Introduction to Total Quality Management
The concept of Total Quality Management (TQM) is associated with quality; quality of services, processes or products. Generally, quality is linked to the quality of raw materials used to produce a product. However, the most significant definition of quality is the ability of a product or service to meet the needs of the customers. If a particular product or service completely satisfies the customer needs, it is then considered to be a quality product or service. In this respect, to make a product or service qualitative, there should be a regular and an equal effort from all the value chain partners or stakeholders.
For a bank to provide a quality service to its customers, all of its departments which directly or indirectly interact with customers must deliver exceptional service. At any point of time, a customer visits the bank for any service, he/she should leave the bank with full satisfaction. If it cannot be achieved by the bank, its service cannot be considered to be a quality service. Therefore, total quality management is a customer-oriented process. The process is a continuous one where the management aims to continuously improve the business operations. It encompasses the entire organization, from supplier to customers, for an operation-based organization. Decisions made by the value or supply chain partners deal with some aspects of identifying and meeting customer expectations. Thus, when the final product or service is provided to the customers, the customer is fully satisfied.
Concepts in Total Quality Management
There are several concepts that make TQM more effective. Most importantly, there are seven key concepts. They are:
Continuous Improvement
It is a continuous improvement process which includes people, equipment, suppliers, materials as well as procedures. Japanese use “Kaizen” to describe the never-ending process of improvement in TQM.
Six Sigma
It is a program that ensures reduction of defects which helps in lowering costs. It also saves time and ultimately improves customer satisfaction. Statistically, it ensures 99.9997% accuracy in producing a product or services and reduces the defects. The pioneer of six sigma i.e. Motorola developed the concept in the 1980s. It was introduced in response to their increasing customer complaints. It is also used by General Electric, Honeywell, DuPont etc.
Employee Empowerment
It is associated with enlarging the jobs of the employees. The added responsibility is then moved to the lower level and involves them in decision making. It ensures that employees take the responsibility of actions whether it is good or bad. TRW automotive uses this concept to ensure the quality of its product through accountability of employees.
Benchmarking
It involves selection of a standard criteria or performance which is among the best. And the other performances are measured against that standard benchmark. The benchmarking can be done internally or externally. Xerox & Mercedes-Benz use benchmarking to enhance their products and reduce the cost.
Just-in-time (JIT)
JIT is a philosophy and system which is designed to produce or deliver goods or services just as they are needed. Under this, the inventory levels are minimized to zero. It helps in reducing cost, improving quality and maintaining less inventory. Companies such as Toyota, Dell and Harled Davidson use the JIT system to produce their products. However, retail chains and restaurants also use JIT to enhance their services.
Taguchi Concepts
It is a concept developed by Genichi Taguchi who focuses on three components namely quality robustness, target-oriented quality and quality loss function. It is used to improve product as well as process quality. Boeing and Ford use this concept to increase their production, improve their quality and reduce the losses.
Through these methods, companies can develop or provide the highest quality goods and services. This further ensures that the customers are satisfied and their needs are fulfilled. In this aspect, the companies can justify the definition of quality and achieve total quality management.
Importance of Total Quality Management
- It ensures that superior quality products and services are provided to customers. The quality of the product or service should outperform through performance, reliability and durability.
- Total quality management is essential to attain greater customer satisfaction. Higher satisfied customers lead to increased customer loyalty. Due to the ignition issues of General Motors cars, many customers lost their lives and the brand lost a huge number of loyal customers.
- The continuous process of improvement helps in reducing the overall cost of the final product and services. This further helps in achieving economies of scale.
- The reduction in cost can also help companies reduce the price of the goods and services. This provides companies a competitive advantage in price.
- It ensures increased revenues and higher productivity of the organizations.
- Focus on quality reduces the cost of wastages and defects. Thus, TQM helps companies in reducing their wastage.
Eight principles of TQM
The principles of TQM are focused on a customer centric approach which involves and ensures continual improvement in process. To achieve the desired quality level, the principles are aligned with strategy, data, and effective communication with the employees at all levels. The eight principles of TQM are briefed below:
Customer Focus
The significance and purpose of creating any service or product is to fulfill customer needs. Thus, the customers are the ones who determine the level of quality. Therefore, the input of companies in attaining the quality of the product is justified only if the customers are satisfied with it. Thus, every activity of the organizations should be centered towards customers and their needs. Companies such as Starbucks, Zappos, and Amazon etc. are focused heavily on customer needs and their satisfaction.
Total Employee Involvement
A final worthwhile product or service is obtained only if employees at all levels are determined to make it happen. Therefore, there must be communication and motivation among employees to work for that common goal. The aspect of employee involvement differs from company to company. Arby’s, Best Buy, Home Depot are some companies known to have great employee engagement and satisfaction.
Process Centered
Process improvement is a fundamental part of TQM. The processes/steps that involve converting the input into output is important in determining the quality. Thus, the process is to be clearly defined, communicated and performance measures are to be established to reduce the loss. Henry Ford brought continuous improvement in automobile manufacturing through the introduction of modern manufacturing.
Integrated System
There are several departments within an organization. In addition, they differ with size and nature of operations they perform. However, to satisfy customers’ needs with their offering, they must integrate all their functions to work for that single goal.
Strategic and systematic approach
The principle of TQM is to formulate, communicate and implement strategic plans whose ultimate focus is achieving quality. The strategies and plans need to be coordinated in the above -mentioned integrated system although it may differ from department to department.
Continual Improvement
The heart and soul of TQM is continuous improvement in the process to achieve customer satisfaction. However, there is no end to continuous improvement. Thus, it is a means to an end but never an end itself. Toyota, Amazon, Haier are companies that continuously improve on their process, product and systems.
Fact-based decision making
Facts and data are prerequisites in making any kind of decision. Since, it is easy to analyze and derive inferences, data and facts need to be collected and stored. Performance metrics must be accurately collected and objectively examined in order to determine whether a business is accomplishing its goals.
Communications
Effective communication is crucial for preserving morale and inspiring workers at all levels. It is required both in regular business operations and during organizational transformation. Communication requires timing, methods, and strategies. Without an efficient communication strategy, a successful TQM method cannot be maintained. Plans for communication ensure that each department is aware of its obligations so that they can work together to attain a common objective.
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