An analysis of benefit in Implementing Total Quality Management into B2C E-Commerce. PMAN639-Project Quality Management University of Maryland University College . . ABSTRACT Total quality management (TQM) comprises three elements; customer focus, variation and continuous improvement. Quality begins with understandings of customer’s requirements upon which the performance goal for the organization is based. Variation in quality is controlled by using statistical methods.
Continuous improvement begins with statically defined current process and identifies the future modification to the process that might reduce the defects and increases the predictability of the performance. In this research paper the concept of TQM and ECommerce is explained. It discusses the issues of the quality in E-commerce. Finally it analyses the applicability of TQM in the ECommerce (B2C). An analysis of benefit in Implementing Total Quality Management into B2C E-Commerce. The topic for this research paper is to analyze the benefits of implementing total quality management principles in e-business.
In order to dig depth in to this topic we need to explore what is quality and define and discuss the concept of total quality management (TQM). Also we need to understand what e-commerce is and briefly explore various domains of e-commerce. Then we need to analyze the issues and benefit of implementing the total quality management in e-business. Analysis Majority of leading companies are implementing customer focused quality management principles. Cost reduction, improve quality, efficiency and customer satisfaction are the core benefit of total quality management (TQM).
TQM have helped many companies to improve their competitiveness (Yang, 2003). E-commerce helps to find new customers and it enhances the improvement of services for the existing customers. Vast numbers of companies are now reaching out large population of customers through e-commerce. Majority e-business firms have accepted the fact that key to their successes is the quality of their e-service. Current research has indicated that quality management principles of each organization must be restructured to face changing e-business.
It is important to tag the major quality issues for e-business dealing with international market. Current research further indicated that the quality management principles must be effectively integrated in to the major issues of quality management for a successful E-business. Definition of quality is based on the need of customer. ISO 8402-1986 standards defines quality as “the totality of features and characteristics of a product or service that bears its ability to satisfy stated or implied needs. In his book “Managing Quality” Harvard Professor David Garvin defined quality using following principal approaches. Product based definitions where quality viewed as measurable features. For example the engineer can design a product to fit its benchmark of reliability, which can be measured. For user based definitions quality is a personal matter and products or services are of best quality if it satisfy their preferences. Manufacturing-based or process based definitions are standards set by the organization.
Strict adherence to quantifiable standards would help to produce a product that satisfies specific user requirements. Excellence in quality lies in the standards set by the organization. Value-based definition, quality is defined in terms of costs. The consumer chooses a product or service which is based on quality at the affordable price. Thus quality is the confirmation of satisfied customers, and confirmation to standards set by the institution. Quality is the necessary characteristics of product and services to satisfy a consumer at an affordable price.
Quality management is defined as an approach to manage a business whose focus is user’s satisfaction. Quality management includes the activities of an organization to directing, controlling, and coordinating the quality process. A quality management function comprises quality planning, quality control, and quality improvement. Quality planning includes the system, service and product development. It includes the steps to identify the customer and its needs and develop products based on their needs.
Quality control involves the steps to asses the quality performance and compares with the standards or objectives and analyze the shorts of objectives. The quality improvement an important stage of quality management function includes the steps to identify the improvement areas and establish the project team. ISO 8402 defines Total quality management(TQM) as a “management approach of an organization centered on quality, based on the participation of all its members and aiming at long term success through customer satisfaction and benefits to all members of the organization and to society. Total Quality Management (TQM) is a comprehensive approach is utilized by any organization that needs to upgrade the quality of its products or services through a process of continuous feedback from its consumers. It creates a framework where initiatives for effective quality and productivity can be implemented, that would help to raise the competitiveness of any organizations. Dr. W. Edwards Deming in 1930 from the help from Bell telephone company statistician Walter A. Shewhart devised a management process which is statistically controlled.
This process is a combination of Shewhart statistical quality-control techniques and Deming’s own management theories. This tool provided the managers to determine the time to intervene the manufacturing process. U. S. State Department had sent Deming to Japan during 1947 to implement its statistical quality control process to help Japan’s ailing manufacturing sector. Deming’s statistical quality control systems were adopted in the United States by many USA corporations which eager to improve their products quality and succeed in competitiveness. Total quality management (TQM) became an acronym for quality initiatives offered by Deming.
The core element of the TQM is the supplier and customer and it is surrounded by the elements that are committed to quality, method of communication and recognition of change of systems within an organization in order to achieve the total quality. In the following sections the basic elements of TQM are discussed. The important factors of TQM are the following: • Leadership • Customer’s satisfaction • Continuous education • continuous improvement • Top management commitment • Statistical process control Leadership is an important factor that ultimately drives implantation of TQM by creating the elements of needs of customer’s satisfaction.
