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The Eurasia International case study is based on the implementation of total quality management (TQM) to improve the overall performance of the shipping company. TQM involves the application of quality management standards to all elements of the business.
It requires that the quality management standards be applied in all branches and at all levels in the organization.
Characteristic of Eurasia going through the total quality process is an unambiguous and clear, limited interdepartmental barriers, excellent customer and supplier relation, time spent on training and the recognition that quality is product quality as well as the quality of the entire firm, including personnel, finance, sales and other functions.
Top management has the responsibility for quality rather than employees and is their role to provide commitment, support and leadership to human and technical processes (Kanji & Asher, 1996).
In as much as the TQM initiative is to succeed, management has to foster the participation of workers in quality improvement and create a quality culture by altering attitudes and perceptions towards quality.
Importance of a voluntary system of self regulation
Mr. Bajpaee believed a voluntary system of self-regulation was essential for the shipping industry largely because of the need to achieve excellence in maintaining the necessary HR focus while controlling the vessel’s cost structure, keeping on line with customer requirements and foreseeing the competition.
That is focusing on the nature of the shipping work and the important roles of individuals in order to meet the diverse needs of the stakeholders. The industry had undergone major restructuring which led to significant growth especially into the international markets.
The outcome of the rapid growth was the demand for more resources, yet in an environment with diverse regulatory systems. This led to issues like shipping accidents and other deficiencies as the industry focused more on making profits at the cost of the quality of services.
According to Bajpaee, the shipping industry is analogous to any manufacturing industry. Therefore, a ship is likened to a factory where independent control is paramount in order to increase efficiency in operations and effectiveness of the human resources.
In addition to the differing needs of the employee, the industry is associated with uncertain environments which call for unique actions and strategies to ensure success. Quality in the shipping industry is measured by the ability of a shipping firm to transport products safely from one place to another.
However, there are factors unique to individual ships that are described by the environment which determine the decision making processes. The self-regulation means that the management is able to respond to these factors free from other restrictions that might not fit in the specific context.
In this respect, total quality management is considered to interlock with a self-regulatory system in that the system supports the creation of a quality culture. Managers as well as other employees who are restricted to explore the ideas they think to fit best in their duties are not likely to understand the needs of stakeholders that can lead to value creation.
They will likely be endeavoring to accomplish tasks rather than accomplishing them efficiently. Bajpaee observes that a ship manager serves as an intermediary with secondary customers and is different from a manager at the base of a shipping company.
Therefore, the success of the two managers is determined by different factors and hence cannot function under a common regulatory framework. Each environment demands self-reliance for the managers to offer effective solutions and steer the respective workforce towards achieving the organizational objectives.
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Creating value for people
Mr. Bajpaee likens cash flow to blood flow such that as oxygen is important to blood flow, profit is important to cash flow. However, the significance of life is not limited to having a pulse and similarly business existence is not limited to the flow of cash.
More important is to create value for the stakeholders: shareholders, customers and employees. These observations mean that profit or cash flow results from value creation and not the other way round. As much as the firm is committed to creating value for the stakeholders, profit is created and the business is also sustained.
The Bajpaee’s saying is directly related to the idea of total quality management. Creating value for the stakeholder means the efforts to bring job satisfaction, customer satisfaction and shareholder satisfaction (Mukherjee, 2006).
No business can be sustained if it lacks the capacity to retain employees, attract new customers and encourage shareholders to invest more. The human resources are the source of customer satisfaction which lead to increased sales and profits as well as shareholder satisfaction which is the source of investments.
Therefore, value creation is not only the source of cash flow but also the best approach to instill a quality culture. The central purpose of a business’ existence is therefore to create value for stakeholders and profit cannot supersede it.
Eurasian international is committed to creating value for stakeholders through total quality management initiatives. First, the organization creates value for its employees through recruitment, training and development.
Attracting employees from diverse environments is important to any firm operating at the global level which Eurasia achieves by recruiting seafarers globally and assembling international crews. Value is created through more friendly conditions for employees by offering stable working hours and established career paths.
Job roles are defined and the employees can advance their careers through education and accumulation of experience. Work performance for individual workers is formally appraised on periodic basis as a way to motivate them.
Second, customer value in Eurasia is achieved by collecting and acting on customer satisfaction information. There are established Key Performance Indicators corresponding to customer value, shareholder value, human value and leadership/intellectual value.
All sea-based and shore-based groups have performance targets at all levels. This ensures that the management is able to observe how all parameters are working on a virtually real-time basis. In addition, the firm collects information from external market and financial information providers which is analyzed by employing TQM methods prior to taking the necessary action.
Third, Eurasia creates the value for its shareholders through a number of ways including the proper use and maintenance of resources as well as ensuring the flow of revenue. Since the shareholders are also the ship owners, Eurasia has set a process of monitoring, evaluating the technical conditions of the vessels in an effort to maintain them in good working conditions.
The teams responsible are organized such that any deficiency is identified, analyzed and corrected appropriately and on time. As much as the resources are in good conditions, the sea activities are increased and thus higher returns for the stakeholders.
In general, the organizational structure, employee training and development, resource allocation and maintenance as well as focusing on customer needs are among the factors that create value for the people. Organizational structure enables the human resource to understand their job roles and responsibility.
