LESSON 2: INTRODUCTION TO TQM

2. TOTAL QUALITY MANAGEMENT AND ITS IMPORTANCE Total Quality Management (TQM) is an enhancement 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 management will the culture and actions of an entire organization be transformed. TQM is for the most part common sense. Analyzing the three words, we have: Total : Make 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. 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 within an organization and exceed customer needs now and in the future. TQM integrates fundamental management techniques, existing improvement efforts, and technical tools under a disciplined approach. Quality should be customer focused and evaluated using customer-based standards.

A product is not easy to use, and a service is not courteous and prompt unless customers say they are. This fact requires organizations to work closely with their customers to determine what the customers want in the products and how they receive value from the products. 3. The production process and work methods must be designed consciously to achieve quality conformance. Using the right tools and equipment, mistake--proofing processes, training workers in the best methods, and providing a good work environment help to prevent defects rather than catching them. In addition, tightly synchronized production systems with quick communication among workers promote quick identification and solution of quality problems when they do occur. 4. Every employee is responsible for achieving good product quality. This translates into self-inspection by workers rather than by separate quality control personnel and it requires workers to cooperate in identifying and solving quality problems. 5. Quality cannot be inspected into a product, so make it right the first time. Making it right or doing it right the first time should be the goal of every worker. Methods such as poka-yoke and structured machine setups, which increase the chance of doing it right the first time, should be utilized as much as possible. 6. Quality must be monitored to identify problems quickly and correct quality problems immediately. Statistical methods can play a useful role in monitoring quality and identifying problems quickly. But self--inspection and assessment of work by employees and customer assessments of quality are important components of the quality monitoring mechanism. 7. The organization must strive for continuous improvement. Excellent product quality is the result of workers striving to improve product quality and productivity on an ongoing basis using experience and experimentation. However, continuous improvement does not happen on its own. Organizational structures, work procedures, and policies should be established that promote and accelerate continuous improvement. A variety of organizational mechanisms have been used to promote continuous improvement, such as work teams, quality circles, and suggestion systems. Each of these methods utilizes workers who are directly involved in the production process as a primary source for improvement ideas. Some

The Principles of Total Quality Management

Good product quality requires a coherent program of activities and policies that combines people, technology, and processes within an institutional infrastructure that provides the correct vision, organization, incentives, and support. Total Quality Management (TQM) synthesizes the most important quality principles and practices proposed by quality gurus. TQM addresses both the design and conformance aspects of quality, and it provides a coherent approach that readily encompasses all the relevant quality management principles and tools. Success in quality management is unrelated to the program followed or techniques utilized; but rather, depends upon whether a TQM program is in place with policies and structures that fit the organizational structure and personnel. TQM is based on the following principles: 1. Primary responsibility for product quality rests with top management. Management must create an organizational structure, product design process, production process, and incentives that encourage and reward good quality. Juran has stated clearly that The critical variable in Japanese quality leadership is the extent of active participation by senior managers.

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experts, however, believe that separate improvement teams should be used to initiate and guide improvement projects. 8. Companies must work with, and extend TQM programs to their suppliers to ensure quality inputs. For many manufacturing companies, purchased components and materials account for well over 50% of their production costs. Similarly, over 80% of the costs of many wholesalers and retailers are the costs of goods in-tended for resale. If suppliers are providing low-quality components, materials, or goods, then the purchasing company will find it impossible to achieve a high level of quality in the goods and services it produces. In fact, many companies now re-quire suppliers to have quality management programs that have been certified by the customer or by a recognized certification organization, such as the International Organization for Standardization. The success of the Japanese in producing quality products can be attributed to their willingness to borrow and synthesize ideas from many sources and to the effort of each organization to customize the quality system to its own character, Some companies use quality circles, while others do not; some have extensive suggestion systems, while others do not; some use statistical methods, while others do not; and some strive for zero defects, while others simply seek continual improvement or more achievable goals such as one defect per 100,000 units, The success of these companies seems to be unrelated to which program they follow or which technique they use. Rather, success depends on whether they have a TOM program in place with policies and structures that fit their own organizational culture and personnel.

