JOURNAL REVIE

Impact of Total Quality Management In Organizational

Performance Oil Company case in Jordan

UAS QUALITY MANAGEMENT

Asked To Fulfill Requirements of the Quality Management UAS Course

Supporting lecturer
Ira Valentina Silalahi, S. Pd, MM

Arranged by :

Name : Diki Ahmad solihin

NPM : 18211109

STUDY PROGRAM MANAGEMENT

ECONOMICS AND BUSINESS FACULTY
UNIVERSITY OF INFORMATION TECHNOLOGY AND
BUSINESS INDONESIA
BANDUNG
2019
 TABLE OF CONTENTS

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

LIST OF FIGURES .......................................................................................................ii

CHAPTER 1 INTRODUCTION
1.1 Background 1
1.2 Research Objectives 2
1.3 Research Hypothesis 2
Research Model 1.4 2
1.5Conceptual and Operational Definitions. 3
CHAPTER 2 METHODS

2.1 Research Methods 5

CHAPTER 3 LITERATURE
3.1Total Quality Management 6
3.2Total Quality Management Principles 6
CHAPTER 4 RESULTS AND DISCUSSION
4.1 Descriptive Results 10
4.2 Analytical Results 10
TQM Principle 4.2.1 Impact On Operating Efficiency 11
TQM Principle 4.2.2 Impact On Employee satisfaction 11
CHAPTER 5 CONCLUSION
5.1 Conclusion 12

i
 LIST OF FIGURES

1. Figure 1 Independent variable and dependent variable ...............................................2

ii
 CHAPTER 1
PRELIMINARY

1.1 Background
Globalization, intense competition worldwide and ever changing customer
demands have changed dramatically the business environment over the past few
decades.Responding to the changes mentioned above. Jordan organizations have
adopted different quality management standards such as ISO9000, Total Quality
Management (TQM), etc. On the other hand, the emphasis on TQM as a new way
to manage the company to increase competitiveness has increased rapidly over the
last few years. Different studies show a positive impact on the implementation of
total quality organizational performance.
The case study conducted in Jordan Petroleum Refinery Company
(JPRC).Jordan Petroleum Refinery Company (JPRC) is the only petroleum refinery
in Jordan. Refinery sites located around the city of Zarqa 35 km east of the Capital
Amman.Headquarters company is in the capital Amman. The company also Lube
oil blending facilities, three LPG bottling stations and LPG storage facility, which
is located in Amman, Zaraq, and Irbid.The Company also owns and operates one -
the only oil terminal and storage facility in Jakarta Aqaba.The total number of
employees at the end of 2011 was (3372) (56th Annual Report For the Year Ended
2011).JPRC understand the importance of 'Total Quality Management'. Quality
assurance observed throughout the various phases of production, namely: mixing,
filling and loading.comprehensive program in implementing quality system
according to the guidelines of ISO 9001: 2000 has been done since the beginning.
JPRC has maintained certification according to ISO since June August 2007.
(Website JPRC).Above is said to have prompted researchers to examine the extent
to which the principles of quality management Oil Refining Company implemented
in Jordan and its impact on organizational performance.

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1.2 Research Objectives

This empirical study aims to achieve the following objectives: -
1. To determine the extent to which the principles of TQM is implemented in
Jordan Petroleum Refinery Company.
2. To see the impact of the principles of Total Quality Management (TQM) in the
performance of Jordan Oil Petroleum Company
1.3 Research Hypothesis
The main hypotheses:
 (H01) There is no statistically significant impact on (Î ± â ‰ ¤0.05). Of TQM
principles on organizational performance
Sub-hypothesis:
 H01.1: There is no statistically significant impact on (Î ± â ‰ ¤0.05). Of
TQM principles in operation efficiency
 H01.2: There is no statistically significant impact on (Î ± â ‰ ¤0.05). Of
TQM principles in employee satisfaction
1.4 Research Model
This model was developed by the researchers based on the following studies:
Flynn et al.(1994), Powell. (1995), Zhang (2000), Evans., And W.Dean ((2003),
Das et al. (2006), Munizu. (2013), and Olcay (2014) .Kerangka work can be seen
below:

Independent variable Dependent variable

(TQM principles) (Organizational Performance)

ï, Customer f ocus Operation

ï,· Leadership efficiency
ï,· continuous improvement
ï,· employees i nvolvement
ï,· Fact based management
ï,· Process management
ï,· Strategic management employees
ï,· Supplier involvement
Satisfaction
·

