A Report on “Introduction to Total Quality Management (TQM)”
Submitted by:
Shenoy Nitesh K M
B070323ME
B-batch
Introduction:
Total Quality Management (TQM) is an enhancement to the traditional way to the traditional
way of doing business. It is a proven technique to guarantee survival in world class competition.
Only by changing the actions of the management will the culture and actions of the entire
organization be transformed. TQM is for the most part common sense. Analyzing the three
words we have:
Total – Made up of the whole
Quality – Degree of excellence a product or service provides
Management – Act, art, or manner of handling, controlling, directing, etc.
Therefore, TQM is the art of managing the whole to achieve excellence. The golden rule
is a simple but effective way to explain it: Do unto others as you would have them do unto you.
TQM is defined as both a philosophy and a set of guiding principles that represent the
foundation of a continuously improving organization. It is the application of quantitative
methods and human resources to improve all the processes in the organization and exceed
customers’ needs now and in the future. TQM integrates fundamental management techniques,
existing improvement methods, and technical tools under a disciplined approach.
What is Quality? :
1. Dictionary has many definitions: “Essential characteristic,” “Superior,” etc.
2. Some definitions that have gained wide acceptance in various organizations: “Quality is
customer satisfaction,” “Quality is Fitness for Use.”
3. The American National Standards Institute (ANSI) and the American Society for Quality
(ASQ) define quality as: “The totality of features and characteristics of a product or service that
bears on its ability to satisfy given needs.”
TQM is a comprehensive, organization-wide effort to improve the quality of products and
services, applicable to all organizations.
Why Focus on Quality? :
What is a customer? :
Anyone who is impacted by the product or process delivered by an organization.
1. External customer: The end user as well as intermediate processors. Other external customers
may not be purchasers but may have some connection with the product.
2. Internal customer: Other divisions of the company that receive the processed product.
What is a product? :
The output of the process carried out by the organization. It may be goods (e.g. automobiles,
missile), software (e.g. a computer code, a report) or service (e.g. banking, insurance).
How is customer satisfaction achieved? :
1. Product features – Refers to quality of design.
Examples in manufacturing industry: Performance, Reliability, Durability, Ease of use, Esthetics
etc.
Examples in service industry: Accuracy, Timeliness, Friendliness and courtesy, Knowledge of
server etc.
2. Freedom from deficiencies – Refers to quality of conformance.
Higher conformance means fewer complaints and increased customer satisfaction.
Why Quality? :
Reasons for quality becoming a cardinal priority for most organizations:
• Competition – Today’s market demand high quality products at low cost. Having `high
quality’ reputation is not enough! Internal cost of maintaining the reputation should be
less.
• Changing customer – The new customer is not only commanding priority based on
volume but is more demanding about the “quality system.”
• Changing product mix – The shift from low volume, high price to high volume, low price
have resulted in a need to reduce the internal cost of poor quality.
• Product complexity – As systems have become more complex, the reliability
requirements for suppliers of components have become more stringent.
• Higher levels of customer satisfaction – Higher customer’s expectations are getting
spawned by increasing competition.
Relatively simpler approaches to quality viz. product inspection for quality control and
incorporation of internal cost of poor quality into the selling price, might not work for today’s
complex market environment.
Perspectives of Quality:
Everyone defines Quality based on their own perspective of it. Typical responses about the
definition of quality would include:
1. Perfection
2. Consistency
3. Eliminating waste
4. Speed of delivery
5. Compliance with policies and procedures
6. Doing it right the first time
7. Delighting or pleasing customers
8. Total customer satisfaction and service
Judgmental perspective:
• “Goodness of a product.”
• Shewhart’s transcendental definition of quality – “absolute and universally recognizable,
a mark of uncompromising standards and high achievement.”
• Examples of products attributing to this image: Rolex watches, Lexus cars.
Product-based perspective:
• “Function of a specific, measurable variable and that difference in quality reflect
differences in quantity of some product attributes.”
• Example: Quality and price perceived relationship.
User-based perspective:
• “Fitness for intended use.”
• Individuals have different needs and wants, and hence different quality standards.
