The Utility And Relevance Of Total Quality Management Management Essay

In the recent years, many companies have been working very hard to produce goods and services of high standards. Many in the organizations now believe that quality is the most important of all the competitive weapons. The meaning of the word “Quality” means Excellence. In 1920s, Quality Management was considered to be an inspection process that involved measuring, testing, and managing products/services against the specified requirements to detect anomalies. The 1940s saw the method of using Statistical sampling techniques to evaluate quality. Having gone through a series of redefinitions over the past few decades, the term used for today’s new concept of quality is Total Quality Management (TQM), which is becoming increasingly popular across organizations in the new millennium (Reid and Sanders 2002).

TQM in Japan is about motivating employees and becoming a way of life for everybody in the organization. The US, on the other hand, has looked beneath the cultural issue to identify the fundamentals of achieving and maintaining quality in all aspects of their activities. The Japanese industrialists, who have been using the TQM approach since 1950s, have created an economic miracle (Kanji and Asher 1993, p.7). TQM is a unified effort to improve quality at every level in the organization. Some of the world famous companies who have implemented TQM include Philips Semiconductor, Ford and Toyota Motor Company (Hashmi 2009).

Fig 1: Timeline showing the evolution of concepts of quality (Source: Reid and Sanders 2002, p.111)

As it can be understood from the above figure, the new concept of TQM reiterates the fact that quality is customer driven. The ability to fulfil customer requirements lies within the company. Quality is the main driving force for the consumers in the Contemporary Business Environment. The days where price of the product/service was perceived as the deciding factor for the consumers have expired now. For businesses to compete, produce, and survive, quality must improve and the improvement can be achieved through TQM approach (Kanji and Asher 1993).

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The scope of this report is to cover the theoretical concepts of TQM, its implementation, and its relevance & importance in the contemporary business atmosphere. The report also talks about the tools of TQM along with Process Capability. Not all concepts or theories yield 100% results when brought in to practice. Considering this aspect, the report tries to reveal the reasons for success and failure of TQM at organizations with strong customer focus and then goes on to offer a critique of the concept. Finally, the quality awards and implementation of TQM at British Telecom have been discussed.

Although TQM was first taken advantage of in the industrial sector, it has been found to be as effective in the service industry (Bank 1992).

The Quality concept

Defining quality is not an easy task because different people have different ideas of what constitutes high and low qualities. There is no single universal definition of quality. Some people may view quality as “satisfying customers” or “meeting customer needs” while others may call it “performance to standards”. Some of the more common definitions of quality are:

Conformance to Specifications: It measures how intimately the product or service meets the targets and tolerances determined by its designers

Fitness for use: It evaluates how well the product performs for its intended use (Reid and Sanders 2002).

Quality could also mean “consistent conformance to customers’ expectations” (Afferson and Beach 2009).

The definition of quality adopted at Manufacturing organizations is different from the one defined at Services organizations. The common definition used in manufacturing is conformance, which is the extent to which a product corresponds in form or appearance to the pre-defined specifications. In Services industry, quality takes the meaning consistency, which is the uniformity in the services provided various times.

Finally, all the above definitions of quality boil down to consumer, either directly or indirectly. As shown below in Fig 2, there exists a series of quality chains of suppliers and customers that may be broken either by the customer, who is an external entity, or by the faulty equipment, which is internal to the organization. Hence it can be inferred that the suppliers should not only understand and satisfy their customers, but also motivate their workforce to exert caution while producing goods/service.

Fig 2: Quality Chains (Source: Afferson & Beach 2009/10)

Quality will not just happen, it has to be managed (Oakland 1995). Everyone that is concerned with the product/service is part of the process and hence each person, be it supplier or consumer, is responsible for the quality perfection. In this regard, both the consumers and the suppliers should question the quality of the product so as to have a positive impact. This is shown in the Fig 3 below:

Fig 3: Customer and Supplier contribution towards quality (Source: Afferson & Beach 2009/10)

Organizations can achieve a reputation of excellence when they can delight the customers by constantly meeting their requirements. There are two distinct but interrelated aspects of quality – quality of design and quality of conformance to design (Oakland 1995, p.17).

