Total quality management principles and techniques
Total quality management (TQM) principles and techniques are now a days well accepted part of almost every manager's ``tool kit'' (Dow et al., 1999). According to Powell (1995), most large firms have ``adopted TQM in some form'', and official quality awards are a badge of honour whether a company is operating in Japan, the USA, Europe, or Australia. Implementing TQM is a major organizational change that requires a transformation in the organization's culture, processes, strategic priorities, and beliefs, among others.
Different people have different definitions of quality but they all have the same central theme. According to (Text book), Quality is consistent conformance to customers' expectations. Some refer to quality as "fitness for use" and other calls it as "conformance of requirement". According to American Society for Quality, "Quality is the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs". However, quality doesn't have a single perspective and is different for the customers of any product and service and for the producers of that good or service.
In the Operation's view, targeting quality is to undertake operations to produce outcomes which are in line with the specifications defined through processes that are designed and controlled to maintain consistency in the specified production and above all, that the 'Customers' Expectations' are met through the produced good or service.
In customer's view, quality has no single definition for all customers. It depends on how they perceive it. Hence, quality is referred to as customers' perception and expectation about different values of a single product or service.
Following are the different dimensions of any product or service:
Main characteristics of a product/service
How well a product/service corresponds to the customer's expectation
Consistency of performance
Useful life of a product/service
Indirect evaluation of quality (e.g. reputation)
After Sales Service
Handling of complaints and requests for information
THE DIMENSIONS OF QUALITY (Stevenson, 1999)
The Quality Costs
The cost of quality is a balance of the cost of assurance of quality against the costs associated with shortcomings resulting in the lack of quality. An attempt to minimize the total quality costs is mere balancing of the four components of quality cost: 'prevention': incurred to prevent quality problems, 'appraisal': associated with controlling quality to check whether problems have occurred or not, 'internal failures': associated with errors dealt with inside of operations and 'external failures': associated with errors or problems going out of the operation to a customer.(Text Book) The variations within the individual quality cost categories are secondary in importance compared to their combined effect on the overall total quality cost.
The quality cost concept is an effective tool that can be used to express the value of the quality aspects of the operation in terms of money so that monitoring and analysis of investments and savings in that area can be readily evaluated using the language of business: money. (George P. Laszlo)
Prevention is the important influence more than inspection, according to a rule of thumb, for every dollar spent in prevention; a company can save $10 in failure and appraisal costs. (Chase, Aquilano and Jacobs, 1998)
Consequences of Poor Quality
Quality has been recognised as the key ingredient for success in business and has been focused upon intensely so as to match the pace of the contemporary market growth and the subsequent competition in it. Production of good or service with the required quality is possible only through properly managed production process, whose vital part is to ensure the satisfactory quality assurance. However, in case this vital part fails to contribute its role effectively, processes produce outcomes with poor quality.
Poor quality products may disappoint the buyer and result in the customer migration. Buying a product and finding it below expectations will make buyer not to buy the same product again. In fact, the chances that the buyer will buy any other product from the company are also low.
Poor quality affects the overall costs associated with that product. The failure cost increases as poor quality product is repaired, replaced or made new. The cost associated with the reimbursements and waste materials increases the overall variable production costs and hence profit margins and contribution. As a consequence of the cost increase, companies alter the price levels. ( Begg & Ward) However, spending enough prevention cost at first place, the economic turbulence in the market can be avoided.
More than all, poor quality damages the image and reputation of the company among the customer base. The famous example of Mercedes, launching A-class car without noticing its faulty design, showed the sensitivity of the relation between reputation of a company with the quality of its products. ( Topfer,1997)
As the repairs or rectification of any faulty product demands for more efforts, the overall productivity of the firm is also affected by the poor quality outcomes.
Also, the Consumer and Product Safety Act of 1972 makes firms liable for damages caused by the products or services, which do not fulfil the standards set and enforced by the act. (Heizer and Render, 2000)
What is TQM?
