Research Study TQM - Grade: A PDF

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Research study on Total Quality Management...

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Abstract The purpose of this research study is to observe 5 selected fast food restaurant within the area of Boca Raton: McDonald’s, Domino’s Pizza, KFC, Pollo Tropical, and Subway. Total Quality Management criterias are also selected to work as the measurement of TQM score for each restaurant. Datas are collected, analyzed, and compared to the actual success of the restaurant. The level of success is determined by the level and trend of revenues that these 5 companies have generated over the past 5 years. Overall, TQM does not totally impact a restaurant revenue. There are 3 companies that show positive relationship between TQM score and their revenues. 1 company shows negative relationship and 1 company does not show any relationship between TQM score and its revenue. However, TQM still plays an important role in contributing to a restaurant success overall, as well as improving its quality and customer satisfaction over time.

Intro Total Quality Management In a developing world of technology and innovation, the food market has become more competitive than ever before. It does not only open new opportunities for new competitors but it also raises the quality standard of products within the existing market. Existing corporations and their new competitors have to face bigger challenge of competing against each other and the only way they can accept this challenge is to produce highest quality products. Corporations need to create good consumer loyalty by providing them high quality products and services with greater suitability to their consumer’s wants and needs as well as corporate social responsibility.

The concept of product quality is very abstract. It cannot be measured or determined definitely. The concept is also not universally accepted, since it is viewed and perceived differently by different countries and cultures. According to Caroline L. Paiva, the definition for quality is that “suitability for the consumer usage.” The definition of quality consists of two aspects: the elements and characteristics of a product that satisfy customer wants and needs and the absence of failures. Satisfaction from high quality products brought to consumers is not only the intrinsic value that consumers can perceive, but it can also be the product’s availability, compatible price and packaging. The second aspect of the quality is the absence of failures. This aspect can be measured by extending the product’s description close to its specifications. Absence of failures is very important because it increases the consumer loyalty to a product by its reliability. Consumers buy products for the first time because of their capability and they rebuy a product the next times because of its reliability. Companies maintain their old consumers by providing safe product without health risks, and with the properties claimed on the label.

In order for companies to operate competitively in the market, effective total quality management must be acquired. Total quality management requires firms to imply continuous improvement in every operational area. According to Caroline L. Paiva, quality management consists of commitment, discipline and a growing effort by everyone who is involved in the production of the product. In order to achieve such things, companies need to organize and establish quality policies, programs, and execute all their production at the highest level of quality.

Food Industry situation and context Currently, companies are applying and implementing Total Quality Management in many different ways. Particularly, companies must realize and apply all the measurements and procedures that lead to actual and visible impact so they can reach higher level of achievement. The criteria of such measurements and procedures may include: waste reduction, environmental damage, and customer satisfaction.

Many enterprises in the food industry declare that they are recording data of customer satisfaction. This shows that these firms are trying to collect information that help them to find root cause of their failures, thus improving results. Companies also make effort to avoid problems and issues by collecting and asking for complaints. Majority of food and beverage companies within the U.S have signed up for using Yelp, a technology platform that help customer to update with real-time situation, status, and rating of restaurants. Customer are able to review particular restaurants before they decide to go, and restaurants are able to collect

complaints and customer opinion upon their products and services so they can what they still need to fix and improve. In the areas of internal policy and strategy, partnerships, resources and processes, it has been recorded that companies do not regularly collect feedback about internal thoughts and personal feedback of employees toward the companies. In addition, only a minority of companies published the impact of their companies to the society. Both of these results show that companies in the U.S are making small influences toward their stakeholders such as: employees and the society.

Hypothesis In this research paper, 5 companies within the fast food industry from Boca Raton area are selected for observation, measurement, and analyzation. It is expected that companies that are operating with application of Total Quality Management will result in generating higher annual revenues within the food industry.

Method: Observation, Evaluation based on Score 5 companies were observed at the same time and date of a week to give the same accurate qualitative data. By doing this, it can assure that the operation of a company won’t be affected by the amount of incoming clients as well as the mood, time, and other concerns of employees. According to Total Quality Management, there are 8 areas that successful products and services must satisfy: Customer-focused, total employee involvement, process centered, integrated system, strategic and systematic approach, continual improvement, fact-based decision making

and communication. Total Quality Management scores are collected from observation and will be analyzed and evaluated based upon these 8 criteria. 1. Customer-focused Customer-focused is how customers determine and perceive the level of quality. In this section, Customer-focused consist of elements that will directly affect the customers: convenience, menu, kitchen, and customer service.

