018 Quality Management
018 Quality Management
018 Quality Management
Huy Truong
Systems and Production Department, University of Minho, Braga, Portugal
Paulo Sampaio
Systems and Production Department, University of Minho, Braga, Portugal
Abstract
Purpose: This research was conducted to recognize quality management (QM) practices which have
relationship with operational performance.
Design/methodology/approach: Based on the extensive literature review, a set of quality
management practices were identified and a conceptual model was built to explore their relationship with
operational performance. An empirical testing at Vietnamese garment enterprises was carried out.
Findings: The results of this research showed that four main practices including top management
support, human resource management, reporting and analysis of quality data, product/service design and
process management are directly and indirectly related to operational performance. In addition, 57.1%
variance of operational performance was explained by the QM practices above mentioned.
Research limitations/implications: Within the scope of this study, there are some aspects that
haven’t been yet considered: (i) there are many other factors that might also have impact on operational
performance which are not incorporated in this study, such as, external environment, capital, technology,
equipment, information flow, oursourcing, etc., (ii) generalized ability of results would be higher if
extending the sample scope to other industries and other countries. These imply directions for further
research.
Practical implications: To increase operational performance, the QM practices should be applied
simultaneously and the structural model was used in this study could play as “a guideline” to orient for
the implementation of these practices.
Originality/value: This study tried to address some issues that have not been fully examined in the
literature. Not only fill these voids, the research model presented the relationship among QM practices
and operational performance, along with the measurement instrument validated in this study also
provided some insights to the theory system of QM and operational performance.
It is also a valuable contribution for the next empirical studies, especially for countries having the
transitional economy as Vietnam.
Keywords: Quality Management, Quality Management practices, Operational performance, garment
industry, transitional economy, Vietnam.
Article Classification: Research paper
1. Introduction
As competition among firms becomes fierce, it is required that managers need to identify practices which
improve capacity and competitive advantage. In organizational context, operational performance brings
advantages in all aspects (Demeter, 2014; Prajogo et al., 2012; Samson and Terziovski, 1999). Increased
operational performance leads to a cost reduction (Heizer et al., 2008), improved product/service quality
(Samson and Terziovski, 1999) financial performance (Kaynak, 2003; Kaynak and Hartley, 2008; Ou et
al., 2010) and customer satisfaction (Ou et al., 2010). It is useful to gain and maintain competitive edge
(Reed et al., 2000). But how can we improve operational performance?
Related to this issue, a lot of academic studies were carried out. Flynn et al. (1995) took into account
the relationship between quality management (QM) and operational performance. He is known as one of
the pioneers to suggest the improvement of operational performance by QM practices. Flynn divided QM
practices into two groups: (1) core QM practices and (2) infrastructure QM practices. Several empirical
studies were conducted after Flynn’s study and proved the importance of QM practices in operational
performance.
As we know, investment on research projects able to leverage the performance of the industrial sector
plays an important role in the economy of countries. This is particularly relevant in the Vietnam garment
sector, which is one of industries with larger social and economical impact, whereas operational
performance is still very low. Thus, carrying out a study to help garment industry to improve operational
performance is one of main objectives of this study.
According to Vietnam Textile and Apparel Association, characteristics of Vietnam garment industry are
a labor-intensive industry, high production costs, ineffective in design and manufacturing and low product
quality as well. To improve operational performance of garment sector, hence, based on the extensive
literature review, the practices of top management support, human resource management, reporting and
analysis of quality data, product/service design and process management are suggested.
The importance of these practices have been partly recognized and applied in some companies.
However, this implementation is not widespread. Pershap, it is the main reason leading to low operational
performance. To verify this, this study will examine the relationship between the QM practices and
operational performance. We aim at providing further insight into this subject in order to create an
understanding on the way to a more efficient industry.
The structure of this paper is organized as follows: after the introduction, QM practices used in this
research are presented. Research model and hypotheses, then, are suggested. Section 3 describes
development of the instrument measurement. Next, results are presented and discussed. Implications and
directions for further research are mentioned at the end of this paper.
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The role of quality management practices in operational performance. An empirical study in a transitional economy
practices which are technique- and methodology-oriented practices such as reporting and analysis of
quality data, product/service design; process management, (2) and support QM practices such as top
management support; human resource management which are people- and culture-oriented practices and
create an environment that supports effective use of the core QM practices.
