Executive Summary
Quality is a key strategic factor in attaining business success, and has grown even more relevant for successful competition in today’s global market (Nelsen 2006, 6). The Car dealership business has grown increasingly dynamic and competitive in the recent past, necessitating the adoption of Total quality management (TQM) which has emerged as a manager’s toolkit in attaining excellence in quality and gaining competitive advantage.
This report presents how best to implement TQM in a Sydney-based large car dealership. The first section will provide evidence of success where focus is on number of sales, revenue, profitability, and percentage of repeat business. The second section of this report presents an Action Plan with list of steps for implementing TQM at the dealership. The third section provides a detailed explanation along with the rationale of the steps in the plan, and the roles of personnel involved in the implementation.
This report recommends that the company needs to apply TQM in order to enhance the quality of its products and services in satisfying their customers. This should be in form of better quality, premium prices, faster service delivery, and better service to customers.
Introduction
The automobile consumer has grown increasingly knowledgeable, selective and demanding thanks to market liberalization and globalization (Jabnoun & Sahraoui 2004, 75). In particular, the Australian auto industry has become more competitive, translating that retaining customers as well as attracting new ones has become more challenging. This has necessitated our company, MotorTech Ltd, to shift focus on quality so as to remain relevant in the marketplace.
Typically, MotorTech has built a reputation as a large car dealership in Sydney suburbs that deals in average new and used cars offered at premium prices. While the company has been able to maintain a significant market share using this strategy for the last couple of decades, it has struggled to appeal to high end consumers because of the quality factor.
Our company has always played second fiddle to competitors that deal in high quality vehicles, even if they offer them at relatively high cost. At the present, our turnover is below the industry average of $500 million. It is on this premise that, we find it fit to adopt Total Quality management practices so as to meet customer needs, increase sales, improve profitability, and increase our competitive edge in Sydney, Australia and the world at large. In general, therefore, there is need for MotorTech to shift focus from short-term measures to evaluating measures relating to quality.
As such, it is believed that successful implementation of TQM would enable our company to bring on board more dedicated and highly skilled automobile salespeople and automotive technicians to bring about quality and ultimate customer satisfaction. Furthermore, MotorTech will be able to stock, sell spare automobile parts as well as process warranty claims more efficiently and effectively resulting customer satisfaction.
SECTION I
Measuring TQM Success
The main objective of Total Quality Management is to increase the quality of both products and services consistently so as to satisfy customers (Basterfield 2011, 72). It is a process characterized by a total corporate focus on satisfying and exceeding customer’s expectations in addition to reducing costs as a result of poor quality through adoption of a new management system along with corporate culture (Nitin et al 2011, 220). Measurement of TQM success will be possible on a number of fronts.
The first metric would be productivity of the firm, where improved quality would result in faster supply to customers, reduced inventory and shortages, proper use of time and effort on the work center, and increased return business. Furthermore, TQM success would be gauged by less or none warranty repairs, less if not none return or lost sales. These metrics concern with the external customer (Nitin et al 2011, 221).
We shall also be able to measure TQM success through the satisfaction levels of our internal customers i.e. the employees of this company. TQM success will be said to have been attained if quality at any one work station/operation/assembly line would meet or exceed the needs (expectations) of the subsequent step in the process. Attainment of this would be further evidenced by the uninterrupted flow of tasks along the assembly line (Escrig et al 2001, 937).
MotorTech personnel would be able to detect any defect that occurs at a workstation and address it instantly so that it does not result in time wasting, compromising delivery of quality products and services to the customer in time. This is particularly essential because one of the key aims of strategic planning is to offer high quality products and services to meet customer needs on time.
SECTION II
The Action Plan
The implementation of TQM at MotorTech will be systematic and simple. There are five basic steps that our company will undertake in managing transition to the new TQM system:
Identification of Tasks
Creation of necessary management structures
Development of strategies for building commitment
Designing of mechanisms to communicate the change, and
Allocation of resources
In identifying tasks to be done, we shall conduct a thorough study of the present conditions of our company. These shall entail assessment of our organization’s current reality, which refer our current needs, precipitating events necessitating TQM, and the prevailing employee quality of working life (Escrig et al 2001, 934). A management audit will serve as a good assessment tool to identify our current standing in terms of organizational functioning and the areas needing change. We shall seek to ascertain that a healthy environment for implementation exists (i.e. assessing readiness through a force field analysis) at MotorTech before embarking on the actual process.
This shall be followed by creation if a model for our desired quality state which ideally translates into the implementation of TQM. The course of action would be announcing of the change goals to the entire organization, followed by delegation of responsibilities and resources to the relevant personnel and departments. Top management will undertake the final step of securing external consultation and training (Newall & Dale 1991, 279)
The task of designing transition management structures will be engineered by MotorTech’s top management. Success will need the commitment and active involvement of senior management, which would necessitate formation of a steering committee for the project.
Mechanisms beyond the existing processes would need to be put in place to facilitate communication of the change to the company. This would be achieved through special entire-staff meetings (input or dialog sessions) involving all executives of MotorTech. Furthermore, TQM brochures and newsletters would be used as effective ongoing communication tool to keep the management, employees and others up to date with activities and accomplishments of the exercise at every stage.
