Quality Management System; case study of Mercadona

Introduction

According to Hellsten & Klefsjo (2000), total quality management (TQM) is considered to be based on a number of core attributes and values. These core values are in the context of an organization and they should be observed by all the stakeholders of an organization. These include suppliers, the top management, the employees, and the customers. As defined by the ISO 9001 (2008), total quality management is a continual effort invested for the purpose of improvement and it involves all the personnel knowing the needs and requirements of the customers, understanding individual’s working areas and work processes, and being well equipped and supported to measure and improve performance. In the modern day management, total quality management is becoming the revolutionary tool for improving performance by emerging employees and placing the customer and his/her needs and expectations at the centre of operations.

This essay therefore seeks to further discuss TQM by presenting a case study of Mercadona. This will be done by analysis of the extent to which total quality management initiatives have been integrated into the organisation’s business objectives and strategy, evaluation on how customers and supplier needs and expectations have been integrated in the quality management systems of the company, evaluation of the tools and techniques that are used in the organization for the purpose of diagnosing and improving process for more effectiveness, and assess extent to which the organisation fits with Deming’s (1990) views on a system. This will be done through review of available literature, and application of quality management systems knowledge to the case study.

Background of Mercadona

Mercadona is a Spanish family owned supermarket that is dedicated to the commercial distribution of hygiene products and food. The company runs large supermarkets that have an average of 1500 square meters or retail space and they have the model for local city centre stores (Mercadona, 2013). Mercadona as at 1 July 2015 had 1538 local retail supermarkets that are located in 48 provinces in Spain’s Autonomous Communities. The supermarkets stores account for 14.4% of the market share of total retail space in Spain and has a great role in stimulating the commercial areas were the stress are located. The company is relied upon by about 4.9 million households for their supplies and has staff averaging 74,000 employees. These employees have long term quality jobs and their professional careers are well developed in the company (Mercadona, 2013).

Mercadona has a rich product line and their customers have ample and efficient section of over 8000 varying items that comprise of both Mercadona products and other commercial brands that are highly recognized by customers. As a result, Mercadona likes to be the “prescriber” hence recommend the best product to their customers.  In 1993, the then president Juan Roig implemented the TQM model as the basis for the company’s operations (Mercadona, 2013). This model made a shift from the traditional supermarket strategy of high-low pricing marked with promotions to a new commercial strategy that is guided by the slogan “Always Low Prices” and a culture of quality and continuous implement (Mercadona, 2013; Blanco & Gutierrez, 2010). This change in operational strategy and as stated by Blanco & Gutierrez (2010) was geared towards protecting the company from fierce competition and economic turbulence then achieves supplier, price, and employee stability. This unusual and original strategy saw the company provide to its customers Total Shopping with products that are of the highest-quality at the lowest prices in the market (Mercadona, 2013)

TQM in Mercadona’s objectives and strategy

The top management at Mercadona fully believes that adoption and maintenance of the TQM model has been crucial for the current rate of growth and the impressive economic results (Ton & Harrow, 2010). One of the key elements of TQM model and its application in Mercadona is its orientation towards satisfaction of customer needs and expectations. This is the reason that Mercadona has taken one of its strategies as providing customers with a privileged position and has a large number of activities that are meant to care for its customers, strengthen customer loyalty, and help in the generation of maximum possible value for shopping in Mercadona stores (Mercadona, 2013).

Mercadona refers to anyone who shops at their stores as a “boss” because they understand that customers are at the centre of their activities and their survival depends on whether customers shop at their shops or elsewhere (Ton & Harrow, 2010; Blanco & Gutierrez, 2010). With this understanding, the company has its objective to focus on the provision of excellent services to its customers. The customer is therefore placed at the top of the firm’s inverted organizational pyramid and all of the company’s personnel including the leaders and the staff work to service the customer’s needs and expectations. While customers needs are to and can be meet through the various products and services offered by the company, customer expectation are more or less facilitating in nature and promote the chances of a customer’s shopping at Mercadona as well as returning to Mercadona (Blanco & Gutierrez, 2010; Miguel & Santiago, 2010).

