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IMPACT OF TOTAL QUALITY MANAGEMENT ON PRODUCTION COST OF AN ORGANIZATION.

CHAPTER ONE

Introduction

1.1     Background to the Study

Total quality management is known as the primary role of management to lead an organization in its daily operations and maintains it as a viable entity into the future. Quality has become an important factor in these. Although ostensibly always. an objective of business is customer in customer terms, because a specific goal in the late 1980’s provide higher quality are recognized as a key element for success, most large operations taking that path have document the success, first they survived the competitors that has set the higher quality levels and now have regained some of their former market.  Total Quality Management is perhaps the leading management approach that compares employed to improve their product and services, quality with the aim of improving typical measures of business performance.  (e.g profit, increased market share reduced cost). 

The Japans have capture more than 30% of the American and electronic markets.  It was achieved by offering higher value products.  In response to the boom in the competitor market, many American firms have implemented require the integration of Human resources, production engineering store and purchasing marketing, distribution, and planning is a continuous improvement process; it is much wider than the traditional quality view of incoming inspection and process control.  It means that the entire organization is working as a team including the cooperate top managers and each an every employee, it is on innovative way of thinking that affect the culture, the strategy and technology of company.  The organization needs a holistic approach so that every department in the organization should come together for cost reduction and improve products, approach will reduce cost and quality will be achieve for competitive advantage.

1.2 Statement of the Problem

This Empirical research has identified some general problems that are associated with Total Quality Management which are listed below. One of the problems is the failure of organization to understand the importance of material quality control and often ignore its application. This has led to the receipt of low quality and substandard lots of materials into the in process, culminating in poor quality out put and increased cost for these organizations. The problem of organization over-relying on suppliers ability as a result of trust thereby falling to check and/or monitor the incoming materials for any possible defect or deviations from specification. Others are manpower related problems were also observed to be a major barrier for achieving a Total quality management program. Most organizations lack the service of specialists to handle materials quality control trained/retrained or lack of proper supervision due to top management neglect. Facilitates related problem in organizations, there are inaccuracies in machineries, tools, fixtures, measuring  instruments etc. that are required in managing quality and total quality control process which can be disastrous for decision making as a result of the unreliable outcomes. The existence of these problems brought about the head for the research work so as to proffer solutions that are workable at the end.

1.3     Objective of the Study

The primary objective of the study is to identify the impact of quality management on production cost of an organization.

i)  To identify the challenges faced by manager in implementing Total Quality Management

ii) To identify the major cost component of Total Quality Management

iii) To identify the contribution of Total Quality Management on material and cost reduction

iv) To identify the method the Nigeria Bottling Company used in storage of raw material

v)  To identify the attributes of quality products

1.4     Significance of the study

The study will be of immense benefit to the researcher, the organization under study in achieving its goal and objective, other researcher, and the general public. It is sincerely hoped that the result of the study will be applied in areas that need to be improved in the organization under study. The study will also widen the horizon of the research on the topic under study and it will serve as reference to the researchers. Finally, the research is a pre-requisite for the award of Higher National Diploma (HND) in Purchasing and Supply of Kaduna Polytechnic.

1.5     Scope of the Study

The research is limited to the Nigerian Bottling Company Kakuri Kaduna Plant, but the research will look at the entire concept of Total Quality Management as well as the major cost component of production and finally the application of Total Quality Management on material cost of production and finished goods cost.

1.6     Research Questions

i)  What are the challenges faced by manager in implementing total quality management?

ii)  What are the major cost components of quality management?

iii) What are the contribution of quality management on material and cost reduction?

iv) What method does the organization used in storage of raw materials?

v)  What are the attributes of quality products?

1.7   Definition of Terms

Quality: fitness for purpose at lowest cost

Management: the process of planning organizing coordinating directing and controlling.

Effectiveness: the ability to bring about the intended result in respective of cost

Quality management: this is the overall management function that determines and implements quality policy.

Specification: this is the detailed description of an item.

Scrap: this is defect, materials or staffs that cannot be repaired or used

Total Quality management: (TQM) this is a management approach to an organization centered on quality based on participation of all its members of the organization and society.

Inspection: To check incoming materials with specification so as to accept or reject based on evaluation.

Performance: performance means doing a job as per specification with efficient use of resources.

Reliability: the ability to yield an acceptable outcome consistently.

Materials: materials are resource used directly or indirectly to produce or incorporate finish goods.

Purchasing: the management function of  buying the right materials from the right source, at the right quality, at the right price, at the right quantity and purpose as economically as possible.

Standard: A predetermined and accepted way of doing things or the accepted state of thins.

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