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IJPDLM
36,3

The effects of technology

and TQM on the performance
of logistics companies

192

Shaukat A. Brah and Hua Ying Lim

Department of Decision Sciences, NUS Business School,
National University of Singapore, Singapore

Received July 2004

Revised November 2005

Abstract
Purpose Total quality management (TQM) and technology are fast becoming essential features of
business strategy for the success of many leading organizations in the world. More and more
companies are using technology and adapting TQM for sustaining competitiveness in the
marketplace. TQM works well for internal integration of logistics companies and they can benefit from
the use of technology, including information technology (IT), to gain further internal and external
integration. Seeks to examine this issue.
Design/methodology/approach This research examines the relationship between quality
management practices, technology and performances of the logistics companies. The study seeks to
gain insights from organizational variables and their effect on operational, quality, technology and
overall business performance.
Findings TQM and technology play important and complementing roles in improving the
performance. The analysis shows that both high technology firms and high technology TQM firms
perform significantly better than their low technology peers.
Research limitations/implications The use of IT is crucial in improving operational, quality
and overall business performance. The information and management technologies strongly correlate
to TQM and serve as an enabler to quality performance.
Practical implications The use of technology assists logistics operations in many ways, such as
cutting down information and processing lead-time, improve efficiency and minimize errors to the
minimum. Perhaps, the logistics companies should look at the long-term benefits of technology and
gradually engage its use to streamline their operations.
Originality/value The results in this research provide recognition for the importance of
technology in quality management in the logistics industry.
Keywords Technology led strategy, Quality, Total quality management, Logistics data processing,
Performance measurement (quality)
Paper type Research paper

International Journal of Physical

Distribution & Logistics Management
Vol. 36 No. 3, 2006
pp. 192-209
q Emerald Group Publishing Limited
0960-0035
DOI 10.1108/09600030610661796

Introduction
Singapore has become one of the most important strategic supply chain management
centers of Asia. The island serves as regional headquarter and distribution center for
many logistics companies. Singapore container port handled 21.3 million 20-foot
equivalent units in 2004, while the airport handled a record air cargo throughput of
1.78 million tons. The logistics industry continues to develop infrastructure and
facilities particularly the information technology (IT) based platforms.
The global competition has enhanced the role of quality in the business world. In
order to remain competitive and cope with increasing pressures, businesses are
integrating into new and evolving global markets. These challenges and pressures

have placed a renewed focus on quality improvement for the long-term survival of the
organization. Also, there is increasing evidence that technology enhances the quality
performance. Perhaps, technology acts as an enabling mechanism, which results in
enriched jobs and increased job satisfaction.
Total quality management (TQM) strives for continuous improvement, customer
orientation, employee empowerment and top management commitment with the
implication of safeguarding the interests of customers, employees, shareholders,
competitor and even society at large. TQM philosophy emphasizes effective
management of primary factors, such as top management leadership for quality,
supplier quality management, process management, employee training and
empowerment, thereby the secondary benefits, such as lower costs, improved
reputation and market share, increased employee motivation and satisfaction, and
improved profitability inevitably follow. The key element is the integration of efforts
and resources towards the common good of conservation of the interests of the
stakeholders.
Similarly, technology is increasingly playing a major role in the integration of the
businesses. While the IT helps to break the internal silos within an organization, it also
assists the coordination of activities with the members of the supply chain and the
customers. Besides IT, the technology in general assists in improving the quality of the
product and services and the dependability of the schedule. Thus, technology seems to
complement TQM. McAdam and Henderson (2004) argue for technology as one of the
four key external factors influential for the development of TQM in an organization.
The key to better performance of logistics companies lies in their ability to achieve
internal and external integration. Through integration, the companies seek to eliminate
the functional silos in the environment. Clearly, TQM is one of the most commonly
used and useful organizational wide approach designed to eliminate silos within an
organization. Increasingly technology, including IT, is assisting the supply chains in
achieving the desired integration, as well. Gimenez and Ventura (2005) analyze the
internal and external integration process and their contribution to the performance.
They find a positive relationship between the internal integration process and the
external integration process, and vice versa. Furthermore, broadly speaking they find
the performance improves with the internal and external integration.
The main objective of the research is to develop a quality framework, which seeks to
examine the relationship between individual quality management, technology and
business performance in the logistics sector. We hope to identify critical success factors
of quality managements and seek to test the correlation between quality management,
technology and performance. In addition, we seek to understand how technology plays
a role in improving the business operation. Finally, we test if there are any significant
differences in overall business performance measured by the operational and quality
performance between low and high technology logistics firms, with and without TQM.
Total quality management
The importance of TQM is evident from the emergence of many high profile awards,
such as, the Malcolm Baldrige quality award in USA, the Deming prize in Japan, the
European quality prize and the recent emergence of the Singapore quality award.
These quality awards identify companies utilizing the best quality management
practices and they serve to motivate companies to implement TQM in order to attain

