a quality management framework for seaports in their supply chains

<Figure 1> Seaport and quality management evolution

A fifth generation of seaports is being advocated in the literature that refers to seaports in the context of international supply chains19). Robinson20) observes that the seaport competes not simply on operational efficiency or location but on how they are embedded in chains to offer shippers greater value. Robinson concludes that shippers will choose between chains based on the value gained and the competitive advantage in which the seaport is one element. This view is also reiterated by Magala and Sammons21) in their proposal of a new approach to seaport choice modeling. In acknowledging that seaports are in the process of progressive integration within supply chains, these researchers reason that shippers are no longer choosing a seaport in isolation but rather choosing a supply chain in which a seaport is just an element in the system. Rodrigue and Notteboom22) also argue that seaport and inland terminals are adopting a more active role within supply chains in that terminals are being used as extended distribution centres. This is similar to the view of Notteboom and Winkelmans23) who argue that a successful seaport should be constantly adopting new roles in order to cope with the changing market environment.

Lean manufacturing and Six Sigma approaches to quality management, which are mostly used by manufacturers to eliminate wastes occurring in all processes, are considered relevant to the fifth stage of seaport evolution. One purpose of Lean manufacturing and Six Sigma is to minimize the complexity of the organisational structure and provide just-in-time (JIT)

19) Bichou (2004); Carbone (2003).20) Robinson (2002).21) Magala and Sammons (2008).22) Rodrigue and Notteboom (2008).23) Notteboom and Winkelmans (2001).

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A Quality Management Framework for Seaports in their Supply Chains in the 21st Century

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service. However, so far, there is no evidence in the literature that such quality practices have been undertaken by seaports.

2. Seaports in supply chains The more recent views of seaports being seen as logistical platforms can

make a significant contribution to the efficiency of supply chains due to their integral position. However, a seaport can be a bottleneck where the potential for congestion is real, therefore maintaining good relationships with stakeholders via collaboration and coordination, and using effective communication and technology are critical. The integration with seaports with their supply chains is shown diagrammatically in Figure 2. In discussing relationships in supply chains, Coyle et al.24) state that the relationships exist between stakeholders upstream and downstream and in logistics centres. Upstream entities include the material suppliers, manufacturing plants, product processing centres, work-in-process inventory, manufacturers, and producers. Downstream entities include retail outlets, finished products distributors and end users. These stakeholders are connected by transportation and storage activities. Gattorna25) explains in more detail that each stakeholder in the supply chain takes outputs from an upstream stakeholder for their input and then transfers it to the next downstream stakeholder. These transactional relationships require stakeholders in these processes to be closely collaborating to ensure timely delivery of products to end users.

<Figure 2> A seaport and its relationships in supply chains

Source: Adapted from Beresford et al. (2004); Coyle et al. (2003); Gattorna (2009) 24) Coyle et al. (2003).25) Gattorna (2009).

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The relationships between stakeholders in a supply chain should be mutual and interrelated. As discussed above, all stakeholders serve the same materials management and movement process but perform different functions, for example, an output of one stakeholder is the input of the other, therefore effective collaboration and coordination in supply chains are of significant importance. Collaboration and coordination among stakeholders facilitates the movement of production, reduces wastes and removes unnecessary inefficiencies in each transaction. It is here that the integral role of seaports in global supply chains in particular becomes evident in relation to the coordination of multinational and multicultural entities in the supply chain.

This cannot be forged without mutual learning between partners, for instance, the use of active communication and sharing of business information and other common business issues.26) The logical inference is that an organisation needs to communicate its business policies, plans, and information to its upstream and downstream supply chain partners in a consultative manner to enhance coordination and collaboration, thus making the supply chain effective. Developing quality management approaches throughout a supply chain, which is external to an organisation’s boundaries is often beyond the current thinking of many managers who often take an internal approach to quality management. An external driven approach to quality will require quality policies and plans of one organisation in the supply chain to be communicated and shared with other supply chain stakeholders. This argument is valid in building a quality management model for seaports in a supply chain context. The internal and external approach to quality management along a supply chain is currently under-represented in the literature and possibly within management practice. Given the previous discussion on the evolution of seaports indicating many seaports are becoming further integrated within supply chains, the discussion of quality management throughout a supply chain is timely.

