ACHIEVING PRODUCT QUALITY ASSURANCE THROUGH EFFECTIVE TQM TECHNIQUE IN SERVICE INDUSTRY (A CASE STUDY OF ZENITH BANK DUTSE)

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Total quality management (TQM) has been popular business strategy in many leading manufacturing organisations over the past few years (Sohal and Terzivski, 2000). There are some manufacturing firms that have been successful and some have failed with TQM implementation. “Total quality management can be defined as the management approach that originated in the 1950s and has steading become more popular since the early 1980’s. A number of companies that have implemented TQM are large multinationals companies (MNCs) such as Hawlef-Packard (HP), international business machine (IBM) and NOKIA. The practical uses of quality methods in SMEs are today still limited (Garvare and Wiklund, 2008). The reason are several but especially local networking between SMEs and long term training in quality methods have been identified as critical factors for successful implementation (Sandvik, 2008). In this era of global competition a company needs to apply new quality techniques in form of strategic management, quality assurance, quality systems, quality control etc, in other words organization has to implement the concept of TQM. This concept provides the approach to realize the manufacturing strategy (Sharm and Kodali, 2009). The principles of TQM philosophy would increase a firms commitment to quality and once they are applied correctly enhance the firms competiveness position in market, because the TQM principles support the business practice e.g cost reduction enhanced productivity, improved product quality and output.

Today every organization has to study what customer demand is. Who is our customer? How do we delight our customers? What do customers wish to experience when dealing with us? What do customers frame in their mind about us? All these questions should be taken into consideration hence it is the customer who defines quality (Arora 2006:1).

Quality is fast becoming an essential aspect of banking, and in the coming years it would form a basic requirement for the survival of the industry. It is indeed worthy of note that quality needs to be natural through positive attitude and quality culture in an organization.

At a time when the deregulation of financial services and consequent ready access to funds produced a new competitive environment, both the commercial and merchant banks in the country then were competing with finance and mortgage houses, insurance companies and stock brokers. The new competition brought about successes for some and spectacular failure for others. In the new millennium, banking has gone even beyond expectation, and for the surviving banks, competition has just began. The financial service sector has not been immune from or ignored the era of quality revolution. New products sought initial competitive advantage, new attractive interest rate, turnaround time, all in the bid to attract more customers. Macdonald (1998:13).

1.2     STATEMENT OF THE PROBLEM

Banks being financial intermediaries are the backbone of any economic system involved in channeling funds from those having surplus to those having its shortage,(Luckett,1994:36). The objective of this fund channeling is to earn profit. In order to reach maximum number of customers, banks develop a network of branches. Branches are the points where banks offer their products. Banking products are almost the same in any country but what matters is the way the product is offered and the quality aspects associated with those products. Total Quality Management (TQM), a buzzword phrase of the modern age is based on the assumption that quality can be managed in every aspect of a company’s business. Total Quality Management is viewed as virtually a new organizational culture and a way of thinking. So the approach has an intense focus on customer satisfaction, accurate measurement of every critical variable in business operations, continuous improvement of products, services and processes and on work relationships based on mutual trust and teamwork, (Pearce & Robinson 2005:24).

Total Quality Management is a structured system for satisfying internal and external customers and suppliers by integrating in the business environment, continuous improvement, and breakthroughs with development, improvement, and maintenance cycles while changing the whole organizational culture,(Cole & Mogab1 999:35). This is the comprehensive approach towards quality management covering all areas of business.

1.3     OBJECTIVE OF THE STUDY

The objectives of the study are;

1.     To ascertain the level the level of awareness of TQM among staff of zenith bank, Plc Dutse Branch.

2.     To assess the level of adoption of TQM practice by staff of zenith bank plc Dutse Branch.

3.     To determine the extent to which members of staff are involved in the practice of TQM in Zenith Bank, Plc Dutse Branch.

4.     To identify the major limitations of TQM practice in Zenith Bank, plc Dutse Branch.

1.4     STATEMENT OF THE HYPOTHESES

The following hypotheses are formulated for this study;

1.       H0; the adoption of TQM by Zenith Bank’s does not help in product/service quality assurance.

          H1; the adoption of TQM by Zenith Bank’s help in product/service quality assurance

2.       H0; the adoption of TQM practice by staff of zenith Bank have not improved their productivity.

H1; the adoption of TQM practice by staff of zenith Bank have improved their productivity

3.       H0; members of staff of zenith bank are not involved in TQM practice to a large extent

H1; members of staff of Zenith Banks are involved in TQM practice to a large extent

4.       H0; the practice TQM does not significantly affect customer service and care in zenith Bank, Plc.

H1; the practice of TQM significantly affect customer service and care in Zenith Bank Plc.

