MAKEREREUNIVERSITY
COLLEDGE OF BUSINESS AND MANAGEMENT SCIENCES
ADOPTION OF TOTAL QUALITY MANAGEMENT PRACTICES AND PERFOMANCE OF SMALL AND MEDUIM SCALE MANUFACTURING ENTERPRISES.
A CASE STUDY OF KAMPALA DISTRICT
BY
MUTEBI RONALD
06/U/9650/EXT
SUPERVISOR: MR. KITALE C.CHARLES
A RESEARCH PROPOSAL SUBMITTED TO MAKEREREUNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF THE AWARD OF THE DEGREE OF BACHELOR OF COMMERCE.
AUGUST -2011
DECLARATION
I Mutebi Ronald declare that this research report is my original work and has never been previously or currently presented to any university for the award of any degree .The source used to compile it are presented and where another person’s work has been used or referred to, an acknowledgement been made respectively.
Signature ………………………………………………………………..
Date ……………………………………………………………………
APPROVAL
This is to certify that this work has been submitted for examination with my approval as university supervisor.
Signature ……………………………………………......
Date ……………………………………………………………….
DEDICATION
To my father Mr. Kizito Austin who basically sacrificed his life to make certain that I get a head start .And to my mother Mrs. Kizito Justine for the support above and beyond the call. What would I do without two?
ACKNOWLEDGEMENT
I would like to acknowledge the assistants, academic moral or material, which was extended to me during the preparation of this research report.
I extended my sincere appreciation to my supervisor, Mr. Kitale Chris for his valuable and brotherly guidance, encouragement, advice and collective comments throughout the preparation of this research report .I am al so indebted to Mr. .Richard Kajumbula and Mr. Isaac Shinyekwe who introduced me to Research Methods
I thank God and my paternal family members who have been by my side since I began my university degree to date .Utmost special thanks to my aunt, M/s Nalongo Sylvia sendi and Mr. Salongo sendi for the love ,care ,moral and financial support rendered to me through out my life my brothers and sisters :Sserwanga john ,Jjuko henry, Kanyike thomas, Nakizito teddy, Ndagire Justin, Demintria, Joseph and Edward and my God mother M/s Sarka slozolova for all the shared triumphs and disasters over so many years .
I would like to appreciate the support and encouragement that my friends have rendered to me during this study. Special thanks go to the following people Nassaka lindah ,Faridah ,Erinah, Paul, Wilson, Innocent ,Lawrence, Joseph, Partrick, Richard, Vanessa ,Hannington, Julius,Special thanks go to Mr.& Mrs. Ssebalamu, M/s Sarka slovilova and all the workers at Afroplast (u) ltd.
Thank you all for the support accorded to me during the course and throughout the research process.
TABLE OF CONTENTS
DECLARATION……………………………………………………………..ii
APPROVAL………………………………………………………………….iii
DEDICATION………………………………………………………………..iv
ACKNOWLEDGEMENTS………………………………………………….v
TABLE OF CONTENTS……………………………………………………vi
LIST OF FIGURES………………………………………………………….xi
LIST OF TABLES……………………………………………………………xii
LIST OF ABBREVIATIONS AND ACRONYMS…………………………xiii
ABSTRACTS…………………………………………………………………..xiv
CHAPTER ONE
INTRODUCTION
1.1BACKGROUND OF THE STUDY…………………………………………1
1.2STATEMENT THE PROBLEM ……………………………………………2
1.3PURPOSE OF THE STUDY………………………………………………...3
1.4OBJECTIVE OF THE STUDY……………………………………………...3
1.5RESEARCH QUESTIONS………………………………………………….3
1.6SCOPE OF THE STUDY …………………………………………………..3
1.6.1CONTENT SCOPE………………………………………………………3
1.6.2GEOGRAPHICAL SCOPE……………………………………………....4
1.7SIGNIFICANCY OF THE STUDY…………………………………………4
1.8CONCEPTUAL FRAMEWORK……………………………………………4
CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTGION…………………………………………………………..5
2.1 Definition of TQM…………………………………………………………….5
2.2 Definition of business performance……………………………………………8
2.3 Definition of quality……………………………………………………………9
2.4 Some of the general causes of poor performance in S.M.ES………………….11
2.5 Critical factors for effective TQM adoption……………………………….11
2.5.1 Management leadership and commitment…………………………………..11
