Unit 1

Introduction to Total Quality Management (TQM)

Quality

Refers to the ability of a product or service to consistently meet or exceed customer requirements or
expectations. Different customers will have different requirements, so a working definition of quality is
customer-dependent. In order to rebuild its economy after the Second World War, Japan focused on
quality improvement, making it a national imperative. This took place during a time when quality was
not uppermost in the minds of business organizations worldwide. It wasn’t that quality was unimportant,
it just wasn’t very important.

Partly because of that thinking, Japanese companies captured a significant share of the U.S. market.
In the automotive sector, leading Japanese manufacturers Honda, Nissan, and Toyota became major
players in the auto sales market in the United States. Both Honda and Toyota built a reputation for
quality and reliability in their cars.

Many companies changed their views about quality after that, and changed them drastically. Stung
by the success of Japanese competitors, they embraced quality in a big way. They hired consultants,
sent their people (including top executives) to seminars, and initiated a vast array of quality
improvement programs. Those companies clearly recognized the importance of quality and realized
that quality isn’t something that is tacked on as a special feature but is instead an integral part of a
product or service. Managing for quality is now a key element of competition.

The Dimensions of Product Quality

One way to think about quality is the degree to which performance of a product or service meets or
exceeds customer expectations. The difference between these two, that is
𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒 – 𝐸𝑥𝑝𝑒𝑐𝑡𝑎𝑡𝑖𝑜𝑛𝑠, is of great interest. If these two measures equal, the difference is zero, and
expectations have met. If the difference is negative, expectations have not been met, whereas if the
difference is positive, performance has exceeded customer expectations.

Customer expectations can be broken down into a number of dimensions that customers use to judge
the quality of a product or service. Understanding these helps organizations in their efforts to meet or
exceed customer expectations. The dimensions used for products are somewhat different from those
used for services.

Product Quality is often judged on eight dimensions of quality.

1. Performance - main characteristics of the product.

2. Aesthetics - appearance, feel, smell, taste.
3. Special Features - extra characteristics.
4. Conformance - how well a product corresponds to design specifications.
5. Reliability - dependable performance.
6. Durability - ability to perform over time.
7. Perceived Quality - indirect evaluation of quality (e.g., reputation).
8. Serviceability - handling of complaints or repairs.
9. *Consistency – quality doesn’t wary
The Dimensions of Service Quality

The dimensions of product quality don’t adequately describe service quality. Instead, service quality is
often described using the following dimensions.

1. Convenience - the availability and accessibility of the service.

2. Reliability - the ability to perform a service dependably, consistently, and accurately.
3. Responsiveness - the willingness of service providers to help customers in unusual situations and to
deal with problems.
4. Time - the speed with which service is delivered.
5. Assurance - the knowledge exhibited by personnel who come into contact with a customer and
their ability to convey trust and confidence.
6. Courtesy - the way customers are treated by employees who come into contact with them.
7. Tangibles - the physical appearance of facilities, equipment, personnel, and communication
materials.
8. Consistency - The ability to provide the same level of good quality repeatedly.
9. *Expectations – meet (or exceed) customer expectations

SERVQUAL - A widely used tool for assessing service quality, an instrument designed to obtain feedback
on an organization’s ability to provide quality service to customers. It focuses on five of the previously
mentioned service dimensions that influence customers’ perceptions of service quality: tangibles,
reliability, responsiveness, assurance, and empathy. The results of this service quality audit help
management identify service strengths and weaknesses. Of particular interest are any gaps or
discrepancies in service quality.
Gaps or Discrepancies in Service Quality

1. Actual customer expectations and management perceptions of those expectations.

2. Management perceptions of customer expectations and service-quality specifications.
3. Service quality and service actually delivered.
4. Service actually delivered and what is communicated about the service to customers.
5. customers’ expectations of the service provider and their perceptions of provider delivery.

If gaps are found, they can be related to tangibles or other service quality dimensions to address the
discrepancies.