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194

and achieve world-class standards. As a result, today both manufacturing and

service industries widely practice many of the TQM practices.
TQM has its roots in manufacturing and thus its initial definition focuses on quality
of products. The quality focus in manufacturing industries is more process-oriented,
which focus on the continuous improvement of all operations, functions and above all,
process of work. Samson and Terziovski (1997) define TQM as a philosophy that
embraces concepts, methods, tools and techniques, which is applied to business
strategy at the top-floor and as a functional strategy at the shop floor.
Service firms, both small and large, are gradually adopting TQM. Thus, the
definition of TQM has been slightly modified to encompass aspects like recognizing
the importance of behavior factors, such as, employees training and empowerment,
customer focus and top management commitment. Where TQM is more concerned
about the processes in manufacturing, the focus in services is more on human touch
factor, such as, after sale services, human resource management, employee attitudes,
and the condition of product delivery. Regardless of the slight differences in emphasis
on TQM philosophy in manufacturing and service industries, the two share many
common characteristics.
Most studies on quality focus on the importance of internal and external customers.
Saraph et al. (1989) develop an eight-factor framework for quality management based
on the literature. The factors are top management leadership, quality data and
reporting, training, employee relations, process management, product/service design,
supplier quality management and the role of the quality department. Flynn et al. (1994)
build up on the research of Saraph et al. and include customer focus as an additional
construct. Their study derives quality management constructs mainly from
practitioners and past empirical literatures on quality management.
Black and Porter (1996) study the perception and experience of a range of
practitioners as the basis for developing an empirical framework of TQM using the
Baldrige award model. Ahire et al. (1996) develop critical factors from the prescriptive,
conceptual, practitioner and empirical literature on quality management. The factors
are top management commitment, benchmarking, statistical process control, internal
quality information usage, employee involvement, employee training, employee
empowerment, customer focus, supplier quality management and design quality
management. Hodgetts et al. (1999) study small businesses and develop TQM
constructs using perspectives from the Baldrige award winners. The results show top
management involvement, customer focus, employees training, employees
empowerment and generating new ideas are the five common and critical factors
among the Baldrige winners.
TQM and performance
Generally, research has shown a positive correlation between TQM practices and
business performance. TQM firms generally outperform in both strategic and
operational performance. TQM firms generally show improvement in supplier
relationship, processes, management of people, policy deployment and strengthened
customer relationship. Powell (1995) points out that TQM can add economic value to
the firm, however, the success of the firm rely more on executive commitment, open
organization, employee empowerment rather than process improvement,
benchmarking and flexible manufacturing. This emphasizes the need for efforts to

focus on building a culture where TQM can thrive. Further, he deduces that these tactic
resources drive TQM success and by acquiring them, the organizations can create
competitive advantage with or without TQM ideology. Brah et al. (2000) show a
significant positive correlation between TQM constructs and financial and operating
performance across the service industries in Singapore.

Effects of
technology and
TQM

TQM in the logistics industry

Anderson et al. (1998) show an association between quality constructs and
performance, with leadership exerting the strongest influence on the operational
results. Sum and Teo (1999) analyze the strategies, management practices and future
plans of the logistics providers in Singapore. Their analysis shows that the logistics
companies adopting cost and differentiation strategy outperform the rest in term of
business performance. Most logistics service providers identify reliable and consistent
services, short delivery lead-time, operating at low-cost and flexible in accommodating
changes as critical operation factors.

195

Pitfalls in TQM implementation

Some recent studies show TQM does not necessarily result in improvement in
performance and in some cases result in deterioration of performance. This raises some
doubts on the effectiveness of TQM implementation. Lack of strategic focus is cited as
one of the three main reasons of poor business performance. In many instances, TQM
implementation is introduced as a bolt on to unchanged business culture. A common
misconception includes wishful thinking that TQM will fix short-term problems and
quickly improve business performance. Indeed, TQM is not a destination but a journey
requiring a long-term, unwavering commitment to the improvement of products or
services and process quality. Failures to have strategic focus and to create an
organizational culture to embrace the implementation of TQM often bring about
failure.
Developing a quality framework
Quality construct
Baldrige quality framework has been the underlying model for a large number of TQM
awards including Singapore quality award. This motivated us to use the seven
components of the Singapore quality award as quality constructs for the purpose of
this research. Rungtusanatham et al. (2005) find the universal applicability of the
quality construct in a four country study; however, they find some evidence of some
differences in the adoption levels. The seven factors adapted from Antony et al. (2002)
and Ahire and Golhar (1996), in this study are as follows:
(1) Top management leadership. Top management leadership is a major
determinant of successful quality management. It plays a very important and
critical role in direct supervision, planning and implementation of certain policy
and serves as important support for the entire organization. Top management is
responsible for the creation of climate that ascertains the success of the
program. Thus, strong leadership quality is a critical component in the
implementation of TQM.
(2) Strategic planning. Strategic planning focuses on the organizational planning
process, integration of key requirements into the organizational plan and

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(3)

