Total Quality Management and Bpr Models to Use

¶ … Quality: VIP -- E-Cigs and Vaporizers under the ECIG Umbrella VIP is an electronic cigarette and vaporizer producer and whole seller that specializes in the new smoking trend commonly known as "vaping" in the UK. VIP operates over 100 kiosks throughout the UK with additional venues in Ireland, Europe and the United States. This is a company that is very dedicated to quality control because of the nature of the business, which is in delivering e-liquids.

E-liquids are the different flavors of liquid (made of water, flavoring, nicotine and other additives) that are used in vaporizing devices. VIP sells both e-cigarettes and vaporizers both online and at the different kiosks. Buyers can purchase e-liquids and they can even mix and match flavors and liquids to make unique flavors that suit their own taste. This is what is occurs at the VIP Boutiques in areas like London.

How is VIP's quality determined? Before there was any governmental oversight or regulation of the e-cig industry, companies could import their e-liquid for cheap from Asia. For the moment in some markets they can still do this. For example, in the U.S., regulation is still pending and so companies do not have to follow tight controls yet regarding quality. In the UK however, VIP is dedicated to delivering a quality product. That is why the company now uses only liquids that are manufactured in the UK.

These liquids are tested and made according to guidelines given by the UK regulating committee. This is to ensure the highest quality in the product that customers will be vaporizing. Why does VIP do this? Many articles have been written especially by opponents to vaporizing. Warnings have been given about how vaporizers can give "popcorn lung" to users (Chaudhuri, 2015).

This is because early vaporizers used chemicals that were associated with the kind used in microwave popcorn that have been linked to lung problems in workers who inhaled this chemical (Allen et al., 2015). But e-cigarette producers like VIP under its umbrella corporation Electronic Cigarette International Group (ECIG) have switched to being more quality conscious in order to give consumers a healthy experience.

This emphasis on health consciousness is due to a recent study undertaken by the UK health department, which found that using vaporizers is 95% less harmful than smoking traditional tobacco products. This is because vaporizers and e-cigarettes do not actually contain tobacco -- only flavoring and nicotine (Public Health England, 2015). The e-liquid is mostly just water and therefore not harmful.

What opponents do not understand is that serious vaporizer companies like VIP understand that vaporizers can help people stop smoking and that this is the big appeal for users who want to be healthy. Using chemicals that would be bad for them in the e-liquid would be self-defeating, so they do not use them. VIP is a serious commercial company that is on course to make 100 million pounds in 2016 (ECIG Financial Report, 2015).

If ECIG and VIP were not dedicated to quality, they would not be a top-selling producer of e-cigarettes and vaporizers like they are. The numbers speak for themselves. However, there is other evidence that also shows that VIP is taking care of quality. According to ECIG CEO Dan O'Neill, the company has dedicated itself to employing both TQM and BPR models. This is because under the former CEO, ECIG was crumbling under debt and lack of sales and needed a new vision to turn itself around.

O'Neill was brought on in order to deliver this new vision and turn the company around, which he began doing in the first quarter of 2015. ECIG's annual report for year ending 2014 was very poor. The company was nearly insolvent and so the company's board hired a new President, who immediately booked an enormous write-down of nearly 400 million (USD) in good will impairment. This was a surprise to investors and the share price of this publicly traded company collapsed.

However, it should be noted that from a BPR theoretical strategy, this move by O'Neill could be accounted for by the fact that it is better to get the loss off the books under the old CEO so as to allow for the new CEO to start with a clean slate. This is stated as the reason by Hoogervorst (2012: 5): "In practice, entities might be hesitant to impair goodwill, so as to avoid giving the impression that they made a bad investment decision.

Newly appointed CEOs, on the other hand, have a strong incentive to recognize hefty impairments on their predecessor's acquisitions. Starting with a clean slate, they can more or less ensure a steady flow of earnings in the future." Thus, the big loss at the end of this period was part of a BPR strategy although this was never explicitly stated by the company; it is clear that this is what happened. And so with that said, VIP under ECIG leadership of Dan O'Neill was about to undergo a change.

Dan O'Neill took over as CEO of ECIG on January 9, 2015, replacing outgoing Brent Willis, who founded the company but who was seen as the main reason for the problems at ECIG and VIP: he was trying to do too much without having a proper strategy -- not even any TQM. Dan O'Neill's record of experience as CEO of Molson's beer and his head leadership positions at Heinz and Star-Kist indicated that ECIG was finally being put in good hands.

Willis had not done well in his previous jobs and his job as head of ECIG was also a failure. O'Neill brought experience and leadership plus innovation and focus. Restructuring its debt and distribution channels were main points that need to be addressed for this company to turn around, and that is why the company adopted a strong BPR strategy at first and then implemented TQM. O'Neill figures as Dr.

Armand Feigenbaum's representative of "total quality" because according to Feigenbaum total quality is something that happens at the management level and not just at the product level. It starts at the very top and trickles down and this is essentially what O'Neill has done with ECIG and VIP.

