Total Quality Management (TQM) has become, according to one source, ‘as pervasive a part of business thinking as quarterly financial results,’ and yet TQM's role as a strategic resource remains virtually unexamined in strategic management research. Drawing on the resource approach and other theoretical perspectives, this article examines TQM as a potential source of sustainable competitive advantage, reviews existing empirical evidence, and reports findings from a new empirical study of TQM's performance consequences. The findings suggest that most features generally associated with TQM—such as quality training, process improvement, and benchmarking—do not generally produce advantage, but that certain tacit, behavioral, imperfectly imitable features—such as open culture, employee empowerment, and executive commitment—can produce advantage. The author concludes that these tacit resources, and not TQM tools and techniques, drive TQM success, and that organizations that acquire them can outperform competitors with or without the accompanying TQM ideology.

Total quality management as competitive advantage: A review and empirical study

http://directory.umm.ac.id/Journals/Journal%20of%20Operations%20Management/Vol19.Issue2.Feb2001/245.pdf

Arcs of integration: an international study of supply chain strategies

A framework for quality management research and an associated measurement instrument

The contemporary quality management (QM) literature prescribes various quality improvement strategies. However, it lacks scientifically developed and tested constructs that represent an integrative QM philosophy. Moreover, an impact of the prescribed QM strategies on a firm's product quality has not been analyzed. Through a detailed analysis of the literature, this research identifies 12 constructs of integrated QM strategies. Using a survey of 371 manufacturing firms, the constructs are then empirically tested and validated. LISREL 7 is used for this purpose. Finally, a framework to examine the effects of integrated QM strategies on a firm's product quality is suggested. Comparisons between this and two other comprehensive scales of TQM are made.

Development and Validation of TQM Implementation Constructs

The relationship between total quality management practices and operational performance

Much has been written about how quality should be managed in an organization. The quality literature contains many case studies of successful companies and descriptions of quality concepts and quality improvement programs. To date, however, there has been no systematic attempt to organize and synthesize the various prescriptions offered, nor have measures of organizational quality management been proposed for areas such as top management leadership, training, employee involvement, and supplier management. While many organizations collect quality data such as defect rates, error rates, rework cost, and scrap cost, these are not measures of organization-wide quality management.

This paper provides a synthesis of the quality literature by identifying eight critical factors (areas) of quality management in a business unit. Operational measures of these factors are developed using data collected from 162 general managers and quality managers of 89 divisions of 20 companies. The measures can be used individually or in concert to produce a profile of organization-wide quality practices. The measures are found to be both valid and reliable. Such measures could be used by decision makers in an organization to assess the status of quality management in order to direct improvements in the quality area. Researchers can use such measures to better understand quality management practice and to build theories and models that relate the critical factors of quality management to the organization's quality environment and quality performance.

An Instrument for Measuring the Critical Factors of Quality Management

While the quality literature abounds with prescriptions for how quality should be managed, no one has proposed an organization-theory explanation for how quality is managed in organizations. This paper proposes a system-structural model of quality management that relates organizational quality context, actual quality management, ideal quality management, and quality performance. The relationships between organizational quality context and actual and ideal quality management are investigated using data collected from 152 managers from 77 business units of 20 manufacturing and service companies. A previously reported instrument is used to measure managers' perceptions of ideal and actual quality management in terms of eight critical factors including product/service design, training, employee relations, and top management leadership. Several measures are used to characterize organizational quality context including company type, company size, degree of competition, and corporate support for quality. The results indicate that organizational quality context influences managers' perceptions of both ideal and actual quality management. This suggests that knowledge of organizational quality context is useful for explaining and predicting quality management practice. Important contextual variables are corporate support for quality, past quality performance, managerial knowledge, and the extent of external quality demands.

The effects of organizational context on quality management: An empirical investigation

The effects of organizational context on quality management: an empirical investigation

INTRODUCTION Progressive firms today consider their key suppliers as an extension of the firm's in-house production processes.[1] An ongoing supplier's performance typically is evaluated on the basis of product quality, delivered cost, and manufacturing and service capabilities. Even though the emphasis today has shifted toward quality, price is still an important criterion in most cases. In some cases a supplier becomes a single source for the buying organization. In these cases, in addition to its commitment to the basic performance criteria just mentioned, a supplier is frequently expected to participate in the buying firm's product development efforts to improve the product's design, manufacturability, and cost characteristics. In addition, the supplier is expected to commit to a program of "continuous improvement," with a strong emphasis on continuing cost reduction.[2] A firm's purchasing professionals must be perceptive in analyzing a supplier's cost performance. They need to be able to determine and understand the likelihood of a supplier's ability to maintain effective cost performance. To do this, a buyer must utilize effectively the available information on a supplier's cost dynamics - that is, the factors that are likely to increase or decrease the supplier's delivered cost. The information produced by this type of analysis is vital for effective management of single sourcing situations. The type of information needed by purchasing professionals to accomplish this objective is much more readily available through the use of an activity-based costing system (ABC). This is a relatively new approach to product cost accounting. Many firms today are beginning to realize that the traditional approach to product cost accounting (TC) produces a distorted product cost. Consequently, many are selectively using ABC to recost their products and compute product profitability.[3] Many of these firms are also modifying their pricing strategies based on ABC. Consequently, to deal effectively with suppliers, a buyer really needs to understand the ABC system and the data that it produces. Although much has been written about ABC as a tool for managerial analysis, there has been relatively less emphasis on ABC's uses in costing and pricing decisions for purchasers. The purpose of this article, therefore, is to point up the differences between ABC and TC systems - and to illustrate how ABC can assist purchasing professionals in approaching cost/price and sourcing decisions. DIFFERENCES BETWEEN ABC AND TC THAT ARE IMPORTANT TO PURCHASERS The major differences between ABC and TC can be explained most effectively by using an example. In the following hypothetical case, a company called Diversified Products Inc. (DPI) is a job shop making custom products for its manufacturing customers. United Plastic Models (UPM), a customer, is interested in purchasing a part, EC-24, from DPI. The purchasing manager of UPM is involved in negotiations with DPI and has asked DPI to provide ABC-based cost breakdowns for an estimated annual volume of 10,000 units. DPI values its relationship with UPM and has agreed to provide requested ABC cost data. Internally, DPI is comparing TC with ABC and has developed the data in Table I (see p. 27). Distortion of Unit Costs Under TC As shown in Table I, the manufacturing cost per unit for EC-24 differs substantially between the TC and the ABC approaches, $55.56 and $42.88 respectively. Upon closer examination of the TC and ABC cost breakdowns, one can see that there are no differences in the direct material and direct labor components. There is, however, a big difference in manufacturing overhead per unit between TC and ABC, $30.56 and $17.88 respectively. The comparison of unit cost data under the TC and the ABC approaches reveals that EC-24 is overcosted under TC as compared with ABC; as a result, DPI may not be priced competitively in the market for EC-24. …

Jayant V. Saraph

Papers

An Instrument for Measuring the Critical Factors of Quality Management

The effects of organizational context on quality management: An empirical investigation

The effects of organizational context on quality management: an empirical investigation

Activity-Based Costing for Purchasing Managers’ Cost and Pricing Determinations

Study of manufacturing strategy and performance in manufacturing firms.