Table 1: QM practices
QM practices Description
Reporting and The collection of quality data. Display of quality data, control charts… at work stations.
analysis of quality Delivery feedback of quality data to employees. Availability of quality data. Use of quality
data data in employees’ tasks.
By (Forker, 1997)
Product/service Use of modular design of component parts. Use of standard components. The simplification
design of products. Review of new product/service design. Clarity of product/service specifications.
By (Kannan and Tan, 2005)
Process Use of fool-proof for process design, statistical techniques, automation, preventive
management equipment. Clarity of work or process instructions. Identification of problem easily.
By (Forker, 1997; Kaynak, 2003; Saraph et al., 1989)
Top management Offer of innovation and continuous improvement policies. Provision of necessary resources
support for processes. Promotion of partners’ involvement in firm’s activities. Participation of top
management in quality improvement process. Review of quality issues in top management
meetings. Responsibility for operational performance.
By (Flynn et al., 1995; Kaynak, 2003; Saraph et al., 1989)
Human resource The relationship between human resource objectives and strategic. The role of environment
management on the development of all employees. Responsibility in employees’ tasks. Promotion in the
motivation of employees. Training program for employees timely. The measurement
methods of employee satisfaction. The effectiveness of employee problem resolution
program. Involvement in determining training needs.
By (Adam, 1994; Choi and Eboch, 1998; Park et al., 2001; Powell, 1995; Samson and
Terziovski, 1999)
The relationship between QM practices and operational performance receives much attention in the
literature. However, results have shown to have low consistency. Some authors employed the same
dimensions to test the relationship between QM practices and operational performance but they obtained
different results. For instance, in the relationship between process management and performance, the
direct impact of process management on performance has been proved in several studies (Feng et al.,
2006; Fening et al., 2008; Kaynak, 2003; Kaynak and Hartley, 2008; Prajogo and Brown, 2004; Sila and
Ebrahimpour, 2005; Terziovski, 2006; Zu, 2009). However, according to Tarí et al. (2007), they have an
indirect relationship (Tarí et al., 2007). Conversely, Flynn et al. (1995) argued that process management
has a negative direct influence on performance, or even they are not associated (Powell, 1995; Samson
and Terziovski, 1999).
An explanation to these contrasting scenarios can be given by the use of different data analysis
techniques. By using multiple regression (Adam et al., 1997; De Cerio, 2003; Fening et al., 2008; Flynn
et al., 1994; Samson and Terziovski, 1999; Zehir and Sadikoglu, 2010) or correlation (Powell, 1995), it is
restrictive to test the relationships among constructs, especially, indirect effects (Kaynak, 2008).
Otherwise, Kaynak (2003) suggested that future research should take into account the the interaction
among QM practices that is able to indicate the indirect relationship between QM practices and
operational performance. However, it has not been yet properly addressed in the literature. In fact, the
empirical studies testing this interaction are still limited (Dow et al., 1999). Therefore, to fill these voids,
the following structure equation model is proposed (Figure 1).
Process management
Human
H2dresource management
Product/service design
The relationships in figure 1 will be tested by applying Structural equation modeling (SEM). It is one of
modern and complex methods, however, it gets the highest accurate in the quantitative research (Bollen,
1989). In the next part, hypotheses on the paths were developed.
H1a: Top management support is positively related to reporting and analysis of quality
data.
Nowadays, products become increasingly complex and differentiated, so design for new products/
services needs to integrate more information and techniques. A design team from different departments,
known as cross-functional team, could help improving design process through overall consideration of
organization’s issues. Top management mobilizes human resource of departments for the team and
creates good conditions in their tasks. In the traditional perspective, moreover, design and manufacturing
activities mainly took place within a firm and even considered as technological secrets. However, as
competition moves from firms to supply chains, key suppliers and customers need to be involved in these
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The role of quality management practices in operational performance. An empirical study in a transitional economy
activities in order to increase the competitive advantage of supply chain (Petersen et al., 2003). Support of
top management is a prerequisite for this integration (Kaynak and Hartley, 2008).
