OPERATIONS

MANAGEMENT-II
PROJECT
The Implementation Of Total Quality Management In Order To
Improve Production Performance And Enhancing The Level Of
Customer Satisfaction

ANKIT MATHUR (UM17260)

KANKANA NANDI (UM17277)
SAILAV PANDA (UM17293)
TRISHA PAL (UM17310)

GROUP 9| SEC-E
 PURPOSE OF ARTICLE
To do business in a competitive and dynamic environment, companies need to
continually enhance and improve their business capabilities and performance. By
making customer needs a primary focus, companies will more likely develop products
that match up with the needs of the customers. Thus, market orientation is important
for organizations in competing against one another in the worldwide global market. It
is needed in both marketing as well as management. In a market-oriented
organization, the highest priority is given to the creation and maintenance of superior
customer value; however, the interests of the other key stakeholders are also
considered.

Being market-oriented implies that the organization will seek information about
customers' needs and preferences and will continuously modify its offering mix as a
result of changing needs and expectations and competitor’s actions. Therefore, we can
expect market oriented organizations to be more likely to meet or exceed customers’
expectations and hence provide service quality.

One of the main factors that keeps the company going in such circumstances is the
application of Total Quality Management. Total Quality Management (TQM) is
sometimes referred as a management system in incessant change and consisting of
values, methodology and tools, the plan of which is to increase external and internal
customer satisfaction with a condensed amount of resources. Whether TQM improves
the performance of companies has been talked about for several years. One way of
working with TQM and its values, methodology and tools is to be relevant for and
work with a quality reward. Today, there are global, national, regional, branch-wise
and in-company quality awards.

The aim of this study is focused at examining the attitudes of corporate clients on a
variety of elements implemented TQM process, provided by bank. The results of the
research point out that top management commitment, courtesy and responsibility
towards customers are key significant factors of satisfaction. Study results help the
bank managers to understand the quality elements that need to be improved in order to
attain maximum level of customer satisfaction.

 RESEARCH METHODOLOGY
In order to investigate the degree of customer satisfaction by key variables
implemented in TQM process, an empirical research is conducted. For this study, data
was collected using the survey method and the statistical analysis such as correlation
and multiple regression analysis. The questionnaire for the primary data consisted of
14 conclusions relating to the quality of the different variables in the banking service
and the three statements related to the measurement of the degree of customer
satisfaction. The level of agreement of the respondents were expressed in a scale of 1-
7 (1– strongly disagree with the statement and 7- strongly agree with the statement)

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 The survey included 124 companies, where the managers of each company rated the
bank with which it conducted business transactions, based on the quality of their
services. These corporate clients of the banks are small and medium sized companies
operating in the territory of the Republic of Serbia. Before the survey was conducted,
a preliminary survey was conducted on a small sample size of 10 students. The main
purpose of this preliminary test was to examine whether there is any ambiguity in the
formulation of the questionnaire, so that it can be corrected.

The analysis of the primary was conducted by two statistical techniques, Correlation
and Multiple regression analysis in Statistical Package for Social Sciences (SPSS).
We used Cronbach’s coefficient alpha to determine the degree of reliability of the
identified variables. Correlation analysis was performed in order to find the degree of
correlation between the selected TQM variables and customer satisfaction. Through
multiple regression analysis, the statistical significance of the impact of the quality
variables on customer satisfaction was determined. The problem of multicollinearity
has also been examined by the Variance inflation Factor (VIF).

 LITERATURE REVIEW

TQM, applied in a variety of sectors around the world, found wide application in
many organizations. According to ISO standards, TQM is defined as an approach to
organizational management that is focused on quality and based on the activities of all
members of the organization, in order to achieve long-term success through customer
satisfaction, and benefits all members of the organization and the community. It is a
concept that enables efficient operation of enterprises and increase competitiveness.

The key elements of the concept of TQM are:

 Focus on Consumers
 Continually increasing customer satisfaction
 Continuous reduction of real costs
 A systematic approach
 Horizontal integration of functions and classes
 Participation of all employees
 Inclusion of supply chain and customer chain

Some important elements of TQM practices are:

 Supplier Relations
 Benchmarking
 Quality
 Measurement
 Continuous Process Improvement.

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 Customer satisfaction is the relation between expectations and perceived performance
of their products/services. The concept of satisfaction is linked to the loyalty of
consumers as a loyal customer is one who will be interested in the company and its
products and/or services over a long period of time, and who will be willing to
recommend the company to other potential customers. One of the key aims of TQM is
to maximize customer satisfaction. Ensuring loyalty means the realization of long-
term profitability by being contained in the elemental model TQM. In modern
literature, one can find numerous studies that indicate the existence of a high degree
of positive correlation between consumer satisfaction, performance improvement and
TQM. The positive linkage between total quality management and customer
satisfaction leads to the improvement of organizational performance.