• Example – Nissan offering ‘dud’ models in US markets under the brand name Datson
which the US customer didn’t prefer.
Value-based perspective:
• “Quality product is the one that is as useful as competing products and is sold at a lesser
price.”
• US auto market – Incentives offered by the Big Three are perceived to be compensation
for lower quality.
Manufacturing-based perspective:
• “The desirable outcome of an engineering and manufacturing practice, or conformance to
specification.”
• Engineering specifications are the key!
• Example: Coca-cola – “quality is about manufacturing a product that people can depend
on every time they reach for it.”
Levels at which Quality is Maintained:
1. At organizational level, we need to ask following questions:
• Which products and services meet your expectations?
• Which products and services you need that you are not currently receiving?
2. At process level, we need to ask:
• What products and services are most important to the external customer?
• What processes produce those products and services?
• What are the key inputs to those processes?
• Which processes have most significant effects on the organization’s performance
standards?
3. At the individual job level, we should ask:
• What is required by the customer?
• How can the requirements be measured?
• What is the specific standard for each measure?
History of Quality Management:
• Before Industrial Revolution, skilled craftsmen served both as manufacturers and
inspectors, building quality into their products through their considerable pride in their
workmanship.
• Industrial Revolution changed this basic concept to interchangeable parts. Likes of
Thomas Jefferson and F. W. Taylor (“scientific management” fame) emphasized on
production efficiency and decomposed jobs into smaller work tasks. Holistic nature of
manufacturing rejected!
• Statistical approaches to quality control started at Western Electric with the separation of
inspection division. Pioneers like Walter Shewhart, George Edwards, W. Edwards
Deming and Joseph M. Juran were all employees of Western Electric.
• After World War II, under General MacArthur's Japan rebuilding plan, Deming and Juran
went to Japan.
• Deming and Juran introduced statistical quality control theory to Japanese industry.
• The difference between approaches to quality in USA and Japan: Deming and Juran were
able to convince the top managers the importance of quality.
• Next 20 odd years, when top managers in USA focused on marketing, production
quantity and financial performance, Japanese managers improved quality at an
unprecedented rate.
• Market started preferring Japanese products and American companies suffered
immensely.
• America woke up to the quality revolution in early 1980s. Ford Motor Company
consulted Dr. Deming to help transform its operations.
(By then, 80-year-old Deming was virtually unknown in USA. Whereas Japanese government
had instituted The Deming Prize for Quality in 1950.)
• Managers started to realize that “quality of management” is more important than
“management of quality.” Birth of the term Total Quality Management (TQM).
• TQM – Integration of quality principles into organization’s management systems.
• Early 1990s: Quality management principles started finding their way in service industry.
FedEx, the Ritz-Carton Hotel Company were the quality leaders.
• TQM recognized worldwide: Countries like Korea, India, Spain and Brazil are mounting
efforts to increase quality awareness.
Evolution of TQM Philosophies:
The Deming Philosophy:
Definition of quality, “A product or a service possesses quality if it helps somebody and
enjoys a good and sustainable market.”
14 points for management:
1. Create and publish to all employees a statement of the aims and purposes of the
company. The management must demonstrate their commitment to this statement.
2. Learn the new philosophy.
3. Understand the purpose of inspection – to reduce the cost and improve the processes.
4. End the practice of awarding business on the basis of price tag alone.
5. Improve constantly and forever the system of production and service.
6. Institute training
7. Teach and institute leadership.
8. Drive out fear. Create an environment of innovation.
9. Optimize the team efforts towards the aims and purposes of the company.
10. Eliminate exhortations for the workforce.
11. Eliminate numerical quotas for production.
12. Remove the barriers that rob pride of workmanship.
13. Encourage learning and self-improvement.
14. Take action to accomplish the transformation.
• “A System of Profound Knowledge”
1. Appreciation for a system - A system is a set of functions or activities within an
organization that work together to achieve organizational goals. Management’s job is to
optimize the system. (Not parts of system, but the whole!). System requires co-operation.
2. Psychology – The designers and implementers of decisions are people. Hence
understanding their psychology is important.