Picture 1 Independent variable and dependent variable

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1.5 Definition of Conceptual and Operational,

 Total Quality Management
Culture adopted by the organization and applied to all employees in the
organization, to achieve customer satisfaction.
 Customer focus
The level of organization in serving the needs and expectations of its clients.By
determining customer needs, as well as receive feedback on the extent to which
these needs are met, and through involving customers in product design and
development process, and focus on achieving greater customer satisfaction.
 Leadership
This is the level of acceptance of responsibility by the quality of top
management, and participation in quality efforts to increase and ini.Termasuk
application monitoring, identifying culture for quality, commitment to improving
the quality, guiding and influencing the company in setting the strategic
direction and maintaining quality effective leadership through organisasi.Mereka
set policy, strategic planning, and launch tactics to be executed by the staff.
 Employee Engagement
Employee involvement in quality improvement activities such as: teamwork,
employee suggestions, and employee commitment.
- Management processes
Design, management, and improvement of effective and efficient processes that
fully satisfy, and generate increasing value for, customers and other
stakeholders.
- Strategic Quality Planning
A systematic approach to determine the long-term business goals, including the
goal to improve the quality and plans to mencapainya.Ini includes: -Analysis
external and internal environment, strategy development, deployment
strategies, and evaluation and control
- Continuous improvement
Continuous efforts to find new ways and techniques in producing quality
products and services more baik.Produksi, become more competitive, and
exceed customer expectations.
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- Management of supplier quality

A series of quality management practices associated with suppliers to improve
product quality and supplier jasa.Ini exemplified by corporation-supplier
partnerships, product quality as a criterion for the selection of suppliers,
participation in suppliers, communication with suppliers, understanding the
performance of suppliers, and suppliers audit quality (Zhang, 2000).
 CHAPTER 2
RESEARCH METHODS

2.1 Research Methods

The case study conducted in Jordan Petroleum Refinery Company (JPRC).
Researchers used two sources for data collection, namely:
 A secondary source with reference to the text book, periodical, etc.
 The main source where researchers used the questionnaire technique to collect
the necessary data for the study.
Respondents are managers of various levels including executive managers,
department managers, and head of Division. Questionnaires were distributed to
128 managers, four executive managers, 39 departments managers, and 85 heads
of division,106 regathered, and 103 questionnaires approved.
The percentage of the questionnaires used in the statistical analysis of
questionnaires that are excluded are (80%).That the questionnaire is in three
parts.Part A includes personal information about the sample, such as information
about the organization, years of education, gender, age, and their positions. Part
B includes information about independent variables (leadership, strategic
planning of quality, customer focus, process management, supplier management,
employee involvement, management and continual improvement, fact-based).
Part C including questions about the performance of organizations,
respectively (operations and employee efficiency satisfaction).Sample answer
questions on a 5-point Likert scale ranging from 1 (strongly disagree) to 5
(strongly agree).The elements in this study applied from various studies such as:
ISO 9004: 2009 and different researchers, for example, Flynn et al (1994), Black
and Porter (1996), Ahire et al (1996).Sun (2000), Motwani (2001) and Zhang et
al (2000).Class interval is developed to analyze the results of the research as
following:
1) Low 1 - 2:33
2) Average 2:34 to 3.66,
3) High 3.67 until 5:00
validated instrument through a panel of referees:academic and professional
experts with high professional background.

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 CHAPTER 3
LITERATURE

Impact of TQM practices on firm performance has been the subject of

interest and a constant challenge researchers.In this study, the literature review
prepared and classified along three main themes: Total Quality Management,
TQM principles, organizational performance and the relationship between the
performance of TQM.

3.1 Total Quality Management

Comprehensive quality management subjects, many researchers define the
concept. The quality for sale Institute defines TQM as a management philosophy
that enables organizations to meet the needs and stakeholders expectations
efficiently and effectively, without compromising ethical values.American Society
for Quality view TQM as a management approach for the long-term success
through customer satisfaction. Kaluzny see TQM as a systematic approach to
planning and implementation continues to focus on process improvement
organization customer satisfaction, build commitment and promote open decision.
Al Ali (2008) looked at TQM as input including individual interaction, methods,
policies and instruments achieving quality results tinggi.Ini is a management
philosophy with a set of tools and a comprehensive approach to implementation
objectives.
3.2 Total Quality Management Principles
There is a consensus view that the company should follow a number of
principles of integrated successful implementation of TQM. Furthermore, to
determine the critical factors of total quality management, various studies have
been done and the different instruments developed by researchers at individual, like
Flynn et al(1994), Black and Porter (1996), Ahire et al (1996),Sun (2000), Motwani
(2001) and Zhang et al (2000), and institutions such as the Malcolm Baldrige
Award, EFQM (European Foundation for Quality Management), Deming Prize
criteria.ISO 900 and models of business excellence Jordan (JEBEM) .Berdasarkan
previous research and the model as seen in table (1), the researchers chose eight
following TQM principles: customer focus, leadership, continuous improvement,

