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TOTAL QUALITY MANAGEMENTTOTAL QUALITY MANAGEMENT

 ““MUST KNOW” CONCEPTS FORMUST KNOW” CONCEPTS FOR

OPERATIONAL MANAGEMENTOPERATIONAL MANAGEMENTPROFESSIONALSPROFESSIONALS 

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Sequence of presen!"onSequence of presen!"on IntroductionIntroduction

Three Quality GurusThree Quality Gurus

Commonality of Themes of Quality GurusCommonality of Themes of Quality Gurus

DIFINITION OF QUALITY

Fie A!!roaches of Definin" QualityFie A!!roaches of Definin" Quality

#ystem A!!roach for TQ$#ystem A!!roach for TQ$

Trian"le of %isdomTrian"le of %isdom

TQO &'$TQO &'$

Customer #atisfactionCustomer #atisfaction

Indicators for Customer #atisfactionIndicators for Customer #atisfaction

Cost of QualityCost of Quality (enefits of TQ$(enefits of TQ$

ConclusionConclusion

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INTRO#UCTION TO TQMINTRO#UCTION TO TQM

W$! "s TQM%W$! "s TQM%

TQ$ is the inte"ration of all functions and !rocesses %ithin anTQ$ is the inte"ration of all functions and !rocesses %ithin an

or"ani)ation in order to achieeor"ani)ation in order to achiee continuous im!roementcontinuous im!roement of theof the

*uality of "oods and serices+ The*uality of "oods and serices+ The "oal is customer satisfaction+"oal is customer satisfaction+

““ No dou,t - humans are al%ays deficient. No dou,t - humans are al%ays deficient.

/Al0Quran1/Al0Quran1

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T$e T$ree Qu!&"' GurusT$e T$ree Qu!&"' Gurus

#e("n)*#e("n

)*  the ,est 2no%n of the “early. !ioneers- isthe ,est 2no%n of the “early. !ioneers- iscredited %ith !o!ulari)in" *uality control in 3a!an in earlycredited %ith !o!ulari)in" *uality control in 3a!an in early

4567s+Today- he is re"arded as a national hero in that4567s+Today- he is re"arded as a national hero in thatcountry and is the father of the %orld famous Demin" !ri)ecountry and is the father of the %orld famous Demin" !ri)e

for *uality+for *uality+

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+URAN+URAN

3uran- li2e Demin" %as inited to 3a!an in 4568 ,y the3uran- li2e Demin" %as inited to 3a!an in 4568 ,y theunion of 3a!anese #cientists and en"ineers+union of 3a!anese #cientists and en"ineers+

3uran defines *uality as fitness for use in terms of desi"n-3uran defines *uality as fitness for use in terms of desi"n-conformance- aaila,ility- safety and field use+ &e focusesconformance- aaila,ility- safety and field use+ &e focuseson to!0do%n mana"ement and technical methods rather thanon to!0do%n mana"ement and technical methods rather than%or2er !ride and satisfaction+%or2er !ride and satisfaction+

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#IFINITION OF QUALITY#IFINITION OF QUALITY

The conce!t and oca,ulary of *uality are elusie+ DifferentThe conce!t and oca,ulary of *uality are elusie+ Different !eo!le inter!ret *uality differently+ Fe% can define *uality !eo!le inter!ret *uality differently+ Fe% can define *ualityin measura,le terms that can ,e !roed o!erationali)ed+in measura,le terms that can ,e !roed o!erationali)ed+9hen as2ed %hat differentiates their !roduct or serice:9hen as2ed %hat differentiates their !roduct or serice:

  TheThe ,an2er  ,an2er  %ill ans%er. serice.%ill ans%er. serice.  TheThe healthcarehealthcare %or2er %ill ans%er “*uality health care.%or2er %ill ans%er “*uality health care.

  TheThe hotel em!loyeehotel em

 !loyee %ill ans%er “customer satisfaction.%ill ans%er “customer satisfaction.

  TheThe manufacturer manufacturer  %ill sim!ly ans%er “*uality !roduct.%ill sim!ly ans%er “*uality !roduct.

 

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F",e Appro!c$es of #ef"n"n) Qu!&"'F",e Appro!c$es of #ef"n"n) Qu!&"'

&arard !rofessor Daid Garin- in his ,oo2&arard !rofessor Daid Garin- in his ,oo2 Managing Quality Managing Quality summari)ed fie !rinci!alsummari)ed fie !rinci!ala!!roaches to define *uality+a!!roaches to define *uality+

TranscendentTranscendent ;roduct ,ased;roduct ,ased

User ,asedUser ,ased $anufacturin" ,ased$anufacturin" ,ased

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Tr!nscen-en!& ,"e.Tr!nscen-en!& ,"e.

