INTEGRATING TQM AND BPR AS

PROCESS-ORIENTED MODELS

A CASE STUDY OF SSAB

Karlstad Business SchoolHandelshögskolan vid Karlstads Universitet

TITLE OF THE WORK:

Integrating TQM and BPR as Process-Oriented

Models: A Case Study of SSAB

Prepared by

Hafez Shurrab

TABLE OF CONTENTS

TABLE OF CONTENTS............................................................................................................

LIST OF TABLES.....................................................................................................................

1. INTRODUCTION..........................................................................................................- 1 -

2. METHODOLOGY.........................................................................................................- 2 -

3. BACKGROUND............................................................................................................- 2 -

3.1. SSAB AND BPR................................................................................................- 2 -

3.2. SSAB AND TQM...............................................................................................- 3 -

4. THEORY........................................................................................................................- 3 -

5. ANALYSIS.....................................................................................................................- 4 -

6. DISCUSSION.................................................................................................................- 5 -

7. CONCLUSION...............................................................................................................- 5 -

8. REFERENCES...............................................................................................................- 6 -

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LIST OF TABLES

Table 1: TQM vs. BPR......................................................................................................- 3 -

II

1. INTRODUCTIONThe change in our life in the last few decades became very difficult to manipulate

or accommodate. The resources of knowledge became vast, innovations has been

integrated to everything at a high pace, competition for markets and technology has

become more fierce day after day, and customers became more acquaint, demanding

and educated than ever. In a context of a survey that has been conducted in 1996 in the

UK, around 96.6 % of senior managers thought that the business focus and

organizational thinking had to change to be more customer-oriented. None of the

respondents however specifically answered how and what to change for improving the

overall performance and productivity (Love & Gunasekaran, 1997).

According to Benito et al. (1999), to show high responsiveness to globalization and

increasing competition in the market, companies should be constantly looking for new

management solutions, or "prescription", in order to make their business more

competitive. This has in turn led to a large number of philosophies, or management

models, to solve these problems for business development. Lean Production is one of

examples of such models in addition to Total Quality Management (TQM) and

Business Process Re-engineering (BPR). What these models have in common is that

they focus on process-oriented approach (Huczynski, 1993).

The two management models, TQM and BPR have been widely used in different

industries during the late 80s and early 90s. There are however many concerns about

which of both models (TQM & BPR) should be adopted, how companies do embrace

them today, how the implementation of them compare with their relevant theory, and if

they are both implemented in combination, totally or partially, or in combination with

other models. According to Miller & Hartwick (2002), the most significant concerns

that businesses encounter in the context of these models is in the implementation phase.

In the implementation of process-oriented models, the system is more or less adapted to

the activities it will support, i.e., the processes of business system must be consistent

with the business (Brandt et al., 1998). This report is dedicated to investigate and

review some answers related to the concerns mentioned earlier about TQM and BPR

integration as process-oriented models in SSAB.

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2. METHODOLOGY Information about the theories and case study was collected from books, scientific

articles, the official website of SSAB, and the course literature “Quality from Customer

Needs to Customer Satisfaction”. The scientific articles were found in the databases

Emerald, Science Direct, and Google Scholar by using the key words in both English

and Swedish: TQM, BPR, Case Study, Continuous Improvement, Incremental, and

Radical Change through Google Scholar and OneSearch as search engines. The books,

course literature and scientific articles are used to build up the core theory of the

process-oriented models (TQM and BPR), while the results of case studies conducted in

the selected companies are used to analyse both the implementation of the process

management of TQM versus process innovation (BPR).

3. BACKGROUND

3.1. SSAB and BPR

As a leading company in high strength steel industry, SSAB has a 6 million tons

capacity for crude steel. There are approximately 9000 persons work in 45 countries for

SSAB. They have almost gained 38.9 billion SEK of sales in 2012 (SSAB, 2012).

