TQM Quality starts with market research – to establish the true requirements for the product or service and the true needs of the customers. However, for an organization to be really effective, quality must span all functions, all people, all departments and all activities and be a common language for improvement. The cooperation of everyone at every interface is necessary to achieve a total quality organization. A frequently used definition of quality is “Delighting the customer by fully meeting their needs and expectations”.
These may include performance, appearance, availability, delivery, reliability, maintainability, cost effectiveness and price. It is, therefore, imperative that the organization knows what these needs and expectations are. In addition, having identified them, the organization must understand them, and measure its own ability to meet them Culture Communication Commitment Introduction Quality control, was born in the U. S. and Japan, in its high economic growth period, imported and developed that concept as Total Quality Control (TQC), which later evolved as Total Quality Management (TQM). , TQM is not a tool merely for big companies or the manufacturing sector; it is a way of managerial thinking for any type of corporation. The Quality Control Circle (QCC) method, a Japanese-made institutional development tool by which employees continuously strive for improvement in their work, usually functions as an integral part of TQM.
More generally speaking, the QCC method can serve to enhance people’s problem-solving skills in organizations that have not yet introduced TQM as a leading management policy: not only in profit-making organizations but also in non-profit organizations, public administration, associations, and any voluntary group. However, QCC functions best as part of TQM, and company-wide quality management through TQM is the most effective way to sustain QCC activities in an organization. Are TQM and QCC Japanese things? Are they effective only in some cultures in the world?
Our answer is a firm, “No! ” They are not and should not be perceived to have such a narrow scope. Our firm belief is that they are applicable anywhere because they invoke universal values, and this is why this handbook has been produced. In our view, TQM and QCC values are much more than so-called Japanese management. Pursuit of quality management never stops. We face more and more tasks in controlling and improving quality in the increasingly integrated world. Requirements of the ISO9000 series are representative of that truth.
We are certain that TQM and QCC can contribute tremendously to any institution that has become conscious about quality management, including those doing so through compliance with the ISO 9000 series. TQM is the way of managing for the future, and is far wider in its application than just assuring product or service quality – it is a way of managing people and business processes to ensure complete customer satisfaction at every stage, internally and externally. TQM, combined with effective leadership, results in an organization doing the right things right, first time.
The core of TQM is the customer-supplier interfaces, both externally and internally, and at each interface lays a number of processes. This core must be surrounded by commitment to quality, communication of the quality message, and recognition of the need to change the culture of the organization to create total Quality. These are the foundations of TQM, and they are supported by the key management functions of people, processes and systems in the organization. This section discusses each of these elements that, together, can make a total quality organization.
Other sections explain people, processes and systems in greater detail, all having the essential themes of commitment, culture and communication running through them. Customers and suppliers There exist in each department, each office, and each home, a series of customers, suppliers and customer supplier interfaces. These are “the quality chains”, and they can be broken at any point by one person or one piece of equipment not meeting the requirements of the customer, internal or external.
The failure usually finds its way to the interface between the organization and its external customer, or in the worst Case, actually to the external customer. Failure to meet the requirements in any part of a quality chain has a way of multiplying, and failure in one part of the system creates problems elsewhere, leading to yet more failure and problems, and so the situation is exacerbated. The ability to meet customers’ (external and internal) requirements is vital.
To achieve quality throughout an organization, every person in the quality chain must be trained to ask the following questions about every customer-supplier interface: Customers (internal and external) ( Who are my customers? ( What are their true needs and expectations? ( How do, or can, I find out what these are? ( How can I measure my ability to meet their needs and expectations? ( Do I have the capability to meet their needs and expectations? (If not, what must I do to improve this capability? ) ( Do I continually meet their needs and expectations? If not, what prevents this from happening when the capability exists? ) ( How do I monitor changes in their needs and expectations? Suppliers (internal and external) ( Who are my internal suppliers? ( What are my true needs and expectations? ( How do I communicate my needs and expectations to my suppliers? ( Do my suppliers have the capability to measure and meet these needs and expectations? ( How do I inform them of changes in my needs and expectations? As well as being fully aware of customers’ needs and expectations, each erson must respect the needs and expectations of their suppliers. The ideal situation is an open partnership style relationship, where both parties share and benefit. From Excellence Poor practices To be able to become a total quality organization, some of the bad practices must be recognized and corrected. These may include: ( Leaders not giving clear direction ( Not understanding, or ignoring competitive positioning ( Each department working only for itself ( Trying to control people through systems ( Confusing quality with grade Accepting that a level of defects or errors is inevitable ( Firefighting, reactive behavior ( The “It’s not my problem” attitude The essential components of TQM – commitment & leadership TQM is an approach to improving the competitiveness, effectiveness and flexibility of an organization for the benefit of all stakeholders. It is a way of planning, organizing and understanding each activity, and of removing all the wasted effort and energy that is routinely spent in organizations. It ensures the leaders adopt a strategic overview of quality and focus on prevention not detection of problems.
