
performance activity.
5. Tving recognition and rewards to measures. Incentives tied to these measures
are being increasingly implemented, but only after a process o f implementing
initiatives on the basis o f a service profit chain has been accomplished. These help
employees buy-in for continuous quality improvement efforts.
6. Communicating results. Distribute the service-profit-chain results o f each unit
to other departments in order to encourage the comparing and sharing o f
information. It triggers an internal best practice exchange that results from the
full acceptance o f the system by those whose performances are being measured.
7. Encouraging internal best practice exchanges. The organization must provide
a budget for other units or sections to visit and leam from units with best
practice even if they have to travel for. (Heskett et aL, 1997, pp.34-37 & 65)
A Summary o f the Key Ingredients o f Continuous

Quality Improvement Philosophies,
Concepts and Strategies
The researcher summarized the key ingredients o f CQI gurusand experts
philosophies, concepts, and strategies as outline in Figure 4. The CQI gurus agree that
CQI activities should begin with organizational visions, missions, values, and goals. From
there, management formulates strategies to ensure the success o f organizational goals.
The strategies should include management and employee commitment, management-byfact, measurement, market research, Gemba Kaizen, a Customer Service Delivery System,
and formation o f a Quality Council. These strategies will then be supported by process
management mainly from Gemba Kaizen, TQM, and CQI philosophies, concepts and
strategies. These require the organization to: train employees, do housekeeping, eliminate
waste, standardize operations, practice cost o f quality, create cross-functional participative
Vision
Mission
Strategy:
- Management
Commitment
-Quality Council
- ManagementBy-Facts
-Training
P rocess
Management:
- Housekeeping
-W aste Elimination
Tools Used:
-TQM
-JIT
- PDCA, SDCA
R
E
C
- Standardization
- Pareto Diagram
-S PC
- Cause & Effect
N & A
Cost, and
Delivery
T
1
0
N
S
D
S
-Service Profit
Chain
- Measurements
Values
Goals
-Visual Management
-Effective Supervisory
- Customer
Service Delivery - Two-W ay
System
Communication
- Benchmarking
-Gem ba Kaizen, - Cross - Functional
Teams
TQM, and CQI
Diagram
- Audit
- Check- Sheet
- Activity - Based
Costing
- Surveys
Quality,
Customer
Employees
Shareholders!
Growth
>roflt.
Figure 4. Summary of key ingredients of continuous quality improvement among quality gurus.
i*
VO
50
teams, use TQM and CQI tools (JIT, SPC, graphs, charts, SDCA, PDCA cycle, Pareto
Diagram), provide manuals and procedures, develop effective two-way communications,
audit, use visual management, and have effective supervision. Once the CQI
cross-functional team achieves targeted results, employees should be rewarded and
recognized via special programs. The ultimate goal o f Gemba Kaizen, CQI, and TQM is
to achieve quality products or services which are cost effective and have fast delivery. All
these efforts shall always be aimed to meet customers, employees, shareholders, and the
communitys satisfaction, in order to have long term loyalty. Growth and profit should
follow. The key variables that unite all CQI or Gemba Kaizen philosophies, concepts and
strategies are: customers, management teams, people in the company, and organizational
processes and systems.
The customer (i.e., the external customer) is the ultimate objective o f all business
efforts and is the reason for the existence o f the organization. Continuously focusing on
the customer is so important that it actually determines what an organization should be in
terms o f the type o f product to make or service to provide, the type o f process required,
the kind o f management style to be used, the kind o f input, the kind o f people to hire, and
the distributing o f the product to the customers. In order to be successful in dealing with
the customer, all gurus and quality experts agree that the company must be able to know
whether what they produce meets customers needs. Is it o f high quality? Is the price
competitive and a good value for the money? How fast can it be delivered? Do the
people in the company provide excellent customer service? The bottom line, after
51
fulfilling all these efforts, will be the question - Has the products or services provided
actually delighted the customers? Are the customers so happy and satisfied that they
become loyal to the organizations products and services? I f the answer is yes, then
how can the organization be so sure? That is why CQI experts suggest that the company
must continue to measure all these factors, not once, but all the time. A company can do
this by listening, talking, interviewing and regularly interacting with customers since its
known that customers tastes change and their perspectives are different and vary from
one another. Therefore, an organization must constantly be aware o f customers needs
and try to satisfy them all the time with quality services or products, the right price, and
quick delivery. This is necessary in order to stay competitive, make profits, and continue
to grow in the business.
Many top organizations business management teams realize that meeting the
needs o f external customers is not an easy task. It requires strong leadership qualities to
be able to steer the company in the right direction. All CQI experts agree that
management should ensure that an organizations vision, mission, values, and goals are
communicated downwards to all members o f the organization. Without this, an
organization will be just like a ship, drifting in the middle o f ocean, getting nowhere.
Having clearly set the vision, mission, values, and goals in mind, management must now
show the seriousness o f their commitment to employees. There is no better way o f
motivating people than leadership by example. Management should plan strategies to
ensure that their goals are achieved. All CQI experts should support the idea o f using
52
process-oriented, participative cross-functional team efforts. Management should involve
themselves in managing Gemba. The management team should equip themselves with the
CQI knowledge, philosophies, concepts, and strategies used by many experts and gurus.
Only with this knowledge can the managers and supervisors guide, train, motivate, and
show employees how to do it right the first tim e. Management must plan what kinds o f
process management to use in managing the entire organization. All CQI experts stress
quality, costs, and delivery and making sure that the entire activity is value enhancing
toward balancing the scorecards o f business results, and not just for the sake o f
improvement or quality. Various TQM concepts and tools such as SPC, JIT, problem
solving techniques, Pareto Diagrams, Fish-Bone Diagrams, and SDCA and PDCA cycles
should be used daily. The Kaizen concepts such as housekeeping, elimination o f waste,
standardization, doing it right the first time, and zero defect should be part o f the
organizations system.
Management should hire the right people for the right job. Employees must have
the right attitude, and be trained and educated with the right CQI knowledge, so that they
can perform their duties as instructed. Management should provide the proper support
system to help employees perform effectively. All suggestions put forward by employees,
suppliers, and external customers must be looked into by management. Suitable rewards
and recognition are also encouraged by most CQI experts. Experts also suggest the
importance o f record keeping and data collection for measurement purposes.
53
Management-by-fact is the core o f the service-profit-chain, instead o f making decisions by
intuition and gut-feelings.
CHAPTER 3
METHODOLOGY
This chapter describes the methodology used before the researcher designed the
model for Organization A. This case study approach used both qualitative and
quantitative research methodologies. The researcher will be using some o f the information
from research that was conducted over a period o f 14 years (August, 1981 until August,
1995) when the researcher worked as an employee o f Organization A Information and
data were collected through interactions with workers and, the researchers own
experiences and observations. Some quantitative approaches, i.e., previous survey
reports, were also employed.
This chapter will be divided into five sections which explain the source o f the
analysis made for Organization A The first section will explain Organization As
background. The second section describes Organization As management system. The
third section describes the source o f the survey reports used for the study. The fourth
section describes the researchers personal experience with TQM in Organization A The
final section will explain the researchers experience in Gemba Kaizen, which will later be
used as part o f the analysis in Chapter 4.
54
55
The Background o f Organization A
For the purpose o f anonymity, Organization As real name is not mentioned here.
This organization provides transportation services locally and internationally. The
company was incorporated as a public company in the 1960s and has enormous potential
growth. In just 29 years, the company grew to have 65 vessels o f various types, deployed
in liners, tankers (chemical, vegetable, and petroleum trades), dry bulk, and liquidized
natural gas (LNG) carriers. More than 20 new building ships are due for delivery in the
year 2000. The organizations business involves high capital assets in terms o f owned
ships, and has also diversified into a wide range o f shipping and non-shipping related
activities, such as shipbuilding and repair, container haulage, warehousing, trucking,
container and prime mover container depots, and ship stores, as well as travel and port
management. The organizations objectives are:
1. To operate shipping services that will generate a fair return on the capital
employed,
2. To achieve and maintain a balanced composition o f vessels and their operation
in order to meet the countrys needs as well as the needs o f other shippers for
ocean transportation and to ensure a stable level o f profit against fluctuations
in the freight market,
3. To meet the objectives o f the government with respect to:
a. Growth in the size o f the countrys flag vessels,
b. Level o f participation in the national, regional, and coastal shipping
services by local flag vessels,
c. Shipping commitments in bilateral and other trade agreements, and
56
d. Minimizing the vulnerability o f the national economy from being
over-dependent on foreign flag vessels;
4. To train and develop local people in technical, professional and commercial
aspects o f shipping for efficient management o f the corporation,
5. To achieve and m aintain high technical and professional standards in respect to
ship design and operation, safety practices, and environmental protection; and
6. To conduct all activities with a high standard o f business ethics and in full
conformity with all legal requirements.
OnamVation As Management System
The management o f the company involves the board o f directors, who represent
the majority o f the shareholders portfolios, and government representatives. The
company is managed by the managing director, assisted by deputy managing directors and
supported by divisional directors, who are the heads o f a division o f business units and
administrative units such as human resources (sea and shore), finance, and fleet services.
Each division will has several department managers for various sections or units such as
business, operations, and accounting. There are about 700 shore staff members and more
than 2,000 sea personnel.
The organization is operated through a management by objective style. The
organizations setup is just like a pyramid. Each division was responsible for their own
cost center. Therefore, the divisions make their own business projections and planning,
create their own marketing strategies, identify their staff training needs, run their own
operation styles, prepare yearly budgets, and do their own recruiting with the help o f the
human resource division. In short, all divisions are responsible for their own division.
57
There is a F inancial Authority Manual (FAM) set up by top management for each division
to follow diligently. C om m unica tio n was mainly top-down and in a vertical direction.
Business was conducted by means o f an approved budget. Every year each unit
submits their yearly budget with month by month estimated figures for approval. Once
approved, this budget will be used to measure each departments and divisions
performance. During the performing year (the current business year when the budget was
previously prepared for), each department will prepare Monthly Performance Reports
(MPR) to show actual monthly figures and compare them with the approved monthly
budget figures. Any positive or negative variances would require an explanation. The
MPR also requires business outlooks for the following two months. A debtor listing is
also attached. The MPR is submitted to the divisional director. Divisional directors will
then attend the weekly Management Committee Meeting (MCM) together with other
divisional directors, and the deputy managing director; the meeting is chaired by the
managing director.
Business hours are from 8:30 A.M. till 4:30 P.M., every Monday through Friday,
and 8:30 A.M. to 12:30 P.M. on Saturday. Employees have a union that guarantees an
annual bonus o f two months with an additional one month subject to management
discretion if the company performs well. The management level staff will get their
bonuses o f two to three months salary subject to management and government approval.
All salary increments are tied-up to a percentage o f job performance with the excellent
performer getting six percent o f their basic monthly salary.
58
The company does not inform their employees about the companys vision,
mission, values, and long term goals. There are no clear long term goals other than
increasing the number o f fleets in the organization. The lower management level only
follows the yearly budget, which reflects short-term goals. Non-executives do not even
know much about the organizations goals. Training is more in terms o f a shipping related
nature. In 1992, the management introduced TQM in two divisions. It ended in 1994. A
customer satisfaction survey has never been introduced. Benchmark exercises were only
from a distance. Costs o f quality has never been practiced. Job manuals and procedures
were only introduced in early 1995 after top management realized that staff turnover was
high. Suppliers dealing with the company had to place and win the tender, ranging from
building new ships, dry-docking, and ship repairs. Procedures circulated to the
departments, other than the FAM manual, often caused confusion, and were not properly
filed. Personnel manuals (guidelines and benefits offered by the company) are no longer
given to all personnel as part o f cost saving. The organization conducts their internal
audit regularly from accounting to performance, and the process takes place at least once
a year.
Survey Report
There are two survey reports that were used in the study to analyze the climate
situation in Organization A. They are as follows:
1. One summary o f survey report is from In Search o f Excellanee Seminar, an
in-house training session conducted by the researcher and his colleagues for the
researchers division in June, 1993. This survey, which consists o f questions
about the company is part o f a seminar evaluation. There were 55
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respondents, o f whom 25 were on the executive level; the remainder o f the
respondents were non-executives. The following are the two open-ended
questions asked:
a. What do you like about the company?
b. What dont you like about the company?
2. Another summary report is from a climate survey. D ata were collected
pertaining to two departments in the same division. Survey questions were
distributed to all 39 executives in the two departments; 31 executives (80
percent) responded. The survey was part o f a Management Improvement
Team (MIT) project conducted in November, 1993. The purpose o f project
was to examine the current inventory levels o f human resources (executive
positions) against current and future requirements. The data collected was
based on the following factors:
a.
Monetary.
b. Management the organizational and divisional leveL

