UNIVERSITY OF SAINT LOUIS

Tuguegarao City

SCHOOL OF ACCOUNTANCY, BUSINESS and HOSPITALITY

Second Semester
A.Y. 2023-2024

COURSE LEARNING MODULE

OMGT 1013 – Operations Management and Total Quality Management

Prepared by:

GLADYS T. TUMBALI, DBM

Reviewed by:

MARY ANN C. BARTOLOME, DBM

Business Administration Department Head

Recommended by:

ALICIA S. TULIAO, DBM

Academic Dean

Approved by:

EMMANUEL JAMES PATTAGUAN, Ph.D.

Vice President for Academics

WARNING: No part of this E-module/LMS Content can be reproduced, or transported or shared to others without
permission from the University. Unauthorized use of the materials, other than personal learning use, will be penalized.
Please be guided accordingly.

OMGT 1013-Operations Management and TQM | 1

 School of Accountancy, Business and Hospitality
Business Administration Department
Curriculum 2018-2019

COURSE LEARNING MODULE

OMGT 1013 (Operations Management and Total Quality Management)
AY 2023-20224

Lesson 17: Total Quality Management

Topic: TQM Evolution

Learning Outcomes: After reading this module, you are expected to:

- Examine the historical perspective of quality and evolution of TQM through creation of timeline.

- Discuss the concepts advocated by various Quality Gurus.

LEARNING CONTENT

Introduction:

Total Quality Management (TQM) is customer oriented management philosophy and strategy. It is
centered on quality so as to result in customer delight. The word “Total” implies that all members of the
organization make consistent efforts to achieve the objective of customer delight through systematic efforts for
improvement of the organization.

The TQM philosophy was evolved in Japan after World War II Edwards Deming, an American quality expert
helped the Japanese to apply concepts of TQM. They concentrated on customer satisfaction and focused on
understanding customer needs and expectations. However, the American industry ignored this development as
it was still riding high because of lack of competition. During the 1980s they were forced to look for new ways
to survive in an environment of deregulation, a growing trade deficit, low productivity, recession, downsizing
and increasing consumer awakening. Ford Motor Company lost more than US $ 3 billion during 1980-82. The
US market share of Xerox Corporation which had pioneered the photocopier, dropped from 93 per cent in 1971
to 40 per cent in 1981. The American industry now realized the importance of Deming’s teachings and started
applying them. This helped Xerox to regain market share from the Japanese, Ford to come out of the red,
Florida Light and Power, USA reduced customer complaints by 60 per cent in 1983. In 1985, the American
Navy coined the term TQM to represent broadly the Japanese way of quality management.

The need for quality was felt, during World War II, due to the unprecedented need for manufactured goods.
From then on, methodologies for assuring quality in products and services evolved continuously, finally leading
to TQM. Experts from many countries spearheaded this evolution, with Deming playing an important role. They
are popularly called the Quality Gurus. Since TQM IS the culmination of the teachings of the Quality Gurus,
understanding the teachings of the gurus will give the right perspective for TQM.

This module will therefore highlight the contributions of the Quality Gurus for the evolution of quality control
techniques and finally TQM.

OMGT 1013-Operations Management and TQM | 2

Lesson Proper:

Figure 1

TQM addresses the concepts of product quality, process control, quality assurance and quality
improvement, all of which are aimed at customer delight. Therefore, it is important to get the right meaning,
interpretation and understanding of the term quality and related terms. This will provide a strong foundation for
TQM. We will discuss various dimensions of quality in the following paragraphs.

DEFINITION OF QUALITY

Juran, one of the quality gurus, defined quality as fitness for use. A very concise definition indeed, for a
term that has so many dimensions! Quality of a product or service in simple terms is its suitability for use by the
customer. Quality has to be perceived by the customer. Perception of the supplier is also important, but the
customer experience of quality of a product or service is more important. Quality does not mean an expensive
product; on the contrary, it is fitness for use of the customer.

International Organization for Standardization (ISO), the world body for standards formulation was founded in
the year 1946 and has its headquarters in Geneva, Switzerland. Most countries in the world are members of
ISO. The national standardization bodies of various countries represent their countries in ISO. ISO is known all
over the world because of its path breaking standard ISO 9000, released for the first time in the year 1987. The
definition of quality as per the ISO 9000 standard is: “The totality of features and characteristics of a product or
service, that bear on its ability to satisfy a given or implied need”.

