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Total Quality Management and Theory of Constraints Implementation in Malaysian Automotive Suppliers: A Survey Result HILMA RAIMONA ZADRY & SHA’RI MOHD YUSOF Faculty of Mechanical Engineering, Universiti Teknologi Malaysia ABSTRACT The automotive industry is one of the most important and strategic industries in the Malaysian manufacturing sector. It supports a large number of Small and Medium Enterprises (SMEs). The Malaysian automotive industry, especially the suppliers, must be able to stay competitive and be in business. In order to be able to achieve the above goals, suppliers should apply Total Quality Management (TQM) to improve the quality of products and services in satisfying the customers. Theory of Constraints (TOC) is a systems methodology that has been developed to assist people and organizations to think about their problems, develop breakthrough solutions and implement those solutions successfully. TOC can be assimilated into TQM implementation as a mechanism to assist TQM and to enhance its implementation. This paper relates to a survey conducted to determine the extent of TQM and TOC implementation in Malaysian automotive suppliers. A questionnaire was sent to 250 automotive suppliers in Malaysia. The Statistical Package for the Social Sciences (SPSS) software was utilized to perform the required statistical analysis of the data from surveys. This paper reports on the findings of the survey conducted. It was found that Malaysian automotive suppliers have achieved quite a high level of their quality implementation programs, although most of them are still in the early stage of implementing TQM. However, there were still problems in their implementation of TQM. It shows that TOC is still something very new in Malaysian automotive suppliers. Its implementation is at a ‘low’ level of practice. The findings culminate with conclusions together with some proposed future research directions. KEY WORDS: Total Quality Management (TQM), Theory of Constraints (TOC), Malaysian Automotive Suppliers Introduction Since the implementation of ASEAN Free Trade Area (AFTA) agreement in 1992, competition has become intense between ASEAN countries. Facing this challenge, the Malaysian automotive industry, as the provider of technological capability and the Total Quality Management Vol. 17, No. 8, 999–1020, October 2006 Correspondence Address: Sha’ri Mohd Yusof, Faculty of Mechanical Engineering, Universiti Teknologi Malaysia, 81310 Skudai, Johor, Malaysia. Email: [email protected] 1478-3363 Print=1478-3371 Online=06=080999–22 # 2006 Taylor & Francis DOI: 10.1080=14783360600747911

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Page 1: Total Quality Management and Theory of Constraints ...shari/download/toc paper hilma tqm dis06.pdf · Total Quality Management and Theory of Constraints Implementation in Malaysian

Total Quality Management andTheory of Constraints Implementationin Malaysian Automotive Suppliers:A Survey Result

HILMA RAIMONA ZADRY & SHA’RI MOHD YUSOF

Faculty of Mechanical Engineering, Universiti Teknologi Malaysia

ABSTRACT The automotive industry is one of the most important and strategic industries in theMalaysian manufacturing sector. It supports a large number of Small and Medium Enterprises(SMEs). The Malaysian automotive industry, especially the suppliers, must be able to staycompetitive and be in business. In order to be able to achieve the above goals, suppliers shouldapply Total Quality Management (TQM) to improve the quality of products and services insatisfying the customers. Theory of Constraints (TOC) is a systems methodology that has beendeveloped to assist people and organizations to think about their problems, develop breakthroughsolutions and implement those solutions successfully. TOC can be assimilated into TQMimplementation as a mechanism to assist TQM and to enhance its implementation. This paperrelates to a survey conducted to determine the extent of TQM and TOC implementation inMalaysian automotive suppliers. A questionnaire was sent to 250 automotive suppliers inMalaysia. The Statistical Package for the Social Sciences (SPSS) software was utilized to performthe required statistical analysis of the data from surveys. This paper reports on the findings of thesurvey conducted. It was found that Malaysian automotive suppliers have achieved quite a highlevel of their quality implementation programs, although most of them are still in the early stageof implementing TQM. However, there were still problems in their implementation of TQM. Itshows that TOC is still something very new in Malaysian automotive suppliers. Itsimplementation is at a ‘low’ level of practice. The findings culminate with conclusions togetherwith some proposed future research directions.

KEY WORDS: Total Quality Management (TQM), Theory of Constraints (TOC), MalaysianAutomotive Suppliers

Introduction

Since the implementation of ASEAN Free Trade Area (AFTA) agreement in 1992,

competition has become intense between ASEAN countries. Facing this challenge,

the Malaysian automotive industry, as the provider of technological capability and the

Total Quality Management

Vol. 17, No. 8, 999–1020, October 2006

Correspondence Address: Sha’ri Mohd Yusof, Faculty of Mechanical Engineering, Universiti Teknologi

Malaysia, 81310 Skudai, Johor, Malaysia. Email: [email protected]

1478-3363 Print=1478-3371 Online=06=080999–22 # 2006 Taylor & FrancisDOI: 10.1080=14783360600747911

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generator of inter-industry linkages, must be able to stay competitive and be in business.

The industry should produce products with better quality, cheaper price, faster delivery

and better service to customers, compared to competitors. Total Quality Management is

considered an important catalyst in this context (Ghobadian & Gallear, 1996) with the

objective of increasing the quality of products and services continuously to satisfy the

customers. So, in order to be able to achieve the above goals, the Malaysian automotive

industry, especially the suppliers, should adopt Total Quality Management.

Total Quality Management has been recognized and used during the last few decades by

organizations all over the world to develop a quality focus and improve organizational

performance. In spite of this, TQM implementation is still problematic for many

organizations–especially for Malaysian SMEs, who have been slow to adopt and

implement TQM.

Theory of Constraints (TOC) was first presented in 1984 by Eliyahu M. Goldratt (Goldratt &

Cox, 1984) through his revolutionary book, The Goal. TOC provides the methodology to

define what to change, what should be changed to, and how to effect the change to continuously

improve the performance of an entire system. TOC, like TQM, treats improvement as an

ongoing process. But instead of focusing on localized improvements in all areas, it attacks

the one constraint or bottleneck that limits the system’s performance.

