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THE IMPACT OF THE TOTAL QUALITY MANAGEMENT (TQM) ON PRODUCTIVITY (A CASE STUDY OF DIAMOND BANK, LTD OWERRI)

CHAPTER ONE

1.0     INTRODUCTION

Embarking the  total quality management (TQM) phenomenon is a call for organizational excellence. The phenomenon which started spreading like will fire across the Globe in early 1980 has been spurred on by the fierce competitions raging between companies of Japan, North America and Europe, Japan which occupies only 0.3 percent of the worlds land surface and  has only 2.7 percent of the world population with no natural resources, recorded in early 1980 overall percent of the worlds gross national product. That was the period the Japanese were like to the American’s and Europeans by lending and selling quality products at prices which lower than what it  was costing the Americans and Europeans to product them.

TQM is a customer forced performance enhancing tools which can be applied to any type of organization. It balances the diverse elements of business (leadership, strategic, planning, human resources development and management, work processes, management, information system, external customers, employees and stalk holders)  and  aligns them to achieve excellent business results. TQM aims at achieving increasing better production and  services at progressive competitive prices, with minimum production or service cost. It involves doing things right in an organization on the  first try, rather than making and correcting mistakes. By focusing on doing things right the first time, organization will avoid the high cost of that is associated with re-work. Many people perceive attention to quality as one of the most important competitive issues of today and tomorrow infact, quality may be one of the most important way a manager can add value to products and services to set them apart from those of this competitors.

Most business organization with in the manufacturing and service industries have in one time or the other experienced a drop in their level of productivity while some are still suffering from it till today. At one time, managers believed that there  was an inevitable trade of between productivity and quality. They through that the two were diametrically opposed that is, increasing one meant decreasing the other. Today however through a systematic application of TQM, effective managers consider productivity  and quality as two sides of the same coin that is increasing one meant increasing the other. Productivity simply means the ratio out put(that is the quantity of goods and services produced) to input  ( that is the quantity of labour, capital, energy).

A manufacturer is faced with the problem of product development or modifications that do not meet the required specifications of a quality product, embodies all its characteristics would definitely have  to device a means of preventing waste, cost re-mark. In such a situation, the ratio of resource input would be higher than what the manufacturers produces as output. More also resources will be wasted as a result of rework in trying  to manufacture a quality product. This the level of productivity would be adversely affected, similarly, in the service industry, firms that  render  quality customers services are also confronted with the problems of cost of quality which makes it difficult for them to achieve a positive  growth of productivity. This  is because in rendering this quality services, there are six categories of cost which a firm must be able to prevent or control if it is to maintain a growth in productivity. But through the application of total quality management (TQM), a firm can comfortably render quality service and also increase its productivity level. The categories of cost of quality would be discussed.

1.       The cost of activities which are designed to ensure conformance to agreed customer requirement cost of conformance of cost of  goods quality.

2.       The cost of activities which result from failure to conform to agreed customer requirements-cost of non-conformance or cost of bad or poor quality.

3.       The cost of lost opportunities-cost of lost sales.

These are the cost of activities, additional to a  basic work process used in a business according to Akpeiyi (1996).

As already mentioned ,total quality management (TQM) is a management concepts that leads to achieving, the  best result on the first try. It stresses on during the right things at the first time and  every time. It  eliminates wastes scrapes and also enables a company to avoid the problem of re0work of alternative. Be it a manufacturing or a service company. Total quality management prevents problems from occurring by creating the attitude and control that make prevention possible and also builds a philosophy of continuous improvement, efficiency, productivity and long terms success.

 1.1     STATEMENT OF PROBLEMS

For total quality management to be successful, there has to be management commitment to it. In many cases, where total quality management is practiced, management often show sings of  greater commitment of determination to achieve the success. Most of the companies that practice total quality management pursued their total quality management efforts for 10 years before seeing returns. This may be due to pressures faced by management to set priorities that will help to maintain or improve company’s performance. Total quality management application requires that management dedicate time, money, labour and other resources, since this is the case, total quality management often conflicts with higher priorities or initiatives. Consequently, management may out of necessity or convenience  redirect its attention or resources to other priorities.

Another problems that is associated with total quality management practice which invariably have a dwindling effect on productivity is lack of skill and knowledge . not every one in a company has the prerequisite  attributes to make total quality management a reality. Necessary attributes include a special knowledge of the business processes a background in statistics or some mathematical aptitude, the capacity to work as a  team member, the ability to communicates effectively and the ability to take advantage of business opportunities. Nevertheless, any employees lack the necessary attributes to execute total quality management successfully or the knowledge of or experience with applying its principles tools.

It has also been observed that most organizations fail to develop a plan that outlines how to make total quality management a part of the company, implement that plan determine progress towards achieving that plan and take any necessary corrective action to improve processes of manufacturing and distribution .