As a result of privileged positions that Mercadona places its customers, the organization philosophy is to continually increase the value of the customers through their always low prices strategy (Miguel & Santiago, 2010). In addition, the organization has done away with special offers, temporary discounts and promotions. However, the strategy is not only focused on prices but the company also embraces a wide variety of other strategies for satisfying customer expectations whether known or potential future expectations (Mercadona, 2013). In order to establish customers unknown, potential, and future expectations, Mercadona maintains a direct dialogue with its customers, running activities for collection of needs, information, and opinions of its “bosses”, organizing meet ups with neighbours in neighbourhoods where the company is looking to start new stores, blind tests, open days, monographic courses on product lines, suggestion boxes in their supermarkets, and free customer service hotline services (Mercadona, 2013; Miguel & Santiago, 2010).

This method used by the company is considerably economically intensive, but the company considers it to be more appropriate as compared to the big advertising campaigns that are extremely expensive and lead to very little information about customers being collected (Mercadona, 2013). Through their strategy, the company learns directly from the customers on their tastes, preferences, products habitual customer’s needs, and future trends in the different lines of consumption (Miguel & Santiago, 2010). With this information, Mercadona then tries to anticipate the future needs of their customers through Research and Design (R&D), innovation, and product improvement programmes. Through the information collected, the company endeavours to increase the value for their customers. The objective of this strategy is to provide customers with a chance to carry out their shopping under the core principles of maximum range, maximum quality, maximum services, minimum time, and minimum costs always (Miguel & Santiago, 2010).

For the quality question, Mercadona lays emphasis on the nutritional quality if it’s more than nine thousand products. In addition, quality also involves speeds, convenience, comprehensiveness of product variety and service. Product variety which is also the same as the maximum range objective doesn’t mean provision of the largest possible number of brands, but rather all the possible products that satisfy customers needs in hygiene, food, pet food, and cleaning (Mercadona, 2013). To deliver on this objective, the supermarket has adopted a strategy of close relationship strategy with its suppliers for its own products (Miguel & Santiago, 2010).

Integration of customers and supplier needs and expectations in TQM system

One of the cornerstones of the TQM system adopted by Mercadona is its orientation towards satisfying customer needs and expectations (Woodruff, 1989). As a result, the company has placed their “bosses” at a privileged position and does execute a large variety of activities that are all aimed towards caring for its customers, affirming their loyalty, and help to provide the most possible value by doing total shopping in their stores (Ton & Harrow, 2010). Mercadona understand that their customers are the life and blood of the company because their very survival depends on the decision by a customer to shop in Mercadona or elsewhere, as a result, the company places their customers at the centre of activity and the staff does not speak of their customers, but rather their “bosses” (Mercadona, 2013).

Under this premise, the entire organization is focused towards provision of excellent services to its customers. The functions of the top management and the entire staff is therefore to serve their customers by provision of top quality-to-price ration, the correct variety of products, and the highest level of service while at the same time ensuring that their customer finish their shopping at the shortest time possible (Mercadona, 2013). In addition, the company provides a guarantee on the name and life principles of the products on their shelves by guaranteeing the date of packaging and the origin of the products. For this reason, Mercadona has designed a relationship with its suppliers to ensure that they provide nothing less in quality and maintain low prices (Blanco and Gutierrez, 2010).

The relationship with its suppliers means incorporation of the external corporation principles into the TQM value system (Woodruff, 1989). This principle requires extension of corporation beyond the boundaries of the company. The company puts this external corporation with its suppliers in a special way (Mercadona, 2013). This relationship with suppliers seeks to develop corporation, stabilize the relationship, mutual benefits, and sharing of information and training for the purpose of improving all the business processes. The integration of suppliers into the TQM systems starts with the adoption of a process management and analysis model. The company analyses the processes from when the products leave the supplier to the point when they reach the customer (Ton and Harrow, 2010).