TOC can be used as a vital mechanism to assist the implementation of TQM. It must not

replace TQM, but rather be used in helping the company to find out problems in its

implementation and focus the TQM efforts toward the organization’s goal. TOC is an excel-

lent approach in continuous improvement, but has not much been widely studied. There is

also no research about the use of TOC as a mechanism to assist TQM in Malaysia, especially

the automotive suppliers, which have an important role to play in the Malaysian industry and

economy. A TOC-based TQM approach can be the way forward in the industry.

In the light of this, it is important to determine the extent of TQM and TOC imple-

mentation in Malaysian automotive suppliers, before assimilating TOC into TQM

implementation. Toward this end, a survey was conducted and the SPSS software was

utilized to perform the required statistical analysis of the data from the survey.

Total Quality Management

TQM is a philosophy aimed at achieving business excellence through the use and

application of tools and techniques, as well as the management of soft aspects, such as

human motivation in work (Juran & Gryna, 1980). Berry (1991) defined the TQM

process as a total corporate focus on meeting and exceeding customer’s expectations

and significantly reducing costs resulting from poor quality by adopting a new manage-

ment system and corporate culture. Quality management is a long-term process that

relies on relative achievements through continuous improvement. Successful TQM

implementation can only come from radically challenging and changing the culture of

the organization (Zairi, 1996). Therefore, one may say that TQM is a philosophy,

concept and powerful management approach. It involves management and empowerment

of people in order to create satisfied customers and improve organizational performance.

In order to be successful in implementing TQM, first, one needs to know what critical

success factors of TQM Saraph et al. (1989) defined critical factors as those ‘critical areas

of managerial planning and action that must be practiced to achieve effective quality

management in a business unit’. There are numerous factors to be stressed as facilitators

1000 H. R. Zadry & S. M. Yusof

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for successful TQM implementation. These factors, which are found in the literature, vary

from one author to another. Saraph et al. (1989) provided eight critical factors of quality

management. Black & Porter (1996) developed TQM factors using the Malcolm Baldrige

Quality Award criteria. Ahire et al. (1996) also identified 12 constructs of integrated TQM

strategies. Their instrument is tested and validated only in the manufacturing sector.

Almost all these factors are identified and developed for large firms, with few excep-

tions. Yusof & Aspinwall (2000a,b, 2001) extensively reviewed the literature of TQM

practices of SMEs and studied CSFs (critical success factors) for TQM. This study

adopted the TQM factors developed by Yusof and Aspinwall (1999, 2000c), with minor

modifications to suit the characteristics of SMEs in Malaysian automotive suppliers.

TQM has helped many organizations improve their competitiveness and profit, such as

Motorola, British Airways, Xerox, IBM and Hewlett Packard. These success stories can

be found in various literatures. Although there are many successful case studies of imple-

menting TQM, there are also many failure experiences (Ahire et al., 1996).

Several authors report problems in TQM implementation: low quality standards, failure

to measure quality, lack of incentives for employees consistently to provide quality goods

and services, insufficient commitment by management to implementing quality (Masters,

1996; Radovilsky et al., 1996; Tatikonda & Tatikonda, 1996; Nwabueze, 2001). These

failures can be avoided if the barriers to implement TQM and the problems can be over-

come. Awareness of the barriers and problems should be emphasized when training organ-

izations in TQM concepts and methods. Any organization can benefit from a better

understanding and knowledge of TQM.

Theory of Constraints (TOC)

Different writers have given various definitions of TOC. According to Dettmer (1995), TOC is

a set of concepts, principles, and tools designed to help manage systems better. TOC is also

defined as an example of a management philosophy built upon a limited number of assump-

tions and designed to provide a process of continuous ongoing improvement (Sivasubramanian

et al., 2003). Generally, TOC is a combination of philosophy, concepts, principles, and tools

conceived to maximize the performance of any system by identifying, managing and breaking

the most restrictive limiting factor that constraints system performance.

Rahman (1998) summarized the concept of TOC that every system must have at least

one constraint and the existence of constraints represents opportunities for improvement.

The one main aspect of TOC, which differs from traditional improvement approaches, is

the way it evaluates improvement efforts. Many quality improvement efforts are focused

on achieving the highest cost reductions. The TOC approach focuses on increasing

throughput rather than reducing costs. The TOC has two major components:

1. The five focusing steps of TOC

2. Thinking Process

The Five Focusing Steps of TOC

Goldratt & Cox (1984) has developed five sequential steps to concentrate improvement

efforts on the relevant component. The steps are:

(1) Identify the system constraints (Its weakest links).

TQM in Malaysian Automotive Suppliers 1001

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(2) Decide how to exploit the constraints.

(3) Subordinate everything else to the above decision.

(4) Elevate the system’s constraints.

(5) If, in the previous steps, a constraint has been broken, go back to step (1), but do not

allow ‘inertia’ to cause a new constraint.

Detailed description of these steps can be found in Goldratt & Cox (1984), Motwani &

Vogelsang (1996), Dettmer (1997), Stein (1997), Rahman (1998, 2002).

Thinking Process

The next important component of TOC is the Thinking Process. Goldratt (1990) developed

the Thinking Process (TP) methodology to address policy constraints and create break-

through solutions using common sense, intuitive knowledge and logic. Managers are

required to make three generics decisions while dealing with constraints: what to

change, what to change to, and how to cause the change. The TP prescribes a set of

five tools in the form of cause-and-effect diagrams to address those questions (Dettmer,

1997). The tools and their purposes are summarized in Table 1.

Theory of Constraints (TOC) is a new concept, which is growing in recognition and

popularity. Some of the literatures have been presented so far has shown that TOC can

complement TQM strongly in helping to focus the parts of a system that need process

improvement (TOC-based TQM) (Simons & Moore, 1992; Gardiner et al., 1994; Ronen &

Paas, 1994; Dettmer, 1995, 1997; Stein, 1997; Fredendall et al., 2002). The principles

of a TOC-based TQM serve as guidelines to help in understanding how to focus efforts

in maximizing profitability through the implementation of TQM. It has the objective to

establish an effective management system designed to implement the process of continuous

profit improvement while meeting the necessary condition of good quality (Stein, 1997).

