POM Notes for FMS MBA Students by Ms.

Shuchi Singhal

UNIT - 5 TOTAL QUALITY MANAGEMENT

Concept of TQM

To understand the TQM concept, the three words are defined separately.

(1) Total: Everyone associated with the company is involved in continuous improvement.
(2) Quality: Customer’s expressed and implied requirements are met fully.
(3) Management: Executives (Top management people) are fully committed.

Definition given by ISO:

TQM is a management approach for an organization centered on quality, based on the

participation of all its members and aiming at long term success through customer satisfaction,
and benefit to all members of the organization and to society.

Features of Total Quality Management:

1. It is a wide concept which includes everyone and everything.

2. TQM emphasis use of all people.
3. The key aspect of TQM is the prevention of defects and emphasis on quality of design.
4. Focus on customer.

Benefits of Adoption of Total Quality Management:

1. Greater customer loyalty.

2. Market share improvement.
3. Higher stock prices.
4. Reduced service cells.

TQM in manufacturing and service sector:

Difference between service and manufacturing sector:

Points Service Sector Manufacturing Sector

1 Customer In service sector, the customer In manufacturing sector, the
Contact contact is Direct. customer contact is Indirect.
2 Use of Machine The machine is service sector, is The machine in manufacturing
Limited. sector, is Extensive.
3 Transaction Lot of paper work, small amount Small volume of paper work, high
of money. amount of.
4 Errors Errors are more in service sector. Errors are less in manufacturing
sector.
5 Tangibility It is Intangible. It is Tangible.
(Possibility of
measurement)
6 Focus It focuses on Human factor. It focuses on Product quality.
7 Indication of Indication of quality is the Indication of quality is the quality
quality customer compliant in the service standard in the manufacturing
sector. sector.
8 Quality In service sector, it is a short term In manufacturing sector, it is a long
Improvement plan for day to day problems. term structured plan.

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These Notes are prepared by Ms. Shuchi Singhal
85, Shri Gopal Nagar, Gopal Pura by pass, 5177216, 3241216
 POM Notes for FMS MBA Students by Ms. Shuchi Singhal

Implementation of TQM in services sector:

The following steps are proposed for TQM implementation in service system:

Step 1- Formulate service quality strategy.

Step 2- Analyse service process and define quality measures.
Step 3- Establish process control system.
Step 4- Investigate the process to identify improvement opportunity.
Step 5- Improve process quality.
In India, both the public sector and top private sectors like Infosys, Tata, Wipro, Swaraj etc are
using Total Quality system in their organizations successfully.

ISO 9000 management principles:

(1) Customer focus.

(2) Provide leadership
(3) Involvement of people
(4) Process approach
(5) System approach
(6) Continuous improvement
(7) Fact based decisions
(8) Relationship with supplies.

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These Notes are prepared by Ms. Shuchi Singhal
85, Shri Gopal Nagar, Gopal Pura by pass, 5177216, 3241216
 POM Notes for FMS MBA Students by Ms. Shuchi Singhal

SIX SIGMA
Meaning

Six Sigma is a business management strategy originally developed by Motorola, USA in 1986.

Six Sigma seeks to improve the quality of process outputs by identifying and removing the
causes of defects (errors) and minimizing variability in manufacturing and business processes.
It uses a set of quality management methods, including statistical methods, and creates a
special infrastructure of people within the organization who are experts in these methods.
Each Six Sigma project carried out within an organization follows a defined sequence of steps
has quantified and financial targets (cost reduction or profit increase).

The term Six Sigma originated from terminology associated with manufacturing, specifically
terms associated with statistical modeling of manufacturing processes. The maturity of a
manufacturing process can be described by a sigma rating indicating its yield, or the
percentage of defect-free products it creates. A six sigma process is one in which 99.99966%
of the products manufactured are statistically expected to be free of defects (3.4 defects per
million). Motorola set a goal of "six sigma" for all of its manufacturing operations, and this goal
became a byword for the management and engineering practices used to achieve it.

In Six Sigma, a defect is defined as any process output that does not meet customer
specifications, or that could lead to creating an output that does not meet customer
specifications.

The idea of Six Sigma was actually “born” at Motorola in the 1970s, when senior executive Art
Sundry was criticizing Motorola’s bad quality. Through this criticism, the company discovered
the connection between increasing quality and decreasing costs in the production process.
Before, everybody thought that quality would cost extra money. In fact, it was reducing costs,
as costs for repair or control sank. Then, Bill Smith first formulated the particulars of the
methodology at Motorola in 1986. Six Sigma was heavily inspired by six preceding decades of
quality improvement methodologies such as quality control, TQM, and Zero Defects.

Origin and meaning of the term "six sigma process"

Graph of the normal distribution, which underlies the statistical assumptions of the Six Sigma
model. The Greek letter σ (sigma) marks the distance on the horizontal axis between the
mean, µ, and the curve's inflection point. The greater this distance, the greater is the spread of
values encountered. For the curve shown above, µ = 0 and σ = 1. The upper and lower
specification limits (USL, LSL) are at a distance of 6σ from the mean. Because of the properties
of the normal distribution, values lying that far away from the mean are extremely unlikely.
Even if the mean were to move right or left by 1.5σ at some point in the future (1.5 sigma
shift), there is still a good safety cushion. This is why Six Sigma aims to have processes where
the mean is at least 6σ away from the nearest specification limit.

