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The Evolution Of Total Quality Management Marketing Essay

3718 words (15 pages) Essay in Marketing

5/12/16 Marketing Reference this

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The definition of quality depends on the role of the people defining it. Most consumers have a difficult time defining quality, but they know it when they see it. For example, although you probably have an opinion as to which manufacturer of athletic shoes provides the highest quality; it would probably be difficult for you to define your quality standard in precise terms.

The evolution of Total Quality Management (TQM)

The concept of quality has existed for many years, though it’s meaning has changed and evolved over time. In the early twentieth century, quality management meant inspecting products to ensure that they met specifications. In the 1940s, during World War II, quality became more statistical in nature. Statistical sampling techniques were used to evaluate quality, and quality control charts were used to monitor the production process. In the 1960s, with the help of so-called “quality gurus,” the concept took on a broader meaning. Since the 1970s, competition based on quality has grown in importance and has generated tremendous interest, concern, and enthusiasm. Companies in every line of business are focusing on improving quality in order to be more competitive. In many industries quality excellence has become a standard for doing business. Companies that do not meet this standard simply will not survive.

Even, the importance of quality is demonstrated by national quality awards and quality certifications that are coveted by businesses. The term used for today’s new concept of quality is total quality management or TQM. Figure below presents a timeline of the old and new concepts of quality. You can see that the old concept is reactive, designed to correct quality problems after they occur. The new concept is proactive, designed to build quality into the product and process design. Next, we look at the individuals who have shaped our understanding of quality.

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Quality Gurus

To fully understand the TQM movement, we need to look at the philosophies of notable individuals who have shaped the evolution of TQM. Their philosophies and teachings have contributed to our knowledge and understanding of quality today. Their individual contributions are summarized in Table below:

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The philosophy of TQM

What characterizes TQM is the focus on identifying root causes of quality problems and correcting them at the source, as opposed to inspecting the product after it has been made. Not only does TQM encompass the entire organization, but it stresses that quality is customer driven.

Customer Focus

The first, and overriding, feature of TQM is the company’s focus on its customers. Quality is defined as meeting or exceeding customer expectations. The goal is to first identify and then meet customer needs. TQM recognizes that a perfectly produced product has little value if it is not what the customer wants. Therefore, we can say that quality is customer driven.

Continuous Improvement

Another concept of the TQM philosophy is the focus on continuous improvement. Traditional systems operated on the assumption that once a company achieved a certain level of quality, it was successful and needed no further improvements. We tend to think of improvement in terms of plateaus that are to be achieved, such as passing a certification test or reducing the number of defects to a certain level.

Now let’s look at two approaches that can help companies with continuous improvement: the plan -do- study – act (PDSA) cycle and benchmarking.

The Plan-Do-Study-Act Cycle:

The plan-do-study-act (PDSA) cycle describes the activities a company needs to perform in order to incorporate continuous improvement in its operation. This cycle, shown in Figure below is also referred to as the Stewart cycle or the Deming wheel.

Plan The first step in the PDSA cycle is to plan. Managers must evaluate the current process and make plans based on any problems they find. They need to document all current procedures, collect data, and identify problems. This information should then be studied and used to develop a plan for improvement as well as specific measures to evaluate performance.

Do The next step in the cycle is implementing the plan (do). During the implementation process managers should document all changes made and collect data for evaluation.

Study The third step is to study the data collected in the previous phase. The data are evaluated to see whether the plan is achieving the goals established in the plan phase.

Act The last phase of the cycle is to act on the basis of the results of the first three phases. The best way to accomplish this is to communicate the results to other members in the company and then implement the new procedure if it has been successful. Note that this is a cycle; the next step is to plan again. After we have acted, we need to continue evaluating the process, planning, and repeating the cycle again.

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Benchmarking:

Another way company implement continuous improvement is by studying business practices of companies considered “best in class.” This is called benchmarking. The ability to learn and study how others do things is an important part of continuous improvement. The benchmark company does not have to be in the same business, as long as it excels at something that the company doing the study wishes to emulate.