internal suppliers on project teams is an excellent approach. Those affected by the plan must be involved in its development and implementation. They understand the process better than anyone lese. Changing behavior is the goal. People must come to work not only to do their jobs, but also to think about how to improve their jobs. People must be empowered at the lowest possible level to perform processes in an optimum manner. 4. Continuous improvement of the business and production process. There must be a continual striving to improve all business and production processes. Quality improvement projects, such as on-time delivery, order entry efficiency, billing error rate, customer satisfaction, cycle time, scrap reduction, and supplier management, are good places to begin. Technical techniques such as SPC, benchmarking, quality function development, ISO 9000, and designed experiments are excellent for problem solving. 5. Treating suppliers as partners. On the average 40% of the sales dollar is purchased product or service; therefore, the supplier quality must be outstanding. A partnering relationship rather than an adversarial one must be developed. Both parties have as much to gain or lose based on the success or failure of the product or service. The focus should be on quality and life-cycle costs rather than price. Suppliers should be few in number so that true partnering can occur. 6. Establish performance measures for the processes. Performance measures such as uptime, percent nonconforming, absenteeism, and customer satisfaction should be determined for each functional area. These measures should be posted for everyone to see. Quantitative data are necessary to measure the continuous quality improvement activity. The purpose of TQM is to provide a quality product and/or service to customers, which will, in turn, increase productivity and loser cost. With a higher quality product and lower price, competitive position in the marketplace will be enhanced. This series of events will allow the organization to achieve the objectives of profit and growth with greater ease. In addition, the work force will have job security, which will create a satisfying place to work. As previously stated, TQM requires a cultural change. The table below compares the previous state with the TQM state for typical quality elements. This change is substantial and will not be accomplished in a short period of time. Small organizations will be able to make the transformation much faster than large organizations. New and Old Cultures
Quality Element Previous State Definition Priorities Decisions Emphasis Product-orientated Second to service and cost Short-term Detection TQM Customer-oriented First among equals of service and cost. Long-term Prevention

Basic Approach
1. A committed and involved management to provide long-term top-to-bottom organizational support. Agreement must participate in the quality program. A quality council must be established to develop a clear vision, set longterm goals, and direct the program. Quality goals are included in the business plan. An annual quality improvement program is established and involves input from the entire work force. Managers participate on quality improvement teams and also act as coaches to other teams. TQM is a continual activity that must be entrenched in the cultureit is not just a one-shot program. TQM must be communicated to all people. 2. An unwavering focus on the customer, both internally and externally. The key to an effective TQM program is its focus on the customer. An excellent place to start is by satisfying internal customers. We must listen to the voice of the customer and emphasize design quality and defect prevention. Do it right the first time and every time, for customer satisfaction is the most important consideration. 3. Effective involvement and utilization of the entire work force. TQM is an organization-wide challenge that is everyones responsibility. All personnel must be trained in TQM, statistical process control (SPC), and other appropriate quality improvement skills so they can effectively participate on project teams. Including internal customers and, for that matter,
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Errors Responsibility Problem Solving Procurement Managers Role

Operations Quality control Managers Price Plan, assign, control,

System Everyone Teams Life-cycle costs, partnership Delegate, coach, Facilitate and enforce and mentor

not recognized the importance of quality. However, a new attitude has emergedquality first among the equals of cost and service. To sum it up, the customer wants value. Gain in Productivity with Improved Quality

Item

Before Improvement 10% Nonconforming

After Improvement 5% Nonconforming 1.00

TQM Framework.
The figure shows the framework for the TQM system. It begins with the knowledge provided by gurus of quality: Shewhart, Deming, Juran, Figenbaum, Ishikawa, Crosby, and Taguchi. As the figure shows, they contributed to the development of principles and practices and/or the tools and techniques. Some of these tools and techniques are used in the product and/or service realization activity. Feedback from internal/external customers or interested parties provides information to continually improve the organizations system, product and/or service.

Relative total cost for 20 units

1.00

Conforming units

18

19

Relative cost for nonconforming units

0.10

0.05

Productivity increase

(100) (1/18)=5.6%

Capability increase

(100) (1/18)=5.6%

Profit increase

(100) (1/18)=5.6%

Shewhart Deming Juran Feigenbaum Ishikawa Crosby Taguchi Benchmarking Information Technology Quality Management Systems Environmental Management System Quality function Deployment Quality by Design Failure Mode & Effect Analysis Products & Service Liability Total Productive Maintenance Management Tools Statistical Process Control Experimental Design Taguchis Quality Engineering