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These Notes are prepared by Ms. Shuchi Singhal
85, Shri Gopal Nagar, Gopal Pura by pass, 5177216, 3241216
 POM Notes for FMS MBA Students by Ms. Shuchi Singhal

Features

• Continuous efforts to achieve stable and predictable process results (i.e., reduce process
variation) are of vital importance to business success.
• Manufacturing and business processes have characteristics that can be measured,
analyzed, improved and controlled.
• Achieving sustained quality improvement requires commitment from the entire
organization, particularly from top-level management.
• A clear focus on achieving measurable and quantifiable financial returns from any Six
Sigma project.
• An increased emphasis on strong and passionate management leadership and support
• A clear commitment to making decisions on the basis of verifiable data, rather than
assumptions and guesswork.

Six Sigma is a registered service mark and trademark of Motorola Inc. As of 2006 Motorola
reported over US$17 billion in savings from Six Sigma.

Other early adopters of Six Sigma who achieved well-publicized success include General
Electric.

Six Sigma projects follow two project methodologies inspired by Deming's Plan-Do-Check-Act
Cycle. These methodologies, composed of five phases each, bear the acronyms DMAIC and
DMADV.

• DMAIC is used for projects aimed at improving an existing business process. DMAIC is
pronounced as "duh-may-ick".
• DMADV is used for projects aimed at creating new product or process designs. DMADV is
pronounced as "duh-mad-vee".

DMAIC

The DMAIC project methodology has five phases:

• Define the problem, the voice of the customer, and the project goals, specifically.
• Measure key aspects of the current process and collect relevant data.
• Analyze the data to investigate and verify cause-and-effect relationships.
• Improve or optimize the current process based upon data analysis using techniques
such as design of experiments.
• Control the future state process to ensure that any deviations from target are corrected
before they result in defects. Implement control systems such as statistical process
control and continuously monitor the process.

DMADV or DFSS

The DMADV project methodology, also known as DFSS ("Design For Six Sigma"), features five
phases:

• Define design goals that are consistent with customer demands and the enterprise
strategy.
• Measure and identify CTQs (characteristics that are Critical To Quality), product
capabilities, production process capability, and risks.
• Analyze to develop and design alternatives, create a high-level design and evaluate
design capability to select the best design.
• Design details, optimize the design, and plan for design verification. This phase may
require simulations.
• Verify the design, set up pilot runs, implement the production process and hand it over
to the process owner.

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These Notes are prepared by Ms. Shuchi Singhal
85, Shri Gopal Nagar, Gopal Pura by pass, 5177216, 3241216
 POM Notes for FMS MBA Students by Ms. Shuchi Singhal

Quality management tools and methods used in Six Sigma

• Analysis of variance • Histograms
• Cause & effects diagram • Process capability
• Chi-square test of independence and fits • Regression analysis
• Control chart
• Correlation
• Cost-benefit analysis

Criticisms
1. Lack of originality
2. Role of consultants
3. Potential negative effects
4. Based on arbitrary standards

Case Study - McDonald’s

If on any day McDonald’s served one million customers, how many of them experienced bad
service during lunch ? If only three customers were unhappy with their Lunch, then McDonald’s
achieved 6 Sigma on that day. This is because 6 Sigma is equivalent to only 3.4 bad customer
experiences for every million opportunities.

If 233 bad customer experiences occurred per million McDonald’s customers then McDonald’s
would be a Five Sigma company. If 6,210 customers had experienced soggy french fries or an
inaccurate order then McDonald’s would be a Four Sigma company.

If 66,807 McDonald’s customers opened their lunch bag and found a Big Mac when they had
ordered a Quarter Pounder, McDonald’s would be a Three Sigma company.
Six Sigma is a measure of customer satisfaction that is near perfection.

Case Study - DABBAWALA

Mumbai’s 5000 plus Dabbawalas are world famous for their impeccable service standards. They
pick up lunch boxes/ tiffin carriers from over 2,00,000 homes/ apartments, deliver them to
some 80,000 destinations and again ensure their safe return to those homes/ apartments – all
on the same day with each lap of journey & route accomplished within the specified time limits.
The people at work are not from any high academic background; rather many of them are
almost illiterate. They face the same crowded pavements, on-road dense vehicular traffic and
overloaded suburban trains.

Their way of doing business has, therefore, become a case study destination for every
management guru and B-school. A Dabbawala figured among a handful few from India who got
invitations to witness the marriage ceremony of Prince Charles. Sometime back, there was also
an All-Dabbawala ‘Deal Ya No Deal’ show in Sony Entertainment TV. They steal all attention
just because their service is of Six Sigma quality.

When the Defects Per Million Opportunity (DPMO) doesn’t exceed 3.4, the process is
said to have met Six Sigma level. And Mumbai Dabbawalas’ DPMO is less than 3.4 or
precisely, it is 2!

‘Sigma (r)’ denotes ‘Standard deviation’ – a statistical measure of dispersion/ variance. It is the
positive square root of the arithmetic mean of the squares of deviations of given observations
from their arithmetic mean.

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These Notes are prepared by Ms. Shuchi Singhal
85, Shri Gopal Nagar, Gopal Pura by pass, 5177216, 3241216