Quality Management in Micro firms – Myth or Reality? A Maltese Micro Manufacturing firm under review

Table of Contents

Acknowledgements

Executive Summary

1.0 INTRODUCTION
1.1 Research Preamble
1.2 Dissertation Objectives
1.3 Overview of Quality Postform Limited – A Case Study
1.4 Outline of the Dissertation’s Structure

2. Literature Review
2.1 Chapter Introduction
2.2 Literature Review – Its Importance
2.3 From Quality To TQM – The On-Going Evolution
2.4 Defining Quality
2.5 Quality Control
2.6 Definition of TQM
2.7 Defining Micro-Businesses
2.8 Quality Management within Micro-enterprises – An Evaluation
2.9 Micro-Enterprises and QM Programmes – Barriers Encountered
2.10 TQM Programme Applications for Micro-Firms – Claimed Benefits
2.12 Quality – Cosby’s Approach
2.13 Crosby’s 14-Point Programme – Applied Examples
2.14 Pre-requisites for QM programmes to succeed
2.14.1 Defining a Programme
2.14.2 Defining a pre-requisite
2.15 Determining Pre-requisites for Quality Improvement Programmes
2.15.1 Management Commitment
2.15.2 Acknowledgement of a Quality Problem
2.15.3 The Organisation’s Readiness to Embrace Change
2.15.4 Readiness of suppliers to support the quality programme
2.16 Chapter Summary

3. Methodology
3.1 Chapter Introduction
3.2 Primary and Secondary Data
3.3 Qualitative and Quantitative Data
3.4 Data Collection
3.4.1 Sampling
3.4.2 Secondary Data
3.4.3 Interviews
3.4.4 Questionnaires
3.5 Interview Classification
3.5.1 Standardised Interviews
3.5.2 Non-Standardised Interviews
3.6 Non-Standardised Interviews verses Standardised Interviews
3.7 The Quality of Interaction Throughout the Interview Process
Figure 1 - Chosen methods for research data collection
3.8 Interviewing Skills
3.9 Interview Guide
3.10 Ethical Issues
3.11 The Case Study: Validity and Generalisability
3.12 Chapter Summary

4. Findings and Analysis
4.1 Chapter Introduction
4.1.1 Section structure
4.1.2 Interview Questions and Interviewees
4.2 Findings and Analysis
4.2.1 Pre-Requisite One: Management Commitment
4.2.2 Pre-requisite 2: Acknowledgment of a Quality Problem
4.2.3 Pre-requisite 3: Readiness to Embrace Change
4.2.4 Pre-requisite 4: Suppliers readiness to support a QIP
4.3 Chapter Summary

5.1 Chapter Introduction
5.2 Conclusive Statements
5.2.1 Pre-Requisite One: Management Commitment
5.2.2 Pre-Requisite Two: The acknowledgement of a quality problem
5.2.3 Pre-Requisite Three: The Organisation’s Readiness to Embrace Change
5.2.4 Pre-Requisite Four: The supplier’s readiness to support a QIP
5.3 Applying a Quality Improvement Programme – The Practical Dimension
5.4 The Realisation of the dissertation’s objectives
5.5 Reflections
5.5.1 Research Strengths
5.5.2 Research Limitations and Areas of Further Research
5.5.3 Final comments

Appendix 1: ‘SMEs in Malta – basic figures’ (Anon 2009a)

Appendix 2: ‘SMEs’ (European Commission 2003)

Appendix 3: The Justification and Application of the Interview Questions

Appendix 4: Consent Form

Appendix 5: Interview Questions

Acknowledgements

I would like to thank Dr. Warren Smith of the University of Leicester, for his priceless advice, guidance and support to carry out this dissertation.

In particular I would also like to thank Andrew Saliba for his leadership and continued backing throughout the entire duration of my MBA reading, without which, I probably would have never ‘made it’.

Executive Summary

Manufacturing companies including a local micro-enterprise - Quality Postform Ltd are persistently facing competitive pressures as a consequence of customers demanding higher quality products. The emergence of Quality Management has been attributed by many researchers and Quality Gurus including Phil Crosby as a strategic imperative for typical organisations to survive within a highly competitive environment. Nevertheless, research carried out throughout the past years is relatively restricted regarding the practicality of micro-manufacturing firms in implementing Crosby’s Quality Improvement Programme, which is claimed to be highly beneficial in typical situations. This dissertation seeks to investigate this scenario from both a descriptive and critical perspective towards Quality Postform Ltd.

