STRATEGY CONTROL AND EVALUATION
ARIZONA STATE UNIVERSITY
WPC 480 - STRATEGIC MANAGEMENT
WEEK 4
After the strategy is implemented, the next stage is strategy control and evaluation.The
control process ensures that the company is achieving what it has set out to achieve. The control
process compares performance with the desired results and provides the necessary feedback for
management to evaluate the results obtained and take corrective action if necessary.
This section will explain the control measures and evaluate the strategies that have been
implemented.
8.1 Control:
In general, control is defined as an action to make something happen in accordance with
what was previously planned. Meanwhile, strategic control is a special type of organizational
control that focuses more on monitoring and evaluating the strategic management process so that
its functions are carried out properly. In addition, strategic control also provides critical feedback to
determine whether all steps in the strategic management process are appropriate, harmonious and
functioning properly.
Common questions asked at the strategy control stage are:
1) Is the strategy implementation consistent with the strategy formula?
2) Does the result of the environmental analysis reflect the actual situation?
3) Is the desired direction of the company being achieved?
4) Should we continue with the strategy we have formulated?
There are two main approaches to strategy control: the traditional approach and the adaptive
strategy approach.
1. Traditional Strategy Control
In reality, management usually carries out control measures by following three general steps,
namely
a. Measuring company performance
b. Comparing the results of measuring company performance against existing standards
c. Take any corrective actions deemed necessary to ensure that the planned events actually
materialize.
This model shows that the control process usually begins with measuring company
performance. After this performance is measured, it is then compared with existing standards or
predetermined standards, The results of the comparison between company performance and
predetermined standards result in two possibilities. First, the company's performance is the same
or even exceeds the predetermined standards, The second possibility, the company's
performance is different or even does not reach the predetermined standards.
Both possibilities have their own consequences. If the performance is equal to or even better
than the predetermined standard then it is likely that the company does not need to take
corrective action excessively, so the work can continue. If the second possibility occurs,
corrective action needs to be taken. The result may be that the company's environmental
situation will change, so analyze environment, strategy formulation and implementation must
also change.
The general control model can be described as follows:
2. Adaptive Strategy Control:
If strategy control is based on a traditional approach, it only compares actual results with the
standards that have been carried out. Pearce and Robinson state that strategy control should
be adaptive to the various changes that occur during the strategic management process.
According to Pearce and Robinson, there are 4 basic types of strategic control, namely
premise control, implementation control, strategic surveillance and special alert control.
Different types of strategic control:
a. Premise Control
Each strategy is usually based on certain planning premises, assumptions or predictions.
Premise control is designed to Systematically and continuously check whether the
premises, assumptions and predictions used as the basis for analyzing the environment to
formulate a strategy are still valid. Whether a vital premise is no longer valid, a strategy
may have to be adjusted or even changed.
According to Pearce and Robinson, there are various premises that are commonly
observed, including planning premises that are closely related to the environment and
industry. Environmental factors that are examined include inflation rates, technology,
regulatory interest rates and various socio-cultural changes that exist. Meanwhile,
industry factors include competitors, suppliers, substitute products, and barriers to entry
in an industry.
b. Implementation control Strategy implementation usually consists of a series of steps,
programs, investments, and various things that occur over a long period of time.
Implementation control Implementation control is designed Implementation control is
designed to assess whether the overall strategy should be changed, in line with the
results associated with the overall strategy implementation actions. The two basic types
of implementation control that are commonly used are "monitoring strategic thrust and
milestone reviews" "strategic thrust" provides information that help management to
assess strategy at overall, whether it is going according to plan or needs some
adjustments. Whereas in 'milestone reviews' the seeing management seeks to identify
significant events, which will be experienced during the implementation of the strategy.
Such events usually include a full-scale reassessment.
c. Strategic Surveillance
By their nature, premise control and implementation control are focused control, but
strategic surveillance is unfocused. Strategic surveillance is designed to monitor a broad
range of events within and outside the company, which are likely to influence the
company's strategic actions. The fundamental idea behind strategic surveillance is that
hitherto unanticipated periling information may be discovered through general
monitoring and 'multiple sources of information.
d. Special Alert Control Type which is of control strategy actually a subset of the other
three is special alert control. This special alert control is the in-depth, frequent and rapid
reconsideration Retrieved from company, due to events sudden or unexpected events.
In many companies, the crisis group handles the company's initial response to unseen
events, which may have an immediate effect on the company's strategy.Many companies
have developed contingency plans with the crisis group to handle emergencies.
All four types share the same general objective of assessing whether the strategy should be
changed in line with evolving events. Unlike operational control, strategic control is designed to
continually and proactively question the basic direction of the strategy. Both operational controls
and strategic controls are necessary to effectively manage the strategy process.
8.2 Strategy Evaluation:
Strategy evaluation is defined as the stage of the strategic management process where top
managers try to ensure that the strategy they have chosen is implemented appropriately and
achieves the company's goals.
Frequently asked questions in relation to strategy evaluation include:
1) Is decision that made consistent with the policy?