Employee Empowerment

Part of the TQM philosophy is to empower all employees to seek out quality problems and correct them. With the old concept of quality, employees were afraid to identify problems for fear that they would be reprimanded. Often poor quality was passed on to someone else, in order to make it “someone else’s problem.” The new concept of quality, TQM, provides incentives for employees to identify quality problems. Employees are rewarded for uncovering quality problems, not punished.

TQM differentiates between external and internal customers. External customers are those that purchase the company’s goods and services. Internal customers are employees of the organization who receive goods or services from others in the company. Just as a defective item would not be passed to an external customer, a defective item should not be passed to an internal customer.

Team Approach

TQM stresses that quality is an organizational effort. To facilitate the solving of quality problems, it places great emphasis on teamwork. The use of teams is based on the old adage that “two heads are better than one.”Using techniques such as brainstorming, discussion, and quality control tools, teams work regularly to correct problems. The contributions of teams are considered vital to the success of the company. For this reason, companies set aside time in the workday for team meetings.

Use of Quality Tools

You can see that TQM places a great deal of responsibility on all workers. If employees are to identify and correct quality problems, they need proper training. They need to understand how to assess quality by using a variety of quality control tools, how to interpret findings, and how to correct problems.

Cause-and-Effect Diagrams

Cause-and-effect diagrams are charts that identify potential causes for particular quality problems. They are often called fishbone diagrams because they look like the bones of a fish. The “head” of the fish is the quality problem, such as damaged zippers on a garment or broken valves on a tire. The diagram is drawn so that the “spine” of the fish connects the “head” to the possible cause of the problem. These causes could be related to the machines, workers, measurement, suppliers, materials, and many other aspects of the production process. Each of these possible causes can then have smaller “bones” that address specific issues that relate to each cause.

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Flowcharts

A flowchart is a schematic diagram of the sequence of steps involved in an operation or process. It provides a visual tool that is easy to use and understand. By seeing the steps involved in an operation or process, everyone develops a clear picture of how the operation works and where problems could arise.

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Checklists

A checklist is a list of common defects and the number of observed occurrences of these defects. It is a simple yet effective fact-finding tool that allows the worker to collect specific information regarding the defects observed.

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Control Charts

Control charts are a very important quality control tool. These charts are used to evaluate whether a process is operating within expectations relative to some measured value such as weight, width, or volume. To evaluate whether or not a process is in control, we regularly measure the variable of interest and plot it on a control chart. The chart has a line down the center representing the average value of the variable we are measuring. Above and below the center line are two lines, called the upper control limit (UCL) and the lower control limit (LCL). As long as the observed values fall within the upper and lower control limits, the process is in control and there is no problem with quality.

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Scatter Diagrams

Scatter diagrams are graphs that show how two variables are related to one another. They are particularly useful in detecting the amount of correlation, or the degree of linear relationship, between two variables.

The greater the degree of correlation, the more linear is the observations in the scatter diagram. On the other hand, the more scattered the observations in the diagram, the less correlation exists between the variables. Of course, other types of relationships can also be observed on a scatter diagram, such as an inverted U. This may be the case when one is observing the relationship between two variables such as oven temperature and number of defects, since temperatures below and above the ideal could lead to defects.

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Pareto Analysis

Pareto Analysis is a technique used to identify quality problems based on their degree of importance. The logic behind Pareto analysis is that only a few quality problems are important, whereas many others are not critical. One way to use Pareto analysis is to develop a chart that ranks the causes of poor quality in decreasing order based on the percentage of defects each has caused.

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Histograms

A histogram is a chart that shows the frequency distribution of observed values of a variable. We can see from the plot what type of distribution a particular variable displays, such as whether it has a normal distribution and whether the distribution is symmetrical.

