The Effects of Technology and TQM on The

8/19/2019 The Effects of Technology and TQM on The

http://slidepdf.com/reader/full/the-effects-of-technology-and-tqm-on-the 1/19

The effects of technologyand TQM on the performance

of logistics companiesShaukat A. Brah and Hua Ying Lim

Department of Decision Sciences, NUS Business School, National University of Singapore, Singapore

Abstract

Purpose – Total quality management (TQM) and technology are fast becoming essential features of business strategy for the success of many leading organizations in the world. More and morecompanies are using technology and adapting TQM for sustaining competitiveness in the

marketplace. TQM works well for internal integration of logistics companies and they can benefit fromthe use of technology, including information technology (IT), to gain further internal and externalintegration. Seeks to examine this issue.

Design/methodology/approach – This research examines the relationship between qualitymanagement practices, technology and performances of the logistics companies. The study seeks togain insights from organizational variables and their effect on operational, quality, technology andoverall business performance.

Findings – TQM and technology play important and complementing roles in improving theperformance. The analysis shows that both high technology firms and high technology TQM firmsperform significantly better than their low technology peers.

Research limitations/implications – The use of IT is crucial in improving operational, qualityand overall business performance. The information and management technologies strongly correlateto TQM and serve as an enabler to quality performance.

Practical implications – The use of technology assists logistics operations in many ways, such ascutting down information and processing lead-time, improve efficiency and minimize errors to theminimum. Perhaps, the logistics companies should look at the long-term benefits of technology andgradually engage its use to streamline their operations.

Originality/value – The results in this research provide recognition for the importance of technology in quality management in the logistics industry.

Keywords Technology led strategy, Quality, Total quality management, Logistics data processing,Performance measurement (quality)

Paper type Research paper

IntroductionSingapore has become one of the most important strategic supply chain management

centers of Asia. The island serves as regional headquarter and distribution center formany logistics companies. Singapore container port handled 21.3 million 20-footequivalent units in 2004, while the airport handled a record air cargo throughput of 1.78 million tons. The logistics industry continues to develop infrastructure andfacilities particularly the information technology (IT) based platforms.

The global competition has enhanced the role of quality in the business world. Inorder to remain competitive and cope with increasing pressures, businesses areintegrating into new and evolving global markets. These challenges and pressures

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0960-0035.htm

IJPDLM36,3

192

Received July 2004Revised November 2005

International Journal of Physical

Distribution & LogisticsManagement

Vol. 36 No. 3, 2006

pp. 192-209

q Emerald Group Publishing Limited

0960-0035

DOI 10.1108/09600030610661796



have placed a renewed focus on quality improvement for the long-term survival of theorganization. Also, there is increasing evidence that technology enhances the qualityperformance. Perhaps, technology acts as an enabling mechanism, which results inenriched jobs and increased job satisfaction.

Total quality management (TQM) strives for continuous improvement, customerorientation, employee empowerment and top management commitment with theimplication of safeguarding the interests of customers, employees, shareholders,competitor and even society at large. TQM philosophy emphasizes effectivemanagement of primary factors, such as top management leadership for quality,supplier quality management, process management, employee training andempowerment, thereby the secondary benefits, such as lower costs, improvedreputation and market share, increased employee motivation and satisfaction, andimproved profitability inevitably follow. The key element is the integration of effortsand resources towards the common good of conservation of the interests of thestakeholders.

Similarly, technology is increasingly playing a major role in the integration of thebusinesses. While the IT helps to break the internal silos within an organization, it alsoassists the coordination of activities with the members of the supply chain and thecustomers. Besides IT, the technology in general assists in improving the quality of theproduct and services and the dependability of the schedule. Thus, technology seems tocomplement TQM. McAdam and Henderson (2004) argue for technology as one of thefour key external factors influential for the development of TQM in an organization.

The key to better performance of logistics companies lies in their ability to achieveinternal and external integration. Through integration, the companies seek to eliminatethe functional silos in the environment. Clearly, TQM is one of the most commonlyused and useful organizational wide approach designed to eliminate silos within anorganization. Increasingly technology, including IT, is assisting the supply chains in

achieving the desired integration, as well. Gimenez and Ventura (2005) analyze theinternal and external integration process and their contribution to the performance.They find a positive relationship between the internal integration process and theexternal integration process, and vice versa. Furthermore, broadly speaking they findthe performance improves with the internal and external integration.

The main objective of the research is to develop a quality framework, which seeks toexamine the relationship between individual quality management, technology andbusiness performance in the logistics sector. We hope to identify critical success factorsof quality managements and seek to test the correlation between quality management,technology and performance. In addition, we seek to understand how technology playsa role in improving the business operation. Finally, we test if there are any significantdifferences in overall business performance measured by the operational and quality

performance between low and high technology logistics firms, with and without TQM.

Total quality managementThe importance of TQM is evident from the emergence of many high profile awards,such as, the Malcolm Baldrige quality award in USA, the Deming prize in Japan, theEuropean quality prize and the recent emergence of the Singapore quality award.These quality awards identify companies utilizing the best quality managementpractices and they serve to motivate companies to implement TQM in order to attain

Effects otechnology an

TQM

19



and achieve “world-class” standards. As a result, today both manufacturing andservice industries widely practice many of the TQM practices.

TQM has its roots in manufacturing and thus its initial definition focuses on qualityof products. The quality focus in manufacturing industries is more process-oriented,

which focus on the continuous improvement of all operations, functions and above all,process of work. Samson and Terziovski (1997) define TQM as a philosophy thatembraces concepts, methods, tools and techniques, which is applied to businessstrategy at the top-floor and as a functional strategy at the shop floor.

