Modeling to Integrate the International Standards with Total Quality Management Philosophy

Abstract

The aim of the present study is to develop an Integrated Management System (IMS) and its implementation framework for RMG industries of Bangladesh. RMG industries are using several management standards in their organizations to increase the performance of a firm in different business dimensions such as quality, occupational health & safety, environment, and social responsibility management. They are also using other management standards depending upon the requirement of customers. As a result, the number of individual management system is increasing day by day as the requirements of customer varies from one to another. RMG industries of Bangladesh are also facing difficulties to implement and operate these individual management systems separately. The key challenge of running of multiple management systems is to split the total budget and human resource of an organization into the multiple management systems. Each management system will get a little amount of budget and human resource, which is not sufficient to implement a management system effectively and efficiently. Consequently, many of the objectives of individual management systems are often left unachievable due to its poor implementation. In addition, the performance of RMG industries in Bangladesh is declining in four disciplines of management. These are quality, environment, occupational health & safety, and social responsibility. Consequently, RMG industries of Bangladesh are losing their values to the customer and in the long run they may not be able to survive in the competitive market. In this context, RMG industries of Bangladesh are forced to adopt an integrated management system in their organizations. A small number of RMG industries of Bangladesh have come forward to develop an Integrated Management System (IMS) for their organizations. As they have no model for integration of management systems, they have built their own IMS based on common elements present in different management standards. The RMG industries of Bangladesh are not getting the desired benefit from their own developed IMS due to lack of developing organizational culture. For successful implementation of any IMS, it is essential to bring change in culture within an organization. In order to bring change in culture within the organization, multiple management systems are to be integrated under a holistic management system. It is evident from the literature that, TQM is a holistic management system. This manifests the demand of developing a model that will be holistic in nature and can accommodate various management standards. In the present work, we have developed an IMS by integrating different management systems under the philosophy of TQM. The IMS has developed in this study is named as Integrated Total Quality Management (ITQM) system. While integrating multiple management systems in this way, several issues come up. Some of the most important issues are: i) identifying the scope and impact of integration, ii) identifying the factors that lead to success or failure of TQM implementation, and iii) developing and validating an effective implementation framework for ITQM system. The following paragraphs will summarize how each of the above issues were addressed in the present study.

To define the scope of integration, it is important to know which management standards are to be integrated to formulate an IMS so that every RMG industry of Bangladesh can use this IMS. To do so, we have conducted a survey in RMG industries of Bangladesh. We have found that, RMG sector of Bangladesh are widely using four management standards such as ISO 9001: 2015, ISO 14001: 2015, OHSAS 18001: 2007, and SA 8000: 2014. Most of the RMG industries of Bangladesh have adopted these standards separately while a small number of industries have adopted two or three of those management standards in an integrated way. However, no industry has integrated four management standards so far. It is important to mention that, the management standards that have not yet been integrated are operating separately in the respective industries. Each RMG industry of Bangladesh will be able to use an IMS if it is composed of commonly used management standards in this sector. In this context, the present study has integrated these four management standards under the holistic management philosophy of TQM. Integration of these four management systems creates a single comprehensive management system. This management system addresses a wide-ranging area encompassing the individual and overlapping areas of these four management systems. After defining the scope, it is important to evaluate the impact of integration.

To evaluate the impact of management systems integration, it is important to assess the impact in terms of improving firm performance. An in-depth review of literature has been conducted to identify the areas where an IMS can improve firm performance. Several researchers pointed out that IMS may enhance the performance of a firm both in financial and operational areas of business. So far, our knowledge goes, very few empirical evidences have found in the literature in favor of this statement. IMS may increase the financial performance of a firm in many ways. Three most important ways of improving financial performance widely discussed in the literature are; improving cost efficiency, optimum use of resources, and increasing sales revenue. On the other hand, IMS may increase the operational performance of a firm in the field of quality, environment, occupational health & safety, and social responsibility. The most important ways to increase firm performance in these fields are; to reduce the production rate of defective product, air pollution level, number of occupational illness and to increase the employment opportunity for the community. The present study has conducted an empirical examination to confirm the impact of ITQM system on financial as well as operational performance of a firm. The outcome of empirical examination has showed that ITQM system can improve financial performance through increase of sales revenue. It can also improve operational performance by reducing the number of defective products, level of air pollution, number of occupational accident or illness, and by creating new job opportunities for local people. After delineating the scope and assessing the impact of integration, it is necessary to recognize the factors that are critical to the implementation of ITQM system.