1.5     SCOPE AND LIMITATIONS OF THE STUDY

The study will assess the practice of TQM in Zenith Bank Plc, a service organization. It therefore stands to reason that the principles and practices this study espouses will be applicable to the service sector only. Due to economic and time constraints in terms of huge amounts of money involved in carrying out the study extensively to cover all branches of Zenith Bank Plc, plus the urgency needed in the early submission of the research result, the study has been limited to cover only the Zenith Bank Presidential Road Branch. The project was also limited by the constraint of securing primary data from the bank coupled with the lukewarm response from respondents who had to be persuaded to complete and return questionnaires on time.

1.6     SIGNIFICANCE OF THE STUDY

The research study is useful to Zenith Bank Plc Dutse Branch as a means of identifying and criticizing effectively the knowledge and experiences gained in the implementation and application of TQM as a newly developed management technique aimed at achieving higher productivity. This research will help top management determine the areas in the organization that needs to be improved upon and adequate measures to be taken as a means of achieving higher productivity through Total Quality Management. It also help the students for further research.

1.7     DEFINITION OF KEY TERMS

TQM – Total Quality Management The following are some definitions of TQM:

(i) TQM is a way of managing to improve the effectiveness, flexibility and competitiveness of a business.

(ii) TQM is a fundamental shift, the systematic analysis and blue printing of operation, process of habitual improvement where control is embedded within and is driven by culture of the organization. Managing quality is the job of each and every member of an organization.

(iii) TQM is a cost effective system for integrating continuous quality improvement efforts of people at all levels in an organization, to deliver products and services which ensure customer satisfaction.

(iv) TLC another name for TQM.

T - Total customer focus and satisfaction

L - Leadership, setting values, vision, mission, goals, objective

C - Continuous improvement of key processes.

ISO standards: ISO is the international organization for standardization. It is made up of national standard institutes from countries large and small, industrialized and developing, in all regions of the world. ISO develops voluntary technical standards which add value to all types of business operations. They contribute to making the development, manufacturing and supply of products and services, more efficient, safer and cleaner. ISO standards serve to safe guard consumers and users in general, of products and services.

ISO 9000: ISO 9000 and 14000 are known as generic management system standards. Generic means that the same standards can be applied to any organization, large or small, whatever its products – independent or whether it is a product or a service – in any sector of activity.

ISO 9000 is primarily concerned with quality management. The definition of quality is ISO 9000 refers to all those features of a product or service which are required by the customer. ISO 9000 is a basic building block of TQM setting the frame work for a culture that nourishes TQM. It is a method of maintenance of standards facilitating TQM.

Quality Assurance: Assurance means insurance. Quality assurance means quality insurance. The main purpose of quality assurance is to assure that the product is fit for use. In the quality assurance concept, qualified independent auditors examine the quality of the product and issue a certificate that the product is fit for use.  

Quality: Is conformance to requirements or specifications or standards. It can also be defined as fitness for the purpose of use.

Service Industry: The service industry is an industry made up of companies that primary earns revenue through providing intangible product and services.

Service industry companies are involved in retail, transport, distribution, food services, as well as other service-dominated business. Also called service sector, tertiary sector of industry, See also primary industry secondary industry.

Customer satisfaction: The customer satisfaction as an abstract concept and involves such factors as the quality of the product, the quality of the service provided, the atmosphere of the location where the product or service is purchased, and the price of the product or service. Business often uses customer satisfaction surveys to gauge customer satisfaction. These surveys are used to gather information about customer satisfaction.

Financial service: This is the economic services provided a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies stock brokerages, investment funds and some government sponsored.

Financial intermediaries: A financial intermediary is an entity that acts as the middle man between two parties in a financial transaction, such as a commercial banks, investment banks, mutual funds and pension funds. Financial intermediaries offer a number of benefits to the average customer, including safety, liquidity, and economics of scape involved in commercial banking, investment banking and asset management.

Surplus funds: The money remaining after all liabilities including taxes, insurance and operating expenses are paid. Having surplus funds means that a company has made a profit or perhaps that it has completed a project under budget. Surplus funds indicate prudent management of funds over the course of the company’s operations or project.

Organizational culture: Organizational culture is a system of shared assumptions, values and beliefs, which governs how people behave in organizations. These shared values have a strong influence on the people in the organization and dictate how they dress, act and perform their job.