Whilst it must involve everyone, to be successful, it must start at the top with the leaders of the organization. All senior managers must demonstrate their seriousness and commitment to quality, and middle managers must, as well as demonstrating their commitment, ensure they communicate the principles, strategies and benefits to the people for whom they have responsibility. Only then will the right attitudes spread throughout the organization. A fundamental requirement is a sound quality policy, supported by plans and facilities to implement it.
Leaders must take responsibility for preparing, reviewing and monitoring the policy, plus take part in regular improvements of it and ensure it is understood at all levels of the organization. Effective leadership starts with the development of a mission statement, followed by a strategy, which is translated into action plans down through the organization. These, combined with a TQM approach, should result in a quality organization, with satisfied customers and good business results. The 5 requirements for Effective leadership are: ( Developing and publishing corporate beliefs, values and objectives, often as a mission statement. Personal involvement and acting as role models for a culture of total quality. ( Developing clear and effective strategies and supporting plans for achieving the mission and objectives. ( Reviewing and improving the management system. ( Communicating, motivating and supporting people and encouraging effective employee participation. Excellence The task of implementing TQM can be daunting. The following is a list of points that leaders should consider; they are a distillation of the various beliefs of some of the quality gurus: The organization needs a long-term commitment to continuous improvement. ( Adopt the philosophy of zero errors/defects to change the culture to right first time ( Train people to understand the customer/supplier relationships ( Do not buy products or services on price alone – look at the total cost ( Recognize that improvement of the systems must be managed ( Adopt modern methods of supervising and training – eliminate fear ( Eliminate barriers between departments by managing the process – improve communications and teamwork Eliminate goals without methods, standards based only on numbers, barriers to pride of workmanship and fiction – get facts by studying processes ( Constantly educate and retrain – develop experts in the organization ( Develop a systematic approach to manage the implementation of TQM Culture change The failure to address the culture of an organization is frequently the reason for many management initiatives either having limited success or failing altogether.
Understanding the culture of an organization, and using that knowledge to successfully map the steps needed to accomplish a successful change, is an important part of the quality journey. The culture in any organization is formed by the beliefs, behaviors, norms, dominant values, rules and the “climate”. A culture change, e. g. , from one of acceptance of a certain level of errors or defects to one of right first time, every time, needs two key elements: ( Commitment from the leaders ( Involvement of all of the organization’s people
There is widespread recognition that major change initiatives will not be successful without a culture of good teamwork and cooperation at all levels in an organization, as discussed in the section on People. TotaThe Four Principles of Total Quality Management 1. Customer satisfaction means not only satisfying the needs and reasonable Expectations of customers, but also having an attitude that puts the needs of the Customer first. 2. Management by fact means not only managers, but all team members manage the work they do by collecting objective data and making decisions based on thisinformation. . Respect for people means that each of us needs to listen to and support the capacity of all other team members for self-motivation and creative thought. 4. P-D-C-A (Plan-Do-Check-Act) is a work philosophy that emphasizes four phases of activity: P- Plan what to do D- Do it C- Check what you did A-Act to prevent error or improve the process Voice of the Customer Feedback Materials Procedures Methods Product Information Services People Information Skills Paperwork Knowledge Training Plant & equipment Feedback
Voice of the Process The building blocks of TQM: processes, people, management systems and performance measurement Everything we do is a Process, which is the transformation of a set of inputs, which can include action, methods and operations, into the desired outputs, which satisfy the customers’ needs and expectations. In each area or function within an organization there will be many processes taking place, and each can be analyzed by an examination of the inputs and outputs to determine the action necessary to improve quality.
In every organization there are some very large processes, which are groups of smaller processes, called key or core business processes. These must be carried out well if an organization is to achieve its mission and objectives. The section on Processes discusses processes and how to improve them, and Implementation covers how to prioritize and select the right process for improvement. From The only point at which true responsibility for performance and quality can lie is with the People who actually do the job or carry out the process, each of which has one or several suppliers and customers.
An efficient and effective way to tackle process or quality improvement is through teamwork. However, people will not engage in improvement activities without commitment and recognition from the organization’s leaders, a climate for improvement and a strategy that is implemented thoughtfully and effectively. The section on People expands on these issues, covering roles within teams, team selection and development and models for successful teamwork.
An appropriate documented Quality Management System will help an organization not only achieve the objectives set out in its policy and strategy, but also, and equally importantly, sustain and build upon them. It is imperative that the leaders take responsibility for the adoption and documentation of an appropriate management system in their organization if they are serious about the quality journey. The Systems section discusses the benefits of having such a system, how to set one up and successfully implement it.