Those %ho hold the transcendental ie% %ould say “I can=t defineThose %ho hold the transcendental ie% %ould say “I can=t defineit- ,ut I 2no% it %hen I see it.it- ,ut I 2no% it %hen I see it.

Adertisers are fond of !romotin" !roducts in these terms+Adertisers are fond of !romotin" !roducts in these terms+

  ““ 9here sho!!in" is a !leasure. /su!ermar2et1+ “9e loe to fly and9here sho!!in" is a !leasure. /su!ermar2et1+ “9e loe to fly andit sho%s> /airline1+it sho%s> /airline1+

Teleision and !rint media are a%ash %ith such indefina,le claimsTeleision and !rint media are a%ash %ith such indefina,le claimsand therein lies the !ro,lem?and therein lies the !ro,lem?

Quality is difficult to define or to o!erationali)e+ It thus ,ecomesQuality is difficult to define or to o!erationali)e+ It thus ,ecomeselusie %hen usin" the a!!roach as ,asis for com!etitieelusie %hen usin" the a!!roach as ,asis for com!etitieadanta"e+ $oreoer- the functions of desi"n- !roduction andadanta"e+ $oreoer- the functions of desi"n- !roduction andserice may find it difficult to use the definition as a ,asis forserice may find it difficult to use the definition as a ,asis for*uality mana"ement+*uality mana"ement+

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PRO#UCT /ASE#PRO#UCT /ASE#

Quality is ie%ed as a *uantifia,le or measura,leQuality is ie%ed as a *uantifia,le or measura,le

characteristic or attri,ute+ For e@am!le dura,ility orcharacteristic or attri,ute+ For e@am!le dura,ility or

relia,ility can ,e measured and the en"ineer can desi"n torelia,ility can ,e measured and the en"ineer can desi"n to

that ,enchmar2+that ,enchmar2+

Quality is determined o,ectiely+Quality is determined o,ectiely+

Althou"h this a!!roach has many ,enefits- it has limitationAlthou"h this a!!roach has many ,enefits- it has limitation

as %ell+ 9here *uality is ,ased on indiidual taste oras %ell+ 9here *uality is ,ased on indiidual taste or !reference- the ,enchmar2 for measurement may ,e !reference- the ,enchmar2 for measurement may ,e

misleadin"+misleadin"+

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USER /ASE#USER /ASE#

II is ,ased on idea that *uality is an indiidual matter and !roductsis ,ased on idea that *uality is an indiidual matter and !roductsthat ,est satisfy their !references are those %ith the hi"hestthat ,est satisfy their !references are those %ith the hi"hest*uality+ This is rational a!!roach ,ut leads to t%o !ro,lems:*uality+ This is rational a!!roach ,ut leads to t%o !ro,lems:

 Consumer !reference ary %idely and it is difficult to a""re"ateConsumer !reference ary %idely and it is difficult to a""re"atethese !references into !roducts %ith %ide a!!eal+ This leads tothese !references into !roducts %ith %ide a!!eal+ This leads tothe choice ,et%een a niche strate"y or a mar2et a""re"ationthe choice ,et%een a niche strate"y or a mar2et a""re"ationa!!roach %hich tries to identify those !roduct attri,utes thata!!roach %hich tries to identify those !roduct attri,utes thatmeet the needs of the lar"est num,er of consumers+meet the needs of the lar"est num,er of consumers+

  Another !ro,lem concerns the ans%er to the *uestion “AreAnother !ro,lem concerns the ans%er to the *uestion “Are*uality and customer satisfaction the sameB. the ans%er is*uality and customer satisfaction the sameB. the ans%er is !ro,a,ly not+ One may admit that a Lincoln continental has !ro,a,ly not+ One may admit that a Lincoln continental hasmany *uality attri,ute- ,ut satisfaction may ,e ,etter achieedmany *uality attri,ute- ,ut satisfaction may ,e ,etter achieed%ith an scort+%ith an scort+

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MANUFACTURING /ASE#MANUFACTURING /ASE#

$anufacturin"0,ased definitions are concerned !rimarily$anufacturin"0,ased definitions are concerned !rimarily%ith en"ineerin" and manufacturin" !ractices and use the%ith en"ineerin" and manufacturin" !ractices and use theuniersal definition of “conformance to re*uirements.+uniersal definition of “conformance to re*uirements.+

'e*uirements or s!ecifications are esta,lished ,y desi"n'e*uirements or s!ecifications are esta,lished ,y desi"nand any deiation im!lies a reduction in *uality+ Theand any deiation im!lies a reduction in *uality+ Theconce!t a!!lies to serices as %ell as !roduct+ @cellence inconce!t a!!lies to serices as %ell as !roduct+ @cellence in*uality is not necessarily in the eye of the ,eholder ,ut*uality is not necessarily in the eye of the ,eholder ,ut

rather in the standards set ,y the or"ani)ation+rather in the standards set ,y the or"ani)ation+