we are trying to implement ITQM system using TQM framework, it is important to identify those factors that are critical to TQM implementation in RMG sector. Critical factors are of two kinds. Some factors enable TQM implementation while some others hinder TQM implementation. An in-depth review of literature has been conducted to identify the factors which are helpful for successful implementation of TQM in RMG sector. These factors are known as TQM enabling factor. Twenty-five of such factors have been identified from TQM literature. As these enabling factors are contextual, it has been empirically examined which of these factors are significant for the RMG industries of Bangladesh. The empirical study of identifying significant TQM enabling factors has been carried out in four steps. At first step, a conceptual model which consists of measurement model and structural model has been developed. In second step, the hypotheses have been developed. In third step, the validation of the measurement and structural model have been performed. And finally, the testing of hypothesis has been conducted. More specifically, the conceptual model consists of six constructs. Five of them have been formulated with five groups of TQM enabling factors such as human resources, contextual, procedural, strategic, and structural while the rest has been formulated with implementation of TQM. In addition, the measurement model has two measuring scales. The first scale is concerned with measuring the five groups of TQM enabling factors while the other scale is concerned with measuring the success of TQM implementation. Five groups of TQM enabling factor are measured in terms of degree to which enabling factors are contributing to implement TQM principles in an organization. The success of TQM implementation is measured in terms of improving financial and operational performance of a firm. A questionnaire has been then developed based on previous questions in the literature and expert opinion. This questionnaire has been pilot tested before conducting the survey. The reliability of questionnaire has been tested by Cronbach alpha value. The accuracy of the measurement model has been verified through convergent as well as divergent validity test. The structural model represents the causal relationship of five groups of TQM enabling factors with implementation of TQM. Fitness and correctness of structural model have been checked through model fit index and causality index respectively. All tested values have been found satisfactory. Finally, the hypotheses have been tested using structural equation modelling. The test results have suggested that, five TQM enabling factors in procedural group such as benchmarking of current processes, knowledge about cost of quality, regular monitoring of processes improvement, and degree of simplicity of a process are not significant for RMG industries of Bangladesh. However, the enabling factors of the remaining four groups will assist in successful implementation of TQM in RMG sector.

To identify the factors that hinder the successful implementation of TQM in RMG sector, an in-depth review of literature has also been conducted. These factors are known as TQM barrier. Twenty-five of such barriers have been identified from the literature. All of these twenty-five barriers do not hinder TQM implementation in the same way. Some of the barriers may be more critical to TQM implementation while some others are less critical. In other words, hindrance level of these TQM barriers varies with the economic condition and cultural values of a country. To identify the hindrance level of these twenty-five TQM barriers in the context of RMG industries of Bangladesh, these barriers have been prioritized using FAHP technique. This study of prioritization of TQM barriers has been carried out in five steps. At first step, a hierarchical structure of TQM barriers has been developed. In second step, a fuzzy scale has been designed for measuring the expert’s judgment. In third step, the consistency ratio has been estimated for checking the accuracy of expert opinion. In fourth step, the local and global weight of each barrier have been estimated. And finally, TQM barriers have been prioritized based on calculated global weights. Some of the important barriers identified by prioritizing of TQM barriers are; inappropriate planning for implementation, lack of financial support, lack of employee training, lack of empowerment of employees, lack of physical resources, lack of top management commitment, lack of practicing a quality management system, inappropriate organizational structure, lack of customer satisfaction, no benchmarking of current process, etc.

Finally, a framework for implementation of the ITQM system has been developed. The implementation framework has been empirically tested in order to decide if this framework would work properly in the RMG sector of Bangladesh. This empirical study has four hypotheses. First hypothesis is “quality management sub-system of IMS has a positive relation with firm performance”. Second hypothesis is “environmental management sub-system of IMS has a positive relation with firm performance”. Third hypothesis is “occupational health & safety management sub-system of IMS has a positive relation with firm performance”. Fourth hypothesis is “Social responsibility management sub-system of IMS has a positive relation with firm performance”. All hypotheses have been found statistically significant. It indicates that all four management subsystems of ITQM system will help a firm to improve its performance. In other words, the proposed framework could be used to implement the ITQM system successfully in RMG sector of Bangladesh.

The outcome of this research possesses some originality. First, it has empirically examined the combined effect of several individual management systems on firm performance. Second, all the IMS models that have been developed so far are only theoretical concepts, no information has been found in the literature on the practical use of these models. In this context, the present study has proposed a framework for implementation of ITQM system and at the same time, it has validated the proposed framework empirically.

This study has also some theoretical implications. First, it has successfully identified the linkage between IMS and TQM which will enrich the existing literature. Second, it has outlined the way to develop an IMS under the philosophy of TQM in order to create a continuous improvement culture within the organization for its (IMS) successful adoption. Third, it offers an important insight into the development of an instrument (survey tool) for measuring several aspects of an integrated management system. Fourth, it has outlined the way to share common resources of an organization by combining the operational processes of different management sub-systems of ITQM system or its parts.

This research outcome has some practical implications too. First, the outcome will help the manager to understand the combined role of four management standards on firm’s performance improvement. Second, managers will get an opportunity for better utilization of the limited resources of their organizations through successful implementation of ITQM system. Third, this research has outlined a mechanism for handling the overlapping areas of the different management disciplines. Finally, this research provides an immense scope to RMG industries of Bangladesh to directly adopt this ITQM system in their organizations without any customization or modification.

At last but not least, this study has put forward some suggestions for future research. First, to generalize the findings of the present study, replication of this study is essential in different context, location, and culture. Second, this study could be replicated over longitudinal time frame to examine whether the finding of the current study change over time. Third, future study could identify the relationship among the management sub-system of ITQM system. Fourth, future study could incorporate different organizational theories in management system integration.