196

(4)

(5)

(6)

(7)

tracking of performance. It plays a vital role in aiding the organization to

occasionally evaluate and modify plans based on changing market and
customer preferences.
Process management. The focus is on the key processes of the organization to
pursue its objectives, including the innovation, production and delivery
processes.
Information systems and analysis. This factor examines the management of
information and the use of comparative and benchmarking information to
support decision-making at all levels of the organization. It helps the company
to keep track and to provide essential feedback on the quality systems. The ease
of information and data collection helps in making informed critical decisions.
Human resource management. Employee empowerment, involvement, training
are important components for the success of a quality program. Worker
empowerment leads to increased employee participation in the quality
improvement work processes, heightened awareness of responsibilities and
equity among subordinates. The focus of this factor is on training, development,
communication, multi-skills, employee empowerment, employee involvement
and commitment, education, employee health and satisfaction and employee
performance and recognition.
Quality focus. The focus is on the effectiveness of an organizations quality
department and the amount of quality efforts directed towards the development
of plans as well as the improvement of products and services.
Customer focus. Customers are the ones who pass judgments on an organization
about their performance. The importance of customer focus is evident from the
highest weight in the Malcolm Baldrige award criteria (Hodgetts et al., 1999).

The influence of top management leadership has an effect on the quality attributes.
Meyer and Collier (2001) find a causal relationship in the Baldrige health care pilot
criteria via the use of structural equation modeling. They find leadership to have a
causal influence on each of the component of the Baldrige system represented by
information and analysis, strategic planning, human resource development and
process management. Perhaps, leadership drives the system, and without top
management leadership, the core and infrastructure quality attributes would be
ineffective (Flynn et al., 1995).
Top management leadership has an expected effect on strategic planning. They are
responsible for the identification of bottlenecks and goals and leading the company in
the direction of the goals. Effective strategic planning helps to reduce costs, allows
entering new markets and creates customer services. Top management allocates
resources for the training of employees and all management levels to build
understanding of TQM. They are responsible for selecting and distributing work
responsibilities and plan work activities for the employees. Top management provides
skill training of workforce and encourage workforce to take on responsibilities and to
be more empowered in problem solving.
Similarly, leadership drives customer focus as they determine current and emerging
customers and expectations. They provide effective customer relationship and
determine customer satisfaction. They provide resources for customer plant visits,

inviting customers to visit the plants and requesting feedbacks from customers
regarding the firm quality status. In terms of quality focus, top management is directly
responsible in the planning of quality-driven environment through personal
involvement in most of the quality programs. Leadership drives process as top
management are involved in the design and introduction of products and services,
integrate production and delivery requirement. Top leadership drives information
systems and analysis by demanding records of key information and encouraging
feedback from the work processes. They implement and review existing policy from
time to time with the feedback from the work processes through customer surveys and
letters.
Therefore, leadership is the driving force of all the other six-quality constructs
represented by strategic planning, information systems and analysis, human resource
management, process management, customer focus and quality focus. This gives rise
to the following hypothesis:
H1. There is an association between top management leadership and strategic
planning, process management, information systems and analysis, human
resource management, quality focus and customer focus.
Performance construct
The effective execution of the seven constructs leads to improvement in the
performance of an organization. The following are the three categories of the overall
business performance of a company:
(1) Operational performance. Deals with the process and evaluates the performance
of internal operation of the company in terms of cost, customer services,
delivery, quality, flexibility and product/services process quality.
(2) Quality performance. This construct evaluates employee services quality in
terms of attitudes towards customers, productivity of the employees, inventory
turnover rate and responsiveness of the employees to customers.
(3) Technology performance. Evaluates the availability and extent of use of
information and management technology in the company. This is measured by
the frequency of use of technology in activities, such as, internal billing,
electronic data interchange (EDI), automated tracking system, vehicle routing
and scheduling system and management technologies such as optical scanners,
warehouse management system and automated storage and retrieval system.
The items constructs are derived mainly from Sum and Teo (1999) and Sum
et al. (2001).
All these three performances, together with the internal quality factors will in turn
affect the overall business performance. Hence, this leads to the following hypothesis:
H2. There is positive correlation between each of the general quality constructs,
and operational performance; quality performance; technology performance;
overall business performance.
The use of information and management technology helps to improve operational
effectiveness and minimize errors in day-to-day operations. For example, both
information and management technology allow for the synchronization of information