Leadership could be dictatorial (which most employees dislike), democratic (where each on involve in decision making, but the leader have final saying). Leadership may be participative where the managers establish the policies and make key decisions by considering the input from the employees who ultimately implement the policies. Customer satisfaction depends on the skillful reorganization of their needs. There are several steps are taken to identify customer needs. First always speculate the outcome of the result. Then plan to gather all the information regarding customer needs.
Analyze the collected information and check its validity. Finally take the appropriate action as indicated. Education and training should be readily available to the employees and managers so that the each team members can take an efficient role in providing the best quality service on products and services offered by the business. Also training programs should be considered as an investment for enhancing the knowledge of the employees and to tap their potentials. Training programs also developed for managers to increase their decision making ability for product quality improvement.
Continuous Quality Improvement is a cost effective process for achieving consumer’s desired expectations. A good continuous improvement program will ensure the successful quality product of any organization. Plan-Do-Check-Act is a cyclical pathway for achieving continuous improvement of quality. Plan or define the required processes or sequence of steps of the improvement steps. In this phase customer’s problem is analyzed, collects relevant information, and finds the problem’s origin. Once the action plan is defined, a next step is “Do” phase, where the action plan is executed.
The progress against the action plan should be continually monitored, measured and compared to what was set in the beginning to gauge its effectiveness. Next step is “Check” phase to check if the improvement actions are successful. It requires establishing performance measurement methods, for example use of Pareto or Run charts. “Check” step provides data and possible lessons learned. The “Act” steps involve documentation of the results, broadcast about the changes in the process, and provide solution for the future PDCA cycle problems. Brainstorming, outlining a plan and efining the targets for improvement are the core element of Plan-Do-check-act cyclical process. It can be repeated to drive continuous improvement. Top management commitment towards the efforts for quality improvement is important. The top executive who leads the effort for quality improvement must understand the TQM and adds to the culture of that organization. It should ensure the TQM message is communicated throughout the organization. The statistical process control (SPC) is essential tool of TQM and it is been used in the manufacturing sector to maintain an appropriate level of quality standard.
Common type of SPC control charts are X-bar and R-charts. The X-bar is used for control mean and R-charts used for to plots the limits of each observation. The process considered in control, if the observation data are within the range of upper and lower limits of the process. Any deviation in X-bar indicates that the process is trending away from its process average. An investigation must be followed if the process not in control. The TQM principles can be used successfully in E-commerce quality management. Electronic commerce or e-commerce is a term applied businesses that are conducted over the internet.
It enables customers to electronically purchase goods and services at any time and at any distance. The goal of the e-commerce is to improve organizational performance through the computer. Now a days e-commerce are being used for communication or transaction between the stakeholders of an organization such as customers, suppliers etc. Parts of the e-commerce include telephone, fax, television and many more. E-commerce is classification is based on their way of business transaction. The type of electronic commerce could be B2C, C2B, C2C, and B2B.
B2C e-commerce portal facilitate selling of products or services directly to consumers. C2B e-commerce helps the consumers to decide what they want to pay, and the seller decide whether or not to accept. This method helps to improve communication between consumer and organization, the negotiation duration become shorter. C2C e-commerce model enables any business transaction between unknown, un-trusted parties. Perfect example of this model is E-bay, where customer sell their goods and services to other customers. B2B e-commerce portal enables business transaction between businesses instead of between businesses and consumers.
Business to customer transaction called B2C are of three categories of model; E-broker model, manufacturer and auction model. The broker model use an intermediary between suppliers and customer, manufacturer model involves when the manufacturer add-value to the purchased product and resell that to customers, and auction model (or internet exchange model) let buyers set the price and determine the willingness of seller to the bidding price. Key components in B2C E-commerce are the consumers, the suppliers, electronic intermediating service providers, and the government. pic] Total quality management can be integrated into e-commerce with it basic elements. First the leaders should create innovative process that has advantage to the consumers, for example lowering cost of production which may lead to lower product cost. Leader of any organization seeking to adopt e-commerce must make proper changes and establish an environment that conducive to e-commerce. Leadership must act to make necessary change in company culture and pursue the sponsors for financial commitment for these changes.
In B2C market leaders must assess the consumers need and provide the product or service that are relate to the customers demand. For example management must ask consumers what they expect from their product or service; it could be on time delivery or free shipping or on-site support etc. Customer’s expectation and perceived performance leads to fulfillment of customers needs. Customer satisfaction plays an important role in B2C e-commerce. Good web design, product availability, product information and service convenience are important factors for customer satisfaction.
Continuous training and education of the e-commerce employees are important factors of quality. Frequent change in information technology and e-commerce business process requires some system which will provide individual quickly with required knowledge to understand and perform their task. Proper methods of training will enable employees to provide their input to organization innovative process in a motivational manner. In order to achieve total quality each product or service must have customer care service personal that could constantly monitor the activities within the time phase and with proper quality.