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Dubai: Quality Management of Emirates Airlines

On 25th October 1985, Emirates flew its first routes out of Dubai with just two aircraft-a leased Boeing 737 and Airbus 300 B4. Then as now, their goal was quality, not quantity, and in the years since taking those first small steps onto the regional travel scene, Emirates has evolved into a globally influential travel and tourism conglomerate known the world over for their commitment to the highest standards of quality in every aspect of their business. Based in Dubai, the Emirates Group is a highly profitable business with a turnover of approximately US$11.2 billion and over 40, 000 employees (and growing rapidly towards 50, 000 over the next 3 years). The Group comprises of Dnata, the successful Airport Services and Travel Industry division, and Emirates, the Group’s rapidly expanding and award-winning international Airline. Within the Group there are a diverse range of businesses offering a wide spectrum of career opportunities, all of which can be explored through the Group’s dedicated careers website. The airline’s business includes:

An award winning international cargo division

A full-fledged destination management and leisure division

An international ground-handler

An airline IT developer.

The Functional Level Strategies of Emirates Airlines

Emirates Airlines has an extremely attractive business model, which has paved the way for them becoming the fastest-growing international airline. The company is well renowned within the industry for excellent service around the globe. This success is widely attributed to Emirates’ attention to fundamental strategic detail, and has thrived through competition, despite by being owned by the government of Dubai.

Quality Control

Quality control is the cornerstone of Emirates Airline’s fundamental success. From the creating and maintaining a state-of-the-art airline fleet to keen attention on how they treat their customers in each aspect of their business, everything is done with the very highest standards being applied.

Extensive Aviation Training

The aviation education arm of the airline’s business is a key fundamental strategy to the company’s success. Not only does it continue to add and keep key aviation talent within their employment, but it creates a huge footprint as it trains other people within the industry. This image and brand recognition alone that is generated from this particular business segment renders it a valuable strategy.

International Airline Information Technology Development

Emirates Airlines has leveraged their international airline domain knowledge into another key profit center, involving the development of software for the industry. The strategy of using their knowledge and trained programmers to create an IT development company for the international airline industry is an excellent addition to Emirates’ portfolio of business strategies.

Resort, Hotel and Tourism Strategy

One of the more unique fundamental level strategies is how the company has successfully moved into the resort and tourism space: They have done so through the creation and acquisition of various resorts and spas, as well as by placing a huge emphasis on quality control, all of which has drawn great praise and, at the same time, lots of business. In addition, the company has built a tourism service around this area of the business, fueling more growth from this particular fundamental level strategy.

Emirates wins award for Best Airline In-flight Entertainment at 2010 World Airline Awards

Emirates were named the winner of the World’s Best Airline In-flight Entertainment Award at the 2010 World Airline Awards – known as the Passenger’s Choice awards. “Emirates continue to excel in this category, and yet again are a repeat winner of the Best Airline In-flight Entertainment Award. This aspect of the travel experience gains in importance each year as customers become more demanding, and Emirates are clearly matching these expectations to have been voted the world’s best by passengers” said Edward Plaisted of Skytrax. This award represents recognition of the in-flight entertainment product that Emirates is delivering to its customers, and the slogan of ‘the Passenger’s Choice awards’ underlines the fact that Emirates are succeeding in satisfying the hardest critics – their users.

Six sigma Strategy for organization

Six Sigma is a term for an organization that emphasizes the improvement of processes for the purpose of reducing variability and making general improvements. It is a meshing of several quality tools into a total quality methodology. When used properly, Six Sigma can provide amazing results to any company’s bottom line. Six Sigma is a rigorous methodology that focuses on consistently developing and delivering virtually perfect products and services. Six Sigma is also a management strategy in which statistical tools are used to achieve greater profitability and breakthrough gains in quality. Six Sigma has been referred to as Total Quality Management (TQM) on steroids. Six Sigma is beneficial by driving data driven decisions instead of “by the seat of the pants” decision making. It has been shown to improve a company’s overall competitive advantage. Companies like Bank of America and Caterpillar are continuing the tradition of Six Sigma strategic deployment. For every success story there are many less than acceptable deployments. Six Sigma has been incorrectly used as justification for personnel reduction, and for taking directions where the data was not clearly and concisely supporting the conclusions. Deployment of Six Sigma should be both strategic and tactical for best results. It is a process that structures work into Project Charters that clearly define the Business Opportunity, Project Goals and Potential Benefits that directly link to Strategic Critical Success Factors, Customer Value and Bottom Line results¬†It is a formal, structured problem solving / problem prevention process that strives for perfection (3.4 Defects / Million opportunities to create a defect)¬†

Impact of Defects on Costs

Six Sigma Level

Defects Per Million Opportunities (DPMO)

Cost of Poor Quality

2

308,537

Not Applicable

3

66,807

25-40% of Sales

4

6,210

15-25% of Sales

5

233

5-15% of Sales

6

3.4 (World Class)

<1% of Sales

Each sigma shift provides a 10% net income improvement.