Based on the above review, the application of TOC-based TQM in an organization can

be a proposed solution in answering the low rate of TQM implementation in Malaysian

SMEs, especially its automotive suppliers. Mabin & Balderstone (2003) have indicated

that the rate of publication on TOC is steadily increasing. The literature contains many

case studies of the application of TOC to manufacturing organizations, but there is no

published article on the topic of TOC-based TQM application to organizations, especially

in Malaysia. Therefore, this study attempts to address this gap by considering the

implementation of TQM and TOC in Malaysian automotive suppliers.

Table 1. Thinking process tools and their roles

Questions Purpose TP tools

What to change? Identify the core problem Current Reality Tree (CRT)What to change to? Develop simple, practical solutions Conflict Resolution Diagram (CRD)

Future Reality Tree (FRT)How to cause

the change?Implement solutions Prerequisite Tree (PRT)

Transition Tree (TT)

1002 H. R. Zadry & S. M. Yusof

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Study Methodology

The objective of the survey was to investigate the level of TQM and TOC understanding

and implementation in Malaysian automotive suppliers. To that end, a questionnaire was

developed to collect data for this research. In order to achieve the objectives of the study,

the Malaysian automotive suppliers were selected as the population of this study. The

respondents consist of executive directors, managing directors, manufacturing managers,

quality managers, production managers, and planning and development managers, in these

automotive suppliers. They were chosen as the population of the study because they

directly involved in the process, have first-hand knowledge and experience in TQM

implementation.

The questionnaire consists of six parts. The first part investigates the general infor-

mation of the companies participating in the research. This include the size of

company, type of business, quality activities that had been implemented, the certificates

that have been received, and the awards that have been won. The second part of the

questionnaire explores the understanding and practice of the Theory of Constraints

(TOC). The third part of the questionnaire explores the general TQM opinions in

Malaysian automotive suppliers.

The practical level of TQM implementation in Malaysian automotive suppliers was

explored in the fourth part of the questionnaire by using critical success factors of

TQM for SMEs. In this part, respondents were asked to rate two aspects on a five point

Likert scale: first, the level of importance placed on each statement in each critical

factor; and, second, the extent to which they thought it is currently a practice in the organ-

ization. For the perceived importance, the rating scales range from 1 ¼ not important at

all, 2 ¼ not important, 3 ¼ neutral, 4 ¼ important, 5 ¼ very important; while for the

extent of practice was given as 1 ¼ very low, 2 ¼ low, 3 ¼ moderate, 4 ¼ high,

5 ¼ very high. TQM results will be explored in the fifth part of the questionnaire. This

part determines the performance of Malaysian automotive suppliers after implementing

TQM. And the last part of the questionnaire identifies the barriers or difficulties faced

in trying to adopt TQM in the Malaysian automotive suppliers.

The process of developing the questionnaire included a pilot survey, which was used to

modify and eliminate a number of variables, until the final questionnaire was designed.

Experts on the subject were consulted, to ensure that the questions were properly

phrased and suitable. The comments and feedback given were very useful in enhancing,

rectifying, and improving the instrument.

Completing the pilot study successfully enabled the full survey to be launched as

planned. The full survey, through the mailed questionnaire, was carried out within three

months. Since the target participants were focused in the automotive suppliers, the best

available directory to use as a basis for choosing respondents was the Federation of

Malaysian Manufacturers (FMM) Directory (FMM, 2000) and Small and Medium Indus-

try Development Corporation (SMIDEC) Directory (www.smidec.com.my).

Reliability Test

In the case of reliability analysis, Cronbach’s alpha was employed to measure internal

consistency of the research instrument. A reliability test was undertaken to ensure that

the research findings have the ability to provide consistent results in repeated incidences

TQM in Malaysian Automotive Suppliers 1003

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(Rahman, 2001). The generally agreed upon lower limit for Cronbach’s alpha is 0.70,

although it may decrease to 0.60 in exploratory research (Saraph et al., 1989).

The internal consistency of the elements in the perception of TQM importance (CSFs of

TQM) was tested by using SPSS reliability analysis procedure. The analysis was

performed separately for the items of each factor. First, the factor is accepted if it exhibited

an alpha value greater than 0.70. Then, factors ranging from 0.60 to 0.70 are retested in an

attempt to determine whether the Cronbach’s alpha value could be improved by

eliminating some items. The summaries of the reliability analysis are given in Table 2.

All of the results proved high internal consistency with coefficient alpha � 0.70. Thus,

this survey instrument has high internal consistency and therefore reliable.

Validity Tests

Content validity is not evaluated numerically, it is subjectively judged by the researchers.

A measure has content validity if there is a consensus among researchers that the instru-

ment includes items that covers all aspects of the variable being measured (Hair et al.,

1998). For this study, the items included in the survey instrument have been developed

based on both an exhaustive review of the literature and detailed evaluations by

academics, practicing managers, and consultants. There were nine questionnaires that

were sent out in a pilot survey and the response rate was almost 78%, revised by 4

academics, a firm manager, and a quality consultant. Thus, it is believed that this research

instrument has content validity.

A measure has construct validity if it measures the theoretical construct or trait that it

was designed to measure. The construct validity of each Critical Success Factors

(CSFs) was analyzed by using SPSS Data Reduction-Factor analysis procedure,

varimax option of orthogonal rotation was used to maximize a variable’s loading on

a single factor. Items that did not have a strong correlation (item loading lower than

0.30) with the factor were eliminated. In addition, those factors with eigenvalue

lower than 1.0 were eliminated as well. The results of factor analysis are provided

in Table 3.

From the results obtained, all factors are uni-factorial and none of the items factor was

removed. Having conducted this analysis, the research instrument had been validated for

construct validity.

