This paper introduces a tool named EB-QFD used for electronic business planning in strategic issues. Nowadays, the challenges of manufacturing sectors for achieving global competition will depend on their speed to change from domestic to world class manufacturing organizations, also the rapid global deployment of electronic business, information technology and their benefits have required managers to make decision, which look for a balance world class manufacturing factors with strategic business goals. To ensure that selected e-business strategies meet world class manufacturing requirements, organizations should simultaneously explore and communicate the relationship between world class manufacturing and electronic business. Electronic business planners can achieve competitive advantages through the implementation of an integration of quality function deployment (QFD) with electronic business (EB) called EB-QFD. This study is based on data collected from an Iranian auto parts manufacturing company and the implementation of EB-QFD. In this research, EB-QFD contains two parts named EB-WHATs as needs of Electronic Business and EB-HOWs as resources for EB-WHATs. Statistical analysis points that there are positive relationships between using EB-WHATs and EB-HOW and world class manufacturing factors as competitive advantages. We used electronic business systems for EB-WHATs and resource based view (RBV) for EB-HOWs.

Mostofi, R., Farsijani, H & Hamidi, N. (2012). Using EB-QFD to achieve competitive advantages for world class manufacturing.Management Science Letters, 2(6), 1947-1956.

Management Science Letters 2 (2012) 1947–1956

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Using EB-QFD to achieve competitive advantages for world class manufacturing

Rahman Mostofi*, Hassan Farsijani and Naser Hamidi

Department of Industrial Management, Islamic Azad University, Qazvin branch, Qazvin, Iran

Department of Industrial Management, Shahid Beheshti University, Tehran, Iran

A R T I C L E I N F O A B S T R A C T

Article history:

Received March 26, 2012

Accepted 15 June 2012

Available online

June 18 2012 This paper introduces a tool named EB-QFD used for electronic business planning in strategic issues. Nowadays, the challenges of manufacturing sectors for achieving global competition will depend on their speed to change from domestic to world class manufacturing organizations, also the rapid global deployment of electronic business, information technology and their benefits have required managers to make decision, which look for a balance world class manufacturing factors with strategic business goals. To ensure that selected e-business strategies meet world class manufacturing requirements, organizations should simultaneously explore and communicate the relationship between world class manufacturing and electronic business. Electronic business planners can achieve competitive advantages through the implementation of an integration of quality function deployment (QFD) with electronic business (EB) called EB-QFD. This study is based on data collected from an Iranian auto parts manufacturing company and the implementation of EB-QFD. In this research, EB-QFD contains two parts named EB-WHATs as needs of Electronic Business and EB-HOWs as resources for EB-WHATs. Statistical analysis points that there are positive relationships between using EB-WHATs and EB-HOW and world class manufacturing factors as competitive advantages. We used electronic business systems for EB-WHATs and resource based view (RBV) for EB-HOWs.

© 2012 Growing Science Ltd. All rights reserved.

Keywords:

Quality function deployment Electronic business

Competitive advantage

World class manufacturing (WCM) 1. Introduction

Manufacturing strategies are concerned with key decision about the specific roles implemented in an attempt to gain competitive advantage (Dangayach & Deshmukh, 2000). The rapid changes in business environment due to its unique characteristic, the raise of international competition among companies, shrinkage of markets, and diffusion of the information technology (IT) through organizations have put pressure on business to continually review and adopt their traditional manufacturing strategy. In fact, there is a constant search for new ways to achieve a competitive advantage through new manufacturing techniques. Therefore, increasing knowledge and coordination in company's processes, which crosses its manufacturing functions becomes the primary requirement of many companies seeking a competitive advantage (Salaheldin & Eid, 2007). Although, in particular, there are some practices organizations should adopt to achieve high performance and this has long been a focus of research in operations management. The resource-based and capability-based views of sustainable competitive advantage have recently highlighted operations as an important source of resources and capabilities, which are valuable, rare, inimitable, and sticky (Winter, 2003; Eisenhardt & Martin; 2000; Teece et al., 1997). According to Porter (1985), competitive strategy can be understood as the activities a company uses to achieve a sustainable competitive advantage in particular industry. These activities are determined by the strategic decisions where the company is attempting to be different from competitors. However the challenges of manufacturing sectors competition are transforming from to change domestic environment to global market, in which managers are under pressure to deliver increased productivity and efficiency (Hayens,1999). The purpose of this study is to determine the impacts of the EB-QFD implementation by manufacturing organizations. Specifically, this article attempts to answer the following questions:

What is EB-QFD?

