In this chapter we discuss not only improvement of the quality of products and services, but also the much broader issues of the quality of human activities, processes, decision-making systems and organizations, i.e. total quality management (TQM).

21.1 Understanding TQM

A successful business relies on making profitable sales to its consumers; it will retain its existing customers and attract new customers only if it knows their requirements, and delivers products and services that conform to them. This can be done by (1) ensuring that the design process results in outputs that meet customer requirements and that can be produced cost-effectively; (2) minimizing inefficiencies such as waste and rework; and (3) ensuring that all activities are directed at satisfying customers’ needs.

The term “quality” has suffered over the years by being used to describe attributes such as beauty, goodness, expensiveness, freshness, and even luxury. So, a car may be described as a “quality car” when, in reality, it is an expensive or luxurious car. Management consultants should be aware of the modern concept of quality, which is defined as total conformance to requirements. These requirements include the total customer requirement, not just a product or service specification. To manage quality, management and employees should:

●recognize the existence of both external and internal customers;

●fully understand and agree on their customers’ needs and expectations;

●deliver what was agreed, without any exception;

●be efficient as well as effective in meeting agreed customer requirements;

●continuously seek to improve performance in meeting customer expectations.

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Thus, the most important objective of quality management is to fully satisfy agreed customer requirements at the lowest overall cost to the organization. But the best companies are those that aim even higher – to delight and excite their customers.

“Sell” quality to the client

To sell the idea of TQM, the consultant should explain to the client that it is not one more management fad or another tool for a quick fix. It is a solid overall approach to improving product and service quality, the way of doing things, and the quality of business and operational systems. It was not invented by anybody in particular, though the idea came from the United States. It has been gradually developed thanks to contributions from many specialists, consultants and companies, and has passed through both successes and failures.

TQM has grown gradually over a period of more than 40 years, starting from the quality control (QC) and quality circles movement in Japan. Around 1946, American experts introduced statistical quality control (SQC) to Japanese telecommunications industries. Visits by Deming to Japan between 1950 and 1952 established the foundation for future development. In the process of practising quality control, it became obvious that the use of statistical techniques was not enough to improve quality: there had to be total participation, from top management to workers. Also, efforts made in production departments alone were not enough: QC activities, therefore, were also applied in engineering, purchasing and sales departments. Moreover, it gradually became understood that QC techniques were useful not only for quality control but also for cost reduction and productivity improvement.

After Deming, Juran also visited Japan and suggested that quality control should be used not only for the production line, but also as an important management tool. Later in the 1950s, Feigenbaum proposed total quality control (TQC), which was brought to Japan in 1958 by the Japanese Productivity Center. Since the beginning of the 1960s, Japanese companies have been using TQC consistently, expanding it to engineering, marketing, general office staff functions, and business planning. TQM is synonymous with TQC as used in Japan.

In the 1960s in the United States, emphasis was put on the idea of “doing it right the first time” (zero defect), which led to the quality assurance (QA) concept. This involves identifying, analysing and writing down all procedures, and using this documentation to ensure that all processes are coordinated and that all employees know what is expected of them and are trained accordingly. However, QA has not contributed significantly to continuous improvement. As Deming correctly noted, just because nothing is wrong this does not mean that everything is right. TQM emerged when QA was added to approaches such as just-in-time, lean production, simultaneous development and continuous improvement (kaizen). As a result of this evolution, TQM was adopted by many companies throughout the world. When adopted fully and practised correctly,

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TQM is a visionary cultural movement that encourages employees to share responsibility for delivering quality services and products.

The main characteristics of TQM

There is no common and universally accepted definition of TQM. The best way to understand it is to review its most common ideas and features. Some specialists describe TQM as a revolutionary philosophy that requires radical and pervasive change within the firm. Others argue that TQM is not just a philosophy, but a strategy. Although it is true that TQM requires a change in mentality, it seems to be more helpful for consultants to present TQM as a strategy for improving operations and results. Indeed, managers seem to be more willing to talk to consultants who offer help with strategy and tools than to those who tell them about TQM philosophy and culture.

In Japan, TQM tends to be viewed as systematic, scientific, company-wide activities that place importance on customers. It aims to apply business principles by which a company can increase sales and profits as a result of achieving customer satisfaction. The most important features of TQM, explaining the essence of this approach, are:

●A priority emphasis on improving quality and customer satisfaction, primarily through a systemic way of improving products and services; structural approaches to preventing, identifying and solving problems; and a lifelong process of product development through teamwork.

●Widespread and extensive involvement, supported by considerable staff training, in basic quality management and process analysis/improvement techniques, and ongoing communications about the organization and its mission, vision, goals and performance.

●Numerous continuous incremental process improvements predominantly attained through ideas generated and supported by extensive employee involvement and data-driven decision-making. The notion of “totality” is reflected in involving all levels of strategic planning, management control, process design and operations.

●Considerable ongoing involvement and support by top management, as well as long-term thinking; willingness to wait three to five years for cultural changes and substantially improved overall outcomes.

TQM advocates the development of true customer orientation, teamwork and inter-unit cooperation, structured problem-solving, a reliance on quality assurance standards and measurement, a system of rewards and recognition for excellence, and long-term commitment to the ongoing process of improving quality. It creates an environment that contributes to positive morale and recognizes that products and services embody the efforts, creativity, values and collective personality of their producers. The fundamental engines for TQM are empowering, energizing and enabling.

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For management consultants, it is important to realize that TQM is not a new programme with a beginning and an end; rather it is a permanent process for achieving excellence, which is a moving target in itself. TQM is not good for fighting fires and other short-term fixing activities. It means continuously meeting agreed customer demands at the lowest cost by releasing the potential of all employees. This holistic approach includes internal and external customers, a sense of commercial reality through cost awareness, and making use of people’s full potential.

Objectives and benefits of TQM

The objectives and benefits of TQM fall into two major categories – revenue enhancement and cost reduction. Significantly improved product performance

– features, reliability, conformance, durability, serviceability or perceived quality – should result in increased demand. A reduction in total product cycle time improves availability and the ability to provide a tailored customer service. Such benefits translate into increased market share and usually increased revenues. Improved quality control reduces material costs, direct and indirect labour costs and working capital. Again, reduction in total product cycle time reduces inventory stock holding costs.

Thus, the use of TQM substantially improves financial and other key broadbased organizational outcomes. For example, financial investment in adopting TQM is primarily an investment in education and training for employees and management. TQM requires employees to be empowered to make decisions regarding process and product quality – to be their own troubleshooters. Therefore, successful TQM implementation results in:

●Meeting customers’ requirements and ensuring their satisfaction; increasing market share, revenue and return on assets; reducing internal costs; providing higher employee satisfaction; understanding better the competition; and developing an effective competitive strategy.

●Achieving a top-quality performance in all business and operational areas, not just in product or service quality, through critical and continuous examination of all processes to remove non-productive activities and waste.

●Involvement of everyone in continuous improvement, not just people directly involved in the quality function; greater focus on work processes and improvements; identification and solution of problems at lower levels by people close to the work who are empowered to deal with the problems.

●Less fire-fighting and rework, and more data-based efforts to eliminate the root causes of problems; more up-front effort to clarify requirements and prevent defects and errors.

●More open and frequent communication horizontally among people who view and treat each other as customers and suppliers, better interdepartmental cooperation.

●Intolerance of, and action taken on, defects and errors that have previously been ignored.

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