3. Quality management in seaports and logistics supply chain networkThe most prevailing quality management practices on seaports are found

on their web pages rather than in the academic literature. Some examples include Australian seaports such as Fremantle and the Port of Brisbane.

26) Robinson and Malhotra (2005).

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Fremantle uses the environmental-related ISO 14001, ISO 9001 (quality) and AS 4801 for safety audits certified by SAI Global,27) whilst the Port of Brisbane has implemented ISO 14001 for environmental management.28) Port Everglades is a leading container seaport and trade gateway to Latin America and Caribbean that has earned ISO 9001:2008 certifications for the Florida International Terminal. Other examples of seaports implementing ISO for their quality management include Virginia Port using ISO 9001,29) and the Port of Los Angeles with ISO 9001:2008 and 14001 certification,30) Malaysian seaports using ISO 9001:2003, and PSA in Singapore implementing the ISO standard for quality management for bunker supply chain – QMBS.31) In Vietnam, many major seaports are certified with quality assurance compliance such as Port of Haiphong with the ISO 9001:2000 certified by the Quality Certification Centre of Vietnam (QUACERT) and the United Kingdom Accreditation Service (UKAS);32) Ben Nghe Port with the ISO 9001:2000 certified by Det Norske Veritas; and Qui Nhon Port with the ISO 9001:2000 certification.33)

The ISO quality series sets out the requirements to be formally recorded and be ready for inspection or audit either by the organisation itself, its customer, or by an independent quality system certification body such as Bureau Veritas, American Society for Quality (ASQ), ABS Quality Evaluation, Det Norske Veritas (DNV). The ISO quality assurance series depends largely upon documentation without requiring a devotion to the quality culture within the organisational culture. This has several drawbacks. Pantouvakis34) argues that such an implementation cannot fully cover individual customer’s requirements and thus a more ‘service quality’ approach is required. In practice, for example, if the declared processes are arduous, organisations may take shortcuts even though records are still kept to meet ISO quality assurance requirements. Seaports may adopt this approach for the purpose of having the certificate to benefit marketing and promotional activities rather than building quality into their work culture, thus making the implementation

27) Fremantle Seaport (2008).28) Port of Brisbane (2008).29) Rodney (2010).30) Port of Los Angeles (2009).31) Singaporestandardseshop (2010).32) Haiphong port (2008).33) Qui Nhon port (2008).34) Pantouvakis (2006).

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of good working practices less meaningful. Furthermore, adopting the ISO quality assurance series does not automatically enable organisations including seaports to apply fundamental quality management practices to achieve good organisational outcomes.

In the seaport-related literature, only a few comprehensive studies35) attempt to build a quality management framework for seaport organisations. Chlomoudis et al.36) advocated the use of the criteria of the European Quality Award (EQA) and Malcolm Baldrige National Quality Award (MBNQA) for seaports. The criteria includes leadership, strategic planning/policy and strategy, customer and market focus/customer satisfaction, information and analysis, a human resource focus, process management, business results, operational results, resources, and society results. These criteria are expected to be employed in the seaport industry as the appropriate quality management practices. The dimensions of each of the above practices however, have not been outlined in any detail. Chlomoudis and Lampridis37) use qualitative analysis to introduce a comprehensive model for a total quality seaport, in which quality management radiates out from a seaport to its suppliers. However, this model has been constructed as a conceptual model thus it is open for other researchers to add in or remove some items subject to individual interpretation.

In the wider literature, there has been some further exploration of quality management in logistics and supply chain network when compared to seaports. The issue of quality management in logistics services has been examined in the logistics industry in Hong Kong.38) The researchers propose a ten-step approach to implement quality management, which includes similar quality management practices discussed in the earlier literature such as management commitment, having a quality improvement team, quality measurement, and continuous improvement. Another study, by Rahman,39) compares the practices between manufacturing and logistics organisations in Australia. However, beyond the finding that on-time delivery is the most important aspect of quality logistics, Rahman found that logistics

35) Chlomoudis et al. (2005); Chlomoudis and Lampridis (2006).36) Chlomoudis et al. (2005).37) Chlomoudis and Lampridis (2006).38) Lai et al. (2004).39) Rahman (2006).