Why is EB-QFD used?

Can usage of EB-QFD help organization for electronic business planning to achieve competitive advantages and How?

2. The concept of QFD

There are many definitions for QFD,asically, it is a method for understanding customer outcomes and developing comprehensive product specifications (Killen, et al., 2005). Essential characteristics are customer orientation, team approach and a way of concisely structuring communication and linking together information (Govers, 1996). QFD is a technique for product or service development, brand marketing, and product management. The primary purpose of the QFD approach is to help planners in focus on the characteristics of the product or service from the viewpoints of market segments. Furthermore, it is a concept and mechanism for translating customer needs into product by the various stages of product planning, engineering and manufacturing (Celik,et al.,2009). The process of QFD contains one or more interlink matrices where the first is called house of quality (HOQ). In this phase the stakeholder needs to the system are identified" WHATs", the company's competitive priorities are incorporated, and then the needs transforming into technical measures are known as "HOWs" (Chan & Wu, 2005). The weights assigned to the WHATs' are placed to the right of the matrix, the amount of each technical response HOWs for achieving each WHATs are given priorities at the bottom of the HOQ shown in Fig 1. The HOQ displays the voice of customer or stakeholder along the left and the team's technical solutions to the stakeholders needs along the top (Masui, et al., 2003, Cohen, 1995, Zhang, et al.,1999).



Technical Response "HOWs"



-Customer/stakeholder needs WHATs""

Planning matrix

Relationship





Technical Matrix "HOWs" priorities



Fig. 1. House of Quality

2.1 Using QFD with other approaches

Jiang et al. (2007) discussed about the development of QFD and its combination with various design methodologies and numerical analysis methods, which also became a research trend. They referred to other researchers' area in three main aspects as following:

QFD combined with TRIZ (Russian theory of inventive problem solving), Pugh concept selection, and Taguchi methods, in order to strengthen more the effectiveness of QFD in product design and process design.

QFD combined with different numerical analysis methods, such as fuzzy sets, AHP(analytic hierarchy process),and neural network, in order to strengthen more the accuracy of QFD in weight determination and numerical analysis.

The research of QFD application, such as QFD combined with strategic management and policy management, and QFD's key successful factors in practice.

2.2 Strategic planning with QFD

QFD tools and principles are traditionally used for product development but they are considered as an appropriate method for the development of business strategy (Walker, 2002). When QFD is implemented in strategic planning, we have different perception of this concept, the customers' requirements can be interpreted as the corporate or business requirements, QFD team consists of top management, functional level management for formulation and engineering for action plan. Therefore, in strategic planning, the QFD project risk is generally higher than in product design.Table1 highlights these differences (Crowe & Cheng, 1996).

Table1

Fundamental differences between product design and strategic planning

Product design Strategic planning

Input data Customers' requirements Corporate and business strategy

Number of translation Phases Four clearly defined phases Multiple phases

Information nature Static Dynamic

Translation data Easy to define and quantify Difficult to define and quantify

Evaluation scale Specific target values for each design attribute Strategic objectives and goals

Team members Implementation engineers Top management, functional level managers and implementation engineers

Output

Specific process for manufacturing the product Manufacturing initiatives, tactical policies and detail tasks

Project risk Generally lower Generally higher

3. Electronic Business(EB)

Electronic business is a concept, which maintains many definitions in practice and in the literature. In the last decade, Electronic Business (e-business or EB defined as business activities conducted over the Internet) has been one of the most important IT innovations (Xu, et al., 2004).

Electronic Business is a new business model, which transform key business process between business partners, supplier, customer, employees, regulatory parties and communities (Criag & Jutla, 2001). E-business supports strengthening business processes and business partners, employees, and customer relationships by using electronic media (Schubert & Hausler, 2001).