Tools and Gurus Techniques

Quality and productivity are not mutually exclusive. Improvements in quality can lead directly to increased productivity and other benefits. The table above illustrates this concept. As seen in the table, the improved quality results in a 5.6% improvement in productivity, capacity, and profit. Many quality improvement projects are achieved with the same work force, same overhead, and no investment in new equipment. Recent evidence shows that more and more corporations are recognizing the importance and necessity of quality improvement if they are to survive domestic and world-wide competition. Quality improvement is not limited to the conformance of the product or service to specifications; it also involves the inherent quality in the design of the system. The prevention of product, service, and process problems is a more desirable objective than taking corrective action after the product is manufactured or a service rendered. TQM does not occur overnight; there are no quick remedies. It takes a long time to build the appropriate emphasis and techniques into the culture. Overemphasis on short-term results and profits must be set aside so long-term planning and constancy of purpose will prevail. Obstacles Many organizations, especially small ones with a niche, are comfortable with their current state. They are satisfied with the amount of work being performed, the profits realized, and the perception that the customers are satisfied. Organizations with this culture will see little need for TQM until they begin to lose market share. Once an organization embarks on TQM, there will be obstacles to its successful implementation. They are given below.

Principles and Practices

Products or Service Realization People and Relationships: Leadership Customer Satisfaction Employee Involvement Supplier Partnership

Customer

Approach: Continuous Process Improvement Measure: Performance Measures

TQM Framework Awareness An organization will not begin the transformation to TQM until it is aware that the quality of the product or service must be improved. Awareness comes about when an organization loses market share or realizes that quality and productivity go hand-in-hand. It also occurs if TQM is mandated by the customer or if management realizes that TQM is a better way to run a business and compete in domestic and world markets. Automation and other productivity enhancements might not help a corporation if it is unable to market its product or service because the quality is poor. The Japanese learned this fact from practical experience. Prior to World War II, they could sell their products only at ridiculously low prices, and even then it was difficult to secure repeat sales. Until recently, corporations have
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Lack of Management Commitment In order for any organizational effort to succeed, there must be substantial management commitment of management time and organizational resources. The purpose must be clearly and continuously communicated to all personnel. Management must consistently apply the principles of TQM. Robert Galvin of Motorola said that only the CEO can ensure, even in times of great pressure, that quality and customer satisfaction are preserved. In a survey of 188 quality professionals, 66% reported that managements compensation is not linked to quality goals such as failure costs, customer complaints, and cycle time reduction. Inability to Change Organizational Culture Changing an organizations culture is difficult and will require as much as five years. Individuals resist changethey become accustomed to doing a particular process and it becomes the preferred way. Management must understand and utilize the basic concepts of change. They are: 1. People change when they want to and to meet their own needs. 2. Never expect anyone to engage in behavior that serves the organizations values unless adequate reason (way) has been given. 3. For change to be accepted, people must be moved from a state of fear to trust. It is difficult for individuals to change their way of doing things; it is much more difficult for an organization to make cultural change. Management by exhortation and inspiration will fail. Speeches, slogans, and copings that are supposed to motivate people are only effective for a short period of time. Impediments to a cultural change are the lack of effective communication and emphasis on short-term results. Organizations that spend more time planning for the cultural aspects of implementing a TQM program will improve their chances of success. Improper Planning All constituents of the organization must be involved in the development of the implementation plan and any modifications that occur as the plan evolves. Of particular importance is the two-way communication of ideas by all personnel during the development of the plan and its implementation. Customer satisfaction should be the goal rather than financial or sales goals. Peterson Products, a metal stamping firm near Chicago, improved on-time delivery, which resulted in a 25% increase in sales. Focus on quality and the other goals will follow. Lack of continuous Training and Education Training and education is an ongoing process for everyone in the organization. Needs must be determined and a plan developed to achieve those needs. Training a education are most effective when senior management conducts the training on the principles of TQM. Informal training occurs by communicating the TQM effort to all personnel on a continual basis.