SSAB started considering BPR in 1996. The reason behind that was ISO 9000 did not

provide much improvement since the certificate did not add much in terms of

customers’ demand. For that, they became more interested in BPR to add a higher value

to the quality of the work. The starting obstacle was the fact that BPR project has been

proposed by a small group inside the company. The group passed their proposal to the

team management that then showed a high degree of interest restricted by the risk of

implementation phase. Furthermore, the BPR project was not warmly welcomed by the

shareholders in the beginning. Therefore, implementing BPR project resulted in

conflicts, and thus under such circumstances, it was not meaningful to implement this

within the administration. However, by time, some development occurred within the

administration in line with what was predicted by the BPR project, with simplified

procedures and more modern systems. In production, the company has developed itself

at the rate and on the level that the world evolved. BPR as process-oriented method

brought radical improvements for the process outcomes. By describing the business

with processes, clarifying what comes in and out of the process, and ensuring that there

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is a customer of each process, SSAB could be able to benchmark their performance in

terms of different contexts (Kero & Nilsson, 2004).

3.2. SSAB and TQM

TQM is used in SSAB partially. The main concepts of TQM is generally well

understood by at least the business development group. The TQM’s parts of concern

integrated in SSAB are mainly the organizational involvement and continuous

improvement. Employee engagement is central in terms of the way SSAB work. There

are no experts to sit on the sidelines and describe how things should be performed and

how the work instructions should look like. Instead, those who perform jobs are the

main designer of the work, since the business development group is only responsible

for supporting them in their work and giving them the tools needed. Moreover,

integrating TQM as process-oriented method helpfully contributed that SSAB is more

customer-oriented company, where customer is located in the main target for each

process. SSAB rely on internal personnel to implement, develop and sustain TQM

practices. Sometimes they ask outsiders to be in support of some activities.

4. THEORYProcess innovation or business process reengineering (BPR) is a fundamental new

thinking and radical re-structuring of core processes to achieve dramatic and

simultaneous improvements of critical result factors, such as cost and quality, service

and swiftness. It is designing new process without using the present structure (Hammer

& Champy, 2001).

Table 1: TQM vs. BPR (source: (Bergman & Klefsjö, 2010))

PARAMETER IMPROVEMENT INNOVATION

Level of Change Incremental Radical

Starting Point Existing Process Clean Slate

Frequency of Change One-time/Continuous One-time

Time Required Short Long

Participation Bottom-Up Top-Down

Typical Scope Narrow, within functions Broad, cross-functional

Risk Moderate High

Primary Enabler Statistical Control Information/Technology

Type of Change Cultural Cultural/Structural

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BPR also refers to discrete initiatives that are intended to achieve radically

redesigned and improved work processes in a bounded time frame (Davenport, 1993).

On the other hand, TQM or continuous improvement refers to initiatives that emphasize

incremental improvement in work processes and outputs over an open-ended period of

time (Bergman & Klefsjö, 2010). Table 1 shows the essential differences between BPR

and TQM initiatives.

Valentine & Knights (1998) argues that the implementation of BPR in practice

often occurs through gradual changes instead of the theoretical model's one-time action.

The reason for this is that it is often not practical, because of the power relations and

organizational culture, to implement such radical changes at one time, without being

forced to implement changes gradually. Moreover, there is a large financial resources

and substantial risks to bring for onetime-radical changes, and this also mitigated when

BPR is integrated in incrementally changing context.

5. ANALYSISAccording to Hammer & Champy (2001), Davenport (1993), and Bergman &

Klefsjö (2010), BPR and TQM have some similarities as they are both process-

oriented, customer-oriented, quality-focused, measurable, and culture-change-oriented

models. On the other hand, the most important difference between both models is that

TQM is employed to constantly build incremental improvements, while BPR is based

on radical change at a single time (Bergman & Klefsjö, 2010). This difference is clearly

seen in the case of SSAB. TQM thinking SSAB have and the small constant

improvements being made are easy to implement, seen from the perspective that the

business development group in SSAB do not usually encounter much resistance by the

institutional forces, while BPR's radical changes have been met with conflicts to be

implemented in the company (Kero & Nilsson, 2004). What really happened is that

BPR’s ideas have been implemented in SSAB in a manner that is more consistent with

TQM. Valentine & Knights also indicates that when BPR is implemented in gradually

changing context, the difference becomes very small between BPR and TQM. One

reason is that the top-down effect caused by the power relations and organizational

culture becomes weaker in terms of conflicts. If the BPR project in SSAB case is to be

looked at in light of this, we can also see that the ideas of BPR project could not have

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been implemented through radical change context. The way SSAB had been working

was very similar to TQM’s context.

