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1) Milan Eri, Ph.D., FME Kragujevac, Sestre Janjic 6, e-mail: ericm@kg.ac.yu2) Miladin Stefanovi, Ph.D., FME Kragujevac, Sestre Janjic 6, e-mail: miladin@kg.ac.yu

COMPARATIVE CHARACTERISTICS OF TQM AND REENGINEERING

Milan Eri, Ph.D.1)

, Miladin Stefanovi, Ph.D.2)

Abstract: Basic characteristics of TQM and traditional reengineering concept are the frameworkof this paper. Their comparison is conducted and their advantages and faults are emphasized.Since the technological environment experiences constant technological changes in terms ofproducing more with available resources and with new engineering and technological knowledgeor achieving the given production with less resources used, the question is: what kind of changesare they. It is obvious that these changes are not always radical, but they lead to improvement ofperformances. A concept that covered the working field between TQM and general reengineeringwas originally defined for these changes. It was defined as "soft" reengineering.

Keywords: TQM, hard reengineering, soft reengineering

1. INTRODUCTIONIn order to be concurrent and to provide self-existence, small production companies are forcedto increase continuously the productivity and touse the existing resources as much as possible.This manifests through decrease in productiontime, more efficient usage of material means and

optimization of material and information flow.Dynamics of market environment reflects in

invention of new products, improvement andchanges of the existing products, that is, incontinuous expansion of demands regarding theassortment and the quality of products, as well asin reduction of costs and delivery deadlines,resulting form the market research. A small

company will have a great business result, that is,it will work well and achieve growth anddevelopment, only if it produces a useful,economical, likeable, thrifty, ecologicallyconvenient, competitive product, acceptable both

for the market and for the buyer.A product, as the final instance of small company's

operation, has its own life cycle. In that cycle, theproduct passes through several phases, shown in

diagram presented in Figure 1. The life cycle of theproduct may be prolonged by its redesign(restyling). The company achieves real,competitive advancement if it develops newproduct or products still in the phase of stableproduction (Figure 2). In technological processes

that are the framework for product manufacture,there is always a space for small changes and

improvements that may contribute to the decrease

in product's job time, increase in productivity,decrease in machining costs, etc., and that may

monitor the product's life cycle, including the endof stable production and sale. Another aspect of

changes in technological process is conditioned bythe changes on the product (design, quality, etc. -the part of the curve of prolonged lifetime of theproduct) that may also demand the changes in theexisting technological procedure of manufacture.Both aspects of changes in technological process

may be achieved through "soft" and "hard" form ofreengineering.

It is obvious that there are two approaches toimprovement of technological processes. The firstapproach means continuous improvement oftechnological processes, redesign of the existingtechnological processes or grouping of post-processes/activities within the process.

Figure 1 Characteristic phases of the product'slife cycle [8]

The second approach means the total reengineeringof the technological processes. In other words, theprocesses can be gradually improved, redesignedto the maximum or changed from the ground up inorder to achieve the maximum efficiency. The

selection of the approach for overcoming the

individual problems depends on what is wrong and

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what benefits are expected. The second approachto process reengineering is conducted based onsignificant change in demands regarding outputproducts or on significant change in technologicalplatform that sustains the production process.

Figure 2 Chart flow of competitive development

conservation [4]In order to accelerate the appearance of new

products on the market, different engineeringphilosophies, strategies, concepts and approachesare applied in development segments of theproduct's life cycle, with the aim to register andremove the problems, errors and faults related to

the functionality and technology of the product assoon as possible, before the production begins.

2. CONTINUAL IMPROVEMENT OF THE

PROCESS

Numerous meanings of the term TQM have a

consequence that the concept of TQM is unclear tothe users. It is described in different ways as "the

way", "philosophy", "culture", "approach", "newreligion", etc. It emerged from practice, but it isevermore researched at the universities, as ascientific management discipline. It is consideredthat the total quality is still the best managementapproach to simultaneous enthusiasm of the

customers, restructuring of organization, reductionof costs, increase in productivity and profits andlong term sustainable development of organization,even at the beginning of the 21

stcentury [5].