c. Job and career advancement.
The Researchers Experience as a Total Q uality
Management Facilitator in O rganization A
The researcher will share his opinion on the success and failure o f the TQM that
was implemented in two divisions in Organization A. The researcher knew what caused
the TQM activities to fail and used the information in making a model and road map for
fixture CQI activity.
The Researchers Experience m G em b a K aizen
The researcher will explain some o f the successfiil attem pts from the researchers
experience in making improvements in Gemba (at the office and on board ship) and what it
60
did for the researchers work environment. Other individuals' activities in Gemba Kaizen
will also be mentioned.
Summary
This chapter first introduced Organization As background in order to describe its

development. Then, Organization As management system and how business is conducted
were reviewed. In addition, a quantitative approach, via two survey reports, was
discussed. These two surveys help us to understand the problems faced by Organization
A, which can be used to develop the necessary strategies for implementing CQI activities.
The researcher feels that blindly implementing such activities without first analyzing the
feelings and current environmental factors will only make CQI efforts foil, and waste time
and money. We also reviewed the researchers experience in TQM and Gemba Kaizen in
the organization in order to highlight that CQI did take place, although that it was not
integrated into the overall organization, and was not on a large scale.
In Chapter 4, the findings o f the qualitative and quantitative approaches are
presented. This chapter will include a description o f the survey results and the analysis o f
the researchers experience.
CHAPTER 4
ANALYSIS OF FINDINGS
Analysis o f the Management System

