Impact Of Total Quality Management On Production Cost Of An Organization (A Case Study Of Nigeria Bottling Company Plc, Kaduna)
Impact Of Total Quality Management On Production Cost Of An Organization (A Case Study Of Nigeria Bottling Company Plc, Kaduna)
Abstract
This research seek to identify the impact of total quality management on production cost of an organization in Nigeria bottling company Plc, Kaduna Plant as a case study. Background of the study create awareness on total quality management as the hub for customers satisfaction quality become a primary source of global competitive advantages, and lead indicator for improved profitability. The statement of problem layered more emphasis on poor quality of product and personnel and the management behaviors towards the concept of Total Quality Management. The research work also attempted to identify the methods of quality control, cost of product, cost components that make up production cost and as Total Quality Management can reduce cost. The researcher went further to review related literatures on the project topic such as Evaluation and definition of Total Quality Management. The traditional vs Total Quality Management approach, as well as quality and product cost. The research methods use in the collection of data the justification for using the method as well as the statistical instrument used is established. These is one research hypothesis for which the questionnaire is drown and designed, administered to sample size of 25 respondents of the organization in question.
Chapter One
Introduction
1.1 Background of the Study
Total quality management is known as the primary role of management to lead an organization in its daily operations and maintains it as a viable entity into the future. Quality has become an important factor in these. Although ostensibly always. an objective of business is customer in customer terms, because a specific goal in the late 1980’s provide higher quality are recognized as a key element for success, most large operations taking that path have document the success, first they survived the competitors that has set the higher quality levels and now have regained some of their former market.
Total Quality Management is perhaps the leading management approach that compares employed to improve their product and services, quality with the aim of improving typical measures of business performance. (e.g profit, increased market share reduced cost). The Japans have capture more than 30% of the American and electronic markets. It was achieved by offering higher value products. In response to the boom in the competitor market, many American firms have implemented require the integration of Human resources, production engineering store and purchasing marketing, distribution, and planning is a continuous improvement process; it is much wider than the traditional quality view of incoming inspection and process control. It means that the entire organization is working as a team including the cooperate top managers and each an every employee, it is on innovative way of thinking that affect the culture, the strategy and technology of company. The organization needs a holistic approach so that every department in the organization should come together for cost reduction and improve products, approach will reduce cost and quality will be achieve for competitive advantage.
1.2 Statement of the Problem
This Empirical research has identified some general problems that are associated with Total Quality Management which are listed below. One of the problems is the failure of organization to understand the importance of material quality control and often ignore its application. This has led to the receipt of low quality and substandard lots of materials into the in process, culminating in poor quality out put and increased cost for these organizations.
The problem of organization over-relying on suppliers ability as a result of trust thereby falling to check and/or monitor the incoming materials for any possible defect or deviations from specification.
Others are manpower related problems were also observed to be a major barrier for achieving a Total quality management program. Most organizations lack the service of specialists to handle materials quality control trained/retrained or lack of proper supervision due to top management neglect.
Facilitates related problem in organizations, there are inaccuracies in machineries, tools, fixtures, measuring instruments etc. that are required in managing quality and total quality control process which can be disastrous for decision making as a result of the unreliable outcomes. The existence of these problems brought about the head for the research work so as to proffer solutions that are workable at the end.
1.3 Objective of the Study
The primary objective of the study is to identify the impact of quality management on production cost of an organization.
- To identify the challenges faced by manager in implementing Total Quality Management
- To identify the major cost component of Total Quality Management
- To identify the contribution of Total Quality Management on material and cost reduction
- To identify the method the Nigeria Bottling Company used in storage of raw material
- To identify the attributes of quality products
1.4 Significance of the study
The study will be of immense benefit to the researcher, the organization under study in achieving its goal and objective, other researcher, and the general public. It is sincerely hoped that the result of the study will be applied in areas that need to be improved in the organization under study. The study will also widen the horizon of the research on the topic under study and it will serve as reference to the researchers.
Finally, the research is a pre-requisite for the award of Higher National Diploma (HND) in Purchasing and Supply of Kaduna Polytechnic.