3.1 Electronic business development

Industry analysts have predicted that e-business applications can facilitate the exploitation of intangible knowledge and relational assets such as intellectual capital and customer relationships. Consequently, many contemporary organizations are realizing that new considerations must be brought to bear in assessing e-business investment (Bharadwaj & Tiwana, 2005). Developing -usiness capability is an important responsibility because it is not only rapidly changing the way that companies buy, sell and deal with customer, but also it is becoming a more integral part of its business strategies (Abu-Musa, 2004). Ihlstrom and Nilsson(2003) used e-business to describe how corporation utilize information technology to conduct business and gain competitive advantage. Although there is no common agreed definition for competitive advantage, it can be viewed as the unique position that the company develops compared with its competitors.

3.2 Benefits of e-business

E-usiness represents new avenue for continuous competitive advantage. Fillis & Wanger (2005) argued about a number of benefits resulting from using e-business such as having more ability for improved internal communications, development of business relationships, logistic, competitive advantages, cost saving, collaboration, information search, marketing and sales promotion and so on. E-business is about business innovation, about serving new and changing markets. E-business has the potential to redefine the existing business infrastructure organizations and to re-evaluate the way in which they do business. It has capability in re-engineering business process across the boundaries that have traditionally separated suppliers from their customers. E-business reduces operational costs since electronic information tends to be more accurate, more timely and easily available. Another benefit of e-business could be that higher efficiency obtained in business transactions due to fast and accurate processing of information (Lal, 2002).

4. Manufacturing strategy

A considerable issues on manufacturing strategy has been offered since the area was initiated by Skinner. Skinner (1969, 1974) introduced manufacturing strategy as the description of how a company intends to compete in the marketplace and identified the manufacturing task as one that needs to make internally consistent choices that reflect the company's competitive priorities to support the corporate strategy and competitive environment. While a company's competitive strategy places specific demands on the manufacturing function, at the same time, the company's manufacturing strategy should be specifically designed to accomplish the goals of the company's competitive strategy. A firm competitive strategy drives its manufacturing strategy leading to operations decisions, which result in some desired performance (Amoako-Gyampah & Acquaah, 2008). Various researchers have interpreted manufacturing strategy over the last 20 years. According to Dangayach and Deshmukh (2000) some of the necessary definitions of manufacturing strategy are summarized in Table 2.

Table 2

Definitions of Manufacturing Strategy

Author Definition Definitions

Hayes & Pisano(1994) In today's turbulent competitive environment, a company more than ever needs a strategy, which specifies the kind of competitive advantage particulates how that advantage it is seeking in the marketplace and is to be achieved.

Hills(1987) This represents a coordinated approach, which strives to achieve consistency between functional capabilities and policies and the agreed current and future competitive advantage necessary for success in the marketplace.

Hayes & Wheelwright (1984) A sequence of decisions that over time enables a business unit to achieve a desired manufacturing structure, infrastructure, and set of specific capabilities.

4.1 World class manufacturing (WCM)

Hayes and Wheelwright (1985) first introduced the term world-class manufacturing to describe how organizations could achieve a global competitive advantage by manufacturing capabilities as a strategic weapon. Becoming a world class manufacturing organization is a common industrial goal. It means being the best in the world in the specific sector of industry or being in a position to compete in a global market. In order to achieve such WCM goals, organizations try to implement improvement program (Muda & Hendry, 2002). In fact world class organizations respond customer needs through emphasizing on High Quality, High Flexibility, High Delivery speed, Low Cost and High Innovation programs to gain competitive advantages. Some competitive factors in WCM are presented in Table3.

Table 3

Competitive Factors in WCM

WCM Competitive Factors Sources

High Quality, High Delivery Speed, Low Cost, High Flexibility, High Innovation Eid, 2009; Brown, et al., 2007; Al Falah, et al., 2003; Muda & Hendry, 2002; Dangayach & Deshmukh, 2000



4.2 What is EB-QFD?

EB-QFD or Electronic Business-Quality Function Deployment is an integrated tool that can help organization for electronic business planning in their strategies to gain competitive advantages through it. It is combined with electronic business systems in order to responding organizations requirements.

4.3 Why isEB-QFD used?

1. There are few researches in application of QFD for planning in IT and electronic business field and competitive strategies issues.