This a!!roach has the serious %ea2ness+ The consumer=sThis a!!roach has the serious %ea2ness+ The consumer=s !erce!tion of *uality is e*uated %ith conformance and !erce!tion of *uality is e*uated %ith conformance andhence is internally focused+hence is internally focused+

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0!&ue /!se-0!&ue /!se-

It is defined in term of costs and !rices as %ell asIt is defined in term of costs and !rices as %ell asnum,er of other attri,utes+ Thus- the consumer=snum,er of other attri,utes+ Thus- the consumer=s

 !urchased decision is ,ased on *uality at an !urchased decision is ,ased on *uality at anacce!ta,le !rice+ This a!!roach is reflected in theacce!ta,le !rice+ This a!!roach is reflected in the

 !o!ular !o!ular Consumer ReportsConsumer Reports ma"a)ine %hich ran2sma"a)ine %hich ran2s !roducts and serices ,ased on t%o criteria? Quality !roducts and serices ,ased on t%o criteria? Qualityand

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MANAGEMENTMANAGEMENT

OF PROCESSOF PROCESS

QUALITYQUALITY

HUMANHUMAN

RESOURCERESOURCE

DEVELOPMENTDEVELOPMENT

ANDAND

MANAGEMENTMANAGEMENT

STRATEGICSTRATEGIC

QUALITYQUALITY

PLANNINGPLANNING

INFORMATIONINFORMATION

AND ANALYSISAND ANALYSIS

CUSTOMERFOCUS AND

SATISFACTION

QUALITYAND

OPERATIONALRESULTS

SENIOR

EXECUTIVELEADERSHIP

S'se( Appro!c$ for TQM

Driver

System

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C$!r!cer"s"cs of TQM Le!-erC$!r!cer"s"cs of TQM Le!-er

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TQO 1RMTQO 1RM

Fie ;rinci!les are?Fie ;rinci!les are?

QualityQuality 9or29or2 the First Timethe First Time

FocusFocus on the Customer on the Customer 

#trate"ic#trate"ic &olistic A!!roach&olistic A !!roach to Im!roementto Im!roement

CICI as a 9ay of Lifeas a 9ay of Life $utual$utual 'es!ect and Team%or2'es!ect and Team%or2

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Cuso(er S!"sf!c"onCuso(er S!"sf!c"on

 Three ;art #ystemThree ;art #ystem

1u(!n Resource

M!n!)e(enCuso(er E2pec!"ons

Co(p!n' Oper!"ons

3Processes4

Cuso(er S!"sf!c"on

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In-"c!ors for Cuso(er S!"sf!c"onIn-"c!ors for Cuso(er S!"sf!c"on

Frontline em!o%ermentFrontline em!o%erment @cellent hirin"- trainin"- attitude and morale for front line@cellent hirin"- trainin"- attitude and morale for front line

em!loyeesem!loyees ;roactie customer serice system;roactie customer serice system ;roactie mana"ement of relationshi! %ith customers;roactie mana"ement of relationshi! %ith customers Use of all listenin" !ostsUse of all listenin" !osts Quality re*uirements of mar2et se"mentQuality re*uirements of mar2et se"ment

Commitment to customersCommitment to customers Understandin" customer re*uirementsUnderstandin" customer re*uirements #erice standards meetin" customers re*uirements#erice standards meetin" customers re*uirements

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Cos of Qu!&"'Cos of Qu!&"'

 T$ree 0"e.s of qu!&"' CossT$ree 0"e.s of qu!&"' Coss

1")$er qu!&"' (e!ns $")$er cos51")$er qu!&"' (e!ns $")$er cos5 Quality attri,utes such as !erformance and features cost more inQuality attri,utes such as !erformance and features cost more in

terms of la,or- material- desi"n and other costly resources+terms of la,or- material- desi"n and other costly resources+

The additional ,enefits from im!roed *uality do not com!ensateThe additional ,enefits from im!roed *uality do not com!ensatefor additional e@!ense+for additional e@!ense+

T$e cos of "(pro,"n) qu!&"' "s &ess $!n $e resu&"n) s!,"n)s5T$e cos of "(pro,"n) qu!&"' "s &ess $!n $e resu&"n) s!,"n)s5 The sain" result from less re%or2- scra! and other direct e@!ensesThe sain" result from less re%or2- scra! and other direct e@!enses

related defects+related defects+

This is said to account for the focus on continuous im!roement ofThis is said to account for the focus on continuous im!roement of !rocesses in 3a!anese firms+ !rocesses in 3a!anese firms+

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T$ree 0"e.s of qu!&"' CossT$ree 0"e.s of qu!&"' Coss

Qu!&"' coss !re $ose "ncurre- "n e2cess of $oseQu!&"' coss !re $ose "ncurre- "n e2cess of $ose

