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QUALITY MANDECLARATION AGEMENT SYSTEM OF UNunder This thesis is prepared IL IV theE R GHofAStNClements supervision A LIMUniversity ITED I do hereby certify that except for reference to other people’s work which have been duly acknowledged, this thesis is entirely my work. It has not been submitted f...

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DECLARATION

QUALITY M AN AGEM EN T S YS TEM OF UNunder ILIV R GHof ASt NClements A LIMUniversity ITED I do hereby certify This thesis is prepared theE supervision that except for reference to other people’s work which have been duly acknowledged, this thesis is entirely my work. It has not been submitted for a degree to any University and bear sole responsibility shortcomings. A DISforSany ER TATION

PRES EN TED TO S T CLEM EN TS UN IVERS ITY, IN TURKS AN D CAICOS IS LAN D S IN FULFILLM EN T OF THE REQUIREM EN T FOR THE …………………………………. D EODARTEY GREE LAMPTEY OF DOCTOR OF PHILOS OPHY SAMUEL (MATRICULATION CERT. NUMBER 8942) (S TRATEGIC M AN AG EM EN T)

BY …………………………………… DR. YASMIN YUSOF (SUPERVISOR)

S AM UEL ODARTEY LAM PTEY (M ATRICULATION CERTIFICATE 8 9 4 2 )

S T CLEM EN TS UN IVERS ITY TURKS AND CAICOS IS LANDS

DEDICATION This work is first and foremost dedicated to the Almighty God for His protection from the beginning to the end of this research work.

Also, I dedicate this work to my wife, Fidelia and children, Sharon, Ethel and Samuel, Jnr.

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ACKNOWLEDGEMENT Research of this nature could never have been carried out without the help and invaluable contributions of several individuals and institutions. It is therefore, prudent to acknowledge their support and assistance.

My great supervisor, Dr. Yasmin Yusof, St Clements University deserves the first part of my thanks for her useful suggestions and encouragement.

I am also most grateful to Dr. Jeff Wooller, also of St Clements University for his immense contributions and assistance.

I am also indebted to the various authors whose work provide the necessary ingredients for this research. I sincerely express my gratitude to Management of Unilever Ghana Limited for allowing me to use the firm as a case study for this project. I also thank Mr. Kofi M. Essuman, SHEQ Assurance Manager, Unilever Ghana Limited, for his invaluable assistance.

My thanks also go to Ms. Kate A. Sowah of CICL and Mr. Richmond A. Armah who typed the manuscript. Finally and above all, To God be The Glory!!

Samuel Odartey Lamptey St Clements University

2009

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ABSTRACT Unilever Ghana became noted for its willingness to develop best in class operations and to establish best practices by benchmarking. These qualities seemed to dominate the firm’s long-term strategic development but did not offer a clear strategy to grow the firm or expand its businesses. Unilever Ghana has made use of a variety of quality management strategies in which characteristics of Six Sigma and Total Quality Management or TQM to name a few. Additionally, the firm has already integrated an ERP platform into its existing information and technology infrastructure. This sophisticated network architecture facilitates web and network analytics in which the company has been able to gain a great deal of accountability. However, through business process reengineering the company has managed to maintain its competitive advantage over even larger firms and markets. The quality processes at Unilever Ghana could be improved by introducing a greater variety of decision-making skills. Improved decision-making skills allow both management and employees to take a greater deal of interest in the inner-functioning of the organization. This project employed a qualitative research methodology based on the case study method. The research project finds that not only are all of the research hypotheses verifiable by scanning the research library, but also, Unilever has some way to go before it can claim a quality crown from other fierce competitors. The recommendation is made based on the four hypotheses in which it is recommended that Unilever Ghana add-on a knowledge management program that would align its quality management strategy with the company’s and its management’s perspectives and opinions. Quality has been expressed in different ways. The term quality has been referred to as fitness for use or purpose by J. M. Juran. Philip Crosby also said that quality is

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conformance to requirements and another guru, H. James Harrington referred to quality as meeting or exceeding customer expectations at a cost that represents value to them. In defining quality, therefore, we need to include recognition of the true requirements of the end-user or customer.

The existence of an organization depends upon its customers.

Satisfying their requirements must be our main aim. This aim can therefore, be achieved by putting quality into everything the organization does.

Any organization in any line of business requires a quality management program or some sort of quality program that is instituted from executive management down to the lowest level employee. While each particular function within an organization requires quality processes modelled after its own unique requirements, these individual quality processes should be designed and established based on the principles of the overall quality management program.

