Operation Management

Introduction

Quality management is a critical research area in present day corporate discourse. Quality management. The topic has developed into an integral facet of business culture, on par with financial reports, as its sustainable competitive benefits are well recognized. Quality management can be defined as a set of principles utilized by management executives to develop infrastructure that guides corporations in continual improvement and performance (Schlickman, 2003).

The principals are an extension of the combined knowledge, skills and competencies of the international ISO Technical Committee which formulated the ISO/TC, Quality management and quality assurance. However, quality management remains an under-researched concept in strategic resource management (Powell, 1995). The standards provided by the ISO 9000 (ISO) were developed from the ISO/TC document, and quality management criteria is now used in corporations across the globe which have been taken up by over 880, 000 corporations in over 161 nations (International Organization for Standardization, 2006). As such, the ISO is a generic management system benchmark for quality management expectations in business due to; its customer-centered approach to their needs and requirements; its regulatory requirements; its orientation toward customer satisfaction; and commitment to continual improvement achieving these goals (International Organization for Standardization).

An individually owned corporation that has successfully implemented the ISO standards is FEXCO in County Kerry, Ireland, is an internationally recognized competitive company (FEXCO, 2006a). The corporation provides world wide payment services for both corporate and public markets, for activities such as financial transfers, bureau de change and currency conversion. On average, FEXCO processes 19 million transactions annually. Over 1,400 staffs are employed with the company, almost half of them being based in Kerry, and the others located in country offices in countries such as the United Kingdom, Spain, Malta, Australia, Finland, Denmark, Sweden, Dubai and the USA. Predominantly, FEXCO has adopted ISO 9000 guidelines to assist with decision making with regard to information technologies (IT), and country and currency codes. The corporation first implemented the ISO code in 1996.

FEXCO displays its commitment to ISO principles in its description of its core competencies and values; a commitment to the best technology, staff and services; a focus on the customer (i.e., people matter); a desire to form long-term relationships with stakeholders; transparency and accountability of corporate practices; embracing innovation and treasury management; and having technology driving the global payment transactions (FEXCO, 2006b). The organization was recently awarded the Payment Card Industry Data Security Standards (PCI DSS) compliance accreditation for its excelling efforts to implement technology that secures cardholder account data security. The award is an example of the effectiveness of ISO principles, as further elaborated by Managing Director of FEXCO, Dermot O’Shea:

We are delighted to have received this important payment card industry accreditation. As FEXCO deploys its Dynamic Currency Conversion solutions internationally, it is vital that we are accredited by the Visa AIS and MasterCard SDP programs to ensure a high level of confidence for our ever-growing customer base (FEXCO, 2006c).

With regard to its focus on continual improvement of staff, FEXCO has drawn on ISO standards to develop managers by providing them the opportunity to pass a Diploma in Management FEXCO, 2006d). Working in conjunction with Carole Hogan & Associates, the managers were accredited by the Institute of Commercial Management, a world renowned Foundation that provides high quality education. The Diploma was initiated in February of 2005 in Kerry, and aims to expose new managers to an overview of corporate culture, procedures, guidelines (e.g., ISO 9000) and goals.

Identify the Benefits of Using ISO 9000

Benefits of using the ISO are manifold. Firstly, its generic application has the advantage of; providing organizations of any size with standards that can be used across all products and services; being user-friendly for all business activity sectors; and allowing businesses, public administrations and government officials with a set of guidelines to guide decision making and organizational practices (Tvrdik, 1997). Additionally, a generic document means that regardless of the amount of activity a company may experience, when it considers quality management systems, it must be recognized that many critical elements must be included, and that these elements are available with the ISO.

Secondly, the ISO is a comprehensive system that innervates an entire organization (Tvrdik, 1997). Empirical indicators that can be used to measure the ‘health’ of a company can be achieved with the ISO, as it can increase a company’s access to international markets; maintain consistent and reliable processes; as well as ensure less idle time, and less waste of materials and staff efforts. Hence, the document improves market benefits for companies and reduces their costs.   Finally, it appears that for small to medium organizations aiming to supplier larger corporations that they may in the future have to be ISO certified in order to maintain business relationships. In other words, the advantages are to continue current client relationships, and to be able to bid for new contracts. However, for those organizations who do not deal with larger organizations in this way, the salient benefits of using the ISO may be misunderstood.

Why it is critical for employees to stay in compliance as they perform specific tasks?

One study found that ISO 9000 provided 86% of respondents with improved management, control, and/or organizational planning, which provided staff with a consistent work environment, encouraged a company culture of collaboration, inclusiveness and continual improvement (Lloyd, 1992 as cited in Schlickman, 2003). Other benefits which have been cited include; enhanced team-spirit; consistency in work performance; instilled a confidence in the reliability and dependability of co-workers, increased employee satisfaction and decreased perceptions of stress; an d improved employee moral and training programs (Saarelainen, 1997 as cited in Schlickman, 2003).

How would you handle an otherwise good manager who refuses to enforce the prescribed standardized processes?

Agency theory provides an explanation for the underlying processes of why a manager would not want to engage in an activity that would be of benefit to company stakeholders (Gill & Jones, 2004). The theory stipulates that managers may have personal goals that do not align with those of the company as a whole, and so the manager may look to achieve outcomes that are not in the best interest of other stakeholders. In such a case, a manager might take advantage of available information asymmetry to mislead stakeholders and to increase the private interests of the manager at the expense of other stakeholders.

For this situation it may seem obvious that the manager needs to be let go, as the personal agenda could seriously negatively affect the profitability of the company, the moral of employees, and the perceptions of customers of the company brand. However, it may be that the manager is unaware of the benefits of the ISO, and simply requires ongoing training to realize that quality management practices do not threaten the manager’s status or ability to perform at a high level.

A focus on continual improvement would provide opportunities to expose the manager to new ways of thinking, and would perhaps cultivate a spirit of accountability, creativity and motivation to become more involved with stakeholders due to reciprocal relationships.

References

Gill, C. W. L., & Jones, G. (2004). Strategic Management Theory an Integrated

Approach, 6th Edition. Boston: Houghton Mifflin Company.

International Organization for Standardization (2006). ISO 9000. Retrieved October 10th, 2006 from http://www.iso.org/iso/en/ISOOnline.frontpage.

FEXCO (2006a). FEXCO. Retrieved October 10th, 2006 from http://www.fexco.com/

FEXCO (2006b). Core values. Retrieved October 10th, 2006

http://www.fexco.com/core.php

FEXCO (2006c). FEXCO awarded important payment card industry accreditation.

Retrieved October 10th, 2006 from http://www.fexco.com/viewnews.php?id=128

FEXCO (2006d). FEXCO supports people development. Retrieved October 10th, 2006

from http://www.fexco.com/viewnews.php?id=124

Powell, T. C. (1995). Total quality management as competitive advantage: A review and

empirical study. Strategic Management Journal, 16(1), p. 15-37.

Schroeder, R. (2003). Operations Management, 3rd ed. McGraw-Hill.

Schlickman, J. (2003). ISO 90001: 2000: Quality management system design. Norwood,

Ma: Artech House.

Tvrdik, B. (1997). Costs and benefits of ISO 9000 registration. Retrieved October 10th,

2006 from http://www.ciras.iastate.edu/publications/CIRASNews/fall97/iso.html

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