3. Understanding process variation – A production process contains many sources of
variation. Reduction in variation improves quality. Two types of variations- common
causes and special causes. Focus on the special causes. Common causes can be reduced
only by change of technology.
4. Theory of knowledge – Management decisions should be driven by facts, data and
justifiable theories. Don’t follow the management’s fads!
The Juran Philosophy:
• Pursue quality on two levels:
1. The mission of the firm as a whole is to achieve high product quality.
2. The mission of each individual department is to achieve high production quality.
• Quality should be talked about in a language senior management understands: money
(cost of poor quality).
• At operational level, focus should be on conformance to specifications through
elimination of defects- use of statistical methods.
Quality Trilogy –
1. Quality planning: Process of preparing to meet quality goals. Involves understanding
customer needs and developing product features.
2. Quality control: Process of meeting quality goals during operations. Control parameters.
Measuring the deviation and taking action.
3. Quality improvement: Process for breaking through to unprecedented levels of
performance. Identify areas of improvement and get the right people to bring about the
change.
The Crosby Principle:
Absolutes of Management
• Quality means conformance to requirements not elegance.
• There is no such thing as quality problem.
• There is no such thing as economics of quality: it is always cheaper to do the job right
the first time.
• The only performance measurement is the cost of quality: the cost of non-conformance.
Basic Elements of Improvement
• Determination (commitment by the top management)
• Education (of the employees towards Zero Defects (ZD))
• Implementation (of the organizational processes towards ZD)
Basic Approach of TQM
TQM requires six basic concepts:
1. A committed and involved management to provide long-term top-to-bottom
organizational support.
2. An unwavering focus on customer, both internally and externally.
3. Effective involvement and utilization of the entire workforce.
4. Continuous improvement of the business and production processes.
5. Treating suppliers as partners.
6. Establishing performance measures for the processes.
TQM requires a cultural change. The difference between a normal organization and TQM
based organization can be shown as:
Quality Element Previous State TQM
Definition: Product-Oriented Customer-Oriented
Priorities: Second to service and cost First among equals of service
and cost
Decisions: Short-term Long-term
Emphasis: Detection Prevention
Errors: Operations System
Responsibility: Quality Control Everyone
Problem Solving: Managers Teams
Procurement: Price Life-cycle Costs
Manager’s Role: Plan, Assign, Control and Delegate, Coach, Facilitate
Enforce and Mentor
A company will not begin its transformation to TQM until it is aware that the quality of
its product or service must be improved. Awareness comes about when a company loses market
shares or realizes that quality and productivity go hand-in-hand. It also occurs when TQM is
mandated by the customer or when management realizes that TQM is a better way to run a
business and compete in domestic and world markets.
LEADERSHIP:
Senior management must recognize that the quality function is no more responsible for
product quality than the finance function is responsible for the profit and loss. Quality, like cost
and service, is the responsibility of everyone in the organization especially the Chief Executive
Officer. When a commitment to quality is made, it becomes part of the organization’s business
strategy and leads to enhanced profit and an improvement in the competitive position.
There are 12 behaviors or characteristics that successful leaders demonstrate. A brief
description in given:
1. Priority attention to customers, both internally and externally and their needs. Leaders
place themselves in the customer’s shoes.
2. Empower rather than control subordinates. Leaders have trust and confidence in the
performance of their subordinates.
3. They emphasize improvement rather than maintenance.
4. They emphasize prevention.
5. They encourage collaboration rather than competition.
6. They train and coach, rather than direct and supervise.
7. They learn from their problems.
8. They continually try to improve communications.
9. They continually demonstrate their commitment to quality.
10. They choose suppliers on the basis of quality, not price.
11. They establish organizational systems to support the quality effort.
12. They encourage and recognize team effort.
Formation of Quality Councils:
In order to build quality into the culture, a quality council is established to provide overall
direction. It is driver for the TQM engine.
In a typical organization the council is composed of the CEO; the senior managers of the
functional areas such as design, marketing, finance, production, and quality; and coordinator or
consultant.
