FROM TQM TO GQM A NEW SHIFT IN A GLOBALIZED WORLD

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1 FROM TQM TO GQM A NEW SHIFT IN A GLOBALIZED WORLD Sitnikov Catalina Soriana University of Craiova, Romania Faculty of Economics and Business Administration Str.Al.I.Cuza, nr.13, , Craiova, Dolj inasitnikov@yahoo.com We witness today a tremendous intensification of global competition that turns to be and to become an obvious reality for new and old businesses, for the companies that meet complex challenges in every phase of corporate management. Among the management areas that should come under a careful examination, quality management is one of those that must be examined afresh when economies, markets and industries operations become global. As practice proved, quality management concept evolved from the engineering and statistical concepts, centered on the statistical quality control, to the large view of the concept that encompasses broad organizational issues and scopes. Today, the quality concepts are under the domination of Total Quality Management(TQM). Concepts standing out as main factors in TQM implementation are these days well established and used: customer value satisfaction, continuous improvement, total organizational involvement. Though TQM is successfully used by many firms, many conceptual and practical questions remain unanswered while global markets and industries are a fact of economic reality. In this context, Global Quality Management (GQM) is a new and emerging area of quality management practice but, despite its frequent use, it is not yet defined, analysed and researched. This paper makes GQM its research focus in order to contribute to the understanding of the concept, and to establish a track for new and future research. Keywords: quality, management, total quality management, global quality management A new vision over TQM Many authors noticed that it has become something of a cliché to say that organizations have gone through a lot of changes in recent years. Although, it is obviously that the changes at business environment level are common for all times, the last transformations have something significantly different. Since the s the development of the economies, societies and world gained new features. During these years, three different but interacting processes took place. The rapid development of information technologies, that exceeded all forecasts; then it was the globalization, which highlighted the significance of the environment as of global unifying connection, and the last process was formation and increased pressures of different non-governmental movements and stakeholders' groups. These processes and reaction influenced by them stipulated development of the new social structure - net society, new kind of economics, and new virtual culture. Nowadays, most of the transformations are associated with external pressures. External pressures may be understood as pressures for change, associated with a number of global phenomena. In this new given environment, it is obviously that management shifts from a situation where the future was controlled by focusing on internal forces, to a situation where any company must deal with lot of external pressures. In this context, Total Quality Management (TQM) was one of the most commonly used change management tools. At first sight, the traditional approach of the evolution of quality management concept from inspection to control, assurance, and, finally, total quality management, does not build a visible link between 598

2 quality function and external pressures. On this ground, the changes in quality management concept are to be underlined: Quality as a quantitative aspect, emphasizing qualitative factors. The reactive function of control changing to a preventative function of assurance, and to a proactive vision of quality. Moving from focus on the final product, to quality on tasks and processes. A global perspective of the organization has emerged as a result of the increasing integration of different aspects of quality, as so the social and environmental aspects are now added to commercial dimensions of organization. During the last years, the purpose of quality movement, as part of quality management evolution, is achieving business excellence. Many researchers notice that most of current business excellence models focus predominantly on a single bottom line of financial results rather than also attending to the social and environmental impact of businesses. However, the top most common and widely used quality management tools for measuring business excellence, The Malcolm Baldridge National Quality Award and the European Quality Award, are using wider approach. Principles of business excellence are linked with corporate social responsibility goals, i.e. these business excellence models are measuring, and therefore are promoting methods of managing external pressures. Society results, along with people results, partnership and resources, and customer results are among the key evaluation criteria. This is a true evidence of the quality management movement extending its scope to include social and environmental responsibility to address the changed demands of today's business. TQM is today seen as an organization-wide effort that emphasizes three core principles: Customer orientation. Process orientation. Continuous improvement. The concept of customer focus is developing into meeting the needs of a broader group of customers including human stakeholders, environmental stakeholders and other interested parties in societal sustainability. TQM, as a management philosophy, has elevated the implementation of quality management practices from operational to strategic level. Sustainability cannot be separated from evolution of TQM, since sustainability itself should be defined as the ability of organization to adapt to change in the business environment, to capture contemporary best practices, and to achieve and maintain competitive performance. The evolution of TQM therefore always evolves along with the changes in the business environment. It is widely believed among scientist of TQM field, that TQM approaches may be applied to the future business environment; just the boundary conditions of TQM should be assessed and understood. In stable environment, the TQM approach for continuous improvement is appropriate and effective. In the context of a recent uncertain global environment, agility becomes a core competence for organization that must develop capabilities to adapt quickly to the changing environment. Therefore TQM theory should reconsider conception of continuous improvement as a contrary or supplement to innovation. Many researchers had a vision of TQM development in the future as integrated system of four basic pillars: TTM - total transformation management TCM - total customer management TIM - total information management TRM - total resource management There exists lack of the literature and empirical evidence of focus on the relationship between TQM and a corporate strategy. It was emphasized that strategic quality management is seen as the key to being competitive; however, the philosophy needs to emphasize integrity, environmental issues and social responsibilities as key elements. 599