Furthermore, it appears that the general feeling concerning total quality management is that employee co-operation is not recessively needed. Total quality management is seen as a culture which requires management to loosen reigns and give employee greater role in managing  the firm. To make total quality management successful;, it requires greater involvement by the people doing the work.

 1.2     OBJECTIVE OF THE STUDY

Specifically, the research work is in partial fulfillment of the requirement for the award of higher national diploma (HND) in business administration and management but in the final analysis, the outcome of this project is in intended to contribute to the method of enhancing productivity in business enterprises in Nigeria through the application of total quality management (TQM).

Quality management deals with how an organization can delight its customers and optimize long term profitability, competitive positive and market share. Quality management is a total corporate focus on meeting and often exceeding customers expectation and significantly reducing the cost resulting from poor quality by shaping a new management system on corporate culture.

Juran (1986) sees quality management as a journey towards excellence a journey that  has no destination. It involves employees at all levels in the assessment and improvement of quality through the application of quality improvement tools and techniques. It can be looked at as systematic method of developing products and service based on a through understanding  of the customers need and reasonable  expectations.

Total quality management can also be looked at from the customers perspective since the number of customers you have perhaps, determines your sales and revenues, they are one of the most important asset any organization has, though they don’t show up on the balance sheet.

The main objective of this study are to the need for s total management. Change is the reality of our time. As in often said the only thing that do not change is change. Itself which of course has to be managed. TQM of course, is one of the many  concepts that is being adopted to manage this change.

Diamon bank operators have realized that the keen competition in the area of quality from other competitors is a matter of survival to them. Diamond bank as an organization, see the demand for quality as a challenge they have faced. Eg the Japanese union of scientist and Engineers (JUSE) based on this, established the Denning prices for quality and the united state government also established the Malcolm  Baldrige national quality award to evidence their working up to the challenge.

The benefits of total quality management to diamond bank are numerous. The improved returns on investment, improved sales margin, competitiveness, improved management, company image and more committed customers.

 1.3     SCOPE OF STUDY

The study will conducted in Owerri in Imo state with particular reference to Diamond bank Ltd. The features of interest will include time, types of services rendered time lines completeness court by, consistency, accessibility convenience, image.

To make the research work more reliable and valid, the sample study will cut across top management and middle management but particular emphasis would be on the top management due to the nature of subject being addressed.

 1.4     SIGNIFICANCE OF THE STUDY

The importance of this research work is to contribute to the method of enhancing productivity in our business organizations through the process of total quality management. This study focuses on the principle of employee empowerment, which is one of the principle on concept of total quality management (TQM) as a means of enhancing productivity in the organization. In most of our organization, the low performance is due to the non-chalet attitude of the worker, through the concept of employee employment (TQM) provides a means of motivating the workers for higher performance by giving employees the opportunity to make decision without asking for approval from their immediate managers. The employees therefore act as their own managers, set objectives for themselves and also take the responsibility for achieving such objective. When this is the case they enjoy a sense of belonging in the organization as they are now part of the decision making process in the organization.

It is hoped that by discovering efficient ways and methods for improving productivity the organization will make maximum use of its resources and spared of wastages. From the fore going the research will attempt to make recommendations to the management of DIAMOND BANK LTD.

 1.5     LIMITATIONS

One can hardly lay claims to any research project that is devoid of limitation and problems such limitations hinder to some extend the accuracy of data and conclusion arrived at.

Obviously the problem of cost and time is always there to impede the work of researcher. The researcher cannot avoid restating it since it is a constant and major limiting factor of every research.

There are also some problems encountered in the application of some of this instruments especially in the application of the questionnaire and conduct of interviews. The sample size of those working at top management level is not encouraging most of them could not grant interviews due to pressure of work and where interviews, were granted, most of the relevant information required were given under few minutes coupled with the delay in return of questionnaires.

 1.6     RESEARCH QUESTIONS

This research questions is guide and it serves as an objective for he researcher  in the course of this study. The research questions are as follows.

1.       To what extent has total quality management (TQM) influenced the productivity of the company DIAMOND BANK LTD?

2.       How does the application of TQM affect the prices of goods and services, and what are the reaction of customers.

3.       Does the application of TQM in DIAMOND BANK LTD, yield negative or positive impact in the organization?

4.       Does diamond bank ltd adhere to the principles, methods etc of the total quality management (TQM).

 1.7     STATEMENT OF HYPOTHESIS

Hypothesis in this case refers to tentative statement of fact that is subject to  empirical validation by testing.

The following are the hypothesis to be tested.

1.       HO:   The application by TQM does not increase the cost of production

          H1:    The application by TQM does not increase the cost of production

2.       H0:    A company cannot succeed without TQM.

          H1:    A company cannot succeed without TQM.

3.       H0:    Diamond bank Ltd does not embark on TQM.

          H0:    Diamond bank Ltd does not embark on TQM.

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