TOTAL QUALITY MANAGEMENT: CONCEPTS, PRINCIPLES AND IMPLANTATION

BY

OLOWU DAUDU Y. MALACHY

DEPARTMENT OF BUSINESS ADMINISTRATIONFACULTY OF ADMINISTRATION

AHMADU BELLO UNIVERSITY, ZARIA

Being a Paper Presented at a Seminar Organised by the Department of Business Administration,

Faculty of Administration,Ahmadu Bello University, Zaria

10th July, 2000

INTRODUCTION

Total Quality Management (TQM) is a management approach that originated in the

1950's and has steadily become more popular since the early 1980's. Total Quality is a

description of the culture, attitude and organization of a company that strives to provide

customers with products and services that satisfy their needs. The culture requires quality

in all aspects of the company's operations, with processes being done right the first time

and defects and waste eradicated from operations. TQM is, thus a management strategy

aimed at embedding awareness of quality in all organizational processes. It is a structured

system for satisfying internal and external customers and suppliers by integrating the

business environment, continuous improvement, and breakthroughs with development,

improvement, and maintenance cycles while changing organizational culture.

TQM is as well a method by which management and employees can become involved in

the continuous improvement of the production of goods and services - a combination of

quality and management tools aimed at increasing business and reducing losses due to

wasteful practices. Indeed, giving a name to a broad set of principles, methods, and tools

as described above can be inherently misleading and limiting. Nonetheless, a word-by-

word examination of the term will provide further insight into the meaning of the TQM

concept.

Total: Suggests full commitment of everyone in the organisation and a coverage of every

aspect of all processes.

Quality: Means continuously meeting customers’ requirements. Thus quality is

ultimately defined by the customer. Organisations must become cognizant of the

three levels of quality, namely;-

(i) Must be quality - meeting requirement

(ii) Expected quality - meeting expectations.

(iii) Exciting quality - exceeding expectation

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Must be (specifications) Quality: This level of quality can excite, cause

indifference or dissatisfy because the customer expressly specifies his

requirements. For example, a customer orders for a 600v APC brand of UPS and

is supplied with a 600v Mercury brand, with the explanation that the two perform

the same function.

Expected Quality: This level of quality does not excite the customer, but if

lacking can cause deep dissatisfaction. Whilst the customer will not tell or ask for

it, he expects it. Usually the customer is indifferent to this type or level of quality

unless disappointed. Every bank customer expects the banking hall to be cool and

comfortable, not hot and humid.

Exciting Quality: This level of quality excites because it is unexpected.

Customers cannot request for it because they are not aware of its existence or

possibility. This level of quality encourages customer loyalty. However, once

experienced, an exciting quality becomes expected.

Management:Implies an active process led from the top. The usage of this term

is intended to reflect the viewpoint that, cetris paribus, “85% of the

problems are caused by the system” and that only management can

correct the system problems. Thus, quality can and must be

managed.

From the foregoing explanation of its constituent terms, Total Quality Management can

be defined as the combination of people and systems, working harmoniously together for

the ultimate benefit of the customer.

Total Army Quality (TAQ)

The concept of TQM is applicable to the military establishment as it is to the

Business Environment. Total Army Quality is the Army’s integrated strategic

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management approach for achieving performance excellence. TAQ cultivates

incremental and breakthrough improvement, innovation, continuous learning

and change, and provides avenues to recognize those who strive for excellence.

BASIC CONCEPTS OF TQM

TQM is founded on a number of basic and extremely important concepts. These

concepts or principles are built around the customer, quality and employees. They

include the following:

1. Everyone has a customer.

2. Everyone is responsible for quality.

3. Focus on preventing problems not fixing them.

4. Team work.

5. Processes fail not people.

6. Top Management must lead.

7. Middle management must support.

8. Focus on process and systems.

9. Know the cost of quality.

10. Zero defects.

Everyone has a Customer

TQM embraces more than the external customer. We all do not work in isolation;

work has no value unless it is “delivered” to someone else. So we are as much

customers as we are suppliers of any service or product. A customer is anyone to

whom you provide a product or service. A supplier is anyone who provides a

product or service to a third party.