3 Summarizing the above said, it is assumed that TQM will evolve to strategic TQM and sustainable TQM, both of which may contribute to successful organization management and coping with emerging changes of global business environment. In this context, it is required the movement beyond TQM to develop a quality concept that reflects the nature of global corporations and their markets. In the last years, this concept was called "Global Quality Management" (GQM). From the several definitions allocated to the concept, one seems to be appropriate to the changing global business environment: The strategic planning and integration of products and processes to achieve high customer acceptance and low organizational disfunctionality across country markets. The definition incorporates the basic philosophy of TQM, but recognizes the challenges for quality management when the organization's business is worldwide. As the number of country markets in the global network increases, the diversity of quality environments across country markets requires that the organization balance local customer requirements with realistic supply-chain capabilities within and across markets. GQM overview GQM is a significant extension of the TQM concept. Although it has in common with TQM a highly customer-oriented philosophy, the expanded geographical and cultural boundaries of quality-related activities require a more dynamic and integrative approach. TQM marked a major conceptual and managerial advance in its linkage of production with marketing, as well as other quality-related functions. Still, in the context of a single country organization, the organizational implications of TQM are relatively straightforward. Even when multiple countries are involved, such as a company importing raw materials from abroad, the organizational requirements can be coordinated from a home headquarters. In a complex network of quality chain activities, coordination from a single headquarters becomes untenable. GQM entails organizational adjustment. Spurred on by regional economic integration in Europe and North America, and the high economic growth of Asian countries, large international companies are building globalized production networks with regionalized systems in several locations. The varied vertical and horizontal linkages of subsidiaries have not been formed by centrally controlled mechanisms but, rather, according to each subsidiary's individual situational needs. Situational factors include availability and access to raw materials and components, capabilities and technology access of the subsidiary, and the subsidiary's access to local markets and market channels. The result is that the constellation of quality-related activities becomes region-specific. In some subsidiaries the quality chain may be fully integrated; in others, it may be appropriately partial. A key characteristic of GQM is the networking of activities within and outside the firm, along with other elements of the overall supply chain. The diversity of markets across countries introduces constraints such as differentiated customer requirements, but also offers opportunities such as greater economies of scope. In this context, there is a high premium on GQM, which enables great flexibility. Because of the great number of configuration possibilities for networking, corporate control of GQM cannot be centralized at a home headquarters. Instead, a combination of regional headquarters coupled with global coordination appear to be a hybrid mechanism that allows adaptation to regional differences while enabling crossfertilization among the corporation's subsidiaries. In the age of multiple headquarters, GQM is the appropriate quality management concept. Viewed from an upper level, the next evolutionary stage, GQM can be linked to TQM through a set of key comparisons. Objective Comparing TQM with GQM, the main concepts behind TQM are maintained, but GQM enlarges the objective to encompass the concerns of multiple functions across multiple countries. A domestic firm attempting to apply TQM in an environment with multiple markets and manufacturing sites is beginning to engage the issues that are raised with global markets and manufacturing. GQM expands the concepts and issues even further to include national sovereignty, language and cultural distinctions, geography, and tax, tariff and currency considerations. The level of complexity in objective is importantly increased. 600