2) Are there enough resources available to get the job done?
3) Are environmental problems all happening as expected?
4) Were short- and long-term goals and objectives achieved?
5) Should we continue with the formulated plan?
The steps of the strategy evaluation can be described as follows:
1) Outline performance goals, standards and tolerance limits for objectives, strategies and
implementation plans.
2) Measuring the actual position
3) Analyze deviations from acceptable tolerance limits
4) Implement modifications where necessary and feasible.
Strategy evaluation is the stage of the management process in which top managers seek to
ensure that the strategies they have chosen are being implemented appropriately and are achieving
the company's objectives. Managers desperately need to know when a particular strategy is not
working well, so strategy evaluation means trying to obtain this information. All strategies are
subject to modification in the future because external and internal factors are always changing.The
three fundamental activities for evaluating strategy are:
1. Review the external and internal factors on which the current strategy is based,
2. Measuring achievement,
3. The activities of strategy formulation, implementation and evaluation occur at three levels of
hierarchy in large organizations, corporate, divisional or strategic business units, and
functional.
Multidivisional business companies, which are usually large, have three levels of strategy:
corporate, business and functional.
1. Corporate strategy describes the overall direction of the company in terms of the company's
general attitude towards the direction of growth and management of various businesses and
product lines to achieve a balanced portfolio of products and services.
2. Business strategy or competitive strategy, is usually developed at the divisional level and
emphasizes improving the competitive position of the company's goods or services in the
specific industry or market segment that the division operates in.
3. Functional strategy emphasizes primarily on maximizing resource productivity. Within the
confines of the company and the business strategy surrounding them, functional departments
develop strategies to pool together their various activities and competencies to improve
performance.
8.3 The nature of strategy evaluation:
The strategic management process results in decisions that can have significant and long-
term consequences. The wrong strategic decision can lead to huge losses, which will be very
difficult to correct. Many strategic planners therefore agree that strategic evaluation is essential to
the life of the organization; timely evaluation can alert management to problems or potential
problems before they become critical.
Strategy evaluation is a complex and sensitive process. Too much strategy evaluation can be
very costly and may be counter-productive. Strategy evaluation is important to ensure that strategic
objectives are achieved.
1. Strategy evaluation activities
Review the foundation of the business/company strategy Compare expected results with reality
Take corrective action to ensure that performance is in line with the plan
2. Strategy Evaluation Criteria
Consistency; a strategy should not have inconsistent objectives and policies.Feasibility; a
strategy should not overburden existing resources nor should it create unsolvable sub-
problems.Appropriateness; appropriateness refers to the need for strategic planners to examine a
series of trends as well as individual trends in evaluating a strategy.Excellence, a strategy should
promote creation and/or maintain a competitive advantage in a particular field of activity.
3. Reasons for the need for Strategy Evaluation
Increasing complexity of environmental problemsMore difficulty in predicting the
organizational period.Decreasing time span in which planning can be done with a certain degree
of precision.
4. Strategy Evaluation Process
Strategy evaluation should question managerial expectations and assumptions, should trigger a
review of goals and values and should stimulate creativity in generating alternatives and
formulating evaluation criteria. Strategy evaluation should be conducted on an ongoing basis,
rather than at the end of a period of time or only after a problem occurs.
5. Reviewing the Strategy Platform
Develop a revised EFE and EFI matrix The revised EFI matrix should focus on changes in
strengths and The revised EFE matrix should show how effective the company's strategies are in
responding to key opportunities and threats.
6. Measuring Organization Performance
These activities include comparing expected results with actual results, investigating deviations
from plans, evaluating individual achievements and noting progress made towards achieving
stated goals.Long-term goals and annual goals are usually used in this process.Criteria for
evaluating strategies must be measurable and easily proven.Strategy evaluation is based on both
quantitative and qualitative criteria. Quantitative criteria usually used to evaluate strategy are
financial ratios; ROI, ROE, Earnings per share, asset growth, market share, etc.Which are used
by strategists to make three comparisons including comparing company performance over
different time periods, comparing company performance with competitors, comparing company
performance with industry averages.
3 reasons for the key activities of strategy evaluation:
1. Review the foundation of strategy evaluation
2. Measuring organizational performance by comparing expected results with actual results.
3. Taking corrective action to ensure that performance is in line with the plan.
Some of the potential problems associated with using quantitative criteria to evaluate strategies
include:
1. Most quantitative criteria refer to annual goals rather than long-term goals.
2. Different accounting methods can produce different results in various quantitative criteria.
3. Intuitive judgments are almost always made in the description of quantitative criteria. For
these and other reasons, qualitative criteria are also needed in evaluating strategies. Human
factors such as high absenteeism and turnover ratios, low production quality and quantity, or
low levels of employee satisfaction, are causes of poor performance. Factors in marketing,
finance/accounting, R&D, or management information systems can also cause financial
problems (FredR. David, 2006: 446).
