Company Background

In order to maintain a competitive image in the global market, it is essential for businesses to provide a better quality of products and services. Increasing competition is affecting the construction industry as well this makes it essential for the construction industry as well to provide more consistent quality and value to its customers. This is the time to leave behind all the adversarial approaches to manage the business in industries like construction. In the construction industry not only about constructing buildings, it also includes companies, manufacturing construction equipment, like Hitachi Construction Machinery, Porter’s Group and many more. Now organizations need to establish a direct relationship with owners and customers of the construction industry to make business more effective and competitive. Such high goals of the market are demanding for a continuous improvement process to establish a better quality management system for the organization. Maintaining quality of product services of the organization gives it a competitive advantage in the market. Total Quality Management (TQM) is an effective strategy to enhance the quality and value of products in the market continuously. Companies like Hitachi, need a continuous improvements system to manage it’s product quality and services to the customers. For this purpose of maintaining a continuous improvement in quality products, Hitachi organization is using Total Quality Management system for a long time. With the help of this management tool company is making an impressive business across the globe.

This report provides a thorough knowledge of total quality management and its application along with the benefits of Hitachi Construction Machinery Pvt. Ltd. This company is a global leading manufacturer of mining and construction equipment. This report provides a complete understanding of company management in terms of quality enhancement through different management techniques like total quality management, risk management, and procurement management. This report discusses the issues faced by Hitachi in it’s TQM. The root causes of the quality problem are identified. Further, the TQM principles are applied to correct problems. Finally, the best practices models are reviewed for the decisions on quality, risk and procurement management.

Hitachi Construction Machinery Co. Ltd. (HCM) is one of the leading organizations in the construction equipment manufacturing industry. The company manufactures mining and construction equipment in different countries and supply around the globe. HCM has executed a global strategy of expansion by generating sales and manufacturing bases in North America, Asia, and Europe. The construction machinery market was dominated by the hydraulic bulldozers in the 1980s. These bulldozers were Chinese made and sold for CNY 800,000. However, these Chinese Bulldozers did not meet the requirement of the customers in China, so the second-hand bulldozers were imported by the Japanese manufacturers in China. At the beginning of the 1990s, HCM was fascinated to China for it’s markets as it projected strong Chinese economic development. HCM established various candidates in the several regions after the evaluation of manufacturing sites in China.

Ishikawa Diagram

HCM supplies a range of construction machineries such as hydraulic excavators, compaction equipment, wheel loaders and more. The machineries are installed worldwide in developed and developing economies. The demand for construction machinery is growing where the speed of infrastructure advancement is picking up such a Southeast Asia, Russia, Middle, Near East and Northeast Africa. The technical development work carried by the company reduces the load on the environment such as electric hydraulic and battery-powered excavators’ makes a substantial involvement in accomplishing zero exhaust emissions and lower CO2 emissions.

HCM has established quality policies and management systems to promote quality assurance for the entire group. The company also launched Global Quality Assurance Group in 2016. This group strengthens the support system for regulating quality assurance operations. It also oversees the quality assurance operations of the group’s companies in Japan and overseas. Various training programmes have been also implemented by the company with the aim of standardizing quality. The general knowledge is provided on the aspects like quality control, reliable engineering and quality control procedures (AlMaian, Needy, Walsh & Alves, 2015). HCM is dominating the market by maintaining it’s quality standards along with technology which helps in constant improvement.

(Source: Hitachi, 2018)

The growth in the coal industry has formed competition in all the directions for the new mining companies. It is accompanied by the rising pressure of increasing production. It considerably brings down the cost sustained by the company. All these factors led to a situation where the mining company is pressurized to find new technologies and excavation techniques. All these techniques are not just cost-effective but strengthen the bottom line. The coal mining projects rely on the construction machinery for the removal of overburden, particularly the hydraulic excavators provided by the Original Equipment Manufacturer. As per Álvarez-Santos, Miguel-Dávila, Herrera, & Nieto, 2018, the Hydraulic excavators work for 24X7 under the exhausting conditions (Álvarez-Santos, Miguel-Dávila, Herrera, & Nieto, 2018). The construction machinery is the determining factor in the success of a project. The issues faced by HCM are:

Maximum machine availability: The cost and time sensitive operation is the removal of overburden. The unnecessary breakdown results in substantial losses. Sushee Infra is one of the leaders in the mining industry, pursued to reach a fail-safe arrangement with OEM to gain protection against the machinery breakdowns to ensure maximum availability of machines.

