Chapter 1: Introduction to Total Quality Management

Objectives:
At the end of the chapter, the students should be able to:
 State a brief introduction of TQM.
 Define Quality.
 Identify primary elements, core concepts, and benefits of TQM.
 Distinguish between traditional management and TQM.
 Compare and contrast reengineering and TQM.

Introduction
In this day and age, companies must compete on the global market for
customers who expect nothing less than perfection. A modern management
concept such as Total Quality Management (TQM) helps improve the quality
of products and services to achieve maximum customer satisfaction. The
concept of TQM is most applicable to companies and organizations that are
heavily department-focused. In such organizations, the left hand often
doesn't know what the right hand is doing, as the saying goes, and inter-
department struggles negatively affect how customers' needs and wants are
met. With TQM, everyone in the company or organization is responsible for
quality assurance and problem prevention. This management concept was
originally applied solely to manufacturing, but it has since been successfully
implemented by a number of businesses across many industries.
Learning Content
What is Quality?
In order to understand "Total quality management", first we have to
understand what does Quality actually mean?
Quality is generally referred to as a parameter which decides the inferiority
or superiority of a product or service. It is a measure of goodness to
understand how a product meets its specifications. Usually, when the
expression "quality" is used, we think in terms of an excellent product or
service that meets or even exceeds our expectations. These
expectations are based on the price and the intended use of the goods or
services. In simple words, when a product or service exceeds our
expectations, we consider it to be of good quality. Therefore, it is somewhat
of an intangible expression based upon perception.
Approaches to Quality Definition
1. The Transcendent Approach
According to the transcendent view, quality is synonymous with
"innate excellence." It is both unquantifiable, a mark of
uncompromising standards and high achievement. Nevertheless,
proponents of this view claim that quality cannot be defined precisely;
rather, it is a simple, unanalyzable property that we learn to recognize
only through experience.
2. The Product-based Approach
Product-based definitions are quite different; they view quality as a
precise and measurable variable. According to this view, differences in
 quality reflect differences in the quantity of some ingredient or
attribute possessed by a product.
3. The User-based Approach
User-based definitions start from the opposite premise that quality "lies
in the eyes of the beholder." Individual consumers are assumed to
have different wants or needs, and those goods that best satisfy their
preferences are those that they regard as having the highest quality.
This is an idiosyncratic and personal view of quality, and one that is
highly subjective. In the marketing literature, it has led to the notion of
"ideal points": precise combinations of product attributes that provide
the greatest satisfaction to a specified consumer; in the economics
literature, to the view that quality differences are captured by shifts in
a product's demand curve; and in the operations management
literature, to the concept of "fitness for use."

4. The Manufacturing-based Approach

User-based definitions of quality incorporate subjective elements, for they are
rooted in consumer preferences—the determinants of demand. In contrast,
manufacturing-based definitions focus on the supply side of the equation and are
primarily concerned with engineering and manufacturing practice. Virtually all
manufacturing-based definitions identify quality as “conformance to
requirements.” Once a design or a specification has been established, any
deviation implies a reduction in quality. Excellence is equated with meeting
specifications.

5. The Value-based Approach

Value-based definitions take this idea one step further. They actually define
quality in terms of costs and prices. According to this view, a quality product is
one that provides performance at an acceptable price or conformance at an
acceptable cost.

Quality Types
1. Quality of Design
Quality of design is all about set conditions that the product or service must
minimally have to satisfy the requirements of the customer. Thus, the product or
service must be designed in such a way so as to meet at least minimally the
needs of the consumer. However, the design must be simple and also less
expensive so as to meet the customers’ product or service expectations. Quality
of design is influenced by many factors, such as product type, cost, profit policy,
demand of the product, availability of parts and materials, and product reliability.
2. Quality of Conformance
Quality of conformance is basically meeting the standards defined in
the design phase after the product is manufactured or while the
service is delivered. This phase is also concerned about quality control
starting from raw material to the finished product. Three broad aspects
are covered in this definition, viz. defect detection, defect root cause
analysis, and defect prevention. Defect prevention deals with the
 means to deter the occurrence of defects and is usually achieved using
statistical process control techniques. Detecting defects may be by
inspection, testing, or statistical data analysis collected from the
process. Subsequently, the root causes behind the presence of defects
are investigated, and finally corrective actions are taken to prevent
recurrence of the defect.

