Developing and Managing Performance at Saudi Aramco: Quality Programs

This report provides an analysis of quality programs for Saudi Aramco, a state-owned oil and gas company in Saudi Arabia. It explores the background of the organization, highlighting its global operations and ambition to become an energy and chemical company. The report then discusses various quality programs, including ISO, TQM, and Six Sigma, and justifies the selection of Total Quality Management (TQM) as the most beneficial program for Aramco. The rationale behind this choice is based on TQM's potential to improve effectiveness, flexibility, and overall organizational performance. The report details the benefits of TQM, such as cost reduction, enhanced customer satisfaction, and improved employee morale, ultimately leading to increased market share and reduced employee turnover. The conclusion emphasizes the importance of consistent implementation of TQM to help Aramco achieve its goals and maintain a strong position in the industry.

Running head: DEVELOP AND MANAGE PERFORMANCE MANAGEMENT
DEVELOP AND MANAGE PERFORMANCE MANAGEMENT
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Table of Contents
Introduction:....................................................................................................................................2
Background of Organization:..........................................................................................................2
Quality Program:.............................................................................................................................3
Reason for selection of the Quality Program:..................................................................................4
Benefit on Organizational Performance:.........................................................................................5
Conclusion:......................................................................................................................................5
References:......................................................................................................................................7

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Introduction:
Different types of quality programs are adopted by diverse organizations in order to
execute its operations without any defects or any kind of error. The principles of the Quality
programs that are adopted by the organizations are method of provision of assurance regarding
the productivity of the organization (Krane, 2015). This report in the context of quality
programs, intends to highlight the quality programs that are adopted by a Saudi Arabian
company by the name of Saudi Aramco.
Background of Organization:
Saudi Aramco is situated in Saudi Arabia and is a state- owned organization that is
completely involved in the production of natural gas and petroleum. The company was founded
in the year 1933 and has its headquarters situated in Dhahran with employees from various
countries (Blanchard, 2010). This company employs around 55,000 employees and is most
popularly known as Aramco; moreover this company holds a leading position in the world in the
production, exploration, marketing, distribution, refining and also in the manufacturing of
petrochemicals. Till date, this organization holds and maintains fourth largest rank in terms of
reserving natural gas in the world along with it, Aramco leads in the place of producers. The
company has known to be diversified globally and the operations of this organization are
conducted through joint ventures in the US, Japan, Egypt, UK, UAE, Republic of Korea, China,
Netherlands and Singapore (Ross, 2017). With a leading position in the arena of oil and gas
industry, Aramco is also aspiring to be an energy and chemical company. The aim is to give
supply of continuous sources of energy to their customers who are spread across the globe

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(Anderson, 2014). It must also be noted that along with their leading position, Aramco maintains
a reputation of being the largest conventional crude oil in the world with approximately 260
billion barrels of condensate reserves.
Quality Program:
There are more than three quality programs which help in improving any business and
these programs are all about making the existing management process of an organization better.
The quality programs help in having an outcome with reduced inefficiencies and making the
customers happy (Simester et al., 2000). ISO is one of the quality programs for QMS or Quality
Management System and this program includes the whole organization. The set of requirements
that this quality program provides are globally recognized and their primary focus is on being
able to meet the needs of the customers (Psomas, Pantouvakis & Kafetzopoulos, 2013). ISO is
international standard for QMS and just like other international standards, it is also updated
every eight or seven years in order to reflect on the fact that the world is in fact changing.
Another quality program is the TQM or Total Quality Management; this program was a
huge factor from the late 1980s and early 1990s. Apparently TQM is not a huge factor in the
present days since it became “unfashionable” and with the impending change, people needed
something else. TQM was created as an outcome of the competition from Japan in the year 1970
and this program’s focus was primarily on manufacturing as well as on the ability off the country
to produce high quality goods and that too at a competitive price. Six Sigma is another quality
program and this is the program that essentially took the place of TQM. It focuses on producing
a reject rate that will be less than 3.4 DMPO or defects per million opportunities (Drohomeretski
et al., 2014).

