Quality assurance (ISO 9000 certification)

The recent decision to pursue ISO 9000 certification resulted from a combination of customer demands and L P ' s desire to differentiate itself in the local printing industry. The printing industry had been a notable laggard in both adopting the principles of Total Quality Management (TQM) and seeking out ISO 9000 certification.

There appeared to be common view among senior printing executives that the time and effort associated with such initiatives simply were not justifiable in terms of foreseeable benefits. However, some of Mr. Li's overseas customers were concerned about the standard of future outputs as his firm shifted its operations to mainland China. He mentioned that "several big buyers told me that they worried about getting a quality product from China".

The ISO 9000 certificate had become popular in many of the Western countries where Mr. Li was now courting packaging-related business. He believed that potential customers would be more willing to establish long-term relationships with suppliers that demonstrated a commitment to quality assurance. Discussions with the top managers of these potential clients confirmed his belief.

Mr. Li's next step was to determine the time, effort, and expense involved with the certification process. Here, he turned to several professional associates, including the author (who had done a study on ISO 9000 outcomes in Hong Kong) and someone who worked as a quality assurance consultant. The consultant was eventually contracted to help Leading Printer document its core business processes and prepare for the audits that precede ISO 9000 certification. This consultant started to work for LP a few weeks before this case study was conducted.

This issue involved only the customer sector of the environment. The informant was acting in the role of entrepreneur while he acquired information from three different sources - customers, business associates, and consultants. Significantly, all three of these sources were personal and external to the organisation.

6.3.2__ Chow Printing

Mr. Chow's printing firm had been in business for nearly 20 years. In many respects, Mr. Chow was the firm. He is from a rather modest Shanghainese family, but set up his own business when he was in his early 30s. Ever since he was six years old, Mr. Chow had earned his own money, variously working as a tutor, a football (soccer) trainer, and a sidewalk hawker before completing his Form 5 (Grade 11) education.

Mr. Chow launched a magazine specializing in fashion when he was 21, using his savings to pay the first instalment on a printing machine. After the failure of his magazine, he took a job as a copy editor for one of the smaller weekly newsmagazine in Hong Kong. However, he had a compulsion to go back into business "before he became too old" . When he sat down to look at the kind of business that he could run successfully, he came up with two key criteria:

1. the business had to be in a growing industry so that he could tap into the overall growth of the market. Otherwise, he would have to take customers away from potential competitors in a mature industry, which would be much more

difficult.

2. the industry had to be relatively familiar to him. He wanted to hit the ground running rather than spend his time learning the ropes.

Many of the other start-ups in the late 1970s jumped into the printing industry and appeared to simply hope for a profitable piece of a growing pie. In contrast, Mr. Chow claimed to have thought long and hard about how to position his firm, not for short-term profits, but for long-term sustainability. He said that he examined the existing industry and observed that it was dominated by two types of firms:

1. bigger players, often foreign-owned, that offered sophisticated products,- and

2. small firms, typically one or two person operations.

The first type had plenty of marketing clout, but were disadvantaged by the hierarchical nature of their operations. They tended to be rather impersonal in their dealings with target customers. Many of their potential clients were large companies interested in making big orders. Front-line staff working in the bigger printing firms were unable to provide good customer service; clients experienced difficulties contacting someone in the printing firm who could help them by making a big decision.

The second type handled small retail orders or were basically sub-contractors for higher-end work. They tended to rely on lower prices and promotional gimmicks for their sales and offered little in the way of after-sales service. There were few barriers to entry or exit, and so these types of firms would come and go quite frequently.

Mr. Chow believed that there was a vacuum to be filled in the middle-range segment of the printing industry. His firm, Chow Printing, grew by serving this market segment better than either the large or small companies. Financial service and trading firms had been among its major customers. They needed fast

turnaround times and demanded reasonably good customer service.

Chow Printing emphasized technical expertise, good qualifications and strong interpersonal skills. In contrast to most of its rivals, staff were encouraged to attend developmental courses and seminars. Although customers paid a small premium, they received prompt attention to their needs, and good quality products along with above-average service.

Mr. Chow viewed both his customers and long-term employees as friends. He was keen to develop good relationships as evident from his extensive customer records. They included individual profiles of preferences, usage patterns and peculiarities as well as notes about problems and complaints. The records enabled targeted marketing, and promoted a high rate of repeat business. Loyal customers had liberal and near-instant access to the service staff at Chow Printing through dedicated telephone lines and a recently-introduced electronic mail system. The latter also enabled cost-effective and flexible direct marketing.

Over the years, Mr. Chow's firm has grown slowly but steadily. "My company has given me tremendous psychological pressure. Whenever there were changes in the situation, I feel worried and cannot function effectively. Maybe it is best to work for someone else, and let them make all the difficult decisions."

Mr. Chow admitted that he had traditionally been a very conservative manager and that his firm probably possessed too much cash. It rarely incurred any debt, even in the early years, except for the property mortgage that was taken out only because interest payments on it were tax deductible. That had recently changed. Between 1992 and 1995, Mr. Chow had made local media headlines by rapidly expanding his maturing business through three separate acquisitions on the mainland. This raised employee numbers from less than 70 to more than 200.

The firm had tried to tightly control its production costs, but

it seemed to have little formalization or standardization beyond the printing and customer service areas. Mr. Chow stated that "surviving in a competitive market is a constant challenge. But to be successful, as we have, is even more daunting. I constantly re-examine what we are doing and how we can do it better, in less time, with less money, or more effectively."

Some industry analysts, contacted by the researcher, indicated that this company would benefit from a more professional management approach. Despite efforts to promote employee involvement, Mr. Chow still ran the show. The responsibilities of his employees were to smoothly carry out the everyday activities which involve a minimum of discretionary behaviour. The CEO believed that they were able to deliver excellent customer service because certain policies and guidelines ensured a consistently high level of quality throughout the organisation.

Only fairly routine decisions and actions were taken without Mr. Chow's involvement. "X have to stay on top of everything my company does." One employee described his management as "a one- man show". In contrast, several other staff mentioned that Mr. Chow did not interfere too much in their day-to-day work and that he was quite generous with bonuses before the Chinese New Year.