Simplified maintenance: The company lacked a simplified maintenance system for measuring and achieving quality improvement specifically in the areas outside of manufacturing. Sushee Infra looks for the hydraulic excavator which ensures affordable, efficient and highly productive.

Issues

Cost reduction: Controlling costs is one of the biggest issues faced by the company. Only a fuel-efficient hydraulic excavator helps the company to keep the costs control. This machinery also ensure maximum production of less fuel.

High performance and durability: Sushee Infra demands a robust excavator with could deliver optimum performance in all conditions even in the rock-solid construction. But the quality of the products has become an issue in the case of durability.

Shortage of qualified workers: HCM faces difficulty in finding qualified workers or experts. The misalignment between the number of candidates required and the number of skilled workers continues to be an issue in the construction industry. The lack of skilled labor negatively affects the performance of the company.

Technology: According to Ashok Kumar, 2014, the technology has a huge role in the quality of the products provided by the HCM. Whenever the company is not able to keep up with the technology left behind (Ashokkumar, 2014). The company having lack of technology cannot attract workers and compete for the projects. The company is not strategic at the time of implementing new technology. The traditional way of doing business also affects the quality of machinery.

Project complexity: The projects at HCM are becoming demanding and complicated. It poses a challenge to the company regarding quality. Serving too many projects prevents the company to provide inappropriate quality and complete job on time. It loses the profitability of the company (Dale & Plunkett, 2017). HCM is not able to deliver projects on the time due to the decreasing number of skilled workers.

The issues faced by the company can be overcome by implementing approaches such as Deming’s approach and Juran’s approach.   The Deming’s approach is distributed into 4 groups, plan, do check and act. It is also known as PDA cycle. It focuses on the creation of an organizational system which promotes cooperation for simplifying the application of process management practices. As a result, it leads to constant improvement of products and processes. As per this approach, the top level management and the employees should be properly trained and should have proper knowledge of systems and variations. It improves the quality lies in the controlling and managing systems and approaches (Chen & Luo, 2014). The first step in this approach, the plan considers the aspects in the field of manufacturing. The company can make maintenance plan as well as plans for the innovative products on the market. In the second step, planned activities are transformed into the actual activities. The formal and informal assessment is done in the third step which is check. Finally, the act is implemented as continuous improvement.

The Juran’s approach to TQM focuses on the teamwork and project work. It encourages and improves quality along with improving communication between the top level management and employees. As per this approach, it is significant to apprehend the needs and necessities of the customers. The departments like human resource, marketing and manufacturing should make use of this approach. The vital analysis is required to identify the needs of the customers and an understanding should be developed to ensure product meets the needs of the customers (Camisón & Puig-Denia, 2016). According to this approach, TQM activities are focused to attaining enchanted customers, empowered personnel and concentrates towards higher revenue and reduced costs.

Quality is one of the success factors which become an issue in the completion of a project if it is not maintained. Quality is a degree of excellence and the factors which do not contribute enhance the quality are regarded as causes. The causes of the quality problem are:

Procedural clearances: The clearance procedure for the construction agency includes multiple agencies and the process is quite slow. According to Asif & de Vries, 2015, the absence of ground coordination between the agencies takes a lot of time for the basic clearances and is difficult to get (Asif & de Vries, 2015). The policy changes are the leading causes which affect the quality and are being taken into consideration. It speeds up the clearance process at grass root level. All these factors are the causes behind project complexity.

Money matters: The financial matters includes various issues such as lack of interest by the private sector, long cycle of working capital, low-cost recovery, thin central outlay spread and more. The profits are comparatively slow and attained over an extensive period of time which reduces the number of players in the market. It causes to select few and less accessibility to big funding.

Unfavorable laws, taxes and government issues: According to Dubey, Singh & Ali, 2015, the laws and the taxes are sometimes not favorable for the quality concerns at HCM. The profit margins have also become smaller which causes investors to lose interest in the company (Dubey, Singh & Ali, 2015). The lack of coordination between the local, state and central bodies leads to delay in getting the required consents and documentation process. It has experienced that the local bodies are not capable enough to authorize proceedings of the large organizations. The lack of combination in the process of manufacturing leads to loss of quality along with the investments and employment opportunities.

Demand-supply gap: The demand is growing for the construction equipment in the market which supports software technologies. The gap in the demand and supply causes a shortage of skilled labor which can make use of available technology. The lack of technology cannot provide the appropriate quality (Duran, Çetindere & ?ahan, 2014).