The research provides a critical evaluation of the academic contributions towards the quality management concept. Distinct disputed viewpoints have been identified focusing on Crosby’s 14-Step Quality Improvement Programme. From one end of the spectrum, supporters uphold that claimed benefits have been acknowledged. Alternatively, others sustain that in essence a Quality Improvement Programme is counter-productive in terms of its application within Small and Medium sized Enterprises. However the researcher has identified four key pre-requisites in order for micro-firms to effectively implement Crosby’s programme. These include: management commitment, the acknowledgement of a quality problem, the organisation’s readiness to embrace change together with the suppliers’ readiness to support the quality programme.

The methodology applied to assess the presence of these four pre-requisites at QPL was to compile primary, qualitative data through one-to-one / face-to-face interviews with key management officials. This approach is justified due to the absence of formalised documentation and as a result, it is imperative to assess that historical data on Quality Systems is seriously lacking at QPL. The field research outcome reveals that QPL’s management is experiencing serious doubts regarding the feasibility and practicality of the program’s implementation within a micro-manufacturing firm. This is the case primarily whenever the latter is facing limited financial and human resource capabilities such as at QPL. The research findings disclose that none of the four pre-requisites are present within this micro-firm. Moreover it confirms the scepticism on the part of specific scholars regarding quality management programmes that micro-firms fail to afford such initiatives. Thus, it transpires that a distinct approach towards Quality Management within small business is more appropriate.

1.0 INTRODUCTION

1.1 Research Preamble

The underlying objective of business concerns is to deliver quality via superior and sustainable quality value systems (Goetsch and Davis, 2010). Within the contemporary business setting, QM appears to be no longer a competitive weapon in the arsenal of established organisations, but a prerequisite for survival (Haksever 1996). The emergence of the TQM concept has been acclaimed as the cure to un-competitiveness in abundant number of cases. Philip Crosby’s 14-step programme is acclaimed to be the catalyst of quality improvement. These views seek to simplify the definition of quality in a business context as firms struggle to implement quality improvement programmes especially in the manufacturing sector were complex factors come into play such as sophisticated production machinery, technical and staff knowledge and skills, integrated information technology software systems, regional and organizational cultures and the size of the firm itself.

Literature indicates that insufficient empirical studies have been undertaken in relation to the systematic implementation of Philip Crosby’s model within the wider context of EU based micro-organisations – the later representing 92% (see Appendix 1). Empirical evidence on outcomes regarding the implementation of the Crosby model is rather constrained. Thus, the researcher was motivated to fill this research gap by insightfully investigating a wide range of aspects within this arena.

The researcher within the capacity of the GM of a micro-manufacturing firm, recognised the need to evaluate the applicability of Crosby’s 14-step Quality Improvement Programme. This is especially the case in a local context, where this industry sector represents 96% of all organisations, employing 40.3% of the Maltese workforce (see Appendix 1).

Competitive pressures are presenting challenges to micro^[1] -organisations, which far outnumber other business structures within the comprehensive EU industry (see Appendix 1). Quality Postform Limited (QPL), is persistently facing typical problems apparently due to quality, or as Crosby (1979) defines it, conformance to customer requirements. As General Manager (GM) of QPL, the researcher appreciates that quality is a critical factor for sustained success. This is qualified in the dissertation title.

The researcher is focusing on Crosby’s model by identifying such shortfalls and addressing success attributes to a list of prerequisites for implementation. Moreover, one has likewise to assess the extent of their presence within QPL. Subsequently, this research will serve to evaluate QPL, and it’s potential in the practical application of Crosby’s Model. The outcomes could be potentially relevant to alternative Maltese micro-firms.

1.2 Dissertation Objectives

The researcher identified the following study objectives following the researchers attempt to critically respond to the posed research questions:

(i) To perform a critical literature review of Crosby’s Quality Improvement Programme’s claimed benefits and shortfalls and transform these into a set of pre-requisites.
(ii) Investigate the presence of pre-requisites at QPL through pre-determined criteria.
(iii) Deduce the practical implementation of Crosby’s QIP at QPL

1.3 Overview of Quality Postform Limited – A Case Study

QPL is the only postform element manufacturer and supplier to the local Maltese furniture industry. Driven by the entrepreneurship of the late Emanuel Chircop way back in 1998, it evolved into a family run business. Currently, QPL employs a staff compliment of nine. QPL’s management consists of two co-Directors (Chircop’s daughters) together with a general manager (being the researcher of this paper). The company is classified as an SME micro-firm in-line with EU jurisdiction, due to its annual turnover rate of approximately €1m (See Appendix 2).

The company enjoys the benefit of a unique strategic location at Malta’s leading industrial estate - Marsa. The latter is easily accessed by a heavy flow of potential clients, thus generating substantial business (QPL 2009). The core focus of QPL is on custom-sized postformed elements, ranging from kitchen counter tops, door panels and table tops. Although the company enjoys a ‘respectable’ market share, it is persistently facing aggressive competition from other local importers and distributors of similar products. The latter contributes 7.4% to the manufacturing sector (NSO 2009).