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organisations use several forms of organisational structures, in particular, a steering committee of senior staff management, to support quality programs. From the extant literature, it appears that continuous improvement may be a key quality management practice used by logistics organisations.

Discussing quality management across supply chains, Lambert and Cooper40) suggest the practices of planning, control, work structure, organisational structure, product flow facility, information flow facility, management methods, power and leadership structure, risk and reward structures, cultural factors and attitude. However, their framework does not conclude how these practices should be arranged in order to have a more effective and efficient supply chain structure, nor do they examine the supply chain as being one that is strongly integrated. The impact of information technology and communication has been included as an important practice among supply chain participants to speed up the processes, reduce product life cycles, and developing closer long term relationships and co-ordination in the supply chain.41)

Chen and Paulraj42) determine there are eight components of quality management in supply chains, which they synthesized from four hundred articles, them being, environmental uncertainty, a customer focus, management support, supply strategy, information technology, supply network structure, managing buyer-supplier relationships, and logistics integration. These components are all supported by the findings of other studies43). Simchi-levi and Simchi-levi, and Wisner et al.44) state that organisations need to communicate and collaborate their business policies, plans, information to upstream and downstream supply chain stakeholders. This will result in more successful supply chains. Besides the factor of just-in-time, a quick response, lead-time management, lean logistics, and agile logistics are other key factors that stakeholders should consider when operating in a network.45) Supply chain competence, externally focused process integration, stakeholder participation, and stakeholder/buyer quality meeting are practices added for supply chains.46)

40) Lambert and Cooper (2000).41) Carbone and De Martino (2003).42) Chen and Paulraj (2004).43) Flynn and Flynn (2005); Foster (2008); Lin et al. (2005); Robinson and Malhotra (2005).44) Simchi-levi and Simchi-levi (2008); Wisner et al. (2008).45) Kuei et al. (2008); Sayareh (2009).46) Kuei et al. (2008).

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Overall, it appears that the quality management practices commonly recommended by researchers are leadership, customer focus, process, information and technology, collaboration, coordination, human resources, with a special emphasis on managing relationships and integration of business processes with supply chain partners. These practices appear to be included because they assist stakeholders in supply chains to manage major flows including material, finances and information smoothly, seamlessly, and with minimal costs and errors. What is also of interest in the academic literature is the paucity of research on quality management in seaports, even though there is evidence that it is being undertaken by managers, albeit with the focus being on ISO-related certification. There is even less evidence that as seaports have evolved to some being recognised as logistical platforms firmly integrated within supply chains, that seaport quality has extended beyond the boundaries of the seaport to along the supply chain. This paper proposes a conceptual framework for quality management in seaports that takes both an internal and external focus.

III. A Conceptual Framework

As a result of the changing role of seaports, this paper argues that quality management must take a wider perspective and consider (i) how quality is managed across the supply chain, and (ii) the role of seaports in enabling this to occur. A conceptual framework, as shown in Figure 3, has been derived from the outcomes of research on quality management practices currently being implemented in seaports and across supply chains. It also proposes critical practices for seaports if they are to be successfully integrated in supply chains. It is envisaged that there are two spatial dimensions that the proposed quality management framework should possess, namely, the internal and the external dimensions. The internal practices shown in the horizontal plane is where a seaport looks within the organisation itself and encompasses practices that are applied within the seaport context. The external practices shown in the vertical plane is where a seaport looks out along the supply chains that run

