NAVAL POSTGRADUATE SCHOOL

1 NAVAL POSTGRADUATE SCHOOLM onterey, CaliforniaAD-A255 1770 DTICG~hGRAD% 0 ~ECT~SEP119 THESISTOTAL QUALITY MANAGEMENT in logistics :A CASE STUDY FROM THE TRUCKING INDUSTRYbyHarry Lehman, 1992 Thesis Advisors: Dan TrietschBenjamin J. RobertsApproved for public release; distribution is unlimited.>- 92-249494e l l l llliil$ 1 lUnclassifiedSECURITY CLASSIFICATION OF THIS PAGEREPORT DOCUMENTATION PAGEI a- REPORT SECURITY CLASSIFICATION l b. RESTRICTIVE MARKINGSUNCLASSIFIED2a. SECURITY CLASSIFICATION AUTHORITY 3. DISTRIBUTION/AVAILABILITY OF REPORTA pproved for public release; distribution is DECLASSIFICATION/DOWNGRADING SCHEDULE4. PERFORMING ORGANIZATION REPORT NUMBER(S) 5. MONITORING ORGANIZATION REPORT NUMBER(S)6a NAME OF PERFORMING ORGANIZATION 6b. OFFICE SYMBOL 7a. NAME OF MONITORING ORGANIZATIONN aval POSTGRADUATE SCHOOL (If applicable) NAVAL POSTGRADUATE School656c.

2 ADDRESS (City, State, and ZIP Code) 7b. ADDRESS (City, State, andZIP Code)Monterey, CA 93943-5000 Monterey, CA 93943-50008a. NAME OF FUNDING/SPONSORING Bb. OFFICE SYMBOL 9. PROCUREMENT INSTRUMENT IDENTIFICATION NUMBERORGANIZATION (if applicable)8c. ADDRESS (City, State, and ZIP Code) 10 SOURCE OF FUNDING NUMBERSP rogram E emennt No Project NO Tak No Work Unit Acce'sionNumber11. TITLE (Include Security Classification)TOTAL QUALITY MANAGEMENT in logistics : A CASE STUDY FROM THE TRUCKING INDUSTRY12. PERSONAL AUTHOR(S) Harry Lehman, TYPE OF REPORT 13b TIME COVERED 14. DATE OF REPORT (year, month, day) 15. PAGE CQNTM aster's Thesis From To 1992 JUNE ILL)16. SUPPLEMENTARY NOTATIONThe views expressed in this thesis are those of the author and do not reflect the official policy or position of the Department of Defense or the COSATI CODES 18.

3 SUBJECT TERMS (continue on reverse if necessary and identify by block number)FIELD I GROUP SUBGROUP Total Quality Management; TQM; Quality; logistics ; Trucking Industry19 ABSTRACT (continue on reverse if necessary and identify by block number)This thesis investigates the impact of the Total Quality Management (TQM) movement on the logistics industry as a whole, and, morespecifically, its impact within the trucking industry. Its focus then narrows to study the practical aspects of implementing a W. Edwards Deming-based quality program within a particular trucking company, Mason Transporters, Inc. The effectiveness of the company's implementation effortis assessed using data collected from a survey questionnaire, formal interviews, and personal observations during an on-site visit. Successes andshortcomings of the implementation process are highlighted and DISTRIBUTION/AVAILABILITY OF ABSTRACT 21 ABSTRACT SECURITY CLASSIFICATIONUNCLASSED/ IUMITEO 13 SAME AS REPO" [ iDTC USERS Unclassified22a NAME OF RESPONSIBLE INDIVIDUAL 22b TELEPHONE (Include Area code) 22c OFFICE SYMBOLDan Trietach 408-646-2456 AS/TrDD FORM MAR 83 APR edition may be used until exhausted SECURITY CLASSIFICATION OF THIS PAGEAll other editions are obsolete UnclassifiediApproved for public release.]

4 Distribution is Quality Management in logistics :A Case Study from the Trucking IndustrybyHarry Lehman, Commander, United States , Harding University, 1979 Submitted in partial fulfillmentof the requirements for the degree ofMASTER OF SCIENCE IN MANAGEMENT from theNAVAL POSTGRADUATE SCHOOLJune 199 Author: F'(~Harrykehman, by: _ _ __ _ _ _ _ _D Trietsch, Thesis Co-AdvisorBenjamin J. k~erts, Te/Co visorDavid R. Whipple, ChairmanDepartment of AdministrativeimeiiABSTRACTThis thesis investigates the impact of the Total QualityManagement (TQM) movement on the logistics industry as awhole, and, more specifically, its impact within the truckingindustry. Its focus then narrows to study the practicalaspects of implementing a W. Edwards Deming-based qualityprogram within a particular trucking company, MasonTransporters, Inc. The effectiveness of the company simplementation effort is assessed using data collected from asurvey questionnaire, formal interviews, and personalobservations during an on-site visit.)