2.5.2 Continuous improvement……………………………………………………12
2.5.3 Total customer satisfaction……………………………………………….....13
2.5.4 Employee involvement………………………………………………………14
2.5.5 Training and education………………………………………………………15
2.5.6 Reward and recognition……………………………………………………...16
2.6 Levels of TQM implementation……………………………………………..17
2.6.1 No customer concern/ No inspection………………………………………..17
2.6.2 Quality control……………………………………………………………....17
2.6.3 Quality assurance…...... 18
2.6.4 Continuous quality improvement…………………………………………...18
2.6.5 Quality award model………………………………………………………..18
2.7 Dimensions of business performance…………………………………………19
2.7.1 Product quality and effectiveness…………………………………………...19
2.7.2 Customer satisfaction………………………………………………………..19
2.7.3 Financial performance……………………………………………………….19
2.8 Effects of TQM adoption on business performance………………………..20
2.8.1 TQM and organization performance…………………………………………20.
2.8.2 TQM and organization growth……………………………………………….20
2.8.3 TQM and organization competitive advantage……………………………….20
2.8.4 TQM and organization profits………………………………………………...21
2.8.5 TQM and organization financial performance………………………………..21
2.8.6 TQM and product quality and price…………………………………………..21
2.8.7 TQM and customer protection………………………………………………..22
2.9 Relationship between adoptions of TQM techniques and
business performance…………………………………………………....22
2.10 Hypothesis developed
2.10.1 Customer focus……………………………………………………………25
2.10.2 Management leadership…………………………………………………...26
2.10.3 Human resource management…………………………………………….26
2.10.4 Quality data and reporting………………………………………………..27
2.10.5 Suppliers’ management…………………………………………………..28
2.10.6 Design management……………………………………………………...39
2.10.7 Process management……………………………………………………..39
2.10.8 Conclusion……………………………………………………………….39
CHAPTER THREE
METHODOLOGY
3.0 Introduction ……………………………………………………………….31
3.1 Research design……………………………………………………………31
3.2 Survey population…………………………………………………...... 31
3.3 Sampling method…………………………………………………………...31
3.4 Sample size ………………………………………………………………....31
3.5 Source of data……………………………………………………………...32
3.6 Data collection tools……………………………………………...... 32
3.7 Procedures of data collections ……………………………………………...32
3.8 Data presentation and analysis ……………………………………………..33
3.9 Problem s /limitations s of the study………………………………………..33
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION P F FINDINGS
4.0 Introduction ……………………………………………………………34
4.1 Findings on demographic characteristics of respondents
4.1.1 Response rate………………………………………………………….34
4.1.2 Age of respondents …………………………………………………..35
4.1.3 Gender of respondents ……………………………………………….36
4.1.4 Educational levels of respondents ……………………………………37
4.1.5 Length of time respondents have worked at the company……………38
4.1.6 Length of time the company has been in existence…………………..39
4.2. Findings on adoption of TQM techniques
4.2.1 Findings on the factors for effective adoption/
implementation of TQM techniques………………………………..40
4.3 Findings on the effects of TQM on company performance……………..42
4.3.1 TQM and organization performance…………………………………..42
4.3.2 TQM and organization growth………………………………………...43
4.3.3 TQM and organization competitive advantage..………………………43
4.3.4 TQM and organization profits…………………………………………45
4.3.5 TQM and organization financial performance…………………………45
4.3.6 TQM and product quality and price……………………………………46
4.3.7 TQM and customer protection………………………………………….47
4.4 FINDINGS ON THE RELATIONSHIP BETWEEN ADOPTION OF TQM TECHNIQUES AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES
4.4.1 Whether effective adoption of TQM techniques affects the performance
of small and medium enterprises……………………………………….48
4.4.2 Whether there is a relationship between adoption of TQM
techniques and performance of S.M.Es…………………………..49
CHAPTER FIVE
SUMMARY OF MAJOR FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction……………………………………………………………………51
5.1 SUMMARY OF MAJOR FINDINGS ………………………………………..51
5.1.1 Summary of major findings on adoption of TQM techniques……………….52