Prior to Malta’s E.U. membership, company records for 2003 indicated that QPL’s clientele comprised two primary users - the commercial sector accounting for 70% of the sales, followed by 30% representing the domestic sector. In view of the inevitable import levy removal after Malta’s EU accession in 2004, QPL’s management smartly adopted a proactive approach. The latter was a constructive strategic response to the predicted increase of cheaper mass produced furniture (Chircop 2002) and thus QPL opted to invest in machinery. This facilitated QPL to compete with off-the-shelf and do-it-yourself furniture (Chircop 2003). This strategic outcome impacted QPL’s client base and it become apparent that 70% of QPL’s clients by 2008 shifted from commercial to domestic users.

In response to these unpredicted market changes, carpenters started purchasing do-it-yourself products. Another outcome due to these market changes is the clients’ high expectations of quality standards. Thus, clients are benchmarking the quality of local manufactured products against high quality imports, presenting a challenge to QPL in the name of ‘Quality’.

1.4 Outline of the Dissertation’s Structure

The dissertation is presented in the form of five chapters; each chapter is a consecutive follow-up of the preceding one. This ensures a reader friendly approach. The content of each chapter is briefly provided.

A backdrop of the study leading to the dissertation’s problem was presented in Chapter 1, stating the attempted objectives of this study. A summary of past literature proceeded leading to the identification of the research gap. An overview of QPL, the firm on which the case-study research is based was presented.

The study proceeds with a comprehensive examination of past academic studies, together with the key topic terms discussed in Chapter 2. A critical account is provided on quality management systems and programmes together with the claimed benefits and pitfalls, and how these can potentially be applied to micro-firms. Furthermore, the elements of Crosby’s 14-step programme are investigated, serving as a pivotal background in the realisation of four pre-requisites as designed by the researcher for its practical application within a micro-manufacturing firm.

The case-study’s methodology applied throughout the dissertation is expounded in Chapter 3. Data types and collection methods are explained, together with the justification of specific approaches. Approaches, which have been either applied or discarded, are discussed. The case-study application within the local context is further expounded together with an explanation of the chosen method. The latter is deemed essential to collate primary data through face-to-face and one-to-one interviews. The steps undertaken throughout the methodology section are further illustrated in a flow diagram. Ethical considerations and the dissertation’s challenges and limitations throughout this phase are detailed.

The views of the four interviewees identified to participate within this study are presented in Chapter 4. The responses to the 13 questions are categorised in-line with specific themes. A critical discussion on the findings is described, integrated directly within the analysis and evaluation, focusing on the extent of agreement or contrasting views vis-a-vis the literature review findings. The extent of presence or absence of the four pre-requisites in the application of Crosby’s 14-step QIP as identified in the literature review is assessed.

The research concludes the investigation in Chapter 5 by providing a set of conclusive statements on the findings and analysis presented throughout the previous chapter. The focus is on the dissertation’s primary objective, which is a declaration on whether any of the identified pre-requisites are present at QPL. This assesses the degree of practicality regarding the application of Crosby’s 14-step programme within this micro-manufacturing concern. The dissertation concludes by highlighting the study limitations, the areas for further research together with the overall study reflections.

2. Literature Review

2.1 Chapter Introduction

This chapter apart from expounding the key topic terms provides a detailed review of the scholarly contributions towards aspects of QM. The chapter commences with an overview of the literature review process in terms of its relevance to this dissertation. It justifies the indispensability of this process, offering the reader a profound insight on the importance of approaching this section backed by a critical framework. The chapter proceeds by tracing the origin and definitions of quality since the 1920s, together with the manner this discipline further integrated within the management functions. The latter ultimately conduced to the evolution of the TQM concept.

The literature review progresses by defining micro-organisations together with the relevant hurdles. The underlying objective is to implement periodically the quality management philosophy. An insightful examination follows targeting micro-manufacturing firms regarding the benefits offered. The 14-Step QIP as designed by Philip Crosby follows. This is supported by case studies. The literature review proceeds by attempting to critically assess past studies on a set of pre-requisites, which are deemed indispensible for a successful implementation of a QIP. The chapter concludes with a summary of the literature review findings.

2.2 Literature Review – Its Importance

It is pertinent to highlight the literature findings regarding the primary topic terms of the proposed dissertation title. This was deemed necessary since it describes the current studies undertaken on the subject matter. Moreover it proved to be of pivotal importance in identifying untapped literature gaps, which served as opportune arenas for investigation. The literature review provides an insightful assessment of the students’ ability and knowledge within the field and subject under review (Randolph 2009). As Gall et al. (1996) proclaim, the literature review will provide the student with perspectives relevant to the research problem.