Service firms, both small and large, are gradually adopting TQM. Thus, thedefinition of TQM has been slightly modified to encompass aspects like recognizingthe importance of “behavior factors,” such as, employees training and empowerment,customer focus and top management commitment. Where TQM is more concernedabout the processes in manufacturing, the focus in services is more on human touchfactor, such as, after sale services, human resource management, employee attitudes,and the condition of product delivery. Regardless of the slight differences in emphasison TQM philosophy in manufacturing and service industries, the two share manycommon characteristics.

Most studies on quality focus on the importance of internal and external customers.Saraph et al. (1989) develop an eight-factor framework for quality management basedon the literature. The factors are top management leadership, quality data andreporting, training, employee relations, process management, product/service design,supplier quality management and the role of the quality department. Flynn et al. (1994)build up on the research of Saraph et al. and include “customer focus” as an additionalconstruct. Their study derives quality management constructs mainly frompractitioners and past empirical literatures on quality management.

Black and Porter (1996) study the perception and experience of a range of practitioners as the basis for developing an empirical framework of TQM using the

Baldrige award model. Ahire et al. (1996) develop critical factors from the prescriptive,conceptual, practitioner and empirical literature on quality management. The factorsare top management commitment, benchmarking, statistical process control, internalquality information usage, employee involvement, employee training, employeeempowerment, customer focus, supplier quality management and design qualitymanagement. Hodgetts et al. (1999) study small businesses and develop TQMconstructs using perspectives from the Baldrige award winners. The results show topmanagement involvement, customer focus, employees’ training, employees’empowerment and generating new ideas are the five common and critical factorsamong the Baldrige winners.

TQM and performance

Generally, research has shown a positive correlation between TQM practices andbusiness performance. TQM firms generally outperform in both strategic andoperational performance. TQM firms generally show improvement in supplierrelationship, processes, management of people, policy deployment and strengthenedcustomer relationship. Powell (1995) points out that TQM can add economic value tothe firm, however, the success of the firm rely more on executive commitment, openorganization, employee empowerment rather than process improvement,benchmarking and flexible manufacturing. This emphasizes the need for efforts to

IJPDLM36,3

194



focus on building a culture where TQM can thrive. Further, he deduces that these tacticresources drive TQM success and by acquiring them, the organizations can createcompetitive advantage with or without TQM ideology. Brah et al. (2000) show asignificant positive correlation between TQM constructs and financial and operating

performance across the service industries in Singapore.

TQM in the logistics industryAnderson et al. (1998) show an association between quality constructs andperformance, with leadership exerting the strongest influence on the operationalresults. Sum and Teo (1999) analyze the strategies, management practices and futureplans of the logistics providers in Singapore. Their analysis shows that the logisticscompanies adopting cost and differentiation strategy outperform the rest in term of business performance. Most logistics service providers identify reliable and consistentservices, short delivery lead-time, operating at low-cost and flexible in accommodatingchanges as critical operation factors.

Pitfalls in TQM implementationSome recent studies show TQM does not necessarily result in improvement inperformance and in some cases result in deterioration of performance. This raises somedoubts on the effectiveness of TQM implementation. Lack of strategic focus is cited asone of the three main reasons of poor business performance. In many instances, TQMimplementation is introduced as a bolt on to unchanged business culture. A commonmisconception includes wishful thinking that TQM will fix short-term problems andquickly improve business performance. Indeed, TQM is not a destination but a journeyrequiring a long-term, unwavering commitment to the improvement of products orservices and process quality. Failures to have strategic focus and to create anorganizational culture to embrace the implementation of TQM often bring aboutfailure.

Developing a quality frameworkQuality construct Baldrige quality framework has been the underlying model for a large number of TQMawards including Singapore quality award. This motivated us to use the sevencomponents of the Singapore quality award as quality constructs for the purpose of this research. Rungtusanatham et al. (2005) find the universal applicability of thequality construct in a four country study; however, they find some evidence of somedifferences in the adoption levels. The seven factors adapted from Antony et al. (2002)and Ahire and Golhar (1996), in this study are as follows:

(1) Top management leadership. Top management leadership is a major

determinant of successful quality management. It plays a very important andcritical role in direct supervision, planning and implementation of certain policyand serves as important support for the entire organization. Top management isresponsible for the creation of climate that ascertains the success of theprogram. Thus, strong leadership quality is a critical component in theimplementation of TQM.

(2) Strategic planning. Strategic planning focuses on the organizational planningprocess, integration of key requirements into the organizational plan and


TQM

19



tracking of performance. It plays a vital role in aiding the organization tooccasionally evaluate and modify plans based on changing market andcustomer preferences.

(3) Process management. The focus is on the key processes of the organization topursue its objectives, including the innovation, production and deliveryprocesses.

(4) Information systems and analysis. This factor examines the management of information and the use of comparative and benchmarking information tosupport decision-making at all levels of the organization. It helps the companyto keep track and to provide essential feedback on the quality systems. The easeof information and data collection helps in making informed critical decisions.

(5) Human resource management. Employee empowerment, involvement, trainingare important components for the success of a quality program. Workerempowerment leads to increased employee participation in the qualityimprovement work processes, heightened awareness of responsibilities and

equity among subordinates. The focus of this factor is on training, development,communication, multi-skills, employee empowerment, employee involvementand commitment, education, employee health and satisfaction and employeeperformance and recognition.

(6) Quality focus. The focus is on the effectiveness of an organization’s qualitydepartment and the amount of quality efforts directed towards the developmentof plans as well as the improvement of products and services.