Table 2. Internal consistency test results-CSFs of TQM

Factor Description

No. of

items

Alpha

value

Items for

deletion

Alpha if item

deleted

F1 Management Leadership 6 0.8346 None 0.8346F2 Resource Management 5 0.9012 None 0.9012F3 Measurement and Feedback 5 0.8269 None 0.8269F4 Continuous Improvement 4 0.8666 None 0.8666F5 Supplier Quality Management 5 0.8705 F5.2 0.8732F6 Systems and Processes 4 0.9179 None 0.9179F7 Education and Training 4 0.8388 F7.1 0.8793F8 Work Environment & Culture 4 0.7764 F8.4 0.8715

1004 H. R. Zadry & S. M. Yusof

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Survey Results

A total of 250 questionnaires distributed with 32 being returned completed. One of the

32 returned questionnaires was incomplete, resulting in 12.4% valid response rate.

Action was taken to increase the response rate by sending a follow up letter to

remind the companies to respond to the survey, but this still did not improve the response

rate.

According to Othman et al. (2001), this response rate is not different from other surveys

in Malaysia, which tend to obtain a response below 20%. One of these surveys is the

research done by Ahmed & Hassan (2003) with a response rate of 11.15%. This response

rate is also satisfactory since accessing the managers is usually difficult.

Background of Respondents

The first aspects to be investigated were the general background of the respondents, such

as the job position of respondents in the company, company size, company ownership, and

length of time involved in TQM, the certification and the awards received.

The respondents to the survey were mainly the Chief Executive Officer (CEO), General

Manager/Director, and Quality Manager of the companies as all the letters were addressed

to them (Table 4). They were selected because they are directly involved and have first

hand knowledge and experience of quality implementation program in their companies.

Figure 1 shows that the respondents were mostly of small and medium sized companies.

Respondents from small-sized companies, defined in this study having less than 50

full-time employees, totaled 12.9%. This is followed by medium-sized companies

(48.4%)–those having 50 to 300 full-time employees. Large companies having more

than 300 full-time employees, constituted 38.7% of the total. In short, SMEs represented

61.3% of the total percentage of respondents, with the remainder being large companies.

Besides the number of employees, respondents are also asked about the ownership of

the companies. As can be seen in Table 5, it shows that majority of the respondent com-

panies are owned by Malaysian (54.8%). Meanwhile, 35.5% of the companies are joint

venture companies, and the remaining 9.7% are fully foreign owned. Because the

owners of the respondent companies are mostly local, they are representative in answering

the objectives of this study to find out the level of TQM and TOC implementation in

Malaysian automotive suppliers.

Table 3. Construct validity test results-CSFs of TQM

Factor

Eigen

value

%variance

explained

Items for

deletion

Item loading

range

F1. Management Leadership 3.285 54.753 None 0.645–0.802F2. Resource Management 3.637 72.734 None 0.799–0.879F3. Measurement and Feedback 2.983 59.651 None 0.688–0.879F4. Continuous Improvement 2.869 71.717 None 0.804–0.894F5. Supplier Quality Management 3.343 66.869 None 0.692–0.870F6. Systems and Processes 3.217 80.421 None 0.851–0.959F7. Education and Training 2.752 68.795 None 0.646–0.894F8. Work Environment & Culture 2.572 64.293 None 0.523–0.944

TQM in Malaysian Automotive Suppliers 1005

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The next question in this survey investigated the number of years respondent companies

involved in TQM. This question can indicate the experience and maturity of the companies

on quality matters. In fact, 35.5% of the companies have been involved in TQM less than 3

years and 45.2% of them have been involved for 3 to 6 years. Only 19.4% of them have

more than 6 years’ experience (as shown in Table 6). Since 64.6% of companies have been

involved in TQM for more than 3 years, it indicates that the companies have had quite

good experiences in TQM. So, it is believed that the respondents can give appropriate

answers to the questionnaire.

With regards to quality system certification, all of the respondents had at least one

certification in placed (see Table 7). When examining the results in more detail, it was

Table 4. Position of respondents in the company

Position in the company Frequency Percentage (%)

CEO/ GM/ Director 7 22.6Engineering Department Manager 0 0.0HRD Manager 1 3.2QA/QC Manager 18 58.1Production Manager 0 0.0Others 5 16.1Total 31 100.0

Figure 1. Background of Respondents: Company Size

1006 H. R. Zadry & S. M. Yusof

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found that 38.7% are certified to QS 9000. It is quite surprising that only about 38.7% of

the respondents have the more stringent QS 9000 even though it has almost become a

requirement for companies involved in the automotive industry. About 58.1% were

certified to ISO 9001-2000, 6.5% certified to ISO 9002-2000, 32.3% certified to ISO

14001, and 35.5% certified to other types quality certification, most of them are ISO TS

16949, which is the more advanced certification system.

Some studies have indicated that ISO 9000 registration is a useful step towards imple-

menting TQM (Meegan & Taylor, 1997; Quazi & Padibjo, 1998; Tsiotras and Gotzamani,

1996; Agus & Abdullah, 2000; Al-khalifa & Aspinwall, 2000). According to Agus &

Abdullah (2000), the ISO certification process can be used as an opportunity to link

quality assurance and process improvement within a TQM framework. TQM implemen-

tation can improve the efficiency and effectiveness of processes, while compliance with

ISO 9000 can minimize variability and control the processes that have been improved.

Besides quality system certification, the companies are also asked about quality awards

achieved by them. As can be seen in Table 8, more than half the respondent companies

have won at least one quality award; there are 45.8% of the respondents that have

never won one. This indicates that these companies have achieved quite a high level in

their quality program.

Quality Initiatives Implemented

In an attempt to discover whether the respondent companies had actually embarked on a

TQM program or not, a question was included which required the companies to indicate

what quality activities they had already implemented from a list of major initiatives. The

results are presented in Table 9.

As can be seen, the initiatives implemented by the majority of the respondent companies

were the setting up of a quality department (90.3%), development of a quality system

(87.1%), and employee involvement to improve quality (87.1%). The ranking of these

initiatives produced expected results. It is surprising to find that there are still companies

Table 5. Company ownership

Company ownership Frequency Percentage (%)

Local 17 54.8Joint Venture 11 35.5Fully Foreign 3 9.7Total 31 100.0

Table 6. Number of years involved in TQM

Company ownership Frequency Percentage (%)

Less than 3 years 11 35.33 to 6 years 14 45.2More than 6 years 6 19.4Total 31 100.0

TQM in Malaysian Automotive Suppliers 1007

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that had not set up of a quality department. A quality department is important as a means

for further commitment to total quality and to make the CEO aware that quality exists

within an organization, especially for small companies. Without quality department, it

is questionable how a company can effectively manage quality.