2. QFD is usually applied for planning but in this article we used it as a basis for categorizing and planning in parallel as a flexible tool named EB-QFD.

4.4. EB-QFD Model

According to the research literature, the process of QFD contains one or more matrices; first we suggest EB-QFD contains one matrix that has two parts; EB-WHATs and EB-HOWs. EB-WHATs refer to electronic business systems (are shown in Table 4) and EB-HOWs refer to needed resources for EB-WHATs. To find EB-HOWs, Resource Based View (RBV) is used.

Table 4

Electronic Business Systems (Needs of Electronic Business)

EB Systems (EB-WHATs) Sources

Enterprise Resource Planning(ERP)

Supply Chain Management( SCM)

Customer relationship Management(CRM)

Knowledge Management(KM)

Computer Aided Design & Manufacturing(CAD,CAM) Wu & Zhong, 2009; Lai & Chen, 2009; Lee, 2003; Malhotra, 2000; Moodley, 2002; Oyelaran, et al., 2004

5. Resource Based View (RBV)

The resource based view prescribes that firm resources are the main driver of firm performance. The Resource Based View (RBV), a dominant theory in the strategic management literature, asserts that firms gain and sustain competitive advantages by deploying valuable resources and capabilities (Barney, 1991; Melville et al., 2004). RBV provides theoretical basis for research of competitive advantage of IT resources (Yang, et al., 2010). Some studies in this field have been shown in Table 5.

Table 5

Research review about IT resources based on RBV

Needed resource for electronic business systems(EB -HOWs) Sources

IT management and managerial skills

Awareness of top managers and commitment

IT technologies

IT infrastructure

Capital and IT investment

IT experts Luftman,et al., 2006; Zhu & Kraemer, 2005; Marchand, et al., 2000; Mata & Barney, 1995; Zhao, et al., 2008; Phan, 2001; Wang & Cheung, 2004; Powell & Micallef,1997; Bharadwaj, 2000;

Thouin,et al., 2008

6. Conceptual model

In this model, we want to Investigate the effect of using EB -QFD on world class manufacturing actors as illustrated in Fig 2.

Using EB-QFD Using EB-WHATs

H High quality, High elivery speed, Low cost, High flexibility, High innovation

Using EB-HOWs HFig. 2.The Conceptual Model

Hypothesis

H: There is a positive relationship between using EB-WHATs and WCM Factors.

H: There is a positive relationship between using EB-HOWs and WCM Factors.

6.1 Methodology

The research was conducted in an Iranian auto parts manufacturing company. The main tool for collecting data is questionnaire that was distributed among managers, supervisors and engineers in functional levels who were familiar with IT and WCM factors. For evaluating the importance weightings of the questionnaire scales applied in seven points: highly important, very high, high, medium, low, very low, negligible. Questionnaire is designed in two parts for statistical analysis and QFD practices.

6.2 Statistical analysis

Normal distribution of data is analyzed by Kolmogorov-Smirnov test, hypothesis measured by T-test and for finding variables priorities QFD practice is used.

Kolmogorov-Smirnov test for analyzing normal distribution of data

H1: EB-QFD has a normal distribution in the sample.

H2: EB-QFD does not have a normal distribution in the sample.

According to the hypothesis measuring, P=0.161 ˃α= 0.05, then H1 cannot be rejected, therefore variable EB-QFD has a normal distribution in the sample that is shown in Table 6.

Table 6

Kolmogorov-Smirnov Test

Using EB-QFD

N 57

Normal Parameters Mean 5.1057

Std. Deviation .27182

Kolmogorov-Smirnov Z 1.122

Asymp. Sig. (2-tailed) .161

6.3 Examining hypotheses by T-test

The following shows the null hypothesis against the alternative one when the level of significance is five percent. As we can observe the null hypothesis of the first question of the survey is rejected.

Ha0:µ≤4Ha1:µ>4Table 7 shows the mean, standard deviation, standard error and mean difference for the first hypothesis.