Once the strategic direction for the organization’s quality journey has been set, it needs Performance Measures to monitor and control the journey, and to ensure the desired level of performance is being achieved and sustained. They can, and should be, established at all levels in the organization, ideally being cascaded down and most effectively undertaken as team activities and this is discussed in the section on Performance. CUSTOMERS The most important Documents are. ( Project Initiation Document: this document consists of the goal, (management and technical) planning, time, personnel etc of the project. Communication Plan: this document contains all people involved and interested parties, the relations, the way and the frequency of communication between the parties involved. ( Business Case: in this document the goal and the purpose of the project are discussed, the pros and cons, the foundation for the execution of the project. ( Quality Plan: in this document all the quality requirements are addressed, the way the quality policy will be implemented and the way quality will be realized, the QMS (Quality Management System). Project Approach: this document discusses the project approach, the chosen solution for the realization of the project or the product, the environment in which the product will be implemented, the risk analysis. Standard templates are used to create uniform documents. They also serve as checklists for dealing with the standard subjects of a project. Prince 2 is mostly used in IT but can be used in other sectors as well. Because it is a formal method the correct and consequent implementation takes a lot of time and discipline of all the people involved.
It is applied especially in larger companies, because uniformity and the recording of responsibilities are regarded to be very important in larger companies. Quality in the Project Organization Planning of the Development Project The total development process of a product is also called the life cycle of the product. The development project consists of three major phases: the analysis phase, the realization phase and the testing phase. When these phases are executed in that sequence then this is called the Waterfall method. The shape of the Waterfall can be recognized. ( Analysis Realization ( Testing (Delivery and (Maintenance The Waterfall method for a product life cycle It is logical that the realization starts when the analysis has finished. A major problem with this project planning is that testing starts when the product realization has finished. That is why this method is also called the” throw it over the wall approach”. The developers throw their product over the wall and the testers have to figure it out. Especially in companies where little time and effort is invested in the creation of proper models and drawings this method is often used.
Testing takes a lot of time, since not only the tests have to be executed, but they have to be prepared as Quality in the Project Organization Methodology The proposed steps to carry the development of a computerized diagnostic TQM model would consist of the following three phases :- Phase 1 will investigate the suitability of computer packages that could deliver such a system, looking from the usability point of view. TQ managers and senior executives will devote phase 2 in the development of the diagnostic model that could be used.
Phase 3 will carry out tests in sample-selected organizations and evaluate the model, then the results and improvement to the model will be examined. Benefits The benefits of the development of such a diagnostic model will be of direct benefit to TQ managers, senior executives, TQ researchers, and to the society as a whole. Management gurus and the business media for its supposedly lackluster impact on financial performance periodically lambast total Quality Management (TQM). This paper presents objective evidence on whether this criticism is indeed justified.
The evidence is based on a study of nearly 600 quality award winners. Three critical issues are addressed in this paper. First, we discuss the ongoing debate on TQM’ ability to significantly improve financial performance, the reasons for this debate, and the importance of resolving this debate one way or the other. Second, we present evidence on the financial results that publicly traded organizations have achieved from implementing TQM effectively. Financial results are measured using variables such as stock returns, operating income, sales, and costs.
Third, we discuss how the financial results vary by organizational characteristics such as size, capital intensity, extent of diversification, and the maturity of the TQM implementation. This evidence helps set realistic expectations of what different organizations can expect to get from TQM. The paper also offers a methodology, including various performances measures and data sources that organizations can use to link their quality initiatives to financial results analysis of carefully collected rigorous data is a key core value of TQM.
Yet, they seem to have ignored this core value in defending TQM. Methodology used in the study There were four main steps in the methodology used in our research study: 1. Choosing the appropriate performance measures. 2. Gathering a sample of firms that have effectively implemented TQM. 3. Choosing a time period (when and over what time) for measuring performance. 4. Selecting appropriate benchmarks for comparing the performance of sample firms. [pic] Choice of Performance Measures To establish the value of TQM, it is important to link it to financial measures.
The primary focus of our study was to examine the stock price performance of firms that have effectively implemented TQM. The reason is that stock price performance is widely reported and tracked, and easily understood. Stock price performance is of great interest to many stakeholders including senior management, employees, suppliers, mutual fund managers, institutional and other individual investors. Many believe that goal of a firm should be to maximize its share value. Clearly, it makes sense to use stock price performance as the primary performance measure for this study.
In the long-run stock prices are driven by profits (or net cash flows). Our study examined profit performance by estimating the changes in operating income, defined as net sales less cost of goods sold and selling and administrative expenses. This measures the profits generated from operations before interest and taxes. Operating income is influenced by changes in the growth rate and efficiency. Our study measured growth by estimating the percent change in sales, total assets, and employees. We measured improvement in efficiency by estimating the percent change in return on sales and return on assets.