The three least implemented initiatives were a supplier involvement program (54.8%),

business processes improvement (54.8%), and cultural change program (32.3%). This

finding concurs with other survey findings, such as Yusof (2000), which conducted

study among UK companies, and Chang (2002), which developed a Six Sigma framework

for SMEs to achieve total quality. They found the same three least implemented initiatives

with these study findings.

The results are understandable because the level of cultural change is usually immeasur-

able and the program is much more difficult to implement than others. Further, for an

organization, even supplier involvement is essential to business success but complicated

to achieve and manage. In addition, seven of the respondent companies (22.58%) had

implemented all ten initiatives listed and 77.42% of them had implemented more than

six of the ten initiatives listed. It indicates that the quality management programs in the

respondent companies (automotive suppliers) are quite advanced and mature.

Theory of Constraints Understanding and Practices

Another important aspect investigated in this survey was the level of the Theory of

Constraints understanding and practices in Malaysian automotive suppliers. Figure 2

shows that only 35% of the respondents know about TOC, the remainder 65%, have

never heard about it before.

Table 7. Number of companies certified to quality system standard

Quality certification No. of companies Percentage (%)

QS 9000 12 38.7ISO 9001-2000 19 58.1ISO 9002-2000 3 6.5ISO 14001 10 32.3Others 9 35.5None 0 0.0

Note: Some companies have more than one certification.

Table 8. Number of companies have won quality award

Quality award No. of companies Percentage (%)

State Quality Award 2 6.5Industry Excellence Award 3 9.7Quality Management Excellence Award 3 9.7Others 9 29.0None 14 45.8

Note: Some companies have won more than one quality award.

1008 H. R. Zadry & S. M. Yusof

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Even though the respondents indicate that they have knowledge about TOC, only

19.35% of them have actually implemented it. All of these respondents are in medium

and large companies; there are no small companies (see Table 10).

When exploring the results in more detail, it was found that the level of TOC Thinking

Process implementation is still at a ‘low’ level of practice. This can be seen in Table 11

where the mean values of the level of TOC Thinking Process implementation range

from 2.00 to 2.63. The Current Reality Tree (CRT) followed by Prerequisite Tree (PT),

and Future Reality Tree are the tree most implemented tools.

The above results indicate that TOC is still something very new in Malaysian automo-

tive suppliers. There are many companies, which do not have knowledge about TOC.

Table 9. Quality Initiatives Implemented

Quality initiatives Frequency Percentage (%)

Setting up of a quality department 28 90.3Development of a quality system 27 87.1Employee involvement to improve quality 27 87.1Customer satisfaction initiatives 26 83.9Establishing measures of quality progress 25 80.6Applying Statistical Process Control 23 74.2Developing strategies for total quality 18 58.1Supplier involvement program 17 54.8Business processes improvement 17 54.8Cultural change program 10 32.3

Figure 2. Percentage of Companies Know about TOC

TQM in Malaysian Automotive Suppliers 1009

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Some of them have only recently heard about TOC, and have not implemented it yet in

their companies.

Level of Understanding and Knowledge on TQM

One of the reasons of the TQM failures in implementation is the low level of under-

standing and knowledge on TQM. In order to investigate the level of understanding and

knowledge about TQM in general, ten statements were presented, ranging from the philo-

sophy of TQM, through the techniques to cultural aspects. The respondents were asked to

indicate their level of agreement with each one on a scale of 1 to 5. Table 12 shows the

mean score from the highest to the lowest rank.

From the results obtained, there are obviously evident that:

. Teamwork and participation are important for achieving a continuous improvement

culture

. Management leadership, commitment, and support determine the success of new

change initiatives

. A work environment, which is conducive for improvement, is created through manage-

ment-worker partnership.

On the other hand, the least important issues are:

. TQM aims to make customer satisfaction as the focus of a business

. Training and education are vital elements with respect to TQM implementation

. Statistical techniques (such as Statistical Process Control, Design of Experiments, etc.)

are important to ensure consistency of product and process quality

. Supplier involvement is vital in supporting quality improvement.

Table 10. Number of companies implemented TOC

Implemented TOC No. of companies Percentage (%)

Small 0 0Medium 4 12.90Large 2 6.45Total 6 19.35

Table 11. The level of TOC thinking process (TP) implementation

TOC TP Mean Rank

Current Reality Tree (CRT) 2.63 1Conflict Resolution Diagram (CRD) 2.00 4Future Reality Tree (FRT) 2.13 3Prerequisite Tree (PT) 2.38 2Transition Tree (TT) 2.00 4

Note: The total number of companies implemented TOC TP ¼ 8 companies (N ¼ 8)

1010 H. R. Zadry & S. M. Yusof

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In a way, the results imply that even organizations have recognized teamwork and

participation are important for achieving a continuous improvement culture, they still

lack training and education as the important elements to support and build good

teamwork and participation. Supplier involvement is also vital in supporting quality

improvement. It is said that 50% of a company’s non-conformances are caused by defec-

tive purchased material (Lascelles & Dales, 1989, as quoted in Mehra et al., 2001). There-

fore, it is crucial to have a mechanism that ensures a good incoming quality from suppliers.

By investigating the level of understanding and knowledge about TQM in Malaysian

automotive suppliers, the respondent companies can be ranked into three levels based

on the score (see Table 13). The higher the score, the better the level of understanding of

TQM. The overall mean of these ten statements scored by respondents was about 44 points.

The first level (Level A) is assumed if the company had very good understanding and

knowledge about TQM. It comprised about 16.13% of the respondents with a score at

least 49. Level B is company with scoring between 39 and 48 (+1 standard deviation

from the mean). Level B’s companies (77.42%) had an average understanding and knowl-

edge of TQM. The remaining 6.45% respondent companies with a score below 39,

assumed to have a low understanding and knowledge of TQM (Level C).

