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Jamshed Khan
Lahore University of Management Sciences
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Perspective
Impact of total quality
management on
productivity
Jamshed H. Khan
The author
Jamshed H. Khan is Associate Dean, Business School,
Lahore University of Management Sciences (LUMS),
Lahore, Pakistan.
Keywords
Total quality management, Productivity rate, Pakistan
Abstract
The twenty-first century harbors intense global
competition where the playing field and the rules of the
game have changed. There is an urgent need for Pakistani
businesses to change the way they operate. This paper
introduces the total quality management (TQM) concept
and argues that its implementation is the critical need of
the hour for the survival of our industries both locally and
internationally. The paper is divided into four segments:
the first discusses the changed environment in which
businesses are operating; the second gives a brief
introduction to the TQM philosophy and discusses TQM
systems and tools; the third discusses the effect of TQM on
productivity and explains what is meant by effective
productivity; and the fourth presents some of the benefits
that were realized by international and local firms
implementing TQM.
Electronic access
The Emerald Research Register for this journal is
available at
http://www.emeraldinsight.com/researchregister
The current issue and full text archive of this journal is
available at
http://www.emeraldinsight.com/0954-478X.htm
374
Jamshed H. Khan
TQM model
A simple model for TQM is depicted in
Figure 1. The model consists of two main
components:
(1) TQM philosophy;
(2) TQM systems and tools.
TQM philosophy
TQM philosophy consists of four basic
beliefs, which are as follows:
375
Jamshed H. Khan
376
Jamshed H. Khan
Percentage change
in operating income
Percentage change
in sales
Percentage change
in total cost/sales
Percentage change
in number of employees
Percentage change
in assets
2 6 to 2 1
2 4 to 2 1
2 1 to +1
2 1 to +3
2 6 to +3
10.41
8.88
14.77
35.06
107.12
6.21
2.8
6.26
18.15
63.74
0.27
2 0.45
2 0.39
2 0.94
2 1.27
0.35
2.33
5.56
13.69
17.00
2 1.93
1.8
8.24
17.52
45.46
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Jamshed H. Khan
378
Jamshed H. Khan
Knitwear exporter
The company experienced an increase in
revenues of 42 per cent within three years of
implementing TQM. It was also successful in
reducing its cost per employee by nearly 24
per cent (from Rs.792,324 to Rs.604,365)
and its defect rate to 4 per cent.
The company experienced progress in its
sales and operations in terms of inventory
turnover, which improved by 20 per cent
(from 4.25 times to 5.12 times), and a
reduced lead-time from an average of 90 days
to a phenomenal average of 53 days; an
improvement of nearly 70 per cent.
References
Evans, J.R. and Lindsay, W.M. (1996), The Management
and Control of Quality, West Publishing Company,
Minneapolis, MN.
Harari, O. (1993), Ten reasons why TQM doesnt work,
Management Review, January, pp. 33-8.
Hendricks, K.B. and Singhal, V.R. (1997), Does
implementing an effective TQM program actually
improve operating performance? Empirical evidence
from firms that have won quality awards,
Management Science, Vol. 43 No. 9, pp. 1258-74.
Conclusion
Considering the current state of global
competition, it is imperative for Pakistani
businesses to develop a customer-focused
culture as soon as possible. This would ensure
that their resources are efficiently and
effectively utilized to produce only those
products and services which the customer
wants and is willing to pay a premium for.
This points towards developing a TQ culture.
Before any of this can be achieved, senior
executives of organizations will have to fully
understand and believe in the TQ philosophy
without which achievement of maximum
benefits would not be possible no matter how
many material resources are invested. The
systems and tools cannot promise significant
or sustainable results without the visible
commitment of the top management to the
TQM philosophy.
Looking at the experience of companies
both local and international, which have
Further reading
Anderson, E.A. and Adams, D.A. (1997), Evaluating the
success of TQM implementation: lessons from
employees, Production and Inventory Management
Journal, Vol. 38 No. 4, pp. 1-6.
Becker, S.W. (1993), TQM does work: ten reasons why
misguided attempts fail, Management Review,
May, pp. 30, 32-33.
Brown, S. (1998), New evidence on quality in
manufacturing plants: a challenge to lean
production, Production and Inventory Management
Journal, Vol. 39 No. 1, pp. 24-9.
Clemmer, J. (1992), Firing on All Cylinders, Irwin,
New York, NY.
Creech, B. (1994), The Five Pillars of TQM, Truman Talley
Books/Dutton, New York, NY.
Crosby, P.B. (1980), Quality Is Free, Mentor, Somerset, NJ.
Harari, O. (1993), The eleventh reason why TQM doesnt
work, Management Review, May, pp. 31, 34-36.
Kanji, G.K. (1995), Total Quality Management:
Proceedings of the First World Congress, Chapman
& Hall, London.
Kanji, G.K. (1996), Total Quality Management in Action,
Chapman & Hall, London.
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