8.3.1 Control and evaluation process:
The structure and administrative style of the company form the main mechanism as a means
of controlling the company. The evaluation process is closely related to the control of ongoing
activities. It is usually seen as a four-element activity that is often related:
a. Outline performance goals, standards, and tolerance limits for objectives, strategies, and
implementation plans.
b. Measuring the actual position in relation to the target at a certain time. If the result lies
outside the limit, it is notified to management with the necessary actions to be taken.
c. Analyze deviations from acceptable tolerance limits.
d. Carry out modifications if deemed necessary and know it is not feasible.
8.3.2 Motivation to evaluate:
If the control and evaluation system is to be effective, top managers must be willing to
evaluate performance. This motivation will exist if senior managers realize that strategies can fail,
and if they are rewarded for their achievements in relation to the company's goals. Sadly, most
managers neglect this. Too many failures stifle careers and can make managers so cautious that few
creative decisions are made. But never failing is just as dangerous. People can believe they are great
if they have never failed and if they are surrounded by assistants who admire them. A few mistakes
will remind us that we need to examine whether our strategy is working or not.
8.3.3 Evaluation criteria:
The field of organizational effectiveness, i.e. formulating and measuring evaluation factors,
is very complex. Choosing a number of factors as a basis for evaluation is not an easy problem.
Evaluation can be based on objective and subjective factors. Various criteria can be used
appropriately, depending on the purpose of the evaluation, as indicated by the five types of control
approaches.
Evaluating the content and process of strategies and plans should play a role in the system.
That is, evaluation is typically assumed to be a way or method to find out whether a strategy is
working or not working. The following are the assessment criteria in evaluating a strategy;
1. Quantitative criteria
In trying to evaluate a company's strategy quantitatively, one can look at how the company's
performance compares to what it has done in the past, or compare it to its competitors in
terms such as net income, stock price, dividend rate, earnings per share, return on capital,
return on equity, market share, sales growth, and so on. In addition to these factors, many
other factors may be seen. Of course, success factors and measures can be much different for
different companies depending on objectives and strategies. For example, the usual way for
executives to monitor manufacturing often relies on inventory turnover measures. This is
acceptable if the strategy relies on measuring the output of long-term production operations.
For the most part, these benchmarks are internal. But objective assessments can also be
made by comparing the company's success with that of other similar companies. This is an
important aspect of assessing strengths and weaknesses, as an input in formulating future
strategies to develop competitive advantage.Another approach is to ask experts about the
most successful companies, which is a subjective approach.Both objective and subjective
approaches to measurement become more difficult when more than one criterion is used to
assess success.
2. Qualitative criteria
It has been argued that subjective judgment can be included with post-fact evaluation. Some
qualitative criteria can also be used here for that purpose. Even as stated earlier, subjective
judgment is to ensure that the strategy is the right one. But the criteria here tend to be more
appropriate for thoroughly reviewing the plan before the company is asked to change its
direction. Direction or A series of qualitative questions can be asked for each of these
criteria. The basic question is whether the objectives, strategies, and integrated and
comprehensive plans are consistent, appropriate, and workable.
a. Consistency
Is the integrated and comprehensive plan consistent with objectives, environmental
assumptions, and internal conditions?
1) Destination
Will the plan bridge the gap that is so important to us?
Are achievement standards linked to critical success factors?
Are there mutually consistent goals for which we make win-loss decisions?
Is the consideration of purpose consistent with the social responsibility required to
sustain our legitimacy?
2) Environmental assumptions
Is the company responsive to important changes that can be anticipated? Is the plan
will it fully exploit the opportunities offered by domestic and international
conditions?
Does it minimize the threat?
Are marketing policies consistent with market changes and financial policies
consistent with capital market changes?
And so on.
3) Internal conditions
Are resource allocation policies, organizational structures, and administrative
systems coordinated with each other?
Is there an integrated implementation policy that fits the strategy and develops the
necessary competitive advantage?
Does the strategy rely on weaknesses or seek to minimize them? etc.
b. Accuracy
Has the integrated and comprehensive plan captured the necessary resources, risk
preferences, and time horizons?
1) Resource capability
Are essential resources readily available? If not, has the plan outlined how to obtain
them if they are needed?
Are the resources in place and right for what you want?
Has the policy outlined the development of raw materials, energy, employees,
executives, facilities, equipment, skills and expertise?
2) Risk preference
Does the strategy have unnecessary risks?
Is the magnitude of the risk acceptable to top management?
Too high or too low?
Does the plan depend on internal sources whose continued existence is not
guaranteed?
Does it rely on highly uncertain environmental assumptions?
3) Time insight
Has the goal been stated based on the appropriate time to achieve it?
Based on the capabilities and abilities possessed, is rapid expansion appropriate? Are
the evaluation criteria measured in a timely manner so that appropriate adjustments
can also be made?
c. Workable
Is an integrated and comprehensive plan feasible and provides a simulation for the
company?
1) Feasibility
Does the plan exhaust our resources and management capabilities?
Does it create further unsolved problems?
Is the strategy definable and clear?
Is the strategy feasible?
Are there any unforeseen consequences that we can avoid?
2) Simulation
Are managers determined to create a strategy that works?
Among the executives, is there agreement that the plan will be implemented?