4 Market Focus TQM and GQM are similar in focus on the market, but the number and diversity of customer requirements across markets implies that customer satisfaction may be more difficult to achieve, especially if resources are limited. As the notes on the expansion in objective underline, customers' perceptions of value are likely to differ widely, much more widely than is possible in varied sites within a single country. On the other hand, a wise market research coupled with creative multi-national design may make it possible to generate and meet demand for global products, particularly where new technology is involved. Cultural sensitivity is a particularly problematic aspect of perceived customer value. The well-worn axiom "Think global, act local" puts the matter succinctly. The objective is products and services that are locally acceptable, yet are designed, developed, manufactured and distributed under a global environment, which embraces intelligent strategies that fit together. Production Focus TQM and GQM are similar in their production focuses, but GQM involves extending TQM to the point where disfunctionalities begin to appear. Involving all functions and all levels in all countries, which is the case in a complete global extension of TQM, naturally entails a seemingly endless set of possible configurations. Not all functions may be located in a particular country. If a business unit finds that domestic suppliers are not price-competitive or that technologies are incompatible, it may be forced to link up with suppliers abroad. Likewise, a need for familiarity with local markets may motivate linkages with foreign distributors. In this expanded multinational "supply chain," a new perspective is called for that is beyond functional integration in the context of a single country. Therefore, the resulting organization of production likely will have to be based on a linkage among organizations across country boundaries. Consistent with this is the fact that production decisions cannot be centralized in a home country headquarters, as may be possible in the simpler TQM environment. Responsiveness to diverse market needs is likely to require maintaining a network of multiple headquarters. The key capability that enables companies to minimize potential disfunctionalities in a global context is flexibility. Production processes that simultaneously allow low volumes, high variety and low cost can offset the disadvantages of diverse marketing requirements. Information Systems The technological advances provide the information systems support for effective global operations, including GQM. However, in most instances, it is not the hardware or software part of the system that poses the challenges. It is more likely to be the information infrastructure that is locked into architectures and organizational designs based around earlier technologies. Ideally, the existence of TQM variants throughout a global organization should offer such benefits as internal benchmarking and transfer of the lessons from successful TQM applications. Capturing such potential advantages requires sound and timely information moving freely throughout the global organization. Information networking among manufacturing units becomes instrumental. GQM should, therefore, not be viewed as simply "connected" TQM units. It is imperative that a global company establish an effective quality audit system that can routinely measure and transfer quality management "know-how" across TQM units. Given the rapid pace of technological development and change, GQM requires an integrative effort that links subunits across countries. Technology Network Since the factors and competitive situations across countries can be expected to be quite different, networking can consist of any combination of technology, supplier, production, distribution and marketing activities across markets. Sometimes, not all of these functions and activities can be satisfied within an intra-company network. For example, emerging technologies may have to be acquired from outside the firm and/or from abroad. The concept of networking has to include outside or foreign firms and science and technology organizations. 601

5 An important trend in global management is the formation of strategic alliances whereby companies strive to share complementary assets. While the concept is deceivingly simple, its implications for GQM certainly are not. An integrated and harmonious quality management and improvement system are difficult to achieve in alliances that are a merger of companies with different histories and styles of TQM. In practice, there are many obstacles within strategic alliances that inhibit organizational learning and transfer of "know-how." If managers can recognize and reduce these expected obstacles, the result should be increased GQM effectiveness. Clearly, inter-company compatibility of quality systems is a consideration when selecting alliance partners. Conclusions This paper focus on GQM tried to define the boundaries of an emerging quality concept and practice. The most of the recent transformations in organizations' business environment are associated with external pressures at the global level. External pressures are understood as pressures for change, associated with a number of global phenomena. In order to be successful in the future knowledge-based environment, companies will need to implement strategies and new tools for simultaneously creating economic, social and environmental values. Total quality management philosophy needs to be rethought and recreated in the context of recent global transformations that make the shift to global quality management. The most likely and reasonable developments for contemporary total quality management should be made by incorporating approaches of sustainability and strategy to the concept of total quality management turning it into a more complex and large concept, global quality management. References 1. Broekhuis, M., 2003, Improving Organizational Sustainability Using a Quality Perspective, unpublished, University of Groningen, Research Institute SOM. 2. Collerette, P., 2001, Managing Organizational Change. Part One: Change in Turbulent Times, ISO Management Systems. 3. Leonard, D., 2002, Developing Strategic Quality Management: A Research Agenda, Total Quality Management, Vol. 13, No Levy, P., Bessant, J., Sang, B., and Lamming, R., 1995, Developing integration through total quality supply chain management Integrated Manufacturing Systems, 6(3), Mehra, S., 2001, TQM as A Management Strategy for The Next Millennia, International Journal of Operations & Production Management, Vol. 21, No 5/6. 6. Povilas, V., Zirgutiene, S., 2005, TQM Paradigm Shift in the Context of Change Management, Engineering Economics, No 3 (43) Influence of Quality Management of the Country's Economy. 602