1.5 Scope of the Study
The research is limited to the Nigerian Bottling Company Kakuri Kaduna Plant, but the research will look at the entire concept of Total Quality Management as well as the major cost component of production and finally the application of Total Quality Management on material cost of production and finished goods cost.
1.6 Research Questions
- What are the challenges faced by manager in implementing total quality management?
- What are the major cost components of quality management?
- What are the contribution of quality management on material and cost reduction?
- What method does the organization used in storage of raw materials?
- What are the attributes of quality products?
1.7 Definition of Terms
Quality:
Fitness for purpose at lowest cost
Management:
The process of planning organizing coordinating directing and controlling.
Effectiveness:
The ability to bring about the intended result in respective of cost
Quality management:
This is the overall management function that determines and implements quality policy.
Specification:
This is the detailed description of an item.
Scrap:
This is defect, materials or staffs that cannot be repaired or used
Total Quality management:
(TQM) this is a management approach to an organization centered on quality based on participation of all its members of the organization and society.
Inspection:
To check incoming materials with specification so as to accept or reject based on evaluation.
Performance:
Performance means doing a job as per specification with efficient use of resources.
Reliability:
The ability to yield an acceptable outcome consistently.
Materials:
Materials are resource used directly or indirectly to produce or incorporate finish goods.
Purchasing:
The management function of buying the right materials from the right source, at the right quality, at the right price, at the right quantity and purpose as economically as possible.
Standard:
A predetermined and accepted way of doing things or the accepted state of things.
Chapter Five
Summary, Discussion, conclusion and Recommendations
This chapter summarize the entire project work it bring out the findings arrive at a conclusion and as well made recommendations to the management on the impact of Total Quality management on production cost of an organization.
5.1 Summary of Procedure
This research is focus on the impact of total quality management on production cost in Nigerian Bottling company plc, Kaduna plant situated at kakuri industrial area of Kaduna south. Kaduna .The chapter of the study include a formal introduction to the topic under consideration of problems related to the study also identified specific objective, significance of the study and questions were developed to assist the researcher to study the situation carefully and come up with possible solutions, suggestions, for the definitions of the terms used in the study were also provided.
The second chapter of the research work center on the previous works of authors and scholars on the topic under study consideration, the definitions evaluation of the topic under consideration. Especially the contributions of Walter A. Shewhart W. Edwards Deming , Joseph M. Juran, Armand V. Feigenbaum, Philip B. Crosby, Kaoru Ishikawa , and Genichi Taguchi. Who are known as TQM gurus’ were vividly reviewed by the researcher.
The methodology adopted by the researcher is based on the area of study, research Design, Population of the study, sample and sampling techniques, instruments for data collection, Administration of the instruments, and techniques for analyzed data and the justification for using the methods etc.
Finally in chapter four, the researcher issuer out 25 questioners which all were filled and return and this formed the basis for the presentation of analysis. The instruments were administered personally by the researcher for the respondents and this was done randomly among the sample size drawn from the Nigerian Bottling company Kaduna.
5.2 Discussion of Findings
In this section, the researcher discussed major findings in relation to research objectives and gave interpretations and explanations of the findings base on the research question relating the findings to existing works and knowledge. The important of TQM in Nigerian Bottling company reviled that Quality must be applied to the entire organization ranging from incoming material, in-process materials, finish products, machineries, human capacity and equipments .and it was revealed that managers gives less attention or ignores the concept of TQM in the running affairs of the organization this has lead to reductions in the Quality and increase cost of production such as prevention cost of rework and cost of discarding and waste to the organization .the research question two ask to know what are the major cost components of total quality management and also research question three ask on the contributions of quality materials on cost reduction responses from respondents shows that effective application of total quality minimize cost and waste of resources in the Nigerian bottling company.
5.3 Implications for Findings
The following implications can be deduced that if action is taking or not, the findings show that TQM helps to improve the levels of service rendered to customers elimination of cost of internal failure, cost of external failure and waste and cost of rework. The study also reviled that TQM stresses that quality is an organizational effort to facilitate the solving of quality problems, it places great emphasis on teamwork using techniques such as brainstorming, discussion, and quality control tools, teams work regularly to correct problems. The study also emphasis that the new concept of TQM, which provides incentives for employees who identify quality problems should be adopted to ensure probity in the process. The study also reviled that the organization should optimize the numbers of it suppliers in order to reduce variety of unwanted material and sub standard m materials in the organization. The non implementation of these findings could lead the organization not realizing or achieving successful adherence to TQM which could leads to lost of goodwill, and lost and targeted market shares.