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Given the background of the organization, the Total Quality Management program will
be beneficial. However, it must also be mentioned that there are no strict bound rules where it is
stated that all the three quality programs mentioned above cannot be applied on one organization
or the fact that only the chosen quality program will be beneficial.
Reason for selection of the Quality Program:
Since Aramco is aiming high and weighing the possibilities of being energy and chemical
company, the approach with the help of TQM will help in improving their effectiveness and the
flexibility of their whole business. Total Quality Management will help in organizing and
involving every department, person, and activity of the organization. Keeping in mind the aims
of Aramco, Total Quality Management will provide strategies that will aid the organization in
generating as well as transferring superior and more efficient services. An appropriate
cooperation among the members of organization is a state that can be achieved through this
quality management (Oakland, 2014). In order to execute the existing operation and operate the
new ideas, the involvement of every department and every member is necessary and this can be
achieved through following the principles of Total Quality Management. If Aramco aspires to
stand stable in the industry with creative ideas, it needs to implement the process of Total
Quality Management and to do so; it requires having its focus upon the company’s people,
leadership, strategy and policy. Although this quality program is not in popular terms with the
people in the present days, yet if this quality program is successful in becoming a permanent way
of business, it will improve everything that Aramco will do.

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Benefit on Organizational Performance:
Total Quality Management imposes several benefits on the organization. These benefits
when put altogether enhance the performance of the organization as a whole. The first benefit is
the benefit of cost reduction. If Aramco applies TQM in an consistent manner over an uniform
amount of time, it will help in the reduction of costs throughout the organization like in the arena
of scrap, warranty and more. These reductions in cost will produce increase in the profitability of
the organization (Pambreni et al., 2019). TQM brings customer satisfaction through the
application of its principles in the company; since Aramco has an established service in across
the world and has leading products in petrochemicals, TQM will provide a guide to interact with
the customers in such a way that will deliver fewer complaints from the customers (Gharakhani
et al., 2013). When the customer satisfaction will reach a higher level, it will increase Aramco’s
market share. TQM will also help in Aramco’s defect reduction and is particularly successful in
improving the morale of the employees; this in turn reduces the turnover rate of the employees
and also diminishes the cost of hiring and training new ones.
Conclusion:
Aramco is a leading company in the industry that it is in and its fame is spread across
globally. However, to have stability in the industry it needs to apply some quality programs.
Amongst the diverse types of quality programs, Aramco will gain more benefits from Total
Quality Management. Analyzing the background of the organization, this quality program
seemed to be appropriate; however, in order to gain the benefits that this quality program
promises, the Aramco needs to implement this and execute consistently for a significant amount

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of time. With the principles of Total Quality Management, Aramco can successfully execute its
aims of being a chemical and Energy Company in the global scale.

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References:
Anderson Jr, I. H. (2014). Aramco, the United States, and Saudi Arabia: A study of the dynamics
of foreign oil policy, 1933-1950. Princeton University Press.
Blanchard, C. M. (2010). Saudi Arabia: background and US relations. DIANE Publishing.
Drohomeretski, E., Gouvea da Costa, S. E., Pinheiro de Lima, E., & Garbuio, P. A. D. R. (2014).
Lean, Six Sigma and Lean Six Sigma: an analysis based on operations
strategy. International Journal of Production Research, 52(3), 804-824.
Gharakhani, D., Rahmati, H., Farrokhi, M. R., & Farahmandian, A. (2013). Total quality
management and organizational performance. American Journal of Industrial
Engineering, 1(3), 46-50.
Krane, J. (2015). A refined approach: Saudi Arabia moves beyond crude. Energy Policy, 82, 99-
104.
Oakland, J. S. (2014). Total quality management and operational excellence: text with cases.
Routledge.
Pambreni, Y., Khatibi, A., Azam, S., & Tham, J. (2019). The influence of total quality
management toward organization performance. Management Science Letters, 9(9), 1397-
1406.
Psomas, E. L., Pantouvakis, A., & Kafetzopoulos, D. P. (2013). The impact of ISO 9001
effectiveness on the performance of service companies. Managing Service Quality: An
International Journal.

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Ross, J. E. (2017). Total quality management: Text, cases, and readings. Routledge.
Simester, D. I., Hauser, J. R., Wernerfelt, B., & Rust, R. T. (2000). Implementing quality
improvement programs designed to enhance customer satisfaction: Quasi-experiments in
the United States and Spain. Journal of Marketing Research, 37(1), 102-112.