The aim of this analysis is to ensure that any inefficiency that might exist in the production process is eliminated because if not, then they will eventually reach the customer (Mercadona, 2013). The company holds the belief that, so as to optimize process management, it is crucial to establish a trust relationship with the suppliers. This relationship with their suppliers starts from the understanding that the continuation of the Mercadona-supplier relationship rests solely on the end-user. This means that a supplier will only continue to supply Mercadona only when the supplier can respond and meet customer needs and expectations (Miguel & Santiago, 2010). According to Mercadona’s philosophy, the supplier is a fundamental element in satisfying customers and the supplier must also satisfy the relationship with Mercadona therefore generating synergies between both parties (Mercadona, 2013).

Mercadona suppliers have certain common characteristics; they are capitalists, partners, and are focused towards adding value for the customer. Given these generic characteristics, the supermarket has four categories of suppliers; classic “distressed” supplier, intermediaries, and “intersuppliers” (Mercadona, 2013). The company has conventional contractual relationship with classic suppliers and they supply products that the customer demands mainly because of the supermarkets marketing. Intermediary on the other hand are agents who come between the supplier and the supermarket (Woodruff, 1989). The supermarket therefore avoided these as their only role is increment of the costs of the product to the customer and adds no value at all. Lastly, “intersuppliers” are those produces who manufacturer Mercadona’s brands and the company has a long-term mutual commitment and corporation which is regulated by Sound Business Practices Framework Agreement and results to “contracts of life” (Mercadona, 2013; Miguel & Santiago, 2010)

Through this TQM system, the company has integrated the customer and the supplier in the system in that, the comp[nay has to get the information from customers on what they need and what their expectation are and feed this to their “intersuppliers” for the aim of manufacturing quality products that deliver value to the customer.

Tools and techniques used for the diagnosing and improving process

Mercadona aims to continually improve customer’s value through provision of products that meet their customer’s needs and expectations. To realize this, the TQM system used by the company requires that they establish the unknown, potential, and even future expectation of their customers. This is done from the premise that provision of stellar products that meet customer needs should be informed by the very customer’s needs and expectation. Therefore, Mercadona uses direct dialogue with their customers as a tool to establishing their needs and expectations (Mercadona, 2013; Miguel & Santiago, 2010). Mercadona does run activities for collection of needs, information, and opinions of its “bosses”, organizing meet ups with neighbours in neighbourhoods where the company is looking to start new stores, blind tests, open days, monographic courses on product lines, suggestion boxes in their supermarkets, and free customer service hotline services (Mercadona, 2013).

When seeking to start a new store, Mercadona does a due diligence exercise to establish the needs and expectation of their target customers. This is done through R&D so as to establish the unmet needs of the potentially new customers and what the company can do to meet these needs. Various tools are used in this event including direct interviews, field data collection of any available potential competition, and the customers need for a new products supplier for their needs (Mercadona, 2013). Laos, the company does a blind test for her products/brands in the area to determine the potential market and the available demand for their brand products. Other information gathering methods used by the company are applied on running stores and they involve direct association and response from their customers.

The information sought by the company from their customers is not only from the value of their products, but also on a variety of other attributes among them convenience, speed, and comprehensiveness of their products and service. Mercadona believes that the value of their products on determine by a range of other factors which affect customer shopping experience (Ton & Harrow, 2010). The value delivered to a customer is holistic in nature and various tools that involve direct dialogue with the customers are used to determine how the satisfaction contributing factors are so far and how the company can improve on them.

The collected information is then fed to their “intersuppliers” who use the information to manufacturer the company’s brand products factoring in the customer’s needs and expectations (Mercadona, 2013). The creation of products that fit customer’s needs, tastes, and preferences is done through research and design where the “intersuppliers” anticipate the future trends and expectation of their customers. The research and design solutions are then innovatively used to improve Mercadona’s brand products. Improvements on their products are done to bring better quality, nutrition in their foods, and enhance safety both in their stores and through their products.