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through the seaport. To further explain the development of the Figure 3 conceptual framework, it

appears that the prominent quality management practices for seaports include ISO and TQM.47) In comparison with quality management in other service organisations, quality management for seaports tends to focus more on the environment (ISO 14000), security (ISPS code) and emphasizing human resource factors such as education, training, and leadership. Even though ISO and TQM have several drawbacks, in the context of an organisation operating independently, ISO is still recognized as being effective and having a positive impact on organisational performance. Thus, the framework was built on an assumption that a seaport should remain ISO and TQM compliant as part of the internal dimension. Although supply chain network integration and quality management has been addressed (for example, for the fourth seaport generation)48), the focus tends to be more on internal operational aspects of a seaport rather than its external relationship with other network partners. As discussed in the previous section, the major practices of supply chain quality management such as JIT, waste elimination, process optimization, and lean and agile structural design do not appear to have been included in a seaport context, thus they are included within the external dimension. This is a necessary addition as collaboration, coordination, communication and integration have become crucial to satisfying the objectives and requirements of supply chains.

<Figure 3> A quality management framework for a seaport integrated in supply chains

47) ISO (2009).48) Beresford et al. (2004)

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Each of the dimensions and the proposed quality management practices will now be explained beginning with the internal quality management dimensions, which are mainly derived from ISO and TQM practices.

Leadership is the prevailing practice in the quality management literature in general and in transport and logistics in particular. The literature explains that the leadership and involvement of senior management in any organisation is the pre-requisite for success of any management activity, including quality management. Without top management commitment and leadership, quality-related processes and procedures may not be undertaken with any rigour or conviction by employees who may not see the real value of quality from their management’s actions. In other words, top management must set a good example by first devoting themselves in their leadership and commitment to quality improvement. The demonstration of senior management’s leadership and commitment could therefore be through a number of attributes such as:

· The long term commitment of top management to quality performance.· Direct responsibility of top management in quality policy, strategies and plans.· A comprehensive goal-setting process for quality throughout the organisation.· Providing adequate resources to quality improvement efforts.· Clear quality collaboration policy with the other stakeholders.· Participation of top management in quality improvement process.

Having a customer focus is another necessary practice for the seaports quality management efforts, particularly due to the required continual interaction with stakeholders. While top management commitment and leadership is critical to the seaport’s quality management success, the focus on customers as the centre of the organisation’s business planning and formulation of strategies, processes and procedures should guide management efforts to realize organisational outcomes. To this end, on the one hand, seaports should focus on measuring key performance indicators, which aims to creating and delivering value to customers, such as customer satisfaction and customer loyalty. On the other, feedback from customers should be treated as critical inputs of the quality improvement process in

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the seaport organisation. As such, this quality management practice may be operationalised as follows:

· Establishing goals to exceed customer expectations.· Creating and delivering value to customers is the seaport’s business philosophy.· Customer satisfaction and loyalty being measured as the seaport’s important

key performance indicators (KPIs).· Customer feedback on the seaport’s service being used as critical inputs in the

quality improvement process.· Employee knowledge on attributes of customer value.· Stakeholders being treated as customers.

The third quality management practice relates to the human resources. It has been argued in the quality management literature that having a total organisational approach to quality management is essential to realize its benefits. It is here that employee involvement and empowerment can have a positive impact on employee commitment to quality. While employee involvement is essential in this respect, they should be empowered so that they can be involved voluntarily. As a result, seaport organisations should develop formal systems to encourage, and reward employee involvement in the quality improvement process. This should also include a system to measure employee satisfaction as this affects their involvement in quality improvement efforts, and thus the success of the seaport’s organisational outcomes. The following attributes therefore may be used to demonstrate this quality management practice:

· Employee participation in quality processes.· Effectiveness of employee participation in quality decisions. · Requirement of the same level of employee competence among stakeholders.· Port employees being encouraged to provide feedback on quality problems.· A system of rewards in place to recognize seaport employee efforts. · Responsibility of seaport employee for error free outputs.

Continuous improvement together with the above quality management practices, is also recognised as one of the fundamentals of a quality

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management philosophy. Indeed, since quality management should be treated as a philosophy rather than a program, there should not be an end point to this management activity. As customers keep raising the bar of their requirements and expectation, it is unreasonable for the seaport organisation to initiate quality improvement efforts once instead of reviewing them on a continual basis. In this respect, continuous quality improvement may be realized through the following attributes:

· Seaport policy, strategies, processes and procedures for quality improvement being continually monitored and reviewed.

