1 TQM LESSON 1 INTRODUCTION TO QUALITY

TOTAL Made up of the whole QUALITY Degree of excellence a product or service provides MANAGEMENT the process of working with people and resources to accomplish organizational goals Act, art or manner of planning, controlling, organizing and leading to achieve organizational goals TOTAL QUALITY MANAGEMENT TQM is an art of managing the whole to achieve excellence TQM is a management system, a philosophy, set of tools and organizational models, an organization wide approach focusing on total quality to satisfy the customers. Consists of continuous improvement activities involving everyone in the organization management and workers in a totally integrated effort toward improving performance at every level. This improved performance is directed toward satisfying such cross-functional goals as quality, cost, schedule, mission and suitability BASIC CONCEPTS THAT ARE THE FOUNDATION OF TQM: 1. Continuous improvement on quality 2. Central focus on the customer 3. Employee involvement 4. Systematic improvement of operations 5. Development of human resources 6. Respect the ability of trained employees 7. Study of work processes 8. Open work environment 9. Long-term thinking 10. Management responsibility for TQM leadership Quality is not a new concept in modern business. In October 1887, William Cooper Procter, grandson of the founder of Procter & Gamble, told his employees: Modern Importance of Quality The first job we have is to turn out quality merchandise that consumers will buy and keep on buying. If we produce it efficiently and economically, we will earn a profit, in which you will share. - William Cooper Procter

This statement addresses three important factors that contribute to the

profitability of the business manufacturing or service organizations: productivity ,cost and quality Determinants of Profitability Productivity measure of efficiency or the amount of output achieved per unit of input

2 TQM
Cost of operation Quality of goods and services that create customers satisfaction

Of these three determinants of profitability, the most significant factor in determining the long-run success or failure of any organization is QUALITY. Importance of quality High quality goods and services can provide an organization with a competitive edge High quality reduces costs resulting from returns, rework, and scrap It increases productivity, profits and other measures of success high quality generates satisfied customers, who reward the organization with continued patronage and favorable word of mouth advertising No quality, no sales; No sales, no profit; No profit, no jobs Key Idea Building and maintaining quality into an organizations goods and services, and more importantly, into the infrastructure of the organization itself, is not an easy task. Quality Assurance (QA) Any planned and systematic activity or action directed toward providing customers with goods and services of appropriate quality to meet consumers requirements QA has bee an important aspect of production operations throughout history Defining Quality Quality is defined in several ways: o Perfection o Consistency o Eliminating waste o Speed of delivery o Compliance with policies and procedures o Providing a good, usable product o Doing it right the first time o Delighting or pleasing customers o Total customer service and satisfaction Formal Definition of Quality a. Transcendent definition: excellence or superiority Excellence is abstract and subjective, and standard of excellence may vary among individuals Transcendent definition does not provide a means by which quality can be measured or assessed as a basis for decision making b. Product-based definition: quantities of product attributes The higher levels or amounts of product characteristics are equivalent to higher quality As a result, quality is mistakenly assuned to be related to price The higher the price, the higher the quality c. User-based definition: fitness for intended use

3 TQM
how well the product perform its intended function product does whats intended and lasts Individuals have different wants and needs, hence different quality standards

d. Value-based definition: quality vs. price Relationship of usefulness or satisfaction to price A quality product is one that is as useful as competing products and is sold at a lower price e. Manufacturing-based definition: conformance to specifications Quality refers to the desirable outcome of engineering and manufacturing practice No processing complaints Done on time Increasing conformance raises profits Ex. If a hotel room is not clean when a guest checks in, hotel is not functioning according to specifications of its design Specifications targets and tolerances determined by designers of products and services Targets are the ideal values for which production is expected to strive Tolerance sacceptable deviations from these ideal values, recognizing tht it is impossible to meet the targets all the time f. Customer Driven Quality Meeting or exceeding customer expectations Customers can be... a. Consumers b. External customers c. Internal customers

Consumers Ultimate purchaser of a product or service The guest who registers at a hotel The buyer of a computer for personal use In case of fast food restaurants, the people who buy and consume the restaurants ready-made burgers, pizzas, tacos, etc. External customers Suppliers of goods and services outside the company that add some value to the product Companies within a chain of customers, a chain of many firms who work together to produce the final consumer product A firm that relies on the product or service of another company to produce its own product or service is an external customer Examples: o Most hamburger-based fast food restaurants use a special French frying unit.

4 TQM
o The fast food restaurant is therefore an external customer of the separate manufacturing company that makes this device

Internal customers People or division within a company who receive goods or services from suppliers within the company o In the fast food restaurant, the employee who serves the French fries is an internal customer to the employee who operates the fryer (assuming that there are separate employees assigned to each task) Every person in a process is a customer of the previous operation (applies to design, manufacturing Each worker should see that the quality meets expectations of the next person in the supplier-to-customer chain Key Idea Because individuals in different business functions speak different languages, the need for different views of what constitutes quality at different points inside and outside an organization is necessary to create products of true quality that will satisfy customers needs Total Quality A people-focused management system that aims at continual increase in customer satisfaction at continually lower real cost. TQ is a total system approach )not a separate area or program) and an integral part of high-level strategy It works horizontally across functions and departments, involves all employees, top to bottom and extends backward and forward to include the supply chain and the customer chain TQ stresses learning and adaptation to continual change as keys to organizational success The foundation of total quality is philosophical: the scientific method. TQ includes systems, methods and tools. The system permits change; the philosophy remains the same TQ is anchored in values that stress the dignity of the individual and the power of community action To summarize, TQ People-focused management system Focus on increasing customer satisfaction and reducing costs A systems approach that integrates organizational functions and the entire supply chain Stresses learning and adaptation to change Based on the scientific method Fig. 1.1 The Scope of Total Quality