From the above results, it can be concluded there are a few of the Malaysian automotive

suppliers who appeared to have a very good understanding and knowledge of TQM.

Total Quality Management Results

The responses regarding the results that the companies believed to have after imple-

menting TQM are presented in Table 14. The mean score of each statement indicates

the degree to which companies witnessed it as a result of the TQM implementation,

from (1 ¼ strongly disagree, 2 ¼ disagree, 3 ¼ neutral, 4 ¼ agree, 5 ¼ strongly agree).

Table 12. Mean score for the level of understanding and knowledge on TQM

No. Statement Mean

1. Teamwork and participation are important for achieving a continuousimprovement culture.

4.55

2. Management leadership, commitment and support determine the successof new change initiatives.

4.48

3. A work environment, which is conducive for improvement, is createdthrough management-worker partnerships.

4.48

4. Management must provide adequate resources in every aspect of thebusiness.

4.42

5. Initiatives such as Kaizen, suggestion schemes, quality circles, etc. willmotivate employees to participate in quality improvement.

4.36

6. TQM is a management philosophy and practice to ensure effective andefficient use of all available resources.

4.35

7. TQM aims to make customer satisfaction as the focus of a business. 4.298. Training and education are vital elements with respect to TQM

implementation.4.29

9. Statistical techniques (such as Statistical Process Control, Design ofExperiments, etc.) are important to ensure consistency of product andprocess quality.

4.29

10. Supplier involvement is vital in supporting quality improvement. 4.16

TQM in Malaysian Automotive Suppliers 1011

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The results prove that the most important results after implementing TQM in the

companies are improvement in customer satisfaction, reduction in the number of customer

complaints, and developing a culture that emphasizes quality. These results support

the main objective of TQM to meet customer requirements and satisfy them. The improve-

ment of customer satisfaction, according to Antony et al. (2002) is one of indication the

successful implementation of TQM in the organization.

The development of quality culture is very important for the success of TQM programs.

It is good to find that the respondent companies have developed a culture that emphasizes

quality, because to change a culture in an organization is a hard process and cannot occur

quickly (Montes et al., 2003).

An increase in employee satisfaction and involvement, and the reduction in employee

turnover are the lowest results of TQM implementation in this study. Even though they are

Table 13. Score of understanding and knowledge on TQM

Level of

company

Score (Out of

possible 50 points)

No. of

companies

Percentage

(%)

Percentage of

each level (%)

A 50 3 9.6816.1349 2 6.45

48 3 9.6847 1 3.2346 1 3.2345 3 9.68

B 44 3 9.6877.42

43 2 6.4542 4 12.9041 3 9.6840 2 6.4539 2 6.45

C 36 1 3.236.45

31 1 3.23Total 31 100.00 100.00

Table 14. Mean score for TQM results

Statement Mean Rank

1. Customer satisfaction has shown improvement. 3.8065 12. The number of customer complaints has decreased. 3.7419 23. Our company has developed a culture that emphasizes quality. 3.7419 2

4. The numbers of products/service defects, errors, or failures found by thecustomer have decreased.

3.7097 3

5. Our financial results have been improving. 3.7097 36. Our quality program has improved our business performance in general. 3.7097 37. Partnership with suppliers has improved quality of purchased parts. 3.7097 3

8. The number of employees participating on quality teams has increased. 3.6774 49. Employee satisfaction has increased. 3.4839 5

10. Employee turnover has decreased. 3.2903 6

1012 H. R. Zadry & S. M. Yusof

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the lowest, the difference between their mean values with the highest one is quite small.

Employee satisfaction and involvement can be improved further by ensuring everyone

within the organization has a clear understanding of what is required and how their pro-

cesses relate to the business as a whole.

Perception on Barriers to TQM

It could be expected that Malaysian automotive suppliers still face particular difficulties in

implementing TQM. In order to explore the barriers faced by the companies in implement-

ing TQM, respondents were asked to submit and rank what they felt were the greatest

problems or issues they experienced. The results are shown in Table 15. From the table,

it can be seen that the highest barrier to TQM the respondent companies faced is resistance

to change. It is followed by lack of understanding and costly consultancies, training

programs.

These results are understandable because it is very difficult to change the quality culture

of the company and convince everybody of the usefulness of the necessary changes.

Serious problems will possibly arise when the employees cannot commit themselves to

the processes that they do not approve of. Some of them react negatively because they

feel threatened and uncomfortable with the change. So, it requires great effort from the

management to develop the whole company quality culture.

It is also understandable that lack of understanding is one of the tree highest barriers in

implementing TQM–because 61.3% of the respondents are SMEs. A survey conducted by

Abd. Rahman et al. (2002) identified that one of the main difficulties facing by Malaysian

SMEs is inadequate knowledge and understanding of quality. The reason is in line with

this study results, which found that only 16.13% of the respondent companies had very

good understanding and knowledge of TQM.

The barrier of costly consultancies and training programs is probably due to lack of

financial resources. Ghobadian & Gallear (1996) argued that the extent of training in

SMEs is limited because of financial constraints. Ahire & Golhar (1996) also reviewed

Table 15. Mean score for perception on barriers to TQM

Barriers to TQM Mean Rank

Resistance to change (Too busy). 3.77 1Lack of understanding. 3.61 2Costly consultancies, training programs. 3.55 3Lack of preparation (No budget, no sponsor). 3.48 4Lack of vision. 3.48 4Lack of systems and structures for TQM activities. 3.48 4Availability to training. 3.45 5Lack of rewards and recognition. 3.45 5Lack of effective measurement criteria. 3.39 6Lack of evaluation procedures and benchmark indices. 3.29 7Lack of customer focus. 3.26 8Training with no purpose. 3.26 8Lack of top management commitment. 3.19 9Lack of resources. 3.19 9

TQM in Malaysian Automotive Suppliers 1013

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one of the weakness of SMEs – lack of capital – which so it may limit SMEs from

investing in high quality processes. These are some of the barriers that hinder SMEs pro-

grams in quality efforts, and they must be addressed if quality results are to be achieved.