The concept of TQM (Total Quality Management) is generally understood, and often also described, as some form of ' management philosophy' based in a number of core values, such as customer focus, continuous improvement, process orientation, everybody's commitment, fast response, result orientation and learn from others. (Ulrika Hellsten and Bengt Klefsjo, emerald). All these core values collectively are nothing but quality improvement. Hence, TQM is best thought of as a philosophy of how to approach the organization of quality improvement. (Text Book)
TQM philosophy stresses the 'Total' of TQM. Putting quality or improvement at the heart of everything and including all activities within an operation, TQM aims at participation of all the members in organization targeting long-run success through customer satisfaction, and benefits to all members of the organization and to society.
TQM and the Quality gurus
Although the quality 'gurus' seem to be recommending different solutions to bringing about improvement, they are all talking the same 'language' but they use different dialects.(Text book). Each 'Guru' stressed a different set of issues, which catalysed the transition from TQM concept to operations improvement. It is believed that Japanese were the first to introduce the concept and implemented it on a wide scale and subsequently popularized the term Total Quality Management. Few of the popular contributors and their philosophies about TQM are briefly described.
A. Feigenbaum stressed on the integration of quality development, quality maintenance and quality improvement efforts of the various groups in an organization so as to enable production and service at the most economical levels which allow for full customer satisfaction.( Text book)
W.E.Deming's basic philosophy is that quality and productivity increase as 'process variability' (the unpredictability of the process) decreases. In his 14 points for quality improvement, he emphasizes the need for statistical control methods, participation, education, openness and purposeful improvement.(Text book)
J.M. Juran was concerned about management responsibility for quality and he focussed on user based approach in defining the specifications of the products.
TQM as an extension of previous practice.
Quality is explained with a different perspective in contemporary organizations in comparison to traditional organizations. The new perspective suggests that from narrow, manufacturing-based discipline, quality has transited to a corporate emphasis and is applicable to each business function and every employee with broader implications for management. The evolution of quality management has reached a point where quality is being viewed as a basis for competition.
Total quality management can be viewed as a natural extension of earlier approaches to quality Management.
Source: Text Book
Earlier quality was achieved by inspection and screening out defects before they were noticed by customers. The quality control (QC) concept introduced the concept of treating the quality problems. Quality assurance (QA) widened the responsibility for quality to include functions other than direct operations and made use of statistical quality techniques. TQM added few more factors or themes into it.
The first and the key element of TQM is that organizations should see the product or its value and quality from customer's point of view in a process of setting its specifications, designing and actual production. In these days, rapidly changing trends, technologies and preferences are collectively making the process of realizing customer's expectations a critical, time taking and expensive process for contemporary organizations.
Another powerful aspect of TQM is the concept of Internal and External customers which suggests the inclusion of all the parts of organization. Delivering the goods and services with a level of quality within the organization considering everyone as customer ensures the delivery of the final product to the external customer to be of required level of expectations and quality. Several companies are adopting the internal customer concept in their operations. Hewlett-Packard, the information systems company, was one of the first to make a success of the internal-customer concept in its operations. (Text Book)
The concept of never ending improvement makes TQM an even better tool for improvement. The reputation and business of any company runs on quality of its product. However, with increasing pace of advancement and research, one level of quality doesn't reflect the same value to customers' in very short time. So, implementing continuous improvement concept keeps the organization in the competition. Quality programs like zero-defects, which aims at performing right at the first time, and 'six sigma', which is intended to keep the error rate of about 3 defectives per million units, are also used to describe the continuous improvement efforts. (Stevenson, 1996 Blackboard)
TQM Cost Model
Quality Systems and Procedures
Very often people are prevented from making improvements by the organization's systems and procedures. Indeed, there is a belief that direct operators can correct, at the most, only 15 per cent of quality problems; the other 85 per cent are management's responsibility because they are due to 'the system' or the lack of one. (Text Book) This calls for a properly defined Quality management system which should cover all facets of the organization's operations.
ISO 9000 series is a set of worldwide standards that draws the common requirements for quality management systems for all organization and provides a framework for quality assurance. The registration process involves a third party evaluation and regular audits to ensure the system doesn't deteriorate. (Text Book).
ISO 9000 registration is an effective element for organizations to have an edge over those which doesn't hold the registration. Customers, these days, are very well aware of these standards and gain confidence, in terms of assured quality, in any company if it is ISO 9000 recommended. Surely, organizations and customers, both are benefitted. However, on the other hand, those contemporary organizations which still haven't achieved the ISO 9000 have to somehow, undertake the time and cost consuming implementation of these set of quality measures to sustain in the highly competitive era.