6. DISCUSSIONThe report gives a short overview about when TQM and BPR are to be adopted by

companies. The need for both models is inevitable matter of success to keep abreast of

competitors’ performance, and then take the lead. TQM could be used as main base for

process improvement that is practiced in a daily basis, while BPR initiatives could be

built on TQM’s thinking when the need for a radical change is meaningful and would

pay off from a strategic point of view. That need could be seen as patents, innovations,

or any other updates related to the industry or business and may need to be integrated in

a specific way to improve the overall business outcomes. For that, many think that BPR

is highly dependent on the development of information systems since they evolve at

quite high pace. The obsoleteness rate is hardly foreseen when it comes to that kind of

technology.

Traditionally, TQM and BPR are not, comparing with the theory, fully integrated

in companies. Companies select some aspects and concepts of these models that are as

they think more required to be built in their processes and industries. As process-

oriented models, TQM and BPR could be also combined with other models such as lean

production, whereby continuous improvement is, within its context, expressed as

kaizen, and BPR is referred to as kaikaku.

7. CONCLUSIONThe report is dedicated to analyse and investigate the adoption of BPR and TQM in

SSAB. The results discussed earlier should be reinforced by several case studies

conducted in different companies and industries to be more valid. TQM is rarely

implemented as an explicit model. One reason for this may be that there is no proper

method or specific blueprint for implementing TQM. The case shows that TQM can be

used in two other ways, even if it is not implemented according to the theory. It is used

either by integrating TQM's ideas in the business, or by implementing models that are

further developments of TQM. On the other hand, BPR is much more tangible project

in reality. However, BPR projects conducted for onetime-radical change are risky and

required a top-down participation, which makes it quite difficult to be integrated

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without conflicts, especially in big and traditional companies such as SSAB. Other

process-oriented models such as lean production could be combined with both TQM

and BPR to bring the best of them all for their adopters.

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8. REFERENCES

Literature Sources:

Benito, J. Lorente, A.R. and Dale, B.G. (1999). Business process re-engineering to

total quality management. Business Process Management Journal.

Bergman, B. and Klefsjö, B. (2010). Quality from Customer Needs to Customer

Satisfaction. 3rd edition. Lund: University Press.

Brandt, P., Carlsson, R. and Nilsson A. G. (1998) Selecting and Managing Standard

Systems. Lund: University Press.

Davenport, T. H. (1993). Process innovation: reengineering work through information

technology. Boston, Mass. Harvard Business School Press.

Hammer, M. and Champy, J. (2001). Reengineering the corporation: a manifesto for

business revolution. New York: Harper Business.

Huczynski, A.A. (1993). Management Gurus. London Routledge.

Kero, G. and Nilsson, P (2004). BPR and TQM: Comparison between theoretical

models and their application. C-Thesis. Luleå University of Technology.

Love, P. and Gunasekaran, A. (1997). Process BPR: a review of enablers, International

Journal of Production Economics.

Miller, D. and Hartwick, J. (2002). Spotting Management Fads. EBSCO Publishing.

Valentine, R. and Knights D. (1998). TQM and BPR – can you spot the difference?

Personell Review.

Electronic Resources:

SSAB (2012). SSAB - SSAB in 90 seconds. [online] Available at:

http://www.ssab.com/en/Products--Services/About-SSAB/SSAB-in-90-seconds/

[Accessed: 15 May 2013].

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