5.1.2. Summary of major findings on business performance………………………52
5.1.3 Summary of major findings on the relationship between adoption
of TQM techniques and performance of S.M.E…………………………52
5.2 Conclusion…………………………………………………………………..52
5.2.1 Adoption of TQM techniques……………………………………………..52
5.2.2 Effects on company performance………………………………………….52
5.2.3 RRLATIONSHIP BETWEEN LOCAL REVENUE COLLECTION AND QUALITY OF SERVICE DERIVERY
5.3 RECOMM ENDATIONS
5.3.2 Recommendations on quality service delivery
5.4 Areas for further research
BIBLIOGRATHY
APPENDICES
APPENDIX I
APPENMDIX II
APPERNDIX III
APPENDIX IV
APPENDIX V
APPENDIX VI
APPENDIX VIII
APPENDIX
LIST OF FIGURES.
Figure 1; Response Rate…………………………………………………… 34
Figure 2; Age of Respondents………………………………………………35
Figure 3; Gender of the Respondents……………………………………….36
Figure 4; Education level of the Respondent………………………………..37
Figure 5; Time of work at the company………………………………...... …38
Figure 6; Length of company existence……………………………………...39
Figure 7; Rating of the factors for effective adoption of TQM techniques…..41
Figure 8; Effects of TQM on company’s competitive advantage……………44
Figure 9; Effect of TQM on product quality and price………………………47
LIST OF TABLES
Table 1: Showing educational levels of the respondents…………………….37
Table 2: Length of time of work at the company…………………………….38
Table 3: Length of time of company’s existence…………………………….39
Table 4: Factors for effective TQM adoption………………………………..40
Table 5: Showing effect of TQM on organization performance……………..42
Table 6: Showing whether TQM has an effect on organization growth……..43
Table 7: Showing effect of TQM on organization competitive advantage…..43
Table 8: Showing whether TQM leads to high profit in an organization…….46
Table 9: Showing effect of TQM on financial perspective…………………..46
Table 10: Showing whether TQM is relevant to product quality and price….47
Table 11: Showing whether there is a cause relation- effect between
TQM techniques and customer protection………………………..48
Table 12: Showing whether effective adoption of TQM techniques leads
High performance of S.M.Es………………………………………49
Table 13: Showing whether there is relationship between adoption of
TQM techniques and performance of S.M.Es……………………..49
LIST OF ABBREVIATIONS AND ACRONYMS
TQM - Total quality management
S.M.Es - Small and medium enterprises
UBOS - Uganda bureau of statistics
NIST - National institute of standard and technology
UNCTAD - United nations conference on trade and development
MNBQA - Malcolm Baldrige National Quality Awards
ABSTRACT
Total Quality Management (TQM) has been widely considered as the strategic, tactical and operational tool in the quality management research field. It is one of the most applied and well accepted approaches for business excellence. There is a greatenthusiasm among manufacturing and service industries in adopting and implementing this strategy in order to maintain theirsustainable competitive advantage.
The aim of this study is to establish the relationships between adoption of TQM techniques and company’s performance particularly in the context of small and medium manufacturing enterprises by measuring the product quality and effectiveness, customer satisfaction and financial performance as performance indicator. Acomprehensive review of literature on TQM and company performance was carried out to accomplish the objectives of this study.
Three research questions were proposed and 7 hypotheses were looked at to re-validate theTQM practices. The adoption of such a theoretical model on TQM and company’s company would help managers,decision makers, and practitioners of TQM in better understanding of the TQM practices and to focus on the identified practiceswhile implementing TQM in their companies. The result finding is expected to bepowerful information for future research directions especially as an indicator for the development of a suitable TQM framework for the local SMEs in Uganda
CHAPTER ONE
1.0Background of the study.