O'Neill also focused on adopting a method of Corporate Social Responsibility (CSR) that was geared towards providing a quality product that was associated with helping people to quit smoking rather than toward recreational drug use, as "vaping" is typically connected in the U.S. because of states like Colorado where recreational marijuana is legal to sell. In the UK, however, the new study by the UK showed that vaporizers are a good thing and O'Neill saw the importance of linking VIP with this new health trend and scientific study.

This study was promoted on the ECIG and VIP websites and used in conjunction with marketing campaigns to show that using VIP was a healthy decision for people trying to stop smoking. Plus, the company has shown that it does not use the "popcorn lung" chemical in its e-liquids and is therefore not associated with this particular risk. Another risk that is often shown in media is the risk of vaporizers exploding in someone's face.

Dan O'Neill was asked about the quality of ECIG products in the third quarter conference call and he stated that their devices do not blow up (SA Transcripts, 2015). What the media leaves out in these inflammatory reports is that the devices that blow up have been tinkered with so that the coils allow the users to blow bigger smoke rings. Therefore these devices are not regulated the way that VIP and ECIG devices are. So there is no question of quality or safety with the devices either.

To return to the subject of quality models, VIP and ECIG under Dan O'Neill were obliged to undergo BPR -- business process reengineering, a radical change in leadership (O'Neill took over) and a restructuring of the company's debts and strategy to get its products into the hands of consumers. It underwent a total overhaul, reducing its SKUs and its costs across the board while growing revenues quarter-over-quarter (SA Transcripts, 2015). The company has also devoted itself to customer service and CSR.

In this way, it undertook a massive marketing campaign that put 10,000 free units in the hands of persons who wanted to quit smoking via a vaporizer as a New Year's resolution. In December of 2015, the company advertised its vaporizer product on British television and gave a code to viewers who could then use it to order their free vaporizer from the company's website.

The direct marketing campaign was a tremendous success, as all 10,000 free units were gone within 24 hours -- but a second campaign immediately followed, in which units could be acquired for 50% off (a special offer that lasted a week) (VIPCIG, 2015). An interactive marketing analytical framework was utilized by ECIG to monitor the success of the ad campaign.

The giveaway of 10,000 units virtually overnight indicated immediately that the campaign was an overwhelming success -- so overwhelming in fact that the website was bogged down by users attempting to get their free vape kit (Gwynn, 2015). ECIG communicated directly with users via phone lines and Twitter, urging users to keep trying as associates were working on the website to keep it live throughout the response to the promotion.

In this manner, the response was measured directly via users who entered the code for a free vape kit, and indirectly by users who later purchased the kit at half-price over the course of the next week. Still further indirect monitoring was performed by assessing the sales growth throughout the end of the final quarter of the year, measuring this performance against the performance of a quarter prior and a year prior.

Contacts were also amassed via registration -- which means that 10,000 customers were entered into VIP's database, potentially expanding its list of prospect and future clients exponentially. Return clients could therefore be monitored by email and shipping address for clients who returned to the website store to purchase more e-liquid for their vape kit. In short, several steps in the monitoring process were available to ECIG. This shows that VIP has committed to BPR. However, now that it has reversed its direction it is also committed to Total Quality Management.

This is evident in the six strategic drivers or pillars that O'Neill spoke of in his conference call to investors. These pillars are focused on orienting the company towards maintaining top quality in care to customers, in organization with respect to continuing to reduce SKUs and to pay off debts, and to grow the company through alternative methods like the kiosks that are set up all throughout UK. This is a commitment to total quality that is evident in the leadership of the management.

VIP under ECIG has undergone massive growth and change as a result of O'Neill's leadership. It is now more focused and controlled and geared towards providing consumer-friendly quality products. As VIP maintains on its website: "There are no stale tobacco odours. Your body, home, office and car can be free of ash, cigarette butts and tobacco smoke, thanks to this ingenious device." That shows that it is concerned for its customer's desire to get away from all the bad parts associated with traditional tobacco products.

ECIG and VIP do not explicitly state that they are using a specific management theory (whether BPR or TQM) but it is evident in their customer relations and investor relations conference calls that their strategy is a combination of the two. The BPR strategy was implemented totally reorient the company to new growth and objectives under O'Neill's vision and the TQM model was adopted was this radical change was established. O'Neill brought in all new personnel to help direct the company and set up a new headquarters in Colorado.

VIP continues to expand in UK while costs are reduced quarter over quarter according to company financials. But how can one verify the quality in terms of products that ECIG produces? An independent study performed by vaporizer clubs in the UK found the ECIG product Vapestick to be the best vaporizer product in its class (Vapestick Ranked the UK's No. 1 E-Cigarette Brand, 2015).

VIP also took special care to manage where its great giveaway was launched and this was part of the total quality management that O'Neill has undertaken since taking over the company. "Places in Trouble" (Kotler et al., 1993) were avoided and places where non-traditional venues, such as kiosks in UK, were essential for this campaign to work. In America, the kiosk has less traction but is being utilized slowly -- and this is one reason why the marketing campaign got underway.