Quality to everyone
Then whole aim of TQM is to transfer ownership of quality to everyone. Production is done in groups where a group of people work on the same product. It is known as the internal customer system the next group of people are the previous group’s customer so before the product is passed on quality of the product must be checked. As ownership is transferred to everyone each person it means more responsibility for the workers. Also unlike the other two systems errors are worked out when found. TQM uses a ‘Right First Time’ method, which works on a theory of prevention not detection.
All three of these methods of testing quality contribute to the overall quality produced by Rolls Royce each day. If quality is not met it could mean lack of sales due to reasons such as loss of reputation. It is not just Rolls Royce that has to deal with quality. All businesses have to ensure they are producing quality goods otherwise people won’t buy their products. After looking at a press release produced by Rolls Royce it is clear they have met their objectives.
A good indication of whether sales have increased is the share price and how much dividend is been paid out. As Rolls Royce is a Plc it is easy to look up financial records. After looking at sales figures compared to previous years there is clear increase in sales. Another objective they aim to achieve is to increase after sales revenue. A statement produced by the company on the website clear sated how well after sale revenue had increased so this is a clear indication that the company was pleased. Therefore showing they had reached there objective with regards to after sales revenue.
A presentation produced by Rolls Royce at the end of each year contains a short statement from each area of Rolls Royce referring to how well they have done in the previous year:These four sentences sum up how the business has done in relation to there objectives mentioned previously. But as regards to SMART it is hard to consider whether these objectives were met. Although there is clearly a positive feel to these four statements it is hard to measure objectives that are far more long term objectives. One objective that is mentioned that there is no reference to in their yearly overview is whether harmful waste has been disposed protecting the environment. However in conclusion I have a quote from the annual press release from the Managing Director of Rolls Royce “2002 is developing, overall, in line with our expectations”
In terms of sales figures however compared to the previous are slightly down due to the September 11th attacks which halted the need for aeroplane parts. (Shown below is the profit and loss account showing the first half of the year for 2001 and 2002) Without structure Rolls Royce would not be the business it is today it relies heavily on its structure, management style and culture. As mentioned before this company is controlled by overseers however if freedom as not given to the workers. This sort of management style contributes to the overall success of the business because staff morale is high.
If workers are pleased the production and quality process is good. This style of management has a chain effect. It is hard to determine a certain type of culture within Rolls Royce; because of this it may cause confusion in the business. If there is confusion within the business it could affect sales. Also lack of control or structure in a business could cause failure of meeting objectives. In this case there is clear answer to whether Rolls Royce was aiming to reduce harmful wastes in their factories.
If a lack of communication caused by poor structure, this objective may not be met. I believe Rolls Royce contains mainly a role culture atmosphere. In this type of culture a man is set to do his own job with a senior management team overlooking production. Due to there been a senior management team there is a level of control within the company, this could aid the company in terms of communication and quality of products been produced.
Within Rolls Royce ICT is a major part of the company. The company believes the role of ICT is important in such a large company. Therefore I think the use of ICT in the company is very good. Internally the company uses ICT for e-mails. Other electronic devices such as telephones are used to record voicemail and a factory wide public address system to notify staff. However this form of communication is open, as it is not used for restricted information such as redundancies. If a company is going to survive in a changing environment it is going to need to communicate quickly, the use of computers or ICT is the best way.
This is why it is best for any company to eventually use computers to aid them in their business not just communicating but for recording purposes. Externally business can use e -mail to place orders or inquire about business. However it isn’t entirely fool proof if a company urgently needs to contact supplier e-mail, although make take a few days before it is read and replied too. Apart from contacting suppliers or customers Rolls Royce uses the use of ICT to produce a website. This has to be the most successful way of using ICT in a business. It provides an alternative way of selling products.
In the case of Rolls Royce it allows them to produce their financial records for potential buyers and shareholders to view, a requirement for a Plc. Apart from selling products and producing financial information it also provides a form of marketing products. Some communication can be used internally and externally, I have mentioned e-mail there are some others such as a fax machine and video messaging. However most technology is very expensive, only large businesses such as Rolls Royce can afford it. Therefore I believe that Rolls Royce use of ICT is exceptional. They use every available technique to aid their business. Although buying the latest technology can only be done because of success in the first place.
It is hard to say what Rolls Royce could do to meet is objectives. However on e objective that could be met better is the environmental issue. The pollution produced by the factories could be monitored and checked regularly. It is also inevitable that turnover will increase within the next year as it is on its way up after September 11th attacks. A more short term solution would be to cut costs. You can do this in several ways. Although slightly unfairly is to cut staff by making people redundant but this case is only really necessary if there is major financial worries which is not the case within Rolls Royce.
Therefore I suggest they pay more attention to quality and reduce waste products. In the long run it would be better but forward booking would increase. This could only be done if the board of directors accepted it. It would also pay to have staff working longer hours but staff morale would decrease. One objective states ‘to address four global growth markets’ to ensure they did, they could get the marketing department to advertise there business or offer cheaper but cost effective prices. As Rolls Royce does not offer products that can be sold over a till but more order based products over long periods of time in bulk it is difficult to keep track of money within business transactions. It is therefore important for Rolls Royce Plc to offer a good stock price to encourage investors. Once you have investors you must keep them happy.
A good way to keep them happy is to send or post regular updates on the web of recent news within the business. Another objective is the hopeful increase in aftermarket sales revenue. This objective was clearly met with a 40% of sales coming from aftermarket sales. However it must not be a one off and must be kept at this level in the future. To ensure this happens the research department within Rolls Royce could undertake in a survey of all its customers regarding customer satisfaction. This may be time consuming but in the long run would benefit the business and keep the aftermarket sales revenue the same or possibly better.
Putting the above effects in to action would mean some changes to the business. First of all certain departments would take more of a role in the business such as the research department if the survey is to be undertaken. The sales and marketing department would have to closely monitor the sales turnover figures and work out how much of that is aftermarket sale revenue. However I believe that the structure of the business would stay the same apart from the mangers taking more responsibility over the production method. The production method itself will rely on quality of the product.
Rolls Royce at the current level has a high level of quality which needs to be maintained or bettered. The orders themselves been so big forms a forward order process which could see customers pulling out of buying large amounts of goods as they have to weight. If in the short term Rolls Royce could invest in faster machinery or more workers it could cut down the forward orders. In the long run however it would mean larger wage bills and higher risk of depreciation on the automated machinery.
One objective that would change is to establish themselves a leading competitor in four growth markets. Once it has established itself which no doubt will be in the near future it must maintain that standard which will mean more orders. Because the company has based itself in four markets it means more areas to get money. If one market slows down like the civil aerospace department after the September 11th attacks, it can fall back on the other three markets maintaining business. A disadvantage of this means the need for experienced workers and management staff in these areas.
The company must also make sure enough money is been produced to fund these four markets. It is there they must make a new objective to keep the shareholder happy and informed on the running of the business. This alternative would make the investor happier to input more money into the business if he or she believes there stake will hold its value or possibly increase.
One other objective that needs to be met is the issue with been environmentally friendly; this could mean the creation of a new department within the business known as the environment protection department. However the drawback with creating a new department like this it would increase the wage bill as more workers are been employed. There is one other alternative to hiring new staff, you can train current staff already on the payroll from different departments as the need to make an entirely new department would not be cost effective.