$! .ou&- $!,e 6een "ncurre- "f $e pro-uc .ere$! .ou&- $!,e 6een "ncurre- "f $e pro-uc .ere

6u"& or $e ser,"ce perfor(e- e2!c&' r")$ $e f"rs6u"& or $e ser,"ce perfor(e- e2!c&' r")$ $e f"rs

"(e5"(e5 T$"s ,"e. "s $e&- 6' !-$erens of TQM p$"&osop$'5T$"s ,"e. "s $e&- 6' !-$erens of TQM p$"&osop$'5

  Coss "nc&u-e no on&' $ose $! !re -"rec7 6u !&soCoss "nc&u-e no on&' $ose $! !re -"rec7 6u !&so

$ose resu&"n) fro( &os cuso(ers7 &os (!r8e s$!re$ose resu&"n) fro( &os cuso(ers7 &os (!r8e s$!re

!n- $e (!n' $"--en coss !n- fore)one opporun""es!n- $e (!n' $"--en coss !n- fore)one opporun""esno "-en"f"e- 6' (o-ern cos !ccoun"n) s'se(s5no "-en"f"e- 6' (o-ern cos !ccoun"n) s'se(s5

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Qu!&"' CossQu!&"' Coss

COST OFCOST OF QUALITYQUALITY IS T1E COST OFIS T1E COST OF

NON QUALITYNON QUALITY

9* 9:*9:: Ru&e9* 9:*9:: Ru&e

;;A s"c$ "n "(e s!,es n"ne”A s"c$ "n "(e s!,es n"ne”

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T'pes of Qu!&"' CossT'pes of Qu!&"' Coss

The cost of *uality is "enerally classified into fourThe cost of *uality is "enerally classified into four

cate"oriescate"ories

4+4+ Cost of ;reentionCost of ;reention

++ Cost of A!!raisalCost of A!!raisal++ Cost of Internal FailureCost of Internal Failure

8+8+ Cost of @ternal FailureCost of @ternal Failure

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Qu!&"' CossQu!&"' Coss

Cos of Pre,en"onCos of Pre,en"on

;reention costs include those actiities %hich remoe and;reention costs include those actiities %hich remoe and !reent defects from occurrin" in the !roduction !rocess+ !reent defects from occurrin" in the !roduction !rocess+

Included are such actiities as *uality !lannin"- !roductionIncluded are such actiities as *uality !lannin"- !roductionreie%s- trainin"- and en"ineerin" analysis- %hich arereie%s- trainin"- and en"ineerin" analysis- %hich areincurred to ensure that !oor *uality is not !roduced+incurred to ensure that !oor *uality is not !roduced+

Appr!"s!&Appr!"s!&

Those costs incurred to identify !oor *uality !roducts afterThose costs incurred to identify !oor *uality !roducts afterthey occur ,ut ,efore shi!ment to customers+ e+"+ Ins!ectionthey occur ,ut ,efore shi!ment to customers+ e+"+ Ins!ectionactiityactiity55

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Qu!&"' CossQu!&"' Coss

Inern!& F!"&ureInern!& F!"&ure

Those incurred durin" the !roduction !rocess+Those incurred durin" the !roduction !rocess+ Include such items as machine do%ntime- !oor *ualityInclude such items as machine do%ntime- !oor *uality

materials- scra!- and re%or2+materials- scra!- and re%or2+

E2ern!& F!"&ureE2ern!& F!"&ure Those incurred after the !roduct is shi!!ed+Those incurred after the !roduct is shi!!ed+ @ternal failure costs include returns and allo%ances-@ternal failure costs include returns and allo%ances-

%arranty costs- and hidden costs of customer dissatisfaction%arranty costs- and hidden costs of customer dissatisfactionand lost mar2et shareand lost mar2et share++

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/enef"s of TQM/enef"s of TQM

Greater customer loyaltyGreater customer loyalty

$ar2et share im!roement$ar2et share im!roement

&i"her stoc2 !rices&i"her stoc2 !rices 'educed serice calls'educed serice calls

&i"her !rices&i"her !rices

Greater !roductiityGreater !roductiity

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Conc&us"onConc&us"on

  'emem,er the earth reoles around the'emem,er the earth reoles around the

CU#TO$'+CU#TO$'+ Quality ,e"ets customers andQuality ,e"ets customers and

customers ,e"et *uality+ Let us all hae actioncustomers ,e"et *uality+ Let us all hae action !lans to su!!ort *uality- this %ill ma2e the %orld !lans to su!!ort *uality- this %ill ma2e the %orld

ha!!y and earn us the ,lessin" of God Almi"hty+ha!!y and earn us the ,lessin" of God Almi"hty+

;;Ac"ons !re -"rec ref&ec"on of one