(7) Customer focus. Customers are the ones who pass judgments on an organizationabout their performance. The importance of customer focus is evident from thehighest weight in the Malcolm Baldrige award criteria (Hodgetts et al., 1999).

The influence of top management leadership has an effect on the quality attributes.Meyer and Collier (2001) find a causal relationship in the Baldrige health care pilotcriteria via the use of structural equation modeling. They find leadership to have acausal influence on each of the component of the Baldrige system represented byinformation and analysis, strategic planning, human resource development andprocess management. Perhaps, leadership drives the system, and without topmanagement leadership, the core and infrastructure quality attributes would beineffective (Flynn et al., 1995).

Top management leadership has an expected effect on strategic planning. They areresponsible for the identification of bottlenecks and goals and leading the company inthe direction of the goals. Effective strategic planning helps to reduce costs, allowsentering new markets and creates customer services. Top management allocates

resources for the training of employees and all management levels to buildunderstanding of TQM. They are responsible for selecting and distributing workresponsibilities and plan work activities for the employees. Top management providesskill training of workforce and encourage workforce to take on responsibilities and tobe more empowered in problem solving.

Similarly, leadership drives customer focus as they determine current and emergingcustomers and expectations. They provide effective customer relationship anddetermine customer satisfaction. They provide resources for customer plant visits,

IJPDLM36,3

196



inviting customers to visit the plants and requesting feedbacks from customersregarding the firm quality status. In terms of quality focus, top management is directlyresponsible in the planning of quality-driven environment through personalinvolvement in most of the quality programs. Leadership drives process as top

management are involved in the design and introduction of products and services,integrate production and delivery requirement. Top leadership drives informationsystems and analysis by demanding records of key information and encouragingfeedback from the work processes. They implement and review existing policy fromtime to time with the feedback from the work processes through customer surveys andletters.

Therefore, leadership is the driving force of all the other six-quality constructsrepresented by strategic planning, information systems and analysis, human resourcemanagement, process management, customer focus and quality focus. This gives riseto the following hypothesis:

H1. There is an association between top management leadership and strategic

planning, process management, information systems and analysis, humanresource management, quality focus and customer focus.

Performance construct The effective execution of the seven constructs leads to improvement in theperformance of an organization. The following are the three categories of the overallbusiness performance of a company:

(1) Operational performance. Deals with the process and evaluates the performanceof internal operation of the company in terms of cost, customer services,delivery, quality, flexibility and product/services process quality.

(2) Quality performance. This construct evaluates employee services quality in

terms of attitudes towards customers, productivity of the employees, inventoryturnover rate and responsiveness of the employees to customers.

(3) Technology performance. Evaluates the availability and extent of use of information and management technology in the company. This is measured bythe frequency of use of technology in activities, such as, internal billing,electronic data interchange (EDI), automated tracking system, vehicle routingand scheduling system and management technologies such as optical scanners,warehouse management system and automated storage and retrieval system.The items constructs are derived mainly from Sum and Teo (1999) and Sumet al. (2001).

All these three performances, together with the internal quality factors will in turn

affect the overall business performance. Hence, this leads to the following hypothesis:

H2. There is positive correlation between each of the general quality constructs,and operational performance; quality performance; technology performance;overall business performance.

The use of information and management technology helps to improve operationaleffectiveness and minimize errors in day-to-day operations. For example, bothinformation and management technology allow for the synchronization of information


TQM

19



and merchandise flow with reduction in errors as a result of bar code scanning;reduction in safety stocks; reduction in stock counts; reduction in physical inventory;fewer lost sales as a result of missed shipments, short shipments and back orders; lesstime in reconciliation with suppliers and customers; lower inventory write-off;

immediate stock on hand information; ability to prioritize order picking and fulfillmentonline (Dewhurst et al., 1999). Moreover, system errors are less frequent as compared tohuman errors, hence this lessen the need to conduct frequent checks, which leads to animprovement in operations efficiency. Therefore, we expect technology performance tohave an effect on operational performance of an organization.

Similarly, operational and quality performances have mutual effect on each other.The operational performance of the products and services is highly dependent on thequality of the workforce, the productivity and the attitudes of the workforce. Operationalefficiency such as reduction in delivery time and damage during delivery is greatlyenhanced if the employees are motivated and take great pride in their work implyinghigh job satisfaction. Similarly, the converse is also possible as improvement inoperational performance such as obtaining compliments from customers regardinggood services can serve to increase the job satisfaction of the employees, which in turnincreases their quality. The proposed relationships give rise to the following hypothesis:

H3. Operational, quality and technology performance has a positive correlationwith overall business performance.

TQM and performanceThere is a general consensus of positive correlation between firms implementing TQMand performances measures. TQM firms refer to the firms currently implementingTQM program, non-TQM firms on the other hand refer to firms yet to initiate suchprograms in their organization. Brah et al. (2002) in a study of manufacturing andservice firms in Singapore observe TQM firms perform better than non-TQM firms in

performance constructs such as supplier performance, employee services quality,p rodu ct q uali ty , em pl oy ee s at is fact ion, c ust ome r s at is fact ion andmanufacturing/services process quality. Ahire and Golhar (1996) in a study of manufacturing firms in the US find that, with the exception of customer focus, TQMfirms generally report executing all of the TQM constructs more intensively thannon-TQM firms. Powell (1995) reports TQM firms outperform non-TQM firms.Consequently, our interest is to test out these arguments in the logistics industry of Singapore. These findings lead us to the following hypothesis:

H4. TQM firms outperform non-TQM firms in operational performance; qualityperformance; technology performance; overall business performance.

