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Total Quality Fundamentals Course, Case Study Example

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Case Study

Summary

The electric utility industry is going through a renaissance. It used to be that the electric utility industry was a monopoly but there has lately been a rise in not only competition but with rates and overall technological improvements. In Saudi Arabia the reason that electric utility companies compete is because bulk customers have the option to relocate their businesses to places in the country with better service. Thus, one or the primary objectives for an electric utility company/industry becomes customer satisfaction on a large scale, and the best possible solution for customer satisfaction is creating better quality services. One of the key elements in creating better quality service is to reduce the cost of industry or capital for the customer through “new and existing distribution network[s]” (Al-Saggaf 40). Due to these great changes in the electric utility industry there has been “little pressure …applied to utility management to control operating maintenance costs.” (Al-Saggaf 40). For these reason Total Quality Management (TQM) came into practice. The article focuses on different factoring areas in which TQM may be utilized in the electric utility industry.

One such TQM method that the article highlights is ways to “improve and increase customer services and satisfaction through quick response to their needs with minimum cost” (Al-Saggaf 40). The article goes on to state that Deming’s philosophy focuses on the basic premise of the “Deming chain reaction “(Al-Saggaf 40) and how industry improvements across the board can and will eventually lead to improvements in all other areas such as lowering cost to customers which in turn creates greater customer loyalty and this loyalty in turn turns into great productivity at SCECO-EAST which in turn becomes increased productivity applies to improvements for the SCECO-EAST electric utility industry. All of these elements, improvements across the board, lower cost to costumers, greater productivity, increased productivity allows SCECO-EAST to maintain a stable industry with high quality services and a solid foundation for employment which in turn positively impacts Saudi Arabia’s economic environment. The article goes into a step-by-step tutorial and analysis on how Deming’s chain reaction can be best implemented with SCECO-EAST.

The article highlights how Deming’s chain reaction philosophy is a necessary step in an industry that has customer that requires it’s businesses to cater to them because the market is overflowing with potential business contracts. This makes the electric utility industry competitive, as it has never been previously in Saudi Arabia. Quality of service may be seen a competitive edge with the proper strategic plan. Chief among the elements in SCECO-EAST’s plan in TQM is distribution substation (S/S) maintenance. There are tools that can be used, and techniques utilized in order to make great improvements in the industry in regards to “achieving external customer satisfaction through satisfying internal customers” (Al-Saggaf 41). In order to get these improvements to a satisfactory level, SCECO-EAST must address issues in their methodology on a team-based level. The paper states that improvements and success is contingentonthe customer.

Analysis of Methodology

SCECO-EAST sought to improve their company through TQM utilization. TQM areas they sought to focus on included customer satisfaction and services, general improvement across the board in their company, employee loyalty, employee improvement, and to “consider improved process-based performance measures” (Al-Saggaf 41). This easy 6-step process was broken down into three phases that was further approached on a PACE scale: PACE, or people achieving corporate excellence, which helps business achieve success through a narrow scope. Although the narrow scope approach allows for improvements in all areas, the time it takes to address each area is deleterious to a company that is expecting fast results. By taking a step-by-step process attack on existing problems only one area is concentrated on at a time and this could lead to other areas suffering through the change. A system works while all of it’s components work and if one component is being taught to do something differently then all of the rest of the component flag. SCECO-EAST’s phase protocol was its saving grace. The company delineated changes through a step-by-step process that didn’t focus on one part of the company in particular but one problem of the company.