o f Organization A
As mentioned in Chapter 3, Organization A is a profit driven organization.
Management based their yearly service strategy on estimating how much profit the
company can make, and aligning various departments goals with the organizations
targets. All o f this is incorporated into the budget, and each department is required to do
an evaluation o f the projected monthly budget against the actual figure. Any variances
will be addressed through the Monthly Performance Reports (MPR). Their service
strategy is not clearly focused on the customer. In a way, all staff members are
responsible for their departments bottom-line. MPR has created pressure on the
business line in order to ensure that the budgeted targets are achieved. This has created a
negative impact on the customer, who at times was pressured by the companys front-line
people to support the organization. The cross-functional activities between departments
also became strained and difficult as everyone was looking alter their own departments
interests and taking care o f their own departments targeted budget. The strategy systems
supported the organization, but did not support the service delivery system well, as
customers came second. Workers were self-centered, and management was mainly trying
to satisfy the shareholders.
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62
Since the company used a budget and the MPR system, communication between
divisions and the units o f different divisions were more vertical in nature. Each unit
needed to get approval from the manager, and the manager then had to go to the
divisional director who wrote an internal memorandum to the other division, which in turn
caused bureaucratic red tape. Management also did frequent restructuring such as
splitting the division in two, then one year later recombining the two subdivisions. The
exercise was mostly to create a position for someone in top management. This created
confusion and upset among workers in lower management, as jobs changed according to
the new setup. This often contributed to low morale.
Organization A did not use demographic research in their shipping related
business. The current systems require a marketing report from various staff
representatives. The style of reporting mainly involves cargo prospects, projects that were
developed in that country that may benefit the shipping business, and competition faced by
the company. If the company wanted to venture into a new market, they would appoint a
United Kingdom shipping consultant to conduct a study. Most o f the studies did not
extend to customer service areas. There was some benchmarking done before by the
company, but the exercise was only for fleet expansion. Benchmarking to improve
customer service and increase customer satisfactions for other business sections were
hardly sought.
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Organisation As Current Service
Delivery System
There are problems that often affected the smooth operations o f customer service
in Organization A. The company's procedures caused administrative delays, creating
red-tape in solving claims, which in turn slowed down the negotiation process with
customers. This procedure is referred to as the Financial Authority Manual (FAM).
FAM limits the authority o f managers, directors, managing directors, the chairman, and
board members in approving all payments, contract values, and the duration o f the
contract. The researcher agreed that there must be a control mechanism, but it must be
feasible. Managers can only approve US $5,000, and the director US $10,000. This slows
down the negotiation process and sometimes creates a loss o f business due to waiting for
authority approval. The researcher fully agreed with Whiteleys (1991) statement that
The more we learn about quality, the more we realize that the systems we have built into
our own businesses often inadvertently create barriers to serving customers (p. 16).
Staff members are not trained to handle customers properly. The Training
Department does not function well in this area. They lack short-term and long-term
planning. Every time a new flyer offering a training course by an external consulting
company is sent to the Human Resource Division (HRD) office, it is circulated to the
necessary divisional director to see if he or she wants to send it to anyone from the
division. The divisional director will pass it to various managers to propose several names
for such training. The director will then make the final selection and pass it to the HRD.
Very few o f the senior management know what customer service, o r CQI, is all about.
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The department is only fam iliar with training in shipping and lacks exposure to other
required training- Customer service, or how to deal with a customer, and quality
related training has never been a part o f the HRD programs. However, computer training
has been introduced before to most executives and clerks. This has proven to be effective
in increasing productivity. All CQI efforts are up to the initiative o f individuals. Some
consideration is given to recognizing such action during the appraisal o f job performance,
although it has never been geared towards rewarding executives for effectively satisfying
customers, or for developing future business results.
Another weak area in the service delivery system o f this organization is that the
company does not have an efficient method to handle customers claims. The Liner
Department (the container department) only has one executive and 4 non-executives who
handle the container c laims, which often lead to a higher number o f customer complaints.
Other departments are not equipped with special personnel to handle customer claims, so
the companys managers handle the claims, or delegate them to their unit managers or
executives. The claim process will involve the companys internal insurance department,
and if need be, the assistance o f external insurance companies will be sought. The
situations can be extremely complicated and lengthy, and most o f the time the customers
lawyers will communicate with the companys external insurance firm. The company does
not solicit complaints.
The measurement o f customer satisfaction is not done in a regular format, but
rather by way o f business minutes, or discussion. Most o f the feedback received from
65
front line personnel is not properly submitted to the higher management leveL Any
complaints made directly will be filtered. Informing higher management about customer
complaints has been taken negatively and perceived as showing the companys
weaknesses.
Analysis o f Survey Reports
On the climate survey that was conducted and given to all o f the executives in the
two divisions, the most frequently asked questions can be grouped into the following
factors:
1. Monetary
2. Management (corporate and divisional level)
3. About your job Career Advancement
In terms o f the three main areas (Monetary, Management Style, and About Your
Job - Career Advancement) which the researcher previously analyzed with his team, it was
the companys executives that concluded that the Monetary issue contributed significantly
towards satisfying their needs. It is clearly shown from our findings that 63% o f the
respondents stated that the Monetary issue had the highest impact on satisfying their
needs, followed by "Management Style" (21%) and "About the Job" (16%). When
cross-checking these findings against the companys remuneration package, the researcher
found that the majority o f the respondents felt that the package was relatively 'fair1
(48.4%) with some indicating 'poor' (26%) compared to other companies in Organization
As country.
66
The second critical issue was in regards to the corporate management style. We
found that the majority o f the respondents felt that management is currently practicing
authoritarian (40%) and bureaucratic styles (56%). However, this finding was different
when reviewing the divisional management style. A total o f 44.4% o f the respondents
stated that their division practices a participative style o f management, and 37% stated it
was a democratic style. In terms o f the decision making process and the process o f
passing down information, 34.7% o f the respondents said that the decision making was
done by one or two persons while 34.7% said that the views o f the majority were sought,
but not taken into consideration. A total o f 36% also said that they were only aware o f
the decisions at the time o f implementation, and 52% said they found out after the
implementation had taken place. This clearly indicates the poor communication process in
the company.
When it comes to the executives job responsibilities and career advancement,
51.7% said that they had no idea where they will be in five years time, if they were
continuously working in the company. However, they felt that they were quite happy with
their current responsibilities. Details o f this climate survey is attached in Appendix A: An
Interpretation o f Climate Survey Data Pertaining to Dry Bulk Services/Tanker Services
Divisions.
Second Survey Report
The researcher and his team reviewed the corporations strengths and weaknesses.
This was done by getting the team to carry out a study on the strengths and weaknesses o f
67
the corporation as perceived by the staff. For that reason, the researcher and his team
used part o f the answered questionnaire from the In Search o f Excellence' workshop
conducted by the researcher and the 'Winners Group (a think-tank group created by
management) just before the Dry Bulk and Tanker Services Divisions embarked on TQM
in 1993.
The staff was asked about the things they like about the company and what they
do not like about the company. The only problem with this questionnaire was that it
was an open ended questionnaire instead o f having a set o f possible answers. The group
tried their best to summarize the answers, and the summary o f the interpretation o f the
data is as follows:
(A) What do vou like about the company?
The executives responded:
As many as 28.6% o f the respondents said that they liked working in the
company due to its job security, stability and because it is an internationally
known establishment.
A total o f 17.9% said that they like to work for the company due to the work
environment, perks and benefits.
About 14.3% claimed that it is because the employees are approachable and
the management is friendly.
About 10.7% replied that they received job satisfaction and were trusted by
their superiors with their responsibilities.
However, 28.5% had no comment or refused to answer the question.
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The non-executives responded:
About 52.6% felt that they liked the company due to its environment, perks and
benefits. A total o f 18.4% said they liked the company because o f the job security,
stability and because it is an internationally known establishment. Only 2.9% said
they liked the establishment because employees are approachable and the
management is friendly, and 5.3% believed that they had job satisfaction and were
trusted by their superiors with their responsibility. However, about 15.8% had no
comment or refused to answer the question.
(B1 What you do not like about the company?
The executives responded:
About 33.3% o f the respondents felt that the main reason they did not like the
company was because o f the management style. They claimed that the
management:
Was slow to react.
Lacked consideration for employees feelings in certain decisions that were

made.
Were too centralized.
Were insensitive to employees suggestions or views.
Lacked trust in its employees.
Lacked rapport between management and staff.
About 8.3% felt that there was a lack o f communication between management
and employees and 4.2% o f the respondents felt each o f the following:
Employees were not aligned to a common vision.
The office workstation was out o f date.
The company lacked perks and benefits, and company regulations were too
strict.
The working environment was perceived negatively.
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The canteen food and service was poor.
The non-executives responded:

Almost 37.5% do not favor the companys management style. They felt the
management:
Practiced favoritism especially in the promotion process.
Did not reward the staff sincerely.
Had a slow process o f promotion.
Made it difficult to transfer to other division or departments and as result

restricted the career development o f the staff.
Lacked communication between staff and management.
A total o f 9.4% o f the respondents stated that they were dissatisfied with the
canteen service, and 6.3% said the company had an unfavourable working
environment. Each o f the following was felt by 3.1% o f the respondents:
Had medical hospitalization coverage for female staff spouse.
Lacked office comfort (too cramped)
Lacked benefits
Lacked support in sports activities
Had poor administration
Created an unnecessary building infrastructure
Finally, about 28.1 % refused to answer or comment on the question.
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The Researchers Experience as a Total Quality
Management Facilitator:
When the company started TQM in 1992, it was only introduced in one division.
The management considered this a pilot project. TQM was taught by an external
consultant. The program received negative response from the executives (especially the
senior and middle level executives) while the non-executives responded very well. Some
executives missed training classes held by the external consultant, especially the senior
managers and the directors themselves. Some o f them did not attend or participate in the
Management Improvement Team (MIT) meeting. They claimed that they had urgent
matters to handle. The researcher had the opinion that the executives did not like to
attend meetings as they perceived it was only a waste o f their time and effort to try to
make improvements if management does not follow through. The researchers prediction
was correct. When the team presented the group project (manpower issues in the
division), the survey results indicated that employees were not happy with management for
the high staff turnover. Since directors and senior management are not committed, the
lower management and employees just kept quiet. The researcher fully agrees with
Peters (1982) remark that:
Consultants and other practitioners sold their programs to lower level
management, like the training officers, and top management let them go a head
with it, as much to avoid getting their own hands messy as anything else, but these
supposed panaceas could not successfully be applied in a wholly bottom-ups way
71
that is to say, applied without intense top management interest. It simply wont
work. (p. 241)
The chairman responded negatively and employees were not surprised that the
TQM project stopped after one year.
The non-executives, however, enjoyed the MIT meeting very much and presented
their Work Improvement Team project very well. They were excited and their daily work
activity began to improve. They applied the simple check sheets and Pareto Diagrams to
solve their daily problems. They basically used the CQI knowledge taught in TQM
classes.
In 1994, the management stopped using the external consultants. TQM also
stopped as most managers did not want to spend more time in meetings. The failure o f
management to respond positively on their first project discouraged the executives to
pursue CQI efforts.
The Researchers Experience in
Gem ha K aizen
The researcher truly believes in the concept o f Kaizen because o f his personal
experience. Imais (1997) statement that you can not manage from your office room is
true. Since management sets goals for the worker, we must go to Gemba first. When the
researcher started his job as an operation executive to handle a ten-year old, secondhand
crude oil tanker in 1983, he did not have any idea how to handle the business in the
beginning. It was the first crude oil tanker in the fleet. Every time the researcher got
business for the ship, he had to drive over 100 miles to the port and take a boat ride to the
72
ship at anchor point. There, at Gemba, the researcher discussed the schedule o f the vessel
and the problems faced on board with the captain, the deck and engine officers, and crew.
Information and ideas were exchanged. Although the researcher and officers on board the
ship were faced with tight schedules, planning together and working as a team enable the
oil tanker to perform better than expected.
Data collected on such as steaming time, speed, and bunker consumption was
analyzed to find the optimum performance. The time wasted (Muda) waiting for
documents was solved with an Early Departure Procedure in which the custom papers and
shipping documents were sent by courier, thus saving 6 to 12 hours o f waiting per voyage,
and saving US $4,000 on ship time and US $1,000 on the bunker. We also discussed how
to save bunker (ship fuel) by empowering the captain to adjust the vessel speed and
analyze the water current to arrive at the port at the right tide, or to catch-up to berth
ahead o f other incoming vessels. Constant coordination with the cargo supplier, receiver,
ship agents at the terminal about berth availability and port conditions were passed to the
ship by telex or cable. This saved vessel waiting time at anchorage and ship fuel from
drifting the ship while waiting for berth. Cargo documents were also analyzed so that the
format could be standardized for easy recording and to make sure important information
was not left out.
The concept o f Kaizen was also applied when the researcher had to make the
voyage calculation. It takes twenty minutes to calculate the estimation o f the voyage
manually, even if only one variable is changed. When the company started to purchase
73
Lotus 123 (spreadsheets software), estimated voyage calculations were made with the
computer and from time to time the researcher improvised to make it better and better
(Kaizen). That program has been used for the past 12 years, and is still being used today.
It is sad to say that the person who took over did not improve it further.
The researcher had also experienced using the concept o f Gemba Kaizen when he
was a manager in one o f Organization As subsidiaries. In 1991. the researcher used the
concept o f going to Gemba, checked gembutsu, asked the clerk Why? many times to get
to the root cause o f the problem. Little did the researcher realize that the concept was
mentioned by Imai (1997) in his book, Gemba K aizen. For example, the researcher once
asked the worker Why a few times when he saw the box o f telex paper under the printer
table:
1. Qt.: Why is the box under the table?
Ans.: Because it is easier to put the wasted telex printed paper in there.
2. Qt.: Why is there wasted telex printed paper?
Ans.: Because the printer does not print properly and is often misaligned.
3. Qt.: Why is the printer not printing properly and misaligning?
Ans.: Because the telex paper holder gets stuck.
4. Qt.: Why is the telex paper holder getting stuck?
Ans.: Because the telex paper roll is thicker in diameter now.
5. Qt.: Why is it thicker in diameter now ?
Ans.: Because we need multiple paper for distribution.
By asking Why? many times (Imai, 1997, suggests 5 times), we can identify the
root cause and take suitable counter measures, such as the getting supplier to supply
thinner multiply telex paper, thus reducing the diameter size. This would resolve the
74
problem once and for all. This reduces the expense on carbonized telex paper, saves the
worker time in reprinting the spofled copy, saves printer ribbon, and less usage means less
maintenance required, and less unnecessary wear on the printer. After that, we
standardized the use o f the right telex paper to prevent a recurrence o f the problem. The
researcher believed that the concept o f Gemba Kaizen that was put forward by Imai
(1997) is a common sense and low cost approach to management.
Other employees in the company were doing their own Kaizen to make their work
life easier, more efficient, and to perform foster delivery in performing the given task. The
only problem is that they were not doing it continuously or collectively. The Kaizen
concept and strategies did not integrate with corporate goals. The concept o f the internal
customer, let alone external customer, was only introduced in 1993, during TQM classes.
Even that was only for the one division. The rest o f the employees may still be unaware o f
TQM. However, it never too late to start practicing Kaizen as soon as possible.
A Case Study - A Continuous Quality

