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krizia mae ayson

on 11 October 2013

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Chapter Objective
After this chapter, students shall be able to:
- Describe TQM in a service company
-Appreciate how KLM Royal Dutch Airlines successfully implemented TQM.
KLM Royal Dutch Airlines - TQM - A Service Company
KLM achieved a total turnover of Dfl. 9.2 billion in the financial year 1994/95, attained primarily through the transportation of passengers and cargo also services for other companies. As illustrated over 11 million passengers flew with KLM that year, and the company transported over 540 000 tons of cargo.
LIke many service organizations, KLM is labour-intensive, with about 24 000 employees on the payroll.
Comparison of service and manufacturing industries.
From a strategic point of view, initiating a Total Quality Management concept in service industries does not differ much from doing the same in manufacturing industries.
Manufacturing industries produce a visible product which can be demonstrated, whereas the service the actual product in service industries is intangible it consist of a series of interactions between staff and customer and has to be experienced by the customer.
Realizing a Total Quality Management concept at KLM
Three basic elements of Total Quality Management concept
KLM aims to achieve full customer satisfaction. In their TQM policy, three basic elements are well balanced.
Personnel - At KLM, quality awareness has been established by intensive training on how to satisfy the customer in every possible situation.
Organization - Changing the organization and bringing it more into line with the specific markets has shortened reaction time.
Results - To guarantee the continuity of the organization, KLM has for formulated principal objectives
-win customer preference,realize high market coverage,achieve and maintain competitive cost levels,continue the present sound financial basis.
The other main difference is that manufacturing industries separate the production and delivery processes. In the production process of industrial goods, it is possible to improve the product before delivery, should there be a defect. As these two processes coincide in service industries the customer actually takes part in the production process. Thus, if anything goes wrong, the customer notices these shortcomings immediately. As customer satisfaction is the main goal of all quality activities, a service industry has to concentrate on the interaction with the customer, as well as on products improvement. Front line care for the customer becomes a strategic issue.
KLM formulated principles for the service sector to follow.
The customer is the standard by which KLM measures quality.
Customer satisfaction start with employee satisfaction.
Empowered front line staff is a prerequisite for personal and flexible service.
Structures, systems and management behaviour should support employees serving customers.
Problems being experienced should, through well trained and skilful staff, be transformed into an opportunity and a positive experience for the customer.
Business Process Thinking
The first three step in the process refer to WHAT is to be produced. The next four step are related to HOW the product or service will be achieved. Starting with market research, a company has to choose what kind of product to served to what kind of customers. Once this choice has been made, the type of product or service WHAT has to be specified, so that the design can be drawn up according to specification and in line with customer requirements. The following four step in the process concern the HOW preparation, production, delivery and after sales service.
Strategic change of structure
A new divisional structure was formalized. Business units became fully responsible for their own bottom line result, with maximum autonomy to control their own critical success factors. The new organizational structure resulted in an effective organization, Business units with small dedicated support functions such as automation, personnel management and so on., Slimming down of central staff departments, and a change in management style from policing to coaching from directional to supportive.
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