TQM concept is based on leadership and

participation in which, all managers, all levels, allemployees are continuously the carriers of the

organizational culture values, all the time. Its basicadvantage is strict commitment to the customers.

Management sustains operational effectiveness,creates stability and sustains a certain state in thecompany. Leadership is oriented towards thestrategy: renewal of the process, changes andfuture development. The good leadership is the keyto encouragement of the best in people and to

creation of the climate for creative thinking andinnovation. The basis of the TQM process is the

orientation towards the users and the achievement

of the balance in satisfaction of all interested

parties (customers, shareholders, stuff, partnersand society) with continuously growingexpectations. TQM is the dynamic concept ofcontinual improvement by generation of internalchanges as reply to rapid external changes.

Development, growth and changes may becomplementary factors as far as the dynamic

process of internal changes, answering to rapidexternal changes, is established within thecompany. This means continual, consistent,preventive, innovative and proactive engagementin improvement of the vision, mission, strategyand practice of the company.New structure of the company is based on the

process and systematic approach oriented towardsall users. Visible and invisible user needs must beconsidered both strategically and systematically, asa resource of ideas, based on which, results of

superior values are created.To obtain success in application of TQM,

managers must select the methodology supportedby different tools and techniques, among which,

there are: Improvement schemes PDCA, QFD,

Self-evaluation, Benchmarking,Brainstorming, Quality groups,Workshops, ... Diagrams PROCESS FLOW, GANT,ISHIKAWA, ... Statistical tools SPC (7 tools and 7

new tools), SQC, ABC, FMEA, SWOT,...

The concept of TQM is considered as the bestmultidisciplinary management approach for longterm and dynamic sustainable development of thecompany. TQM values, methodology and tools arethe basis for application of modern organizationalmodels, from the models of excellence to the

integration of different standards and systems intothe strategy and practice of the company.

3. RADICAL IMPROVEMENT OF THE

PROCESS

The changes are a constant challenge to thecompany. They are very distinct in technology,where they are turbulent, with high degree ofuncertainty, but also in other domains: customersconduct, competition, social relations, cultural

values, economic system, economic policy andecological demands. The companies face the

constant effort to improve competitiveness inconditions of highly variable business environmentthat carries a high level of uncertainty and risk.Thus, a need for radical change of basic attitudes,approaches and principles imposes itself and this iscalled "a new company's philosophy". This effort,

a new assembly of ideas, procedures and principles

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for ensuring the radical changes, is also calledreengineering and it implies such engagements inorganization and design of business processes thatbring essential, qualitative changes.Reengineering of business processes implies a

systematic approach aimed at radical improvementof the key business processes of the company.

Numerous modern approaches in the area ofmanagement, quality, informatics, production, etc.,have marked the 1990's. Reengineeringdistinguished itself as a relevant concept ofconduction of radical organizational changes andas a paradigm for business process redesign andfor creation of conditions for effective operation.

According to some research results, it has achievedthe fast and successful expansion, above all inlarge companies in the Great Britain. In a way, thisis understandable, because reengineering have

opened new perspectives in organizationdevelopment. Besides, this concept of

organizational changes have gained certain mediaattention and popularization as redesign of

business processes, as reengineering of businessprocesses or only as reengineering [7].

Practical experiences in the companies wherereengineering of the business processes wasconducted, have shown the following [9]: thequality was improved by 84%, time to productappearance was decreased by 75%, communicationwas improved by 61%, development costs were

reduced by 54%, changes were reduced by 48%

and profit was increased by 35%. These results areachieved, among other things, due to thecompany's transition to information technologies,which define new partnerships and which are usedto get closer to the customers. Then, it is necessaryto know the problems of the customers before

themselves, to know solution to their problems andto offer it by Internet service.The term "Business Process Redesign" was usedfor the first time at MIT (Massachusetts Instituteof Technology), within the research program"Management in the 1990's" conducted during1984-1989. In the course of this research, it was

noted that many successful companies used theinformation technology in more efficient mannerthen traditional automation of administrative and

production sectors.Regardless of the fact that the concept of "businessprocess redesign" appeared somewhat earlier, theterm "reengineering" was used for the first time inthe article "Reengineering work: Don't Automate,Obliterate", published by Michael Hammer in