Improvement Model for
Organization A
The researcher will now propose a suitable model for Organization A with some
consideration o f the companys background, and applying the researchers previous
Kaizen experience and observations. The model is similar to figure 1 in chapter 1.
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Set the Organizations Vision. Mission.
Values and Goals
Vision is defined as:
Vivid picture o f an ambitious, desirable future state that is connected to the
customer and better in some important way than the current state....The ideal
vision statement is...clear, involving, memorable, aligned with company values,
linked to customers needs and seen as a stretch that is, difficult but not
impossible....A vision has two vital functions...One is to serve as a source o f
inspiration. The other is to guide decision making, aligning all the organizations
parts so that they work together for a desirable goal. (Whiteley, 1991, p. 26-27)
An organizations mission is stated as:
The articulation o f the vision will be in the form o f a mission statement. The
Mission Statement is the most important vehicle for communicating the objectives
o f total quality to the organization, and to external bodies as well. Mission
Statements usually contain an overall statement o f the goals o f the business,
followed by a number o f bullet lines on the means by which they will be achieved.
( Hutchins, 1992, p. 156)
Evans and Lindsay (1996) state that Value, or guiding principles guide the
journey to that vision by defining attitudes and policies for all employees, which are
reinforced through conscious and subconscious behavior at all levels o f the organization
(Evans and Lindsay, 1996, p. 200). Values are determined by customers. Therefore,
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quality council members should seek important customers for their views in this area. Ask
the customers what their expectations o f a good shipping company should be.
For the purpose o f O rg anisation As vision, mission, and values the researcher
seriously suggests that top management look inward in terms o f how their management
style has caused great dissatisfaction among executives and non-executives. The factors
o f dissatisfaction have been discussed in the above survey reports. Employees were
against the bureaucratic and authoritarian management style and the survey indicated that
employees were eager to participate, wanted to get involved in making decisions, and
wanted to be empowered. Looking at it from a different perspective, is a positive sign.
The employees want management to seek their point o f view and take their views into
consideration, Le., to be part o f the organization. With this kind o f spirit, 50 percent o f
the key ingredients o f the CQI effort have already been achieved before it has even started.
The ball is in the top managements court now.
This is where management must establish a quality council. The quality council
members must seek employees inspirations, talk to major external customers, study the
organizations strength and weaknesses, and then develop a vision for the company. More
will be covered about a quality council under corporate strategies below.
Organisation As Corporate Goals
Evans and Lindsay (1996) state that Goals are broad statements that set the
direction for the organization to take, in realizing its mission, and closing the gap between
where it is and where it wants to be (p. 201). For Organization A, the researcher
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proposes that the management focuses on the customers as their first priority. All action
in the o rganization must be on adding value for the customers. The organizations
customers will be employees (internal customers), the shareholders, the external
customers, and the com m unity- Harvard Business Schools Theodore Levitt advises:
Industry is a customer-satisfying process, not a goods-producing process. Know
your customer as you know your own fondly, satisfy the customer completely, and
youll succeed....The key is that everyone throughout the organization, starting
with the leader, must gauge every action against customers needs, expectations,
and wants. If an action isnt adding value for a customer, simply eliminate it. (cite
in Whiteley, 1991, p. 41)
Organization A should be customer-driven in order to create a transforming
company-wide belief. In order to achieve a customer driven organization, Whiteley
(1991) suggests three things which the researcher summarized as follows: (1) management
must carefully target whom they want to be their customers; (2) they must get to know
those customers better then they get to know themselves. The entire organization must
work to identify what the customer needs and expects, now and in the future; and (3) they
must inspire everyone in the organization to measure every action against the customers
needs and expectations, and to strive constantly to exceed those expectations (pp. 41-42).
It is also important to remember the service profit chain o f an organization requires a
strong relationship between the internal customers satisfaction and the external
customers satisfaction. The happy and satisfied internal customer helps to bring external
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customer satisfaction with the service, and this will bring employee loyalty and, eventually,
customer loyalty too.
Organization As next goal should be a Quality Customer Service Delivery System
and equipment. Alberecht and Zemke (1985) mentioned that:
The service system is all apparatus, physical and procedural, that the service
people have at their disposal to meet the customers needs....M uch o f the service
system consists o f the physical facilities....less visible activities....M aintenance and
repair o f facilhies...Even though the customer never sees these and other key parts
o f the system, they are essential to delivering the service....The key success factor,
where the service system is concerned, is the customer-friendly system, (p.77)
The service system should be well planned and the executed service system should
become simple and less complicated.
As for Organization A, the apparatus, physical and procedural will be suitable ships
to carry the customers cargo; efficient running o f the equipment on board the ships;
effective communication equipment through which customers can reach company
personnel at any time; professional operation, marketing, and other customer service
personnel; proper documentation and contract; sufficient advice o f the ships position;
clean container, tank and cargo holds; and the timely arrival o f the prime mover. The less
visible activities will be a quick response to customers complaints, a fast telephone
response time, correct information, and good ship maintenance, which insures quality
vessel performance. The bottom line o f the service delivery system should support the
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employees by treating external customers as a shipping partner, and should avoid
documentation and procedures that create confusion, unnecessary paper work, and delays.
It would also mean a speed o f execution in responding to customers requirements, and
good handling of problems in any given situation.
The next goal o f Organization A should be to reduce waste at all levels and
improve service delivery. Reducing waste, or *Muda elimination, will help to increase
profit without even soliciting new customers, and new market development. Improving
the delivery o f service will make customers happy, and the company should also align ail
CQI efforts toward improving profit and growth.
Corporate Strategies
Strategy is the key action by which Organization A will achieve their goals. As
mentioned in the literature review summary, it is important that CQI activities start with
total commitment from management and employees. Without this, CQI or TQM or
Gemba Kaizen activities will fail. For Organization A, the researcher had already
highlighted the readiness o f lower management and non-executives to participate in dayto-day business activities. All it takes is for management to change their attitude and
management style.
The next strategy is to select tools for managing CQI. As discussed earlier,
Gemba Kaizen and some TQM concepts are a low cost approach to use. Management is
required to establish Quality Councils. This is the first step o f a thousand in a CQI
journey. This Quality Council for Organization A should be represented by the
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Management Team such as m anaging directors, deputy managing director, and divisional
directors. Senior executives, facilitators, the human resource manager, and union leaders
should also be included. The responsibility o f the Quality Council as mention by Ebel
(1991) can be summarized as follow:
1. Live by, and exemplify, the CQI principals.
2. M aintain the employees focus on CQI in work life, skill, and tools.
3. M aintain aw areness o f em p lo y ees attitudes.
4. Pursue greater levels o f and more meaningful, participation.