SCECO-EAST sought to improve their industry by a three-phase approach. Phase I included a success timeline in which the company would have all of its parts functioning according to TQM within one year. Although giving oneself a time line can be setting oneself up to fail it is still important to be reaching toward a goal. The way that SCECO-EAST did it though was smart because they weren’t expecting unrealistic results. Phase I also included the implementation of 24 teams whose focus was solely quality improvement. This is an ambiguous team and being ambiguous it is uncertain whether or not they knew what they were doing, or if they felt daunted before the task began in all of the areas that “quality improvement” encompassed. In Phase II this problem is addressed as each department was given two teams that addressed TQM. Another smart move by SCECO-EAST is that while phase I improved upon TQM with a one year deadline (overall) phase II paralleled this idea but by giving each department two teams whose sole focus was TQM and by extending the deadline by two years they made realistic goals for the company. Also, by integrating TQM teams within each department it allowed for the problem to be addressed on a local scale instead of attacking it in a broad sense. By keeping it local, problems within the departments had an immediate TQM team or supervisor to see to curtail problems in their early stages. This created a system that worked on alacrity and celerity and whose standards were thus being met on a day-to-day basis. Phase II’s genius was that communication was readily available for all departments and they didn’t have to wait for answers to questions they had about TQM, they could just stay within their own department. By conquering the problem in a bifurcated way improvements were bound to be successful. Phase III presented more of a challenge as it sought to improve upon quality in the industry both person and industry quality. SCECO-EAST sought to improve upon business processes. This part of the phase was rather ambitious to take on as an overhaul, a massive overhaul in TQM requires a lot of change, willingness, and the human factor involved is a type of wildcard. In order to get management onboard for re-engineering methodology in the company is difficult because people don’t like change. Analyzing this maneuver from an objective point of view SCECO-EAST should have come up with a whole separate department to manage this pseudo-merger of getting current employees to change their methodology that in turn makes use of PACE, meaning the employees would be required to pick, analyze, create, and enact in order to properly handle this change-over.

The best plan that SCECO-EAST had was preventative maintenance. This means “conducting routineinspections, tests and the servicing of power distribution S/S equipments,consistent with good economics, so that impending faults can be detected andreduced or eliminated” (Al-Saggaf 42). This is kind of like the human body and in order not to get diabetes people maintain a healthy lifestyle. This was one of the better ideas SCECO-EAST implemented. The three goals that SCECO-EAST achieved by this was that they having scheduled outages (instead of unplanned ones), reducing emergency failures, and ultimately (and most importantly) reducing cost. These goals speak to phase I of the company’s plan. The improvements that this plan created were decreased outage time by almost a full hour. This means that customer satisfaction is being attended to as the TQM plan was to not only prevent maintenance (which the scheduled outages did) but to also improve customer satisfaction. Since the customer’s were aware of the outages, as they were planned maintenance outages, they were prepared and better able to incorporate this slight problem into their routine without a lot of frustrated that would have existed with an unplanned outage. Reducing the cycle time was also a boon to cost efficiency.

The customer survey was a great tool to use for the methodology. The survey broke down how well customers were satisfied with service as well as areas in which customers wished the industry to improve upon. This worked as a type of focus group and paved the way for customer-driven business and potential for growth in the customer highlighted areas. This in turn would increase SCECO-EAST’s TQM and lead to completing their phases according to their timeline.

Classroom Techniques and TQM

Other tools that this class offered that could be best utilized in SCECO-EAST’S industry is customer needs and wants. Customer’s are finicky and their desires and complaint change every day. One important factor when understanding customer needs that was taught in class is having each employee know what the customer wants, then to anticipate those wants. If the company operates on an old model of business in an industry that is so obviously centered on customer satisfaction because the customer may move their business outside of the industry’s jurisdiction, customer satisfaction becomes paramount. While SCECO-EAST improved their manpower expenditure and saved on materials and tools, the best section of their methodology approach was “responding to most of the customer needs and wants” (Al-Shaggaf 53). Customer satisfaction goes very well under TQM standards and practices.

SCECO-EAST has begun to improve its business because it is creating a culture of customer care within the framework of its TQM teams. Product development and customer satisfaction is beginning to be the pinnacle of the industry and it’s what is saving the industry. In fact, part of the methodology should have included a marketing campaign in which the industry informed the public about their new style of business. This marketing campaign would have garnered more customers moving to SCECO-EAST’s jurisdiction because of the improved outages and the fact that they were scheduled outages. This improvement is tremendous. A marketing campaign would have been able to do a compare and contrast with other electric utility industries in Saudi Arabia and shown off what they were capable of doing in comparison with their competition.