"Harvard Business Review", in 1990. Hammer isnowadays considered as the founder ofreengineering concept. Together with JammesChampy, he published the book "Reengineering

the Corporation - A Manifesto for Business

Revolution" (in 1993), where they morecompletely explained the concept and the ideas ofreengineering.A large number of definitions of reengineeringexist in the literature. All of them mainly rest upon

the definition given by Michael Hammer andJammes Champy: "Reengineering is fundamental

revision and radical redesign of business processesin order to achieve dramatic improvement incritical measurable performances of the company,like costs, quality, services or speed" [2] (Figure3).

Figure 3Key parameters in focus of reengineeringIn addition to already mentioned definition givenby Hammer and Champy, there is a set of otherdefinitions given by individual authors or teamsengaged in research of the concept ofreengineering. Thus, Thomas Davenport (1993)defines reengineering as "revolutionary newapproach that uses information technology for

dramatic improvement of business performances",while Butter Cox (1991) defines it as "the way of

transforming business based on abolition of

traditional ways of business with informationtechnology in a key role".

4. Similarities and differences between

reengineering and TQM

TQM (Total Quality Management) is described as

long term, intensive effort to transform all parts ofthe company in order to create products andservices that are best in accord with needs,expectations and demands of the customers. In thebroadest sense, TQM represents continuous,incremental improvement of the activities thatincludes all members of the company, managersand stuff in totally integrated effort to improve

performances at all levels [1]. Improvement isaimed at satisfaction of all goals like quality, costs,organization, mission, etc.Reengineering means actions in organization andsystem design that provide essential andqualitative changes in systems operation. It isbased on radical horizontal restructure of

organization in order to improve performance ofthe key processes, to obtain visible improvements

in short term. Reengineering technique wasdeveloped at the beginning of the 1990's and, atthe start, it was considered that its applicationmeant designing the organization from nothing.

However, since it was shown that a small number

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of companies might allow themselves that luxury,reengineering has directed itself to introduction ofimprovements in basic processes, as well as onattempts to define adequately real needs forengagement of management and stuff in their

realization, based on criteria for maximalsatisfaction of customers or users.

Market increase by 20%, income increase peremployee by 15-30%, reduction of developmentstage of the product by 30-50% and reduction oftime for preparation process and production (fromcreating the order form to delivery) by three timesare obtained results of reengineering in companieslike "Hewlett-Packard", "Lloyd", "Ball Atlantic"

and "General Electric". However, practicalexperience shows that almost 50 to 70% (typically)of actions taken in reengineering do not giveresults specified for some definite term.

Considering the promises and price, this very highdegree of failure is extremely problematical and

arouses a large number of questions. Why is thesuccess rate so small? Does the reason lie in over

planning or in bad judgement of which processesshould be changed or in the human factor that is

not ready to accept changes? It may beimmediately emphasized that the odds for successare primarily connected to the confidence of theleading management in success.Both concepts incline towards improvement ofcompany's performances in order to obtain as good

position on the market as possible and to create

competitive advantages. Both, reengineering andTQM, bring changes to the company. However,TQM means incremental changes conducted over alonger period that lead to gradual improvement ofperformances. Such changes are frequently notenough to provide competitive advantage for the

company in environment that can change a lotfaster. The essence of reengineering reflectsexactly in the speed of conducting the changes thatare dramatic and radical. TQM is oriented on theexisting processes, while the old processes areconducted in a new way. Reengineering mostlyleads to the changes in organizational structure,

while TQM is directed towards the improvementof performances within the existing organization.Basic similarities between reengineering and TQM