Does the reward system design encourage effort in the desired direction?
Are the personal aspirations of key strategic planners involved in decisions about
strategy?
TOTAL QUALITY MANAGEMENT (TQM)
Total Quality Management (TQM) or with its translation in Indonesian "Integrated Quality
Management", is a concept that prioritizes quality, not only applied in the business or industrial
world, but recently has also been applied in the world of education. "Customers' satisfaction
oriented", through optimization and management aspects is the obsession in the application of
TQM, so that customers (costumer) will feel satisfied with the quality of the products/services
produced.
This section will explain TQM in detail, starting from the concept of TQM in Business, the
history of TQM in business, the principles of TQM, the quality function and the key elements of
TQM.
9.1. The concept of Total Quality Management (TQM) in the business world.
Quality is a term that means different things to different people. Understanding the quality
dimensions of a company's products is the first step in developing and maintaining product
excellence in business competition. Whether they like it or not, consumers are the most interested
parties in assessing the quality of the products they consume. Each definition emphasizes different
aspects of quality - fitness for use, the degree to which a product can meet consumer desires, and
the degree to which a product conforms to its design specifications and technical requirements.
According to John F. Welch Jr. (G.E "s Chairman):
"Quality is our best assurance of customer loyalty, our strongest defense against foreign
competition and the only path to sustained growth and earnings"
There is a close relationship between the quality of products (goods and services), customer
satisfaction and company profits.The higher the quality, The higher the customer satisfaction and at
the same time supports high prices and often low costs. Therefore, quality improvement programs
generally increase profits. According to the Japan Industrial Standard formulation. "Quality is the
overall nature and correct performance that is the target of optimization to determine whether a
product or service meets its intended use or not". While Mizuno (1994:12) emphasizes that:
"Quality assessment should be based on the nature and function of the product from both the
producer and consumer sides". Meanwhile, Garvin sees it from a broader perspective and
categorizes 5 (five) definitions of quality as follows:
1. Transcendent based definition; quality cannot be precisely defined; quality is a universally
recognized concept of excellence.
2. Product-based definition; quality is the degree or quantity of attributes a product has.
3. Definition based on users; quality means the degree (level) of fulfillment of customer desires
by a product.
4. Definition based on manufacturing; quality means fulfillment of required/requested
specifications.
5. Value-based definition; quality refers to providing a product of acceptable quality at a
reasonable price.
Defining quality requires a comprehensive view. There are several elements that make
something quality, namely;
1) Quality involves meeting or exceeding customer expectations
2) Quality encompasses products, services, people, processes, and the environment.
3) Quality is an ever-changing condition (what is considered quality today may be considered less
quality at another time).
4) Quality is a dynamic condition related to products, services, people, processes, and the
environment that meet or exceed expectations.
Integrated quality or also called Total Quality Management (TQM) can be defined from the
three words it has, namely: Total (whole), Quality (quality, degree/level of excellence of goods or
services), Management (action, art, way of controlling, controlling, directing). From its three
words, the definition of TQM is: "a management system oriented towards customer satisfaction
with activities that are pursued right first time, through continuous improvement and motivating
employees" (Kid Sadgrove, 1995).
Total Quality Management (TQM) is a customer-oriented approach that introduces
systematic management change and continuous improvement to an organization's processes,
products, and services. The Total Quality Management process starts with the customer and ends
with the customer.
The concept of Total Quality Management comes from three words: total, quality, and
management.The main focus of TQM is quality/quality.Quality as conformance to requirement.
The next word is total, which in Indonesian is often used as a comprehensive or integrated
word. The word total (integrated) in Total Quality Management confirms that everyone in the
organization must be involved in continuous improvement efforts.
The third element of Total Quality Management, is the word management, which is the
initial concept of TQM itself.There are many definitions of management that have been put forward
Etymologically, the word management comes from English management which means
management, governance, and management.
According to Tjiptono, Total Quality Management (TQM) is an approach to doing business
that tries to maximize the competitiveness of the organization through continuous improvement of
products, services, people, processes, and the environment. In short, TQM is a management system
that elevates quality as a business strategy and is oriented towards customer satisfaction by
involving all members of the organization. The goal is to ensure that customers are satisfied with
the goods and services provided, and to ensure that no party is harmed.
Total Quality Management (TQM) is a modern management concept that seeks to respond
appropriately to any changes that exist, both driven by external and internal organizational forces.
The rationale for TQM is very simple, namely that the best way to compete to excel in global
competition is to produce the best quality. Therefore, Total Quality Management (TQM) is a
management science theory that directs organizational leaders and personnel to carry out continuous
quality improvement programs focused on achieving customer satisfaction.
As with quality, Total Quality Management can be defined as follows;
1) The integration of all functions of the company into a holistic philosophy built on the
concepts of quality, teamwork, productivity, and customer understanding and satisfaction
(Ishikawa, 1993, p.135).
2) A management system that promotes quality as a business strategy and is oriented towards
customer satisfaction by involving all members of the organization (Santosa, 1992, p.33).