TQM and technologyTechnology is popularly known to help enrich jobs and increasing job satisfaction. Forexample, the introduction of IT involves cross training of all employees in all aspects of work including the running of technical infrastructure, which eliminates paper-basedtask assignments and free employees from routine activities. Consequently, employeeswith higher skills and knowledge of the work find greater job satisfaction andhenceforth enhancing the quality of work. Also, this process will break thedepartmental silos and result in internal integration – one of the main themes of TQM.

IJPDLM36,3

198



Sum and Teo (1999) observe heavy usage of IT in the most profitable logisticsservices providers and identify the importance of technology as a key impact agentfor the future. They further classify IT into high-cost and revolutionary technology,medium-cost, medium revolutionary technology and low-cost, incremental

technology. High-cost and revolutionary technology includes robotics, automatedmaterial handling equipments and automated storage and retrieval equipments.Medium-cost medium revolutionary technology includes data handling hardware(barcodes, optical scanners, local area network and hand-held data entry devices)and software such as EDI, direct product profitability, material resource planningand distribution resource planning. Low-cost, incremental technology includessoftware applied to inventory control (in process, raw materials, finished goods) andwarehousing (order selection, short-interval scheduling) (Germain et al., 1994). Sumet al. (2001) in a follow-up study report IT as offering many benefits such asopportunity to improve logistical efficiency, effectiveness and flexibility in futurelogistics system.

IT is one of the essential components of logistics systems and supports daily

operations in many ways. The use of IT brings an improvement in services level andincrease the competitive posture of the company. Technology, in general, results inbetter integration within the organization and with the companies of the supply chain.Thus, technology assists in internal and external integration of the organization andtherefore it complements TQM.

We expect high-technology (high-tech) firms to perform better in terms of operational, quality and overall performance than low-technology (low-tech) firms.High-tech firms are defined as those utilizing high level of technology in theiroperations; low-tech firms on the other hand utilize low level of technology. As such,this leads us to find out the relevance of IT in the logistics companies in Singapore.This leads to the following hypothesis:

H5. High-tech firms outperform low-tech firms in operational performance;quality performance; overall business performance.

The information and management technologies strongly correlate to TQM and serve asits enabler. Therefore, use of IT enhances TQM practices, which results in animprovement in the performance level. IT enables rapid and more accurate informationretrieval and transfers, improve communication links and facilitate the implementationof advanced tools, systems and modeling techniques (Dewhurst et al., 1999). We expecthigh-tech TQM firms to perform better than their low-tech counterparts and thusleading to the following hypothesis:

H6. High-tech TQM firms outperform low-tech TQM firms in operationalperformance; quality performance; overall business performance.

QuestionnaireThere are four sections of the questionnaire, each designed to collect specificinformation. Section A consists of two general questions to identify the presence of aquality program in the company. Section B contains 33 questions for probing thequality practices of the company in general. Section C consists of 26 questions toreview the business performance of the company over the past few years. Thesequestions are subcategorized into three areas; operational performance, quality


TQM

199



performance and technology performance. Finally, Section D is used to collect thedemographic company profile of the company.

We use a five-point Likert scale to ensure consistency and the ease of datacomputation on most of the questions. The remaining questions are either in structured

form or in multiple choices. The sampling frame for the study is a list of certifiedlogistics companies obtained from three main sources namely, Singapore tradedevelopment board 2001/2002 and two online directories. We select a random sampleof 325 logistics companies. General or operational managers are the target respondentto ensure the accuracy of the result. We use face-to-face interview and e-mail exchangeto inquire about the trends of the logistics companies in Singapore, on issues of technology, operation and quality. The final questionnaire is the result of literaturereview and the information on various characteristics of the logistics industry. Wereceived a total of 81 usable completed questionnaires, giving a response rate of 24.9percent.

First, we perform factor analysis to determine if the individual items under major

heading group in the proposed manner. The factors are extracted using principalcomponent factor analysis with varimax rotation. Also, we use Cronbach’s a todetermine the reliability of the scales. It is based on the average correlation orcovariance between items in a scale and it is used to determine internal consistency.The analysis uses a value of 0.7 or higher to ensure reliability of the measures orconstructs.

Next, we evaluate the construct validity using principle components factoranalysis. Nunnally (1978) recommends a factor loading of at least 0.30 asguidelines to determine whether a variable is a part of a factor though a value of

0.5 and above is considered as meritorious. We use a cut-off point of 0.50 exceptfor two items, whose values are close, 0.427 and 0.467. These two items aresignificant in the stepwise regression analysis and their inclusion improves thereliability. The rest of the other items have factor loading ranges above 0.5 andhence ensuring construct validity.

The criterion-related validity is concerned with the extent to which a measuringinstrument is related to an independent measure of the relevant criterion. Hence,the six measures of quality managements in a business unit have criterion-relatedvalidity if the measures (collectively) are highly correlated with performances in abusiness unit. The correlation coefficient between general quality constructs andperformance constructs is 0.837, which is significant at the 0.001 levels indicatinghigh correlation.

Finally, reliability is the degree to which measures are free from errors and yieldconsistent results. The two most common methods of accessing reliability of the scales

are by the Split-half method and the Cronbach’s a. In this study, we utilize theCronbach’s a to test for reliability. The values of Cronbach a above 0.7 are consideredacceptable and those above 0.8 are considered meritorious. All the a values forconstructs are above 0.8, indicating the constructs are consistent and reliable. We usePearson’s correlation to test the correlation between quality constructs andperformances. Also, we use comparison test using independent sample t -test tocompare performances between TQM and non-TQM firms, and between variousgroups of high- and low-tech firms.