If you fail to satisfy your external customer - he has a choice to go somewhere

else for an alternative service. If you fail to satisfy your internal customer, then it

is most likely the service provided has to be done again to meet the required

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expectation or specification, thus costing more. In either case - the company

loses!

Everyone is responsible for Quality

Everyone - everyone must make a commitment to getting things right first time.

To get everyone involved, you must provide the tools and techniques to analyse

and drive out problems. These have to be taught at all levels in all functions if

everyone is to participate. There is a need to develop the attitude and influence

the culture of the organization by learning to put people first, caring for

employees, creating goal congruence between leaders and those being led.

Prevent Problems not fix them

Fire fighting is random strategy which is inefficient in the short run and grossly

ineffective in the long run. There must be a structured approach to dealing with

problems in organizations. This involves:

- Finding root causes - dealing with core problems not the symptoms. These will

entail the use of specific tools available in the quality field to assist in identifying

root causes of problems.

- Selecting the best solution.

- Prevent reoccurrence by standardizing the solution or the new system or process

devised.

Team Work

People work in teams either naturally within the same department or across

departments and functions in recognition of the specialized role they all play. The

solution for effective work processes is through teamwork. This is based on

everyone understanding each other’s needs.

Processes Fail Not People

Everything we do is a process, which is the transformation of a set of inputs into

the desired outputs. Processes should be managed through a strategy of

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prevention, rather than detection. In reality nobody goes to work to make

mistakes unless the system makes it possible. Indeed, majority of mistakes occur

at work because the process has failed. The objectivity of TQM in this area is to

design robust processes that make it difficult to fail. TQM ensures that

management adopts a strategic overview of quality and focus on prevention, not

detection of problems. Using flow charts for example, areas of possible failure

can be highlighted and possibility of failure reviewed.

Top Management Must Lead the Process

TQM must start at the top where serious commitment to quality must be

demonstrated. Indeed, TQM now challenges management’s traditional role to

plan organize and control and now demands that management should now

empower, coach, develop and encourage organization wide participation in

running the business. This demands commitment and leadership from

management at all levels. Management must realize that with the advent of the

knowledge worker, he is no longer the only solution provider.

Middle Management Must Support

Middle management also has a key role to play in communicating the message.

Traditionally, middle management’s role is that of supervisor, maintenance of

quality, setting priorities and developing staff. In TQM focused organization, all

these remain, in addition to the responsibility for the continuous improvement of

every aspect of processes under his control.

Focus on Improving Processes and Systems

People work in chains of activities that collectively form business processes.

TQM focused organizations seek to improve the process of delivering a service or

product than individual or departmental performance or competence. TQM

philosophy encourages a supportive and encouraging organization culture where

people will innovate and improve these processes. Unfortunately, few

organizations have a process by which employees are encouraged or enabled to

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improve their work-giving rise to the frequent system failures that is prevalent in

most organisations. System failure is said to occur when the link in the chain

breaks i.e. the flow of work is disturbed.

We have all learnt to live with and accept failures. Systems failures have become

standard because we view each step or function of our activities and not the total

process. Sub-optimal performance at functional or unit level is viewed as

acceptable, the accumulation of such breakdowns at every step ends up in global

failure.

Know the Cost of Quality

The cost of quality is a misnomer. Cost of quality is what it costs an organization to

avoid, review and measure all those activities devoted to consciously improving quality.

Prevention: Costs to ensure that things get done right time first time. The whole

philosophy of TQM hinges on prevention.

Appraisal: Cost of inspecting, testing another checking of products or services.

Internal failure costs: Cost of putting things right before delivery to customer.

External failure costs: Cost of putting things right after delivery i.e. warranty costs.

Exceeding requirements: Cost of providing a service or product, which a customer does

not need.

Lost opportunities: Cost of an uncompetitive product or service.

Focus should be on prevention, which drives out failure costs. Focusing therefore

on processes instead of inspection should reduce costs associated with inspection

as product or service levels improve.

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Zero Defects

Zero defects is a standard of performance which insists on doing the job right first

time. It then follows that if it can be done right first time, it can be done right all

the time.

