Early TQM successes

• Nashua
• Xerox
• Motorola
• Intel
• Dayton-Hudson
• Corning
• Hewlett-Packard

Chapter 2 1
 Why TQM?
Ford Motor Company had operating losses of
$3.3 billion between 1980 and 1982.
Xerox market share dropped from 93% in 1971
to 40% in 1981.
Attention to quality was seen as a way to
combat the competition.

Total Quality Management

 TQM: A “Buzzword” Losing
Popularity
• For many companies, the term TQM is associated
with corporate programs (mid 1980s ~ early
1990s) aimed at implementing employee teams
and statistical process control.
• Unfortunately, many companies were dissatisfied
with the perceived results of these programs,
concluding TQM does not work.

Question: Why were they dissatisfied?

Were they justified?
Total Quality Management
 TQM
• Total - made up of the whole
• Quality - degree of excellence a product or
service provides
• Management - act, art or manner of planning,
controlling, directing,….

Therefore, TQM is the art of managing the

whole to achieve excellence.
excellence
Total Quality Management
 What does TQM mean?
Total Quality Management means that the
organization's culture is defined by and
supports the constant attainment of customer
satisfaction through an integrated system of
tools, techniques, and training. This involves
the continuous improvement of organizational
processes, resulting in high quality products
and services.

Total Quality Management

 What’s the goal of TQM?

“Do the right things right the first time,

every time.”
This boosts Customer satisfaction
immensely and increases efficiency of
the Business operations.
• Clearing the bar (ie. Specification or
Standard stipulated) Excellence that is
better than a minimum standard.
Total Quality Management
 Another way to put it
• At it’s simplest, TQM is all managers leading
and facilitating all contributors in everyone’s
two main objectives:
 (1) total client satisfaction through quality
products and services; and
 (2) continuous improvements to processes,
systems, people, suppliers, partners,
products, and services.
Total Quality Management
 Productivity and TQM
• Traditional view:
– Quality cannot be improved without significant
losses in productivity.
• TQM view:
– Improved quality leads to improved productivity.

Total Quality Management

 Basic Tenets of TQM
• 1. The customer makes the ultimate
determination of quality.
• 2. Top management must provide leadership and
support for all quality initiatives.
• 3. Preventing variability is the key to producing
high quality.
• 4. Quality goals are a moving target, thereby
requiring a commitment toward continuous
improvement.
• 5. Improving quality requires the establishment of
effective metrics. We must speak with data and
facts not just opinions.
Total Quality Management
 The three aspects of TQM
Tools, techniques, and training in
Counting their use for analyzing,
understanding, and solving quality
problems

Customers Quality for the customer as a

driving force and central concern.

Culture Shared values and beliefs,

expressed by leaders, that define
and support quality.

Total Quality Management

 Total Quality Management
and Continuous Improvement
• TQM is the management process used to
make continuous improvements to all
functions.
• TQM represents an ongoing, continuous
commitment to improvement.
• The foundation of total quality is a
management philosophy that supports
meeting customer requirements through
continuous improvement.

Total Quality Management

 Continuous Improvement versus
Traditional Approach
Traditional Approach Continuous
Continuous Improvement
Improvement
• Market-share focus • Customer focus
• Individuals • Cross-functional teams
• Focus on ‘who” and “why” • Focus on “what” and “how”
• Short-term focus • Long-term focus
• Status quo focus • Continuous improvement
• Product focus • Process improvement focus
• Innovation • Incremental improvements
• Fire fighting • Problem solving

Total Quality Management

 Quality Throughout
• “A Customer’s impression of quality begins with
the initial contact with the company and continues
through the life of the product.”
– Customers look to the total package - sales, service
during the sale, packaging, deliver, and service after the
sale.
– Quality extends to how the receptionist answers the
phone, how managers treat subordinates, how
courteous sales and repair people are, and how the
product is serviced after the sale.
• “All departments of the company must strive to
improve the quality of their operations.”
Total Quality Management
 Value-based Approach
• Manufacturing • Service Dimensions
Dimensions – Reliability
– Performance – Responsiveness
– Features – Assurance
– Reliability – Empathy
– Conformance – Tangibles
– Durability
– Serviceability
– Aesthetics
– Perceived quality

Total Quality Management

 Quality - Definitions

• Quality is excellence that is better than a

minimum standard.
It is conformance to standards and
‘fitness of purpose’
• ISO 9000:2000 definition of quality-
It is the degree to which a set of inherent
characteristics fulfills requirements.
• Quality is ‘ fitness for use ‘ of the product –
Joseph Juran.
 Quality and customer
expectations