The responsibility of the coordinator is to build a two-way trust, propose team needs to
the council, share council expectations with the team, and briefs the council on the team
progress. In addition, the coordinator will ensure that the teams are empowered and know their
responsibilities. The coordinator’s activities are to assist the team leasers, share lessons learned
among teams, and have regular team meetings with the team leaders.
The main responsibility of the quality council is to establish core values and define the
missions and vision of the quality standards in the organization.
CEO Commitment:
The most important aspect of management commitment is the involvement by the CEO.
This involvement can be achieved by:
Chairing or participating in quality councils.
Chairing or participating in ISO 9000 teams.
Coaching project teams.
MBWA (Management By Walking Around)
Presiding at recognition ceremonies.
Writing a column in the newsletter
Spending 1/3rd of the time on quality
Periodically meeting with all the employees
CUSTOMER SATISFACTION:
There is an old saying that “customer is always right”. The primary measure of the
quality of the product is customer satisfaction. Satisfaction is a function of the entire experience
with the company- not just the purchased unit. Companies should strive to maintain customers
for life. On the average, it takes five times as much money to win a new customer as to retain an
existing one. TQM implies an organizational obsession with meeting or exceeding customer
expectations, to the point that customers are delighted. Understanding the customer’s needs and
expectations is essential to winning new business and keeping existing business.
Customer Feedback:
In order to focus on the customers, an effective feedback program is necessary. The
objectives of the program are to:
1. Discover customer dissatisfaction
2. Discover relative priorities of quality with other attributes like price and delivery.
3. Compare performance with the competition
4. Identify customer needs
5. Determine opportunities for improvement
For end-users, warranty cards or questionnaires that are included with the product provide an
inexpensive method. Telephone surveys collect the required information but are time-consuming
and costly and may alienate the customer. Mail out surveys for end-users are usually not
completed but may be useful for commercial customers. Many companies rely on their service
centers to provide feedback.
Customer Complaints:
A recent survey revealed that dissatisfied customers rarely complain. On an average, only
1% of the dissatisfied customers complain to the management, 18% complain to the front line
people and about 81% don not complain. About 25% of the dissatisfied customers will not buy
the product again.
Every company should have a procedure for using customer complaints. A suggested one
is:
Accept complaints- don’t fight them- for they are a measure of your quality.
Feedback complaint information to all the people.
Analyze complaints by doing the detective work
If possible, eliminate the root cause. More inspection is not the correct action
Report the results of the investigation and solutions to everyone involved.
Good experiences are repeated to six people and bad experiences are repeated to 15
people. Know your customers, listen to them and when necessary educate them, for they
determine their needs and ultimately judge your ability to satisfy them.
Every company should establish a partnership relationship with its customers. The quality
of the US products was outstanding during World War 2 because there were the ultimate
partnership with the customer- our sons, daughters, spouses, relatives, friends and neighbors.
EMPLOYEE INVOLVEMENT:
No resource is more valuable to an organization than its people. While this expression is
surely a cliché, it is certainly a true one and very applicable to quality. Many companies view
quality problems in terms of the operating personnel. The frequent response is to develop
motivation programs with goals and slogans.
Actually, management makes a serious mistake when it assumes that the quality problem
is due to unconcerned operating personnel. Dr. Deming has established that only 15% of the
quality problems of an organization are due to local faults. The rest are due to the system.
Point 8 of Dr. Deming’s 14 points is:
Reduce fear throughout the organization by encouraging open, two-way, non-punitive
communication. The economic loss resulting form the fear to ask questions or report problems is
appalling.
Quality Circles:
• Teams of workers and supervisors that meet regularly to address work-related problems
involving quality and productivity.
• Developed by Kaoru Ishikawa at University of Tokyo.
• Became immediately popular in Japan as well as USA.
• Lockheed Missiles and Space Division was the leader in implementing Quality circles in
USA in 1973 (after their visit to Japan to study the same).
• Typically small day-to-day problems are given to quality circles. Since workers are most
familiar with the routine tasks, they are asked to identify, analyze and solve quality
problems in the routine processes.