Thus, the standard definition of quality is common both to products and services. It is essentially satisfying the
customer needs, both stated and unstated (implied). The latter is more dominant in a service. When there is a
contract for supply of a product or service, the needs will be specified clearly. In other situations, it is the
responsibility of the supplier to identify and define them.

OMGT 1013-Operations Management and TQM | 3

CHAIN REACTION

The importance of quality will be clear from the chain reaction on account of quality envisaged in Japan
in the 1950s. The ‘chain reaction’ is depicted in Fig. 2 as follows:
Figure 2

Quality improvement results in improved productivity, as is clear from Figure 2. By eliminating defects, non-
value adding activities and rework, additional resource capacity is created. Improved quality also reduces the
production cycle time and machine time. Less material is required due to reduction of scrap and rework. All this
leads to improved productivity and increased capacity. If this is used to expand markets with lower prices, the
company prospers and stays in business. Deming noted that this chain reaction was on the black board of
every board meeting in Japan from July 1950 onwards. The Japanese success is the best case study for TQM.
Understanding the chain reaction transformed them from a shattered economy to a successful nation
challenging the USA after World War II.

DIMENSIONS OF QUALITY

Quality has many dimensions. The dimensions of quality are nothing but the various features of a
product or service. We will discuss some of them briefly:

Product Quality

1. Functionality - Functionality refers to the core features and characteristics of a product. The definition
of functionality as per ISO / EC 9126: 1991:

“A set of attributes that bear on the existence of a set of functions and their specified properties.
The functions are those that satisfy stated or implied needs”.

For instance, a car has to have a seating capacity for five persons; a steering wheel an accelerator, a
break, a clutch, head lights, gears, four wheels, etc. The functionality of a car represents each one of the
functions mentioned above and many others not listed above.

OMGT 1013-Operations Management and TQM | 4

 2. Reliability. A car should not breakdown often. This is the reliability attribute to quality. Reliability is
measured by mean (average) time between failures (MTBF) Reliability IS an indicator of durability of products.
For instance, the MTBF of a car can be specified as 1000 hours of running or 10000 kilometers.

3. Usability. A product should be easily usable. The customer should be able to use the product easily
without the help of experts. For instance, repairing a car may need the help of a mechanic, but the car can be
driven by the owner himself, it he is trained accordingly. Thus, each product should be made so that a person
can use it with minimum training. Usability can also be measured by the time taken for training an operator for
error-free operation of a system.

4. Maintainability. Maintainability refers to the ease with which a product can be maintained in the
original condition. Products may become defective while in use or in transit. It should be repairable so as to
retain the original quality of the product at the lowest cost at the earliest possible time. This applies to software,
automobiles, household items such as refrigerator, air conditioners, personal computer, etc. For instance,
when we use a Walkman we may need to change the batteries periodically. For software, maintainability is
defined in the Standard ISO 9126: 1991 as “A set of attributes that bear on the effort needed to make specified
modifications”.

Maintainability is measured as Mean Time To Repair (MTTR). For instance, the MTTR of a street light
controller is 15 minutes.

5. Efficiency This Is applicable to most products. Efficiency is the ratio of output to input. If a car gives a
mileage of 20 kms per litre of gasoline and another car with identical features gives 15 kms per litre, then the
former is more efficient than the latter. Another example is the brightness of a lamp at a given input voltage.

6. Portability This is more important in the context of software. Portability is defined as a set of
attributes that bear on the ability of software to be transferred from one environment to another. The
environment may be organizational, hardware or software environment. Any program purchased, such as an
accounting software, should be usable in many different machines without any problem. This is portability. This
feature is applicable even to consumer goods such as bulbs, razors etc.

Service Quality

Unlike products, every service is made to order. Therefore, the service quality has additional features. In
availing a service, the customer interacts more with the service provider. The quality of service depends to a
large extent on understanding the correct requirements of the customer through such interactions. Each
service has to be designed specifically for the customer. Hence, quality of service design is an important
feature Service delivery is another feature of service quality Thus, the additional features of service quality are:

 Quality of customer service

 Quality of service design
 Quality of service delivery

Each one of the above may have further dimensions. For instance, quality of service delivery includes
timeliness of service and the number of defects on delivery.