3. Quality of Performance
Quality of performance is how well the product functions or service
performs when put to use. It measures the degree to which the product
or service satisfies the customer from the perspective of both quality of
design and the quality of conformance. Meeting customer expectation
is the focus when we talk about quality of performance.
Quality Level
1. Organizational Level
The organizational level quality requirements revolve around its
customers' quality requirements. A customer is anyone who receives
one or more of the organization's products or services who could be an
internal or external one. The following issues may help define quality at
this level:
a. Products or services that meet the customer expectation.
b. Products or services that do not meet customer expectation.
C. The key inputs to the process.
d. Processes that have the most major effect on performance standards.
e. The internal customers and their needs.
Defining quality at the process level starts with determining the end-customer
requirements for the process . End – customer requirements should then be translated
into specific measures that should drive one or more internal measures for the overall
process. These measures must be brought to the different sub-process. The outcome is
a set of meters in addition to the specific standards they produce placed and key stages
of the process that will serve as the basis for monitoring each step's contribution to
process quality. The meters and standards will also be used for troubleshooting the
system in case customer requirements are not met.

3. Performer/Job/Task Design Process

Individuals are one of the vital components of the human performance
system. At the micro level, they serve as a reflection of the process and the
system being used by the organization. Each individual under the human
performance system accepts inputs, generates outputs, and then adjusts his
performance from the feedback obtained.
Developing standards to measure each individual key output is a necessity to
define individual quality. The standards created from organization and
process levels should be the basis for these standards to be developed.
Productivity and cost are the requirements for a customer-driven quality.
With these requirements, the areas to be measured to qualify individual
standards would include accuracy, completeness, innovativeness, reliability,
ease of use, timeliness, volume, rate, cost, and flexibility.
Quality Paradigms
1. Custom - Craft Paradigm
The custom-craft paradigm focuses on the product specification
relative to customer demands. In this case, the crafts person and
customer communicate directly so the product is customized to exactly
what the customer wants.
2. Mass Production and Sorting Paradigm
The focus in the mass production and sorting paradigm is on productivity.
Customers are often contacted through mass advertising and sales promotion.
The product is defined with the customer in mind but without direct customer
involvement.
3. Statistical Quality Control Paradigm
The statistical quality control paradigm is similar to the mass production and
sorting paradigm with the difference that more attention is given to production
processes. Statistical process control and lot-by-lot sampling inspection are used.
The result is far less scrap and rework than in the mass production and sorting
paradigm. Product performance and timeliness are similar to that obtained with
the mass production and sorting paradigm.

4. Total Quality Management Paradigm

The total quality management (TQM) paradigm involves customers and suppliers
in addition to mass production and statistical methods. The TQM paradigm
recognizes the importance of customer focus on continuous quality improvement
in day-to-day processes, aiming at higher product performance, lower cost, and
faster delivery.
5. Techno-Craft Paradigm
The techno-craft paradigm is the socio-technical counterpart to the custom-craft
paradigm. The techno-craft paradigm is a new frontier in quality that seeks to
emulate the custom-craft paradigm in performance, but reduce the cost and the
delivery time. The techno-craft paradigm is possible through the proper
integration of people, machines, and automation.

Cost of Quality
The application of costs of quality is a good means to identify the quality
performance of an organization. A quality costing system is a management
tool for identifying and monitoring costs incurred with respect to quality. It
enables the application of proper management direction and control over
areas where quality cost figures are abnormally high.
1. Prevention Cost
The costs associated with preventing the potential for quality
problems. These can consist of training costs, quality improvement
program costs, design costs, preventive maintenance costs, data
collection and analysis costs, etc.
2. Appraisal Cost
The costs associated with determining the quality of the systems or
 products. These can consist of inspection equipment costs, testing
costs, laboratory costs, inspector costs, costs associated with
evaluating the performance of the systems and products, etc.
3. Internal Failure Cost
The costs incurred as a result of a product failure before it is delivered
to the customer. These can consist of rework costs, scrap cost,
downtime, etc.
4. External Failure Cost
The cost incurred when a product fails after it has been delivered to the
customer. These can consist of rework costs, warranty costs, liability
claims, etc.

