Principles of TQM as Applied by Audi AG
Total Quality Management, in short TQM, is a strategic approach applied in businesses with an aim of improving the quality as well as the performance of products in any given organization, with the optimal goal of either fully meeting, or exceeding the expectations of the clients. Essentially, TQM involves taking into consideration all the relevant quality measures applied by any company, including quality design and development, quality maintenance and control, as well as quality assurance and improvement. Basically, TQM incorporates the coordination of all functional quality measures implemented across all levels, involving all the employees. More specifically, in an engineering business such in Audi AG, TQM comes out as the process applied in reducing or completely eliminating failures either in the manufacture or in streamlining the chain assembly of automobiles, thus improving the customer experience and employee efficiency.
Audi Automobile Company (Audi AG) is a German public company, incorporated since June 1932. It deals with the manufacture and distribution of automobile across the entire world. Starting from its headquarters in Ingolstadt, Germany, Audi AG has ten production facilities in eight countries. Here, continuous engineering activities culminate into the daily manufacture of Audi luxury cars (Audi AG, 2014). There are many specific engineering activities applied in the manufacture of Audi luxury cars that call for the strategic application of TQM principles. According to Sylvia Droll, head of Total Vehicle Materials and Corrosion Engineering in Audi AG, these include the selection, the processing, and the chemistry of the raw materials used. In light of this, Audi AG applies a number of principles under TQM to ensure that the best results are achieved in its automobile engineering (Ramsey, 2009).
In the pursuit of achieving the very best from the application of TQM techniques, leadership is a key principle. As applied by Audi AG, the executive management plays the role of the main driver in enforcing the constant application of TQM measures, as well as creating an environment that ensures the success of implementing those measures. Throughout the company’s existence since its incorporation in 1932, the executive management has changed many times, however, with each different management; TQM has been prioritized over other measures to ensure continuous satisfaction of the company’s customers.
Audi AG specializes in the manufacture of luxury cars for worldwide distribution. In light of this, this company faces the challenge of ensuring that the quality of their cars meets the standards of the luxury expected by the customers. One of the measures taken through TQM to ensure the accomplishment of this goal is the choice of materials used in the manufacture of the cars. To start with, the leather used in the upholstery comes from natural leather tanned from animal skins and hides. The company also uses wood veneers to create an interior atmosphere that conveys high degrees of elegance. The passenger compartment is characterized by a coating that either repels liquids, or provides ease in cleaning. Also, at the epitome of complying with the different needs of its customers across the world, Audi AG has a wide range of models including hatchbacks, wagons, sedans and coupes.
Through proper application TQM measures, Audi AG has been characterized by massive improvement over the years. First of all, starting its operations with only one firm in Germany, its engineering business is now carried out across eight other countries. More so, many models have been developed, each aimed at sufficiently meeting the desired expectations of a specific target group.
Management Structures Suitable for Effective Quality Organization <>/p
Establishing effective quality management systems is very important in all business organizations. This acts as the cornerstone over which the concept of customer, company and product coordination is founded. The effectiveness of TQM measures relies deeply on the management structures applied by the organizations in the implementation of those measures. In the case of Audi AG, the prevailing management structure systems has helped the TQM measures to culminate into setting the ideal direction for the company with respect to meeting the customer’s expectations, improving process control, reducing wastage, reducing production costs, expanding and increasing the market share, facilitating employee training as well as raising the employee morale.
The management of Audi AG has been built and designed in a structure that incorporates quality management systems, both in the processes as well as in the implementation. The structure includes an executive leadership of senior managers who suit the needs of the organization by working under a framework that embraces decision making. More so, the management structure in Audi AG also determines the organization’s key processes with respect to meeting the goals and objectives that are linked to the expectations of the majority stakeholders. It is this kind of structural design that enables Audi’s management to effectively implement its TQM measures.
Impact of Applying TQM Techniques in Audi Automobile
As noted above, TQM is characterized by a combination of quality and management tools with an aim of increasing business turnover and reducing losses that would otherwise result from wasteful practices. In today’s business world, high quality products constitute an essential aspect towards meeting the consumer’s requirements. In light of this, a business organization with the ability to incorporate the basic ideas and principles of TQM such as client orientation, competitiveness, top management involvement, client-supplier relation, and continuous quality improvement, benefits from a number of positive results.
In light of the above, Audi AG boasts of a number of positive results culminating from the continuous use of suitable TQM measures, both in the specific engineering activities of their products and in the general manufacturing process. To start with, there is market expansion. Audi AG started with a small domestic market in Germany. However, following the implementation of the suitable measures in its engineering processes, the company was able to establish superior designs that attracted foreign consumers. As a result, the company opened other manufacturing branches in other countries and now enjoys a worldwide market operating form nine countries.
Another impact is the continuous improvement of Audi AG cars. The first automobile was engineered in 1932. The technological advancements since then have been tremendous. New and better materials have found their way into the automobile industry. Through proper application of TQM, Audi AG has been able to improve its engineering aspects on its products over the years, resulting to a remarkable history in product improvement. As of today, Audi AG has launched very many models; a relatively bigger percentage being launched in the period after the year 1998. This way, the philosophy of a never-ending improvement as incorporated in the TQM measures has enabled the company to keep its innovative ability above average and as a result gained more fame in Germany and globally.
