Total quality management is managing the entire organization so it excels on all dimensions of products and services that are important to the customer. In today's competitive marketplace, the production and delivery of high-quality goods and services is a key element of any organization's success. Quality can be used as a competitive advantage or a strategic weapon for an organization. TQM, or total quality management is the advanced stage of quality programs, not only in Japan, but also in Europe and North America. The critical elements of a successful TQM program include leadership, employee involvement, excellence in products or processes, and customer focus.
The Malcolm Baldrige National Quality Award is a quality award sponsored by the U.S. Commerce Department to recognize organizations that have achieved excellence in their total quality management program. The Award was created in 1987 to recognize total quality management in American industry and represents the government's endorsement of quality as an essential component of a successful business strategy. The award seeks to improve quality and productivity.
The award consists of comprehensive criteria for evaluating total quality in organizations. A Board of Examiners reviews applicants. The Baldrige is designed to be flexible and it evaluates quality in various business categories including health care, educational institutions as well as manufacturing and service companies and small businesses.
The quality criteria focus on seven broad topical areas that are integrally and dynamically related. The seven areas are: Leadership, Strategic planning, Customer and Market Focus, Information and Analytics, Human Resource Focus, Process Management and Business Results. Customer satisfaction is the ultimate goal of the quality program.
The categories addressed in the award were selected because of their importance to all businesses. Companies not applying for the award can use the criteria to assess their current operations, design a total quality system, evaluate internal relationships, and to assess customer satisfaction. Participation in the award program is declining but many state-sponsored quality programs and awards are growing. The Deming Prize recognizes quality excellence in Japanese companies. A European Quality Award exists as well and is similar to the Baldrige Award.
Leaders in the quality revolution include Deming, Juran, and Crosby. These three gurus researched and advanced the role of quality. When considering quality, the concept has many dimensions. One is the performance of a product. Another dimension is the features of a product. Still other important quality variables include reliability, conformity, durability, serviceability, aesthetics, and finally perceived quality. The customer perceives quality. That is why a customer-focus is critical to any quality implementation.
Operation managers have to evaluate their designs for quality output. Do the specification of the product satisfy the customers? Is the design capable of providing satisfaction to the users? Is the production system capable of producing the specification. The operations managers are responsible for the design of processes and they have to certify that processes are capable of producing the designed specification. Even though processes are designed with the ability to produce the desired quality, there has to be control during the execution phase so that machines are reset whenever the performance deteriorates. Similarly operators must take adequate care in operating the machine. Management should not force operators to work when they are exhausted as the probability of making errors increases whenever operators feel fatigued or bored.
A key to a successful quality initiative is the use of planning and management tools and procedures to track quality progress. Both quantitative and non-quantitative measures are used to track initial quality and quantity improvements over time. An important quantitative method for monitoring a process is statistical process control. SPC allows employees to distinguish between random fluctuations in machines and processes and to determine when variations signal that corrective action is needed. Some of recent ideas that emerged in quality improvement or management field are the process of developing quality specifications by understanding customer requirements, understanding the cost of quality concept, conformance quality concept, quality at the source, and the goal of zero defects.
Continuous improvement has its own tools and procedures including the concept of Kaizen borrowed from the Japanese, the PDCA Cycle, and benchmarking both internally and externally in the industry.
An alternative to the statistically based approach is the Shingo system, developed in Japan. It focuses on self-checks, source inspections, and successive checks to ensure quality. Key features of the Shingo system include fail safe or poka-yoke systems that prevent defects.
ISO 9000 is a series of standards agreed upon by the International Organization for Standards. Adopted in 1987 these standards consist of five primary parts and more than 100 countries now recognize the 9000 series for quality standards and certification for international trade. ISO 14000 standards cover environmental compliance by manufacturing companies. ISO 9000 standards are compared to the Baldrige Criteria in this section.
SERVQUAL is a questionnaire used to poll customers about service quality. It is an important tool for customer satisfaction. Many methods are available to production practitioners to measure quality. However, quality is a strategic issue and the internal capabilities and the external environment requirements have to be taken into consideration in decisions related to quality. Internal capability needs to be developed as required and also external commitments must be based on internal capability at any point in time. Quality programs are valuable in all organizations -- both service and manufacturing.
Total quality management may be defined as "managing the entire organization so that it excels on all dimensions of products and services that are important to the customer."
It has three important stages or steps.
1. Design of the product or service taking into consideration the customer expectations.
2. Designing a production system capable of delivering to design specifications and maintaining and improving the process capability on a continuous basis.
3. Controlling the production system during the execution phase so that it function according to design and any problems are highlighted so that they can be rectified or eliminated from the production system.
Cost of Quality Framework
Costs associated with quality are categorized and reported as;
1. Prevention costs
2. Appraisal costs
3. Internal failure costs
4. External failure costs
While the traditional quality systems concentrated on appraisal, the Japanese quality movement focused on prevention level. Now it is understood that prevention is economical. :Philip Crosby gave a benchmark that total quality related costs can be brought down to 2.5 percent of every sales dollar from the estimated 15 to 20 percent of sales dollar.(Crosby, 1979)
Six Sigma Quality
A process that is in Six-Sigm control will produce no more than two defects out of every billion units. In practice it is stated as four defects per million units, as the process mean may be somewhere within one sigma of the target specification. This notation provides a common metric to compare processes - defects per million opportunties (DPMO)
Six Sigma methodology advocated DMAIC cycle
The tools used for measuring and analyzing data on defects are flowcharts, run charts, pareto charts, checksheets, cause-and-effect diagrams, opportunity flow charts, control charts. Failure mode and effect analysis (FMEA) and design of experiments (DOE) are also used. DOE is used test the relationship between process inputs and outputs. Six Sigma emphasizes the scientific method like operations research and optimizes variance of the processes that minimizes variance of the process by developing various conjectures about the levels of input variables and variability of the process and the conjectures are converted into hypotheses that are tested using design of experiments (DOE) methods. Modern statistical software specially developed to support process analysis has reduced the drudgery of displaying and analyzing data.
Six Sigma has large number of successful applications in various companies and companies like GE claim billions of dollars of saving. Hence it is a very popular technique now in the world and more and more companies are training their employees in Six Sigma methods.
Chapter Outline (Chase et al. Book)
Total Quality Management
Total Quality Management Defined
Malcolm Baldrige National Quality Award Defined
Quality Specification and Quality Costs
Developing Quality Specifications
Design Quality Defined
Conformance Quality Defined
Quality at the Source Defined
Zero Defects Defined
Dimensions of Quality Defined
Cost of Quality
Cost of Quality Defined
Functions of the QC Department
Six Sigma Quality
Six Sigma Defined
Six Sigma Methodology
PDCA Cycle Defined
Continuous Improvement Defined
Analytical Tools of Six Sigma and Continuous Improvement
Six Sigma Roles and Responsibilities
The Shingo System: Fail-Safe Design
Fail-Safe Procedures (Poka-Yoke) Defined
ISO 9000 Defined
ISO 14000 Defined
The ISO 9000 Series
ISO 9000 Certification
External Benchmarking for Quality Improvement
External Benchmarking Defined
Service Quality Measurement: SERVQUAL
Case: Hank Kolb, Director of Quality Assurance
Case: Shortening Customers' Telephone Waiting Time
Case: "Hey, Is Anybody There? " An Example of DMAIC at American Express
Updated 7.12.2014, 10.12.2011
MBA Core Management Knowledge - One Year Revision Schedule