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employee involvement, fact-based management, process management, strategic

quality management, and supplier involvement.
 customer focus
Organizations rely on their customers, so they have to understand the needs
of current and future, and achieve needs, and work to exceed the expectations of
them.This is achieved through research and understand all the needs and
customer expectations in terms of products, services and delivery date, price and
reliability, and to connect objectives are defined by the needs and expectations
of clients, and follow the way of ensuring a balance between needs and
expectations of customers and other stakeholders (owners, employees, suppliers,
and community), and inform all levels in this facility needs and expectations,
and measuring customer satisfaction and act according to the results, customer
relationship management to achieve common interests.
 Leadership
The philosophy of Total Quality comes from the commitment of senior
management in the application total quality management in a variety of
organized activities. Leadership must play a key role in the establishment of a
clear vision of the future of the facility, the development of common values,
justice and moral models principles at all levels and maintain their facilities,
build trust and eliminate fear, and support personnel with the necessary
resources and adequate training to motivate employees and encourage their
enthusiasm and appreciates the positive efforts, encouraging open
communications, and increasing awareness, education, training workers, and
demonstrate their commitment to quality by example. Strategic Quality
Planning: - Organizations today face a barrage of requests continuously to
improve the quality.
Strategic Quality Planning is a process of quality department, quality
managers and quality professionals conduct within their organizations to identify
quality initiatives "right" to manage the best quality today and beyond future.It
includes the following criteria: the analysis of external and internal environment,
development of quality mission, quality policy development, the development of
the strategic objectives of quality, strategic development quality plan, the
implementation of quality strategy and monitoring and evaluation of the quality
strategy.
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Employee engagement: - employee engagement needed for successful

quality program.this bias achieved through the use of teamwork, looking for
opportunities to increase the level of competence of employees, sharing of
information and experiences between teams and groups and focused on
motivation and employee loyalitas.Penelitian focused on the following quality
improvement activities such as: education, training, teamwork, suggestions of
employees and employee commitment.
 process management
The desired result is achieved more effectively and efficiently when
resources and activities are managed as Related process.This is achieved by:
identifying the activities required to achieve the desired results, and measure
input and output of the process, and to identify the main activities of the
communication channel business, and the results of the risk assessment and the
potential impact on the operation of customers, suppliers, and others
stakeholders, explain the responsibilities and authority of the management of the
main activities.That the focus should be on how to design, manage, and enhance
the best process to fully satisfy, and generate increasing value for, customers and
other stakeholders.
 Continuous improvement
The main components berkelanjutan.Perbaikan TQM is continuous
improvement leads to increased and higher process quality.The term refers to
continuing incremental improvements and breakthroughs. Continously
improvements ensure companies find new ways and techniques in producing,
production, become more competitive, sustainable and exceed expectations
pelanggan.Peningkatan designed to ensure utilization of organizational resources
efficiently and effectively and to achieve a quality driven culture.
 Fact-based management
Organizations of all sizes and types will often succeed or fail on the quality
of their decision-making we have to adopt a fact-based decision making. Fact-
based decision-making involves placing early enough emphasis on the collection
of facts, figures, data and evidence.Effective decisions based on data and
informasi.Ini analysis is achieved by measuring and collecting data and
information relating to purpose, and to ensure the accuracy and validity of the
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data, information, and easy access to, and analysis of data and methods of
information, and realize the importance of using appropriate statistical
techniques, and decision-making based on the results of logical analysis.
 supplier management
Organizations and independent suppliers and work together in a partnership
environment, and strive toward the same goals that satisfy users akhir.Ini
exemplified by the partnership, supplier companies, products quality as a
criterion for selecting suppliers, participation in suppliers, communication with
suppliers, understanding of the performance of suppliers, and supplier quality
audits (Zhang, 2000).The benefits of success relationships such as: Improving
the ability to create value for the party, long-term commitment, mutual trust,
flexibility and speed of joint responses to changing market and customer needs
and expectations as well as the optimization of costs and resource
 CHAPTER 4
RESULTS AND DISCUSSION

