QUALITY AND TOTAL QUALITY

Quality is a term that is very common. In a day-to-day conversation, if something needs to be

classified as being ‘superior’, it is often said to be of ‘good quality’. Commodities that possess
attributes that make them special are also considered to be ‘quality’ commodities, as against
the ‘run-of-the mill’ items that are ‘ordinary’ or ‘inferior’ as opposed to the former.

Yet, for all the commonplace usage of the term quality’ it is still a greatly mystifying
term to most people. That would not have posed much of a problem, had the ignorance of the
real meaning of the concept not been shared by those who are engaged in the business of
producing goods and services that are meant to benefits society. Therefore, we begin by
defining the term.

Product satisfaction, therefore, has to do with the extent to which features and attributes
contribute toward making the product worthwhile for the customer. Product dissatisfaction has
to do with the deficiencies that arise in a product owing to non-conformance to desired
specifications or degradation due to storage, for instance. Deficiencies in products give rise to
customer complaints.

Problems in quality can therefore be a consequence of either the attributes falling short
of the customers’ expectations or the features possessing some deficiency. Successful
organizations that are engaged in serving the society, need to be conscious of both these aspects
if they intend to consistently keep their customers, and keep them from complaining!

TOTAL QUALITY MANAGEMENT

INTRODUCTION

Although the concept of quality is very old, today it is perhaps the major preoccupation
of organizations world-wide However, in the recent years, Total Quality Management (TQM)
has captured the world-wide attention and is being adopted in many organizations, both profit
and non-profit. TQM is being accepted as a management philosophy. Many organizations
around the globe are conducting Organizational Development (OD) programs to enhance
quality awareness and change the attitudes of their employees. These efforts towards
understanding, adopting and promoting TQM are primarily because of the changes taking place
in the global economy, changing market conditions and customer’s expectations and increasing
competitive pressures. Many large organizations have recognized the important contributions
that TQM can make in dealing with these challenges.

The objective of this chapter is to trace the evolution of TQM as a general philosophy
and a set of paradigms. Attempt is also made to discuss the significant contributions of various
pioneering promoters of TQM philosophy towards the design, development and application of
TQM systems. Various definitions and models of TQM are also outlined is this chapter to have
a preliminary but fundamental grasp over the subject.

QUALITY DEFINED

‘Quality’ though familiar to everyone has a variety of uses and meanings. The classic
perception of quality is the position of the product attribute on a good-bad scale. Most people
associate it with defects in products. However, quality relates not only to the product but also
to the instructions for its use, to installations, to services, to marketing and so on. Quality has
been defined in various ways. Some of the important definitions of quality are presented below:

1. Quality is fitness for use. (Juran, 1974).

2. Quality is conformance to requirements (Crossby, 1984).
3. Quality means best for certain customer conditions. These conditions are: The actual
use and the selling price of the product (Feigenbaum, 1961).
4. Quality is the capability of products or services to knowingly satisfy those preconceived
composite wants of the user(s) that are intelligently related to the characteristics of
performance, and do not cause major overt or covert reactions or actions by other
people. (Johnson, 1987).
5. The totality features and characteristics of products or services that bears on its ability
to satisfy given needs (ANSI & ASAC, 1978).

Quality is, thus, both a user-oriented and a production-oriented expression. From the user’s
point of view, quality is an expression of the products/services usefulness in meeting the
needs and expectations and its reliability, safety, durability and so on. From the production
point of view, the quality of a product is measured by the quality of its performance which
depends on the quality of design and the quality of conformance. Quality of design is
concerned with the stringency of the specifications for manufacturing the product. The
quality of conformance is concerned with how well the manufactured product conforms to
the original requirements.
 Different views of quality are held by marketing, engineering and manufacturing
departments. Garvin (1988) outlines these as:

 Transcendent – Quality as a simple analyzable property recognized only through

experience.
 Product based – Quality as a precise and measurable variable.
 User based – ‘Quality lies in the eyes of the beholder’.
 Manufacturing based – Quality as conformance to the requirements.
 Value based – Quality as performance or conformance at acceptable price or cost.

Quality, therefore, is –

 defined by the customers.

 a measure of achievement of customer satisfaction.
 fulfilling the customer’s needs/requirements.
 value for money.
 keeping one’s word.
 ensuring no defects.
 ensuring fitness for use.
 image of the company and customer confidence in the organization.
 a precise and measurable variable.
 utility to the society.