· Using quality improvement teams to facilitate quality improvement efforts.· Development of a formal system and procedure of review for quality

improvement.· Identification of areas for improvement. Process management is acknowledged in the quality management literature

as being a more effective means than only using final inspection of a product or service at the end of the process. This emphasizes the importance of ‘making things right the first time’, especially in the context of a service given its simultaneity characteristics. Therefore, business processes in the seaport organisation must be strictly controlled and managed to ensure satisfactory outcomes. As a result, this quality management practice may be reflected by the following:

· Control and continuous improvement of key seaport processes.· Comprehensive quality plans.· Preventing faulty services is a quality practice.· Root causes, quality problems, continually being tracked and fixed.

Quality measurement is another practice that is widely acknowledged as having a critical role since management cannot be facilitated without any form of measurement. This also applies in a quality management context where quality measurement and reporting is essential for the implementation of other practices such as continuous improvement and process management. In respect to seaports, they should first have in place a key performance indicator

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system as the foundation for quality measurement. The use of other quality measurement tools such as internal and external audits is also advisable. In addition, a system of quality reporting from the frontline employees back to top management should also occur, this is reflected in the following:

· Use Key Performance Indexes (KPIs) for quality improvement.· Develop KPIs for seaport operations and management. · Initiate a system of recording and reporting quality problems.· Reports from internal and external audit be used as inputs for quality

improvement.· Quality data and reporting be instigated.

The practice of quality education and training in quality improvement should be provided to both seaport management and employees so that they can appreciate and comfortably exercise quality systems. This should first begin with seaport management allocating resources including the training for employees as mentioned in previous quality management practices. Furthermore, everyone in the seaport should undertake training on seaport quality improvement, not just those on the quality improvement committee or team. Results of quality measurement and reporting should be used as the proxy for training development in the seaport. These training activities should also be conducted on a continual basis to sustain the capability and commitment of seaport management and employees. To this end, this quality management practice may be demonstrated by the following attributes:

· Training and education to the same level for all stakeholders.· Results of quality measurement and reporting be used for training and

development.· Quality training and education be continuously conducted.

In relation to the practice of social benefits, it has been argued in the earlier sections that the integration of safety, security and environmental management in the seaport’s overall business management forms an indispensable part of a successful quality improvement agenda. Therefore it was reasoned that the seaport should utilize fundamentals of quality management such

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as top management commitment and leadership, employee involvement and empowerment, training to manage safety successfully, security, and environmental management. In addition, the seaport should be clear about its community and have a clear corporate social responsibility strategy as an integrated part of its business strategy to act as a good citizen in society. As a result, the following attributes may be used to address this practice in seaport organisations:

· Development of a clear policy on safety, security and environmental management.

· Application of an environmentally sustainable system be initiated (such as salvage and disposal).

· Consider the contribution of the seaport to the public interest.· A clear social responsibility policy for the local community.

Having proposed the horizontal dimensions of the seaport quality model, the vertical dimensions of the model are now explained. As discussed earlier, the vertical dimensions include practices that are essential to the management of relationships between a seaport and its stakeholders for assuring the quality of the whole seaport supply chain rather than the seaport alone. In this connection, they refer to the management of stakeholder relationships across the seaport supply chain, covering both upstream and downstream partners, as well as the communication of quality management values to these partners and consultation with them to enhance these values. This should also include the factors that the seaport designs and communicates in the way so that a quality management culture and activities initially inspired and fostered within the seaport can be extended throughout its supply chain and strengthen the equally beneficial partnership.