Results of Critical Success Factors (CSFs) of TQM

This section presents the results of the CSFs of TQM in Malaysian automotive suppliers.

Having conducted the level of understanding and knowledge on TQM, the various means

for the perception of importance and practice were analyzed. The overall mean for each

factor was obtained to look at the level of importance and practice perceived by respondents.

Perception on Importance

The first item investigated is on the level of importance TQM CSFs perceived by respon-

dents. Table 16 presents the overall mean for each factor. The mean values range from

4.0645 to 4.2500, which is at the ‘important’ level. The two highest critical success

factors are Systems and Processes (4.2500) and Work Environment and Culture (4.2177).

On the other hand, Supplier Quality Management (4.1355) and Resource Management

(4.0645) are the two least important critical success factors perceived by respondents.

Extent of Practice

The next item investigated was the extent of practice of each of the eight CSFs. Table 17

shows the respondents’ overall mean values on extent of practice for the eight CSFs. The

mean values ranges from 3.5935 to 3.8200, which correspond to a ‘moderate’ to ‘high’

level practice on the Likert scale. It can be seen that the two highest critical factors

practiced by the respondents were Measurement and Feedback (3.8200) and Management

Leadership (3.7043). On the other hand, Education and Training (3.6048) and Resource

Management (3.5935) were the two least practiced factors.

Table 16 and 17 indicates that Measurement and Feedback is one of the highest TQM

CSFs both in term of importance and practice. The results also show that Resource

Management indicated by the respondents as the least critical success factor in term of

importance and practice. In short, the survey results show that the respondents’ perception

on importance of TQM CSFs is the same as on practice.

Table 16. Mean importance – overall Results

Factor Description Mean Rank

F6 Systems and Processes 4.2500 1F8 Work Environment and Culture 4.2177 2F3 Measurement and Feedback 4.2129 3F7 Education and Training 4.1935 4F1 Management Leadership 4.1613 5F4 Continuous Improvement 4.1613 5F5 Supplier Quality Management 4.1355 6F2 Resource Management 4.0645 7

1014 H. R. Zadry & S. M. Yusof

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From the above results, it can be seen that overall mean of practice is lower than that of

importance. This is probably due to the companies’ failure to translate what they perceived

to be important into practice. All of the CSFs indicate they might show significant differ-

ence between perception of importance and practice. The statistical comparison to test

whether there was significant difference between the perception of importance and prac-

tice will be discussed in coming sections.

In summary, these survey results show that respondents’ perception of importance and

practice on the CSFs were consistent. On overall, the respondents have ‘important’ level of

perception on the importance on the CSFs; however, in terms of practice, the level was

from ‘moderate’ to ‘high’. These results show that there is still need for more efforts to

be focused on improving the practices, especially the human resource management and

education and training, in order for TQM to flourish.

Hypothesis

Difference of Perception on Importance and Practice of the CSFs

The preceding section described the means of the eight CSFs for TQM implementation.

From the results, it was shown that, overall, the respondent companies have high

degree of perception of importance on most of the factors; however, the extent of practice

was generally lower. In an attempt to find out whether there are any significant differences

between the level of importance and the extent of practice of the eight CSFs, hypothesis

testing was carried out.

The following hypothesis was formulated for conducting the significant test for the

respondent companies:

H0: m1 2 m2 ¼ 0, i.e. there is no significant difference between the importance and

practice means.

H1: m1 2 m2 = 0, i.e. there is a significant difference between the importance and

practice means.

The paired comparison t-test by using SPSS – Compare Means Procedure was

employed for analyzing the test. The results in Table 18 show that the p-value of the

eight CSFs are lower than 0.05 (i.e. significant level); hence the null hypothesis was

rejected. In short, it can be concluded that there was a significant difference between

perceived importance and the extent of practice by the companies on all factors.

Table 17. Mean practice – overall results

Factor Description Mean Rank

F3 Measurement and Feedback 3.8200 1F1 Management Leadership 3.7043 2F8 Work Environment and Culture 3.7016 3F6 Systems and Processes 3.7000 4F5 Supplier Quality Management 3.6968 5F4 Continuous Improvement 3.6944 6F7 Education and Training 3.6048 7F2 Resource Management 3.5935 8

TQM in Malaysian Automotive Suppliers 1015

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Comparing to other studies (Yusof, 2000; Deros et al., 2004), the difference of percep-

tion on importance and practice of the CSFs in this study gives the same result. All of the

CSFs indicate they might show significant difference between perception of importance

and practice. This is probably due to the companies failure to translate what they perceived

to be important into practice. It means the companies know the importance of TQM

factors, but have failed to accomplish them.

Difference of TQM Practice based on the Company Size

This second hypothesis test involved one-way ANOVA to compare the means of TQM

practices between small, medium, and large companies. In order to conduct the test, the

following hypothesis was set up:

H0: m1 2 m2 ¼ 0, i.e. there is no significant difference between small, medium,

and large companies on the practice means of TQM CSFs.

H1: m1 2 m2 = 0, i.e. there is a significant difference between small, medium, and

large companies on the practice means of TQM CSFs.

The results in Table 19 show that there is no significant difference between small,

medium, and large companies on the practice means of TQM CSFs. That this is probably

due to many of them having less than 6 years’ experience in TQM. They are still in their

infancy stage of getting used to the idea of TQM in their companies.

Difference of TQM Barriers based on the Company Size

This hypothesis test compares the means of TQM barriers between small, medium, and

large companies by using one-way ANOVA. The following hypothesis was formulated

for conducting the test:

H0: m1 2 m2 ¼ 0, i.e. there is no significant difference between small, medium,

and large companies on the means of TQM barriers.

Table 18. Paired sample statistics for mean importance and practice

Factor Description

Mean

importance

Mean

practice tcalc. p-value Results

F1 Management Leadership 4.1613 3.7043 6.256 .000 Sig.F2 Resource Management 4.0645 3.5935 4.830 .000 Sig.F3 Measurement and Feedback 4.2129 3.8200 3.108 .004 Sig.F4 Continuous Improvement 4.1613 3.6944 4.342 .000 Sig.F5 Supplier Quality Management 4.1355 3.6968 4.050 .000 Sig.F6 Systems and Processes 4.2500 3.7000 4.717 .000 Sig.F7 Education and Training 4.1935 3.6048 4.966 .000 Sig.F8 Work Environment & Culture 4.2177 3.7016 4.285 .000 Sig.