How Mercadona fits with Deming’s (1990) views on a system

Deming (1990) makes several attributes of a quality management system that each system should be characterise to. The first is that the system should bear a constant purpose of improvement of product and services with the objective of this being to be competitive and stay in business while providing jobs. Mercadona TQM system is compliant with these views as the company is constantly endeavouring to improve its products and services as per the needs, tastes, and preferences of their customers. This is done as a cycle with information being gathered from the customers for R&D purposes, feedback on new improvements, and even future expectations for predicting future customer trends (Miguel & Santiago, 2010).

As per Deming (1990) views on ending the practise of awarding business based on the price tag and adopting one of minimised total costs, Mercadona has ensured that it provides products and services of high quality and low price by doing away with the various cost-inflating processes like intermediary suppliers (Mercadona, 2013). As argued by Bendell (1991), these processes for example the intermediary process only add costs to the product/service with no added value. By eliminating intermediary and dealing directly with the manufacturer, Mercadona ensure that its products are not only of high quality, but also with low price. This strategy fits with Deming (1990) views on not only focusing on high quality, but also low price of the product.

While the primary focus in Mercadona is on the customer, their TQM system requires that the staff be well trained to ensure that they deliver on the satisfaction promise to their customers. Deming (1990) requires that the organization should institute leadership that aims at supervising for the aim of causing people to do a better job. To ensure that this is achieved in the supermarket, the top leadership has a stringent recruitment method that ensures only the best are picked and employed in the company. In addition to recruitment of the best, Mercadona has on the job training programmes that seek to better the service provided by its staff (Miguel & Santiago, 2010; Mercadona, 2013).

Deming (1990) suggests that organizations should eliminate slogans, exhortations, and targets for the workforce as they do normally realize the objective they are set out for. However, Mercadona has a variety of these. Mercadona has slogans that target their customers. These include ‘Siempre Precios Bajos’ (SPB, which translates as ‘Always Low Prices’) which means low prices of its products always, their TQM model premise ‘to be satisfied, first you have to satisfy everyone else’, and their philosophy of ‘value for the customer’ (Mercadona, 2013). These slogans have been so far successful. However, this is in conflict with Deming (1990) views, even though these slogans are not meant for the staff, but for the customer only implemented by the staff.

Conclusion

The top management at Mercadona fully believes that adoption and maintenance of the TQM model has been crucial for the current rate of growth and the impressive economic results. One of the key elements of TQM model and its application in Mercadona is its orientation towards satisfaction of customer needs and expectations. One of the cornerstones of the TQM system adopted by Mercadona is its orientation towards satisfying customer needs and expectations. As a result, the company has placed their “bosses” at a privileged position and does execute a large variety of activities that are all aimed towards caring for its customers, affirming their loyalty, and help to provide the most possible value by doing total shopping in their stores. Mercadona aims to continually improve customer’s value through provision of products that meet their customer’s needs and expectations. To realize this, the TQM system used by the company requires that they establish the unknown, potential, and even future expectation of their customers. Mercadona uses direct dialogue with their customers as a tool to establishing their needs and expectations. Mercadona does run activities for collection of needs, information, and opinions of its “bosses”, organizing meet ups with neighbours in neighbourhoods where the company is looking to start new stores, blind tests, open days, monographic courses on product lines, suggestion boxes in their supermarkets, and free customer service hotline services. Mercadona’s TQM systems fits with Deming’s views in that, it bears a constant purpose of improvement of product and services with the objective of this being to be competitive and stay in business while providing jobs, it provides products and services of high quality and low price by doing away with the various cost-inflating processes like intermediary suppliers, and requires that the staff be well trained to ensure that they deliver on the satisfaction promise to their customers.

References

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