5. Ensure on going control and improvement in all aspects o f the organization,
(pp. 71-72)
Training will remain the most important aspect o f CQI. To change the culture o f
O rganization A, the CQI activities must be put into daily work practice. The Quality
Council must determine the kind o f training that is needed for the entire work force.
Levering and Moskowitz (1998) reported that surveys show that successful companies
spend from IS hours per year for each employee (Southwest Airlines, USA) to 80 hours
(Coming USA) on employees on professional training (pp. 84-85). The Quality Council
members must first attend CQI training sessions. Training should cover SPC,
problem-solving techniques, graphic applications, check sheets, PDCA, PDSA, TQM and
Kaizen philosophies, cost o f quality, effective customer service, how to conduct and
design survey forms, and other related quality issues.
Another important corporate strategy is measuring customer satisfaction,
benchm arking, and market research. Only by measuring these can Organization A know
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where they stand, and whether there is a gap between employees perceptions and what
the customers perceive as satisfying their needs. Measuring should cover all activities that
are related to customers directly or indirectly, as well as all aspects related to the Quality
Customer Delivery System.
Organization A should also continue to create an awareness o f quality and
customer service all the time. This can be done by putting up posters, having
cross-functional team competitions, bulletins, and regular visits o f management at Gemba,
etc. These help employees to continually focus on quality and the importance o f
customers.
Process Management
According to Evans and Lindsay (1996):
Process management involves planning and administering the activities necessary
to achieve a high level o f performance in a process, and identifying opportunities
for improving quality and operational performance, and ultimately, customer
satisfaction. It involves collection o f data; controlling o f the process by
identifying, analyzing, and correcting abnormal conditions; identifying and
implementing improvements; and maintaining these improvements, (p. 327)
This technique is the same as the Gemba Kaizen approach suggested by
Imai,(1997).
These require using a control chart to analyze the process, going to see Gembutsu
at Gemba, taking temporary counter measures on the spot, finding the root causes by
82
asking Why five times, and applying the standard to prevent a recurrence o f the
problems. PDCA and PDSA are part o f the daily process. This can be further enhanced
through the problem solving technique o f cause and effect diagrams, check sheets, Pareto
Diag ram s., and other TQM and Kaizen techniques. This is what management-by-fact is all
about: data collections that can be analyzed to solve problems.