• Quality is also defined as excellence in the

product or service that fulfills or exceeds the
expectations of the customer.
• There are 9 dimensions of quality that may be
found in products that produce customer-
satisfaction.
• Though quality is an abstract perception,it has a
quantitative measure- Q= (P / E ) ,
where Q=quality, P= performance(as
measured by the Mfgr.), and E =
expectations( of the customer).
 The 9 Dimensions of Quality

• Performance
• Features Performance
• Conformance
• -----------------------------
• Reliability
• Durability
• Service Cost
• -----------------------------
• Response- of Dealer/ Mfgr. to Service Features
Customer
• Aesthetics – of product
• Reputation- of Mfgr./Dealer
 TQM six basic Concepts

• Management commitment to TQM principles and

methods & long term Quality plans for the
Organisation
• Focus on customers – internal & external
• Quality at all levels of the work force.
• Continuous improvement of the production/business
process.
• Treating suppliers as partners
• Establish performance measures for the processes.
 Benefits of Quality
• Higher customer satisfaction
• Reliable products/services
• Better efficiency of operations
• More productivity & profit
• Better morale of work force
• Less wastage costs
• Less Inspection costs
• Improved process
• More market share
• Spread of happiness & prosperity
• Better quality of life for all.
 TQM implementation

• Begins with Sr. Managers and CEO’s

• Timing of the implementation process
• Formation of Quality council
• Union leaders must be involved with TQM plans
implementation
• Everyone in the organisation needs to be trained
in quality awareness and problem solving
• Quality council decides QIP projects.
 Quality Costs

• Good Quality – leads to more Productivity

» Sales, Profits, and increased
Operational efficiency and min. Losses.
• Bad Quality - results in less Productivity,
Sales , Profits and Efficiency -
with Losses amounting to 20%
or more of the Sales revenue
generated .
 Quality Costs
• Quality cost is the cost of bad Quality of product and services
that rebounds to the Manufacturer.
• It adds to other costs in Design, Purchase,Production,Sales ,
Service etc. Quality costs in all depts. can be measured ,
programmed,budgeted etc.
• External failure Quality costs – Returned goods,
Warranty,Service etc.
• Internal failure Quality costs- Rework of products
• Appraisal costs –Inspectors and Inspection costs
• Prevention costs-assoc. with Design,Sales,Purchase
• ----------------------------------------------------------------------------
• [.Accepted Quality Level ( AQL) eg. 3-4 defects per million ( six Sigma
process) or zero-defect manufacturing process.]
 Customer satisfaction
• Internal and external customer
• Customer is the Boss or ’King’
• Customer dictates the market trends and direction
• Customer not only has needs to be supplied( basic
performance functions)
• Also he ‘wants what he wants!’( additional features satisfy
him and influence his purchase decision)
• Hence the Suppliers and Manufacturers have to closely
follow at the heel of the customer.
 Customer Satisfaction Organisational Diagram

•
CUSTOMERS

Front-line Staff

Functional
Department
Staff
Sr.
Mgrs
CEO
Continuous Process Improvement

• Process refers to business and production activities of an

Organisation.
• Processes for improvement- eg. Design &
Manufacturing,Marketing,Stores & Purchase,etc.
• Inputs of the Process-
Manpower,materials,money,data,etc.
Outputs- Products,Services,data etc.
Outputs need performance measures – main outcome
being customer satisfaction.(feedback is used to improve
the process)
 Continuous Process Improvement
• Process refers to business and production
activities of an organisation
• Business processes-Manufacturing,Design,
Sales,Purchase,Stores etc.are areas where
non-conformance can be reduced and
processes improved
Continuous Process Improvement

• FEEDBACK

PROCESS
INPUT People OUTPUT
Materials Equipment Infornmation
Money Method Data O/P
Data,etc. Environment Product
Matterials Service,etc.
Procedures

CONDITIONS
 Juran’s Trilogy
• Three components - PLANNING,CONTROL
AND IMPROVEMENT
• Based on financial processes ,such as
budgeting(planning), expense
measurement(control), and cost reduction
(improvement)
 The 5S Method
• Seiko - Sort ( Proper arrangement )
• Seiton - Set ( Systematic or
Orderliness )
• Seiso - Shine ( Sweep or clean-up )
• Seiketso - Standard ( Personal
cleanliness )
• Shitsuke - Sustain ( Self-discipline )
 Kaizen Technique

• Kaizen- defines the managements role in continuously

encouraging and implementing small improvements in the
individual & organization.
• Break the complex process into sub-processes and then
improve the sub-processes.
• Continuous improvements in small increments make the
process more efficient ,controllable and adaptable.
• Does not rely on more expense,or sophisticated equipment
and techniques.
 The TQM System
Objective Continuous
Improvement

Principles Customer Process Total

Focus Improvement Involvement

Leadership
Elements Education and Training Supportive structure
Communications Reward and recognition
Measurement

Total Quality Management