In such a competitive environment resulting from world globalization and liberalization, firms survive with much difficulty unless they create the competitive advantage over their competitor (Adam et al., 2001, Samson & Terzivzki, 1999). Around 12% of businesses close within their first year, 25% are closed within two years, and around one thirds will have disappeared by the end of the third year, Alan and Jamieson (2006).
With the increasing competition, business survival pressure and the dynamic, changing customer-oriented environment, Total quality management (TQM) has been recognized as one of the important management issues for every organization and it has generated substantial amount of interest a monger managers and researchers (Achier et al., 1995; Benson et al., 1991; Powel, 1980).
According to Stevenson (2002), TQM is defined as a quest for quality in an organization and according to him there are three philosophies in this approach, namely; continuous improvement, involvement of everyone in the organization, and the customer satisfaction.
Performance on the other hand is the effectiveness to the firm's ability to serve or produce what the firm requires at particular time and efficiency which means meeting the objectives at the lowest possible cost with the highest possible benefit (Grassing 2000).
Various authors have argued and empirically stated the positive impact of TQM adoption on company’s performance in terms of operating and financial results, quality, customer satisfaction or employee satisfaction. However, most of these studies focus on identifying the TQM practices that are most effective and crucial from the performance improvement point of view. Some of these studies focus only on a particular type of performance: quality performance, financial performance, or operating performance. They do not provide much evidence on how exactly TQM affects performance: are all performance dimensions improved and what areas of performance are mostly improved by TQM adoption?
Therefore the objective of this study is to understand and measure the impact of TQM on different dimensions of company performance. In order to achieve the above objective, the research is focused on answering the following questions: Is there a significant company performance improvement after TQM adoption? Are these improvements more of financial, operating, employee performance or customer satisfaction nature? How long does it take to get significant positive benefits?
1.2Statement of the Problem.
The Small and medium scale manufacturing sector is widely regarded as the driving force in economic growth and job creation in Uganda. It plays a significant role as over 90% of the active non farming population are employed in this sector, UBOS ;( 2003). However, the performance of this sector is relatively poor. Despite the fact that the Government of Uganda has provided non-fiscal incentives to stimulate its growth, the performance of these small scale industries has remained low. S.M.Es are not growing. The industrial sector, which is dominated by .S.M.Es, still contributes less than 20 percent to the GDPand has not been performing impressively, James.M; (1994). From 1997/98 to 2005/2006 the manufacturing sector’s annual growth rate was only 1.3%, Esther.K et al;2008. The sector’s efficiency has been decreasing,and its technical efficiency is much lower (that is, 0.19) than that of manufacturers in Cameroon, Ghana, Kenya, and Zimbabwe (Gauthier 2001). There is concentration of S.M.Es in low-quality production (Sengendo et al. 2001, and poor managerial and skills competence (Nalumansi et al. 2002; Nel and Shapiro 2003). The industrial sector’s annual growth rate was approximately 1.3%. The capacity utilization of the Ugandan manufacturing sector when compared to that of other African countries was around the mean (58%) but lower than that of the manufacturing sectors in Kenya (63%) and Côted’Ivoire (71%), This limits their levels of sales and profits sincemost of them compete for the same customers, (Sengendo et al. 2001).
This has been attributed to the lack of resources and knowledge to practice total quality management techniques in their operations hence they continue producing low quality products that do not meet customer need thus loosing the competitive advantage over their rivals hence collapse.
1.3Purpose of the Study
The purpose of the study is to investigate the effect of the adoption of total quality management practices on the performance of Small scale industries in Kampala district (Uganda)
1.4Objectives of the Study
The study has the following objectives:
1. To identify the key factors for the successful adoption of TQM techniques.
2. To examine the effects of TQM techniques adoption on company performance.
3. To establish the relationship between company performance and the adoption of total quality management practices.
1.5Research Question
1. What are the key factors for the successful adoption of TQM techniques?
2. What are the effects of TQM adoption on the manufacturing firm’s performance?
3. What is the relationship between the adoption of TQM practices and the company performance?
1.6Scope of the study.
