Quality management is an area of increasing managerial focus for businesses. Firms want to ensure that their clients enjoy their products, and they have settled on quality as one of the most fundamental aspects of this satisfaction. This notion has also received a wide reception among researchers since there is plenty of literature that explains the relationship between quality and customer satisfaction. Such literature forms the theoretical connection between quality and customer satisfaction. However, on a practical basis, companies have identified the area of quality management as having the capacity to realize the relationship described in literature. In such processes, managers evaluate their processes geared towards the improvement of quality and the effects that such efforts produce in terms of customer satisfaction. While there are other models of this evaluation, the Input-Transform-Outcome (ITO) model gives a simplified way for managers for the same purpose. This model is the subject of this paper. The work uses the ITO model in the evaluation of operational processes of Cemex Cement Company. The analysis identifies shortcomings in one of the processes and proposes changes following an extensive review of literature on quality management as a reflection of customer expectations. It is found that the company’s transformational activities do not facilitate continuous connection between the business and its customers, which might hinder effective quality management.
Cemex Cement Company
Cemex Cement Company operates as a worldwide firm that specializes in the production of building materials. The corporation offers products of high quality as well as reliable services to clients located in more than fifty nations across the globe (Cemex, 2017). In addition, it is noted that the firm is involved in the maintenance of trade relations in more than a hundred nations. According to the firm’s website, the management and employees of the corporation work tirelessly to create and deliver the best solutions in their products, which are aggregates, ready-mix, cement, and other related products. The company has a reputation as being one of the global leaders in its industry, with revenues of over $14 billion annually, and being one of the leading cement manufacturers of the globe. As much as the company has a global presence, its main clients are located in Mexico where the company has its headquarters and in Europe (Cemex, 2017).
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Operational Processes of Cemex and the ITO Model
The company operates in the manufacturing industry, but the nature of products and the manner of their production makes it to have an additional type of business process. For example, the production of cement aggregates makes the firm to have processing business processes since the ingredients for the aggregates are obtained from extraction of sand and stones that are latter ground to the desired sizes and texture without changing their nature.
Concerning the manufacturing process, the company is committed to the production of the highest quality of cement for its clients around the globe. Considering the ITO model, the input processes for this type of business process include the cost of labor for workers in each of the plants the company owns (Cemex, 2017). In addition, the firm has invested in machinery used in mining limestone and other additives that are used in the manufacturing of cement. The company also obtain limestone and other input products from suppliers at a cost. Considering the cost of labor, there is a need to understand that Cemex employs more than forty-three thousand people worldwide, which means that incurs a significantly high cost of labor (Cemex, 2017). Labor is one of the most important factor of production, which has led to most companies using their human resources as their sources of competitive advantage. Resultantly, the company seeks to hire only talented people because it considers that suitable workers must share in the dream of providing solutions to the most profound social, economic, and environmental problems that confront humanity. The aspect of talent therefore implies that the company may be interested in hiring trained staff that would provide the desired source of competitive advantage.
The transformational activities of the manufacturing business process at Cemex entail factors that lead production of cement and its subsequent transfer to the customer end for usage. The firm prioritizes large-scale production even though it also delivers cement to clients on small-scale basis. In this process of production of cement, employees of the firm are supposed to adhere to high standards of ethics in their working. For example, the company requires that all workers stick to their working hours and be committed to their tasks (Cemex, 2017). It is also a requirement for all workers to be effective managers of activities at the workplace through having such skills as critical thinking and problem solving. These requirements and others ensure that the workplace at the firm has a culture of hard work and commitment to the realization of the objectives of the company.
In addition, the company uses the latest technologies that ensure high-quality production of cement. After production, the company transports the cement to warehouses for temporary storage while awaiting customer orders. At this stage, the storage facilities are supposed to be of the highest standards to avoid damage to the product. Extra costs will also be incurred in the transportation of the cement to the premises of the client upon request. Lastly, the outcomes of the manufacturing process are high quality, affordable cement for the millions of clients around the world. The product of the company is supposed to be distinct from those of other firms in the market. To this component of the ITO model, it should be understood that the company hopes to help clients construct structures at the lowest cost levels possible, and that such structures will be as durable as possible.