As Organization A has never developed a proper system in terms o f measuring and
benchmarking, they need to start with something simple and achievable. The company can
start with internal measures. This can be done through management directive and regular
meetings with staff about the importance o f measurement as a tool to improve our service.
After training and in-house seminars, managers will hold discussions with their workers
and start to identify who their internal customers are within the department itself. This can
be in areas such as the accuracy o f description, proper filing, proper records, up-to-date
records, proper billing, error-free documents, proper transferring o f phone calls, a well
organized and presentable work environment, and faster execution o f work.
The process then can be extended by a measuring the customer service o f a
department in term o f other departments. A department can meet with their internal
customers (other departments who receive their departmental output) for a focus group
meeting. This focus group will discuss, comment, and make suggestions as to how the
other department is servicing them. Once this is finalized, the manager will set new
standards and draw up procedures so that the new standard will be followed. This cross
functioned interaction team must be first approved by the Quality Council to ensure that
83
what the team is trying to accomplish indeed creates a significant value enhancement to
the present service.
Once the workers are familiar with the internal measure exercises which can take
approximately six months, they can start measuring their customer service in terms o f their
external customers. The company must first focus their attention on their most important
customers. The same procedures can be applied beginning with regular focus group
meetings (with the companys strong supporters), a visit to customers offices and
facilities, and a customer survey. The organization also needs to talk to their agents,
brokers, forwarding agents, tank installation operators, customs, and port authority. With
seriousness, persistence, and patience, measuring can help the company to set a new
direction towards customer service. Again, the Quality Council plays a role in approving
this project. The approved project should include cross-functional members from the
related departments. The Quality Council will give the project charter to the team and let
the team be part o f the participating teams for the annual work improvement team
competition.
The customers needs will cover various process levels within the organization.
This process involves marketing, operations, administratio n , finance and insurance. Using
the five measurement systems, the organization would require details and an
understanding o f all the work processes that are linked to the customers needs, directly or
indirectly:
1. Marketing personnel will be dealing with the shippers and charterers. The
company needs to measure how the marketing people service them in areas like
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response to orders, friendliness, negotiation style, quick regular advisement o f
the vessel's position, competitiveness o f freight level, and the confirmation o f
the fixture's details for the use o f operations personnel, administrative
personnel, and the finance department.
2. The operation personnel will be evaluated on sufficient advisement o f the
vessels arrival time, fast vessel turnaround, proper ships documentation and
records, following the heating instruction for vegetable oils, smooth operation
o f the vessel (no breakdowns), no contamination, no oil loss, properly cleaned
tanks (tanker business) or containers (liner business), and proper coordination
with the receiver.
3. The administrators will involve company head office personnel and agents at
each load and discharge port. They will be measured on proper preparation o f
Bill o f Lading, the statement o f ships time in port; manifest; proper and fast
dispatch o f documents to the discharging ports agent, good communication
with the shippers operations and administrative personnel, timely release o f
the Bill o f Lading upon freight confirmation received from the companys
finance personnel, and other required documents for shippers or charterers.
Telephone operators will also be evaluated in terms o f how they respond to
customers calls. The clerical staff will be measured on their performance on
correct, 'error- free, and timely typing o f the charter party or contract.
4. The finance people, along with the agents, will closely monitor that there is no
excess port disbursement money tied-up in their hands, to ensure that the
freight is properly billed (telex-invoice) to the customers, that the freight is in
the bank, that a good liaison with the shippers or charterers account section
has been created, and they also advise the agent to release the Bill o f Lading to
the shipper upon receipt o f the freight.
5. The in-house insurance department will be measured on the way they respond
to customers claims, and how long it takes to process the claims.
All o f the above may directly or indirectly involve charterers and the customers
needs. Measurements that involve the customers directly will be forwarded to the
customer, while the indirect link to customers will require measurements between each o f
the process levels within the organization itself. All these can be measured through a
survey form with a numeric scale such as 1 to 7 (1 poor and 7 -- excellent). Some
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open-ended questions will be asked to see if there are other needs that may be necessary
to include in future measurements. This survey will be done when the work process has
ended, or upon completion o f each voyage, when charterers cargoes were safety delivered
and free o f claims. Focus groups will also be conducted from time-to-time, when
required, to solve certain problems urgently. All the related process levels personnel and
customers would meet. In the focus groups, these standards must meet the MARC
(measurable, achievable, relevant to customers, and controllable) criteria all the time.
A Standard, Do, Check, and Act (SDCA) cycle will be used to make sure the
standard procedures are being followed. The department will send a copy o f the
customers report cards every time work is provided to the customers. The customer will
then send their feedback on their level o f satisfaction to the divisional directors. Any
deviation from the standard will be checked and analyzed so that it will never happen
again. Once the work process is stabilized, the department will begin thinking o f how to
improve the system through a Plan, Do, Check and Act (PDCA) cycle. This will help to
elevate the current standard to a new improved level. Then SDCA will take over again.
This Kaizen concept o f PDCA and SDCA cycles will continue to elevate the companys
performance towards satisfying their customers. It must be remembered that it is not a
fancy survey feedback that is looked for. Instead, it is consistency that counts.
Measurement must be a regular part o f the business cycle.
Organization A has been found to use Activity-Based Costing (ABC) in their
MPR. This ABC is a new approach to management accounting which the researcher
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thinks needs to be a true reflection o f the cost matrix relationship. However, the company
should take one more step to ascertain Cost o f Quality. There are many hidden costs o f
inefficiency which are incurred all over the business sections. Through team projects,
however, there is no doubt that this cost o f quality will slowly be revealed; a more
aggressive approach should be planned by management. Improvement in this area can be
rewarding. The cost o f quality can include preventive maintenance on board ships.
Japanese ship management has long been practicing this. Current MPR systems have
made engineers put aside most preventive maintenance in order to bring down their
monthly and yearly expenses. However, preventive maintenance will reduce dry-docking
costs. This is just one improvement area that can be done. Many other areas can be
looked into by management and various project teams. A simple switching o f the telex
system to electronic mailing will save the organization thousands o f dollars.
The organization should also develop supplier partnerships, especially with
shipbuilders. Currently, the tender system does not encourage partnerships. In the long
run, however, cutting comers and reducing specification will happen without the ship
owner (buyer) being aware o f it. Supplier Rating Systems (SRS) or Partnership Systems
have advantages that help organizations satisfy their customers. Below are some o f
the advantages:
1. Suppliers consistently provide high-quality products, Le., conformance to
specification, and shipment-to-shipment consistency. It also helps to ensure
the reliability and performance o f the products made that they supplies to its
buyers.
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2. Suppliers help to share market intelligence which enables the customer to
react toward the ever-changing market conditions quickly and costeffectively.
3. Suppliers help to identify and eliminate costs from the entire supply chain, and
then can reflect these cost-savings in their pricing.
4. Some o f the suppliers can offer technology that provides a competitive edge
in the market place.
5. Suppliers also help to keep prices competitive through defect-free and low
price materials.
6. Suppliers are sometimes able to operate under sound health, safety, and
environmental performance standards.
7. Suppliers, at all levels, may able to be flexible and creative when dealing with
organizations market changes.
8. Suppliers offer assurance through factors such as ISO 9000 certification that
quality assurance standards are built into the manufacturing and distribution
system.
9. The SRS helps the company to generate a greater awareness among suppliers
to achieve a higher supplier performance. When integrating this with other
operating functions, a supplier rating can serve many purposes ranging from
monitoring quality costs to tracking the timeliness o f incoming materials.
10. The SRS helps to reduce the number o f suppliers, and buyers can concentrate
on partnering with fewer suppliers. In 1980, Xerox purchased components and
parts from 5,000 vendors worldwide. It now has fewer than 400 vendors
(Power, 1994, p. 16).
Housekeeping and waste elimination is the Gemba Kaizen way o f managing, and
should be part o f the daily way of running the business. The five Ss that can be used in
the housekeeping exercise are: Sort, Straighten, Scrub, Systematize, and Standardize. All
non-value adding activity is classified as waste. Details o f these approaches have been
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covered in chapter 2. This housekeeping and Muda elimination activity can begin in every
unit and department in each division.
Visual management is lacking in Organization A, as indicated on the survey done
previously. It proved a point that people always need to interact with the management
team. Management visiting and interaction with employees can make employees feel good
and it also shows that management is concerned with what employee do in the CQI effort.
Management also will get the real "feel o f what is going on in Gemba. This way,
management can closely observe what needs to be done about developing front- line
employees capabilities.
Two-way communication must also be practiced in the organization. The practice
o f visual management through various team activities and competitions will help to
improve this situation greatly. This would also mean that management must respond to
the project teams proposals after the team presentation in order to encourage permanent
employees buy-into CQI efforts. In the survey results, Organization As employees
claimed that management did not communicate well. Sam Walton once said:
Communicate everything you can to your associates. The more they know, the more
they care (cited in Freiberg and Freiberg, 1996, p. 285). Freiberg and Freiberg explained
that Southwest Airline is known for saturating their people with information that helps
them understand the company better, as well as its mission, customers, and competition.
Freiberg and Freiberg further explained that customers who deal with Southwest Airline
employees rarely get the run-around. Instead, they usually deal with Southwest employees
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who are well informed, make sound decisions, and use a creative problem-solving
approach (p. 285).
Continuous Performance Measure
There are many ways o f measuring performance in the departments, in the
divisions, and with external parties outside the organization. Within the departments,
simple check lists can be applied to make sure all areas o f work have been completed.
This check list can be used on board the ship in handling the customers cargo. Manuals,
procedures, and flow charts can be a useful tool in helping employees to perform
consistently. Any CQI effort can start with a flow chart. Improvements made will then
be updated in manuals and written procedures.
All performance procedures can be displayed on a performance notice board.
Management should breakdown long-term goals into small short-term goals. This can
help employees to work toward the goals more comfortably. The performance notice
board can also be used for:
1. Charts, graphs and other statistical business results
2. Project charter and findings
3. Customer complaint letters
4. CQI training schedules
5. Kaizen Success Story o f the Week a good individual or team project that
enhances work
6. Results o f monthly external customer satisfaction evaluations
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This notice board will help employees share knowledge, and keep employee
focused on the short-term goals.
Management can send their team o f internal auditors to the various departments to
check on performance. It must be noted that the function o f the auditor is not to try find
fault. The objective is to help the department, or unit, to perform as expected by ensuring
that the unit, o r department, has the proper manuals and procedures in place. Most
im portantly, however, is whether the systems become a barrier to customer service or not.
Analyze Outcomes R eg u larly
This is an important exercise that must be done on a continual basis. The purpose
o f this activity is to ensure that the CQI activities achieve their corporate goals. As
mentioned in previous chapters, the bottom line o f CQI is to satisfy the needs o f the
external customers, employees, shareholders, government, and community. Profit and
growth require high quality service, low costs, and fast delivery. Since the manager is
responsible for meeting the target set by top management, it is his or her duty to analyze
the improvement made and report on it monthly in the Quality Council Meeting. The
results o f self-appraisal and customer feedback will be shared with other departments.
This is to encourage internal Best Practice exchanges. It is up to the individual
managers to learn from the successes o f other departments.
The causes o f any shortfall in meeting targeted corporate goals will be
brainstormed during Quality Council sessions. More data will be collected to ensure that
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correct root cause is identified. Corporate strategy and process management will be
reviewed to make sure the result is achievable the next time.
Rewards and Recognition
(a)
Employees and Team. Rewards and recognition should not be o f high
monetary value. As much as possible, it should be given to team members rather than