1. Quality of Customer Service Customer service is important in every business. In a service industry,
meeting customers and finding out their implied requirements is more challenging. Therefore, ability to satisfy
customer depends on the quality of customer service. This includes but is not limited to:

 How well the customer is received?

OMGT 1013-Operations Management and TQM | 5
  How well the implied requirements are elucidated?
 How well the customer is treated/handled/satisfied?

2. Quality of Service Design Since services are usually made to order, it is important that the service is
designed as per the requirements of the specific customer. For instance, a software product developed for a
specific bank takes into account the unique requirements of the bank. Quality of service design in turn depends
on the quality of customer service.

3. Quality of Delivery Quality of delivery is important in any sector, but more crucial in case of services.
Defects on delivery should be zero to satisfy the customers. Additional attributes of quality, which are
applicable to both products and services, are given below:

a. Timeliness Delivery on schedule as per requirements of the customer is a must both in the
product sector as well as in service sector. No customer likes waiting. Any anticipated delay in schedule
should be communicated to customer well in advance. Timeliness is critical for many products and
services. Delay in arrival of aircrafts or trains are instances of poor quality of the services encountered in
day-to-day life.

b. Aesthetics A product or service should not only perform well but also appear attractive.
Therefore, aesthetics is an important element of quality. Aesthetics may include, but not limited to the
appearance of the product, the finish, colour, etc. Customers will buy only those refrigerators or TV
receivers or music systems, which look good. '

c. Regulatory Requirements Regulatory requirements as stipulated by the local and federal

governments should be fulfilled by the product or service. For instance, an automobile has to meet Euro 11
Standards in respect of emission to minimize environmental pollution. Similarly, there are regulatory
requirements in respect of safety of electro-medical products.

4. Requirements of Society The products should fulfil both the stated and implied requirements imposed by
society. The customer requirement should not violate society or regulatory requirements. Thus to satisfy a
customer, a product cannot be built in such a way as to violate the requirements of society of a safe and
healthy product. For instance, providing belts for persons sitting in the front seat in a car is a requirement of the
society. Hence, the car manufacturers should provide belts for the passengers travelling in the front seat.

5. Conformance to Standards Product or service should conform to the stated and implied requirements if
customers. Where applicable, they should conform to applicable standards such as national standards.
International standards and industry standards. For instance, Electro-Magnetic Interference (EMI) from a PC
should be within the limits prescribed by the corresponding standard.

EVOLUTION OF QUALITY

Quality has been evolving for decades. The contribution of American Quality Gurus to this evolution is quite
impressive. The concepts were initially experimented successfully in Japan by the American Quality Gurus. In
this section, we will look at the contributions of some of them.

1. Dr Walter A Shewhart (1891-1967) worked in Western Electric Company and AT&T, USA. He
advocated Statistical Quality Control (SQC) and Acceptable Quality Level (AQL). AQL is the foundation
of today’s Six Sigma. He is considered to be the father figure of SQC, who developed control charts for
quality assessment and improvement. Dr Shewhart also developed the Plan, Do, Check, Act (PDCA)
cycle for continuous improvement, which is in use even today. He is the author of the following books:
OMGT 1013-Operations Management and TQM | 6
  Economic Control of Quality of Manufactured Products
 Statistical Method from the view Point of Quality Control
2. Deming W. Edwards (1900-1993) An associate of Shewhart, worked in Western Electric Company as
a statistician. He was invited to Japan to lead the quality movement. He modified PDCA cycle of
Shewhart to the Plan, Do, Study and Act (PDSA) cycle. He also advocated extensive use of statistics
and control charts and focused on product improvement and service conformance by reducing
variations in the process. He joined the US Census Bureau in the year 1939 and proved that quality
control methods could lower costs even in an exclusive service organization.

Deming stressed on the importance of suppliers and customers for the business development and
improvement. He believed that people do their best and it is the system that must change to improve
quality. His 14 points formed the basis for his advise to Japanese top management. The 14 points are
applicable to every industry in product and service sector.