Quality of design

It is a measure of how well the product or service is designed to achieve the agreed requirements

Quality of conformance to design

It is the extent to which product or service achieves the design

Fig 4: Two interrelated aspects of quality (Source: Oakland 1995)

Importance of TQM

Ho in his book (1995, p.13) refers to the statement of John Young, President of Hewlett-Packard, as below:

“In order to compete in a global economy, our products, systems and services must be of a higher quality than our competition. Increasing Total Quality is our number one priority here at Hewlett-Packard”.

Quality is of utmost importance for a business to succeed. Poor quality results in customer dissatisfaction and hence can affect the company’s brand image. Evidence to this is the state of Motorola as of today. Motorola, which was once the leading mobile phone company, is losing its brand name due to customer dissatisfaction. Consumers perceive Motorola’s cell phone to be inferior in quality and hence the company has been running in loss over the past few years. Besides this, poor quality has pushed the company to bear the quality control costs as well as the quality failure costs.

Fig 5: Cost of Quality

In the contemporary business environment, TQM focuses on improving the competitiveness, effectiveness and flexibility of a whole organization. Today’s concept of quality places emphasis on building quality into the process. TQM is customer driven and it encompasses the entire organization and stresses that quality is customer driven (Reid and Sanders 2002, p.111,118). Since TQM underlines customer driven approach for better quality & lower costs, companies that follow TQM approach gain competitive advantage over their rivals.

All companies want to provide high quality goods/services. Deming’s chain reaction offers one benefit after another on quality improvement as shown below. It is through TQM that Deming’s chain reaction can be activated (Ho 1995).

Fig 6: Deming’s Chain reaction (Source: Ho 1995).

Total Quality Management – Concept and Model

The meaning of TQM can be simplified as follows:

Quality is to satisfy customer requirements continually.

Total Quality is to achieve quality at low cost.

Total Quality Management is to obtain total quality by involving everyone’s daily commitment (Kanji and Asher 1993, p.10).

In the current business environment, TQM has been adopted by organizations as an approach for “prevention rather than detection”. The underlying theme of TQM is to meet the customer requirements. The concept of TQM relies on three principles namely Customer Focus, Continuous Improvement and Employee Empowerment.

The first, and overriding, feature of TQM is the company’s focus on its customers (Reid and Sanders 2002, p.112). TQM recognizes that a product that is perfectly produced has little or no value if it is not what customers want. Hence the goal is to identify and fulfil customer requirements.

It is believed that goods/services can never achieve 100% perfection. This belief has been the base for TQM’s second aspect, Continuous Improvement. Companies must continually revisit their quality methods and strive to be better through problem solving.

The third philosophy of TQM is to empower all employees to identify quality related issues and correct them rather than delegate those issues as someone else’s problem. To highlight the importance of the role of employees in quality, TQM differentiates between External and Internal customers. External customers are those that purchase the products/services of the company. Internal customers are the employees of the organization who basically receive services/goods from other employees or divisions within the company.

The senior management at organizations can achieve quality improvements at all functional divisions by following the approach observed in the TQM model as shown in Fig 7. The right culture, commitment, and communication form the first part of the model for TQM. The process core is surrounded by three management requisites: quality management system, tools such as statistical process control (SPC), and teamwork. The quality system, teamwork, or SPC are used as a spearhead to drive TQM through an organization (Oakland 1995, p.333).