Lack of accreditation norms: The norms mandatory to set the standard and maintain the quality of machinery is missing. HCM lacks the need for formal training of operators and official certification. As per Ellis, 2018, the quality is the main standard which is considered to be maintained and improved in terms of products and processes (Ellis, 2018). Various players have come up in the market with training programmes for the heavy equipment operators.

Poor rental penetration: The equipment rental is a new business segment but the concept of equipment rental is a new concept for the business and requires a huge amount of investment to initiate (Düren, 2017). Giving equipment on rent also affects the quality of the products. It can cause damage. The rental market is also highly fragmented and underdeveloped. It has also seen that the players’ books for the cash transactions avoid paying taxes.

Poor training and lack of process improvement: The lack of training towards new and updated concepts affects the quality of the machinery. The lack of quality affects the process at HCM. It slows down the process and does not produce the efficient quality. The expertise should be hired time on time to maintain the quality of the products. The training has a major role in the quality aspect of the products (Frolova & Lapina, 2015).

The TQM principles have become a part of the organizational culture. These principles focus on the product quality, customers and keep strategic approach towards improvement. These also improve constantly and encourage teamwork and mutual respect. TQM centers core values and continually improves the feature of products and processes in order to encounter expectations of the customers. The employees are educated in a professional manner are encouraged to make decisions on their own by making use of TQM. The organization can also achieve higher returns on the sales and investments. This approach provides better access to the global markets and attains customer loyalty. The TQM principles focus on the top management and employees to offer quality products to the consumers. The suppliers and customers are also part of the TQM.

Customer-centric approach: According to Fu, Chou, Chen & Wang, 2015, customers are the vital authority to define whether the products are of greater quality or not. The customers decide the products successfully meet their expectations. This approach includes the functionality, aspects, suitability and the means by which the details about a product are expected by a customer. The marketing department is usually accountable for getting the prospective clients. The sellers use a variety of media sources like email, social networking to attain customers and suppliers. The TQM practices should be implemented by the company on all fronts focusing customers in mind (Izvercian, Radu, Ivascu & Ardelean, 2014). The organization should make efforts to raise quality enhancement by teaching employees, assimilating quality into the design process, upgrading software’s or making use of new measuring tools.

Employee involvement: It should be ensured that the employees are involved in attaining goals and the business objects. It also leads to the employee authorization and active involvement in the decision-making process. According to Howarth & Greenwood, 2017, the involvement of the employees also addresses the quality related problems (Howarth & Greenwood, 2017). The employees should work towards a common goal. The commitment of the employees can be more strengthened by providing a proper work environment. The employee authorization and contribution can be enhanced by making the work environment more open and lacking fear. The high performance of the employees brings constant improvement in the company within the normal business operations. The self-managed work teams are one of the forms of empowerment (Lavender, 2014).

Continual improvement: It is a major constituent of TQM. The continual improvement leads to the improved and higher quality processes. As per the views of Jiménez-Jiménez, Martinez-Costa, Martínez-Lorente & Rabeh, 2015, the continuous improvement ensures that the organization finds innovative ways and techniques to produce improved quality products which are more modest and exceeds the expectations of the customers (Jiménez-Jiménez, Martinez-Costa, Martínez-Lorente & Rabeh, 2015). This approach also drives ways to be more effective at meeting expectations of the stakeholders. It also analyses the ways work being performed is effective or striving for excellence. The human resources department makes sure that the employees are qualified and skilled enough to perform their jobs. It helps to run an organization smoothly having a qualified team. Any interruption in the booking process should be fixed quickly by the representatives and the improvements should be made.

A strategic approach to enhancement: The organization should implement a strategic approach to quality improvement. This approach helps to attain goals, vision, and mission. As per Stolzer & Goglia, 2016, the strategic plan is essential to certify quality and it is the core feature of all the business processes. The strategic and systematic approach is a acute part of the management of quality (Stolzer & Goglia, 2016). It comprises the formulation of a strategic plan which incorporates quality as a core component.

Integrated system: A company maintains several departments within diverse functionality purposes. Such functions are interlinked with numerous horizontal processes on which TQM can focus. According to Long, Kowang & Wan Ismail, 2015, every person of the company should be aware of the quality policies, values, goals, and the required procedures. It is necessary to endorse a quality work culture as it assists in achieving superiority and fulfill the expectation of the customers (Long, Kowang & Wan Ismail, 2015). An integrated system brings persistent enhancement and helps to attain competitive advantage.