2. Total employee involvement/Communications Total employees have to get involved into the business in order to achieve common goals. In this section, teamwork and communication are counted together as they indicate the level of involvement between employees and employees as well as employees and customers.

3. Process-centered One of the most fundamental part of Total Quality Management is process-thinking. Process is a seri of steps that will transform inputs into outputs and finally deliver them to customers. In this section, Process-centered is considered as: food packaging, food making process, and taking order.

4. Integrated system/ Strategic and systematic approach Integrated system and systematic approach are all micro processes and steps that may contribute to the bigger success of products and services. These processes are used in order to achieve an organization’s vision, mission, and goals. Cleanliness, time, hygiene, food safety,

waste reduction, and food quality are considered as micro elements that organizations should focus on in order to achieve high level of quality.

5. Fact-based decision making Fact-based decision making are critical because it determines how employees and managers can deal and solve critical problems as well as specific customer requirements in unusual scenarios. This includes problem solving skills and leadership skills.

Data Domino's Mcdonald's Good, with

Customer Focused Convenience

Subway

drivethrough/

Long time

order taking

waiting

Pollo

Pizza

KFC

Tropical

online order,

No online

Sauce

pre-order, real

pre order,

buffet,

time tracking

fast process easy menu

machine 5

3

4

4

4

Too many easy to

ok, Very very

Menu

understand,

straightforwar complicated

straightforward

hidden kitchen

ward, match, not

d

5 Kitchen

straightfor mix and

very clean,

simple necessary 3 3.5 3.5 Open open kitchen, clean, but

food making

pizza making

hidden

kitchen,

process is

process

food

clean

making

overall

shown

process

5

3

5

5

4

5

very good, Customer

more

Very very

very good

Very good

Very good

customer

service

good

interaction 5 Total

Teamwork

Employee

Smooth

Smooth 5

Good

Involvement/

Communicatio

Communicati

n

5

5 Smooth

5 Good

5

5 Smooth

5 Good

5

5 Smooth

5 Good

5

5 Good

5

5

on not sure if Food

Space saving, Neat

Very neat

A little messy

they have

heat reserve

Packaging

togo? 5

4

5

5

3 Freshly

Food Making Process

Process

Hidden, precooked food

Centered

Freshly made,

Freshly made,

Some pre-

made

cooked,

grilled

cuztomization cuztomization fresh 3.5 5 5

chiken 4

5 Spanish

Good, free

Fast, online,

no

speaker,

choice of

pre-order,

customizati

can be

topping, fast

customization

on

misinterpr

Very fast and Taking order

convenient

eted 5 Integrated

Cleanliness

system/Strate

Time

Good

5 Good

5 Fast

5 Good

5 May have

4 Good

5 Fast

4 Good

5 Fast, pre-

5 Fast

gic

time issue

cook food

5

Systematic

4

5

5

5

Employees

Approach

always wear Hygiene

Good

Good

Good

Good

cooking gloves 5

5

5

5

5 Fresh grilled

Freshly baked chiken, Food Safety

Pre-cooked and

bread , cold

Fresh, can be

Can be too

frozen Food

cut meat can

frozen

oily

and rice. No need be frozen to store leftover. 3.5

4.5

4

3.5

5 Free sauce,

Waste

Vegetable

Charge every

leftover

piece of sauce

Good

Reduction

Unlimit

sometimes

drink, no

unlimit

free sauce

drink, sometimes no

5 Food Quality

3

5

Not as good as

Very very

Very very

advertised

good, free

good,

choice of

standard

topping

quality

4 Very good

3.5 Very good

Fact-based

Problem

decision

solving

making

Leadership

2

5

4.5

4.5

5

4.5

5

5

5

5

5

5

5

5

5

Total 76.5 76.5 81 72.5 Average quality score of 5 companies are used as the average quality score of the food industry. Companies that grade higher than the average score are considered using and implementing total quality management and companies that grade lower than average are considered not implementing total quality management.