From the view point of TQM, quality is everything that an organization does, in the
eyes of its customers, which will encourage them to regard that organization as one of the best
in its particular field of operation. This definition encompasses all the activities of the business
and is not related to any product. It also considers the importance of meeting the needs and
expectations of the customers at a cost that represents the best value, so as to enhance the image
of the organization in the eyes of the customer and build a loyal customer base.

TQM : SOME DEFINITIONS

TQM has been defined in various ways such as search for excellence, creating the right
attitudes and controls to make the prevention of defectives possible and optimize customer
satisfaction by increased efficiency and business effectiveness. All pervading characteristics of
TQM has been described by Oakland (1989) in the following definition:
 “Total Quality Management (TQM) is an approach to improving the effectiveness and
flexibility of business as a whole. It is essentially a way of organizing and involving the whole
organization, every department, every activity, every single person at every level”. This
definition brings to the forefront, the universality of the nature of TQM and explains the current
imperatives.

TQM has also been considered as a combination of various processes representing the
dynamic behavior of an organization. For this, organization is referred to as a total system
(socio-technical), where the activities carried out are geared towards meeting customer
requirements with efficiency and effectiveness in mind and where the health of business is
considered by measuring costs/returns at each stage of the business cycle as reflected by the
following definition given by Zaire and Simintiras (1991). The definition takes a dynamic
system view of TQM.

“Total quality management is a combination of socio-technical process towards doing

the right things (externally), everything right (internally), first time and all the time with
economic viability considered at each stage of each process”.

Another approach of TQM has been based on the quest for progress and continual
improvement in the areas of cost, reliability, quality innovation, efficiency and business
effectiveness. Pfau (1989) states that TQM is an approach for continuously improving the
quality of goods and services delivered through the participation of all levels and functions of
the organizations. Tobin (1990) views TQM as the totally integrated efforts for gaining
competitive advantage by continuously improving every facet of organizational culture. These
definition are functional purposive view of TQM.

Mann and Kehoe (1994) identified two types of definitions of TQM based on the
perceptions of quality practitioners. These are:

 Definitions which describe TQM in terms of its ultimate goal.

 Definitions which describe TQM in terms of the activities or functions that need be
addressed to achieve its objectives.

TQM has also been defined in a way to suit the organizational needs. For example, in a health-
care system, TQM is defined as a systematic approach to implement a lasting change in an
organization through the use of:

 Teamwork and participation.

  Statistical methods and analysis.
 Management leadership.
 Problem solving management.

Bently (1987) mentions that TQM is a systematic approach to education, management and
operations designed to focus and co-ordinate the efforts of all employees in a organization to
perform certain activities to:

 Know and meet requirements of their jobs.

 Prevent problems which may cause defects.
 Understand the cost of not meeting the requirements; and
 Strive to reduce the cost on a continuous basis.

COST OF QUALITY:

Inspite of the organizational benefits that a successful TQM program can provide, its
real value will ultimately be determined by its ability to contribute to profit. The top
management always likes to have tangible proof, in terms of profit improvement, for continuing
all the efforts and providing the resources to continue quality improvement programmers. This
is provided by collecting, reporting and use of quality related cot information.

Quality costs are a measure of all costs associated with achievement of product quality.
Traditionally, collection and analysis of quality related costs received less attention because of
the lack of understanding of the concept and difficulties in measuring and linking it with the
organization’s cost system. However, the measurement of these costs helps to-

 highlights to all employees the importance of product and service quality to business
profitability.
 form a basis for decision making.
 identify areas which need immediate attention and improvements.
 measure the effect of action taken.
 budget the expenditure for accomplishing the TQM program.

For achieving these purposes an understanding of quality costs and a program for
evaluating these is required.

Quality costs incurred in manufacturing are divided into four major classifications:
prevention, appraisal, internal failures and external failures.
1. Prevention costs:

This category involves all those activities aimed at preventing defects, defective products
and errors, on the one hand and building acceptable quality into products and services, on
the other. It includes designing, implementing, maintaining and auditing the quality system
where such a system is actually identified. It includes planning, training, seminars,
customer, surveys and consumer research, oriented at improving quality. However,
prevention, as is used, is a negative term and should be replaced in TQM by a new phrase
as “cost of building acceptable quality”. The term thus will not be related only to quality
control activities which aims at preventing defects and errors but will be related to all
employees and operations.

