CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY        

The advent of globalization characterized by widening consumer choice has intensified competition in both local and international markets. Consumers were now exposed to a wider range of generic products which enabled them to choose products of high quality at low prices. One of the strategies that could give organizations a competitive advantage could be the offering of quality products and services to consumers at competitive prices. The success of Japanese organizations in the late 20th century led most organizations to consider quality as the prominent market variable which gives a competitive advantage, (Alolayyan.et al, 2013).

As a result most organizations are now integrating Total Quality Management (TQM) as a strategic choice to gain customer loyalty, market share and win competition and subsequently survive in the competitive environment.The existing turbulent market environment requires companies to adopt and implement total quality management practices which enable them to identify and quickly respond to changing market conditions. TQM practices help organizations to respond proactively through continuous improvement to achieve best organizational performance (Chase et al., 2005). More so, total quality management may be adopted by organizations to increase market share and to gain competitive advantage, reduce operational costs and improve corporate reputation( Heizer and Render, 2004). Ismail, (2002) further identifies generic TQM practicesas, customer focus, leadership and top management commitment, employee training, employee involvement, continuous improvement, innovation, product design, cross functional quality teams, benchmarking, performance measurement and statistical process control. These generic practices are applicable to all organizations regardless of size and type. Firms need to give priority to total quality practices which give them competitive advantage in order to survive global competition.

The food industry aims at ensuring the harmlessness of its products and providing important information for its business partners along the food chain and consumers. On the other hand, the focus of the enterprises extends and the meaning of quality changes when considering the processes from the broader point of view of the stakeholders, who can influence business processes. As a consequence the enterprises use different instruments and systems, particularly Integrated Management Systems, to guarantee certain quality standards. Within the framework of a research project titled ‘Assessing the role of total quality management on food and beverages companies in Lagos Nigeria, the use, relevance and efficiency of Integrated Quality Management Systems, or so-called Total Quality Management (TQM), was investigated (Morath, 2008). Furthermore, the potential of TQM to provide improvement in food industry enterprises has been analyzed and recommendations deduced.

In the globalization era, quality is the most important element as competitive source in every company or industry. The fastest change in the competitive business environment to drive many enterprises to create both innovation and ability to win the competition in the domestic and international market. Today, in order still exist in marketplace, companies should adopt and implement the management best practices in operation management, i.e: total quality management (TQM) and Supply Chain Management (SCM) (Heizer and Render, 2004). These practices can help organization to identify change in the dynamic environment and to respond proactively through continuous improvement activity in operation functions to achieve best performance (Chase et al., 2005). The challenges in improving the performance in competition era are continuous improvement of business activities which focused on customers, flexibility and quality. Therefore, the management of quality should be done by companies in order to increase their market and to win the competition. Companies couldn’t be able to manage the change would be decline gradually in marketplace. Conceptually, quality is the totality of the shape and characteristics of the goods or services that demonstrate its ability to satisfy the needs of its apparent and hidden (Heizer and Render, 2004). Some experts define quality with a variety of interpretations. Juran (1989) defines quality as fitness for use. This definition includes product features that meet the needs of consumers and free from deficiencies. While Deming found the quality is meet the needs and expectations of consumers based on over the price they have paid. Deming’s philosophy of building quality as a system (Bhat and Cozzolino, 1993). General define of quality by Bina Produktivitas Tenaga Kerja (1998) are: (1) a perfect degree that contains a comparative understanding of the product level (grade) specific, (2) The level of quality that contains the notion of quality to evaluate technical, and (3) suitable for use, the ability of the product or service in delivering satisfaction to customers. Heizer and Render (2004) found that quality primarily affects companies in four areas: 1) cost and market share: an improved quality can lead to increased market share and cost savings, they can also affect profitability, 2) corporate reputation: reputation company follows a quality reputation produced. Quality will appear along with the perception of the company’s new product, employee management practices, and relationship with suppliers; 3) product liability: organizations have a great responsibility for all resulting from the use of goods or services, and 4) the international implications: in the age of technology, the quality is a concern of international operations. In order companies to compete effectively, products and services must meet the desired quality and price. In fact, quality is a concept that is quite difficult to be understood. Today, the word of quality has varied interpretations. It cannot be defined as a single phrase, because it based on the context. Thefore thus study focuses on assessing the role of total quality management on food and beverages companies in Lagos Nigeria.

1.2     STATEMENT OF THE PROBLEM

According to Sila et al. (2007) total quality management (TQM) plays a very important role in enhancing the strength of enterprises competitiveness. In the global market that continuously changing both speed of delivery and product quality are the essential elements for companies to compete in marketplace. TQM is an approach that should be done many organizations to improve the quality of products, reduce production costs and increase productivity. Implementation of TQM have a positive impact on revenue and production costs (Gaspersz, 2005). Other evidence also suggests that companies that pursue best practices of TQM to achieve higher profits and shareholder value as well greater cashflows (Corbett and Rastrick, 2000). Performance measurement is an important factor for effective management. In general, performance is defined as the extent to which an operation meets performance objectives, and major steps in order to meet customer needs. The evidence suggests that without performing a measurement of the performance, managers are very difficult to fix it. Therefore, improving the organizations performance should begin from identification some variables that influence of performance and measure it accurately. Measurement of quality performance is essential for many organization, in order to achieve both operation efficiency and optimal business performance (Demirbag et al., 2006).

The Food and beverage industry seemed to be losing market share because of quality related challenges. Some food companies in the food and beverages industry lost 12% and 10% sales in lager beer and soft drinks respectively because of the proliferation of imported beverages into the country, (Delta Corporation Full Year Report 31 March 2015). Similarly, Nestle PLC seemed to be facing quality problems in raw milk and this resulted in related imports gaining ground (Nestle PLC Annual Report 2014). The question is whether quality management practices have an impact on market and operational performance of the food and beverage industry. Thus, our study sought to determine the extent to which total quality management related practices have affected the performance of the beverage sector in Lagos Nigeria with a view to proffering some solutions. These problems necessitates the need to carry out a study on assessing the role of total quality management on food and beverages companies in Lagos Nigeria.

1.3     OBJECTIVES OF THE STUDY  

The general objective of this study is to assess the role of total quality management on food and beverages companies in Lagos Nigeria. The specific objectives include the following:

1.     To assess the effectiveness of the total quality management practices employed in the food and beverage sector.

2.     To establish if total quality management practices is employed in the food and beverage sector.

3.     To determine the extent to which total quality management practices were affecting performance of the food and beverage sector.

4.     To determine the total quality management practices related challenges that faced the food and beverage sector.

5.     To find out the possible solution to the challenges facing the practice of the total quality management in the food and beverage sector.

1.4     RESEARCH QUESTIONS

The relevant research questions related to this study include the following:

1.     What is the effectiveness of the total quality management practices employed in the food and beverage sector