are in orientation towards the processes, while theinitiative for introduction is given, in both cases,by the top management, and, in both cases,responsibilities and permissions as well as needsfor education and training are being nominated.Reengineering of business processes and TQM

methodology have drastic differences. Firstly,continuous and small improvements are gained byTQM, while reengineering brings abrupt anddrastic improvements. TQM demands involvement

of all stuff, while reengineering demands team

work. TQM demands small investments, whilereengineering demands large ones. TQM demandsinclusion of all processes, while reengineeringincludes separate critical processes. Finally, it mustbe emphasized that TQM means voluntarily

involvement of the stuff, while reengineering isforced under command.

Some theoreticians connect the term improvementto TQM concept, while the term innovation is asynonym for reengineering [6]. Thus, TQM andreengineering processes are observed as twoseparate processes, which is considered as beingwrong by other theoreticians that state that theorganization cannot constantly advance through

improvements and that innovations andreengineering must be introduced. This secondgroup of theoreticians think that one shouldinnovate, then improve, then innovate again and

improve again. This applies to the processes, to theproducts and to the total operation. Total quality is

the goal, TQM is the mean, and techniques andreengineering are given for achievement of total

quality. TQM may serve for adjustment of theprocesses between the two radical changes. This

means that continual and radical improvements areperiodically interchanged (Figure 4).

Figure 4Dependence of the improvement level ontime [6]

A new, derived concept is introduced as a

compromise between these two concepts "soft"reengineering. Soft reengineering meanstraditional interpretation of reengineering or the

"hard" reengineering mixed with TQM. Softengineering carries evolutional, that is continualchanges. It is process directed. The carriers of theprocesses have the responsibility for changes andthe process is project oriented. Continuous, notradical improvement is its basic characteristic.Comparative characteristics of TQM, soft

reengineering and hard reengineering are presentedin Table 1.

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Table 1Comparative characteristics of TQM, soft reengineering and hard reengineering [3]

Factors TQM Soft reengineering Hard reengineering

Responsibility forapplication

Top management Carrier of the process Top management

Initiative for change Top - Down Top - Down Top Down

Changes in

management structureMarginal Small Radical

Type of changesEvolutional better

way of conducting theexisting work

Evolutional better wayof conducting the

existing work

Revolutionary newway of conducting

work

Method

Improvement of the

existing process addition of new value

in the existingprocesses

Improvement of theexisting process

addition of new value inthe existing processes

Checking of thejustification of theexisting processes

and functions fundamental change

in process

Area Complete organization Key processes Key processes

Role of technology Traditional support Traditional support Technology as abasic actuator

Duration Long term oriented Project oriented Project oriented

Soft reengineering of the process should enableimprovement of quality, reduction of costs,reduction of process execution time, elimination ofunnecessary activities, comfortable working

atmosphere and it should define broadresponsibilities of stuff. Conducting of the softreengineering of the process dictatescorresponding changes in organization,technology, business and informatics.

Reengineering, as a concept, has a "soft" and a"hard" component or form. The first form is rather

the way of thinking like "If something is wrongwith my system, I will not look for an offender,but I will fix the system". It relies, first, on humanresources, on motivation, knowledge, creativity,inventiveness, innovation, teamwork, etc. Thesecond form is "fundamental change" and, as far as

technological systems are concerned, it includesmodern and expensive technical solutions like

CNC machines, industrial robots/manipulators,graphical stations, computers, software, etc.Constant improvements of the system make

evolution, while fundamental, drastic, radicalchanges make revolution. Evolution is more safeway, without any risk (small changes). When thepressure of the environment (market) becomes toobig and when gradual changes do not help, a

radical change is necessary.

CONCLUSIONThe shown concepts enable the removal of the

weak spots, optimization, innovations andrationalization of the processes. They differ inrange (scope) of the intervention on the process, by

intervention duration, by results and by amount ofrisk. Regardless of the mode, they should enable

finding and introduction of new, better solutionsthat will provide more effective and efficient

production or operation.

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