IJPDLM36,3

200



Analyses and findingsTable I presents the demographic profile of respondents. There are 40 TQM companiesamong the 81 respondents. The TQM companies are further categorized into 27 largefirms and 13 small firms, while eight large and 33 small firms are non-TQM companies.

It seems more and more logistics companies, especially larger companies are realizingthe importance and benefits of TQM and they are gradually adopting it in theiroperations. On the other hand, the non-TQM companies comprise mainly of smallcompanies and the reason for lack of TQM implementation may be attributed to lack of financial support, no pressure to initiate, and lack of management support.

No. Percent

Type of companyTQM (large ¼ 27, small ¼ 13) 40 49.4Non-TQM (large¼ 8, small ¼ 33) 41 50.6

Ownership of companyLocal company 37 45.7Foreign company 31 38.3

Joint venture 13 16.0 Number of employeesLess than 50 36 44.450-100 10 12.3100-200 15 18.5200-500 8 9.9More than 500 12 14.8Years of TQM adoptionLess than one year 4 10.01-2 years 10 25.02-3 years 8 20.0

3-5 years 8 20.0More than five years 10 25.0

Business concentrationAir/sea cargo 64.2Container services 38.3Freight forwarding 71.6Transportation/delivery 69.1warehousing 70.4Shipping 40.7Courier services 19.8Others 14.8Technology usersElectronic data interchange 64.2

Internet 76.5Portnet/tradenet 77.8Warehouse management system 51.9Auto online tracking system 40.7Vehicle routing/scheduling system 18.5Optical scanners 28.4Inventory control system 33.3Auto storage and retrieval system 11.1Distribution resource planning system 6.2

TableDemographic informatio

of responden


TQM

20



There are 37 local companies, 31 foreign companies and the remaining 13 joint ventureof foreign and local companies. Similarly, there are 46 small companies (with less than100 employees) and 35 large companies. Of the 81 respondents, 71.6 percent of therespondents deal with freight forwarding, 70.4 percent in warehousing, 69.1 percent in

transportation or delivery, 64.2 percent in air or sea cargo, 40.7 percent in shipping,38.3 percent in container services, and 19.8 percent in courier services. Clearly, a largenumber of respondents have major and minor business concentration in freightforwarding and warehousing. In terms of technologies profile, it is interesting to notethat 70 percent of the respondents use portnet/tradenet and internet indicating theirwidespread use in the logistics industry of Singapore.

Constructs of quality management We use factor analysis with varimax rotation to determine the grouping of the qualityconstructs. The 33 items of quality constructs are categorized into six factors, withitems loading highly together under one construct grouped together. The sixconstructs are top management leadership, strategic planning, information systemsand analysis, customer focus, quality focus and human resource management. Allfactor loadings range from 0.7737 to 0.9076, clearly exceeding the 0.5 mark andindicating a relatively high level of internal consistency among the TQM items. Table IIpresents the factor loading of only the six main factors.

Performance constructsWe use factor analysis with varimax rotation to group 26 items of performanceconstructs. The three performances constructs are operational performance, qualityperformance and technology performance as proposed initially. The result analysisshows a values ranging from 0.8902 to 0.9378 indicating good reliability. The factorloading of performance constructs are shown in Table III. Items that do not load

together in the originally proposed factor are italicized.

Results of hypotheses testing H1 proposes top management leadership to be the driver of customer focus, qualityfocus, human resource management, process management, strategic planning andinformation systems and analysis. Table IV presents correlation matrix of the qualitymanagement attributes. The results show positive values of more than 0.5 for allcorrelations at 0.001 significance levels. This indicates a strong positive correlationbetween top management leadership, customer focus, quality focus, human resourcemanagement, strategic planning, information systems and analysis and processmanagement. This is similar to the findings of Meyer and Collier (2001) and Anderson

Quality construct Loading

Top management leadership 0.8702Customer focus 0.8724Quality focus 0.8466Human resource management 0.8731Strategic planning 0.8582Information system and analysis 0.9103

Table II.Factor loadings of qualityconstruct

IJPDLM36,3

202



et al. (1998) who also find strong correlation between leadership and the qualityattributes in the Baldrige award and both studies identify leadership as an importantinitiator and driver of the other components.

H2 proposes a positive correlation between individual quality construct andoperational, quality, technology and overall performance constructs. We test thehypothesis for overall business performance, as well as individual operational, quality

Performance construct Loading

Operational performance ( a ¼ 0.9085)Cost (as compared to main competitors)

Our company maintains low inventory costs as a percentage of sales 0.8902Our company has low transportation costs as a percentage of sales 0.8885Our company maintains low labor cost as a percentage of sales 0.8933Our company has low equipment and facilities cost as a percentage of sales 0.8998Our company operates with low overall operating cost as a percentage of sales 0.8968

Delivery quality and flexibility (as compared to main competitors)Our company offers greater proportion of on time and accurate delivery 0.8949Our company offers short delivery lead-time 0.9002Our company provides quicker response to customers 0.9087

Quality performance ( a ¼ 0.9351)Employees quality (Inter-organizational over past one year)

The employee turnover rate in our company has decreased 0.9378The use of technology has increased employees’ productivity 0.9325Our employees’ morale has increased and they show greater enthusiasm at work 0.9269Our employees show improvement in skills 0.9265The use of technology has helped to cut down on wastage and time associatedwith picking and stocking 0.9305