Mean of industry: (76.5 + 76.5 + 81 + 72.5 + 79.5)/5 = 77.2 The mean of industry is 77.2, this indicates that McDonald’s, Subway, and KFC are not implementing Total Quality Management, while Domino’s Pizza and Polli Tropical are currently implementing such strategy.

Impact, influence of TQM on each companies It is expected that higher score of total quality management may positively influence total sales and revenues of each company within the industry. In this section, there is going to be comparisons between Total Quality Management scores and revenues from each company.

79.5

On the horizontal axis, lowest number indicates the most recent year and highest number indicates the oldest year.

McDonald's Revenues 25,000 24,000 23,000 22,000 21,000 20,000 19,000

1

2

3

Based on McDonald’s Revenues graph, it indicates that in the past 3 years, the company has been experiencing a fall in their revenues. McDonald’s also has a TQM score of 76.5, which is lower than the industry average. This is one of the very first evidences that indicates higher TQM may result in higher revenues. As McDonald’s does not completely implement TQM in their strategies and organization, they may experience a fall in their revenues over time.

Subway's Revenues 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

1

2

3

Based on Subway’s Revenues graph, the company experienced a little fall in their revenues during the second year, however, the company generated more revenues during their last year. Subway has a TQM score of 76.5, which is equal to McDonald’s TQM score. However, they seem to experience a growth in their revenues over time.

Domino's Pizza's Revenue 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1

2

3

Unlike Subway, Domino’s Pizza has experienced a steady growth in their revenues over the past 3 years. Domino’s Pizza has a TQM score of 81, which is the highest within the industry. This shows that a high score of TQM may play a role in contributing to the growth of revenue of a company.

Pollo Tropical's Revenues 2,360 2,350 2,340 2,330 2,320 2,310 2,300 2,290

1

2

3

Pollo Tropical’s revenue sharply fall during the past 3 years. Pollo Tropical also has a TQM score of 79.5, which is higher than industry average. In this scenario, even though the company scores very high on their TQM, they still experienced a loss in their revenue.

KFC's Revenues 13,400 13,300 13,200 13,100 13,000 12,900 12,800 12,700

1

2

3

KFC also experienced a decrease in their total revenues over the past 3 years. Based on observation, KFC has the lowest TQM score, mostly due to it’s low quality of food. This highly indicates a positive relationship between TQM score and revenue. As the company has low TQM score, it also generates a loss in their revenue. Results Subway and and Domino’s Pizza are only 2 companies that have positive growth in their revenues over the past 3 years. Domino’s Pizza shows a positive relationship between TQM score and revenues. However, Subway shows the opposite. Even though Subway has a lower TQM score than the industry average, the company still had a steady growth in their revenue over the past 3 years. McDonald’s, Pollo Tropical and KFC are 3 companies that gained a loss in their revenues over past 3 years. McDonald’s has a lower TQM score than average and this could be a reason why they fall in revenues. This shows a positive relationship between TQM score and revenue. Pollo Tropical experienced a loss in their revenues over 3 years. However, the company has higher TQM score than industry average. This is the case that shows negative relationship

between TQM score and revenues. KFC experienced a loss in their revenue over past 3 years and the company has the lowest TQM score of all 5 companies. This is a strong evidence of positive relationship between TQM score and revenues. McDonald’s and KFC and Domino’s Pizza show strong positive relationship between TQM score and revenues. Pollo Tropical is the only company that shows negative relationship between these 2 factors. Subway revenues seem not to be affected by their TQM score. Based on their result, it can concluded that TQM score does not completely influence the business result of companies. However, TQM still plays an important role in contributing to the success of a business. 3 over 5 companies are affected strongly by their TQM score: McDonald’s, KFC and Domino’s Pizza.

Limitations In this research, there are several limits that may affect the result of the study. Matter of location, regions, and time are taken into consideration. The result may show lack of accuracy due to the number of locations of each companies. All 5 companies are operated under franchising. There maybe a big difference between the number of locations opened by these companies. Revenues are counted as total revenue of all franchise locations throughout the world. Number of locations might greatly affect the revenues of each company. The research study was based only in 1 region, Boca Raton. Different location throughout the country, or over the world, with different culture and consumer habit may give different result on TQM score. The research study is biased on single region of study.

The research study was based on only one specific time frame of a week. Different timeframe may also affect the TQM score, since it can strongly affect employees productivity.

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