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and merchandise flow with reduction in errors as a result of bar code scanning;
reduction in safety stocks; reduction in stock counts; reduction in physical inventory;
fewer lost sales as a result of missed shipments, short shipments and back orders; less
time in reconciliation with suppliers and customers; lower inventory write-off;
immediate stock on hand information; ability to prioritize order picking and fulfillment
online (Dewhurst et al., 1999). Moreover, system errors are less frequent as compared to
human errors, hence this lessen the need to conduct frequent checks, which leads to an
improvement in operations efficiency. Therefore, we expect technology performance to
have an effect on operational performance of an organization.
Similarly, operational and quality performances have mutual effect on each other.
The operational performance of the products and services is highly dependent on the
quality of the workforce, the productivity and the attitudes of the workforce. Operational
efficiency such as reduction in delivery time and damage during delivery is greatly
enhanced if the employees are motivated and take great pride in their work implying
high job satisfaction. Similarly, the converse is also possible as improvement in
operational performance such as obtaining compliments from customers regarding
good services can serve to increase the job satisfaction of the employees, which in turn
increases their quality. The proposed relationships give rise to the following hypothesis:
H3. Operational, quality and technology performance has a positive correlation
with overall business performance.
TQM and performance
There is a general consensus of positive correlation between firms implementing TQM
and performances measures. TQM firms refer to the firms currently implementing
TQM program, non-TQM firms on the other hand refer to firms yet to initiate such
programs in their organization. Brah et al. (2002) in a study of manufacturing and
service firms in Singapore observe TQM firms perform better than non-TQM firms in
performance constructs such as supplier performance, employee services quality,
product quality, employee satisfaction, customer satisfaction and
manufacturing/services process quality. Ahire and Golhar (1996) in a study of
manufacturing firms in the US find that, with the exception of customer focus, TQM
firms generally report executing all of the TQM constructs more intensively than
non-TQM firms. Powell (1995) reports TQM firms outperform non-TQM firms.
Consequently, our interest is to test out these arguments in the logistics industry of
Singapore. These findings lead us to the following hypothesis:
H4. TQM firms outperform non-TQM firms in operational performance; quality
performance; technology performance; overall business performance.
TQM and technology
Technology is popularly known to help enrich jobs and increasing job satisfaction. For
example, the introduction of IT involves cross training of all employees in all aspects of
work including the running of technical infrastructure, which eliminates paper-based
task assignments and free employees from routine activities. Consequently, employees
with higher skills and knowledge of the work find greater job satisfaction and
henceforth enhancing the quality of work. Also, this process will break the
departmental silos and result in internal integration one of the main themes of TQM.

Sum and Teo (1999) observe heavy usage of IT in the most profitable logistics
services providers and identify the importance of technology as a key impact agent
for the future. They further classify IT into high-cost and revolutionary technology,
medium-cost, medium revolutionary technology and low-cost, incremental
technology. High-cost and revolutionary technology includes robotics, automated
material handling equipments and automated storage and retrieval equipments.
Medium-cost medium revolutionary technology includes data handling hardware
(barcodes, optical scanners, local area network and hand-held data entry devices)
and software such as EDI, direct product profitability, material resource planning
and distribution resource planning. Low-cost, incremental technology includes
software applied to inventory control (in process, raw materials, finished goods) and
warehousing (order selection, short-interval scheduling) (Germain et al., 1994). Sum
et al. (2001) in a follow-up study report IT as offering many benefits such as
opportunity to improve logistical efficiency, effectiveness and flexibility in future
logistics system.
IT is one of the essential components of logistics systems and supports daily
operations in many ways. The use of IT brings an improvement in services level and
increase the competitive posture of the company. Technology, in general, results in
better integration within the organization and with the companies of the supply chain.
Thus, technology assists in internal and external integration of the organization and
therefore it complements TQM.
We expect high-technology (high-tech) firms to perform better in terms of
operational, quality and overall performance than low-technology (low-tech) firms.
High-tech firms are defined as those utilizing high level of technology in their
operations; low-tech firms on the other hand utilize low level of technology. As such,
this leads us to find out the relevance of IT in the logistics companies in Singapore.
This leads to the following hypothesis:
H5. High-tech firms outperform low-tech firms in operational performance;
quality performance; overall business performance.
The information and management technologies strongly correlate to TQM and serve as
its enabler. Therefore, use of IT enhances TQM practices, which results in an
improvement in the performance level. IT enables rapid and more accurate information
retrieval and transfers, improve communication links and facilitate the implementation
of advanced tools, systems and modeling techniques (Dewhurst et al., 1999). We expect
high-tech TQM firms to perform better than their low-tech counterparts and thus
leading to the following hypothesis:
H6. High-tech TQM firms outperform low-tech TQM firms in operational
performance; quality performance; overall business performance.
Questionnaire
There are four sections of the questionnaire, each designed to collect specific
information. Section A consists of two general questions to identify the presence of a
quality program in the company. Section B contains 33 questions for probing the
quality practices of the company in general. Section C consists of 26 questions to
review the business performance of the company over the past few years. These
questions are subcategorized into three areas; operational performance, quality