The Determinants of Quality

1. Design
• Quality of Design – refers to the intention of designers to include or exclude certain features in a
product or service. For example, many different models of automobiles are on the market
today. They differ in size, appearance, roominess, fuel economy, comfort, and materials used.
2. How well the product or service conforms to the design.
• Quality of Conformance - refers to the degree to which goods and services conform to (i.e.,
achieve) the intent of the designers. This is affected by factors such as the capability of
equipment used; the skills, training, and motivation of workers; the extent to which the design
lends itself to production; the monitoring process to assess conformance; and the taking of
corrective action (e.g., through problem solving) when necessary. One important key to quality
is reducing the variability in process outputs (i.e., reducing the degree to which individual items
or individual service acts vary from one another).
3. Ease of use
• The determination of quality does not stop once the product or service has been sold or
delivered. Ease of use and user instructions are important. They increase the chances, but do
not guarantee, that a product will be used for its intended purposes and in such a way that it
will continue to function properly and safely. (When faced with liability litigation, companies
often argue that injuries and damages occurred because the user misused the product.) Much
of the same reasoning can be applied to services. Customers, patients, clients, or other users
must be clearly informed on what they should or should not do; otherwise, there is the danger
that they will take some action that will adversely affect quality. Some examples include the
doctor who fails to specify that a medication should be taken before meals and not with orange
juice and the attorney who neglects to inform a client of a deadline for filing a claim.
4. Service after delivery
• For a variety of reasons, products do not always perform as expected, and services do not
always yield the desired results. Whatever the reason, it is important from a quality standpoint to
remedy the situation—through recall and repair of the product, adjustment, replacement or
buyback, or reevaluation of a service—and do whatever is necessary to bring the product or
service up to standard.

Key Areas of Responsibility for Quality

1. Top Management.
• Top management has the ultimate responsibility for quality. While establishing strategies for
quality, top management must institute programs to improve quality; guide, direct, and
motivate managers and workers; and set an example by being involved in quality initiatives.
Examples include taking training in quality, issuing periodic reports on quality, and attending
meetings on quality.
2. Design.
• Quality products and services begin with design. This includes not only features of the product
or service; it also includes attention to the processes that will be required to produce the
products and/or the services that will be required to deliver the service to customers. It also
includes attention to the processes that will be required to produce the products and/or the
services that will be required to deliver the service to customers.
3. Procurement.
• The procurement department has responsibility for obtaining goods and services that will not
detract from the quality of the organization’s goods and services.
4. Production/operations.
• Production/operations has responsibility to ensure that processes yield products and services
that conform to design specifications. Monitoring processes and finding and correcting root
causes of problems are important aspects of this responsibility.
5. Quality assurance.
• Quality assurance is responsible for gathering and analyzing data on problems and working with
operations to solve problems.
6. Packaging and shipping.
• This department must ensure that goods are not damaged in transit, that packages are clearly
labeled, that instructions are included, that all parts are included, and that shipping occurs in a
timely manner.
7. Marketing and sales.
• This department has the responsibility to determine customer needs and to communicate them
to appropriate areas of the organization. In addition, it has the responsibility to report any
problems with products or services.
8. Customer service.
• Customer service is often the first department to learn of problems. It has the responsibility to
communicate that information to appropriate departments, deal in a reasonable manner with
customers, work to resolve problems, and follow up to confirm that the situation has been
effectively remedied.

Benefits of Good Quality

• an enhanced reputation for quality

• the ability to command premium prices
• an increased market share
• greater customer loyalty
• lower liability costs
• fewer production or service problems

- which yields higher productivity, fewer complaints from customers, lower production costs, and higher
profits.

The Consequences of Poor Quality

It is important for management to recognize the different ways in which the quality of a firm’s products
or services can affect the organization and to take these into account in developing and maintaining
a quality assurance program. Some of the major areas affected by quality are:

• Loss of business
• Liability.
• Productivity.
• Costs
Three Categories of Costs of Quality

1. Appraisal Cost
• Relate to inspection, testing, and other activities intended to uncover defective products or
services, or to assure that there are none. They include the cost of inspectors, testing, test
equipment, labs, quality audits, and field testing.
2. Prevention Cost
• Relate to attempts to prevent defects from occurring. They include costs such as planning and
administration systems, working with vendors, training, quality control procedures, and extra
attention in both the design and production phases to decrease the probability of defective
workmanship.
3. Failure Cost
• Are incurred by defective parts or products or by faulty services.
o Internal Failure - those discovered during the production process.
o External Failure - those discovered after delivery to the customer.