Top management offers policies which encourage innovations and continuous improvement in design
and production. For instance, the support for initiatives in the use of standard component, modular design
of component parts makes design activities more simple. The effectiveness of design is improved as a
result (Kaynak, 2003; Kaynak and Hartley, 2008; Ou et al., 2010). In addition, supports for continuous
improvement in manufacturing activities, such as, by increasing level of automation and using statistical
techniques, fool-proof of process design and preventive equipment maintenance can minimize chances of
employee errors and reduce variance in processes (Flynn et al., 1995; Forker, 1997; Kaynak, 2003;
Lakhal et al., 2006; Saraph et al., 1989; Sila and Ebrahimpour, 2005). Hence, the following hypotheses
are suggested:
Quality-related training programs help employees know how to use quality improvement tools, fool-
proofing for process design, the preventive equipment maintenance, etc. (Ahire and Dreyfus, 2000; Ho et
al., 1999). As a result, employees could reduce unnecessary or excess motions, errors as well as process
variance (Sila and Ebrahimpour, 2005; Tarí et al., 2007; Zu et al., 2008). Hence, the following hypothesis
is given:
H3b: Reporting and analysis of quality data is positively related to process management.
In addition, available quality data provides historical information about: (1) customers, (2) supplier
quality, (3) distributors, (4) manufacturing process. These information is useful for reducing order-time
and rate of late delivery, improving quality of inputs, detecting potential problems faster, making operating
activities smoothly and reducing lead-time and other expenses as well (Kaynak, 2003; Kaynak and
Hartley, 2008; Ou et al., 2010). Hence, we propose the following hypothesis:
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The role of quality management practices in operational performance. An empirical study in a transitional economy
add. Based on the feedback from experts, items were adjusted, and then, the official questionnaire was
established.
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The role of quality management practices in operational performance. An empirical study in a transitional economy
Then, exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) were conducted to
assess unidimensional and validity of constructs, including: convergent validity, discriminant validity and
criterion-related validity.
Additionally, the distribution of observed items is the normal distribution. Most of Kurtosis and
Skewness range from (-1, +1), which is in acceptant range (Kline, 1998). Thereby, the method of ML
(Maximum Likelihood) is appropriate to estimate parameters in research model (Muthen and Kaplan,
1985).
If measurement items are unidimensional, reliable and valid, the analysis of structural equation model
is carried out to test the hypotheses developed in the research model. In contrast, the process will turn
back to literature review to redefine the constructs as well as the measurement instrument.
5. Results
5.1. Test results of the measurement instrument
Cronbach’s Alpha and EFA were calculated with the support of SPSS (Statistical Package for the Social
Sciences) in advance. Extraction method was used in EFA is principal component – rotation method of
Varimax. The breakpoint is at Eigenvalue ≥ 1 for all constructs in theory model. The results, in the table 2,
indicated that six items were deleted because they could not get the target value. The remaining items
have the coefficient of item-total correlation range from .462 to .775 (greater than 0.35), the minimum of
Cronbach’s Alpha is 0.748 (greater than 0.7), factor loadings range from .683 to .904 (greater than 0.4),
Eigenvalue is greater than 1, the average variance extracted is greater than 50.
Then, CFA was carried out by AMOS software. After removing 4 items which do not get the target
values, the measurement model including five constructs of QM is tested with the following results: χ2 =
163.058; p = .132 (greater than 0.05); df = 144; χ2/df = 1.132 (less than 3.0); GFI = .911, TLI = .985,
CFI = .987 (greater than 0.9); RMSEA = .027 (less than 0.08), indicating that the QM measurement
model is appropriate with the collected data (Bollen, 1989; Byrne, 1998; Carmines and McIver, 1981;
Hair et al., 1995; Jaccard and Wan, 1996; Joreskog and Sorbom, 1993).
For the dependent construct, χ2 = 6.977, p = .222 (>0.05); df = 5; χ2/df = 1.395 (<3.0); GFI = .985,
TLI = .988, CFI = .994 (>0.9); RMSEA = .047 (<0.08), indicating that the measurement model of the
dependent construct is appropriate with the collected data.
Standardized Regression Weights of all items are greater than 0.6 (the minimum value is .656) and
significant (p<0.05). The composite reliability of all items ranges from .721 to .872, greater than the
acceptant level of 0.6 and the average variance extracted ranges from 51,1 to 69.5 ( 50 ) (Table 2).