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performance and technology performance. Finally, Section D is used to collect the

demographic company profile of the company.
We use a five-point Likert scale to ensure consistency and the ease of data
computation on most of the questions. The remaining questions are either in structured
form or in multiple choices. The sampling frame for the study is a list of certified
logistics companies obtained from three main sources namely, Singapore trade
development board 2001/2002 and two online directories. We select a random sample
of 325 logistics companies. General or operational managers are the target respondent
to ensure the accuracy of the result. We use face-to-face interview and e-mail exchange
to inquire about the trends of the logistics companies in Singapore, on issues of
technology, operation and quality. The final questionnaire is the result of literature
review and the information on various characteristics of the logistics industry. We
received a total of 81 usable completed questionnaires, giving a response rate of 24.9
percent.
First, we perform factor analysis to determine if the individual items under major
heading group in the proposed manner. The factors are extracted using principal
component factor analysis with varimax rotation. Also, we use Cronbachs a to
determine the reliability of the scales. It is based on the average correlation or
covariance between items in a scale and it is used to determine internal consistency.
The analysis uses a value of 0.7 or higher to ensure reliability of the measures or
constructs.
Next, we evaluate the construct validity using principle components factor
analysis. Nunnally (1978) recommends a factor loading of at least 0.30 as
guidelines to determine whether a variable is a part of a factor though a value of
0.5 and above is considered as meritorious. We use a cut-off point of 0.50 except
for two items, whose values are close, 0.427 and 0.467. These two items are
significant in the stepwise regression analysis and their inclusion improves the
reliability. The rest of the other items have factor loading ranges above 0.5 and
hence ensuring construct validity.
The criterion-related validity is concerned with the extent to which a measuring
instrument is related to an independent measure of the relevant criterion. Hence,
the six measures of quality managements in a business unit have criterion-related
validity if the measures (collectively) are highly correlated with performances in a
business unit. The correlation coefficient between general quality constructs and
performance constructs is 0.837, which is significant at the 0.001 levels indicating
high correlation.
Finally, reliability is the degree to which measures are free from errors and yield
consistent results. The two most common methods of accessing reliability of the scales
are by the Split-half method and the Cronbachs a. In this study, we utilize the
Cronbachs a to test for reliability. The values of Cronbach a above 0.7 are considered
acceptable and those above 0.8 are considered meritorious. All the a values for
constructs are above 0.8, indicating the constructs are consistent and reliable. We use
Pearsons correlation to test the correlation between quality constructs and
performances. Also, we use comparison test using independent sample t-test to
compare performances between TQM and non-TQM firms, and between various
groups of high- and low-tech firms.

Analyses and findings

Table I presents the demographic profile of respondents. There are 40 TQM companies
among the 81 respondents. The TQM companies are further categorized into 27 large
firms and 13 small firms, while eight large and 33 small firms are non-TQM companies.
It seems more and more logistics companies, especially larger companies are realizing
the importance and benefits of TQM and they are gradually adopting it in their
operations. On the other hand, the non-TQM companies comprise mainly of small
companies and the reason for lack of TQM implementation may be attributed to lack of
financial support, no pressure to initiate, and lack of management support.

Type of company
TQM (large 27, small 13)
Non-TQM (large 8, small 33)
Ownership of company
Local company
Foreign company
Joint venture
Number of employees
Less than 50
50-100
100-200
200-500
More than 500
Years of TQM adoption
Less than one year
1-2 years
2-3 years
3-5 years
More than five years
Business concentration
Air/sea cargo
Container services
Freight forwarding
Transportation/delivery
warehousing
Shipping
Courier services
Others
Technology users
Electronic data interchange
Internet
Portnet/tradenet
Warehouse management system
Auto online tracking system
Vehicle routing/scheduling system
Optical scanners
Inventory control system
Auto storage and retrieval system
Distribution resource planning system

No.

Percent

40
41

49.4
50.6

37
31
13

45.7
38.3
16.0

36
10
15
8
12

44.4
12.3
18.5
9.9
14.8

4
10
8
8
10

10.0
25.0
20.0
20.0
25.0

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64.2
38.3
71.6
69.1
70.4
40.7
19.8
14.8
64.2
76.5
77.8
51.9
40.7
18.5
28.4
33.3
11.1
6.2

Table I.
Demographic information
of respondents

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There are 37 local companies, 31 foreign companies and the remaining 13 joint venture
of foreign and local companies. Similarly, there are 46 small companies (with less than
100 employees) and 35 large companies. Of the 81 respondents, 71.6 percent of the
respondents deal with freight forwarding, 70.4 percent in warehousing, 69.1 percent in
transportation or delivery, 64.2 percent in air or sea cargo, 40.7 percent in shipping,
38.3 percent in container services, and 19.8 percent in courier services. Clearly, a large
number of respondents have major and minor business concentration in freight
forwarding and warehousing. In terms of technologies profile, it is interesting to note
that 70 percent of the respondents use portnet/tradenet and internet indicating their
widespread use in the logistics industry of Singapore.
Constructs of quality management
We use factor analysis with varimax rotation to determine the grouping of the quality
constructs. The 33 items of quality constructs are categorized into six factors, with
items loading highly together under one construct grouped together. The six
constructs are top management leadership, strategic planning, information systems
and analysis, customer focus, quality focus and human resource management. All
factor loadings range from 0.7737 to 0.9076, clearly exceeding the 0.5 mark and
indicating a relatively high level of internal consistency among the TQM items. Table II
presents the factor loading of only the six main factors.
Performance constructs
We use factor analysis with varimax rotation to group 26 items of performance
constructs. The three performances constructs are operational performance, quality
performance and technology performance as proposed initially. The result analysis
shows a values ranging from 0.8902 to 0.9378 indicating good reliability. The factor
loading of performance constructs are shown in Table III. Items that do not load
together in the originally proposed factor are italicized.
Results of hypotheses testing
H1 proposes top management leadership to be the driver of customer focus, quality
focus, human resource management, process management, strategic planning and
information systems and analysis. Table IV presents correlation matrix of the quality
management attributes. The results show positive values of more than 0.5 for all
correlations at 0.001 significance levels. This indicates a strong positive correlation
between top management leadership, customer focus, quality focus, human resource
management, strategic planning, information systems and analysis and process
management. This is similar to the findings of Meyer and Collier (2001) and Anderson
Quality construct