Decision making: According to Rohit & Rengamani, 2018, the data achieved from the performance measurement of the processes represent the health of a company (Rohit & Rengamani, 2018). The company should collect and analyze data for the efficient TQM. More factors which contribute to the efficient decision making are decision-making accuracy, consensus, and forecasts. The decision making is required to be statistically and situation centered to avoid any place for the temporary or emotional based decisions (Rumane, 2016).

Communications: The communications have an important role in the TQM as it encourages employees and improves their confidence in the daily operations of the business (Maher Altayeb,  & Bashir Alhasanat, 2014). The communication maintains morale and motivates employees at all the levels. This process also involves strategies, approaches, and timeliness. The employees should show more involvement in the daily operations and decision-making practice to give them a sense of authorization. It builds up an environment of success and unity and helps to drive results TQM process can attain.

It entails efforts, courage, and endurance to successfully implement TQM in an organization. A business can improve it’s quality across processes and departments with the implementation of the TQM approach (Matsuda & Kosaka, 2016). It results in greater customer retention, higher revenue, upgraded sales and the international brand recognition.

Six Sigma model is a practice used for designing and redesigning new and existing products and process. It associates the concept of quality with the aim of customer satisfaction. This model targeted at design activities which results in a new product and design of an existing product (Mandava & Bach, 2015). This model comprises of 5 phases, define, measure, analyze, design and verify. In the case of HCM, it manufactures a different kind of machinery. It is one of the best brands on the market. HCM has evaluated it’s performance to maintain it’s reputation in the competitive market and has made some changes in the products.

Define: The define framework of six sigma model aids to identify what is to be attained and the way of achieving it. This process is instigated between the management and the chosen team (Saleh, et. al. 2018). For instance, the feedback and the sales report for the previous years of the company can help managers to made changes and laid down the information required in the designing of the products.

Measure: This phase assists in recognizing the key customers, their requirements and measurable quality requirements critical for designing products. This phase lays down the framework helpful in designing products and processes (McCabe, 2014). It also forecasts the error level. In the case of HCM, the company is required to identify the customer needs and the modifications they are seeking from the products such as the latest technology and design. After the evaluations of such requirements, the next step is to analyze the design of products.

Analyse: A design is accepted from the various designs in the ‘analyze’ phase. This step requires depth study and test variations for the selected design of the products. HCM can analyze the performance of the machinery and can design a particular design and look along with focusing quality.

Design: The design phase is helpful in building selected design of the products. It also checks the feasibility of the design for the quality, customer needs, production and more. HCM can undertake pilot testing, feasibility, and prototyping. The company can change the design of machinery to compete in the market by making changes in the design and concepts (Motohashi, 2015). The company can also promote new products with different offers in order to attract customers. It helps to enhance sales.

Verify: This phase assists in classifying the measurement of the particular design for it’s manufacturing capability. It maintains the designated quality standards and financial viability of producing products. This phase is helpful in evaluating the endurance and servicing issues (Mazher, Gharleghi & Chan, 2015).

The six sigma model helps to satisfy the customer needs and it is equally helpful in producing good quality products. Six Sigma is a quality enhancement process and is deliberated as a part of TQM. It is a perfect practice model which utilizes information and analysed statistically to measure and improves the operational performance and systems of the company. It identifies and prevents defects in the manufacturing process and anticipates and exceeds expectations of the stakeholders to achieve effectiveness (Thorpe & Sumner, 2017).

There should be a visible commitment of management for the effective placement of the six sigma program. All the levels of the management should comprehend the needs and wants of the customers and there should be a process of understanding for maintaining and satisfying old customers and to attract new customers as well (Oakland, 2014). The management should hire the qualified personnel for the projects using six sigma approach and specify the measurement system to measure the performance process of the model. The management should select the employees that are experts and properly trained at the time of making recruitments. Six- Sigma is helpful in renovating customer’s need into significance and segment into different tasks which can be accomplished properly. These steps affect the quality as well as the design of the products and the services. There should be an arrangement of on-going training for the development of employees (Nguyen, Pham & Pham, 2016). The management should also ensure the process of eradicating wastage and errors should exist. There are several tools which are arranged by six-sigma but the units analyse the specific tools and processes significant to the manufacturing companies.

Conclusion 

This report critically reviews the issues faced by the HCM in it’s quality aspects. The root causes behind the quality problems are identified. The total quality management principles have been suggested to correct root causes of the quality problems. The important quality management principles are integrated systems, communications, decision making, strategic approach and continual improvement. The best practice model such as six- sigma has been suggested to make decisions on the quality, risk and attaining management. Hitachi can make customers comfortable by solving their problems and make them happy so that they can rely on the company. The company should focus more on the customer satisfaction as an integrated management system.

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