 RESEARCH FINDINGS

 The values of the alpha coefficient range and interval from 0 to 1, where it is
recommended that the values are greater than 0.7.

 In this study, the variables implemented TQM (commitment of top

management, courtesy, responsibility, tangible elements) and satisfaction
show a high degree of reliability

 High levels of alpha coefficients ranging in the interval from 0.715 to 0.905,
confirmed the internal consistency of the associated statements

Reliability of variable- value of Cronbach’s alpha

Variables Cronbach’s alpha

Commitment of top 0.804

management 0.849
Courtesy
Responsibility 0.735
Tangible elements 0.715
Satisfaction 0.905

 The obtained values of Pearson's correlation coefficient showed that all variables
generate significant positive correlation with customer satisfaction banks

 "Commitment of top management" and “Responsibility" demonstrate a high

degree of correlation between "Courtesy” and customer satisfaction appears
moderate correlation, while "Tangible elements" show poor correlation with
customer satisfaction
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Correlation between variables of TQM and customer satisfaction in banking

Correlation coefficients with customer

TQM variables satisfaction
Commitment of top 0.602**
management
0.387**
Courtesy
0.623**
Responsibility
0.243**
Tangible elements

**Correlation is significant at the 0.01 level (2-tailed)

Results of the multiple regression analysis (dependent variable: satisfaction)

TQM variables B t VIF

Commitment of top 0.473** 5.772 1.473

management
0.159* 2.105 1.250
Courtesy
Responsibility 0.254* 3.403 1.225
ns
Tangible elements - 0.037 - 0.468 1.336

Results are significant at the level: p < 0.01 (**); Results are significant at the level: p < 0.05 (*);
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Results are not significant at the level: p > 0.05(ns); R = 0.457

 Located regressions indicate a significant effect of three independent variables:

"Commitment of top management" (ß — 0.473, t = 5.772), "Courtesy" (ß — O.
159, t = 2.105) and Responsibility (ß — 0.254, t = 3.403). In the case of Tangible
elements (ß - 0.468) no statistically significant effect. - 0.037

 Independent variables explain about 46% of the variability of the dependent

variable. Through the VIF values, the tested and the problem of multi-collinearity.
If the given coefficient value to be greater than 5, multi-collinearity occurs as a
problem. Values of the VIF coefficient lie in the range of 1.250 to 1.473

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 Conclusion
Any organization which adopts the philosophy of management that institutionalizes
planned and continuous improvement with discipline that undertakes that quality is
the outcome of all activities which transpire inside an organization and that all
functions and each and every employee has to participate in the improvement process
and accepts that the organization need both quality systems and a quality culture can
be said to be implementing TQM (TOTAL QUALITY MANAGEMENT. The
behaviour of consumers determines how successful any organization can be, so
businesses need to understand and realize the current and future needs and
expectations of consumers, strive to meet their requirements, and even exceed their
expectations. The primary purpose of any organization, in this study banking the
institution, is to meet and exceed the expectations and demands of their customers, so
customers were satisfied and eventually become loyal.

Modern conditions of banking stress that the service offered with high quality is the
best way to achieve competitive advantage and achieving financial success. In order
to achieve this, the business process in which the product is implemented and/or
services must be based on the TQM approach. Banks must continuously work on
improving and improving business processes within which to create financial
services.

We implemented an empirical study to examine the relationship between TQM and

customer satisfaction in the banking industry. Based on the findings of the correlation
analysis, it was confirmed that there is a positive correlation between the four
variables of TQM (commitment of top management, courtesy, responsibility, tangible
elements) and customer satisfaction. Based on the obtained results of multiple
regression analysis, it was confirmed that the strongest influence on the satisfaction of
clients is realized variable "Commitment of top management". The influence of
variables "Courtesy" and "Responsibility" also showed statistically significant at the
satisfaction of customers, but the strength of the impact of these variables are inferior
to commitment of top management. The variable "Tangible elements" did not show a
significant impact on customer satisfaction.

The results point out that the commitment of top management is crucial for the
successful implementation of TQM. Without the support and understanding of TQM
by management at the highest point, there is no effective implementation of a given
system. The findings confirm that corporate clients do not give great importance to
the physical elements of the banks, such as the uniform employees, computers]
equipment, decoration of interior, etc.. Based on the research of attitudes of clients,
banking institutions can significantly improve and grow their business. Managers can
get valuable information on how customers evaluate the quality of banks and on this
basis to identify where the negative aspects of the quality of banking services.
Improving the quality of service offerings, the bank increase the level of customer
satisfaction and loyalty, and achieve higher levels of profitability.

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