Practices

5 TQM

PRINCIPLE S

Participation and Teamwork Infrastructure Tools and Techniques

Principles of Total Quality a. Participation and teamwork b. Process focus supported by continuous improvement and learning c. Customer and stakeholder focus .all supported by an integrated organizational infrastructure, a set of management practices, and a set of tools and techniques Participation and teamwork Employees know their jobs best and therefore, how to improve them Management must develop the systems and procedures that foster participation and teamwork Empowerment better serves customers, and creates trust and motivation Teamwork and partnerships must exist both horizontally and vertically Organizations are integrated vertically by linking all the levels of management in a hierarchal way TQ requires horizontal coordination between organizational units such as between design and engineering, engineering and manufacturing, manufacturing and shipping and sales Cross-functional teams provide this focus Partnerships with unions, customers, suppliers and educational organizations also promote teamwork and permit the blending of the organizations core competencies and capabilities with the complementary strengths of partners, creating mutual benefits Process focus supported by continuous improvement and learning a. Process A process is how work creates value for customers Processes transform inputs (facilities, materials, capital, equipment, people, and energy) into outputs (goods and services) Most processes are cross-functional Example: an order fulfillment process might involve a salesperson placing the order; a marketing representative entering it on the companys computer system; a credit check by finance; picking, packaging and shipping by distribution and logistics personnel; invoicing by finance and installation by field service engineers

6 TQM
b. Continuous Improvement Enhancing value through new products and services Reducing errors, defects, waste, and costs Increasing productivity and effectiveness Improving responsiveness and cycle time performance c. Learning The foundation for improvement Understanding why changes are successful through feedback between practices and results, which leads to new goals and approaches Learning cycle consists of 4 stages: Planning Execution of plans Assessment of progress Revision of plans based on assessment findings Customer and stakeholder focus Customer is principal judge of quality Organizations must first understand customers needs and expectations in order to meet and exceed them Organizations must build relationships with customers Customers include employees and society at large A firm must recognize that internal customers are as important as external customers Fig. 1.2

TQ Infrastructure Refers to basic management systems necessary to function effectively and carry out the principles of TQ Elements of TQ infrastructure: a. Customer relationship management Requires that an organization establish effective strategies for listening to and learning from customers as well as approaches to measure of satisfaction relative to competition and to build

7 TQM
relationships, in order to understand present and future customer needs and keep pace with chanting markets b. Leadership and strategic planning Leadership must create clear values and high expectations for performance excellence and serve as role models to inspire and motivate the workforce to adopt and use quality practices Strategic planning though quality requires a future orientation and willingness to make long-term commitments to customers and stakeholders c. Human resources management Human resource management is responsible for providing a fully committed, well-trained and involved workforce in order to meet the organizations stakeholders d. Process management Process management is needed to develop processes that effectively deliver products and services that meet the needs of the customers, are controlled so that they perform as required, and are continuously improved, over time e. Information and knowledge management Data and information management must be linked to an organizations strategy so as to provide critical information about key processes, outputs and results Practices Activities that occur within each element of the infrastructure to achieve high performance objectives Examples: Leadership practice: reviewing company performance HRM practice : training and determining employee satisfaction Process management practice : coordinating design and productivity/delivery processes to ensure trouble free delivery of products/services Tools Include a wide variety of graphical and statistical methods to plan work activities, collect data, analyze results, monitor progress and solve problems Example: Chart showing trends in guests complaints as employees progress through a training program Competitive advantage Firms ability to achieve market superiority Characteristics of competitive advantage Is driven by customer wants and needs Makes significant contribution to business success Matches organizations unique resources with opportunities Is durable and lasting Provides basis for further improvement

8 TQM
Provides direction and motivation Quality supports each of these characteristics Fig. 1.3

3 Levels of Qaality Organizational level: meeting external customer requirements Process level: linking external and internal customer requirements Performer/job level: meeting internal customer requirements Organizational level Meeting external customer requirements The following questions help to define quality at the organizational level o Which products and services meet your requirements? o Which do not? o What products or services do you need that you are not receiving? o Are you receiving products and services that you do not need Customer-driven performance standards should be used as bases for goal setting, problem solving, performance appraisal, incentive compensation, non financial rewards and resource allocation Process level Linking external and internal customer requirements At the process level, organizational units are classified as functions or departments, such as marketing, design, product development, operations, finance, purchasing, billing, and so on. At this level, managers should ask the following questions: o What products or services are most important to the external customer? o What processes produce those products and services o What are the key inputs to the process

9 TQM
o Which processes have the most significant effect on the organizations customer-driven performance standards o Who are my internal customers and what are their needs? Performer/job level Also known as job level or the task-design level Meeting internal customer requirements Standards for output must be based on quality and customer service requirements that originate at the organizational and process levels These standards include requirements for such things as accuracy, completeness, innovation, timeliness and costs For each output of the individuals job, one must ask the following: o What is required by the customer, both internal and external? o How can the requirements be measured? o What is the specific standards for each measure? Quality and Personal Values Personal initiative has a positive impact on business success Quality-focused individuals often exceed customer expectations Quality begins with personal attitudes Attitudes can be changed through awareness and effort (e.g., personal quality checklists) Unless quality is internalized at the personal level, it will never become rooted in the culture of an organization. Thus, quality must begin at a personal level (and that means you!).

Key Idea In the daily attempt to bring about change in the individual parts of the organizational universe, managers, employees, professors, and students can find that personal quality is the key to unlock the door to a wider understanding of what the concept really is all about.