3. Joseph M. Juran (1904) Juran also joined Western Electric Company and developed Western Electric
Statistical Quality Control Handbook. JUSE invited him to Japan in 1954. He identified fitness of quality and
popularized the same.

Juran's Quality Planning Roadmap

1. ldentify your customers.

2. Determine their needs.
3. Translate them into your language.
4. Develop a product that can respond to the needs.
5. Develop processes, which are able to produce those product features.
6. Prove that the process can produce the product.
7. Transfer the resulting plans to the operating forces.

4. Philip B. Crosby (1926) Crosby was Vice President of International Telephone & Telegraph (ITT) His
4 absolutes of Quality4 are very relevant to TQM.

Crosby’s four absolutes of quality

1. Quality is conformance to requirements, nothing more or nothing less and certainly not
goodness or elegance.
2. Quality has to be achieved by prevention and not by appraisal.
3. The performance standard must be zero defect and not something close to it.
4. The measurement of quality is the price of non-conformance, i.e. how much the defects in
design, manufacture, installation and service cost the company. It is not indexes, grade one or
grade two.

5. Armand V. Feigenbaum He was President of American Society of Quality Control (1961-1963). He said,
Quality is in its essence a way of managing the organization.” He suggested the following:

Feigenbaum’s cycle time reduction methodology

1. Define process.
2. List all activities.
3. Flowchart the process.
4. List the elapsed time for each activity.

OMGT 1013-Operations Management and TQM | 7

 5. Identify non-value adding tasks.
6. Eliminate all possible non-value adding tasks.

6. Kaoru Ishikawa (1915-1989) A Quality Guru from Japan, he strongly advocated the use of cause and effect
diagrams to provide a true representation of the organizational impacts and procedures. He developed
Fishbone or Ishikawa diagram for cause and effect analysis.

Other Quality Gurus include James Harrington, Taguchi and Shingo.

The reader should be familiar with some of the basic terms related to quality to understand TQM.

QUALITY CONTROL (QC)

Quality Control or QC may be defined as: The operational techniques and activities that are used to fulfil
the requirements for quality. Juran gives 3 steps of QC:

1. Evaluate actual operating performance.

2. Compare actual performance to goals.
3. Act on the difference

In simple terms, QC is inspection or appraisal of products and services to ensure that the stated
requirements are fulfilled. This was the only technique practiced during World War II. Since it was found that
QC was essential but not sufficient, Quality Assurance techniques were developed after the war.

QUALITY ASSURANCE (QA)

The definition of quality assurance is: All the planned and systematic activities implemented within the
quality system and demonstrated as needed, to provide adequate confidence that an entity will fulfil the
requirements for quality.

The purpose of QA is to fulfil the quality requirements of an entity, i. e. product or service, with adequate
confidence by the supplier. This requires implementation of all the activities planned for building quality into the
product. Such planned activities are to be implemented systematically within the purview of a documented
quality system. Building quality into the products requires the following:

 Quality of Design
 Quality of Conformance
 Quality of Performance
 Quality of Service

 Quality of Design It refers to how well the product or service has been designed to meet the current and
future requirements of customers and add value to all the stakeholders. The stakeholders for any
organization are:
 Customers
 Employees
 Suppliers
 Owners
 Society
Quality of design involves all activities that will result in a successful design. It necessarily includes
finding out the customer’s requirements.

OMGT 1013-Operations Management and TQM | 8

  Quality of Conformance This indicates the consistency in delivering the designed product. Product
quality in tum depends on the quality of all processes in the organization. Therefore, it involves all
activities that will ensure the conformance of the products to its requirements consistently.
 Quality of Performance It is an indicator of the performance of the end product. This in turn depends on
the quality of design (including the reliability of the product) and quality of conformance.

 Quality of Service Selling a product is not the end of the business. It is the quality of associated
services rendered that adds value to the product. Quality of service involves all activities that will enable
the customer to procure and use the product without any hassles.

Thus Quality Assurance, is much more involved activity than mere inspection or QC. In fact QC is one of the
activities of QA.

