In the 1990s, organizations around the world added capacity in response to increased demand. Companies built new facilities, expanded services, and added staff. The result is today, almost every industry suffers from excess supply. Retail suffers from too many malls and shopping centers. In India, the development of shopping malls has literally been a revolution. There are about 250 modern shopping centers and malls and another 250 are being planned. The mall mania is based on an assumption, that people will desert neighborhood retail stores and buy into promise of a better shopping experience. But this is yet to happen. The initial investments are high and breaking even is difficult.
Automobile factories can build more cars than consumers can afford to buy. The telecom industry is drowning in debt from building capacity that might take 50 years to absorb. Introducing new schemes to attract to attract customers frequently are indicators of more capacity than demand. And most cities and towns now have far more restaurants than their communities can support.
Excess capacity translates into increased competition. And increased competition is forcing managers to reduce costs while, at the same time, improving their organizationâ€™s productivity and the quality of the products and services they offer. To achieve these ends, managers are implementing programs such as quality management and process reengineering programs that require extensive employee involvement.
In times of rapid and dramatic change, itâ€™s sometimes necessary to approach improving quality and productivity from the perspective of â€œHow would we do things around here if we were starting from scratch?â€? That, in essence, is the approach of process reengineering. It asks managers to reconsider how work would be done and their organization structured if they were starting over. Instead of merely making incremental changes in processes, reengineering involves evaluating every process in terms of its contribution to the organizationâ€™s goals. Inefficient processes are thrown out and entire new systems are introduced. Importantly, reengineering typically redefines jobs and requires most employees to undergo training to learn new skills.
What Is Quality management (QM)?
Intense focus on the customer: The customer includes not only outsiders who buy the organizationâ€™s products or services but also internal customers such as shipping or accounts payable personnel who interact with and serve others in the organization.
Concern for continuous improvement: QM is a commitment to never being satisfied. â€œVery goodâ€? is not good enough. Quality can always be improved
Improvement in the quality of everything the organization does. QM uses a very bro-ad definition of quality. It relates not only to the final product but also to how the organization handles deliveries, how rapidly it responds to complaints, how politely the phones are answered, and the like.
Accurate measurement: QM uses statistical techniques to measure every critical performance variable in the organizationâ€™s operations. These performance variables are then compared against standards or benchmarks to identify problems. The problems are traced to their roots and the causes are eliminated.
Empowerment of employees: QM involves the people on the line in the improvement process. Teams are widely used in QM programs as empowerment vehicles for finding and solving problems.
Todayâ€™s managers understand that the success of any effort to improve quality and productivity must include their employees. These employees will not only be a major force in carrying out changes but increasingly will actively participate in planning those changes. OB offers important insights into helping managers work through these changes.