Education and Training:
The cost of education and training for all personnel is enormous and the time to achieve
is lengthy. The Japanese trained hundreds of thousands of managers and supervisors at all
organizational level plus millions of non-supervisors. As far as quality is concerned, this massive
training program has made their managers, specialists, and workers the best trained on earth.
This training took more than 10 years to achieve.
A suggested start-up program for small companies is that
All managers and supervisors receive 7 hours of TQM training
All managers and supervisors receive 7 hours of SPC training
All operating personnel receive 7 hours of TQM/SPC training
Suggestion System:
Once a proper environment is established, a suggestion system can be developed that will
provide another approach for quality improvement. In order to be effective, action by the
management is necessary on each suggestion. This action can be quite an increase in the
management’s workload; however, it is the only way a suggestion system will provide the
maximum benefits. A few CEO’s answer each suggestion with a personal letter stating why the
suggestion was or was not a good one and whether it will be implemented or not.
CONTINUOUS IMPROVEMENT PROGRAM:
The goal of TQM is to achieve perfection by continuously improving the business and
production processes. Of course, perfection is an elusive goal; however we must continually
strive for its attainment.
Kaizen:
Kaizen is a daily activity, the purpose of which goes beyond simple productivity
improvement. It is also a process that, when done correctly, humanizes the workplace, eliminates
overly hard work and teaches people how to perform experiments on their work using the
scientific method and how to learn to spot and eliminate waste in business processes. In all, the
process suggests a humanized approach to workers and to increasing productivity: "The idea is to
nurture the company's human resources as much as it is to praise and encourage participation in
kaizen activities."Successful implementation requires "the participation of workers in the
improvement."
People at all levels of an organization can participate in kaizen, from the CEO down, as
well as external stakeholders when applicable. The format for kaizen can be individual,
suggestion system, small group, or large group. At Toyota, it is usually a local improvement
within a workstation or local area and involves a small group in improving their own work
environment and productivity. This group is often guided through the kaizen process by a line
supervisor; sometimes this is the line supervisor's key role. Kaizen on a broad, cross-
departmental scale in companies, generates total quality management, and frees human efforts
through improving productivity using machines and computing power.
While kaizen (at Toyota) usually delivers small improvements, the culture of continual
aligned small improvements and standardization yields large results in the form of compound
productivity improvement. This philosophy differs from the "command and control"
improvement programs of the mid-twentieth century. Kaizen methodology includes making
changes and monitoring results, then adjusting. Large-scale pre-planning and extensive project
scheduling are replaced by smaller experiments, which can be rapidly adapted as new
improvements are suggested.
In modern usage, a focused kaizen that is designed to address a particular issue over the
course of a week is referred to as a "kaizen blitz" or "kaizen event". These are limited in scope,
and issues that arise from them are typically used in later blitzes.
Kaizen Blitz:
• An intense and rapid improvement process in which a team or a department throws all its
resources into an improvement project over a short period of time.
• Short time “burst” rather than long range simmer- hence the name.
• Blitz teams usually comprise of employees from all areas involved in the process who
understand it and can implement the changes on the spot.
Poka Yoke (Mistake Proofing):
• Approach for mistake-proofing processes using automatic devises or methods to avoid
simple human error.
• Developed and refined in the 1960s by the late Shigeo Shingo, a Japanese manufacturing
engineer who developed the Toyota production system.
• Focused on two aspects:
1. Prediction – Recognizing that a defect is about to occur and provide a warning.
2. Detection – Recognizing that a defect has occurred and stop the process.
SUPPLIER PARTNERSHIP:
In recent years, a growing number of manufacturing firms in North America have
established supplier partnerships and supplier development programs. The partnering concept
has received attention for a variety of reasons, not the least of which is quality. Dr. Edwards
Deming has recommended limiting the supply base and forming single source relationships to
reduce the sources of variance in incoming product quality. The Malcolm Baldrige National
Quality Award, which includes supply quality criteria, clearly has increased awareness of the
importance of supply management. Total quality management (TQM), a system of management
whose primary objective is customer satisfaction, has broadened the historical definition of
quality to include the quality of supplier produced materials. Quality management and
partnering, or strategic relationships with suppliers, are inexorably linked.