Return on Quality (ROQ) – an approach that evaluates the financial return of investments in quality.

THE EVOLUTION OF QUALITY MANAGEMENT

• Prior to the Industrial Revolution, skilled craftsmen performed all stages of production.
• A division of labor accompanied the Industrial Revolution; each worker was then responsible for
only a small portion of each product.
• Frederick Winslow Taylor, the “Father of Scientific Management,” gave new emphasis to quality
by including product inspection and gauging in his list of fundamental areas of manufacturing
management.
• G. S. Radford improved Taylor’s methods. Two of his most significant contributions were the
notions of involving quality considerations early in the product design stage and making
connections among high quality, increased productivity, and lower costs.
• In 1924, Bell Telephone Laboratories introduced statistical control charts that could be used to
monitor production.
• Around 1930, H. F. Dodge and H. G. Romig, also of Bell Labs, introduced tables for sampling.
• World War II caused a dramatic increase in emphasis on quality control. The U.S. Army refined
sampling techniques for dealing with large shipments of arms from many suppliers.
• By the end of the 1940s, the U.S. Army, Bell Labs, and major universities were training engineers
in other industries in the use of statistical sampling techniques.
• During the 1950s, the quality movement evolved into quality assurance. In the mid-1950s, total
quality control efforts enlarged the realm of quality efforts from its primary focus on
manufacturing to also include product design and incoming raw materials.
• During the 1960s, the concept of “zero defects” gained favor. This approach focused on
employee motivation and awareness, and the expectation of perfection from each employee.
 It evolved from the success of the Martin Company in producing a “perfect” missile for the U.S.
Army.
• In the 1970s, quality assurance methods gained increasing emphasis in services including
government operations, health care, banking, and the travel industry.
• Something else happened in the 1970s that had a global impact on quality. An embargo on oil
sales instituted by the Organization of Petroleum Exporting Countries (OPEC) caused an increase
in energy costs, and automobile buyers became more interested in fuel-efficient, lower-cost
vehicles. Japanese auto producers, who had been improving their products, were poised to
take advantage of these changes, and they captured an increased share of the automobile
market. The quality of their automobiles enhanced the reputation of Japanese producers,
opening the door for a wide array of Japanese-produced goods.
• American producers, alarmed by their loss of market share, spent much of the late 1970s and
the 1980s trying to improve the quality of their goods while lowering their costs.
• The evolution of quality took a dramatic shift from quality assurance to a strategic approach to
quality in the late 1970s. Up until that time, the main emphasis had been on finding and
correcting defective products before they reached the market.