In a study by Tamimi and Sebastianelli, lack of training in group discussion and communication techniques, quality improvement skills, problem identification, and the problemsolving method was the second most important obstacle. Incompatible Organizational Structure and Isolated Individuals and Departments Differences between departments and individuals can create implementation problems. The use of multifunctional terms will help to break down long-standing barriers. Restructuring to make the organization more responsive to customer needs may be needed. Individuals who do not embrace the new philosophy can be required to leave the organization. Adherence to the six basic concepts will minimize the problem over time. At Spartan Light Metal Products, Inc. in Sparta, IL, product support teams composed of three members from design, quality, and production are assigned to each customer segment. Ineffective Measurement Techniques and Lack of Access to Data and Results Key characteristics of the organization should be measured so that effective decisions can be made. In order to improve a process you need to measure the effect of improvement ideas. Access to data and quick retrieval is necessary for effective process. People Bank of Bridgeport, CT found that extra inspection, training, and management encouragement did not help a high error rate. Finally the bank investigated the root causes of the problem and corrected them which virtually eliminated the problem. Paying Inadequate Attention to Internal and External Customers. Organizations need to understand the changing needs and expectations of their customers. Effective feedback mechanisms that provide data for decision making are necessary for this understanding. One way to overcome this obstacle is to give the right people direct access to the customers. Ingersol Rand of Princeton, NJ had its design team of marketing, engineering, and manufacturing conduct focus groups of customers throughout the country with the result that it was able to develop a new grinder in one-third the usual cycle time. When an organization fails to empower individuals and teams, it cannot hold them responsible for producing results. Inadequate Use of Empowerment and Teamwork Teams need to have the proper training and, at least in the beginning, a facilitator, whenever possible, the teams recommendations should be followed. Individuals should be empowered to make decisions that affect the efficiency of their process or the satisfaction of their customers. Solar Turbines, Inc. flattened its organization by restructuring into work teams and delegating authority to the point of customer contact or to the work performed. Failure to Continually Improve It is tempting to sit back and rest on your laurels. However, a lack of continuous improvement of the process, product, and/ or service will even leave the leader of the pack in the dust. Will

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Rogers said it best, Even if youre on the right track, youll get run over if you just sit there. Even though Champion Mortages 1998 business volume increased 59%, it continues to address culture, staff, and services issues. Benefits of TQM As I have told about TQM and approach to TQM ,there are benefits of TQM ,I am going to discuss about the benefits of TQM. According to a survey of manufacturing firms in Georgia, the benefits of TQM are improved quality, employee participation, teamwork, working relationships, customer satisfaction. Employee satisfaction, productivity, communication, profitability, and market share. TQM is a good investment as shown by a ten-year study by Hendricks and Singhai. They showed that there is a strong link between TQM and financial performance. The researchers selected a group of 600 publicly traded organizations that had won awards for effectively implementing TQM. They then selected a control group similar in size and industry to the award winners. Performance of both groups was compared during the five years prior to the award and five years after winning the awards. No difference was shown between the two groups prior to the award. However, as shown below the award group far outstripped the control group during the fiveyear period after the award. Description Increase in Sales Increase in Total Assets Control Award 91% 69% 79% 32% 37% Growth in Operating Income 43%

strategy (which may not exist), but rather to have a strategy that is well thought out and fits the culture and personnel of the organization (exploits its strengths), and to have everyone in the organization committed to the strategy and its underlying goals. By reading the comments of the managers who failed in their implementations of TQM, we can see that failure was almost guaranteed. They lacked a real strategy and commitment from management and the employees. The most common causes for TQM failures appear to be the following: 1. Lack of Commitment by Top Management. Top management cannot simply pro-claim that the organization will now use TQM. Management must itself learn what TQM is, establish the organizational structure and reward system to support it, and be willing to devote the significant up-front resources and effort required to implement and monitor it. 2. Focusing on Specific Techniques Rather Than on the System: A surprising num-ber of managers read an article about the success another company has had with some quality management technique, such as SPC or quality circles, and assume the technique will work for them as well. In most cases, the technique worked for the first company because it was part of a larger quality management system that supported its use, and it evolved and was implemented over time. No simple recipe of techniques ensures high quality (take two cups of SPC and one cup of quality circles and sprinkle the mixture with Demings 14 points). TQM is an entire system with reinforcing and synergistic components. Although TQM can and maybe should be implemented on a small scale initially, the focus needs to be on the system as a whole and the achievement and improvement of quality as a process, not a slogan, formula, or technique. 3. Not 0btaining Employee Buy-in and Participation. The success of TQM depends on employee buy-in and commitment to its principles and their increased responsibility for quality. This commitment cannot be achieved by edict. It requires informing employees about the reasons for and goals of a TQM system, and involving them in setting up the training and implementation of the system. They must also see clearly why it is in their best interest to participate. Middle managers especially must be sold on TQM or they must be taken out of the process. TQM transfers some job responsibilities and authority to the lowest levels in the organization, which usually reduces the number of middle managers needed and changes the functions of those managers who remain. Unless this issue is addressed, middle managers can sabotage the entire implementation.4. Program Stops with Training. Some organizations obtain management and employee commitment and provide training but then expect that .the rest will happen on its own; It wont. The next step is crucial: turning the training into action. This can take several forms, such as specific quality improvement projects or the creation and operation of a suggestion system. These steps must produce clear
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The study also showed that stock price performance for the award winners was 114% while the S & P was 80%. In addition, the study showed that small organizations out performed larger organizations. Recent studies have shown that only about 30% of manufacturing organizations have successfully implemented TQM. Do TQM Programs always succeed? How can TQM be a tremendous success in some cases and a terrible failure in others? Is it because some companies used statistical quality control, while others did not? Is it because some companies used concurrent design and others did not? Is it because some used quality circles and others did not? When we look at the principles of TQM, it is clear that they make eminent sense and a quality system that embodies these principles should be successful. Failures attributed to TQM are not due to a deficiency in the programs philosophy or its basic principles. Certainly no one would claim that top management should not take responsibility and be involved in quality, or that the company should not strive to improve or not consider customer preferences and standards. Nor is TQM too new or conceptually complicated. Many of the principles of TQM have been used for several decades, and the basic features of TQM are quite simple. The primary cause of failure is in the implementation of TQM. Many business and mil-itary leaders and sports coaches claim that the secret of success is not necessarily to have the best