Defining Total Quality Management

 Total Quality Management is defined as a customer-oriented
process and aims for continuous improvement of business operations.
It ensures that all allied works (particularly work of employees) are
toward the common goals of improving product quality or service
quality, as well as enhancing the production process or process of
rendering services. However, the emphasis is put on fact-based
decision making, with the use of performance metrics to monitor
progress.
 Total quality management (TQM) is the continual process of
detecting and reducing or eliminating errors in manufacturing,
streamlining supply chain management, improving the customer
experience, and ensuring that employees are up to speed with training.
Total quality management aims to hold all parties involved in the
production process accountable for the overall quality of the final
product or service.
 TQM is a continuous process of improvement for individuals, groups,
as well as the entire organization, whereby managers attempt to
change the organization’s way of working by developing people's
knowledge about what to do, how to do, doing it with the right
methods, and measuring the improvement of the process and the
current level of achievement.
The Primary Elements of TQM
Quality is a necessary parameter which helps organizations outshine their
competitors and survive the fierce competition. The achievement of TQM
depends on the following eight elements which are further classified into
four groups.

Foundation
The entire process of TQM is built on a strong foundation of ethics,
integrity, and trust. TQM involves every single employee irrespective of
his designation and level in the hierarchy.
1. Ethics - is a combination of written and unwritten codes of principles
that govern decisions and actions within a company. It is an
 understanding of the difference between good and bad decision
making and behavior at the business world. It boils down to following
the code of conduct of organization and adheres to rules and
regulations.
2. Integrity - is the consistency of action, values, methods, measures,
principles, expectations, and outcomes at the workplace. There is a
need to respect organizations policies. Avoid spreading unnecessary
rumors about fellow workers. TQM does not work in an environment
where employees criticize and backstab each other.
3. Trust - is one of the most important factors necessary for the
implementation of TQM because it builds a cooperative environment. It
is a relationship based on reliance. Employees need to trust each other
to ensure participation of everybody and allows empowerment that
encourages pride of ownership and commitment. Trust improves
relationships among employees and eventually helps in better decision
making which further helps in implementing TQM successfully.
Building Bricks
Bricks are placed on a strong foundation to reach the roof of recognition.
The foundation needs to be strong enough to hold the bricks and support
the roof. Leadership, Teamwork, and Training are the building bricks of
TQM.
1. Leadership - Provides a direction to the entire process of TQM. It is
about raising the aspiration of followers and enthusing people with a
desire to reach the goals. Leadership in TQM requires the manager to
provide an inspiring vision, make strategic decisions, and instill values
that guide subordinates. TQM needs to have a supervisor who acts as a
source of inspiration for other members and can assist them in
decision-making. A leader himself needs to believe in the entire
process of TQM for others to believe in the same.
2. Teamwork - A crucial element of TQM. Rather than working
individually, employees need to work in teams. When individuals work
in unison, they are in a position to brainstorm ideas and come up with
various solutions that would improve existing processes and systems.
Team members ought to help each other to find a solution and put it in
place.
3. Training - Employees need to be trained on TQM to become highly
productive. Managers need to make their fellow workers aware of the
benefits of TQM and how it would make a difference in their product
quality and eventually yield profits for their organization. Employees
need to be trained on interpersonal skills, the ability to work as a team
member, technical know-how, decision-making skills, and problem-
solving skills. Training enables employees to implement TQM
effectively within their departments and also make them indispensable
resources.

Building Mortar
 Building mortar binds all the elements together. Communication binds
everything together, starting from foundation and going up to the roof.
Communication is the vital link between all the TQM elements and must
be prevalent in an organization in order for TQM to work the way it should.
The channels of communication need to be credible and easily interpreted
for all members of the organization.
Communication binds employees and extracts the best out of them.
Information needs to be passed on from the sender to the recipient in its
desired form. Small misunderstandings in the beginning lead to major
problems later on. Employees need to interact with each other to come up
with problems existing in the system and find solutions as well. Three
types of communication take place between employees:
1. Downward communication – this is the dominant form of
communication in an organization. Presentations and discussions are
two examples of this form of communication. Flow of information takes
place from the management to the employees. The supervisors are
able to make the employees clearly understand TQM using this type of
communication.
2. Upward Communication – flow of information takes place from the
lower-level employees to the top level management. The lower-level
employees are able to offer suggestions on the effects of TQM to the
upper level management using this type of communication.
Supervisors should listen effectively and incorporate the insights and
constructive criticisms offered by the employees in correcting the
situations that arise through the use of TQM. This creates a level of
trust between supervisors and employees. This is also similar to
empowering communication, where supervisors listen to others.
3. Sideways/Lateral Communication – Communication also takes
place between various departments. This type of communication is
important because it breaks down barriers between departments. It
also allows a more professional dealing with customers and suppliers.