Implementation of TQM
While implementing TQM, organizations should not forget that firms will have different needs and thus TQM must be specially customised to the circumstances of the organization. (Slack, Chambers and Johnston; 2001). Also, TQM involves all aspects of the firm and unless its significance is fully understood by everybody, its implementation will fail. (N.N., 2000b Blackboard). The successful implementation of TQM should focus on following factors.
Factor 1: Top management commitment:
The degree of visibility and support that management takes in implementing a total quality environment is critical to the success of TQM implementation (Deming, 1982;
Juran and Gryna 1980). Management should plan to reduce traditionally structured operational levels and unnecessary positions. For example, 'spot checking' can be implemented instead of hiring a supervisor for this job. Simplifying the organization will lead to the establishment of an infrastructure of integrated business functions participating as a team and supporting the strategic vision of the company. (Jaideep Motwani)
Factor 2: Quality measurement and benchmarking:
Most authors endorse a 'zero defect' and a 'do it right the first time' attitude towards the quality program. Measurement techniques should include monitoring supplier quality levels, utilizing SPC (Statistical Process Control) to reduce process variability, and calculating the cost of quality (Ahire et al., 1996; Powell, 1995; Hardie, 1998).
Factor 3: Process management:
This factor emphasizes adding value to processes, increasing quality levels, and raising productivity per employee. The concept of Continuous improvement discussed earlier, has to be implemented for assurance. The other tactics can be reducing the operator material handling duties, achieving a compact process flow or implementation of quality circles.
Factor 4: Product design:
The study of quality performance commence from the product design stage, when everything is in flux. A range of possibilities exist at this stage about the material to be used, specifications, vendors etc. Hence, at this critical point, customers' expectations should be clear.
Factor 5: Employee training:
Employees should be trained and oriented to the overall gaols of the company, the commitments to successfully utilizing the TQM methodology and to be an effective team member. There are techniques for staff to learn as well, of course, but the purpose of the techniques is solely to work towards the basic objective - the elimination of errors. (Text Book)
Factor 7: Customer involvement and satisfaction:
When considering customers, internal and external customers are addressed. Internal customers should undertake timely and dependable deliveries, continuously improve and self-implement solutions. An external customer service program should include providing customers with timely information and quick responsiveness to complaints, and maintaining a corporate goal to reduce the quantity of questions or complaints while recognizing all successful efforts by employees in providing outstanding service (Kasul and Motwani, 1995b).
Reasons of TQM failure:
Organizations often do not understand the depth of implementing TQM. The weak commitment results in ineffective value setting in the organization. A blind pursuit of TQM, which doesn't integrate quality into strategy, will draw an organisation's attention away from the real important issues like customer focus and never ending improvement and thus TQM, considered a short-term investment, will certainly fail. (Reid and Sanders, 2002 and Stevenson, 1999). At the same time, expecting a radical change or a quick fix by mere implementing it results in the failures. Managers take issues for granted after implementing TQM; creating an absence of good decision making skills which leads to the TQM failures.
Another reason is the ambiguity in the roles for making change, undertaking quality measures and eliminating errors in an organisation after implementing TQM. Top management may believe that identification and eliminations of errors has to be processed at operations level, however, operation workers may not take extra responsibility and can develop a perception that improvement measures are burdening them which can lead to lack in belief and commitment and eventual failure.
Lack Employees Commitment
As discussed earlier, training is an important part of the TQM implementation process. Training the employees doesn't only points to the operations training but also the attitude training as well. Absence or lack of employee training can be a reason of failure. TQM demands for the complete awareness and participation at every level of the organization.(Text Book) Unless, employees develop a commitment level at which they perceive organizational goals as their own, they cannot work to their full potential. However, spending adequate amount on conducting trainings can be a key for the desired outcome.
Lack of organization's communication system and function is also a cause for the failure of TQM in an organization. The varied information regarding TQM as a result of lack of co-ordination between different departments may not satisfy the questions of workforce and hence create a loss of ideas which may have developed with proper information in the flow.
Absence of proper review technique to check the effectiveness of the quality system is a major cause for failure. Organizations fail to find the cause for defects in products or procedures on implementation of TQM. It may be due to the wrong techniques being used to review or ineffective business process adopted.
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