In Ghana, several organizations are underperforming and finally collapsing because they have relegated quality management to the background. Most of them, especially, the service and manufacturing ones operate as if customers are the beggars, forgetting that in contemporary business world customers are the kings and queens and therefore, should attach much importance to quality. The organizations also do not pay attention to the quality of their employees. Training and development of employees from top to bottom is relegated to the background, hence the production of inferior goods by these workforce.

This study examines Unilever Ghana Limited quality systems, policies, procedures and activities within the company. In other words, finding out whether the company has a well-documented and comprehensive policy on quality performance systems, and if it does, (v)

whether this policy meets international standards. If these quality management policies on quality performance systems meet international standards, then this study would discover whether the policy is being implemented according to industry best practices and also, whether the implementation is yielding the expected or desired results.

Researchers such as Ebrahimpour and Schonberger (1984) described problems encountered by manufacturing firms in developing countries and made an attempt to show the potential of practices such as just-in-time (JIT) and total quality control in helping to ease these problems. Carddick and Dale (1987) pointed out that sourcing from developing countries is more complex than from domestic markets where regional locality facilitates supply and delivery issues that cannot be as easily resolve in developing markets. Similarly, there have been a number of studies that have examined existing practices in several developing countries and others have compared practices between developing and developed countries. Among the studies that have been done in developing countries, very few have been devoted to countries in Africa and for that matter Ghana to be specific. Ghana is slowly recognizing that it must elevate not only it physical infrastructure but also its internal business practices in order to attract further foreign direct investment (FDI) as well as to make its own organically developed industries more competitive.

The

examination and development of more effective quality management programs is an ideal target to begin this procedural elevation within its corporate hierarchy.

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TABLE OF CONTENTS Pages Declaration

I

Dedication

II

Acknowledgement

III

Abstract

IV

Table of Contents

VII

CHAPTER ONE

1

General Background

1

Introduction and Conceptual framework

1

Objective of the study

29

Research Problem

39

Working Hypothesis

42

The Research Scope and Methodology

51

Preview of Subsequent Chapters

53

Definition of Terms

55

CHAPTER TWO

61

Review of Relevant Literature

61

Introduction

61

Literature Review

68

Highlights of Unilever Background and Quality

82

Chapter Conclusion

98

CHAPTER THREE

106

Data Collection and Presentation

106

Introduction

106

Method (s) of Data Collection

111

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Descriptive Data

127

Quantitative Data

146

Chapter Conclusion

161

CHAPTER FOUR

167

Analysis of Data and Test of Hypothesis

167

Introduction

167

Quantitative Data Analysis

172

Test of Hypothesis

196

Chapter Conclusion

202

CHAPTER FIVE

242

Findings, Conclusions and Recommendations

242

Introduction

242

Findings

245

Conclusion

250

Recommendations

278

Limitation of the Study

302

Bibliography

304

Appendices

317

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CHAPTER I:

1.1

General Background

Introduction and Conceptual Framework Any organization in any line of business requires a quality management program or

some sort of quality program that is instituted from executive management down to the lowest level employee. While each particular function within an organization requires quality processes modelled after its own unique requirements, these individual quality processes should be designed and established based on the principles of the overall quality management program. While there are many different quality management programs, such as: total quality management (TQM), kaizen based programs, and Six Sigma, one feature unique to all of them is that they are, and should be, part of the strategic DNA of an organization and an integral part of the strategic planning process. Beinhocker and Kaplan (2002, para.20-2) argue that by instituting a quality management program as a chief component in the strategic planning process, executive management achieves not only quality management initiatives that are inline with an organization’s stated business objectives, but also gain a new, creative management approach that in itself breeds innovation. Because of this unique ability of quality and quality management to align itself with corporate strategy, multi-national corporations (MNCs) such as Unilever and certainly Unilever Ghana Limited (Unilever and Unilever Ghana respectively) can utilize quality management to elevate itself above the competition as well as to create competitive separation. Quality and management of quality processes through the implementation of a comprehensive quality management program is a defining moment for most organizations and is now an effective requirement if a company, and by extension, a country, is going to