IMPLEMENTATION PRINCIPLES AND PROCESSES

Many companies have difficulties in implementing TQM. Surveys by consulting firms

have found that only 20-36% of companies that have undertaken TQM have achieved

either significant or even tangible improvements in quality, productivity, competitiveness

or financial return. As a result many people are skeptical about TQM. However, when

one looks at successful companies one finds a much higher percentage of successful

TQM implementation.

A preliminary step in TQM implementation is to assess the organization's current reality.

Relevant preconditions have to do with the organization's history, its current needs,

precipitating events leading to TQM, and the existing employee quality of working life. If

the current reality does not include important preconditions, TQM implementation should

be delayed until the organization is in a state in which TQM is likely to succeed.

If an organization has a track record of effective responsiveness to the environment, and

if it has been able to successfully change the way it operates when needed, TQM will be

easier to implement. If an organization has been historically reactive and has no skill at

improving its operating systems, there will be both employee skepticism and a lack of

skilled change agents. If this condition prevails, a comprehensive program of

management and leadership development may be instituted. A management audit is a

good assessment tool to identify current levels of organizational functioning and areas in

need of change. An organization should be basically healthy before beginning TQM. If it

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has significant problems such as a very unstable funding base, weak administrative

systems, lack of managerial skill, or poor employee morale, TQM would not be

appropriate.5

However, a certain level of stress is probably desirable to initiate TQM. People need to

feel a need for a change. Experts address this phenomenon by prescribing the use of

building blocks which are present in effective organizational change. These forces

include departures from tradition, a crisis or galvanizing event, strategic decisions,

individual "prime movers," and action vehicles. Departures from tradition are activities,

usually at lower levels of the organization, which occur when entrepreneurs move outside

the normal ways of operating to solve a problem. A crisis, if it is not too disabling, can

also help create a sense of urgency which can mobilize people to act. In the case of TQM,

this may be a funding cut or threat, or demands from consumers or other stakeholders for

improved quality of service. After a crisis, a leader may intervene strategically by

articulating a new vision of the future to help the organization deal with it. A plan to

implement TQM may be such a strategic decision. Such a leader may then become a

prime mover, who takes charge in championing the new idea and showing others how it

will help them get where they want to go. Finally, action vehicles are needed and

mechanisms or structures to enable the change to occur and become institutionalized. In

this respect, the principles discuss above provide the needed platform for actualizing

TQM.

Deming's 14 points

W Edwards Deming was an American statistician who was credited with the rise of Japan

as a manufacturing nation, and with the invention of Total Quality Management (TQM).

Deming went to Japan just after the War to help set up a census of the Japanese

population. While he was there, he taught 'statistical process control' to Japanese

engineers - a set of techniques which allowed them to manufacture high-quality goods

without expensive machinery. In 1960 he was awarded a medal by the Japanese Emperor

for his services to that country's industry.

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Deming returned to the US and spent some years in obscurity before the publication of

his book "Out of the crisis" in 1982. In this book, Deming set out 14 points which, if

applied to US manufacturing industry, would he believed, save the US from industrial

doom at the hands of the Japanese.

Although Deming does not use the term Total Quality Management in his book, it is

credited with launching the movement. Most of the central ideas of TQM are contained in

"Out of the crisis".

The 14 points seem at first sight to be a rag-bag of radical ideas, but the key to

understanding a number of them lies in Deming's thoughts about variation. Variation was

seen by Deming as the disease that threatened US manufacturing. The more variation - in

the length of parts supposed to be uniform, in delivery times, in prices, in work practices

- the more waste, he reasoned.

From this premise, he set out his 14 points for management, which we have paraphrased

here:

A core concept in implementing TQM is Deming’s 14 points, a set of management

practices to help companies increase their quality and productivity:

1. Create constancy of purpose for improving products and services. Replace short-

term reaction with long-term planning.

2. Adopt the new philosophy. The implication is that management should actually

adopt his philosophy, rather than merely expect the workforce to do so.

3. Cease dependence on inspection to achieve quality. If variation is reduced, there

is no need to inspect manufactured items for defects, because there won't be any.