3) An approach to doing business that
It seeks to maximize the organization's competitiveness through continuous improvement
of its products, services, people, processes, and environment.
Another definition put forward by Nasution says that Total Quality Management is an
approach in running a business that tries to maximize the competitiveness of the organization
through continuous improvement of products, services, labor, processes, and the environment.
The elements of Total Quality Management are as follows:
1. Customer satisfaction includes the following:
a. Conformance to specification, namely the suitability of product quality with the provisions
of the properties of the goods produced. namely durability, usability, strength, and so on.
b. Value, consumer perceptions of the benefits and sacrifices to obtain goods.
c. Fitness for use, the ability to fulfill its function.
d. Support, company support in terms of providing warranty, spare parts, and service.
e. Psychological impressions, image of goods, influence on the environment, and aesthetics.
2. Employee engagement, in terms of:
a. Cultural change, culture organization, internal and external customers
b. Individual development, realized in employee performance/productivity
c. Incentive, as motivation for employees in the form of: bonuses, gifts
d. Teamwork, common interests, goals, ways of working, responsibilities
3. Continuous improvement, a cycle that never break up:
a. Plan, is the most appropriate planning by considering costs and benefits
b. Do, implementation, plan execution and monitoring
c. Check, analyze based on implementation, evaluate
d. Act, created procedures standard, guidelines to be implemented henceforth.
9.2 History of Total Quality Management in the Business World:
According to history, Frederick Taylor (an American) who is also recognized as the father of
management, in the 1920s, sparked the Total Quality Management (TQM) movement. Then in 1950
Japan vigorously developed TQM to improve and revive its economy, after W. Edwards Deming
taught one of the emphases in TQM, namely quality to Japanese scientists, engineers and company
executives. Since the 1980s TQM has become very popular in the business world. It can be said that
TQM was born in the United States, raised in Japan, and then developed in North America and
Europe.
Japan believes that the key to its companies is the quality of their products. Therefore, it
continuously strives to create an infrastructure as the basis for achieving quality, namely human
aspects, processes and facilities. In fact, Japanese products have surpassed the quality of those
produced by western countries, so the volume of Japanese industrial exports has increased
dramatically.
In Japan, Total Quality Management TQM is summarized into four (4) steps, which are as
follows:
1. Kaizen: focused on continuous process improvisation (continuousImprovement) so that the
process that occurs on the The organization becomes visible, repeatable, and measurable.
2. Atarimae Hinshitsu: Focuses on the intangible effects of the process and optimization of those
effects.
3. Kansei: researching how consumers use products to improve the quality of the product itself.
4. Miryokuteki Hinshitsu: tactical management used in products that are ready for trading.
The eight (8) TQM tools described are as follows:
1. Brainstorming - Brainstorming
Brainstorming is a planning tool that can be used to develop group creativity. Brainstorming is
used, among other things, to determine the possible causes of a problem or plan the steps of a
project.
2. Flowchart (Process Flow Chart)
A process flow chart is a planning and analysis tool used, among other things, to organize a
step-by-step process drawing for the purpose of analysis, discussion, or communication and to
find areas of improvement in the process.
3. SWOT Analysis
SWOT analysis is an analytical tool used to analyze problems within the framework of
Strengths, Weaknesses, Opportunities, and Threats.
4. Preference Ranking
It is an interpretation tool that can be used to select ideas and solutions among several
alternatives.
5. Fish Bone Analysis
Fishbone analysis (also known as cause-and-effect diagrams) is an analytical tool, among others,
for categorizing the various potential causes of a problems and analyzing what actually happens
in a process.
6. Critical Assessment
Critical appraisal is an analytical tool that can be used to examine any manufacturing, assembly,
or service process. It helps us to think about whether the process is necessary, appropriate, and
whether there are better alternatives.
7. Benchmarking
Benchmarking is the process of collecting and analyzing data from our organization and
comparing it with the situation in other organizations. The results of this process will become a
benchmark to improve our organization continuously. The purpose of benchmarking is how our
organization can be developed so that it becomes the best.
8. Power Field Analysis Diagram (Force Field)
A power field diagram is an analytical tool that can be used, among other things, to identify
constraints to achieving a goal and identify possible causes and solutions to a problem or
opportunity.
The conditions for implementing TQM in a company are as follows:
a. Every company/organization must continuously improve the quality of products and
services so as to satisfy customers.
b. Provide satisfaction to owners, suppliers, employees and shareholders.
c. Have foresight in seeking profit and providing satisfaction.
d. The main focus is on the process, followed by the results.
e. Create conditions where employees actively participate in creating quality excellence.
f. Create leadership that is subordinate-oriented and actively motivates employees not by way
of authoritarianism so as to create an atmosphere conducive to the birth of new ideas.
g. Willing to give rewards, recognition for those who succeed and easily apologize for those
who have not succeeded/made mistakes.
h. Every decision should be based on data, not experience/opinion.
i. Every step of the activity should always be clearly measurable so that supervision is easier.
j. Education and training programs should be at the forefront of quality improvement efforts.