Table7

T-test for finding relationship between EB-WHATs and WCM factors

Using

EB-WHATs Test Value = 4

N

57 Mean

5.2982 Std. deviation

.27590 Std. Error Mean

.03654 Mean Difference

1.29825 Sig.

.000

Similarly, we test the second hypothesis when the level of significance is set to five percent as follows,

Hb0:µ≤4Hb1:µ>4Table 8 shows the mean, standard deviation, standard error and mean difference for the second hypothesis.

Table 8

T-test for finding relationship between EB-HOWs and WCM factors

Using

EB-HOWs Test Value = 4

N

57 Mean

4.9132 Std. deviation

.32171 Std. error Mean

1.29825 Mean ifference

.91322 Sig.

..000



According to the support of Ha1 and Hb1 results indicate that there is a positive relationship between using EB-WHATs and WCM Factors (M=4.9132˃ µ=4, P<α= 0.05), and also there is a positive relationship between using EB-HOWs and WCM Factors (M=5.2982˃µ=4, P<α=0.05).

6.4 QFD Practices for variables ranking

The relationship scores between variables are collected from questionnaires. The total relationship score is defined as:



where Mij is the strength of the relationship among the ith WCM actors and the jth using EB-WHATs; Wi,the importance of the ith WCM Factors. As QFD practices; the output of the matrix I is the input of the matrix II.

6.5 Matrix I Analysis of importance weightings of using EB-WHATs

Using Electronic Business systems( EB –WHATs)

Using CAD,CAM Using KM Using CRM Using SCM Using ERP Level of importance WCM Fctors

6.0175 6.333 5.7719 4.4643 4.614 6.263 High Quality

6.2105 5.8246 5.5789 5.7143 5.7018 6 High Delivery Speed

4.9298 4.7080 4.1579 4.2679 4.1754 6.052 Low Cost

6.0351 5.7193 5.8070 5.5375 5.614 5.631 High Flexibility

5.3684 6.3684 5.2281 4.0375 4.228 5.315 High Innovation

167.302 169.122 155.273 140.837 142.463 Total Relationship Score(TRS)

0.989 1 0.918 0.832 0.842 Normalization(N)

6.6 Matrix II Analysis of importance weightings of using EB-HOWs

Using EB – HOWs

IT experts

Capital and IT investment

Awareness of top management and commitment IT management and managerial skills

IT infrastructure

IT technologies

Relationship Score Using EB –WHATs

5.736 6.473 6.368 5.526 6.736 6.052 0.842 Using ERP

6 6.368 6.263 5.052 6.473 5.842 0.832 Using SCM

5.421 6.315 6.210 4.684 6.315 5.789 0.918 Using CRM

5.368 6.368 6.473 6 6.105 6 1 Using KM

5.894 6.631 6.210 4.210 6.684 5.894 0.989 Using CAD,CAM

25.995 29.471 28.888 23.320 29.567 27.099 Total Relationship Score(TRS)

0.879 0.997 0.977 0.789 1 0.92 Normalization(N)

7. Conclusion

Since E-Business is causing organizational transformation and improving performance for achieving competitive advantages, there is a need to know more about the implementation and relationship within an organization to reach the necessary objectives, successfully. In this paper we analyz the using of EB-QFD for gaining competitive advantages as the World Class Manufacturing factors through electronic business planning in a big Iranian auto parts manufacturing company. Drawing upon Electronic Business Systems and RBV; EB-QFD contains EB-WHATs and EB-HOWs. Statistical analysis shows that there is a positive relationship between using EB-WHATs and WCM factors and also there is a positive relationship between using EB-HOWs and WCM factors, which lead to have positive relationship between using EB-QFD and WCM competitive factors. For variables ranking, QFD practices proposes that using KM and IT infrastructure have the most weighting score that company planning may focus on these variables more than others. Ranking of variables are shown in Fig. 3 and Fig. 4.



Fig. 3. Diagram of EB-WHATs ranking for electronic business planning result from QFD practices Fig. 4. Diagram of EB-HOWs ranking for electronic business planning result from QFD practices

As QFD is a planning tool that has ability to be combined with other management and engineering issues; EB-QFD is a startup for further researches in electronic business and IT area, and can be a basis for planning and categorizing other electronic business system that are common in other industries. EB-QFD can be used more in details for organizations that want to plan directly in one or more than one electronic business system according to their goals in the markets.

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