TOTAL QUALITY MANAGEMENTTOTAL QUALITY MANAGEMENTEMM 5602EMM 5602

Chapter 3: Opportunities for Small and Medium Chapter 3: Opportunities for Small and Medium IndustriesIndustries

Prepared by:- Hamed Mirabi GS 29164- Lim Yan Bin GS 28756 - Ng Wei Lin GS 28873- Omar Abdullah @ Bonny Lu GS 29074 - Omar Mohammed Saeed GS 28658

IntroductionIntroduction

• Every company tries to satisfy their customer, they can only be achieved through cost reduction and improvement in product performance.

• In 1980s quality became a competitive weapon but today is essential to survival and growth.

• Many large companies rely on small companies for parts and services they use in producing their products.

The quantitative criteria are being used to measure the size of company include the following:

• Number of employees• Volume of scales• Volume of assets• Insurance in force• Volume of deposits

Definition of SMEs (Quantitative Characteristics)

Definition of SMEs (Qualitative Characteristics)

SMEs should have at least two of the following qualitative characteristics:

• Independent business management• Usually managers are the owners• Capital is supplied by owner or small group.• Locally operated, employers and owners reside in

one community.• Smaller size of the firm.

• Malaysian SMEs can be grouped into three categories : Micro, Small, or Medium.

• These groupings are decided based on EITHER• the numbers of people a business employs OR• on the total sales or revenue generated by a business

in a year.

Definition of SMEs in Malaysia

Strength of SMEs• Number of business unit• Economic output• Providing employment opportunities• Regional income generation through external

sale/Import substitution:• Saving• Training

Strength of SMEs (cont)

• Stimulate competition• Aid to large companies• Encourage innovation and complexity• As a seed-bed from which large companies grow• Breeding ground for new business ventures and

entrepreneurs

Percentage of SMEs in Agriculture, Manufacturing, and the Services Sector, Malaysia, 2003

Percentage Distribution of Output of SMEs by Sector, Malaysia, 2003

What is Globalization in Business?• Consists of transactions that are devised and

carried out across national borders• To satisfy the objectives of individuals,

companies, and organizations.• These transactions take on various forms,

which are often interrelated

Challenge of Globalization• Growing competition in domestic and

international markets.• The proliferation of free trade agreements.• No longer ‘protection’ through tariff and non-

tariff measures.• Trade impediments in the form of trade

conditionality and other non-tariff measures.

How To Cope?• Reap economies scale• Keep pace with technological progress.• Strong ICT to keep in touch with e-business• Differentiation by creating new markets• Developing new markets• Customer service, personalization and

efficiency

Thinking and Planning• How will our idea, good, or service fit into the

international market?• Should we enter the market through trade or

through investment?• Should I obtain my supplies domestically or from

abroad?• What product adjustments are necessary to be

responsive to local conditions?• What threats from global competition should be

expected and how can these threats be counteracted?

Herba Prima Marketing: Dr Rozmey• Started as a healthy supplement supplier in 2006• Tough competition in the early stage, but

managed to survive • Well known with ‘Just Mate 5’ product and now

raising popularity throughout the country• Currently expanding his business under dR

Rozmey Skin Care, dR Rozmey Beauty Slimming Fitness Centre, dR Rozmey Body Shop, dR Rozmey Fashion, dR Rozmey Sport Wear dan dR Movie Production, and dRPlaces.

• Rumors that he’s going to introduce dRBook

TQM

Why TQM in SMEs?• To improve business performance• To compete in globalization• To comply with Malaysian Standards for

product certification• Promotion growth by gaining investor’s

confidence• Gaining customers satisfaction and exceeding

expectation

Implementation of TQM in SMEs

Challenges of SMEs in TQM Implementation

• The application of quality methods in SME today is still limited

• Limited resources and location– Lack of capital and credit facilities – Shortage of skilled labor – Shortage of row materials– Inadequate infrastructure

Challenges of SMEs in TQM Implementation (cont)

• Lack of brand recognition, channel power, market reach

• Lack of managerial and technical experience• Limited application of new technology• Always functions in flat organization structure

How To Overcome?• Implement ICT into the business• Practice TQM• Switch from domestic market into global

supply chain• Hire skilled and talented workers regardless

the salary for long term benefit• Obtain quality systems such as MS ISO 9001

and TS16949.

How To Improve?

• Create a network among SMEs• Manager play vital role by implementing TQM• Train workers to be highly motivated and

gaining skills everyday

TQM implementations in SMEs which is related to a big factory. SKD factories(simply knocked down)

•Manufacturing of some parts

•Assembling the final product

•Follow the strategy of the mother factory

•Supplying parts to the market

•Product quality

•Assy’ line quality

•Line inspection

•Final product inspection

•Packing

•Labeling

•OQC

•LQC

•IQC

*all these quality reports provide by the original factory to the SKD factory .

QC Monitoring by the Original Factory

Quality Control

IQC

ProcessProcess

Safety Test1st Leakage

Function test

Characteris-tics

Appearance test

Assembly

Somg TestEarly Life

Test Withstanding

Voltage testInsulation testLeakage current

test

Low voltage sta -rting test

VibrationNoiseFunctionTemperature Diff

Input(current/ watt)

2st Leakage Test

Safety test Time Check

-1Time/2HrSampling Level

-2Units/1Day

All the units4hr→6hr

LQC OQC

PatrolInspection

Sampling level -1units/1dayTest Time 24hr

Shipment

Function TestWithstanding

Voltage test Insulation testLeakage current

test

IQC

Safety Test1st Leakage

Function test

Characteris-tics

Appearance test

Assembly

Smog test ELT

Time Check

Sampling

4hr→6hr

LQC OQC

Leak test

Sampling : 1set

: 24hr

Blue Ocean Innovation Profitable GrowthGreat Company Great People

Withstanding Voltage test

Insulation testLeakage current

test

Low voltage sta -rting test

VibrationNoiseFunctionTemperature Diff

Input(current/ watt)

2st Leakage Test

Function TestWithstanding

Voltage test Insulation testLeakage current

test

Shipment

•Save the international standards for the product

•To maintain the reputation of the company

•Compete the globalization

Why SKD FACTORIES SHOULD BE MONITERED

Malaysia Government’s Support in SME

1. Financing

2. License & Permit

3. Training & Development

4. Marketing & Networking

5. Advisory & Consultancy

Financing• Type

a. Loanb. Grantc. Subsidiesd. Guarantee

• Financial Institutiona. SME Bankb. SMIDECc. MITI, MATRADE, MOA and etc

License & Permit

1. Manufacturing License 2. Import license under ctrl items3. Licenses issue by MIDA4. Licenses manufacturing warehouse5. Form E

Training & Development

1. SMIDEC- such as SME- University Program2. 1 MALAYSIA Training Program- RM 200 Million to

HRDF for companies3. Ministry of Human Resource- RM 100 Million

Marketing & Networking1. SMIDEC2. MATRADE- Branding3. Malaysia Franchise Association

Advisory & Consultancy

1.SMIDEC2.SME Bank3.MITI

Conclusion

• Economic war is flat over the world• TQM- Increase the strength, improve the weaknesses

in an industry• Government support and industries exposure is

effectively improve the TQM implementation in SME

THE END

Thank You