5 Successes andshortcomings of the implementation process are highlighted ForNTIS GRPA&IDTIC TAB 0U"'"nannlnced 03 u ; t ! c t f 0 oAvalail It,Avalabllt CodesDis Avli-an -d /orD SpDelalDTIC , ,:..TABLE OF CONTENTSI. INTRODUCTION .. 1A. BACKGROUND .. 1B. OBJECTIVE .. 1C. RESEARCH QUESTION .. 2D. DISCUSSION .. 2E. SCOPE OF THESIS .. 3F. METHODOLOGY .. 41. Observational .. 42. Personal Interviews .. 53. Survey Questionnaire .. 5G. LITERATURE REVIEW .. 5H. ORGANIZATION OF THE STUDY .. 6II. BACKGROUND .. 7A. TQM: A BRIEF OVERVIEW .. 7B. TQM IN THE SERVICE INDUSTRY .. 14C. TQM AND THE logistics INDUSTRY TODAY .. 161. TQM and the Shipper-Carrier Relationship ..182. Defining and Measuring TransportationQuality .. 20D. THE QUALITY MOVEMENT'S IMPACT ON MOTOR FREIGHTCOMPANIES .. 24iv1. Consolidated Freightways .. 272. ABF Trucking Company.

6 283. Yellow Freight .. 304. Roadway Express .. 31 III. MASON TRANSPORTERS AND TOTAL QUALITY MANAGEMENT 33A. THE COMPANY .. 331. History .. 332. Mission .. 343. Organization/Structure .. 36a. Line Organization .. 36b. Staff Organization .. 374. Operations .. 38B. WHY TQM? .. 39C. IMPLEMENTATION OF TQM AT MASON .. 41IV. DATA ANALYSIS .. 50A. THE DATA .. 501. Observational .. 522. Formal Interviews .. 533. Survey Questionnaire .. 61B. ANALYSIS .. 641. Leadership .. 65a. Point Two: Adopt the New Philosophy ..65b. Point Seven: Institute Leadership ..66c. Point Eleven: Eliminate Numerical Quotas;vSubstitute Leadership ..672. Strategic Quality Planning .. 67a. Point One: Create Constancy of Purposefor the Improvement of Service.. 673. Human Resource Development and Management 68a. Point Six: Institute Training on theJob .. 68b. Point Thirteen: Institute a VigorousProgram of Education and Self-Improvement.

7 69c. Point Twelve: Remove Barriers to Pride inWorkmanship .. 704. Management of Process Quality .. 70a. Point Four: End the Practice of AwardingBusiness on Price Tag Alone .. 71b. Point Five: Improve Constantly andForever the System of Production andService .. 715. Communication .. 72a. Point Nine: Break Down Barriers BetweenStaff Areas .. 72b. Point Ten: Eliminate Slogans,Exhortations, and Targets for the WorkForce .. 73c. Point Eight: Drive Out Fear .. 73C. DISCUSSION ..74vi1. Leadership .. 742. Strategic Quality Planning .. 793. Human Resource Development and Management 81a. Training .. 82b. Employee Empowerment .. 83c. Employee Performance and Recognition .864. Management of Process Quality .. 875. Communication .. 90V. CONCLUSION .. 92A. SUCCESSES/SHORTCOMINGS .. 92B. RECOMMENDATIONS .. 97 APPENDIX A: DEMING POINTS GROUPED BY CRITICAL AREA.

8 100 APPENDIX B: BREAKDOWN OF CRITICAL AREAS .. 101 APPENDIX C: SURVEY QUESTIONNAIRE .. 104 APPENDIX D: NINE CORPORATE PLANNING PROCESS AREAS 107 LIST OF REFERENCES .. 109 INITIAL DISTRIBUTION LIST .. 111viiI. INTRODUCTIONA. BACKGROUNDThis thesis will investigate the practical aspects ofimplementing a W. Edwards Deming-based Total QualityManagement (TQM) program within a company. It will examinethe application of TQM theory and methodologies in thelogistics industry as a whole, and then in a specific truckingcompany through the use of a case study OBJECTIVE"Quality" is a buzzword sweeping American manufacturingconcerns, service organizations, and government agencies. Intheir headlong rush to implement quality programs, it islogical to assume that many of these businesses andorganizations are not fully aware of the level of commitmentrequired, or of the degree of organizational change necessaryto make a program such as Deming's fourteen points work.

9 Byclosely examining the experiences of one company, MasonTransporters, Inc. (to ensure anonymity and ease of datacollection, the real name of the company is not used), somepractical aspects of incorporating TQM will be highlighted andstudied. These "lessons learned" should be helpful to anyorganization, private or government seeking to implement aquality RESEARCH QUESTIONIn this case study of Mason Transporters, an analysis ofTQM implementation will be conducted based on two questions:(1) What was the history of events and managementdecisions that led to the application of TQM at MasonTransporters, "\2) How effective were those efforts to implement aquality program and what were the biggest obstacles to itssuccess?D. DISCUSSIONW. Edwards Deming's "Total Quality Management" approach tomanagement has been widely touted as a way for Americanindustry to produce the quality goods and services sodesperately needed to remain competitive in the internationalmarketplace.

10 Ford Motor Company, Xerox, and Federal Expressare but a few of thousands of companies, big and small, thathave adopted the "new philosophy" of quality , even the Navy has sought to incorporate Deming'sfourteen points to improve quality and productivity at itsship and aircraft industrial view of the tremendous impact of the Deming managementphilosophy, both on American businesses and on the military,this thesis will study a company which, five years ago,embarked on a course of action to implement a Deming-basedquality improvement program (TQM). The Company, Mason2 Transporters, Inc., is a regional tank truck carrier withheadquarters in the Southeastern United States. The companyranks among the top ten tank truck carriers in the nation withover 600 tractors, 900 trailers, and 27 terminal facilitieslocated in nine states. Operating revenue in 1990 was $76million.