Total Quality Management For Micro-businesses in the Manufacturing Industry

Diplomarbeit von Phillip Käser

Introduction:

Total Quality Management (TQM) has already made its mark in history. Big players in major industries, such as Ford and Siemens, have already aligned their business and production processes to this holistic management concept. Over the past three decades there are more medium-sized companies applying TQM principles to their business. Quality has been important in helping companies gaining a competitive edge in globalized markets. TQM with its extensive set of methods aims to embed quality awareness among all departments of a company where work affects the quality of the products. There are thousands of articles and books written on how large and medium sized companies have successfully implemented of TQM.

An extensive literature review and interviews of experts and owners of very small businesses (micro-businesses) indicate that this is the only industry where TQM systems have not yet been implemented. Although micro-businesses are pressured by their customers to achieve high levels of quality in their products, there is not enough research that addresses the issues of implementing TQM practices for micro-businesses.

Scientific literature does not provide answers to crucial questions such as:

- What methods of quality management are currently being in use in micro-businesses?

- How could a TQM system be tailored to meet the needs in a micro-business environment?

This thesis is part of a large-scale field study that recently has been launched by the Howe School of Technology Management at Stevens Institute of Technology, Hoboken, NJ. The study aims to reveal answers to the questions listed above.

This thesis forms the foundation for the subsequent field study. The main goals is to deploy a systematic TQM framework for micro-businesses that will be help micro-businesses understand how the quality management culture has an impact on a company’s success. Additionally, this thesis aims to develop a questionnaire that will examine the validity of the framework and serve as basis for the field study.

The focus is on very small manufacturers. First breakthroughs in quality management have been taken place in this industry. Thus we can dispose of more than 100 years of research results in this field. Furthermore it is the manufacturer who is used to the first-movers role in new quality management models – another good reason for choosing this industry.

Layout of This Thesis:

After an exposure of the problem in Chapter 1, Chapter 2 addresses the extraordinary meaning of total quality management for today’s businesses. In addition, this chapter highlights the historical development of quality and total quality management. Then Chapter 3 defines what this thesis means by the term ‘micro-business’ and gives some background information on peculiarities of this sector of the economy. This chapter also pinpoints differences in the implementation of quality management practices between micro-businesses and larger enterprises and integrates micro-businesses into the quality management context. For this purpose research papers are examined in an extensive literature review that reveals a serious lack of knowledge about the quality management practices of micro-businesses within the world of business sciences. In Chapter 4 existing research results and the authors’ and experts’ own ideas are combined into a new model of total quality management for micro-businesses, called ‘Micro TQM for Micro-businesses Framework’. The chapter highlights the core and the starting point of the model – the cost curves of prevention and the one of correction. Then each element of the framework is discussed in detail and interconnections explained. Chapter 5 provides information about the development process of the quality management questionnaire that is needed for the field-study that follows the work of this thesis. The chapter also highlights the structure and methodology of the survey and the questionnaire. Possible problems and solutions regarding the subsequent telephone interviews are addressed. Chapter 6 gives a brief summary of the thesis and discusses limitations of the work.

Table of Contents:

Text Sample:

Chapter 5.1, Design/Methodology:

The next step of this survey is to test the „Micro TQM for Micro-business Framework” in the real business environment. Goals are for one to find out what relevance total quality management already has for micro-business owners and what techniques are already in use. Secondly, we want to test the validity of our hypotheses regarding the framework. Finally, we want to readjust the model, if necessary, based on interview results in order to provide micro-businesses a framework that gives them more sophisticated guidance on how to optimize their business results.

A survey will be conducted in the form of an interview questionnaire. The main advantages of using a questionnaire versus using other interviewing methods are the ease of evaluation, objectiveness, and the minimization of failures. In our study, we limit the search area to micro-businesses of the manufacturing industry. The questionnaire addresses quality representatives in general, e.g. the general manager, president, or employees leading the quality effort in the companies. The sample size, however, is determined by the ability to find matching interviewees that are willing to participate.

In creating the quality management questionnaire, we were assisted by experts from both the academic and business world. Two professors from the Howe School of Technology Management, S.I.T (Hoboken), gave us useful information in the development of efficient and effective questionnaire design. Also, we were supported by a member of the Brooklyn Chamber of Commerce and the business consulting organization ITAC that supplies its services for small and medium-sized companies in the field of technology and quality management in the five boroughs of New York.

The questionnaire itself is structured as follows. The design of the questionnaire is optimized for telephone interviews. It is easy for the interviewer to fill in responses right away on the telephone. Most of the questions either have radio-buttons (yes-no decisions) or fields where predefined answers can be filled-in. Some questions are open-ended. The questionnaire asks for background information about the company and the interview partner. After that, the content is oriented according to the sections of the Micro TQM for Micro-businesses Framework. It starts off with some open questions mainly on the quality policy of the company, and then asks the interviewee for detailed information about awareness and the quality context of the organization. Next, how internal and external prevention of non-conformities are managed, including particular quality techniques. It continues with questions on internal and external correction and specific methods. The questionnaire then completes with customer satisfaction and performance figures questions.

Difficulties in Empirical Studies on Micro-businesses Generally, there are several difficulties to overcome when conducting empirical studies on micro-businesses. First, identifying micro-businesses turns out to be very complicated. In many parts of the world, micro-businesses are part of the so called „black economy”. This means that there is often no data collected in official statistics on business figures of this group of the economy. The situation in the U.S., however, is much better than other places in the world. For this thesis, we will fortunately have access to statistics of the Small Business Association and to the database of the U.S. Chamber of Commerce of Brooklyn, which allows us to sample specifically very small manufacturers in this region of the United States.

Once a sample is drawn, the next problem we face is the fact that micro-businesses conduct business more informally than larger companies. Large companies maintain records, data sheets, and cost calculations about quality related processes that is often not present in micro-businesses. The most straightforward way to measure quality activities and performance in companies is by gathering figures about costs and analyzing them quantitatively. Since this does not seem to be feasible, a measurement has to be carried out more qualitatively in form of self-estimations of the effort that is being put in quality related activities on scales from 1 to 7.

Another problem that can possibly become apparent is that mail and telephone surveys only work if the interviewee receives value out of it. It is up to the survey team to find an equitable exchange for the effort of the recipient of the questionnaire.