In addition, the correlation coefficient between pairs of constructs ranges from .417 ê n .648 in the
significant level of p = .000 (table 3). In other words, constructs have discriminant validity (Steenkamp
and van Trijp, 1991). Likewise, each QM practices has high and positively related to operational
performance, indicating that constructs have criterion-related validity (Chen and Paulraj, 2004; Kaynak,
2003; Li et al., 2005) (table 3). It is concluded that scales of constructs have unidimensional, reliability
and validity (Bollen, 1989; Byrne, 1998; Carmines and McIver, 1981; Hair et al., 1995; Jaccard and Wan,
1996; Joreskog and Sorbom, 1993).
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The role of quality management practices in operational performance. An empirical study in a transitional economy
Practices 1 2 3 4 5 6
1. Top management support 1
2. Human resource management .514 1
3. Reporting and analysis of quality data .556 .578 1
4. Product/service design .594 .592 .544 1
5. Process management .551 .548 .513 .417 1
6. Operational performance .475 .648 .617 .542 .640 1
0.425
Process management
0.265
Human
H2d resource management
0.429 0.571
TopH2e
management support
0.494
Product/service design
The R2 for operational performance explained by the QM practices is 0.571, indicating that the QM
practices can explain a large amount of variance in operational performance. Therefore, it can be said that
QM practices suggested in this study have important role in improving operational performance.
6. Discussion
This study determines the multidimensionality of QM constructs (Adam et al., 1997; Ahire and
O’Shaughnessy, 1998; Anderson et al., 1995; Das et al., 2000; Dow et al., 1999; Flynn et al., 1995;
Forza and Filippini, 1998; Kaynak, 2003; Kaynak and Hartley, 2008; Mohrman et al., 1995; Powell,
1995; Rungtusanatham et al., 1998; Samson and Terziovski, 1999; Shin et al., 2000). QM is identified as
a multidimensional construct including different practices: top management support, human resource
management, reporting and analysis of quality data, product/service design and process management.
Operational perforamance will be improved remarkably if these practices are implemented as an
integrated system instead of independent practices. In this system, they interact with each other and
improve operational performance. The interaction among QM practices and the relationship between
those and operational performance are presented as follows:
The support practices consisting of top management support and human resource management
are directly related to the core practices: reporting and analysis of quality data, product/service
design and process management. The support practices create an environment that supports
effective use of the core quality management practices. In particular, by maintaining the support
and commitment of top management, encouraging the participation of employees in quality
activities throughout empowerment and training program, an organization could create studied-
and cooperated-based environment that can improve the efficiency of reporting and analysis of
quality data, product/service design and process management.
Reporting and analysis of quality data is both directly related to operational performance and
indirectly through the relationship with process management. Quality data, which is collected and
displayed in control charts, histograms, etc., and timely delivered to employees, is useful to
identify problems in production processes. Based on them, preventive solutions and innovations
are offered and operational performance is improved as a consequence. In addition, the relation
of the support QM practices to reporting and analysis of quality data indicated that reporting and
analysis of quality data is a mediating factor in the relationship between the support QM practices
and operational performance.
Product/service design is directly related to operational performance. By reviewing new
product/service designs before they are produced and making clear specifications (Kannan and
Tan, 2005), employees know clearly about products and what they need to do. They quickly get
acquainted with their works that drives to low rate of errors, shorter lead-time and improve
output. The cost of repair, rework also is significantly reduced. In addition, the relation of the
support QM practices to product/service design indicated that product/service design is a
mediating factor in the relationship between the support QM practices and operational
performance.
The relationship between process management and operational performance is supported in this
study. When an organization can manage its processes effectively, manufacturing processes
operate smoothly. Process variance and chances of employee errors are also minimized.
Consequently, operational performance is improved. In addition, process management is also
proved to have relationship with the support QM practices and reporting and analysis of quality
data. It indicated that the role of process management is as a mediating factor in the relation of
the support QM practices and reporting and analysis of quality data to operational performance.
Human resource management is directly related to reporting and analysis of quality data and
process management.