Table II.
Factor loadings of quality
construct

Top management leadership

Customer focus
Quality focus
Human resource management
Strategic planning
Information system and analysis

Loading
0.8702
0.8724
0.8466
0.8731
0.8582
0.9103

Performance construct
Operational performance (a 0.9085)
Cost (as compared to main competitors)
Our company maintains low inventory costs as a percentage of sales
Our company has low transportation costs as a percentage of sales
Our company maintains low labor cost as a percentage of sales
Our company has low equipment and facilities cost as a percentage of sales
Our company operates with low overall operating cost as a percentage of sales
Delivery quality and flexibility (as compared to main competitors)
Our company offers greater proportion of on time and accurate delivery
Our company offers short delivery lead-time
Our company provides quicker response to customers
Quality performance (a 0.9351)
Employees quality (Inter-organizational over past one year)
The employee turnover rate in our company has decreased
The use of technology has increased employees productivity
Our employees morale has increased and they show greater enthusiasm at work
Our employees show improvement in skills
The use of technology has helped to cut down on wastage and time associated
with picking and stocking
External
Frontline employees/drivers/workers are friendly and courteous
Frontline employees/drivers/workers are careful about on-time delivery
Our company ensures that goods are not damaged during delivery.
Frontline employees/drivers/workers exercise caution in handling of
goods/products
Frontline employees offer after-sales services/support
Our employees are knowledgeable about some quality issues listed above
Technology performance (a 0.9312)
Our company is a heavy user of technologies for daily transaction. Examples
include, internet billing and EDI for order processing
Our company is a heavy user of management technologies. Examples include
optical scanners, warehouse management system and automated storage and
retrieval system (ASRS)
Our company employs the use of effective distribution system. Examples include
vehicle routing and scheduling system to facilitate distribution planning
Our company employs use of automated tracking system (customer online
tracking system, and tracking system for company to locate their goods in the
supply chain)
Our company is a fully integrated IT organization
Our company has a more sophisticated logistics system that has the ability to
handle unexpected events (or non-routine requests) compared to our competitors.
Our technical infrastructure allows us to offer a variety of services with faster
changeover.

Loading

0.8902
0.8885
0.8933
0.8998
0.8968

Effects of
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203

0.8949
0.9002
0.9087
0.9378
0.9325
0.9269
0.9265
0.9305
0.9290
0.9248
0.9319
0.9255
0.9289
0.9271
0.9230
0.9169
0.9187
0.9130
0.9144
0.9263
0.9302

et al. (1998) who also find strong correlation between leadership and the quality
attributes in the Baldrige award and both studies identify leadership as an important
initiator and driver of the other components.
H2 proposes a positive correlation between individual quality construct and
operational, quality, technology and overall performance constructs. We test the
hypothesis for overall business performance, as well as individual operational, quality

Table III.
Factor loadings of
performance construct

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Table IV.
Correlation of quality
management attributes

and technology performance for a significant positive relationship with TQM using
Pearsons correlation. Table V summarizes the results. Each individual construct
positively and significantly correlate with operational, quality, technology and overall
business performance. Therefore, we find strong evidence of association and
correlation between quality management practices and performances measures
including technology.
H3 proposes a positive correlation between operational, quality and technology
performance and overall business performance. Table VI shows a significant positive
correlation of operational, quality and technology performances with the overall
business performance at the 0.001 levels. This indicates the operational, quality and
technology performance has an impact on the overall business performance. Hence, we
find sufficient evidence to support H3. In addition, correlation between the operational
and quality performance has a positive value of 0.49 at 0.001 significance levels.
The preceding tests show significant positive correlations between TQM and
business performance. Therefore, we expect TQM firms to perform better in
performances compared to non-TQM firms. H4 proposes differences in operational,

Top management leadership (TML)

Customer focus (CF)
Quality focus (QF)
Human resource management (HRM)
Strategic planning (SP)
Information systems and analysis (ISA)