Another positive impact of TQM application in Audi AG is evident in the powerful employee body of the company. The company has been able to create a very effective and efficient human resource background. From the understanding that the employees are the key stakeholders towards achieving the desired outcomes of the company; the strategic management of the company has over the years managed to instil the very best working morale in the employees. They are trained and kept up to date with the ever improving technological advancements. Consequently, the employees of Audi AG are now capable of seeking out, identifying, and correcting quality issues, with little or no supervision.
Lastly, another positive result from the implementation of TQM measures by Audi AG lies in the current superior designs. In the recent years, this automobile company has been able identify the sources of the quality problems and corrected them accordingly. As a result, the current models of Audi luxury cars on sale in different parts of the world are designed to meet the different environments of the various customers. There are wagons and hatchbacks for family use, and coupes for sporting activities. More so, specific engineering is emphasized to suit different models for different use.
Key Factors Necessary for Effective Implementation of a QA System
The success of establishing and implementing a Quality Assurance system in any organization is subject to a number of factors. That is, there are some key elements that must be considered for the Quality Assurance system to yield positive results; the cornerstones of TQM. The first one is organization and management structure. It is really important for the management structure in any organization yearning to effectively implement a Quality Assurance system to be in a way that it follows the goals and objectives of the organization. The Audi AG management structure supports clear and straight communication channels. It adopts a structure where every stakeholder’s opinion is considered in decision making and thus incorporates a wide range of data from a wide base before initializing any engineering change.
The other factor is the reason for the Quality Assurance. This is the driving force behind the incorporation of the system. There must be a reason as to why such a system is established, otherwise it is not important. In the case of Audi AG, Quality Assurance was established with an aim of facilitating maximum satisfaction of the customers’ needs. Having this in mind, this company has over the years strived to improve the comfort and the quality of its cars since it is aware that they are made to meet the expectations of luxury car buyers.
Lastly, another important factor is the internal and external evaluation of the products. That is, for every organization, the employees alongside the management are able to analyze and decide on the quality level of the products they manufacture. Likewise, the customers and the competitors too are in a position to analyze it. Quality Assurance systems should be made from this basis as well. In the case of Audi AG, the management and the employees are aware of the high quality in their products. However, they still need to keep the quality in track since the automobile industry includes other manufacturers of luxury cars who pose as competitors. This means that Audi AG must ensure continuous product quality improvement otherwise its market share might drop as a result of better products from the competitors.
Application of Internal and External Quality Audit
Setting up TQM measures and assurance systems is not enough to spearhead any organization into successful realization of its objectives. There must be ways and means of monitoring the implementation of the set measures and reporting progress to the relevant stakeholders. Audi AG has both internal and external quality audit measures. As the name suggests, the internal audit is from within the organization. For example, there is the Nose Team that decides if the materials used are within the comfortable zone of the customers as far as the passenger compartment is concerned. There are other committees and teams that evaluate other features from within Audi AG.
However, internal audit and control might be subject to bias and thus most customers are more likely to rely on external analysis and evaluation, calling for external audit. In light of this, Audi AG operates under to the automotive industry Quality Management System that consists of the ISO/TS 16949 Standard and the relevant customer-specific requirements (Shar, 2011). The above standard was established and developed by the International Automotive Task Force (IATF) members and was approved by the International Organization for Standardization (ISO). The certification of this standard comes as a result of meeting objectives such as promoting continuous improvement, laying emphasis on defect prevention, and reduction in continual waste and variation. Audi AG, which is a member of IATF by virtual of being under Volkswagen AG which was among the founding members, is ISO 9000:2008 certified meaning that according to the external monitors, this company complies to quality management systems, management responsibility, product realization, resource management, as well as measurement, analysis and improvement of its product’s engineering.
How Quality Assurance Affects Costing
The ultimate price of any product is subject to many factors. Traditionally, the basic factors included all the costs of production, distribution costs and storage costs. However, in the contemporary business world, another key factor affecting costing is the application of quality assurance measures. To start with, proper implementation of quality assurance measures calls for the employment of more human resource as well as upgrading equipment to ensure that the desired quality standards are achieved. This increases the internal operating costs for the organization. Consequently, these extra costs are transferred to the customers by increasing the price of products, as in the case with Audi AG luxury cars.
More so, to comply with all the quality assurance measures, adequate market research and consultancy is necessary. Market research is necessary to enlighten the company of the evolving needs of the customers as well as the most up to date technologies in a specific industry. On the other hand, consultancy helps in guiding the organization on the best strategies to deploy so as to avoid the pitfalls that accompany the implementation of changes. However, even though both market research and consultancy are core elements of quality assurance systems, they impose significant costs whose recovery is only possible once again by increasing the final price of the product. Audi AG carries out extensive market research and consultancy and consequently recovers the associated costs by increasing the unit price of its luxury cars, with a relative ratio.