The processing business process of Cemex Cement Company entails the processes that lead to the extraction of raw materials for the production of aggregate material. The company develops aggregate materials from a mixture of sand, gravel and other products that would be used together with cement in the construction process. In this process, the input products are similar to those of the manufacturing process since they involve a significant involvement in labor and technologies of extraction of raw materials. However, the company does not stress the need for employees to be innovative and creative for this type of business process. The process is also less labor intensive because machines and related technologies are widely used in the extraction of the raw materials for aggregates.
The transformational activities are meant to transform the raw materials into the finished products and the transfer of the finished products to the consumer. Such processes include grinding stones and other material into the desired size suitable for mixing with cement in the construction process. The workers in this type of business process are supposed to uphold the same levels of work ethics as the ones described above. Once the process of developing the aggregate material shall have been completed, the firm engages in storage and final transportation to the client premises. Lastly, the outcome activities of this type of business process are aggregate material that may be mixed with cement to form mortar by the clients. There is no specification on the levels of quality desired for this output activity, but it may be assumed that the firm desires the highest levels of quality. The fact that the company delivers to the clients at request means that value is a critical element for this process.
Literature Review on Quality Management as a Reflection of Customer Expectations
The discussions and definitions concerning the idea of quality in, for example, Hansen (2001), Nicholls (1990), Chacour and Ulaga (2001), and Dahlgaard et al (2008) embrace the connection between value and quality, for instance, reviewing the idea of value as ‘value for money,’ which might be taken to imply that customer value is the phase of evolution of quality. The studies also strive to explain the connection between perceived value and quality. As much as the objective of quality management is the creation of value for the customer and TQM researchers have focused on the value creation process for clients. However, in Colurcio and Mele (2006), it is noted that there is a lack of studies in Total Quality Management (TQM) that analyze the contributions of quality management to the creation of value as well as diffusion according to stakeholder perspective. In addition, Khalifa (2004) notes that individuals lean towards to defining value in terms of one of the following factors: customer value, stakeholder value, and shareholder value. The later study suggests that customer value is the basis of the rest of all values. This idea means that the focus of quality management should be first on the creation of customer value.
Colurcio and Mele (2006)’s and Khalifa (2004)’s ideas could therefore be used to construct a reasoning that a theoretical gap exists between quality management both at an operative and at a strategic level in the sense that most studies done on TQM have their focus on customer value. In addition, such studies have not been recommended to the improvement of quality management as a way of allowing value creation for clients. However, because the focus of this literature review is to determine the relationship between quality management and customer value, the studies are sufficient to argue that a relationship of any type exists between the two aspects of business. It is imperative to note that studies indicate different models of explaining the connection between quality management and customer value such as Lean Production, Six Sigma, Total Quality Management, ITO, and Input-Process-Output (IPO). The focus of this paper, nevertheless, is on the ITO model.
The ITO model of quality management attempts to provide a framework for explaining the manner in which inputs of a process could be transformed into outcomes (Zwikael and Smyrk, 2011). The left side of the model (the input) refers to the processes that companies and individuals may be involved in towards the attainment of the desired outcome. The outputs of this process are handed over to individuals who will be tasked with ensuring that such outputs translate to the desired outcome of value creation for the customers. All the entities used in the transformation of the outputs into the desired outcomes of a project are considered to be customers to the project (Zwikael and Smyrk, 2011). It should be understood that being customers to the project does not mean being customers to the organization. In addition, it is imperative to understand that each process is made up of an IPO model. By this suggestion, it means that each project is made up of inputs that are then processes to give the desired output. It means that the IPO model considers the outputs of a project as its outcome. However, the ITO model distinguishes the two through noting that outputs need further processes that transform them into the outcomes.
It is needful to concentrate on the issue of outcome and output before understanding the implications of studies on the nature of the ITO model. First, output relates to the project results in terms of the volumes of production per unit of input (Zwikael and Smyrk, 2011). Such value could be in terms of the numbers of bags of cement that a company may produce within a specified period and after consuming a given level of input in terms of labor, technology, and raw materials. Extant studies indicate that outputs are not necessarily the outcomes for all industries (Khalifa, 2004). For example, as the latter piece of literature suggests, the service sector may not have a distinction between outcomes and outputs since the activities of generating outcomes may affect the clients directly or indirectly. However, for firms in the manufacturing industry, outcomes and outputs are separate. A manufacturer, for example, may be required to hand over their output to other entities or use other activities to reach the clients of the organization so that the outcomes of the entire project may be realized. Using this model, a cement manufacturer, for instance, may produce cement and transport it to the consumers who will then use it in construction. This process will be helpful in the determination of what the entire manufacturing process achieved for the company in terms of quality perception.