The definition of various elements included in the cost of building acceptable quality are
outlined below:

a) New product design and development: Costs incurred in designing and developing
customer oriented new products. This includes the total cost of all design reviews
conducted prior to the release of design documents, to the fabrication of prototype
or pilot model, the cost of engineering drawing checkers and component and
material engineers as applicable to the prevention of design deficiencies.
b) Quality planning: This includes costs incurred in the manufacturing process
evaluation, evaluation of an overall quality plan, inspection test plan, reliability and
other related plans for implementing the TQM system. It also includes the costs of
preparing the procedure manuals and communicating these to all concerned.
c) Vendor development costs: Costs incurred in the identification, selection and
development of vendors as well as costs related to planning for the incoming and
source inspection. It also includes the cost of tests necessary to determine
acceptance of supplier products, supplier reviews and cost of preparing the
necessary documents for inspection and test equipment.
d) Administration costs: This includes all the costs incurred in an overall
administration of the TQM system.
e) TQM training costs: This includes all the costs related to training and educating
employees for quality improvement programs.
f) Quality audit costs: The cost of quality audits specially performed to measure the
effectiveness of TQM performance.
2. Appraisal costs:
These include those costs incurred in attempting to measure the extent to which TQM
objectives are met. These activities include measuring, inspecting, testing and auditing
products and performance to determine conformance with acceptable quality levels,
standards of performance and specifications. These include evaluating products,
components and purchased materials. It includes performance of employees,
performance of equipment and machines, receiving field tests, laboratory tests, quality
audits, life testing, quality data processing, failure testing and random time sampling
for appraisal.

The elements included in appraisal costs are:

a) Product design, qualification and conformance tests: The costs incurred in testing
the new product design for their suitability or the design of the existing product for
major changes, conducting qualification tests to verify that all design requirements
have been met and checking the conformance of the product throughout its
progression in the factory, including the final acceptance and check of packing and
shipping.
b) Supplier product inspection: The cost of determining the quality of products
supplied by vendors. This includes all the costs such as the costs for the normal or
routine incoming inspection, testing of purchased material, the cost of additional
inspection and tests required at the time of release of production quantities of
purchased goods and inspection cost at suppliers plant.
c) In-process and final inspection and test: The costs incurred for all in-process and
final inspection and acceptance test of manufactured products.
d) Maintenance and calibration tests: Costs incurred in the maintenance and
calibration of measuring instruments and equipments.
e) Costs of products consumed in destructive testing.
3. Failure costs:
These can be classified into two categories, internal failure cost and external failure
cost.
a) Internal failure costs: These are the costs which are incurred because of defects in the
product before its shipment to a customer. These include:
 1) Scrap and Rework: For the purpose of obtaining operating quality costs, scrap
represents the total cost of defective product (material, labour and overheads) which
cannot be economically reworked to conform to requirements. This includes the
cost of material or product which is discarded because of irreparability or
uneconomical rework, the total cost incurred in selling and price differential
required to sell a non-conforming substandard product, and productive labour hours
lost. Rework cost represents the cost of correcting defectives for reuse. It includes
material and labour cost incurred in rework and the cost of inspection and test
additionally required.
2) Downtime costs: This includes costs incurred because of loss of productive time of
engineers, workers etc. and the machines.
b) External failure costs: These represent all costs incurred on defective products after it
is delivered to a customer. These include:
i. the cost of investigating and resolving individual customer complaints.
ii. costs associated with receipt and replacement of defective product returned by
the customer.
iii. the cost to correct defects according to the required specifications.
iv. the total cost of additional claims to be paid to the customer to cover legitimate
expenses.
v. liability costs and penalty costs.
4. Analysis and use of quality costs:
The quality cost data collected through a systematic program needs to be analyzed for
orienting efforts to reduce them. For this, it must be realized that for each failure there
is an assignable cause, causes can be discovered and prevented and prevention is always
economical. The strategy for analyzing quality costs involves:
 Use zero defect program to eliminate failure costs.
 Review the quality standards for their utility.
 Use ‘cause and effect’ analysis to reveal failures and causes for it.
 Eliminate through effective corrective action.
5. Quality cost program:
For successful deployment of TQM, organizations need to adopt quality cost program
as suggested below:
1. Initiate quality cost program.
2. Identify and define quality cost items.
3. Design formats for collecting quality cost data.
4. Establish procedures for gathering quality costs.
5. Link quality cost with an accounting system of the organization.
6. Analyze and identify higher cost areas requiring improvement.
7. Develop corrective action programs.
8. Implement modifications.
9. Review and rectify.