Bryman and Bell (2007) expound the vital significance of the literature review within a dissertation. They sustain that this process stage is one of the primary tools that inspire the author in formulising a research plan. The researcher, thanks to the literature review, enjoys a vantage position in determining any existing research areas (ibid). Moreover, the researcher will be able to establish whether there are any notions and theories published in connection to the subject, thus establishing any pending contradictions in this regard. The underlying objective is to identify unexamined topics, and moreover to assess future prospects for further investigation on the subject matter (ibid). The literature review is a concise overview of what has been studied, argued, and established regarding a particular topic. Furthermore, Easterby-Smith et al. (2008) highlight that:

“Literature reviews undertaken as part of a thesis invariably focuses on the topics that relate to the main research questions that have been raised and highlight the influential conceptual or empirical studies that have been conducted in the field.”

Easterby-Smith et al. 2008:30

Easterby-Smith et al. (ibid) confirm that a typical literature review must embrace critique of one’s work together with other researchers. Bryman and Bell (2007) explain that amongst the necessary skills required to enrich the literature review, the author is required to be more analytic than merely descriptive. The literature review will enable the author in further understanding the underlying objectives of the research - thus its justification (ibid).

2.3 From Quality To TQM – The On-Going Evolution

It is acclaimed that the ancient Babylonians adopted simple quality techniques for their construction industry (Adanur 1997). Ambitious quality inspections developed around the 17th century by the British Navy so as to secure high quality supplies of timbers, sailcloth and anchors (Davis 1811). The term ‘Quality’ emerged as a distinct discipline that attracted significant attention around 1920s (Dhanakumar 1999). Throughout that period acclaimed scholars, mainly, Fayol, Taylor, Gantt and Gilbreth were alarmed by the fact that manufacturing systems required high levels of efficiency and effectiveness to be competitive (Lemak et al. 1997). Throughout the 1940s the US military defence started implementing sampling quality testing procedures to inspect ammunition delivered by suppliers (Garvin 1988).

A major milestone in 1949 witnessed the debut of QM in Japan by engineers systematically applying the statistical models proposed by Deming (Walton 1986). Throughout the 50s, Juran and Deming assisted manufacturing companies in the US to improve quality by capitalising on innovative models (Furnham and Gunter 1993). The U.S. Navy branded the technical definition of TQM in 1985 (Walton 1993). The origin of TQM can be traced to Total Quality Control, where the underlying logic was to control quality via management (ibid). Joseph et al. (1999) assert that TQM represents an approach regarding the achievement of work-class manufacturing capability.

2.4 Defining Quality

The ISO adopts a holistic definition towards quality being the ‘degree to which a set of inherent characteristics fulfil requirements’ (Anon 2005:7). Dale et al. (2009) sustain that there is no universal definition of quality. This justifies the line of thinking adopted by Maromonte (1996) sustaining that the manner via which the customers exigencies are integrated within the product’s quality, depend on industry and business specific factors. Within this context, quality is interpreted as being conformity to requirements (Anon 2005:7){9pg5} or predetermined specifications (Meloan and Graham 1998). Bidgoli (2003) perceives quality as being ‘fit for purpose’. Juran and Gryna (1993) interpret quality as linked to internal and external customer satisfaction. Further, other researchers perceive quality as fitness for use (Hacksever 1996).

Design and conformance represent two interlinked dimensions, which have been specifically selected by researchers to interpret quality in comprehensive terms (ibid). Saraph et al. (1989) venture a step further and assess QM as the ‘integrated activity set that contributes to intentional product and service improvement’ (ibid:400). Crosby (1979) defines quality as conformance to requirements in contrast to goodness. However, Pryor et al. (2009) advocate that Deming, Juran and Crosby, although they sought to interoperate quality in holistic terms, have persistently neglected to relate quality to processes, relationship or value building approaches. Nevertheless, Ishikawa (cited in Goetsch and Davis 2010) acknowledged a link connecting quality and customer satisfaction. This entails from a critical perspective that quality is a broad concept that transcends product quality, so as to incorporate within the strategy, personnel and processes. Goetsch and Davis (2010) specify that quality within the business value chain, is periodically experiencing dynamic changes, as regards products, services, personnel, processes and business settings. These are persistently shaped by quality strategists so as to fulfil or exceed predetermined expectations (ibid). The underlying objective of business concerns is to deliver quality via superior and sustainable quality value systems (ibid).

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^[1] Organisations are typically classified by their head count, turnover or balance sheet total (see Appendix 2)