Table VI.
Correlation of
performance constructs
and business
performance

CF

QF

HRM

SP

ISA

1.000
0.582
0.628
0.527
0.657
0.573

1.000
0.612
0.629
0.620
0.636

1.000
0.737
0.667
0.733

1.000
0.664
0.690

1.000
0.715

1.000

Note: All correlations are significant at the 0.001 levels

Quality constructs

Table V.
Correlation of individual
quality and performance
constructs

TML

Top management leadership

Customer focus
Quality focus
Human resource management
Strategic planning
Information systems and analysis

Operational

Performance constructs
Quality
Technology

0.373
0.457
0.489
0.542
0.500
0.392

0.631
0.659
0.717
0.782
0.691
0.660

0.439
0.430
0.635
0.609
0.534
0.755

Overall business
0.584
0.621
0.758
0.787
0.701
0.762

Note: All correlations are significant at 0.001 levels

Overall business

Operational

Quality

Technology

0.696

0.875

0.850

Note: All correlations are significant at the 0.001 levels

quality, technology and overall business performance of the TQM and non-TQM firms.
Table VII shows the mean, standard deviation and the p-values of the performance
attributes. TQM firms generally outperform non-TQM firms in quality, technology and
overall business performance as indicated by the p-values of less than 0.001. Hence,
there are statistically significant differences between TQM and non-TQM firms in
aspects of quality performance and technology performance. As for operational
performance, though the mean of TQM firms is slightly higher than non-TQM firms,
however, the results are not significant at the 0.001 level. However, taking into
considerations the three performance constructs, the overall business performance
between TQM firms and non-TQM firms is significant, which indicates a significant
positive impact of TQM.
Quality management makes managerial jobs more demanding by requiring more in
the way of people-management and technical skills and by making greater demands on
the managers time. People argue that TQM is a long-term process requiring a
sufficient amount of financial and technical investment, time involved in training,
meeting and system development and strategic focus. Perhaps, this explains why a
larger proportion of the big companies are implementing TQM, and higher successes
observed in the larger companies as compared to the smaller companies. Here, a bigger
proportion of large companies adopted TQM; therefore, caution is in order in the
interpretation of the results.
H5 proposes that high-tech firms, usually more sophisticated in IT utilization,
perform better in terms of operational, quality and overall business performance
compared to low-tech firms. In order to differentiate high- and low-tech firms, we
compute the average of the technology constructs of each firm and use a cut-off point of
3 to indicate their technology level. That is, firms with a score of less than or equal to 3
are considered as low-tech firms, while firms with a score higher than 3 are considered
as high-tech firms. Table VIII shows quality and overall business performances of
high-tech firms to be significantly better than the low-tech firms. The results show that
the adoption of more extensive and expensive technologies by high-tech firms help
companies to simultaneously differentiate their products and services more effectively

TQM firms
Operational
Quality
Technology
Overall business

Operational
Quality
Overall business

Mean

SD

3.6531
4.0432
3.8893
3.8619

0.50199
0.43476
0.65063
0.42106

Non-TQM firms
Mean
SD
3.5915
3.5854
3.0279
3.4016

0.77461
0.64796
0.85070
0.60983

High-tech firms
Mean
SD

Low-tech firms
Mean
SD

3.6897
4.0204
3.8550

3.2511
3.2846
3.3678

0.55074
0.37965
0.40253

0.84421
0.71598
0.67540

Effects of
technology and
TQM
205

p-value
0.673
0.000
0.000
0.000

Table VII.
Performance of TQM and
non-TQM firms

p-value
0.010
0.000
0.000

Table VIII.
Performance of high- and
low-tech firms

IJPDLM
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206

and reduce their overheads and cost at the same time, leading to better operational
efficiency and improved quality performance.
Also, we are interested to find out whether this technology differences applies to
TQM versus non-TQM firms. Based on earlier results, we expect high-tech TQM firms
to perform better in all aspects of performance compared to low-tech TQM firms.
Hence, the H6 proposes that high-tech TQM firms are better in operational, quality and
overall business performance as compared to low-tech TQM firms. Table IX shows
significant differences between operational performance of high- and low-tech TQM
firms at 0.01 levels. Quality performance on the other hand is significant at the 0.10
significance levels. The overall business performance for high-tech TQM firms is
significantly higher as compared to low-tech TQM firms at the 0.001 levels.
Limitations of the study
There are some limitations to this study. We are unable to test and account for the lags
between the existence neither of practices and performance changes nor to trace the
progress of particular company. The sample size of 81 firms is relatively small. Hence,
factor analysis and the comparative results need to be treated with caution. The result
only provides a reference rather than an actual scenario of the logistics industry.
There is a potential for self-reporting bias as managers would generally report
favorably to certain familiar issues. Perhaps, it would be helpful to collect multiple
responses from different management level to obtain a more accurate picture of the
quality program. Also, there are issues of selection bias in the listings and online
directories. Lastly, the study uses perceptual data, provided by operations and quality
managers, which may not provide a clear measure of the perceived quality of customers.
Discussion of findings
The adoption of TQM as a quality improvement tool is widespread in Singapore
logistics companies with almost 50 percent take up rate. Larger firms are more likely to
be using TQM, as seen by a higher percentage of larger TQM firms. Only 45 percent of
the logistics firms claim to have adopted TQM program for three or more years. This
indicates to a certain extent that though TQM is widespread in the logistics sector,
many firms are still in the early stages of implementation. Many logistics companies in
Singapore specialize in more than one category of business concentration, with a
higher percentage of business concentration in warehousing, freight forwarding,
transportation, delivery, and air/sea cargo. Perhaps, this is one of the reasons behind a
high usage of technologies such as EDI, internet and portnet/tradenet. However, the
relative low percentages of usages for certain technologies such as vehicle
routing/scheduling system, distribution resource planning and automated storage
and retrieval system imply existence of opportunities for Singapore logistics providers
to make use of these technologies.