The first practice of integration quality in the vertical dimension relates to the philosophies of the TQM literature being extended to a group-wide management of a quality culture and activities beyond the seaport to its business partners. This is particularly essential in the context of international logistics and supply chains. In this context, customers may choose a seaport based on the competitive advantage of its supply chain rather than the seaport itself. For instance, although a seaport may perform cargo handling activities,


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they may be outsourced to various stevedoring companies. However, customers’ perceptions of the seaport’s quality service may start immediately at the service interface with their stevedores, who although not direct seaport staff, may be construed by customers as being seaport staff rather than being contractors. The same practice may also apply to other activities such as the procurement process. This practice may be evidenced as follows:

· Selection of stakeholders being based on their quality approach.· Long term collaboration and cooperation existing among stakeholders.· Participation of stakeholders in quality improvement efforts.· Development of stakeholder trust. · Commitment of stakeholders by documentation to provide the same quality of

products/services.

The communication and information technology practice can be seen as being the backbone of a supply chain. No flows, transactions and operations can be facilitated without communication and information technology. This practice therefore requires adopting an effective information technology system, which support quick identification of market trends and patterns and analysis of business data. Information technology also enables an organisation’s strengths and weaknesses to highlighted, and when combined together with customer feedback can help organisations to forecast market demands and align their business in accordance with the needs of the customers. It is reasonable to argue that, since stakeholder quality management is a fundamental component of the overall quality management effort, that customer feedback should always be encouraged and considered as necessary inputs for quality improvement, these will not be facilitated without the continual communication and consultation with the seaport’s stakeholders. This practice may be reflected in the following factors:

· Application of an effective information technology system. · Effectiveness of the information channel among stakeholders.· A clear system of records and feedback from stakeholders and customers.

The practice of having a quality culture becomes more crucial in a global

supply chain context. This is because the end users often seek high quality and more value but at less cost. To achieve this will require supply chains to have a dependable image, as well as the trust, stable reliability, and high integrity among stakeholders and customers, thus the following is an important consideration:

· Creating trust and openness within supply chains

The final practice of network optimization requires each member of a network chain to have a flexible or lean structure that can work together for quick and rapid responses to customer’s needs. This practice can be measured by designing an optimal network configuration, lean organisational structure for smooth material, and information and people flows to reduce cycle time and the total costs, therefore the following become important:

· Designing an optimal and effective network.· Use one link Enterprise Resource Planning system to minimize the total costs.· A clear system of records and feedback on quality issues from stakeholders.

IV. Conclusions

This paper proposes twelve internally and externally focused quality management practices that may be used by seaports integrated within supply chains. This conceptual development is based on synthesising the literature on quality, seaport development, and supply chain management. More specifically, eight internal practices are developed from ISO quality assurance while four external practices were based on supply chain quality management practices and the factors that make seaports successfully integrated in supply chains.

This paper is one that is overdue given the evolutionary development of seaports and paucity of research on quality practices in seaports. In particular, this paper asserts the necessity to understand quality from both an internal

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organisational perspective and an externally driven perspective that involves how quality management may extend through other organisations within the supply chain. It is argued that this internal and external focus for seaports and their supply chains is necessary to improve efficiencies and a common understanding and vision for the supply chain. This paper although drawing extensively from earlier generic quality studies, has found that existing knowledge of quality management practices in seaports is under-researched as is the understanding of how one or more organisation’s quality practices are extended throughout a supply chain to ensure supply chain quality.

The major issue confronting this field of study is for empirical validation of the quality management framework to be undertaken. Whilst at an industry level there is evidence of instances of quality management or certification, the level of integration between the horizontal dimension practices is not clear, never mind whether they are also being integrated with the vertical dimension practices to ensure a multidimensional supply chain approach to quality management. Moreover, it will be necessary to explore whether seaports consider the quality management practices of the upstream organisations who wish to move cargo through the seaport; for example, incorrect details on container manifests may result in catastrophic events either on ships at sea, in the hinterland or even at the seaport.

In terms of the managerial implications of this paper, the advantages of having quality systems and practices has been repeatedly recognised both in industry and research as an most economical means for sustainable business growth in a challenging business environment. The challenge for managers will be whether they have the inclination to assert their quality practices on supply chain partners and how this may be operationalised, or indeed penalized.*

* Date of Contribution ; July 14, 2011 Date of Acceptance ; Dec. 5, 2011


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a quality management framework for seaports in their supply chains

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