join the global economy. Most developed markets have product and service quality expectations that cannot be fully met unless they are manufactured or produced within the context of a quality management program that also provides for oversight and monitoring. Unilever, the largest manufacturing and marketing company in Ghana, is a public company listed on the Ghana Stock Exchange (GSE) and as such carries a high profile in the country where such large, internationally recognized MNCs are recognized for their economic contributions to the local market. Unilever Plc owns 66.6% of the shares in Unilever Ghana and CWA Holding Limited. The remaining 33.4% shares belong to portfolio investors and several individual Ghanaians. Unilever Ghana came into being on July 14, 1992, when two significant and complimentary Ghana subsidiaries of Unilever, UAC of Ghana and Lever Brothers Ghana Limited, merged to form Unilever Ghana. Thus, the company in its current incarnation in Ghana has only been in operation since 1992 and as such is relatively young when compared to the international profile and heritage of its corporate parent. Currently, Unilever Ghana consists of Lever Brothers with Swanzy Real Estate Limited as a wholly owned subsidiary of Unilever Ghana. The Company has majority shares in BOPP and 40% shares in TOPP. Because of its association with Unilever, Unilever Ghana maintains a solid reputation as a responsible manufacturer in the country and it relies on constant reinvention of itself to keep abreast of market developments as well as to remain competitive. Unilever Ghana is an efficiently organized enterprise with recognized market power in Ghana. The company is a multi-product institution with a variety of lines of business (LOBs). It markets an extremely wide variety of products and services while mandating the highest quality standards available. Unilever Ghana’s products and services are segmented into the following six categories: (i)

Home Care Products, e.g. Key Soap

(ii)

Personal Care Products, e.g. Pepsodent

(iii)

Food Products, e.g. Frytol

(iv)

Real Estate Development

(v)

Plantation Firms

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Diversey lever

which functions as a small business unit (SBU) offering house keeping services as well as kitchen care to large hotels, factories, guest houses, and the like, in Ghana. These diverse products and services allow the company to remain solvent in virtually any type of market. Regardless of the severity of a market downturn in one LOB or increasing competitive forces in another, this diverse product and service line allow the company to compensate for any loss of revenues in one of its primary businesses with an increase in another. Based on the character of this product and service line, it can be said that Unilever Ghana Limited operates as an oligopolistic firm where it is one of the few firms in that market with differentiated products. The company enjoys economies of scale and scope across the full spectrum of its operations. Because of Unilever Ghana’s product and service diversity, the only way the company could maintain its competitiveness without losing focus on any single product or service line is to develop and implement a structured operating environment where best practices are continually introduced and updated. The use of best practices is a technique associated with quality management programs such as Total Quality Management (TQM), Six Sigma, and other quality management systems, which owe most of their processes and underlying logic to the work of Dr. Deming who was the first researcher to promote the use of statistics as a management device (Hahn, 2002).

Dr. Deming was, for example,

instrumental in facilitating Japan’s rise to the top of the quality chain and his methods have influenced every quality management program in existence to one extent or another: “His teachings were encapsulated in his 14 points, his 7 deadly diseases and...his system of

profound knowledge. Deming challenged us...to reconsider both our fundamental roles and our technical teachings...” (Hahn, 2002, paras.5-7). It is his fundamental use of statistics and quantitative analysis that have allowed industries such as Unilever and Unilever Ghana to continually improve based on modelling industry best practices.

Regardless of a

competitors market in the contemporary business environment, the use of best practices is a virtual requirement in order to remain fully competitive as well as relevant.

Deming offered fourteen (14) key principles for management for transforming business effectiveness (Deming, E.W, Out of the Crisis, p.23-24).

1.

Create constancy of purpose toward improvement of product and service, with the aim to become competitive and stay in business, and to provide jobs.

2.

Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

3.

Cease dependence on inspection to achieve quality.

Eliminate the need for

inspection on a mass basis by building quality into the product in the first place. 4.

End the practice of awarding business on the basis of price tag. Instead, minimize total cost.

Move towards a single supplier for any one item, on a long-term

relationship of loyalty and trust.

5.

Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease cost.

6.

Institute training on the job.

7.

Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.

8.

Drive out fear, so that everyone may work effectively for the company.

9.

Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.

10.

Eliminate slogans, exhortations, and targets for the workforce asking for zero defects and new levels of productivity.

Such exhortations only create adversarial

relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the workforce.

11.

(a)

Eliminate work standards (quotas) on the factory floor.

Substitute

leadership. (b)

Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute workmanship.

12.

(a)

Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.

(b)

Remove barriers that robe people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objective.

13.

Institute of vigorous program of education and self-improvement.

14.

Put everybody in the company to work to accomplish the transformation. transformation is everybody’s work.

The

Deming also propounded the seven (7) deadly diseases which are also known as seven wastes. They are-:

1.

Lack of constancy of purpose.

2.

Emphasis on short-term profits.

3.

Evaluation by performance, merit rating, or annual review of performance.

4.

Mobility of management.

5.

Running a company on visible figures alone.

6.

Excessive medical costs.

7.

Excessive costs of warranty, fuelled by lawyers who work for contingency fees.

In his later years, Dr. Deming taught many concepts that boarded on quality issues which are of great relevance t...