It can be concluded that in implementing TQM in a company there are several things that
must be done, namely:
a. Customer-focused
b. Obsession with quality
c. Using a scientific approach
d. Long-term commitment
e. There is teamwork
f. Continuous system improvement
g. HR Improvement through Education and Training
h. Respect for every member of the organization
i. There is unity of purpose
j. Employee engagement and empowerment.
9.3 TQM principles:
There are several figures who put forward the principles of TQM. One of them is Bill Crash,
1995, saying that the TQM program must have four principles if it is to be successful in its
implementation. The four principles are as follows:
a. The TQM program should be based on quality awareness and be quality-oriented in all areas
activities throughout the program, including in every process and product.
b. The TQM program must have a strong human nature in enforce employees, include them,
and inspire them.
c. TQM programs should be based on a decentralized approach that gives authority at all
levels, especially at the frontline, so that enthusiasm for involvement and common goals
become a reality.
d. The TQM program must be implemented thoroughly so that all principles, policies, and
habits reach every nook and cranny of the organization.
Furthermore, Bill Creech, 1996, stated that the principles in the TQM system should be built
on the basis of 5 pillars of the system namely; Product, Process, Organization, Leadership, and
Commitment.
The product is the central point for organizational goals and achievements. Quality in the
product is not possible without quality in the process. Quality in process is impossible without the
right organization. The right organization is meaningless without adequate leadership. Strong
commitment from the bottom up is the supporting pillar for all the others. Each pillar is dependent
on the other four, and if one is weak the others will naturally be weak as well.
Another opinion was expressed by Hensler and Brunnell (in Scheuing and Christopher,
1993: 165-166) quoted by Nasution in his book entitled Integrated Quality Management, saying that
TQM is a concept that seeks to implement a world-class quality management system. For that,
major changes are needed in the culture and value system of an organization. there are four main
principles in TQM, namely:
1. Customer satisfaction.
2. Respect for everyone.
3. Fact-based management.
4. Continuous improvement. The benefits of TQM for customers
are:
1) Little to no problem with
product or service.
2) Better customer care or more customer attention.
3) Customer satisfaction is guaranteed. The benefits of TQM for
institutions are:
1) Changes in product and service quality
2) Staff are more motivated.
3) Increased productivity
4) Cost down
5) Defective products are reduced.
6) Problems can be resolved quickly. The benefits of TQM for the Organization's
staff are:
1) Empowerment
2) More trained and capable
3) More appreciated and recognized
To implementationprogram TQM program runs as expected, the following
requirements are needed:
1) High commitment (full support) from top management.
2) Allocate full time to the TQM program.
3) Setting up funds and preparing quality human resources.
4) Selecting a TQM program coordinator (facilitator).
5) Banchmarking other companies that implement TQM.
is:
6) Formulate values, vision and mission.
7) Prepare mentally to face various forms of obstacles.
8) Planning the mutation of the TQM program.
Furthermore, there are advantages and disadvantages. Advantages of TQM
1) Better quality.
2) Introducing continuous improvement
3) Increases flexibility
4) Increase profit or productivity
5) More organized learning
6) Safe and healthy communities
7) Better customer service or customer satisfaction
8) Economically stronger organization
9) Improve market share
10) Better management organization
11) Better employee relations and performance
12) Competitive advantage The weaknesses of
TQM are:
1) Quality is often a side activity, separate from
key issues of business strategy and performance.
2) In many organizations, quality is perceived to be temporary and when the leader who initiated it
leaves the company, quality is then neglected.
3) The confusion over TQM comes from the word quality itself. The word quality has many
meanings, depending on how we look at it.
4) Many companies make quality more vague or unclear by setting seemingly positive goals
without having a way to monitor progress towards those goals.
5) TQM is a department-only activity in many companies.
6) TQM teaches incremental or small improvement, not radical improvement, so many corporate
leaders were impatient after the emergence of the reengineering concept.
9.4 Quality Function:
According to Shigeru Mizuno (1994: 2), there are basically three main functions of the
quality of a product, namely:
1) Quality Inspection
With the quality of a product, quality inspection can be carried out, which is an action to find
out whether the product is as intended or not.
2) Quality Control
When a product has gone through the quality inspection stage, it is found that the product does
not comply with the requirements, then control action is taken against that condition, bringing
the product into the "as intended" condition.
3) Quality Assurance
Quality is not guaranteed through inspection alone. Quality requires rational design, execution
of operations, and correct quality control procedures. Quality can be ensured in such a way that
consumers who buy are worry-free, in the long run without difficulty.
Product quality is directly fulfilled by nine basic factors, known as the "9Ms", which consist
of:
1) Market
The number of new and improved products on offer in the market continues to grow at an
explosive rate, as a result businesses need to be more flexible and able to change direction
quickly.
2) Money
Quality cost is one of the soft spots where operating costs and losses can be reduced to improve
profits.
3) Management
Quality responsibility has been distributed to all sections and levels of management.
4) Human (Men)
The workers needed now are those with specialized knowledge.
5) Motivation
Positive personal recognition that workers are contributing to the achievement of company goals
can increase worker motivation.
