Marine Industry

How Does TQM AffectsMaritime Industry

Maritime Industry

• Maritime industries include all enterprises engaged in the business of designing, constructing, manufacturing, acquiring, operating, supplying, repairing and/or maintaining vessels, or component parts thereof: of managing and/or operating shipping lines, and customs brokerage services, shipyards, dry docks, marine railways, marine repair shops, shipping and freight forwarding services and similar enterprises. This emerging industry also includes a significant component of traditional oil and gas and renewable energy (particularly wind, but also marine turbines).

The 3 Dimensions of Quality Management in Shipping

Quality Management in

Shipping

Service Quality Ship Safety

Environment Protection

The dimensions of service quality in shipping, thus, may be identified as following three factors – customer satisfaction.

1.Service Quality – a service provided to shippers, freight forwarders that use shipping as a transportation means.2.Ship Safety – means the safety of cargo as well as ship itself which should be afloat and can navigate to the destination with seaworthiness.3.Environment Protection – means the pollution control against sea caused by ship operation (like ship’s crew sewage) or accident (like oil pollution) and polluted air emitted by ship’s engine.

Why Quality Management In Shipping

It were Deming, Juran and Fiegenbaum who laid the foundation of quality control not in service but in manufacturing sectors. They suggested a set of steps or points － Deming’s fourteen points, Juran’s quality planning roadmap and Fiegenbaum’s ten benchmarks.

Quality management has a positive effect on company’s market share and profitability. Quality management creates more employee sensitivity to the issue of quality. This generates a higher level of quality, which impacts on both increased repurchased and increased sales from positive word of mouth.

Benefits of Quality Management

Quality Management Quality standard Quality

Improvement

Repurchase

Positive Word of Mouth

Market share and Profitability

Positive company image A reputation for high-quality service creates a positive image for shipping lines. Positive image helps a Shipping company increase sales obtain funds from various lending agencies, and recruit better personnel ．

Lower Cost and Higher Market ShareQuality enhancement increases productivity and lowers rework time, scrap cost, and warranty costs, leading to increase profits. Improved performance enables the company to increase its market share and gain competitive advantage through economies of scale.

Decreased liabilityShipping companies have been facing complaints caused during transportation or because of ship accidents. Successful launch of quality assurance system such as ISO and ism shall typically result in improve service.

Benefits of Quality Management

Shipping is a service industry with two interrelated aspects: the technical aspect and the commercial aspect. The former is directly related to ship personnel and the latter, to onshore personnel. Overall however, it has the characteristics of a rigid “command and control” hierarchy. The objective of a quality system, along with producing an international standard service, should be to lessen this rigidity by pushing the decision making process downward within the organization. This is a concept put forward by David Mottram. According to him, all shipping companies should have an objective of creating processes and organizational structures which make it easy to get things done. This in turn will lead to proactive attitudes and higher profitability.

Principles of Quality

According to UNCTAD, 1997, quality in shipping is determined by certain characteristics:

• Quality is a focus on the customer. • Quality is a goal of achieving “zero defects”

• Quality is a frame of mind that must pervade the entire organization - top management, middle management and the workforce.

• Quality is an earnest attempt to do things right, from the beginning not simply do them better.

Principles of Quality

Quality Assurance is “prevention of problems with quality by means of a system designed to involve everyone in the organization in continuous improvement and the development of a quality culture”. (Mottram, 1998,1). If there is consistency in the approach and operation of an organization then it is likely that the result of the product or service will also be consistent. Whatever system is used, will be according 35 to the organization’s structure and responsibilities, along with resources and operational requirements.

Quality Assurance

These standards on their own, do not guarantee quality, but can be used as a benchmark against which a company’s commitment to quality can be measured. According to Peter Cremers from Anglo Eastern Ship Management in Hong Kong, any continuous improvement process within an organization must encompass certain characteristics:

• High standards of totally independent internal auditing.

• Accident reporting and analysis.

• Regular and sincere management reviews of the systems.

• Regular feedback to employees

• A strong training programme. • Continuous commitment from the top. (BIMCO, 1999, 235).

Quality Assurance

Shipping is a service industry and as such shipping agents are providing a service both internally and externally. Internally to the principal(s) and externally to the shippers or consignees. Quality assurance is needed to ensure a set quality standard service is maintained. The reputation of any organization is often linked to the quality of its product or service. Within this highly competitive industry, the better service provider will be in a more successful position. More and more demands are being placed on shipping agencies by all parties to display compliance with international standards through certification. ISM is presently mandatory and ISO is voluntary. It is however fast becoming increasingly possible that shippers/consignees will soon refuse to do business with companies that do not hold the necessary certification that their agency complies with ISO quality management standards

Quality Assurance

The objective of having a quality manager is to actually implement quality standards, and ensure the results of the product or service complies with the requirements. There are certain procedures or steps to be followed when implementing a quality management system or model. According to David Mottram in his lectures on Principles of Management, 1998, they are as follows:

The Total Quality Management Model

Development • Ascertain what standards apply to the organisation. • Research standards and associated guidelines. • Compare the organisation’s activities against the requirements of the standards and determine work required to meet them. 39 • Obtain quotes for documentation, consultants and external assessors. • Present cost proposal to senior management for review and approval. • Create implementation plan, programme and budget.• Conduct awareness seminars for the staff.


Implementation• Create and issue draft system documentation. • Organise internal audits to check implementation of system. • Establish pre-assessment by external agency. • Issue formal system documentation. • Organise continued internal audits. • Establish management reviews. • Organise assessment by external agency. • Organise 6 monthly surveillance visits by external agency. • Organise 3 or 5 year re-assessment by external agency.


Implementation• Create a quality manual • Create a procedure and instruction manual • Ensure everyone is aware of their responsibilities and how to achieve them. • Organize continuous means for correcting errors and ensuring continuous improvement. • Ensure everyone participates in the future development of the system.


If you say what you do by writing it down, and you actually do what you have written down, and can prove as such to your external auditor, then the outcome should be beneficial to the organization. According to Peter Cremers in his article in BIMCO Review, 1999, 235, “for every dollar in insurance claims there are at least five dollars of hidden or indirect costs which cannot be recovered. So in reality the shipping Establish a quality policy Establish quality system Identify problem areas Prepare quality improvement program Implement program Monitor progress Audit and review effectiveness Define TQM objectives Define responsibilities Figure 4. Source: Mottram, 1998. “Principles of Management.” 42 industry loses quite a few billion dollars due to losses.” The benefits achieved by a company after implementation of a quality system are estimated by a classification society and presented in BIMCO Review, 1999, 235, as follows:

Benefits of an Effective Quality System

Quantity Benefits • 10 - 15% Reduction in P & I premium. • 15 - 25% Reduction in hospital hours. • 23 - 35% Reduction in loss of man-hours. • 30 - 40% Reduction in environmental protection fines. • 35 - 45% Reduction in sick leave. • 50 - 90% Reduction in damage to cargo.

Benefits of an Effective Quality System in Maritime Industry

Quality Benefits • Improved staff motivation. • Improved communication with sea staff. • Improved market reputation. • Improved employee’s perception of the company. • Improved management • Better employee retention• Better service provided by the shipowners.

Benefits of an Effective Quality System Maritime Industry

Marvin MadaitonJenny PerezNelson Quirit Jr.BTMT4

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