The survey respondents have a fairly diverse characteristics. Personal

data retrieved from respondents including gender, age, experience, position and
qualifications. As shown in the table (2), it seems the majority respondents who
took part in this study were male sex (95.1%), between the ages of 41-50 years
(54.4%).Have experience of 16-20 years (43.7%), have a position in the
company as head of division (73.8%), and has undergraduate educational level
(91.3%).
4.1 Descriptive Results
Data were analyzed using descriptive statistics.Class interval developed as
follows:
a) Low, 1-2 to 33
b) Medium, 2:34 to 3.66
c) Tall, 3.67 until 5:00
The average value and standard deviation principles of TQM and firm
performance.According to the table (3), the respondent has felt TQM practice as the
medium category (3.641). The average value of respondents' perception of the
extent implementation of TQM principles ranged from 3.592 to 3.975 with a
standard deviation ranging from 0721 until 0554.Results for process management
focus showed the highest category (Mean = 3.975, Standard Deviation = 0.721)and
Continuous Improvement indicated by the lowest category (Mean = 3.86, Standard
Deviation = (0.721).wherein the variable performance of the organization are in the
high category (4.148), employees The highest satisfaction results (Mean = 4.708,
Standard Deviation = 0.275), and the operating efficiency as the lowest results
(Mean = 3.369, Standard Deviation = 0.569 4.2
4.2 Analytical Results
Data were analyzed by statistical analytic methods below: - regression, multiple
wise step regression and Pearson correlation coefficient, Main hypothesis (H01):
There is no statistically significant the impact on the (Î ± â ‰ ¤0,05) the principles
of TQM (customer focus, process management, supplier management, employees
engagement, evidence-based management, leadership, strategic planning and

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continuous improvement the organization's performance (the operating efficiency

and employee satisfaction).
ANOVA table shows that the F-statistic is (7.703) and the level of significance
(0.000). Therefore, the null hypothesis is rejected and the alternative hypothesis is
accepted, proving that there TQM impact on organizational performance.Based on
the multiple regression model, three predictor variables found to be significant in
explaining the performance of organisasi.Mereka is continuous improvement (β1
= .413), based on the facts (β1 = .246), and process management (β1 = .215).R-
squared of (0. 596) means that 59.6 % Variation in the performance of the
organization described by three variables.
TQM Principle 4.2.1 Impact On Operating Efficiency
The results of multiple linear regression on the table (5) to show support
for the first sub-hypothesis (H1.1) with F is (3.94) and statistical significance
(0.000). Therefore, the null hypothesis is rejected and the alternative
hypothesis is accepted.It can be concluded that there is an impact of TQM on
operating efficiencies. The regression results show that three predictor
variables found to be significant in explaining the operation efficiency.They
are sustained improvement (β1 = .326), process management (β1 = .237), and
based on facts (β1 = .206), the R-squared of (0,462) means that 46.2% of the
variation in the efficiency of the operation described by three variable.
TQM Principle 4.2.2 Impact On Employee Satisfaction
The regression analysis in Table (6) shows support for sub second
hypothesis (H1.2), with significance level (0,000).Therefore, the null
hypothesis is rejected. The alternative hypothesis is accepted, prove that there
is a statistically significant impact of TQM on employee
satisfaction.regression the results showed that only two variables were found
to be significant predictors in explaining employee satisfaction. They are the
focus of the Customer (β1 = 0.288), supplier management (β1 = 0.283).R-
squared of (0.317) indicates that two predictor variables explained 31.7% of
the variation in employee satisfaction.
 CHAPTER 5
CONCLUSION

5.1 Conclusion
The purpose of this study was to examine the impact of TQM practices on
organizational performance in Jordan Oil Refining company. The main conclusions
have been obtained from this study as follows:
a) First, the tool used to measuring the implementation of TQM and organizational
performance is reliable and valid.
b) Second, many conclusions have been drawn from tests
c) The third hypothesis, as follows:
 TQM has an impact on organizational performance
 TQM implementation impact on operating efficiency
 TQM implementation impact on employee satisfaction. Overall, the results are
supported by most of the previous studies, such as: Zhang, (2000), Powell
(2009), Munizu.(2013), Clouds and et al, (2009), Ware (2014) & Abuzaid
(2015).

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