Advantages & Disadvantages of Six Sigma

Six Sigma is a popular process improvement methodology that started in the manufacturing sector and has spread to other areas as well. Some companies have seen tremendous success, while others have abandoned the methodology or found it too overwhelming to support.

Based on Data

In Six Sigma, decisions are made based on empirical evidence, not just on assumptions and anecdotal evidence. This includes determining the need for a project, determining the cause of the problem being addressed, and deciding what improvements will be made. In all these cases, data is required for decision making.

Proven Success

Beginning with Motorola, many large companies have successfully rolled out Six Sigma initiatives and driven positive change in their organizations. The results have benefited customers, employees, and shareholders.

Sustainable Solutions

The DMAIC and DMADV processes are specifically designed for sustainable solutions. In DMAIC, the improvements to a process are confirmed with data, and an entire phase is devoted to ensuring that the gains are sustained. In DMADV, which is used for creating new products and processes, a similar mindset holds.

Timeframe

As the saying goes, “Do you want it fast or do you want it right?” In order to effectively use the Six Sigma methodology, a substantial amount of time must be allowed for a project. It does not provide simple fixes, and at times the people involved can become frustrated with the time required to systematically follow the improvement model.

Training Requirements

In traditional Six Sigma implementations, employees go through extensive training to become Six Sigma project leaders (Black Belts and Green Belts) and sponsors (Champions and Process Owners). For the Black Belt role in particular, training can take several weeks or more, and occur over a period of months. This is not feasible in some environments.

Corporate Focus

Although the principles underlying Six Sigma could certainly be made applicable to small business and organizations, it is primarily an option for larger corporate organizations. Overwhelmingly, the majority of training and information available is geared toward that sector. This makes it difficult for other groups to see any benefit in adopting the methodology.

Example: General Electric Company and Motorola, Inc.

Today’s customers demand and expect high quality. World-class organizations such as General Electric and Motorola attribute their success to having one of the best quality management programs in the world. These companies were some of the first to implement a quality program called, Six- Sigma, where the level of defects is reduced to approximately 3.4 parts per million. To achieve this, everyone in the company is trained in quality. For example, individuals highly trained in quality improvement principles and techniques receive a designation called “Black Belt.” The full-time job of Black Belts is to identify and solve quality problems. In fact, Motorola was one of the first companies to win the prestigious Malcolm Baldrige National Quality Award in 1988, due to its high focus on quality. Both GE and Motorola have had a primary goal to achieve total customer satisfaction. To this end, the efforts of these organizations have included eliminating almost all defects from products, processes, and transactions. Both companies consider quality to be the critical factor that has resulted in significant increases in sales and market share, as well as cost savings in the range of millions of dollars.

Conclusion

There are still many companies that attempt a variety of quality improvement efforts and find that they have not achieved any or most of the expected outcomes. The most important factor in the success or failure of TQM efforts is the genuineness of the organization’s commitment. Often companies look at TQM as another business change that must be implemented due to market pressure without really changing the values of their organization. Recall that TQM is a complete philosophy that has to be embraced with true belief, not mere lip service. Looking at TQM as a short-term financial investment is a sure recipe for failure. Some common causes for TQM failure are

Lack of a genuine quality culture

Lack of top management support and commitment

Over- and under-reliance on statistical process control (SPC) methods

Companies that have attained the benefits of TQM have created a quality culture. These companies have developed processes for identifying customer-defined quality. In addition, they have a systematic method for listening to their customers, collecting and analyzing data pertaining to customer problems, and making changes based on customer feedback. In these companies there is a systematic process for prioritizing the customer needs that encompass the entire organization.

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