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Achieving Sustainable Performance Through TQM and Market Orientation: A Proposed Framework for Empirical Investigations - Page 10

MBQ elements and sustainable performance

Firm that implement TQM can derive competitive advantage in the market place as well as from the operational processes. In the market place, created positional advantage can produce increased market share and increase revenue. Dean and Bowen (1994) argue about the relationship between TQM and competitive advantage by linking improved quality with high prices and increased market share. Internally, improved design can lead directly to efficient process, which can reduce defective production. This argument is also consistent with Deming’s quality chain that improved quality lead to reduced cost, which in turn increase market share and profit (Deming, 1982).

Effective and efficient design would yield directly both improved product reliability and market reputation (Reed et al., 1996). Improved reliability is a resulted after the customers use the product or experience the service, hence has its time lapse before its effect can be recognised. However, once reputation on reliability has been built, repeat purchase is more likely. Reputation, rooted in product reliability is therefore a source of competitive advantage, which is more sustainable because it is harder for competitor to imitate (e.g. Kay, 1993).

Design optimisation, process optimisation and product or service reliability by themselves are sources of quality advantage. Design process is a combination of managerial responsibilities and customer analysis which include identification of core customer benefits, benefits positioning, and development of physical products, strategy, and service policy to fulfil the key benefits. Design optimisation includes activities that allow firms to use cost-effective input in product design and develop better product faster than competitors thus reduce new product cycle time to meet time-based competition. Optimisation in design would improve defect in production through design for produceability and by using fewer components. It would also enable firms to increase process optimisation through efforts such as plant modernisation, facilities expansion, and re-layout, redesign and reengineering. Design optimisation is often driven by internal processes as opposed to product reliability which is more stimulated by market response, such as customer complaint (Garvin, 1988). In essence, design optimisation, process optimisation and product reliability are prerequisites to lowering product costs and achieving operational excellence. Also as has been discussed in earlier section design optimisation is antecedent to an array of strategic assets, which in turn can contribute to market advantage leading to sustainable competitive advantage.

Design optimisation and sustainable performance

Design quality is the process and activities that ensure providers fully meet customer requirements. This means designing include identifying customer need, developing what satisfies the need, checking the conformance to the need, and ensuring that the need is satisfied (Oakland, 1993, p. 45). These entail to carefully manage the entire design process by using effective design management framework such as concurrent engineering or total design.

Cost reduction in TQM context can be associated to design optimisation, often subsumed under the concept of concurrent engineering (Schmidt and Finnigan, 1992). Concurrent engineering enables participation of multi-division personnel early in the design process. This is a highly critical process because as much as 80% of the product cost is committed at the design stage (Pye Andy, 1998).

Simultaneous or concurrent engineering includes techniques like the Taguchi design method, design for manufacturability, design for assembly, and quality function deployment (Reed et al., 1996). QFD is concerns with selection of critical customer expectation into design features to create product with market advantage and cost effective to produce. By various claims QFD has reduced design time by 40% and design costs by 60% while maintaining or enhancing the quality of the design (Hauser and Clausing, 1988). In tandem, all synergistic effect of efficient design-robust and manufacturability, reliable product with less defective production can lead to reduced costs and sustaining advantage.

Computer aided design (CAD) is one of the enabling technologies for concurrent engineering. Through this, consistent design data provides an ideal mean of co-ordination and bridging information across divisions and disciplines. Related to CAD, electronic data management (EDM) can make a major contribution to concurrent engineering. The ability to produce, access and revise critical documents quickly can lead to competitive advantage through reduced new product development life cycle, increased product complexity, and reduced time to market.

TQM and market orientation cultures promote flat structure, speedier corporate communication, and team approach to decision making. All the above, particularly cross-functional teams can simplify design process. It also facilitates modular approach to design, which enables firms to combine and utilise existing standardised components to create new models or services more effectively and drastically reduce product development costs (Lau, 1996). According to Lau modular design results in firm’s flexibility to meet changing market demand faster. The entire process is seen as making value delivery processes into modules of dynamic network of skills and capabilities, which allow integration of resources to customise product or services.

Design determines what elements of tangible and intangible features should be included in the product or service. This decision in turn determines the key financial factors in an operation: revenue, cost, and capital employed, which all affect profitability. For example, redesign that applies substitution with lower cost materials lead to reduced total cost. Redesign for produceability (or ease of operations in service) leads to increased labour productivity and increases capacity of existing facility.

The above arguments support the notion that TQM companies, either customer focus or operation focus, tends to benefit from optimum design and product or service reliability therefore can translate into higher degree of customer focus and market orientation. Flynn et al., (1995) propose that optimise design create direct impact on quality performance through its effects on product reliability, product features, and serviceability. The indirect effects of design on quality performance take root through its impact on produceability, which in turn affect operation flow management. It is hypothesised that TQM companies produce reliable products and employ optimum design will achieve lower cost and hence better performance. Consequently, the market oriented TQM companies, which employ optimum design and produce reliable products are more likely to maintain sustainable performance.

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