Analysis on the Application of Quality Control Techniques
The bottom line of applying quality control techniques is enjoying their positive results. As the head of Quality Assurance in Audi AG, Werner Zimmerman says, “quality is about passion and striving for perfection.” The best benchmark through which a customer-oriented company such as Audi AG judges its success in implementing quality control and assurance measures is by looking at the customer’s satisfaction which is portrayed by the statistics of the changes in the buying behaviour. In light of this, one of the best ways to quantify the results of effective quality assurance and control measures is through analyzing the changes in the consumption of certain products from time to time. Increase in consumption would most probably imply positive results as far as quality assurance is concerned, with the vice versa being equally true.
According to the interim management report of the Audi Group from January to June, 2013Audi AG gives statistical review of its quality assurance. As reported, there was general increase in the consumption of automobile in the entire world. Consequently, due to the quality of its luxury cars, Audi AG’s production increased as more consumers sought for Audi cars. In the quest of quantifying such data, Audi AG prepares comparison tables, showing the increase in Audi cars production by models. Use of such charts and tables among other statistical methods plays a very important role in giving a virtual analysis of the success of TQM measures. Below is a chart comparing production between two years.
Application of Quality Control Techniques in Determining Process Capability
There are many applications of quality control techniques. The basic ones as discussed above help the management to improve the customer focus, establishing a basis for continuous improvement, empowering the employees, among others. However, after successfully implementing the given quality control techniques, it is possible to use the results in determining the process capability. For example, as a result of successful implementation of quality control measures, Audi AG produces the leading premium luxury car models according to surveys, competitions and analyses (Kaufmann, 2009).
With the statistics proclaiming Audi cars as a very reliable brand, it provides a pathway for Audi AG to pursue a new process capability with reference to harnessing more reliability features, thus remaining a favourite brand. The quality possessed by Audi luxury cars begins from the initial selection and use of raw materials. All the way from the natural leather used for upholstery, the high grade wood veneers, the dirt-repellent materials in the passenger compartment; all result into the high standards that lead to the customer satisfaction. Having used the quality assurance measures to achieve this, Audi AG is now aware of the possibility to move higher in customer satisfaction by embracing the current global trends.
This means that if the above measures have resulted into such tremendous market success, the production and engineering processes are capable to achieve more with the incorporation of fresh ideas. Therefore, other than succeeding in the development of high quality, and luxurious high performance cars, Audi AG is capable of establishing new engineering skills to develop future products that could be both eco friendly and sustainable. In fact, the company has already tried out a number of high performance but low consumption engines in the verge of attempting to change the production capability, incorporating higher quality cars while at the same time reducing their negative effect in the environment as far the emission of carbon is concerned. Below is the statistics of the already tried models.
Application of Computer Software in Data Collection and Analysis
Owing to the ease and clarity of data collection and analysis prepared through computer aided software, many companies have embraced the application of such data collection and analysis software such as Excel and Access. In some industries, there is specific software relevant for use only in those industries. Such is the case of with Audi AG. This company utilizes the services of software called RIB Construction Suite. The selection of RIB Suite came as a result of a long research and selection procedure. The main use of this software by Audi AG is to forecast costs, analyze tenders and contracts, along other key figures of control.
This software is most ideal for controlling the company’s comprehensive internal processes all through the production processes. It also helps to generate useful data necessary for benchmarking, and concerning specific developments scheduled for future releases (RIB Software AG, 2014). Due to its private policy, Audi AG secures all its data in a private database where only the relevant stakeholders are allowed access to it. However, it evident that the company has a rich human resource database as seen from the records of its board members retrieved from its database by the Stock Exchange Market in Germany as shown below.
- Audi AG, 2013. Interim Financial Report 2013. Financial Report. Ingolstadt: PricewaterhouseCoopers.
- Audi AG, 2014. Production Sites Worldwide. [Online] Available at: HYPERLINK “http://www.audi.com/com/brand/en/company/production_plants.html”
- Kaufmann, A., 2009. German Cars Tops in Latest Breakdown Statistics. [Online] Available at: HYPERLINK “http://www.motorauthority.com/news/1033101_german-cars-tops-in-latest-adac-breakdown-statistics
- Ramsey, J., 2009. What goes into German Engeneering – Audi TechDay Quality. [Online] Available at: HYPERLINK “http://www.autoblog.com/2009/07/05/what-goes-into-german-engineering-audis-techday-quality
- Reuters, 2014. Audi AG: NSUG.DE. [Online] Available at: HYPERLINK “http://www.reuters.com/finance/stocks/companyOfficers?symbol=NSUG.DE
- RIB Software AG, 2014. Audi AG: Case Study. [Online] Available at: HYPERLINK “http://www.rib-software.com/en/main/industries/manufacturing/automotive/audi.html”
- Shar, I., 2011. ISO/TS 16949: Automotive Quality Management Standard. [Online] Available at: HYPERLINK “http://www.standards.org/standards/listing/iso_ts_16949”