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improvements in the system. Nothing ignites a TQM, or any production improvement system, more than initial visible successes. 5. Expecting Immediate Results, Not a Long-Term Payoff. For most companies TQM involves a complete organizational and cultural change. Such changes do not occur quickly, and significant tangible results may take one or two years to achieve. Certainly it is helpful to achieve some tangible, quick successes. But realistically, these quick successes are likely to be small at first. Too many companies gave up on TQM after six months because they did not see large benefits. To accelerate benefits, some companies try to do too much too fast. Terrence Ozan of Ernst and Young, who has studied TQM implementation, found this to be a prescription for failure: A lot of companies tried to implement 9,000 new practices simultaneously. But you dont get results that way. Its just too much. 6. Forcing the Organization to Adopt Methods That Are Not Productive or Compati6le with its Production System and Personnel. Not all quality management techniques are suitable for every organization. For example, in some production processes, such as one that makes customized goods, SPC is not practical or does not provide sufficient benefit to justify the effort. When companies try to force the use of techniques and organizational structures in situations where they do not fit, not only do those techniques fail, they undermine confidence in the entire TQM system. Anger and frustration are then directed to the entire system rather than to the real cause. Companies need to be flexible in how they implement specific aspects of TQM, and they must be willing to backtrack quickly when some aspect of it clearly is not appropriate for their situation. We have described reasons why TQM sometimes fails, but why does TQM succeed and what factors contribute to success? The necessary ingredients for TQM to succeed are implicit in the causes of failure. Successful TQM systems are the result of a commit-ted top management that takes the steps necessary to educate all employees about the reasons for adopting TQM, sharing a vision, getting them to buy into and participate in designing and implementing the system, providing the necessary training, following up with action, and then having the patience to wait for benefits that may take years to be fully realized. One crucial question is, where should we start? Clearly, we want to start where we believe we have the best chance of producing substantial benefits quickly. A large percentage of quality costs and defects involve a relatively small number of products, production activities, or departments (the Pareto principle). By collecting good data on where quality problems and costs occur, we can locate those areas with the greatest potential for improvement. Second, once we identify the major problem areas, we have to deter-mine what actions are necessary to solve the problems-quickly and easily, if possible. Frequently, there is no simple or easy solution, and we may be better off initially attacking problems that have fewer potential payoffs but can be solved more quickly and easily. Third, changes can be implement

more successfully by cooperative people. So a major consideration in deciding where to implement the first changes is the personnel and performance history of the units. Those departments or facilities with enthusiastic, cooperative personnel should be prime candidates for the initial implementation. When a quality management program is implemented successfully in one part of a company by enthusiastic employees, that program can become a model and a rallying point for other divisions and provide a talent pool that can be tapped to help other units design and implement their quality management programs. These successes can create momentum that carries the program throughout the organization.

Exercise
Q1.What is TQM? Explain the principles on which TQM is based? Q2.What is the basic approach to achieve TQM? Q3.What are the dimensions of Quality? Describe them in your own word. Q4.Compare and contrast the Quality aspects of goods/ manufacturing and services? Q5.What are the Obstacles for implementing TQM? Describe them. Notes

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