Statistical process control enables the website managers to monitor and observe the factors that influence the effectiveness of their websites. This continuous monitoring could make their websites more attractive and may lead to higher level of customer satisfaction. E-commerce should be able to help organization for reduction of cost and improvement of its product/service quality, reaching out new customers or suppliers in various geographical regions, and helping in new ways of marketing their products. The quality issues in E-Commerce could be operational or environmental.
E-commerce should have attractive web sites, web technology that supports the online transaction and web security. High quality web technology is critical in order to sustain efficiency and effectiveness of e-commerce. A quality e-business operation can elevate the corporate revenue, improve consumer communication, and helps to retain the exiting customer. According to Chou (2001), a successful E-commerce application has the following characteristics: Its Web site contents should provide useful information about product and service of the providers within the shortest time possible.
For B2C web site this is very important to inform the consumer adequate information about the provider’s organization. Its Web technology must qualify for bandwidth of the network, and should be equipped with supplementary services in order to facilitate efficient online transactions and sales. The payment transaction should be user friendly. The users should be able to monitor the price comparison of the various products and their order status. Additional services in the web site would be helpful to the consumers, such as risk management services, authentication of buyers or sellers, and electronic payment services.
E-commerce’s number one operational quality is its customer’s privacy. Consumers are fear of leak of their personal information. Security issues arise when customer exchange their credit card numbers over the internet. The firewalls are there to safeguard the transmission security only. Also customer loose their interest if speed web very slow. Environmental quality issues involves with the influence of external factors (such as governmental control, taxation etc. ). E-commerce always tend to be global, thus it could face barriers in language, culture and infrastructure of the countries they are dealing with.
Chou (2001) have mentioned following supportive environmental characteristic; • E-commerce community should have less governmental control on them. • Introduce more online Tax-free shopping • Various customs restrictions must be reduced in order to facilitate more online selling across the globe. • Lowers the cultural and infrastructure differences among the e-commerce communities. Total quality management carries many benefits to all domain of e-business. B2C e-business is of three types of model; e-broker model, manufacture and auction model. E-broker model the agent is the middle man between customer and supplier.
Manufacturing model, where manufacturer adds value to its product through its internal process. The auction model enables the buyers to bid the price and allows the supplier willingness to accept the bidding price. The Plan-Do-Check-Act cycle can be conducted by the e-commerce companies by integrating TQM in to their B2C e-commerce. Most important TQM factors are customer focus, which offers consumer with high quality product/services whenever the consumer needed. The benefits of TQM in B2C e-commerce can be summarize below; • The efficient, reliable web site could drive more new customers. The advanced technology that supports the B2C web sites enables faster transaction over vast distance. • The top-quality operational process protects the e-commerce security. • E-commerce companies would bee able to maintain top-quality environment. Lee and Kozar (2006) in their study have investigated the website factors, and its relative importance in selecting preferred website. They have used DeLone and McLean’s IS success model to observe the relationship between website preference and financial performance. They have conducted survey of 156 online customers and 34 managers of different e-business.
Their study has identified different quality factors and their importance for each website. They have also identified the alternative website priority among e-business and stakeholders. Their study has indicated that highest quality is associated with highest performance of e-business. Navigability and security are important for online customer. Their result supports the view that customer importance in on-line business depends on product type and technology. It also indicates that customer satisfaction comes from engaging in online buying rather than direct financial gain.
Finally their studies have shown strong relationship exists between preference of website and e-business performance. Their finding suggests DeLone and McLean’s IS success model can be applied for measurement of the quality level of e-business web sites, which would guide manager and designers for quality improvement. Stefani and Xenos (2011) in their study the points of view; software system and service to customers, can be combined with a weighted model for bottom up evaluation of a Business to consumer system.
The quality of B2C e-commerce can be assessed from two points of view: as a software system and as a service to end-users. Software system can be assessed by software engineers or professional evaluator. Where as the software function or service must be assessed by end user’s perspective. The B2C quality can be perceived through the interaction between the customer and the software function. The paper provides a model which uses the ISO9126 software quality standard which provides a baseline in combination with points of view of end-users and evaluator.
This model can be use for forward evaluation of qualitative strength and weaknesses of current B2C system and also can be used backward for quality improvement. Discussion Implementing quality management in E-Commerce is challenging. Few researches have been done on integrating TQM with different categories of E-commerce. The applicability of TQM varies depending on structure and functional nature of organization. But the application of the basic principle of TQM, such as improvement of quality and to retain customer’s loyalty by creating long term customer relationship remains same.
By analyzing various research papers it seems that customer satisfaction, management of supplier, employee empowerment, and quality results can be improved effectively by integrating TQM in e-Commerce. Integrating TQM in to e-business is just adding thousands of horses to the business wagon. Popular quality business product and services could reach many customers to any region in very short time. According to Lee and Kozar (2006) the customer should be engage in to web site, therefore the web site must be user friendly and informative.