Return on sales is the ratio of operating income to sales and measures the profit per dollar of sales. Return on assets is the ratio of operating income to assets and measures the profit per dollar of assets. Gathering a sample of firms that have effectively implemented TQM. Any attempt to establish the link between TQM and financial performance must focus on firms that have implemented TQM effectively. This is important because while most firms will claim that they have implemented TQM, few are doing it effectively. Including non-effective implementers will obscure the impact of TQM.
Effectively implementation means that the key principles of TQM such as focus on customer satisfaction, employee involvement, and continuous improvement are well accepted, practiced, and deployed within the firm. We used the winning of quality awards as a proxy for effective implementation of TQM. A review of various quality award criteria confirmed that the core concepts and values emphasized are those that are widely considered to be the building blocks of effective TQM. implementations. Awards are given after the applicant goes through a multi-level evaluation process where internal or external experts judge the applicant.
A stringent process seems to be in place to ensure that winners are effectively implementing and practicing TQM. Choosing a time period for examining the performance. Choosing when to begin measuring the performance and over what time period should the performance be measured are critical issues in linking TQM to financial performance. Ideally, one should begin to measure performance from the point in time when the firm first started implementing TQM. The measurement period should also include the time after the firm has effectively implemented its TQM program.
Furthermore, as many experts have emphasized, TQM takes a long time to be fully absorbed and integrated in the normal operating mode of doing things at a firm. Hence, any attempt to establish the relationship between TQM and financial performance must examine performance over a long-time period. We examined performance over two five-year periods. The first period -the postimplementationperiod- starts one year before and ends four years after the date the winners won their first quality award. Clearly, winners have a reasonably effective TQM implementation by the time they win their first quality award these costs.
Selecting appropriate benchmarks The performance of all firms is influenced by industry and economic conditions which may have nothing to do with whether firms have an effective TQM implementation. Benchmarks serve the purpose of adjusting a firm’s performance for the relevant industry and economic influences. Stock market portfolios such as the S&P 500 were used to benchmark the stock price performance of award winners. For the other performance variables a sample of benchmarks firms was generated by matching each award winner to a benchmark firm of similar size from the same industry.
Results Results for the implementation period No significant differences in performance are observed during the implementation period. Basically, there was no difference in the performance of the winners and the benchmarks. This is good news since one would have expected worsening performance during this period because of the direct and indirect costs in implementing TQM. It is plausible that during the implementation period winners find easy improvement opportunities. Capitalizing on these opportunities pays for the implementation costs.
On the other hand, the results could also suggest that the implementation costs may not be as high as widely believed. would have resulted in a 80% return. stock returns. Organizations should view TQM as along-term investment and must allow time for its benefits to show up in financial performance. How the benefits of TQM vary by firm characteristics? Many firms are also interested to learn how the gains from TQM vary by firm characteristics so that they can set realistic expectations of what to expect from successful implementations of TQM.
To provide insights into this issues, we segmented the sample of award winners by type of quality award won, capital intensity of the firm, size of the firm, and the extent of diversification. Results are examined separately for the various segments. Some interesting insights are obtained about how the extent of benefits from TQM vary by firm characteristics. Independent versus customer award winners There are some very dramatic differences among firms that won independent awards such as the national and state quality awards, and those winning customer awards such as those given by Chrysler, Ford, and Texas Instruments, among others.
The national and state awards have more comprehensive and stringent evaluation criteria, and use a multi-stage evaluation process conducted by independent third-party examiners. Thus, winning independent awards could indicate more mature TQM implementations when compared to the maturity of implementations at firms that have only won awards from their customers. Consistent with this conjecture independent award winners significantly outperformed customer award winners. An important component of TQM is adopting practices such as employee training, involvement and empowerment, and information sharing.
Employees are the driving force for improvements originating from activities such as suggestion programs, quality circles, cross functional teams, and process improvement teams. Clearly, the opportunities for gains from these activities are likely to be higher in a less capital-intensive environment than in a more capital-intensive environment. To test this conjecture, we segmented the sample of quality award winners into low and high capital-intensive winners. Capital intensity is measured as the ratio of net property, plant, and equipment to the number of employees.
The median value of this ratio, $25,000 of assets per employee, is used to segment the sample into low and high capital intensive winners. Winners with assets per employee less than $25,000 are considered to be low capital-intensive and winners with assets per employee greater than $25,000 as high capital-intensive award winners on all performance variables except growth in employees considering the fact that many key elements of TQM such as teamwork, worker empowerment, and spirit of co-operation across functional departments are already present to some extent in smaller firms.
Additionally bringing change can be more difficult in larger firms. Clearly, the results do not support the conventional wisdom that TQM is less beneficial to smaller firms. ———————– People Supplier Processes Systems CUSTOMERS SUPPLIERS Process OUTPUTS INPUTS