QUALITY PLANNING (QP)

In order to consistently meet customer requirements, the quality of 4 Ms-namely Man, Machine, Material
and Methods need to be ensured. The requirements of the 4 Ms are to be identified in the form of quality
objectives. The objectives should be established for all the functions. The functions include suppliers,
purchase, product design, engineering, production, in process inspection, final inspection, after sales service,
etc. Quality planning refers to the activities that establish the objectives and requirements for quality. QP
involves planning for the following with regard to a product or service or project or a contract:

 Quality objectives to be met

 Specific of QA/QC practices
 Resources needed
 Sequence of QA/QC activities.

The QC activities include testing, inspection, examination and audit at various stages of product or service life
cycle. Therefore, quality has to be planned for every product or service and documented in the form of a quality
plan.

QUALITY IMPROVEMENT

This process aims at attaining unprecedented levels of performance, which are significantly better than
the past level.

STRATEGIC PLANNING

Strategic planning is important for any business. It involves making plans for the following, in particular:

 Business value
 Investment in machinery and equipment
 Manpower to be hired
 Budget
 Product diversification
 Markets to be served
OMGT 1013-Operations Management and TQM | 9
  Strategies for improving profits, etc

Strategic planning is carried out generally at annual intervals and is carried out using a formal structured
approach. The strategic planning is kept confidential due to obvious reasons. Usually organizations treat
strategic planning and quality planning as separate and isolated activities. However, Malcolm Baldrige National
Quality Awards (MBNQA) -the prestigious quality award in USA calls for the integration of both. It means that
quality planning and improvement planning should be carried out as part of strategic planning. The quality
improvement planning should focus on the needs of current and future customers and support the strategic
and business goals of the organization.

QUALITY MANAGEMENT (QM)

According to ISO 9000 standards, Quality management comprises “All activities of the overall
management function that determine the quality policy, objectives and responsibilities and implement them by
means such as quality planning, quality control, quality assurance and quality improvement within the quality
system.”

The quality system consists of the organizational structure, procedures, processes and resources needed to
implement quality management.

The above brings out the following:

 The company must have an objective and policy for quality of the products and services
 The organization should plan for meeting the objective.
 The plan should include QA, QC and methodology for improvement.
 There must be a clear organizational structure for building quality into the products with necessary
resources.
 The quality management should be implemented formally with well-defined processes and procedures
and trained resources.

TOTAL QUALITY MANAGEMENT (TQM)

It was Feigenbaum who coined the phrase “Total Quality Control” . The concept is known in Japan as
Company Wide Quality Control (CWQC). In 1985, the Americans came up with the term Total Quality
Management (TQM) to represent essentially the Japanese way of Quality Management.

Just-In-Time (JIT)

Tai-ichi Ohno of Toyota motors refined an idea for Just-In-Time. This means that at no stage of
manufacturing nobody or nothing waits for anything. This is to ensure that there is no wastage of
machinery, materials and manpower. JIT focuses on right scheduling so as to keep inventory as low as
possible. This requires perfect partnership between supplier and customer.

ISO 9000 Standards

ISO 9000 Standards were released for the first time in the year 1987 to bring in system for
quality in every organization. The standard was revised in 1994 and later in the year 2000. The
standard version advocates TQM and continuous process improvement.

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 Deming Award for Quality

To express their gratefulness, Japanese instituted a Quality Award in the name of Deming in the
year 1951. The award is now given not only to companies in Japan but even overseas who excel in
quality.

AIMS OF TQM

• Customer satisfaction

• Employee involvement

• Continous improvement (KAIZEN)

*** END of LESSON***

REFERENCES

Textbooks

Ramasamy, Subburaj. Total Quality Management. Tata McGraw-Hill Publishing Company Limited. New Delhi

Collier, David Alan, et.al.(2020). Operations Management and Total Quality Management. Cengage Learning
Asia Pte. Ltd.

Stevenson, William J. (2018). Operations management thirteenth edition. McGraw Hill Education, 2 Penn
Plaza, New York, NY 10121.

WARNING: No part of this E-module/LMS Content can be reproduced, or transported or shared to others without
permission from the University. Unauthorized use of the materials, other than personal learning use, will be penalized.
Please be guided accordingly.

OMGT 1013-Operations Management and TQM | 11