In conclusion, literature reports that quality management has a critical role to play in the perception of quality among customers. The same studies also report the existence of models used in explaining these connections such as the ITO model, which is a variant of the IPO model. According to this model, firms are supposed to invest in factors used in the production process. The factors of production should then be managed to deliver products, which is the transformational stage. However, the products should not be left as they are, but should be transferred to the customer end. This way, the client will comment on their perception of value of such products. Although not explained by the theory, it would be plausible that businesses use comments from clients concerning the perceived quality of their products to improve their production, which translates to quality management.
Identification of Potential Problems with Production Processes of Cemex and Solutions
The ITO model suggests that outcomes and output should not be the same for manufacturing processes. The outcome for the firm studied in this work is to improve the quality of the lives of individuals through offering building solutions to them (Zwikael and Smyrk, 2011). The perception of quality, however, remains an issue that the company has to address. For instance, the system of cement manufacturing under the ITO model does not indicate how clients perceive the quality of the products. The firm may be achieving the objective of offering affordable construction solutions to its clients, but not on affecting the perceptions of quality of the product among the same customers. In fact, comparing the company with the largest producer of cement in the world, Larfage from France, suggests that the latter offers the cheapest prices of cement to clients ( Lafarge, 2014 ). This factor results from the fact that the company enjoys economies of large-scale operation, which enables it to be a cost leader. The same issue might apply to Cemex since it is the world’s sixth largest producer of cement globally. Cemex has additional advantages that may have contributed to its success in the market such as product differentiation that includes ready mix cement (Cemex, 2017). Therefore, it may not be possible for the firm to determine how clients perceive Cemex’s products according to quality, which suggests a need for change.
The transformational processes of the company should be reviewed if the company needs to translate its operational process into business productivity. For instance, there needs to be a section within the company that will deal with client responses after using the products. The responses must not just be inform of complains and comments, but should entail a research into the perceptions of the firm about quality. For instance, while transporting the cement to the premises of the customers, the firm may accompany the delivery notes or invoices to the client along with a survey that would seek their opinion about quality. This suggestion draws reference from literature suggesting that incorporating comments of clients into strategies of production helps companies to improve in their production quality (Zeithaml, Parasuraman, and Berry, 1990). This factor does not dispute the efforts that the company has made in terms of investing into the production process, including technologies and human resources. Rather, the idea to incorporate a survey into the transformational characteristics targets to improve the firm through providing a clue on what should be improved.
The comments of clients will also be useful because quality management is a continuous process. This fact means that the company has to learn the changing dynamics of the market, which are likely to affect the perception of quality. Therefore, the comments will provide a chance for the firm to continue restructuring to meet the changing characteristics. If the company does not have such a strategy, it is likely that they will be sticking to the traditional IPO model, which only produces products (output) for the clients but does not care what the products will do to them. It means, therefore, that the ITO model incorporates the follow-up activities that firms should undertake to improve their perception of the outcomes of their production processes on their clients.
In conclusion, the ITO model is one of the theories explaining the connection between quality management and the perception of such quality among clients. According to this model, companies must move away from the traditional investment in inputs and production of outputs because of its shortcoming in considering the activities that will lead the products to reach the customer end of the process. The ITO model stresses the importance of the last phase, the outcomes. According to this model, outcomes refer to the effect that the production process has on clients, that is if it meets the set objectives. Cemex, a global leader in the cement and construction company with headquarters in Mexico and locations abroad has an excellent plan for management control. For instance, the company has significant levels of investment in the appropriate technologies and human resources required to produce high-quality cement and other products in large volumes and at low market prices. These factors make the firm to be considered as being concerned with the quality of its products. However, little emphasis exists on the transformational process that connects the production process to the client for quality management practices. This finding, therefore, leads to the recommendation that the business should implement a system that may survey clients on their perceptions of quality. However, if the company does not have such a strategy, it is likely that they will be sticking to the traditional IPO model, which only produces products (output) for the clients but does not care what the products will do to them. It means, therefore, that the ITO model incorporates the follow-up activities that firms should undertake to improve their perception of the outcomes of their production processes on their clients and that this process is the most important in explaining the connection between quality management and perceived customer quality.
References
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