Managing improvement – the TQM approach Chapter -20

Managing improvement – the TQM approach Chapter -20

Summary TQM ? The origin of TQM. The difference between traditional quality management and TQM. ISO9000 Quality awards

TQM The total quality management is related to managing operations improvement. Quality Management focuses on the ability to produce and deliver the products and services that the market requires, both in the short and the long term.

TQM Defined TQM is a holistic ( considering all, complete) quality management approach, that emphasis the role of all parts of an organization and all people within an organization to influence and improve quality. So, TQM means a quality management approach, where whole organization and people are involved.

The origin of TQM The notion of TQM was first developed by Feigenbaum and popularises by W Edwards Deming who implemented many TQM programmes in Japan, where his ideas, initially at least, were more readily accepted. In essence, Deming, Juran, Crosby and all the other gurus, said that total quality management involves everyone taking a positive and proactive approach to quality and that good quality, i.e. consistent conformance to customers’ expectations, can only be achieved if:

The organisation understands what customer needs are and could define and specify all of them. All employees understand that all parts of an organisation have a role to play in meeting customer expectations, not just the people on the shop floor, but the work of finance staff for example in ensuring error free invoices for example. Each employee recognises that they have an impact on quality. All the costs of quality are considered, not just the cost of putting things right when they go wrong, but also the costs of trying to prevent problems, with an emphasis on the latter in order to bring about a reduction in the former. There is a focus on getting things ‘right first time’ and instead of putting it right when it goes wrong to try to make sure it does not go wrong in the first place. There are robust and organisation-wide quality systems and procedures that both ensure the things above happen, but also the removal of systems and procedures that can make quality difficult to deliver (see Deliberate Defectives box). The organisation is concerned with continually improving what it does and how it does it

Traditional quality approach VS TQM First quality was regarded as an ‘inspection’ procedure which is known as traditional quality approach. (avoiding errors before it is seen by customers) But, Quality Control went further by inspecting errors ( checking ) and dealing quality problems. Quality Assurance again, moved further by including the responsibility for quality in functions or operations. Finally TQM considers quality as a holistic approach concerning everyone. So, TQM can be regarded as a philosophy of how to approach the organization of quality improvement. TQM is based on the following principles:

1. Meeting the needs and the expectations of customers 2. Covering all parts of the organization. 3. Including every person in the organization. 4. Examining all costs which are related to quality, especially failure costs. 5. Getting things ‘right first time’ 6. Developing the systems and procedures which support quality and improvement 7. Developing continuous process of improvement.

Total quality management can be viewed as a natural extension of earlier approaches to quality management Quality is strategic Teamwork Staff empowerment Involves customers and suppliers Makes quality central and strategic in the organization Quality systems Quality costing Problem solving Quality planning Broadens the organizational responsibility for quality Solves the root cause of quality problems Prevents ‘out of specification’ products and services reaching market Statistics Process analysis Quality standards Error detection Rectification Inspection Quality control Quality assurance Total Quality Management

1. TQM regards the needs and expectations of the customer In TQM meeting customer expectations means seeing things from a customer’s point of view. Customers are seen not as external, but as the most important part of the organization. 2. TQM covers all parts of an organization Every single part of organization, each department, each activity, each person and each level should work together. The main concept of TQM is ‘internal customer’ & ‘internal supplier’ idea. According to this theory there is customer and supplier within the organization. For example one department produces the design for another department and delivers. Here design unit is the supplier for the production unit. So any error in the organization process will affect the external customers. So, to avoid this the best idea is to adopt the policy that every part of the organization contributes to external customers satisfaction, by satisfying own customers.

The internal customer–supplier concept involves understanding the relationship between processes Process 3 External supplier Process 1 Process 2 Process 6 Process 5 Process 4 Between each process, the requirements of the ‘customer’ process must be understood and met by the 'supplier’ process External customer

Service – Level – agreements (SLA) The formal level of service that should be provided by one process to the other. This agreement covers: Response time The range of services Dependability of service supply

3. Every person in the organization contributes to quality This idea explains that each and every staff member has on quality, and everyone’s responsibility is to get right quality. Some staff can affect quality directly – example the staff who make the products, and those who serve the same face – to – face to customers. So everyone can reduce or impair(damage) quality and everyone can improve quality.

4. All costs of quality are considered The cost for controlling quality isn’t small. So, it is necessary to analyze all the costs and benefits associated with quality. The quality costs are categorized as follows: 1. Prevention costs 2. Appraisal costs 3. Internal failure costs 4. Eternal failure costs

Prevention costs Costs incurred while trying to prevent problems, mistakes, failures and errors. Indentifying potential problems and putting the process right before poor quality occurs. Designing and improving the design of products and services and processes to reduce quality problems. Training and development of personnel in the best way to perform their jobs Process control

Appraisal costs The costs associated with controlling quality to check to see whether problems or errors have occurred. The setting up of statistical acceptance sampling plans The time and effort required to inspect inputs, processes and outputs. Obtaining processing inspection and test data Investigating quality problems and providing quality reports Conducting customer surveys and quality audits

Internal failure costs Costs associated with failures. The cost of scrapped parts and material Reworked parts and materials The lost production time as a result of coping with errors Lack of concentration due to time spent troubleshooting rather than improvement

External failure costs Costs associated with error going out of the operation to a customer. Loss of customer goodwill affecting future business. Aggrieved customers who take up time. Litigation Guarantee and warranty costs The cost to the company of providing excessive capability

So, the sooner we find the error, the cheaper the cost will be. TQM QUALITY COST & TRADITIONAL QUALITY MANAGEMENT In traditional quality management, failure cost is reduced is money is spent on appraisal and prevention. Or The more we spent on quality control, checking the cost high, but the cost of failure is lower, because less mistakes happens.