Fig 7: Total Quality Management Model (Source: Afferson & Beach 2009/10)

TQM – Additional Pointers to the new concept

For any organization or company to be successful in the contemporary business environment, it is not sufficient to keep their focus only on customers, continuous improvement processes and employee empowerment. Organizations have to look at other factors as well. TQM philosophy encompasses other aspects as well. These are discussed below:

Quality at the Source

Quality at the source is an integral part of TQM. The belief is that it is better to uncover the source of quality problems and correct them at the earliest instead of discarding the defective item after production.

Team Approach

Working in teams facilitates the solving of quality problems using techniques such as brainstorming and discussions. Hence TQM places great emphasis on teamwork. Team’s contributions play a major role in company’s success.

Benchmarking

Benchmarking is an important aspect of TQM. It concentrates on studying business practices of companies that are considered to be the best in the class. This will enable the companies to implement the most effective & efficient practices at work. It is not necessary to benchmark with the companies in the same business (Reid and Sanders 2002).

TQM Tools and Methods

Improvements in quality cannot be achieved thoroughly without the application of basic techniques. The factors such as data gathering, recording and presenting form the basis for the improvement in the ways processes are operated. Now we know that quality improvement is the responsibility of everyone in the organization, it is necessary for employees to understand the tools and techniques for quality assessment. The below methods will offer any organization means of collecting, presenting, and analysing most of its data:

Tools/Techniques

Questions?

Process Flowcharting

What is done?

Cause & Effect Diagrams

What causes the problems?

Pareto Analysis

Which are the big problems?

Check Sheets/Tally Charts

How often is it done?

Scatter Diagrams

What are the relationships between factors?

Histograms

What do overall variations look like?

Control Charts

Which variations to control and how?

Emphasis curve

Which are the most important factors?

Force-field analysis

What will obstruct or help the change or solution?

Stratification

How is the data made up?

Table 1: Tools and Techniques for Quality improvements (Oakland 1995)

Statistical Process Control (SPC)

Each year, defective products cost various industries millions of dollars. Sometimes the simplest solution to a problem proves to be the most effective one. The most common method of checking the quality of sampled product or service so as to make further inferences about the overall output is called Statistical Process Control (Slack et al 2009). SPC is more than just the statistics. It might be “a philosophy of business operation stressing one major gaol – zero defects” (Chase 1988, p.109).

SPC is a strategy for reducing variability, which is the cause of most problems related to quality. Problems could be in equipment and its use, people’s attitudes, or variation in products. For TQM, these variations should be reduced through continuous process improvements. This could be brought out by studying & questioning the aspects of the process through questions like “could we do this job more consistently and on target?”. The answers to such questions drive the improvements. It is evident from this that SPC is not constrained to measuring conformance. It is intended to lead to action on processes, which are operating within the specification to minimize variability (Oakland 1995, p.212).

SPC forms a vital part of the TQM strategy. For many companies, SPC will bring a new change, a new philosophy. It is not just limited to operations or administration; it is applicable to service as well. SPC exist because there will always be variations in the products/services developed. Hence, the underlying concept is that variations must be understood and then assessed in order to be managed. Below is the representation of variability measuring chart, measuring the data on a monthly basis (NHS 2008).

SPC chart.gif

The SPC system – Process Capability

Are we capable of doing the job correctly?

Do we continue to do the job correctly?

Have we done the job correctly?

Could we do the job more consistently and on target?

Answering the above questions provides knowledge of the process capability and the sources of non-conforming outputs (Oakland 1995, p.212). Process capability is a measure of the variations in processes and their abilities to produce components consistently within specifications. Process capability applies to those processes that are in statistical control. Process capability index (Cpk) is used to measure process capability. Cpk measures the variability of the process relative to the specification and process setting. When Cpk is less than 1.00, a 100% inspection must be enforced and required action must be taken to increase its value to at least 1.00 (Bank 1992).

Any process must first be brought into statistical control and in order to achieve this, control charts are used. Once the performance of the process is predicted, its capability to meet the requirements of the customers can be ascertained. This forms the basis for continuous improvement (Bank 1992, p.170).