5.4 Conclusion
Part of the TQM philosophy is to empower all employees to seek out quality Problems and correct them with the old concept of quality, employees were afraid to identify problems for fear that they would be reprimanded. The new Concept of TQM provides incentives for employees to identify quality problems. Employees are rewarded for uncovering quality problems, not punished. TQM stresses that quality is an organizational effort to facilitate the solving of quality problems, it places great emphasis on Teamwork using techniques such as brainstorming, discussion, and quality control tools, teams work regularly to correct problems. competitive Evaluation the important thing here is to identify which customer requirements we should pursue and how we fare relative to our competitors companies know that a high reliability is an important part of customer-oriented quality and try to build this into their product design the old concept focused on inspecting goods after they were produced or after a particular stage of production. If an inspection revealed defects, the defective products were either discarded or sent back for reworking. All this cost the company money, and these costs were passed on to the customer. The new concept of quality focuses on identifying quality problems at the source and correcting them. Managing Supplier Quality traditionally, companies tended to have numerous suppliers that engaged in competitive price bidding.
When materials arrived, an inspection was performed to check their quality TQM views this practice as contributing to poor quality and wasted time and cost. The philosophy of TQM extends the concept of quality to suppliers and ensures that they engage in the same quality practices. If suppliers meet preset quality standards, materials do not have to be inspected upon arrival. The responsibility of improving product and Service quality should be a company top priority due to vast knowledge that people now have on quality and eliminate in effective implementation of TQM which always result in lower sales lost of market shares and low profit, many organization that adopt this has document success as their reason for increase profitability. They see TQM as the key to create customers value and satisfaction in customers’ term which comprise the functions of purchasing, finance, store, engineering and marketing. Accurate communication needs to be build among all the function to achieve the desire result quality in customers term and in the organization.
5.5 Recommendations
Base on the finding and conclusions the following recommendations are made to the managements of Nigerian Bottling Company plc
- The company must first recognize the importance TQM as it relate to their line of business operation and direct efforts to enforce straight quality management on its materials and all process components.
- Manpower related problems should also be address to achieve superior quality. Training and development of staff should be for personnel of the company in the area of TQM, and areas as quality control, inspection, technical education and engaging the service of specialist while management should ensure accurate supervision.
- Adequate machineries and tools should be provided by the management so as to achieve higher quality to meet the defined terms of costumers.
- Standard should be set for materials input so that supplied materials can be measured against such standard. Quality requirement should be well spelt out in specifications to supplier so as to avoid conflict.
- Management should not rely on the ability of their suppliers to provide the best quality of materials .there the are received and used for production.
- The management should know that application of Quality is not only apply to the product or service itself; it also applies to the people, processes, and organizational environment associated with it with this superior quality will be achieved. Companies that consider quality important invest heavily in prevention and appraisal costs in order to prevent internal and external failure costs the Nigerian bottling company should not be an exception because The earlier defects are found, the less costly they are to correct.
- Additional quality control measure should be applied to inputs such as statistical process control, testing trial runs sampling etc.
- Inspection should be conducted before a commitment is made to suppliers and after such commitment is made so as to effectively and efficiently tackle any quality discrepancy or related problems before they occur.
- Quality of materials must be a strategic priority of Nigerian Bottling Company it seeks to achieve success as a basis for competition in soft drink industry.
- Decision on the methods of inspection, the timing of inspection and individual office to handle the function must be made appropriately.
5.6 Suggestion for Further Studies
In the process of conducting the research the researcher discovered some additional areas related to the studies which are not discussed in the work doe to the scope of the research. These areas are recommended or suggested for additional studies as they form a fertile grand for conducting subsequent research .they are total quality control, Continuous improvement on quality, Effective use of quality tools, Six sigma of Quality, quality cost, Prevention cost, Appraisal cost, Internal and external cost of quality, Quality function Development, Managing suppliers quality, and Process management of quality at the source.
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