SCECO-EAST could also have benefited from analyzing their competition and working not just toward personal TQM goals but working on goals that allowed them exceed their competition’s competency. Knowing what the competition is capable of allows for better organization and goal setting in the company. Studying and learning a competitor’s techniques can only improve business through standard, structure, and through competitive means. It also allows for working outside of the box and collaborating on new projects, or new ways to do old business. If another electric utility industry has more customers moving to their jurisdiction then they’re obviously doing something right according to the customer, and in an industry in which the customer is king then paying attention to market trends only makes smart business.

Most Convincing Analysis in Case

The most convincing analysis used in the case was cost-benefit. Each TQM improvement that SCECO-EAST made increased their cost-benefit in some capacity. Thus, improvements were proved to be working. Cost-benefit was broken down into four sections: man-hours, operator hours, material cost, and KWH consumption interruption. Across the board, every section improved dramatically in cost-benefit. The drop in labor hours from 21,864 to 16,016 and the drop in man-hours from 5,392 to 4,280 shows extreme efficacy in relation to before and after TQM implementation.

Key Learning from Case

One of the key factors that I learned from this case was the customer survey. In asking customer’s questions in relation to SCECO-EAST’s product, I was able to better gauge desired improvements from the customer’s point of view. In an industry that is ruled by customer satisfaction (since customers have the ability to move their business to other electric utility industries) this seemed very important). I liked how the survey was broken down into reviewing product through customer’s requirement of the product, it’s importance, and how satisfied the customer was with the product. This way the customer had direct control over what TQM services were working for them and which ones were not.

Since SCECO-EAST allowed customers to contribute to the working TQM model, the survey was a reflection on where the industry needed improvement according to the customer. As a result, the survey is presented more as a fail-proof map as to how to best improve the company according to customer standards and needs and thereby improve cost. If the customer is the driving force for these changes, and making these changes allows customers to maintain their loyalty with the industry, then this survey works as a way to have a better, more cost-efficient company.

Along with the customer survey another interesting and compelling element of the case was the customer calculation. The way that this was set up was kind of genius. The team ranks customer’s importance factors (along with services, etc.) and how satisfied the customer is with those factors. This will get the industry an improvement ratio. Beneath this the industry created a relationship value by improving the relationship with associated relationship. Both of these ratios portend to improve the industry’s TQM. The survey was a product of these ratios.

In the survey the customer’s links were then paired with forms of improvement based on importance and how satisfied the customer was with past efforts. The 19-point survey table includes a lot of areas to improve upon. It was eye opening to discover that customers wanted to extend maintenance time more than they wanted proper maintenance. This was revealing because it seems as though the customer was more concerned with how concerned the company was for themabove whether or not the company performed their tasks up to par. In evaluating human surveys it seems as though it’s the effort and time an industry puts in to their customers, above whether or not they’re doing a good job, which seems to matter. This may be a cultural thing, or it may be a phenomenon.

Another interesting revelation in the customer survey was that as much as the customers wanted improvements in the company, this did not extend to the pragmatic purposes of the company (things that could benefit the customer but which the customer did not understand or have knowledge about such benefits). This is exemplified with the survey scoring “1’s” in the following areas: radio sets for crews, numbering feeder names, maintenance, inspection, and the stoppage of use of the generator during PMs. All of these items are essential to the phases set forth above and to general TQM improvement across the board at the company (in a very vital way), a benefit that the customer gains from in lessening of cost, but which the customer does not care.

While the industry is seeking improvements in areas according to customer needs, it’s important to know that while the survey shows these needs, the customer’s lack of knowledge in what makes a working electric utility industry top-notch is not always the things that they care about. This translates to the very subjective formation of the survey and it would be questionable if the survey were used to pattern areas of improvement upon. It would be questionable because this a crew may need radios in order to perform planned outages and to stay in correspondence with each other in case of an emergency (which in turn benefits the customer as correspondence could lessen the length of time the outages are to take place) but customers scored this as 1 on their list and placed too long a maintenance time as their prerogative.

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