THE FOUNDATIONS OF MODERN QUALITY MANAGEMENT: THE GURUS

A. Walter Shewhart.
• Walter Shewhart was a genuine pioneer in the field of quality control, and he became known
as the “father of statistical quality control.”
• He developed control charts for analyzing output of processes to determine when corrective
action was necessary.
B. W. Edwards Deming
• Statistics professor at New York University in the 1940s, went to Japan after World War II to assist
the Japanese in improving quality and productivity.
• The Union of Japanese Scientists, who had invited Deming, were so impressed that in 1951, after
a series of lectures presented by Deming, they established the Deming Prize, which is awarded
annually to firms that distinguish themselves with quality management programs.
C. Joseph M. Juran
• Juran, like Deming, taught Japanese manufacturers how to improve the quality of their goods,
and he, too, can be regarded as a major force in Japan’s success in quality.
• Juran viewed quality as fitness-for-use. He also believed that roughly 80 percent of quality
defects are management controllable; thus, management has the responsibility to correct this
deficiency.
• He described quality management in terms of a trilogy consisting of quality planning, quality
control, and quality improvement
D. Armand Feigenbaum
• Feigenbaum was instrumental in advancing the “cost of non-conformance” approach as a
reason for management to commit to quality.
• He recognized that quality was not simply a collection of tools and techniques, but a “total
field.”
• According to Feigenbaum, it is the customer who defines quality.
E. Philip B. Crosby
• Crosby developed the concept of zero defects and popularized the phrase “Do it right the first
time.” He stressed prevention, and he argued against the idea that “there will always be some
level of defectives.”
F. Kaoru Ishikawa
 • The late Japanese expert on quality was strongly influenced by both Deming and Juran,
although he made significant contributions of his own to quality management.
• Among his key contributions were the development of the cause-and-effect diagram (also
known as a fishbone diagram) for problem solving and the implementation of quality circles,
which involve workers in quality improvement.
• He was the first quality expert to call attention to the internal customer —the next person in the
process, the next operation, within the organization.
G. Genichi Taguchi
• Taguchi is best known for the Taguchi loss function, which involves a formula for determining the
cost of poor quality.
• The idea is that the deviation of a part from a standard causes a loss, and the combined effect
of deviations of all parts from their standards can be large, even though each individual
deviation is small.
H. Taiichi Ohno and Shigeo Shingo
• Taiichi Ohno and Shigeo Shingo both developed the philosophy and methods of kaizen, a
Japanese term for continuous improvement (defined more fully later in this chapter), at Toyota.
Continuous improvement is one of the hallmarks of successful quality management.

QUALITY AWARDS

• The Baldrige Award – annual award given by the U.S. government to recognize quality
achievements of U.S. companies.
• The European Quality Award – European award for organizational excellence.
• The Deming Prize - named in honor of the late W. Edwards Deming, is Japan’s highly coveted
award recognizing successful quality efforts.

QUALITY CERTIFICATION

• ISO 9000 – a set of international standards on quality management and quality assurance,
critical to international business.
• ISO 14000 – a set of international standards for assessing a company’s environmental
performance.
• ISO 24700 – a set of international standards that pertains to the quality and performance of
office equipment that contains reused components.

ISO 9000 standards include the following categories:

• System requirements
• Management requirements
• Resource requirements
• Realization of requirements
• Remedial requirements

Eight quality management principles form the basis of the latest version of ISO 9000:

1. A customer focus.
2. Leadership.
3. Involvement of people.
4. A process approach.
5. A system approach to management.
6. Continual improvement.
7. Use of a factual approach to decision making.
8. Mutually beneficial supplier relationships.
The standards for ISO 14000 certification bear upon three major areas:

• Management systems - systems development and integration of environmental responsibilities

into business planning.
• Operations - consumption of natural resources and energy.
• Environmental systems - measuring, assessing, and managing emissions, effluents, andother
waste streams.

Total Quality Management

A philosophy that involves everyone in the organization in a continual effort to improve quality and
achieve customer satisfaction.

ELEMENTS OF TQM

1. Continuous improvement - The philosophy that seeks to improve all factors related to the process
of converting inputs into outputs on an ongoing basis.
Kaizen - refer to continuous improvement.
2. Competitive benchmarking - This involves identifying other organizations that are the best at
something and studying how they do it to learn how to improve your operation.
3. Employee empowerment - Giving workers the responsibility for improvements and the authority to
make changes to accomplish them provides strong motivation for employees.
4. Team approach - The use of teams for problem solving and to achieve consensus takes advantage
of group synergy, gets people involved, and promotes a spirit of cooperation and shared values
among employees.
5. Decisions based on facts rather than opinions - Management gathers and analyses data as a basis
for decision making.
6. Knowledge of tools - Employees and managers are trained in the use of quality tools.
7. Supplier Quality - Suppliers must be included in quality assurance and quality improvement efforts
so that their processes are capable of delivering quality parts and materials in a timely manner.
8. Champion - A TQM champion’s job is to promote the value and importance of TQM principles
throughout the company.
9. Quality at the source - Quality at the source refers to the philosophy of making each worker
responsible for the quality of his or her work.
10. Suppliers - are partners in the process, and long-term relationships are encouraged.