ExternalFrontline employees/drivers/workers are friendly and courteous 0.9290Frontline employees/drivers/workers are careful about on-time delivery 0.9248Our company ensures that goods are not damaged during delivery. 0.9319Frontline employees/drivers/workers exercise caution in handling of goods/products 0.9255Frontline employees offer after-sales services/support 0.9289Our employees are knowledgeable about some quality issues listed above 0.9271

Technology performance ( a ¼ 0.9312)Our company is a heavy user of technologies for daily transaction. Examples

include, internet billing and EDI for order processing 0.9230Our company is a heavy user of management technologies. Examples includeoptical scanners, warehouse management system and automated storage andretrieval system (ASRS) 0.9169Our company employs the use of effective distribution system. Examples includevehicle routing and scheduling system to facilitate distribution planning 0.9187Our company employs use of automated tracking system (customer onlinetracking system, and tracking system for company to locate their goods in thesupply chain) 0.9130Our company is a fully integrated IT organization 0.9144Our company has a more sophisticated logistics system that has the ability tohandle unexpected events (or non-routine requests) compared to our competitors. 0.9263Our technical infrastructure allows us to offer a variety of services with fasterchangeover. 0.9302

Table IIFactor loadings

performance constru


TQM

20



and technology performance for a significant positive relationship with TQM usingPearson’s correlation. Table V summarizes the results. Each individual constructpositively and significantly correlate with operational, quality, technology and overallbusiness performance. Therefore, we find strong evidence of association and

correlation between quality management practices and performances measuresincluding technology.

H3 proposes a positive correlation between operational, quality and technologyperformance and overall business performance. Table VI shows a significant positivecorrelation of operational, quality and technology performances with the overallbusiness performance at the 0.001 levels. This indicates the operational, quality andtechnology performance has an impact on the overall business performance. Hence, wefind sufficient evidence to support H3. In addition, correlation between the operationaland quality performance has a positive value of 0.49 at 0.001 significance levels.

The preceding tests show significant positive correlations between TQM andbusiness performance. Therefore, we expect TQM firms to perform better inperformances compared to non-TQM firms. H4 proposes differences in operational,

TML CF QF HRM SP ISA

Top management leadership (TML) 1.000Customer focus (CF) 0.582 1.000Quality focus (QF) 0.628 0.612 1.000Human resource management (HRM) 0.527 0.629 0.737 1.000Strategic planning (SP) 0.657 0.620 0.667 0.664 1.000Information systems and analysis (ISA) 0.573 0.636 0.733 0.690 0.715 1.000

Note: All correlations are significant at the 0.001 levels

Table IV.Correlation of qualitymanagement attributes

Performance constructsQuality constructs Operational Quality Technology Overall business

Top management leadership 0.373 0.631 0.439 0.584Customer focus 0.457 0.659 0.430 0.621Quality focus 0.489 0.717 0.635 0.758Human resource management 0.542 0.782 0.609 0.787Strategic planning 0.500 0.691 0.534 0.701Information systems and analysis 0.392 0.660 0.755 0.762

Note: All correlations are significant at 0.001 levels

Table V.Correlation of individualquality and performanceconstructs

Operational Quality Technology

Overall business 0.696 0.875 0.850

Note: All correlations are significant at the 0.001 levels

Table VI.Correlation of performance constructsand businessperformance

IJPDLM36,3

204



quality, technology and overall business performance of the TQM and non-TQM firms.Table VII shows the mean, standard deviation and the p-values of the performanceattributes. TQM firms generally outperform non-TQM firms in quality, technology andoverall business performance as indicated by the p-values of less than 0.001. Hence,

there are statistically significant differences between TQM and non-TQM firms inaspects of quality performance and technology performance. As for operationalperformance, though the mean of TQM firms is slightly higher than non-TQM firms,however, the results are not significant at the 0.001 level. However, taking intoconsiderations the three performance constructs, the overall business performancebetween TQM firms and non-TQM firms is significant, which indicates a significantpositive impact of TQM.

Quality management makes managerial jobs more demanding by requiring more inthe way of people-management and technical skills and by making greater demands onthe manager’s time. People argue that TQM is a long-term process requiring asufficient amount of financial and technical investment, time involved in training,meeting and system development and strategic focus. Perhaps, this explains why alarger proportion of the big companies are implementing TQM, and higher successesobserved in the larger companies as compared to the smaller companies. Here, a biggerproportion of large companies adopted TQM; therefore, caution is in order in theinterpretation of the results.

H5 proposes that high-tech firms, usually more sophisticated in IT utilization,perform better in terms of operational, quality and overall business performancecompared to low-tech firms. In order to differentiate high- and low-tech firms, wecompute the average of the technology constructs of each firm and use a cut-off point of 3 to indicate their technology level. That is, firms with a score of less than or equal to 3are considered as low-tech firms, while firms with a score higher than 3 are consideredas high-tech firms. Table VIII shows quality and overall business performances of

high-tech firms to be significantly better than the low-tech firms. The results show thatthe adoption of more extensive and expensive technologies by high-tech firms helpcompanies to simultaneously differentiate their products and services more effectively

High-tech firms Low-tech firmsMean SD Mean SD p-value

Operational 3.6897 0.55074 3.2511 0.84421 0.010Quality 4.0204 0.37965 3.2846 0.71598 0.000Overall business 3.8550 0.40253 3.3678 0.67540 0.000

Table VIIPerformance of high- an

low-tech firm

TQM firms Non-TQM firmsMean SD Mean SD p-value

Operational 3.6531 0.50199 3.5915 0.77461 0.673Quality 4.0432 0.43476 3.5854 0.64796 0.000Technology 3.8893 0.65063 3.0279 0.85070 0.000Overall business 3.8619 0.42106 3.4016 0.60983 0.000

Table VIPerformance of TQM an

non-TQM firm


TQM

20



and reduce their overheads and cost at the same time, leading to better operationalefficiency and improved quality performance.