Table IX.
Performance of high- and
low-tech TQM firms

Operational
Quality
Overall business

High-tech TQM firms

Mean
SD

Low-tech TQM firms

Mean
SD

3.8563
4.1591
4.1456

3.4500
3.9273
3.5781

0.57964
0.48364
0.35349

0.30726
0.35467
0.26361

p-value
0.010
0.092
0.000

Table X provides a summary of the results of hypotheses testing. The results suggest
that the six quality constructs are critical factors required for any TQM
implementation due to its strong association with overall business performance in
the logistics industry in Singapore. These six quality constructs can further be
subdivided into intangible factors and tangible ones. The success of TQM lies in both
the tangible and intangible factors. Intangible factors such as, top management
leadership, customer focus and quality focus act as baselines for quality improvement,
and actual improvement in performance is attributed to the tangible factors, such as,
human resource management, strategic planning and information systems and
analysis. Though the study seems to suggest that the tangible factors are the key
factors for the success of TQM implementation, however, the prior research has shown
that intangible factors are equally as important. Intangible factors such as top
management leadership act as driver for other quality constructs; moreover, they are
responsible for creating an environment culture of TQM and accessing the suitability
of TQM implementation.
Also, the strong positive correlation between the six quality constructs with
performance constructs suggests that TQM is not only applicable to the manufacturing
industry (where TQM first originated) but is also widely applicable to the services
industry, inclusive of the logistics industry. This study finds greater performance level
in operational, quality and technology performance in TQM logistics firms, hence the
relevance and importance of TQM to the service industries. Perhaps, as logistics firms
look for better ways to improve their processes and management, they need to seek a
continuous improvement in quality. The results also show a positive correlation
between quality management practices and performances in the logistics industry of
Singapore.

Hypotheses
Quality framework
H1 There is a positive association between top management
leadership and strategic planning, process management,
information systems and analysis, human resource
management, quality focus and customer focus
Quality and performance
H2 Operational, quality, technology and overall business
performance has a positive correlation with the general quality
constructs
H3 Operational, quality and technology performance has a
positive correlation with overall business performance
TQM and non-TQM firms
H4 TQM firms outperform non-TQM implemented firms in
operational, quality, technology and overall business
performance
TQM, technology and performance
H5 High-tech firms out perform low-tech firms in operational,
quality and overall business performance
H6 High-tech TQM firms outperform low-tech TQM firm in
operational, quality and overall business performance

Effects of
technology and
TQM
207

Support at p , 0.10

U
U

Mostly supported

U
U

Table X.
Summary of results of
hypotheses

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208

The results provide recognition for the importance of technology in quality

management. Analysis shows technology plays an important role in quality
management and high-tech firms generally perform better in operational, quality
and overall business performance when compared to low-tech firms. Also, high-tech
TQM firms generally outperform low-tech TQM firms in day-to-day operations,
quality assurance and overall business performance. Perhaps, use of technology assist
operations in many ways, such as, cutting down information and processing lead-time,
improve efficiency and minimize errors to the minimum. Therefore, logistics firms
should look at the long-term benefits of technology and gradually engage its use to
streamline their operations.
The use of IT is a crucial component in improving the operational, quality and
overall business performance. The information and management technologies strongly
correlate to TQM and serve as an enabler to quality performance. They also help to
improve relationships with customers. Results support the notion that IT improves
business operations, increase the delivery quality of services/products, provide greater
flexibilities to customers and bring about an increase in the productivity of employees.
Perhaps, this leads to an improved operational and quality performance. Hence,
management should recognize the roles of technology in TQM and utilize technology to
aid the continuous quality improvement efforts. Moreover, future logistics
management is affected by external environment factors such as customers,
globalization and competition. Therefore, logistics managers must be sensitive to
their customer needs and should seek to meet, and preferably exceed customer
expectations. As such, technology will be a key impact agent in the future logistics
industry.
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Corresponding author
Shaukat A. Brah can be contacted at: bizbrahs@nus.edu.sg

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