Roof

It includes recognition which brings greater internal customer

satisfaction which in turn leads to external customer satisfaction in the
organization. There can be huge change in self-esteem, productivity, and
quality when the contributors are recognized.

Recognition is the final element of TQM. Recognition is the most important

factor which acts as a catalyst and drives employees to work hard as a team
and deliver their best. Every individual is hungry for appreciation and
recognition. Employees who come up with improvement ideas and perform
exceptionally well must be appreciated in front of all.
Core Concepts of TQM

Each of the following core concepts of TQM can be used to drive the process of continuous improvement and to develop a
framework for quality improvements over many years.

1. Customer Satisfaction – is a marketing term that measures how products or services supplied by a company meet or
surpass a customer’s expectation. It is important because it provides marketers and business owners with a metric that
they can use to manage and improve their businesses. TQM is centered on the requirements of the customer. In order to
meet customer requirements, it is imperative to listen to them and do what is agreed upon.

2. Internal Customer Satisfaction – customers are not only external, but there are also internal customers. Internal
customers have a relationship with, and within, your company, either through employment or as partners who deliver
your product or service to the end user or the external customer. Less obvious but certainly still significant,
stakeholders and shareholders are also internal customers. All of these may or may not purchase your product or
service.

3. All work is Process – another possible focal point of improvement is that of business processes. A process is a
combination of methods, materials, manpower, and machines that work collectively to produce a product or service.

4. Measurement – in order to improve, one must first measure one’s present performance. This will help one focus both
on satisfying internal customers and meeting the requirement of external customers.

5. Synergy in teamwork – the idea in synergy in teamwork, where the whole is greater than the sum of the parts, is the
key concept in TQM. Here, it is used to promote collaboration, consensus, creative conflict, and team winning. One of
the strengths of using teams for TQM is that they can merge the

6. People make Quality – most of the quality problems within an organization are
not usually within the control of an individual employee. The system often comes
in the way of employees who are trying to do a good job. In such a situation,
motivation by itself cannot work. Therefore, managers are required to ensure
that all necessary is prepared to let people to produce quality. This creates an
environment where people are eager to take responsibility for the quality of their
own work.
7. Continuous Improvement Cycle – the continuous cycle of instituting customer
requirements, meeting and measuring them, measuring success and continuing
the improvement can be used both externally and internally to stimulate quality
improvements. The continuous improvement cycle used over and over again will
lead to a fresh “chemistry” within the organization so that the culture starts to
change to one of continuous improvement.
8. Prevention – at the heart of TQM is the conviction that it is possible to achieve
defect-free work most of the time. This is termed “right first time, every time” or
zero defects. The “right first time, every time” or zero defects policy is the result
of an emphasis on prevention, and the diligent use of measurement, process
controls, and the data-driven elimination of waste and error. It serves as a goal
for continuous improvement. Prevention is the goal of all quality assurance.
Through planned and systematic action, quality assurance prevents quality
problems.

Benefits of TQM

There are many benefits of TQM. Essentially, TQM refers to the total quality in
fulfilling the needs of customers, the quality of the products, and the quality of life.
1. Creates a Good Corporate Culture – TQM is an approach where the customer
is the center point of the business rather than the department. Therefore, quality
is transformed from an issue of the production department to a strategic
business entity to meet global challenges. The TQM philosophy revolves around
developing a culture that supports total commitment to customer satisfaction
through continuous improvement.
2. Better Reviews from Customers – another benefit of TQM is that customers
and clients are highly satisfied with the performance. Given the quality assurance
testing procedures, the products of the company will constantly meet the
requirements and needs of clients and customers. Therefore, the customers stay
with the company longer, deepen their relationship with the company, and
demonstrate less price sensitivity while recommending the company’s products
or services to others.
3. Better Performance from Employees – through TQM, there is often more
attention placed on meeting the needs of the employees or internal customers.
The training given to the employees as part of the program can boost
employees’ morale at the workplace, resulting in employees working harder to
achieve the goals of TQM.