4. End the practice of awarding business on price alone; instead, minimize total cost

by working with a single supplier.

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5. Improve constantly and forever every process for planning, production and

service. Constantly strive to reduce variation.

6. Institute training on the job. If people are inadequately trained, they will not all

work the same way, and this will introduce variation.

7. Adopt and institute leadership. Deming makes a distinction between leadership

and mere supervision. The latter is quota- and target-based.

8. Drive out fear. Deming sees management by fear as counter- productive in the

long term, because it prevents workers from acting in the organisation's best

interests.

9. Break down barriers between staff areas. Another idea central to TQM is the

concept of the 'internal customer', that each department serves not the

management, but the other departments that use its outputs.

10. Eliminate slogans, exhortations and targets for the workforce. Another central

TQM idea is that it's not people who make most mistakes - it's the process they

are working within. Harassing the workforce without improving the processes

they use is counter-productive.

11. Eliminate numerical quotas for the workforce and numerical goals for

management. Deming saw production targets as encouraging the delivery of poor-

quality goods.

12. Remove barriers that rob people of pride of workmanship, and eliminate the

annual rating or merit system. Many of the other problems outlined reduce worker

satisfaction.

13. Institute a vigorous program of education and self-improvement for everyone.

14. Put everybody in the company to work towards accomplishing the transformation.

ESSENTIAL TQM TECHNIQUES

Having discussed its essential principles and concepts, we can now outline and discuss

the techniques, systems and procedures used to ensure a successful implementation of the

TQM doctrine. Among these systems, the following are especially important:

* establishing and monitoring the Cost of Quality

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* establishing and monitoring Total Quality Standards

* establishing and motivating Quality Groups

* benchmarking

Establishing And Monitoring The Cost Of Quality Making any product or providing

any service involves two basic costs:

i) The Mandatory Cost of Doing Business (MCDB); and

ii) The Cost of Quality.

MCDB includes all the costs that would actually be incurred in providing defect free

products or services and of running the business. These include the cost of inputs (raw

materials), equipment, labour, office spaces, transportation, management processes, etc.

As we have already seen, the Cost of Quality (COQ) is one of the most central concepts

of Total Quality Management. MCDB and COQ make up the Cost of Doing Business

(CDB). By reducing COQ, we reduce CDB and move nearer MCDB. If we understand

and properly manage the relationship between the elements of COQ, we will be able to

ensure TQM in the various parts of the Organisation.

Establishing and Monitoring Total Quality Standard and TQM Level.

In order to produce a quality product or service that meets and even exceeds the stated

needs and expectations of the customer, we need in the first instance to have in a place a

way of ascertaining what level of product/service quality we are seeking to meet and even

exceed.

TQS provide therefore the measurements against which the quality level of a

product/service provided by a supplier to, a customer could be determined. TQS, contain

the needs and expectations reduced to measures and indices - in short, the quality

specifications of the customer which the supplier must attempt to meet and even exceed

at all times.

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The end result of the quality specifications will usually be a product or service provided

by the supplier to the customer. To assure the quality of that end result - product or

service, TQS also need to be established and applied to all the activities and processes,

including procedures, systems used by the supplier to produce the product or service

desired by customer.

One procedure developed for doing this is called Supplier and Customer (SC) Analysis.

Another procedure introduced by Mike Robson is called In-Department Evaluation of

Activities (IDEA). Through the use of either procedure, an Organisation is able to

establish a system, which enables it to establish:

i ) The current level of customer satisfaction and hence the overall level of TQM

existing in the entire organisation;

ii) The range of opportunities existing for quality improvement in all parts of the

organization;

iii) Total Quality Standards for every activity, process and hence the results (product

and services) that flow from such activities for the entire Organisation.

The Establishment of Quality Groups

The establishment, training and subsequent activities of quality groups constitute

an important component of any process aimed at achieving Excellence through

TQM.-. We are of course, familiar with the Quality Circles for which Japanese

companies are famous. However, quality circles are one of the many types of

quality groups that TQM organisations use. For your Total Quality Management

programme, the following groups will be essential:

* Quality Circles;

* Quality Improvement Teams; and

* Quality Task Forces.

