Comparing quality management practices in the Australian service and manufacturing industries.

Introduction

This paper attempts to identify and explain differences in quality management practices between Australian manufacturing and service organizations. The Australian economic context and the sectors' relative economic importances are briefly described; and relevant past research summarized. The paper is based on two surveys: the first asked questions on the use of and attitudes to quality management practices (QMP) in service organizations; the second asked almost identical questions of Australian manufacturers. The paper compares the responses and identifies statistically significant differences between the sectors. Some possible reasons for these differences are advanced. Conclusions are given and suggestions for further research are made.

There is no generally agreed definition of QMP. The literature suggests that it is a collection of techniques designed to improve quality outcomes - primarily for customers but also for employees and the organization. QMP differs from total quality management (TQM); the latter implicitly demands a total and pervasive commitment to quality. This commitment dictates every aspect of an organization's structure and culture. Flat structures and employee empowerment may be required, not as ends in themselves, but to correct problems affecting customers in minimum time. The culture must support employees who point out problems (even stopping the line) and potential improvements even if these are very inconvenient or embarrassing in the short term.

QMP may be useful for organizations which do not yet feel able to commit themselves fully to TQM. Adopting TQM may require exceptional managerial skills and a very large amount of managerial time. TQM's benefits are hard to quantify and seem to be long-term; thus management might rationally decide to improve performance quickly by adopting some aspects of QMP.

Studies showing positive results of quality programmes include those by Tanner et al.; Capon et al. and Sohal[1-3]. Some studies which describe and/or attempt to explain the failure of quality programmes are those of Eskildson, Holoviak, Cordeiro and Turner, Powell, Mann and Kehoe[4-8].

Past work on QMP

Quality gurus such as Juran, Deming and Crosby[9-12] have advocated various methodologies for business success and single out some quality practices such as the engagement of top management and use of statistical techniques.

Hammond[13], although not defining QMP explicitly, designed a survey applied to service and manufacturing organizations in several countries which investigated business organization and culture, product and service development, delivery processes and customer satisfaction and quality and strategic planning. One objective was to determine what quality practices were specific to particular industrial groups or sectors and which were universal.

Badri et al.[14] conducted a thorough study of 120 hypothesized components of QMP. They used factor analysis on the 424 responses to a survey of United Arab Emirate firms, to show that QMP could be reduced to eight factors which they labelled as:

(1) top management leadership;

(2) role of quality department;

(3) training;

(4) product design;

(5) supplier quality management;

(6) process management;

(7) quality data reporting;

(8) employee relations.

They note [14, p. 49] that manufacturers are much more inclined than service providers to use QMP.

The analysis of Sohal and Lu[15] reflects the authors' conversations with business executives. The elements of QMP reflected in this article are:

* The primacy of the customers' perception of quality.

* Continuous improvement.

* Vendor partnership.

* The use of statistics to measure performance.

* Employee involvement (comprising goal setting, measurement, empowerment and recognition of performance).

Mraz[16] reports on a study undertaken by the American Quality Foundation and Ernst & Young. The thrust of this article is that some QM practices are not recommended for low performing companies. Such companies may not have the skill or experience to foster or exploit increased employee participation. For these companies, mundane and unfashionable activities such as increasing training directed at improving employees' basic activities and "inspecting quality in" are more likely to be fruitful.

Flynn et al.[17] propose and statistically test a model of the relationships between QMP and performance. They categorize QMP as "core" if they have a direct effect on external customers and "non-core" otherwise.

The core QMPs are:

* Product design processes.

* Process flow management: essentially operations management with emphasis on minimizing deviation (from product specifications or delivery dates).

* Statistical control and feedback (the emphasis is on detecting and rapidly correcting deviation).

Non-core practices comprise:

* Customer and supplier relationships.

* Work attitudes and workforce management.

* Top management support.

Flynn et al. use sophisticated statistical methods to test their model and note some counter-intuitive results. As the data appear to be ordinal, (respondents appear to have been asked to indicate agreement or disagreement with propositions on a five-point Likert scale) the use of parametric statistical techniques might produce misleading results. Perhaps the best previous study of service quality is that by Redman[18] who conducted a survey of quality management in the UK, ascertaining that, although QM practices were widely used, it was difficult to link them to business success.

Past work on QMP in Australia

Over the past six years a number of Australian studies have addressed QMP. During 1990, Sohal et al.[19] surveyed members of the Australian Total Quality Management Institute. These were companies with a known commitment to quality. This study, to which 52 companies responded (51.5 per cent) found that companies were implementing a range of QMP and achieving both tangible and intangible benefits from their quality initiatives; however, companies indicated that these benefits did not come about easily.

A 1994 study of "best practice" by the Australian Manufacturing Council (AMC) has been influential in Australia[20]. This study purports to relate best practice to business performance. A total of 962 (32 per cent) Australian companies returned the …