being based on individual participation. Recognitions, ceremonies, and symbols are
important underpinnings to the successful functioning o f CQI, or the TQM process. An
expression o f appreciation for a job well done can be as formal as a written "thank you.
or a plaque, or a certificate. An informal verbal thank you can also encourage morale.
There are some variations between the Japanese and Western methods o f rewarding the
worker. Imai (1997) mentioned that the Japanese method does not encourage large
monetary rewards. To them, monetary gain demeans the process. They do recognize the
workers efforts. Rewards for suggestion ideas from the workers are given on the basis o f
the number o f ideas they contribute, and it does not really matter if it saves the company
$1 or $100,000. Each suggestion will receive a point that later can be converted into
products or services, such as a holiday trip, or $5 worth o f merchandise (depending on the
accumulated points). Oliver (cited in Imai, 1997) gave examples o f rewards. For
example, managers are encouraged to know their workers by name. To make this plan
workable, the company gives 25 tokens to hand out during the coming year for every 100
workers in the department. The manager will give a token to the worker who did an
exceptional job, whether the work was consistent or incidental. This process not only
92
increases the managers awareness o f the worker's name, but it also increases the
motivation o f the worker to be recognized by performing well and by receiving the token.
A bag may be given for the second year, and a company T-shirt may be the reward for the
third year. Workers who receive this token must be singled out by a manager for
exceptional performance (Imai, 1997).
Reward and Recognition (R&R) have various functions in the CQI system or
TQM organizations:
1. They improve the reinforcement o f quality-related behavior and achievements.
2. CQI or TQM processes demand good workers, team players and
cross-functional activities. R&R can motivate these individuals and groups to
continue their active participation in the organization. It will also create a
positive environment for various teams to compete against each other and
these give a win-win situation between the organization and employees.
Workers can also be motivated to utilize TQM tools, solve problems, and to
interact with internal and external customers.
3. R&R improves CQI or TQM organizational culture.
4. A study conducted by Pfau and Gross (1993) for Conference Board in 1991,
found that those looking toTQM for a quick fix were likely to be disappointed.
According to Troy (cited in Pfau and Gross, 1993): Patience, leadership, and
the ability to nurture a long-term commitment to TQM is crucial to promoting
and enlivening the buy-in process (p. 11). How does an organization create
such a culture? Pfau (1993) further reported that 1992 report on a general
accounting office study o f the TQM o f 20 companies divided the approach to
quality into two categories: Little Q and Big Q. The Little Q approach
emphasizes training and other tools, but lacks an overall strategy and top
management support. The Big Q approach, led by management, has a
well-articulated strategy, and is fully integrated in the companies. The Big Q
strategies require fundamental changes in a companys culture, structures, and
processes (p. 11). According to Knouse (1996):
Corporate culture has several essential components corporate values,
leadership, and the reward structure o f the organization. The reward
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system reflects the corporate philosophy-- democratic and innovative o r
autocratic and stifling. Promotion and rewards cements employee
commitment to corporate values in the corporate culture. R&R will serve
to initialize organizational values, such as quality, in the employees.
(pp. 18-19)
According to Demings (1982) terms, R&R can help transform the
organization toward a philosophy o f quality.
5. They flag organizational values.
6. The R&R system will increase the awareness among workers that management
is prepared to reward them if they are serious in applying TQM values, such as
quality, customer satisfaction, and continuous improvement. Employees will
have higher instrumental motivation if they work in organizations that are
consistent in their R&R process and the workers will perceive management
initiative as a fair effort by management. This will extend the feeling o f trust,
and create a strong sense o f belonging in the organization.
7. They indicate achievement.
8. Some forms o f recognition, such as awards and plaques, show publicly that the
individual o r team has achieved some degree o f success with TQM. They are a
visible indicator, both to the team and to outsiders, o f a job well done.
9. R&R activities provide feedback.
10. Recognition is also a form o f feedback about the result o f individual or team
efforts. It shows the individuals or the teams that they are on the right track
toward continuous improvement. Recognition as feedback can come from
supervisors, other teams, internal customers in the organization, or external
customers in the marketplace.
11. They show the organizations appreciation o f effort.
12. Recognition highlights employees and teams who make a definite contribution
to the CQI or TQM effort. Such recognition stimulates additional effort in
employees.
(b)
Suppliers. Suppliers are our partner and they are together with us in the
business. It is also important to recognize their effort so that they can continue to
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understand and support our needs. A supplier can be recognized by means o f Supplier
Award given at an annual dinner, or during a designated day o f appreciation for them. A
Certificate o f Achievement can also be given at the ceremony. This certification is a
valuable tool to prove supplier capability, an important credential in helping the supplier
gain other business.
(c) Customers Appreciation. Recognizing our external customers can be in the
form o f volume discount o f freight rate in future business. These often create customer
loyalty. A discount on freight helps our regular customer to be more competitive in their
business.
(d) Return to Shareholder. This is often done, with sufficient profit, in the form o f
bonus issues. Bonus issues will encourage shareholders to continue investing in the
organization. These actions help to stabilize the organizations share prices.
Summary
This CQI model will help the company to improving their business cycle by
continuously measuring and counter-checking the CQI results with corporate goals. Any
change in corporate strategies must also be aligned with a suitable method o f measuring
the results.
CHAPTER 5
CONCLUSION
This chapter will first summarize the whole study. Then the researcher will look at
the strengths o f the company which are in favor o f the CQI approach. The researcher will
then make recommendations for Organization As top management in order to ensure the
success o f CQI. Finally, the researcher provides some suggestions for the future research
on CQI.
Overview o f the Study
The researcher has described various CQI, TQM, Gemba Kaizen gurus and the
philosophies, concepts, and strategies o f other experts. Out o f these guidelines, the
researcher has developed a suitable CQI model for Organization A. These approaches,
which the researcher calls a CQI Business Focus, have some key differences compared
with the Management-By-Objective (MBO) Business Focus. The summarized content o f
both CQI and MBO Business Focus can act as a quick check list for management, and
they are listed in Table 1.
The results o f the study show that the CQI model is suitable for application in
Organization A. A few recommendations are made for the top management in ensuring
the successful application o f the modeL The researcher strongly believes that the CQI
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96
Tablel.
Comparision o f Manapement-Bv-Oiectives (MBO) Business Focus Against Continuous
Quality Improvement (COD Business Focus.
M BO
Remedial for short-term results.
Employees are the source o f the
problem.
Plan, assign, control, and enforce.
Manage by objective and budget.
Cost cutting percentage across the
board.
Do work as per job description.
Operation basis vertical line o f
response.
Employee responsible for error and
how this affects his or her appraisal.
Managers solve the problems.
Wait for management approval to
make changes.
Quality is Quality Control
Departments responsibility.
Measuring individuals performance.
Monetary reward to individuals.
Employees are a companys liability.
Top-down communication.
Meeting specification.
Each business section is responsible
for their own bottom line.
Supplier selection on tender basis.
Detection o f errors.
Profit oriented.
CQI
Improvement for long-term results.
The systems and processes are the
problem.
Delegate, facilitate, and mentor.
Balance the scorecards.
Manage cost o f quality.
Team and cross-functional effort.
Operation basis horizontal and
vertical lines o f response.
Did the system foil to support the
people? Is it because a lack o f
training or clear instruction?
Teams solve the problems.
Team are empowered to implement
the changes.
Quality is everyone responsibility.
Measuring the process performance.
Non-monetary recognition to teams.
Employees are companys greatest
assets.
Two-way communication.
Continue improvement even after
meeting specification.
We are all working together
towards achieving common goals.
Building supplier-partnership.
Prevention and reducing variation.
Customer oriented.
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M odel will work in Organization A because o f the following reasons:
1. The employees want to participate in the decision making process.
2. The CQI or Gemba Kaizen strategies do not require high costs or
restructuring.
3. The employees are highly experienced and that is a great asset to the company.
4. The company is stable and provides job stability.
5. CQI can start immediately without the need o f a High technological
infrastructure.
6. CQI processes require cross-functional team work and this helps a
management kill two birds with one stone. By having this team, management
can allow employees to participate in problem-solving activities. Team
activities will also improve two-way communication between management and
employees.
Recommendations for Organisation A
The researcher will list some recommendations for the management o f
Organization A to ensure the success o f CQI in their organization. The researcher
suggests that the organization invest in its employees. The present management system,
which has more o f a MBO business focus, directly o r indirectly caused the imbalanced
situation in the organization. The over-emphasis on assets, budget, and profit rather than
on the people that stand behind the success o f the company, has hurt the executives
tremendously. W ith the aggressive fleet expansion plan, the organization would definitely
require the right people for the future tasks.
However, continuing to run the company the way it is now will not guarantee that
experienced executives will not leave the organization. Employee loyalty to the company
98
has eroded drastically. Since employee loyalty is part o f the service-profit-chain. and an
important ingredient in CQI processes, management must seriously look into this matter.
The desire to apply the CQI model proposed by the researcher is not sufficient unless the
people are ready, the management is committed, and the systems are supportive. These
ingredients must be integrated properly for CQI to function effectively.
Management must be able to convince employees that management is putting
employees first, above all, and that employees are the companys greatest assets.
According to Rosenbluth, CEO o f Rosenbluth International, The customer comes
second. (cited in Heskett, Sasser, and Schlesinger, 1997, p. 241). Heskett et aL, (1997)
explained that what Rosenbluth meant is that the employee is the pathway to the
customers heart. Heskett et al. (1997), wrote that:
Putting employees first requires that managers spend unusually large amounts o f
time on the service front lines with employees, personally lead developmental
efforts, spearhead efforts not only to redesign front-line jobs to provide greater
latitude, but also to introduce technologies and other supporting mechanisms to
make front liners more successful at what they do, and actually support higher
wages as a means o f lowering overall labor costs in relation to revenues, (p. 241)
This is where the Human Resources Division (HRD) in Organization A can play a role.
HRD must plan to improve the current situation by benchmarking the companys benefits,
terms, and conditions with other successful companies.
99
Management must convince employees that they are able to change their
management style and have a more democratic approach. The secret to this is that
management must be transparent and sincere in their thoughts and actions. Management
needs to celebrate employee successes, visit them in the hospital when they are sick, care
about employees family problems, and provide them with a sense o f security. Rewards
and recognitions must be the new culture in ensuring CQI success. In other words, Drive
out fear as suggested by Demings (1982) eighth point in his 14 points(see Chapter 2).
CQI should not have any implication o f loss o f jobs or career advancement. Leadership by
example can help to lead employees to CQI success.
Management must also be passionate for CQI in order to see results. It is a long
journey and it will not happen overnight. Organization A is no exception to this situation.
Management should help to educate the employee with CQI knowledge and how to use it
in daily activities. The process o f changing paradigms and corporate culture will happen.
When gradual improvements start to show up, the employees mind set begins to change
and new paradigms start. We will soon see that the power o f the people will transform the
organization to new heights. Always keep customers in mind and heart, and measure,
measure, and measure their satisfaction regularly.
Getting information and data collection is only part o f the journey; the other part is
fixing the problems with corrective action. The researcher has described some o f the tools
that can be used when applying the CQI model. It would be wonderful if we could create
joint corrective action teams with customers, which can generate useful ideas for
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improving service quality. The continuous feedback system in the CQI model presented
by the researcher will help the organization achieve the establish goals.
Suggestions for Future Study
It would be interesting, in the researchers opinion, to also include a customer
survey in the study. Gap analysis should be used to check how we perceive customer
satisfaction against what the customers actual expectations are regarding our service.
Managements understanding o f such a gap will bring awareness o f a problem in analyzing
customer satisfaction correctly. This can provide an excellent way o f developing
appropriate solutions such as the need to listen more closely to our customer.
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and human relations: The U.S. TWI Programs and the Japanese management style.
California M anagem ent Review. 35 (21. 35-57.
105
Svenson, R., Wallace, K., Wallace, G., & Wexler, B. (1994). The quality
marlmap- How to get your company on the quality trackand keep it there. New York:
AMACOM.
Whiteley, R. C. (1991). The customer driven: M oving from talk to action.
Reading, MA: Addison-Wesley Publishing Company.
APPENDIX A
APPENDIX A
SUMMARY REPORT OF AN INTERPRETATION OF