Published quantifiable data to support partnership effectiveness is difficult to find,
particularly as it relates to quality management. Most partnership studies have been based on
surveys of purchasing executive perceptions, have been descriptive in nature, or have used the
automotive industry as the unit of analysis.
Several case studies have appeared in the literature that highlights the benefits that can
accrue from supplier partnerships. For example, the Campbell Soup Company has acknowledged
that its "select supplier" program yielded $2.3 million in savings during the fourth quarter of
1990 alone, through reduced inventory levels, productivity improvements, and cost reductions.
Unfortunately, this and similar case reports do not necessarily prove that supplier partnerships
are the cause of the improvement. Management attention to problem areas might be the actual
underlying cause of the change. This phenomenon is sometimes referred to as the Hawthorne
effect, after the well known study at Western Electric's Hawthorne plant in the 1930s.
The purpose of this study was to examine the interrelationship between total quality
management (TQM) and supplier partnering activities outside of the automotive sector. In this
study, a carton manufacturer became involved in a TQM program that included supplier
partnering activity with a buyer. Prior and post intervention data provide a good illustration of
the impact a supplier partnership can have in achieving productivity gains and in achieving
continuous improvement. Subsequently, the carton supplier was subjected to traditional
purchasing practices by the buyer when an alternative supplier temporarily was utilized. The
implications of utilizing traditional purchasing practices are explored, as are the difficulties in
developing purchasing partnerships without the commitment of top management.
This study has significant implications for managers along several dimensions--supplier selection
and management, the role of central purchasing decision-making criteria within an environment
of supplier alliances, and the impact that successful alliances can have on both a supplier's and a
buyer's quality improvement process.
Partnering as opposed to traditional purchasing:
A partnership represents a purchasing philosophy that expands the relationship with a supplier
beyond that typically found in traditional purchasing methodologies. A partnership involves such
elements as the use of long-term contracts, a reduced number of supply sources, and a high
degree of mutual trust between the two parties. The relationship is long term in nature and
involves close collaboration and mutual commitment. Based on U.S. practice, one researcher has
defined a strategic partnership as a "mutual, ongoing relationship involving a commitment over
an extended period, and a sharing of information and the risks and rewards of the relationship."
Another team of researchers found that cooperative buyer-supplier relationships typically were
characterized by five attributes.
1. A supply pool consisting of one or a preferred few suppliers.
2. An alliance …
PERFORMANCE MEASURES:
Introduction:
• “In God we trust. All others must use data.”
• “The first step in quality control is to judge and act on the basis of facts. Facts are data
such as length, time, fraction defective and sales amounts.”
• “Views not backed by data are more likely to include personal opinions, exaggeration and
mistaken impressions.”
• “Statistical methods help to understand processes, to bring them under control, and then
to improve them. Otherwise, people will forever be “putting out fires” rather than
improving the system.”
Fish-bone Diagram:
• Also known as cause-and-effect diagram, or Ishikawa diagram
• Fishbone diagram used to sort out causes of the problems
• Brainstorming sessions of groups of workers needed
• Involves identifying complete lists of causes of problem, and the relationships between
causes and effects in a rational manner
• A valuable educational process
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Flow Charts:
Pareto Analysis:
Purpose: To identify and highlight major symptoms of major quality problems
• Based on the premise that usually, a small number of faults cause the majority of
malfunctions
• To separate the “vital few and trivial many”
• The necessity of recording data for pareto analysis a useful exercise
• Information useful for other departments
• Useful for vendor evaluation
Developing pareto analysis:
• Define the classification of defects to be monitored.
• Define the period of time over which the assessment is to be made.
• Total the frequency of occurrence of each class of defects over the period.
• Plot the histogram and cumulative distribution of the classes in descending order of the
frequency of occurrence.
Identify the classes that constitute the majority of defect occurrences.
Run Chart:
Histogram:
Control Charts:
Scatter Diagram:
Benchmarking:
1. Identify those processes needing improvement.
2. Identify a firm that is the world leader in performing the process.
3. Contact the managers of that company and make a personal visit to interview managers and
workers.
4. Analyze data....
