Impact of Total Quality Management, work teams, and Just-In-Time on the performance of the Mexican manufacturing industry
There is no doubt that every corner of the manufacturing world is changing in important ways. Industries that were once dominated by North American and Western European companies are now global, and competition around the world is intense. No manufacturer can afford to be complacent about past successes and expect to survive. The pressures of competition are significant, and they are growing. In Mexico too, companies are becoming concerned by the increasing global competition they are facing. The most immediate threat is posed by the USA and Canada as a consequence of the establishment of the North American Free Trade Agreement (NAFTA). Japanese competition is also increasing, and so too is the competition from the newly industrialised countries of Asia and Europe. Many Mexican companies which relied on cheap labour and had little outside competition are now threatened by technically more advanced companies. Manufacturers find themselves competing more intensely than ever before in international markets. This also means they face more intense competition in their own domestic markets from international producers. Of course, there is no blueprint for survival in the global market. But clear patterns emerge when one carefully examines the practices of those manufacturers regarded as "world class". A good deal of evidence suggests that the failure of some firms to survive in the global market is due to the mismanagement of people rather than to problems with technical systems per se. In particular, changes in manufacturing often are not accompanied by complementary changes in human resource management. Human resource management considerations such as Work Teams may be as important as other aspects of modern manufacturing, such as Just In Time (JIT) and Total Quality Management (TQM). Recognition of this issue is so widespread that most theorists see Work Teams (WT) as a critical link in the conversion to the modern manufacturing paradigm. This study investigates the impact of Total Quality Management (TQM), Work Teams (WT), and Just-In-Time (JIT) on the performance of Mexican manufacturing firms. The direction and magnitude of the impact is analysed for large, medium, small and Maquiladora industries. Findings of the study are intended to provide a clearer view of what impacts the performance of the companies. This overall theme is consistent with a long history of research on the integration of technology and organisation. Little empirical research has, however, investigated the effect of Work Teams, Just In Time manufacturing, and Total Quality Management programs as an integrated concept on the performance of manufacturing firms. Research to date has relied mainly on studying the effect of each factor as a stand-alone system on organisationsor case studies, which have frequently presented idiosyncratic practices or conflicting findings. Based on the model of Malcolm Baldrige Quality Award, and Mexican National Quality Award, a survey questionnaire was developed. It contained variables of the TQM, WT, and JIT practices which were measured on a five-point Likert type scale for all items to ensure higher statistical variability among survey responses- The respondents were asked to choose the grade (from 1 to 5) of implementing these practices in the last three to five years in their firms. The questionnaires were mailed to 230 large, 133 medium, 105 small, and 175 Maquiladora companies. The first section of the questionnaire gathered information on the quality improvement techniques practised by each firm based on a 68 questions on TQM, JIT, and WT, and the second section determined the outcome of the companies measured as the performance based on the perception of plant managers divided into 7 questions on operational results, customer satisfaction, and organisational climate. Reliability and validity tests were addressed in survey development and evaluation to provide confidence that the empirical findings accurately reflected the proposed constructs. While the reliability test permitted to the determining of the degree of systematic variance in the questionnaire, the validity test allowed labelling of this systematic variance. The findings reported here are based on questionnaire data collected covering 122 large, 60 medium, 56 small, and 60 Maquiladora manufacturing companies from different sectors. Given the purpose of the study, a principal component factor analysis with varimax rotation was used to examine the interrelationships among the variables and then explaining these variables in terms of their common underlying dimensions (factors). In order to examine the impact of these variables on the performance of the companies, a canonical correlation analysis was done. The study showed that no stand-alone improvement technique had an impact on the performance. The only significant impact was found when TQM, lIT, and WT were practised simultaneously.