Also, we are interested to find out whether this technology differences applies toTQM versus non-TQM firms. Based on earlier results, we expect high-tech TQM firms

to perform better in all aspects of performance compared to low-tech TQM firms.Hence, the H6 proposes that high-tech TQM firms are better in operational, quality andoverall business performance as compared to low-tech TQM firms. Table IX showssignificant differences between operational performance of high- and low-tech TQMfirms at 0.01 levels. Quality performance on the other hand is significant at the 0.10significance levels. The overall business performance for high-tech TQM firms issignificantly higher as compared to low-tech TQM firms at the 0.001 levels.

Limitations of the studyThere are some limitations to this study. We are unable to test and account for the lagsbetween the existence neither of practices and performance changes nor to trace theprogress of particular company. The sample size of 81 firms is relatively small. Hence,factor analysis and the comparative results need to be treated with caution. The resultonly provides a reference rather than an actual scenario of the logistics industry.

There is a potential for self-reporting bias as managers would generally reportfavorably to certain familiar issues. Perhaps, it would be helpful to collect multipleresponses from different management level to obtain a more accurate picture of thequality program. Also, there are issues of selection bias in the listings and onlinedirectories. Lastly, the study uses perceptual data, provided by operations and qualitymanagers, which may not provide a clear measure of the perceived quality of customers.

Discussion of findingsThe adoption of TQM as a quality improvement tool is widespread in Singapore

logistics companies with almost 50 percent take up rate. Larger firms are more likely tobe using TQM, as seen by a higher percentage of larger TQM firms. Only 45 percent of the logistics firms claim to have adopted TQM program for three or more years. Thisindicates to a certain extent that though TQM is widespread in the logistics sector,many firms are still in the early stages of implementation. Many logistics companies inSingapore specialize in more than one category of business concentration, with ahigher percentage of business concentration in warehousing, freight forwarding,transportation, delivery, and air/sea cargo. Perhaps, this is one of the reasons behind ahigh usage of technologies such as EDI, internet and portnet/tradenet. However, therelative low percentages of usages for certain technologies such as vehiclerouting/scheduling system, distribution resource planning and automated storageand retrieval system imply existence of opportunities for Singapore logistics providers

to make use of these technologies.

High-tech TQM firms Low-tech TQM firmsMean SD Mean SD p-value

Operational 3.8563 0.57964 3.4500 0.30726 0.010Quality 4.1591 0.48364 3.9273 0.35467 0.092Overall business 4.1456 0.35349 3.5781 0.26361 0.000

Table IX.Performance of high- andlow-tech TQM firms

IJPDLM36,3

206



Table X provides a summary of the results of hypotheses testing. The results suggestthat the six quality constructs are critical factors required for any TQMimplementation due to its strong association with overall business performance inthe logistics industry in Singapore. These six quality constructs can further be

subdivided into intangible factors and tangible ones. The success of TQM lies in boththe tangible and intangible factors. Intangible factors such as, top managementleadership, customer focus and quality focus act as baselines for quality improvement,and actual improvement in performance is attributed to the tangible factors, such as,human resource management, strategic planning and information systems andanalysis. Though the study seems to suggest that the tangible factors are the keyfactors for the success of TQM implementation, however, the prior research has shownthat intangible factors are equally as important. Intangible factors such as topmanagement leadership act as driver for other quality constructs; moreover, they areresponsible for creating an environment culture of TQM and accessing the suitabilityof TQM implementation.

Also, the strong positive correlation between the six quality constructs with

performance constructs suggests that TQM is not only applicable to the manufacturingindustry (where TQM first originated) but is also widely applicable to the servicesindustry, inclusive of the logistics industry. This study finds greater performance levelin operational, quality and technology performance in TQM logistics firms, hence therelevance and importance of TQM to the service industries. Perhaps, as logistics firmslook for better ways to improve their processes and management, they need to seek acontinuous improvement in quality. The results also show a positive correlationbetween quality management practices and performances in the logistics industry of Singapore.

Hypotheses Support at p , 0.10

Quality framework H1 There is a positive association between top managementleadership and strategic planning, process management,information systems and analysis, human resourcemanagement, quality focus and customer focus U

Quality and performance H2 Operational, quality, technology and overall businessperformance has a positive correlation with the general qualityconstructs U

H3 Operational, quality and technology performance has apositive correlation with overall business performance U

TQM and non-TQM firms H4 TQM firms outperform non-TQM implemented firms inoperational, quality, technology and overall businessperformance Mostly supportedTQM, technology and performance

H5 High-tech firms out perform low-tech firms in operational,quality and overall business performance U

H6 High-tech TQM firms outperform low-tech TQM firm inoperational, quality and overall business performance U

Table XSummary of results

hypothes


TQM

20



The results provide recognition for the importance of technology in qualitymanagement. Analysis shows technology plays an important role in qualitymanagement and high-tech firms generally perform better in operational, qualityand overall business performance when compared to low-tech firms. Also, high-tech

TQM firms generally outperform low-tech TQM firms in day-to-day operations,quality assurance and overall business performance. Perhaps, use of technology assistoperations in many ways, such as, cutting down information and processing lead-time,improve efficiency and minimize errors to the minimum. Therefore, logistics firmsshould look at the long-term benefits of technology and gradually engage its use tostreamline their operations.