But TQM approach rejects the quality level or point system idea. TQM is more about balancing different quality costs (prevention costs, appraisal costs, internal failure costs, external failure costs) So, TQM argues to stop errors in the first place. Because no errors in the beginning means internal and external failure cots are reduced. So, in TQM importance is to prevention system. Here, the idea is to get the things right firs time. Or instead of waiting for something to happen, do something before anything happens.

Costs The traditional cost of quality model Optimum amount of quality effort Amount of quality effort Cost of errors costs of prevention and appraisal Total cost of quality Cost of quality provision costs of internal and external failure

6.Quality systems & procedures Quality systems means organizational structures, responsibilities, procedures, processes and resources for implementing quality management. So quality systems in a document has three level: Company quality manual – summary of quality management programme. Procedure Manual – structure, design, responsibilities. Work instructions, specifications and detailed methods for performance activities.

Total Quality Management Includes all parts of the organization Includes all staff of the organization Source: Corbis/Richard T Nowitz Includes consideration of all costs Includes every opportunity to get things right Includes all the systems that affect quality Never stops

The cost of rectifying errors increases more rapidly the longer they remain uncorrected in the development and launch process Cost of rectifying error 10000 1000 100 10 1 Concept Design Prototype Pilot Market use production Stage in development and launch process

Increasing the effort spent on preventing errors occurring in the first place brings a more than equivalent reduction in other cost categories Total cost of quality Costs of quality Appraisal Internal failure Appraisal Prevention Time

The ISO 9000 Approach It is a quality management system, where set of worldwide standards are placed as requirements for company’s quality management system. So, ISO 9000 is a framework for quality assurance. ISO registration requires a third party assessment of a company’s quality standards and procedures and making sure the system works well. The objective of ISO 9000 was to give an ssurance to the purchaser that the goods/services that they buy have been produced by meeting quality requirements. Advantages of ISO 9000 PAGE 662

Implementing improving programme Not all improvement programmes are successful in many companies. There are two types of failures: The programme is not introduced and implemented effectively. After the introduction of the programme he effectiveness got lost.

TQM implementation For successful implementation of quality programme, the following factors are important: A quality strategy Top management support A steering group Group based improvement Recognize the success Training

The Six Sigma approach to organizing improvement Six Sigma approach is a improvement and quality management approach developed by Motorola. It is using process control, measuring, improving and managing quality as a tool. According to this specially trained people are needed to improve processes. They are divided into three categories: Master black belt – experts Black belt – organize improvement teams Green belt – people within improvement team9 team leaders)

TQM loses effectiveness The situation where TQM programmes doesn’t guarantee improvement is known as quality drooping disillusionment. Quality awards Quality awards are useful because they: Provide motivation for improving quality and pursuing TQM approaches. Provide frameworks to assess quality. Provide incentives to improve quality. Provide international recognition of success. Three best known awards in quality are as follows: The Deming prize For companies who applies company-wide quality control

What are the main implementation issues in TQM initiatives? The main implementation issues are: To realise that TQM is not a ‘quick fix’ but a long-term approach to quality. Good quality needs to be underpinned by systems with clearly set out goals and guidelines. The need for top management commitment – because TQM involves the whole organisation without top level support any such initiative is doomed to failure. This support usually is evidenced by an executive champion, and a high level steering group.

Involving the people who know – TQM is not a management tool but a means of involving everyone in identifying and solving problems. It is essential that there should be means of involving everyone, providing necessary training and also recognising success when it is achieved. The final issue is that TQM may, over time, lose its effectiveness (see figure 20.8), if it is seen as a ’programme’ (with an implied start and end) rather than a ‘working philosophy’ that is a part of the organisation’s way of working. To this end many organisations refrain from using the name ‘TQM’ and simply seek to encourage good (TQM) practice.

Effectiveness of the TQM initiative The pattern of some TQM programmes which run out of enthusiasm Introduction Learning and understanding Growth Increasing enthusiasm Levelling off Starting to hit the more difficult problems Disillusionment Waning enthusiasm Repackaging Attempts to revitalize the programme

The malcolm baldrige national quality award For American companies to improve quality and productivity. EFQM From European Federation of Quality Management to recognize quality. EFQM promotes self- assessment as follows:

The EFQM’s ‘Business Excellence’ model People results People Leadership Policy and strategy Partnerships and resources Processes Customer results Society results Key performance results