6) Materials
Materials must be inspected in such a way that they are fit for processing. Increasingly stringent
checks on specifications can effectively reduce costs.
7) Machines and Mechanization The company's desire to achieve cost reductions and increased
volume production encourages the use of perfect factory equipment.
8) Modern Information Method The rapid evolution of technologies such as computers opens up
the possibility of to collect, store, and retrieve and manipulate information.
9) Requirements Process Production ( MountingProducts Requirements)
Advances in design engineering require tighter control over the entire manufacturing process.
The eight TQM tools outlined are as follows.
1) Brainstorming is a planning tool that can be used to develop group creativity. Brainstorming is
used, among other things, to determine possible causes of a problem or planning the steps of a
project.
2) A flowchart, or process flow chart, is a planning and analysis tool used, among other things, to
draw up a step-by-step process for the purpose of analysis, discussion, or communication and to
find areas of improvement in the process.
3) SWOT analysis, is an analytical tool used to analyze problems with the framework of Strengths,
Weaknesses, Opportunities, and Threats.
4) Preference ranking, is an interpretation tool that can be used to select ideas and solutions among
several alternatives.
5) Fishbone analysis (also known as cause-and-effect diagrams), is an analytical tool, among
others, for categorizing potential causes of a problem and analyzing what is actually happening
in a process.
6) Critical appraisal, is an analytical tool that can be used to examine any manufacturing,
assembly, or service process. It helps us to think about whether the process is necessary,
appropriate, and whether there are better alternatives.
7) Benchmarking, is the process of collecting and analyzing data from our organization and
comparing it with the situation in other organizations. The result of this process will be a
benchmark to improve our organization continuously. The purpose of benchmarking is how our
organization can be developed so that it becomes the best.
8) The power field analysis diagram (power field), is an analytical tool that can be used, among
other things, to identifying obstacles to achieving a goal and identifying possible causes and
solutions to a problem or opportunity. In the event that quality is deemed feasible, it is necessary
for a product to be able to fulfill the following dimensions:
a. Performance: how well the product is used in accordance with its need fulfillment function
b. Features: the content of a product that differentiates it from other products
c. Reliability: how long the product can withstand damage
d. Conformance: the extent to which the product can be developed by the consumer himself.
e. Durability: how long the product can be used until it can no longer be used.
f. Serviceability, speed, cost, ease to repair: whether or not there is a service center and how
much it costs consumers.
g. Aesthetic: the beauty value of the product, included in this definition is the physical
appearance of the product.
h. Percieved quality: the impression that the product leaves on the consumer's mind.
The conditions for implementing TQM in a company are as follows:
a. Every company/organization must continuously improve the quality of products and
services so as to satisfy customers.
b. Provide satisfaction to owners, suppliers, employees and shareholders.
c. Have foresight in seeking profit and providing satisfaction.
d. The main focus is on the process, followed by the results.
e. Create conditions where employees actively participate in creating quality excellence.
f. Create leadership that is subordinate-oriented and actively motivates employees rather than
in an authoritarian manner so as to obtain an atmosphere conducive to the birth of new
ideas.
g. Willing to give rewards, recognition for those who succeed and easily apologize for those
who have not succeeded/made mistakes.
h. Every decision should be based on data, not experience/opinion.
i. Every step of the activity should always be clearly measurable so that supervision is easier.
j. Education and training programs should be at the forefront of quality improvement efforts.
9.5 Key Elements of TQM:
Total Quality Management (TQM) is a manifestation of the culture, attitude and
organization of a company in serving customers in the form of products and services so as to meet
their needs. TQM is an integrated effort to improve quality performance at all levels of the
organization. To succeed in the implementation of TQM, it is necessary to have an integrated
approach to quality performance at all levels of the organization. To successfully implement TQM,
there are 8 main keys that an organization must concentrate on, namely:
1.
Ethics
2.
Integrity / Integrity (Honesty)
3.
Trust
4.
Training (Education and Training)
5.
Teamwork
6.
Leadership
7.
Recognition / Credibility (Recognition)
8.
Communication
Key Elements TQM has been described as a philosophy of quality as the driver for
leadership, design, planning, and improvement initiatives.
The elements of TQM can be grouped into 4 groups, namely:
1. Foundation: Ethics, Integrity, Trust
TQM is built on a foundation of Ethics, Integrity and Trust. This will foster Openness, Fairness and
Sincerity and enable everyone's involvement. This is the key to unlocking the ultimate potential of
TQM. The three elements move together and each brings something different to the TQM Concept.
a) Ethics, is the discipline that deals with what is good and what is bad in any given situation.
This translates into organizational and individual ethics. Organizational ethics form a single
code of business conduct that includes guidelines that all employees must adhere to in their
performance. Individual ethics include personal rights or wrongs.
b) Integrity (Integrity means honesty, morals, values, fairness, and adherence to facts and
sincerity.
Integrity is a characteristic of what customers (internal or external) expect and deserve.