CLIMATE SURVEY DATA PERTAINING TO DRY
BULK SERVICES/TANKER SERVICES
DIVISIONS
1.0
BACKGROUND
Persuant to the mission assigned by the Policy Deployment Team to our
Management Improvement Team (MIT) which read "To exam ine the current
inventory levels o f hum an re so u rc e againts current and future requirements,
making recom m endations o n an action plan to meet needs".
Data was collected based on the following factors:
1.1
1.2
1.3
Monetary
Management
a) The Organization
b) Division
About the job and Career Advancement
The climate survey was completed in November, 1993.

The methodology o f the climate survey was a survey questionnaire distributed to
all 39 executives in the division, o f which 31 executives responded (Le., a response rate o f
80%).
2.0
INTERPRETATION OF DATA
2.1
Monetary
A. A total o f 22.6% o f the respondents rated the remuneration package o f
the company compared to other companies in the country as good and
48.4% said it was fair. However, the percentage o f respondents who
rated it very good was small, Le., 3.2%. Furthermore, quite a
significant percentage (26%) rated the company's remuneration
package as poor.
107
108
B. A total o f 48.4% o f the respondents rated the remuneration package o f

the company compared to its competitors within the region as fair and
16.1% said it was good. However, quite a significant percentage
(35.5%) rated the companys remuneration package as poor.
C. The respondents were requested to indicate the areas in which the
company was less competitive, which are listed below in rank order:
Allowances
80.6%
Salary
74.2%
Benefits (medicaUeaves,loans etc) 64.5%
Bonuses
51.6%
Other perks
12.9%
2.2
Management - Corporate
A. Over half (56%) o f the respondents found the companys overall
management style bureaucratic and 40% said it was authoritarian.
A small percentage felt that it was participative and democratic (1
respondent).
B. The respondents were requested to indicate which management style
the company should adopt. All the respondents (100%) would like to
see that the company adopt a participative and democratic style.
C. A total o f 60.8% o f the respondents stated that the decision making
process in the company were done by one or two persons and the views
o f the majority sought but not taken into consideration. Over one
fourth o f the respondents (26.1%) felt that the views o f majority were
considered and only 4.3% said that views o f the majority were take into
consideration.
D. The respondents were requested to indicate the timing o f when the
important decision were officially conveyed to them. The majority
(88%) indicated it was during and after the implementation o f the
decisions. Only 12% said that they were informed immediately after or
when the decisions were made.
E. The respondents were requested to indicate how the company treated
them. The majority (87.5%) felt that the company treated them as
liabilities. Only 12.5% o f the respondents felt that the company treated
them as a valuable assets.
109
2.3
Management - Division
A. Nearly half (44.4%) o f the respondents found their divisions overall
management style was participative and democratic. The rest said it
was either bureaucratic (37%) or authoritarian (18.6%).
B. Almost all o f the respondents (96.5%) stated that the division should
adopt a participative and democratic style o f management while the
balance (about 3.5%) gave their own opinion o f management.
C. When we asked how the decision making process was carried out in the
respondent's respective division, the distribution was quite even as
28.6% said that the views o f the majority were considered, 25% said
that the views o f the majority were sought but not taken into
consideration, 25% said it was done through committee, and 21.4%
said it was done by one or two persons.
D. A total 46.4% felt that they were informed by their division o f any
important decisions during the implementation o f the same while about
28.6% and 25% felt that they were informed at its source and after the
implementation o f the decision, respectively.
2.4
About the Job & Career Advancement

A. When we asked the respondents where would they be in five (5) years
time, the majority (51.7%) said that they had no idea at all, 34.5% said
they would be in a higher grade while 13.8% felt that they would still
be in their same position
B. Almost half (48.5%) o f the respondents felt that they had mixed
emotions when asked whether they were happy with their
responsibilities. About 42% said that they were happy with their
current responsibilities while 6.5% felt otherwise.
C. A total o f 83.3% o f the respondents felt that they had been entrusted
with the right responsibilities while the rest said the opposite.
D. When we asked whether respondents received sufficient guidance from
their superiors, 50% said 'Y ES while the other 50% said 'NO'.
110
E. We asked the respondents who replied 'N O' to the previous question
what the areas are they need most. These are rank ordered below:
76.9%
69.2%
61.5%
23.1%
15.4%
Attending special courses or programs

Exposure to new responsibilities
Job enrichment
* Constant coaching & counselling
On-the-job-training
2.5
Interpretation
The last question we asked the questionaire respondents was which o f the
following main topics (Monetary, Management Style and About the Job and Career
Advancement) had the highest impact on them pertaining to their day-to-day functions.
We found that 63% said Monetary, followed by Management Style with 21%, and About
the Job and Career Development with 16%.
Below is the summary o f our findings for this question:
High
Impact
Monetary
Management Style
About the Job & Career Advancement
63%
21%
16%
Medium
Impact
Low
Impact
27%
21%
42%
0%
58%
42%
APPENDIX B
SPC P r e s s ,
in c .
STATISTICAL PROCESS CONTROLS, INC.
April 8, 1998
Alias BE Jalaludin
California State University Dominguez Hills
1893 BE, Fiesta C l
Columbus, OH 43229
Dear Mr. Jalaludin:

We are delighted to give you permission to use the following figures from The World o f
W. Edwards Denting by Cecelia Kilian in your M aster Thesis:
Figure 3.1, pg. 24: Production Viewed as a System
Figure 3.2, pg. 25: Chain Reaction from Improvement of Process.
Please include the following information in your citation:
The World ofW. Edwards Denting, 2nd Edition

1992 Cecelia Kilian
Used by permission of SPC Press, Inc., Knoxville, Tennessee
All Rights Reserved
We wish you the very best in your work.
Sincerely,
Frances Wheeler, President
5908 Toole Drive, Suite C Knoxville, Tennessee 37919 phene (423) 584-5005 fax (423) 588-9440
112
yLsr
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CONTINUOUS QUALITY IMPROVEMENTA MODEL FOR A SERVICE ORGANIZATION

UMI Number: 1393850

UMI Microform 1393850

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CONTINUOUS QUALITY IMPROVEMENT A MODEL FOR A SERVICE ORGANIZATION

Alias Bin Jalaludin

E. Eugene Watson, PKD.

In the name o f Allah, Most Gracious, and Most Merciful.

Continuous Quality Improvement Philosophies, Concepts, and S trategies..

The Background o f Organization A .................................................................

Analysis o f the Management System o f Organization A ................................

A: Summary o f Report o f an Interpretation o f Climate Survey Data

Table 1. Comparision o f MBO Business Focus against CQI Business Focus

Figure 1. Continuous Quality Improvement A Model for a Service Organization....................................................

Figure 2. Production Viewed as a System ................................................................

Figure 3. Chain Reaction from Improvement o f Processes .....................................

Figure 4. Summary o f Key Ingredient o f Continuous Quality

The purpose o f this study was to propose a Continuous Quality Improvement

Objectives o f the Study

Conceptual Process Model

-Total Commitment from

Rewards & Recognition:

Figure 1. Continuous quality improvement - a model for a service organization.

-Self-Appraisal Internal Measures

Significance o f the Study

This chapter begins by reviewing the literature on continuous improvement or

Deming began examining quality improvement in the 1940s with a focus on

Figure 3. Chain reaction from improvement of processes.

wrong? A ct refers to the adoption o f change, or abandoning it or running through the

2. Determine the needs o f the customers.

Provide a means for preventing recurrence o f errors and minimizing

An example o f Kaizen PDCA standardized steps will be:

A Summary o f the Key Ingredients o f Continuous

- Cause & Effect

b. Management the organizational and divisional leveL

This chapter first introduced Organization As background in order to describe its

Analysis o f the Management System

However, 28.5% had no comment or refused to answer the question.

Was slow to react.

Lacked consideration for employees feelings in certain decisions that were

Were too centralized.

Were insensitive to employees suggestions or views.

Lacked trust in its employees.

Lacked rapport between management and staff.

Employees were not aligned to a common vision.

The office workstation was out o f date.

The working environment was perceived negatively.

The canteen food and service was poor.

The non-executives responded:

Practiced favoritism especially in the promotion process.

Did not reward the staff sincerely.

Had a slow process o f promotion.

Made it difficult to transfer to other division or departments and as result

Lacked communication between staff and management.

Had medical hospitalization coverage for female staff spouse.

Lacked office comfort (too cramped)

Lacked support in sports activities

Had poor administration

Created an unnecessary building infrastructure