Evaluating TQM – Success and Failure

There are many companies that put in lot of efforts to implement quality improvement techniques yet fail to achieve the desired outcomes. There are three different reasons for this. First, the success or failure of TQM efforts can be attributed to the genuineness of organization’s commitment. The companies must clearly understand what it takes for them to achieve high performance. If the companies view TQM as a short-term financial investment then they are for sure going to face failure formula.

Next, the top management in an organization view that the responsibility of quality and waste elimination belongs only to the employees and not to themselves. It is a sort of “let the workers do the task” attitude. Final mistake is about under- and over- reliance on Statistical Process Control (SPC). Though SPC is an essential tool for identifying quality problems, it is not a substitute for continuous improvement and team work (Reid and Sanders 2002).

From the above highlights, we can sum up the reasons for TQM failures as below:

Lack of actual quality culture

No support and commitment from top management

Over- and under- reliance on SPC methods (Reid and Sanders 2002, p.130)

TQM Success path

There are many companies that have attained the benefits of TQM and their success can be attributed to quality culture. These companies have well-defined & developed processes for identifying customer defined quality. Besides this, these companies also have a system for collecting the customer feedbacks, analyzing the data, and then implementing changes as per customers’ feedback.

Deming has 14 points for successful TQM:

Create stability of purpose for service and product improvements

Adopt the new philosophy of management so as to transform the style of management

Create dependence on mass inspection

Start the practice of awarding business on the basis of quality and not just the price

Continuously improve the system of service and production

Institute modern methods of job training

Establish modern methods of supervision to help employees and machines do better jobs

Drive out fear from the organization

Remove barriers between departments

Eliminate slogans and incitements asking for zero defects

Put a full stop to work standards that are based on numerical quotas

Remove the barriers to the pride of workmanship

Bring in vigorous education and training programmes

Create an organizational structure that allows everyone to work towards the transformation of the organization (Key Note 1993, p.8,9).

For the most effective implementation of TQM, there are three hard blocks that are of major importance as they form the pillars of TQM. These are depicted in the below diagram:

Fig 8: 3 blocks of TQM

Quality Management System

The aim of the Quality management system is to make sure the consistency is maintained for every product or each time a service is performed. Organizations that follow same methods and procedures perform most efficiently and effectively. However, if a new way of making the product better or reducing the waste is discovered, then a change may be effected.

Tools & Techniques

If an organization uses more than a single tool, then each tool must complement the other. Any tool or technique must focus on reducing the variability and this can be achieved by making use of SPC. SPC must be backed by management commitment. Other tools may be required in defining the process, developing quality costing, and so on. As mentioned above, these tools must support the SPC tools.

Teamwork & People

Processes operate beyond the control of one individual. It is only through teamwork that problems concerning processes can be tackled. Organizations must encourage teamwork cultures so that many complex problems at other departments can also be handled in a better manner. Teamwork on improving quality changes the independence to interdependence through greater trust and exchange of ideas. This is shown in the below diagram. Lastly, employees must be motivated to perform better and this cannot happen without management’s commitment to quality and team approach to quality related issues (Oakland 2009).

Fig 9: Independence to Interdependence through teamwork (Source: Afferson & Beach 2009/10)

Critiquing TQM

Unfortunately TQM has spawned considerable controversy and seemingly failed to meet the expectations of majority of the western companies that have adopted it (Hayes et al 2005, p.303). TQM is criticised for the following reasons:

TQM stresses on getting direct feedback and suggestions from customers. Many organizations have found this aspect to be tedious and time consuming.

A study conducted at Australian and New Zealand manufacturing facilities revealed that though TQM approach did seem to improve operating performance, most of this improvement came from top management leadership and employee involvement. The process analysis, fact-based analysis, and continuous improvement appeared to have limited impact on overall performance (Hayes et al 2005).