Finally, allocation and management of resources during the TQM implementation would call for external consultants (Newall & Dale 1991, 276). The company will source consultants on grounds of their prior relevant experience along with their commitment to integrating the program to fit MotorTech’s unique organizational needs. Consultants would be tasked with preliminary training of staff together with TQM system design. It would be paramount to ensure active involvement of all MotorTech personnel, customers and other stakeholders during the TQM implementation. We would establish a clear role definition and activity specification, and a collaborative relationship with external consultants.
To this end, it is worth noting that a number of Australian car dealerships have implemented a wide range of strategies in the effort to achieve and maintain flexible and adaptable organization of work. Many car dealerships have adopted the Theory of Constraints (TOC) which aims to increase throughput by addressing the single most restrictive limiting factor that compromises the system performance of a business (Hotamişli et al 2010, 273).However, most of the automobile companies have not achieved sustainable improvement in both productivity and quality (Hotamişli et al 2010, 275)
This has largely been as a result of ill-training of supervisors who are instrumental in effecting desired change at the firm. The supervisors in many Australian automobile companies have long focused on productivity enhancement and cost minimization approaches at the sake of quality and thus customer satisfaction (Salegna & Fazel 2000, 57)
Companies in the auto industry have also encountered problems in implementing TQM because of low quality standards, failure to appropriately measure quality, insufficient commitment by management to implement quality, and lack of consistent incentives for the workforce to provide quality services and products (Salegna & Fazel 2000, 54). Our company stands a great chance of successfully implementing TQM because of prior better understanding and knowledge about TQM that would be emphasized training management and employees in TQM concepts and methods.
SECTION III
Explanation and Rationale of the Steps
As mentioned earlier, the implementation of Total Quality Management at MotorTech will be systematic and simple compared to other auto dealerships that have undertaken this technique. This is an undertaking that will involve all departments of MotorTech, namely: Business administration, Sales department, Service department, Finance department, Mechanics department, and Accounting department.
It shall begin with radical changes in the way business is done at the company (Watson 2012, 16). We shall strive to have increased involvement of management along with empowerment of people so as to realize satisfied customers and improved organizational performance. Unlike the TOC, where the focus is on a single constraint or bottleneck limiting the operation of the system, TQM focuses on localized improvements in all areas of the system (Watson 2012, 18)
The sales department will gather sufficient information on customer needs and expectation. The most effective data collection approach to be employed is the market survey (customer/dealers) survey. In addition to customer needs & expectations and customer complaints and satisfactions, other crucial data for successful implementation of TQM would relate to quality policies, quality procedures, quality instructions, design specifications and tolerances, engineering & maintenance schedules, training & development schedules, production scheduling and planning data, and marketing & sales data.
Proper and faster collection, processing, analysis, storage, and retrieval of the research data would be made possible by a total quality management information system. Processing and analysis of the data collected will pay particular special focus on customer complaints and suggestions in terms of quality products and services and appropriate strategies agreed upon in consultation with the Business Administration department. The Finance and Insurance (F&I) department provide the funding for the implementation of Total Quality Management.
To a larger extent, the success of TQM implementation at MotorTech would be facilitated by the Service or Fixed Operations department. It is paramount for the service department to have highly trained technicians to perform auto repairs and maintenance so as to guarantee high quality end products (Sinha 2006, 6). Skilled service advisors will advice customers on our stocks and services in addition to selling maintenance packages. The Service department shall also ensure quality service to customers through porters who prep just-sold car for delivery according to customer’s specification.
The porters would also extend their service to washing cars brought in for repair after the repair process has been completed. More quality service to the customer shall in the form of transportation, where MotorTech shall designate drivers to pick up and shuttle willing customers as well as shuttle repaired cars to customers’ homes as necessary. Employees in our service department would also practice TQM by offering loaner cars. Our customers will also be afforded high customer service from highly skilled customer-service specialists trained by the company. New customer-service specialists will be sourced from highly reputable training firms while already existing ones would undergo intensive training programs to better their skills.
Conclusion & Recommendations
It is worth noting that implementation of TQM at MotorTech will be challenging, comprehensive and a long-term process. It will take the commitment, unwavering support, discipline and sense of responsibility of MotorTech management and employees to realize TQM success (Sinha 2006, 8). In view of these, this report recommends that it is high time MotorTech applied Total Quality Management because of its multiplicity of benefits
In general, TQM will enable the company to efficiently and effectively meet the needs of expectations of its customers besides attracting new ones. The TQM model covers all sections of the organization, thus will be able to reed MotorTech of all the major constraints hindering delivery of quality and high business performance (Sinha 2006, 8). TQM will also bring everyone on board from the management, the employees, the customers and other stakeholders for the greater benefit of the company.
As such, implementation Total Quality Management would see our company develop systems and procedures supporting quality and continuous process of improvement. Finally, implementing TQM will help unleash employee potential and creativity, reduce bureaucracy and operational costs, and improve service to customers and the community (Salleh 2011, 632).
Bibliography
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