1.6.1 Content scope.
The content of the study will be centered on total management techniques in my case studies. It will include among other things, the key elements of TQM, the effect of TQM adoption.
It will also analyze the firm’s performance in terms of; product quality, business set goals against the achieved one, profits, sales, and other related indicators of performance of the company since their existence.
1.6.2 Geographical Scope,
This will be in the area of the study location. This will be Kampala districtspecifically. It will also involve all workers at different levels; officials from private sector foundation will also be approached on this matter.
1.7Significance of the Study
- The study will help managers to establish a strong total quality management system in their organization.
- Academicians and future researchers will base on these findings to conduct future related studies.
- The study is to propose a model which can study TQM effects more effectively and hence, implement TQM in a more efficient manner.
- The study will help manager/owners of SMEs to recognize the need for an efficient management system in an organization.
1.8 The Conceptual frame work
coll
ection
CHAPTER TWO
2.0 LITERATURE REVIEW.
2.0 Introduction
This chapter looked at what other researchers and academicians have written about the variables in the study and any other related literature. This chapter is aimed at giving an insight into the related literature about Total quality management and performance of S.M.Es. Under TQM, various definitions, principals, its effect on business performance, the relationship between TQM and business performance,and the hypothesis developed on TQM will be covered. With business performance,things like definitions, likely causes for their poor performance and also an overview of the SME in Uganda will be looked upon.
2.1 Definitions of TQM
Feigenbaum defined total quality as a continuous work process, starting with customer requirements and ending with customer’s satisfaction. According to him, the definitions of quality have changed with the passage of time with the changing customer’s needs and requirements. But the essence has been more or less to develop an approach to problem solving, conformation to standards for customer satisfaction. With management functions getting complex, approaches to managing quality in functional areas are becoming difficult. Organizations, which have successfully used TQM principles, have customer satisfaction and quality embedded in their corporate strategy.
According to Jack P. Pekar, “any organization is a system of interrelated units. For TQM to succeed, all of the components within the organization must be collectively involved. Initially, organizations implemented TQM in hope that improvement in the shop-floor activities would solve all existing productivity and quality problems.Later; they have realized that TQM is much more than just shop-floor improvement. the definitions of quality incorporates factors like top management commitment, leadership, team work, training and development, rewards and recognition, involvement and empowerment of employees e.t.c. these critical factors are the foundation for transformational orientation to create a sustainable improvement culture for competitive advantage on continuous basis.
According to Kamukama Nixon, (2006), TQM is a technique in which management develops policies and practices to ensure that firm's products and services exceeds customer expectations. The approach includes increased product functionality, reliability, durability and serviceability.
According to Professor Vinod Kumar, Total quality management has many definitions.
Gurus of the total quality management discipline like Deming,Juran,Crosby,Ishikawa and Feigenbaum defined the concept in different ways but still the essence and spirit remained the same.
According to Deming,E.W. (1986), TQM is a continuous quality improvement process towards predictable degree of uniformity and dependability.Diming also identified 14 principles of quality management to improve productivity and performance of the organization,
Juran,J.M.(1993), defined quality as “fitness for use”. According to him every person in the organization must be involved in the effort to make products or services that are fit for use. Crosby defines quality as conformance to requirements. His focus has been on zero defects and doing it right the first time.
Ishikawa also emphasized the importance of total quality control to improve organizational performance. According to him quality does not only mean the quality of the product, but also of after sales service, quality of management, the company itself and the human life.
.
According to Selladurai Raj, TQM an interventions or activities must be guided by four change principles, namely work processes, variability analysis, and continuous improvement. Product design and production processes must be improved; variance must be controlled to ensure high quality; data must be systematically collected and analyzed in a problem solving cycle; and commitment made to continuous learning by employees about their work.