In Vietnam, garment is a labor-intensive industry (5% in the total of national workforce). Productivity
and product quality are almost decided by direct labors. Human resource management throughout
training programs and empowerment can enhance work performance of employees. Specifically, an
effective training program helps employees know how to collect and use quality data and quality
improvement tools in their tasks. In addition, empowerment makes employees more active, easier in their
tasks, e.g. cooperation with other departments to collect quality data or even suggest continuous
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improvement initiatives at their workplace. It is useful to improve the efficiency of quality data and
business processes.
To improve efficiency of QM practices and operational performance, therefore, it is necessary to build
up a high quality human resource which needs to be considered as the most important factor to gain
competitive advantage. In doing so, based on the research results, some following solutions are proposed:
Human resource objectives should be integrated into firm’s strategies.
Companies need to organize training programs timely and employees are involved to determine
training needs.
Firms pay attention to create a work environment conductive to the development of employees
and empower for them in their tasks.
In addition, the research results indicated the relation of top management support to human resource
management. It proves the mediating role of human resource management in the relationship between
top management support and other QM practices.
Top management support plays the driving force for the implementation of other QM practices. It
indirectly improves operational performance throughout paying attention to (1) training programs
and create a good environment for employees, (2) collection and use of quality data, (3)
effectiveness of product/service design, and (4) process management. The research results
showed that successful implementation of top management support practice required the
participation of top management actively in the quality improvement process. Top management,
who has responsibility for quality performance, needs to create quality-related policies and
objectives as well as conveys them to employees.
In an enterprise, top management could be Board of Directors. Widenly, it could be associations or
governments in an industry or in a country. Therefore, the support of top management could create a
good environment helping companies to improve their operational performance.
The relationship among product/service design and other practices, including reporting and analysis of
quality data and process management is not supported by data in this study. The reason can be that
Vietnamese garment enterprises, currently, mainly work at cutting & sewing stages - the lowest value-
added segment in global apparel value chain. Others, such as design, input materials and distribution,
etc., are nominated by customers. The use of quality data in the design process, therefore, is not
concerned. And the passive attitude in design activities leads to the lack of attention in the establishment
of cross-functional teams, in the use of standard components and modular design of component parts to
improve process. Thus, in the context of Vietnam garment industry, product/service design is not related
to reporting and analysis of quality data and process management. This result is contradictory with the
studies of (Kaynak, 2003; Kaynak and Hartley, 2008; Ou et al., 2010). Hence, future research should test
this result in different contexts to consolidate the statements about relationship among them.
6. Conclusion
This research project aimed at exploring the relationships between QM practices and operational
performance. A conceptual model was developed and an empirical study was carried out to validate the
model. The results showed that operational performance is impacted by QM practices under two groups:
support practices (including: top management support, human resource management) and core practices
(including: reporting and analysis of quality data, product/service design and process management).
These factors interact with each other to improve operational performance, so it’s better if these practices
are implemented as an integration system rather than independent. Therefore, in order to improve
operational performance, practitioners and researchers could not simply choose some practices
mentioned in this study to apply in their context. These practices should be applied simultaneously and
the structural model was used in this study could play as a “guideline” to the implementation of QM
practices.
It was noted that operational performance is not only impacted by QM practices as suggested in this
study, but also by many factors such as: external environment, capital, technology, equipment,
information flow, etc. However, QM practices suggested in this study could explain 57.1% variance of
operational performance, which is a remarkable value. Enterprises which have limitations in resources for
equipment investment and technological innovations could still improve operational performance
remarkably by the implementation of these QM practices. In other words, in the same conditions of
finance, capital, technology, equipment, information, etc., firms which could implement QM practices
successufully will have higher operational performance.
Finally, the proposed research model is also a valuable document for next empirical studies, especially
for countries having the transitional economy as Vietnam.
Within the scope of this study, there are some aspects that haven’t been yet considered including a
wider sample, which extends to other industries and countries, will allow the generalization of the main
findings. Also, it will be more comprehensive if future researches incorporate other critical factors such as
external environment, capital, technology, equipment, information flow, oursourcing, etc. These imply
directions for further research.
Acknowledgment
This project has been funded with support from the European Commission. This publication
[communication] reflects the views only of the author, and the Commission cannot be held responsible for
any use which may be made of the information contained therein.
This work was also financed with FEDER funds by Programa Operational Fatores de Competitividade
(COMPETE) and national funds by Fundação para a Ciência e Tecnologia (FCT) through Project: FCOMP-
01-0124-FEDER-022674.
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