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Quality Circles

These are groups formed voluntarily by between 5-7 employees who work in the same

section or unit. They meet periodically, usually once a week for about 1 hour during

office hours. The purpose is working on a problem affecting the productivity and

performance of the entire unit or section using appropriate problem solving techniques

and analysis of the selected problem and which following the investigation, prepare

reports with recommendations for action and make presentation to management for its

consideration and action.

The reports and the recommendations are considered by management and when accepted,

implemented, usually with the full participation of or feedback to circle members. QC's

are ongoing: they disband only when circle members are no longer interested in

membership of the circle.

Quality Improvement Teams

These are similar -to quality circles the only difference between QlTs and- QCs is that the

membership drawn from different functional areas whereas the, membership of QCs is

drawn from the same work group or work unit. Membership of QITS is voluntary.

Quality Task Forces

Quality Task Force are formed by the management of the organization to examine,

analyse and make, recommendations which are perceived by the management to be

adversely affecting the performance and productivity in the organization. The members

of the QTF as well as its terms of reference are chosen by management.

QTF's are problem specific which will be disbanded as soon as they have accomplished

the examination and analysis of the assigned problem. Quality task Forces can be used

by top management or by the manager of a particular section, unit or department. In the

former case, membership of the QTF will be cross functional. In the latter case, it will be

sectional or departmental restricted only to one functional area.

Benchmarking

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To become the best you must learn from the best. Companies have been scrutinizing

competitors ever since there were competitors. When they weren’t comparing price,

product features, they look at product quality. Total quality management demands a

broader view of competitive comparisons. They are still being made on product and

service quality, but they have been extended to include customer satisfaction, and other

customer data, internal operations, business procession and support services. Much of

this information is gathered by Benchmarking.

Benchmarking is the process of understanding your performance, comparing it against

the performance of best-in-class companies (renowned industry leaders) learning how

they perform better, and using that information to improve in other words adapting their

successful strategies.

Benchmarking has been called the “power and tool of quality.” It is the difference

between teaching yourself how to play football and taking lessons from Pele. One leads

to inefficient mechanics and frustration, the other to frequent netting and hope for

improvement.

Benchmarking can be divided into two parts: practices and metrics. Benchmarking

should first be approved on the basis of investigating best industry practices. The metrics

that quantify the effect of incorporating the practices in an operation can be analysed and

synthesized later. Generally, metrics chosen should be true indicators of the process

performance and may include customer satisfaction, unit cost, cycle time, and appropriate

asset measurement.

The bottom-line benefit of Benchmarking is competitiveness. Benchmarking helps to

develop a picture of how the operation should look after the changes has been made or

attain superior competitive performance. This is a powerful way to marshal the energies

of the operation to enable it to become competitive and then outdistance the competition.

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CONCLUSION

Having discussed the concepts and basic issues relating to TQM, it is important to

emphasize that the commitment to quality cannot be real nor taken seriously by

employees and indeed, by other managers where a single manager allows the integrity of

operations to be compromised.

The integrity of operations is compromised when a manager engages in double standards.

It is compromised when, in the words of the Quality Manager, “a manager puts pressure

on the system to let him or her get away with things that are definitely wrong”. The

integrity of operations is compromised when a manager fails to see himself as the

standard by which the quality of operations is judged. It is composed when, as a

management, we build into the environment of work conditions that indicate contempt

for lower level employees.

For these reasons, assuring the integrity of operations requires, indeed demands, courage

on the part of top management to take ‘hard’ decisions where necessary. This courage is

required to change current management attitudes and practices as well as processes,

structures and procedures that have provided support whether hidden or open for these

attitudes and practices in the past.

TQM encourages participation amongst shop floor workers and managers. There is no

single theoretical formalization of total quality, but Deming, Juran and Ishikawa provide

the core assumptions, as a "...discipline and philosophy of management which

institutionalizes planned and continuous... improvement ... and assumes that quality is the

outcome of all activities that take place within an organization; that all functions and all

employees have to participate in the improvement process; that organizations need both

quality systems and a quality culture.".

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