People see the opposite of Integrity as Falseness. TQM will not work with two-faced people
and atmosphere.
c) Trust, Trust is the product of Integrity and ethical behavior. Without trust, the TQM
framework cannot be built. Trust encourages full participation from all members. It enables
pride and commitment. Trust builds informed decisions, encourages individual risk-taking in
the context of Continuous Improvement and aids measurement that is centered on process
improvement and not on competing with others. Trust is essential to ensure Customer
Satisfaction. Trust among employees and parties associated with the company will facilitate
the decision-making process and implementation.
2. Building Bricks: Training, Teamwork, Leaderships:
A building stands on a strong foundation formed from trust, ethics and integrity, and after
the foundation is built, it needs to be completed with bricks that are assembled into the walls of the
building.
a) Training, is essential in improving productivity and performance. as a supervisor is
responsible for implementing TQM in the work area and teaching the TQM philosophy.
Some of the skills required by the team are
1) Interpersonal Skills (ability to work actively in a team)
2) Problem Solving
3) Decision Making
4) Performance Analysis and Improvement
5) Business Economics
6) Technical Skills
The goal of training is to create effective and productive employees.
b) Teamwork, is also a key element of TQM to be successful in business. Teams get faster
and better solutions to problems. Teams also provide more permanent improvements in
processes and operations. In teams, people feel more comfortable sharing problems that
may occur, and can get help from others to find the right solution, and will also be able
to improvise the process and implementation of TQM. There are three types of teams
suggested in TQM, as follows.
1) Quality Improvement Teams or Excellence Teams (QITS), which are temporary teams
tasked with solving specific problems, are usually used for a period of three to
twelve months. These teams are also usually used again when the same problem
arises in the next period of time.
2) Problem Solving Teams (PSTs), are temporary and tasked with solving specific
problems and identifying and addressing the causes of problems within a period of
one week to three months. Problems are of a lower level than those faced by QITS.
3) Natural Work Teams (NWTs), comprised of a small group of subject matter experts
with each team member assuming duties and individual responsibilities that are
divided based on their capabilities. The concept of a team involving employees, the
ability to manage the team professionally, and the unity among team members in the
form of a quality circle. The team is continuous without any time limit with working
hours of approximately one to two hours each week.
c) Leaderships, perhaps the most important element in TQM. Leadership in TQM requires
managers to provide an inspiring vision, make strategic directions easy to understand
and instill values as a guide for subordinates. A supervisor must understand TQM,
believe in it and demonstrate his/her belief and commitment through daily practice. The
supervisor ensures that strategies, philosophies, values and goals flow down throughout
the organization to provide focus, clarity and direction.TQM must be introduced and led
by top management. Personal commitment and involvement from top management is
required in creating and spreading clear quality values, consistent goals and in creating
and using well-defined systems, methods and performance measures to achieve goals.
2.
Binding Mortar :Communication:
a. Communication, which binds everything together. From the foundation to the roof of the
TQM house, everything is bound together by the strong "cement" that is
Communication.Serves as an important link between all elements of TQM.Communication
means a common understanding of ideas between sender and receiver.The success of TQM
demands communication with and among all members of the organization, suppliers and
customers.Communication coupled with sharing is the key to success. Credible
communication is able to explain the sender's intentions and be received and interpreted by the
receiver. There are various ways of communication such as:
1) Downward Communication
This is the dominant form of communication in an organization. It is basically done
through presentations and discussions so that a supervisor or manager is able to make
employees clear about TQM. Example: information from top management to supervisors,
then supervisors to employees.
2) Upward Communication
It is a form of employee participation by providing suggestions to upper management.
Employees provide Insights and constructive Criticism, Supervisors and Managers must
listen effectively to improve the situation that occurs through the use of TQM. This is also
similar to Empowering Communication, where you as a Manager or Supervisor keep your
ears open and listen to others.
3) Sideways Communication
This type of communication is important because it breaks down barriers between
departments. It is also necessary for Customer and Supplier affairs in a more professional
manner.
3.
Roof: Recognation:
a. Recognation, is the end of a good TQM process where each individual or team can get
recognition according to their contribution. You as the leader of an organization are required
to recognize and detect the participation and contribution of each level of your organization.
People who Receiving rewards and recognition will have a greater effect on self-esteem,
productivity, quality, and effort in tasks. Indirectly, this will ultimately provide satisfaction to
consumers in the form of high quality products as a result of empowering quality human
resources. Recognition comes in unique and different forms such as:
1) Ways: Personalized Letter, Plaque, Trophy, Charter, etc.
2) Places: Management Meeting Forum, Performance Board, etc.
3) Time: Staff Meetings, Annual Awards Banquet, etc.
These eight elements are key in ensuring the success of TQM in an organization and
supervisors play a major role in their development in the workplace. Without these elements,
business entities cannot guarantee the successful implementation of TQM. It is very clear that TQM
without involving Integrity, Ethics and Trust would be a major omission. Training is the key by
which organizations create a TQM environment. Leadership and Teamwork must go hand in hand.
Lack of Communication between departments, Supervisors and Employees creates a burden on the
overall TQM process.