The next criticism is that quality programs such as TQM tend to reach the quality levels expected by customers. Critics argue that customers may not know to expect better and moreover, these quality related initiatives have barely led to product’s performance improvements. Noritaki’s Kano model of product development and customer satisfaction, as shown in the figure below, can be brought into discussion. Kano’s model addresses three types of quality expectations: basic, expected, and excited. As per these definitions, customers are excited, provided the requirements exceed expectations. However, TQM model can reach only up to the “expected” level of quality (CiteMan 2009).

Fig 10: Kano Model (Source – Wikipedia 2009).

Conclusion

The greatest benefit of improved quality is the increased market share. Quality is thus directly proportional to profit. TQM is a part of holistic approach to progress. Any company that offers genuine commitment to total quality will experience enormous unlocking of energy in workforce and top management (Bank 1992).

TQM is based on three fundamental principles – customer focus, continuous improvement, and people empowerment. One has to understand that not all quality improvement techniques will lead to better prosperity within an organization and this applies to TQM as well. Many organizations face problems in implementing TQM. But successful implementations do not happen by chance (Evans 1995). As explained above, Deming’s 14 points for successful TQM will help companies proceed in the right direction. Organizations must adopt the approach that best suits their profile based on existing resources, requirements and capabilities. TQM emphasizes on team working approach with mutual coordination rather than working individually (Fig 9). In a nutshell, TQM follows a top-down approach in which the foundation is laid by putting top management commitment. Once the foundation is in place, attention is given to people empowerment & training, benchmarking, process management, and customer involvement and satisfaction (Motwani 2001). These are the pillars of TQM implementation and when they are put in place accordingly with genuine commitment, success will surely follow.

The failures of TQM can be attributed to the organization’s top management commitment and lack of quality culture. With the problems existing within the organization, it is not justifiable to blame TQM technique itself for any failure.

Finally, in the contemporary business environment, the customer focus approach led by the employee empowerment, organizational commitment & constant improvement will result in both internal and external customer satisfaction, which is the key to success.

Appendix A: Quality Awards

Often TQM is illustrated by the model of quality award such as the Malcolm Baldrige National Quality Award or the European Quality Award (Slack et al 2009) established by the European Foundation for Quality Management (EFQM). Fig 11 below highlights the core values of these awards.

Fig 11: Core values of awards (Hellsten and Klefsjö 2000, p.238-244)

Appendix B: TQM Implementation at British Telecom

In the last ten years TQM has been taken up by services companies, i.e. travel companies, airlines and banks. Initially companies used TQM to enhance their positions in marketplaces that were still evolving. But today the motive behind TQM implementation is different. Many large companies across the world have successfully approached TQM. One such company is the British Telecom.

British Telecom (BT)

BT has around 15 million consumer customers and around 1 million small and business customers. This gives us an idea of how large the customer base of BT is. Quality, Reliability and Trust are an integral part of BT (BT 2009).

BT’s mission revolves around demonstrating a total dedication to the quality of service. They have developed a strategy to get to their mission. BT’s principles are as follows (BT 2009):

Customer oriented approach

Understanding what is important to customers

Listening to the customers and acting on their feedback

Identifying and resolving root causes of customer problems

Delivering the basics of quality

Empowering everyone to be involved in the improvement process

Anticipating and correcting potential problems beforehand

Using processes to manage performance

Being clear about which processes to operate to meet customer needs

Having benchmarked measures of performance

Providing clear focus to the people

Having clear strategy that everyone understands

Building business plans for all teams

The above principles adopted by BT make us realize that BT is on the same page as TQM techniques. BT has practically implemented most of the theoretical concepts of TQM such as customer focus, continuous improvement, team work, employee empowerment, benchmarking and so on. BT’s strategic approach to TQM has placed it at a successful position in the marketplace.

Lastly, BT’s 10 quality steps (BT 2009) are shown below and they continue to work on enhancing their quality improvement processes.

improvement_list.gif(Source – BT 2009)

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