Note: tcritical value at 0.05 level of significance with 30 degree of freedom ¼ 1.960

1016 H. R. Zadry & S. M. Yusof

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H1: m1 2 m2 = 0, i.e. there is a significant difference between small, medium, and

large companies on the means of TQM barriers.

From the results obtained, it was found that there is no significant difference between

small, medium, and large companies on the means of TQM barriers. Both SMEs and

large companies face the same problems or barriers in TQM implementation. The

results are summarized in Table 20.

Conclusions and Future Research

This paper has presented the results from survey about the level of TQM and TOC

understanding and practice in Malaysian automotive suppliers. An important area inves-

tigated is the achievement of quality system certification and quality awards. Even

though most of the companies are still in the early stage of implementing TQM, all of

them have been certified to quality system standard and some of them have even won

quality awards. It shows that many of them have achieved a high level of quality

program. This is probably due to the companies having good understanding and

knowledge of TQM even though most of them are still in the average level.

When the extent of TQM practices are related to TQM results and barriers, it shows that

the highest critical factors practiced by the respondents was Measurement and Feedback

(3.8200). This is reflected in the improvement of customer satisfaction and reduction in the

number of customer complaints. The findings also show that Education and Training

(3.6048) and Resource Management (3.5935) were the two least practiced factors of

TQM, which is shown in the TQM barriers relating to training with no purpose and

lack of resources. However, this can still increase the number of employees’ participation

on quality efforts and employee satisfaction.

The analysis also revealed that one of the highest barriers in implementing TQM is

resistance to change. Serious problems will possibly arise when employees cannot

commit themselves to the process that they do not approve of. So, it requires great

effort from the management to develop the whole company’s quality culture.

Table 19. One-Way Anova Test Results on TQM Practice for Small, Medium, and Large Companies

Factor Description

Small

mean

practice

Medium

mean

practice

Large

mean

practice F

p-

value Results

F1 Management Leadership 4.1250 3.6333 3.6533 1.415 0.260 Not sig.F2 Resource Management 3.8500 3.4800 3.6500 0.635 0.537 Not sig.F3 Measurement & Feedback 3.9000 3.8133 3.8792 0.046 0.955 Not sig.F4 Continuous Improvement 3.5625 3.7500 3.6042 0.212 0.811 Not sig.F5 Supplier Quality

Management3.8000 3.7333 3.6167 0.127 0.881 Not sig.

F6 Systems and Processes 3.6875 3.6500 3.7917 0.135 0.874 Not sig.F7 Education and Training 3.7500 3.6333 3.5208 0.181 0.836 Not sig.F8 Work Environment &

Culture4.0630 3.7170 3.5630 0.660 0.525 Not sig.

Note: tcritical value at 0.05 level of significance with 30 degree of freedom ¼ 1.960

TQM in Malaysian Automotive Suppliers 1017

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Another finding was the significant difference that exists between perceived importance

and the extent of practice of TQM CSFs by the companies. It can be concluded that the

companies know the importance of TQM factors, but have failed to accomplish them. It

was also found the level of CSFs practice in Malaysian automotive suppliers was

between neutral important to important level. This means the efforts must be done in

encouraging these respondent companies to adopt and practice those CSFs. It is important

to improve their business process effectiveness and thus enhancing their competitiveness

in the local, regional and global market.

The findings about TOC show that the level of TOC understanding and implementation is

still very low in Malaysian automotive suppliers. Only 19.35% of the respondent companies

have actually implemented it. All of them are medium and large companies; there are no small

companies. It indicates that TOC is still something very new in Malaysian automotive suppli-

ers. There are many companies that do not have knowledge about TOC. Some of them have

only recently heard about TOC, and have not implemented it yet.

Future research will concentrate on conducting case studies to obtain more information

on developing a TOC-based TQM framework, which consists of procedure for using TOC

in TQM implementation. The framework will hopefully be useful and applicable within

the context of Malaysian automotive suppliers.

Acknowledgement

The authors would like to thank the Ministry of Science, Technology and Innovation,

Malaysia, for the research funding through project number 03-02-06-0060 EA 254.

Table 20. One-way anova test results on TQM barriers for small, medium, and large companies

Description

Mean

F

p-

value ResultsSmall Medium Large

1. Lack of understanding. 3.75 3.60 3.58 0.058 0.944 Not sig.2. Lack of preparation (No budget,

no sponsor).3.50 3.67 3.25 0.567 0.573 Not sig.

3. Resistance to change (Too busy) 3.75 3.67 3.92 0.235 0.792 Not sig.4. Lack of vision. 3.75 3.53 3.33 0.305 0.739 Not sig.5. Lack of top management

commitment.3.25 3.33 3.00 0.310 0.736 Not sig.

6. Lack of customer focus. 3.25 3.47 3.00 0.667 0.521 Not sig.7. Lack of resources. 3.50 3.07 3.25 0.268 0.767 Not sig.8. Lack of systems and structures

for TQM activities.3.50 3.60 3.33 0.213 0.810 Not sig.

9. Availability to training. 3.25 3.60 3.33 0.370 0.694 Not sig.10. Training with no purpose. 3.50 3.27 3.17 0.140 0.870 Not sig.11. Costly consultancies, training

programs.3.50 4.00 3.00 3.016 0.065 Not sig.

12. Lack of rewards and recognition. 3.25 3.60 3.33 0.402 0.673 Not sig.13. Lack of effective measurement

criteria.3.50 3.47 3.25 0.226 0.799 Not sig.

14. Lack of evaluation procedures andbenchmark indices.

3.25 3.40 3.17 0.259 0.774 Not sig.

Note: tcritical value at 0.05 level of significance with 30 degree of freedom ¼ 1.960

1018 H. R. Zadry & S. M. Yusof

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