Employee training and development provides the employees with the necessary skills and motivates them to work hard. Resource allocation enables the company ensures higher returns by reducing inefficiencies in operations. By focusing on the needs of customers, Eurasia ensures brand equity which lead to a royal customer base.
Realizing operating efficiencies
One of the objectives that Bapjaee put forward when implementing TQM was to increase the operating efficiencies. For this goal, the manager was determined to establish coordination in activities between the sea-based and shore-based groups.
This was because any successful operation depended on the effort of both groups. The failure of crew members to deliver cargo safely would as well nullify the efforts by the shore-based groups to complete the transaction with the customer. As a result coordination of activities begins at the initial stages of a transaction and continues through until success is attained and evaluated for recommendations.
To start with, the crew members are recruited, trained and developed according to the specific type of vessel under management, the particular type of cargo or the voyage in question.
The shore-based group must communicate to the crew the system of safety, guidelines, policies and procedures in order to equip them with tools and knowledge necessary for any probable eventuality.
This is backed up with well established daily, weekly and monthly reporting systems; quarterly inspections; pre-embankment and post-dismemberment debriefings and constant satellite-based monitoring to determine whether the vessel was making the right progress.
Moreover, Eurasia has established a management structure comprised of self-check, cross-check and external-check constituents corresponding to the firm’s shipboard fleet management and support team.
Additionally, when defects or deficiencies are identified in a particular operation, they are analyzed by a reliability team to determine the root course of the failure. For all operations, this determination is widespread involving the crew, system and equipment.
The appropriate remedy to the failure is arranged while touching on the relevant adjustments such as provision of more training and development, making necessary maintenance and revising the policies and procedures. Such a follow up ensures that every other operation is performed better than the previous one; continuous improvement.
Other companies have a number of lessons to learn from Eurasia operating efficiencies. First, operating efficiency are achieved when there is corporation between operating groups. This means that operating efficiency touch every party that has influence no matter how small it is.
Companies should not assume some departments simply because they are not directly related to the particular operation. They should aim for total quality improvement. Secondly, efficiency is about improving on the weak areas rather than introducing new ideas.
When one learns from failure, he becomes more confident to explore new ideas that add to the existing knowledge. Finally, other companies can learn the need to create a quality culture in order to increase operating efficiencies.
Indeed, quality of service in the service industry translates to efficiency in operations and improving that quality is an effort to increase operation efficiencies (Klefsjo & Bergquist, 2006).
The role of information
Information play a central role in everything that Eurasia does which begun from its establishment to its expansion into the global market. Initially, the selection of Hong Kong as headquarter stemmed from the information gathered about the city.
The city had a sophisticated telecommunication, infrastructure, an extensive air transport system, an advanced banking infrastructure, a low tax regime and a productive workforce, all of which suggest extensive research of the market.
As a competitive competency, Eurasia deployed advanced database-management and computerized information system that gave users access to timely and accurate information.
Most of the strategies established in the firm were based on information attained either from the market environment or failures in the industry. For instance, the strategy to become the best instead of the biggest was established after continued failures of firms in the shipping industry.
During this time, Bapjaee observed how many shipping companies competed in a limited marketplace to acquire economies of scale and decided to focus on a completely different direction. Operations efficiencies originated from relevant actions on the weak areas identified through the collection and good flow of information among the operating groups.
Another area that information has played a central role is on the Eurasia’s quality journey. Despite Bajpaee having reflected on the changes taking place in the industry to conclude that TQM was most necessary to the firm, he studied processes at other companies that had implemented TQM to confirm the relevant components.
Again, these components were based on the need to seek much information on both the industry and the market. A definition of quality in terms of customer’s needs is a matter of seeking information about the diverse needs of customers.
An organization-wide quality performance is about integrating stakeholder information into the company. The work system proposed relates to the adoption of an information system by the human resources. A meaningful way to monitor and measure results will require an evaluation and analysis of information pertaining to the performance of the system.
Information has also played a center role in recruiting, training and developing employees. The recruitment of seafarers globally and assembling of international crews clearly stipulate the need to have relevant information about the global market needs.
Job design that specified the roles of the candidates is a consequence of information about the objectives of the firm and the market needs. Again, organizational learning occurs as information cascades down through the levels of the organization.
Employees plight in the information provided by the higher levels while managers take use of the feedbacks from the employee. Appraisal system is also an issue of collecting information about the performance of the employees and weighing them against the objectives of the firm in order to determine the worthy workers.
Total Quality Management is a concept applied in businesses such as Eurasia with a focus on continuous improvement across all branches and levels of an organization. Being part of Eurasia, the concept defines the way in which the organization can create value for its people.
Bapjaee thinks that the most appropriate environment to use TQM is that which has a self regulatory system which allows the appropriate response to the dynamics of the shipping environment. Through TQM, Eurasia has been able to create value which eventually leads to operation efficiencies.
These efficiencies have particularly been achieved by continuous correction of deficiencies identified in the process. A particular interest is the central role that information has played in enabling TQM initiatives especially through continuous learning.
Kanji, G. K. & Asher, M. (1996). 100 methods for total quality management. Thousands Oak, CA: SAGE.
Klefsjo, B. & Bergquist, B. (2006). Six sigma and total quality management: different day, same soup. Int. J. Six Sigma and Competitive Advantage, 2(2), 162-178.
Mukherjee, P. N. (2006). Total quality management. New Delhi: PHI Learning Pvt. Ltd.