The use of IT is a crucial component in improving the operational, quality andoverall business performance. The information and management technologies stronglycorrelate to TQM and serve as an enabler to quality performance. They also help toimprove relationships with customers. Results support the notion that IT improvesbusiness operations, increase the delivery quality of services/products, provide greaterflexibilities to customers and bring about an increase in the productivity of employees.Perhaps, this leads to an improved operational and quality performance. Hence,management should recognize the roles of technology in TQM and utilize technology toaid the continuous quality improvement efforts. Moreover, future logisticsmanagement is affected by external environment factors such as customers,globalization and competition. Therefore, logistics managers must be sensitive totheir customer needs and should seek to meet, and preferably exceed customerexpectations. As such, technology will be a key impact agent in the future logisticsindustry.

References

Ahire, S.L. and Golhar, D.Y. (1996), “Quality management in large versus small firms: anempirical investigation”, Journal of Small Business Management , Vol. 34 No. 2, pp. 1-13.

Ahire, S.L., Golhar, D.Y. and Waller, M.A. (1996), “Development and validation of TQMimplementation constructs”, Decision Sciences, Vol. 27 No. 1, pp. 23-56.

Anderson, R.D., Jerman, R.E. and Crum, M.R. (1998), “Quality management influence on logisticsperformance”, Logistics and Transportation Review, Vol. 34 No. 2, pp. 137-48.

Antony, J., Leung, K. and Knowles, G. (2002), “Critical factors of TQM implementation in HongKong industries”, International Journal of Quality & Reliability Management , Vol. 19 No. 5,pp. 551-66.

Black, S.A. and Porter, L.J. (1996), “Identification of the critical factors of TQM”, DecisionSciences, Vol. 27 No. 1, pp. 1-21.

Brah, S.A., Tee, S.S.L. and Rao, B.M. (2002), “Relationship between TQM and performance of Singapore companies”, International Journal of Quality & Reliability Management , Vol. 19No. 4, pp. 356-79.

Brah, S.A., Wong, J.L. and Rao, B.M. (2000), “TQM and business performance in the servicessector: a Singapore study”, International Journal of Operations & Production Management ,Vol. 20 No. 11, pp. 1293-312.

Dewhurst, F., Lorente, A.R.M. and Dale, B.G. (1999), “Total quality management and informationtechnologies: an exploration of the issues”, International Journal of Quality & Reliability

Management , Vol. 16 No. 4, pp. 392-405.

IJPDLM36,3

208



Flynn, B.B., Schroeder, R.G. and Sakakibara, S. (1994), “A framework for quality managementresearch and an associated measurement instrument”, Journal of Operations Management ,Vol. 11, pp. 339-66.

Flynn, B.B., Schroeder, R.G. and Sakakibara, S. (1995), “The impact of quality management

practices on performance and competitive advantage”, Decision Science, Vol. 26 No. 5,pp. 659-84.

Germain, R., Droge, C. and Daugherty, P.J. (1994), “A cost and impact typology of logistictechnology and the effects of its adoption on organizational practice”, Journal of Business

Logistics, Vol. 15 No. 2, pp. 227-48.

Gimenez, C. and Ventura, E. (2005), “Logistics-production, logistics-marketing and externalintegration”, International Journal of Operations & Production Management , Vol. 25 No. 1,pp. 20-38.

Hodgetts, R.M., Kuratko, D.F. and Hornsby, J.S. (1999), “Quality implementation in smallbusiness: perspectives from the Baldrige award winners”, SAM Advanced Management

Journal , Vol. 64 No. 1, pp. 37-47.

McAdam, R. and Henderson, J. (2004), “Influencing the future of TQM: internal and external

driving forces”, International Journal of Quality & Reliability Management , Vol. 21 No. 1,pp. 51-71.

Meyer, S.M. and Collier, D.A. (2001), “An empirical test of the causal relationships in the Baldrigehealth care pilot criteria”, Journal of Operations Management , Vol. 19, pp. 403-25.

Nunnally, J.C. (1978), Psychometric Theory, McGraw-Hill, New York, NY.

Powell, T.C. (1995), “Total quality management as competitive advantage: a review andempirical study”, Strategic Management Journal , Vol. 16 No. 1, pp. 15-37.

Rungtusanatham, M., Forza, C., Koka, B.R. and Nie, W. (2005), “TQM across multiple countries:convergence hypothesis versus national specific arguments”, Journal of Operations

Management , Vol. 23 No. 1, pp. 43-63.

Samson, D. and Terziovski, M. (1997), “The relationship between total quality management

practices and operational performance”, Journal of Operations Management , Vol. 17,pp. 393-409.

Saraph, J.V., Benson, P.G. and Schroeder, R.G. (1989), “An instrument for measuring the criticalfactors of quality management”, Decision Sciences, Vol. 20 No. 4, pp. 810-29.

Sum, C.C. and Teo, C.B. (1999), “Strategic posture of logistics service providers in Singapore”, International Journal of Physical Distribution & Logistics Management , Vol. 29 No. 9,pp. 588-605.

Sum, C.C., Teo, C.B. and Ng, K.K. (2001), “Strategic logistics management in Singapore”, International Journal of Operations & Production Management , Vol. 21 No. 9, pp. 1239-60.

Corresponding authorShaukat A. Brah can be contacted at: [email protected]


TQM

209

To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints



Reproducedwithpermissionof thecopyrightowner. Further reproductionprohibitedwithoutpermission.

The Effects of Technology and TQM on The

Documents

Transcript of The Effects of Technology and TQM on The