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●The third step is to analyse the quality costs to identify opportunities for improvements over time and highlight the magnitude of current problems. Assigning quality costs to problems that are endemic will draw attention to these costs. Various methods can be used to analyse the COQ data collected, the three most common of which are trend analysis, variance analysis and Pareto analysis.2

●Finally, it is necessary to institutionalize the process of quality improvement and quality cost reduction to ensure that the business objective of higher quality at lower cost continues to be met. This means that the COQ system must be implemented systematically, with the quality improvement effort being planned, coordinated and sustained.

21.3 Principles and building-blocks of TQM

While the TQM design and process will be different in different companies and circumstances, there are some common basic principles and building-blocks of the system.

Principles

Principle 1: Focus on customer satisfaction and delight.

This principle drives the entire TQM process. Every department and work unit has customers, whether internal or external. Managers and employees have to be customer-focused to meet or exceed customer expectations, creating not only customer satisfaction and loyalty, but delighting them. Emphasis should be placed on improving the practices of frontline personnel, delivery mechanisms and logistics, customer focus and processing of customer requests. Measurement of customer satisfaction through surveys, focus groups, benchmarking and market analysis provides the best evaluation of TQM results.

Principle 2: Quality improvement requires the strong commitment of top management.

The leadership must be committed to TQM and be the driving force behind it. It must create a vision that will take the organization from its current position to where it wants to be. Top management must clearly specify which actions will improve quality; they cannot delegate this responsibility. To demonstrate commitment, involvement and leadership, management must establish and communicate clear corporate values, principles and objectives relevant to quality; channel resources towards these objectives; invest time in learning about quality issues; and monitor the progress of any initiatives.

Principle 3: Quality is a strategic issue.

Quality should be a part of the company’s goals and strategies and integrated in the way the organization conducts business, including product and process

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design, planning and budgeting. Quality must be also a part of the corporate mission. Therefore, TQM requires integrated planning systems that coordinate strategic quality planning with other strategies for products and services, logistics, distribution, customer service, manufacturing and sourcing. It also entails streamlining design processes, integrating engineering systems, forming cross-functional teams, and integrating quality design techniques into process design.

Principle 4: Employees are key to consistent quality.

Employees are natural sources of ideas for ways to improve quality and customer service. The best companies incorporate quality and customer service into performance appraisal and reward systems. They encourage full participation and involvement, employee empowerment, recognition, reward and motivation to instill a dedication to quality at every level. TQM also requires a highly skilled, knowledgeable workforce, well trained in its tools and methods. The process usually begins with awareness training for top managers, followed by training of mid-level managers and finally of non-managers. Continuing education and training are integral components of any TQM process.

Principle 5: Quality standards and measurements must be customerdriven.

Explicit quality standards for performance are essential. The company’s definition of product and service quality should include the criteria that customers use when they perceive value. A customer’s product preference is determined by the perceived quality/price ratio of one product in relation to other competing products. Cost of quality is also a useful measure of performance. Measurement is essential to ensure that planned improvements are implemented.

Principle 6: Many programmes and techniques can be used to improve quality.

Quality control and improvement must occur continuously in day-to-day operations. Process simplification is a low-cost, low-technology way to increase quality and effectiveness, through focused operations, smooth and continuous material and paperwork, management-by-eye, synchronization with customers and suppliers, and other techniques. More sophisticated techniques could also be used, such as statistical quality control, quality circles, suggestion systems, and quality-of-work-life projects, as well as automation, computer-based design and manufacturing, product design improvement and benchmarking.

Principle 7: All company activities have potential for improving product quality; therefore, teamwork is vital.

Quality improvement requires close cooperation between managers and employees and among departments. TQM involves preventing errors at the point where the work is performed. Under this system, every employee and department is responsible for quality and should try to provide defect-free

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products or services. Successful companies remove barriers between specialists and create a climate for teamwork.

Building-blocks

Components. The TQM system is composed of three major business structures or components (see figure 21.2). The first one is strategic policy management, which is the process that enables an organization to implement a results-oriented approach. It provides a focus on strategic and operational priorities and promotes resource alignment independent of organizational boundaries. Through strategic policy management, the organization’s vision is formulated and then broken down into key components. The second component, process management, is instrumental in involving all employees in TQM. Every employee is linked to a superior’s accountability and is a part of the process to fulfil that accountability. This is the realm of process management and a key to defect prevention and employee involvement and empowerment – the third component.

Policies and objectives defining the organization’s aspirations. These provide a context and a focus for the quality improvement actions taken by all employees and include the business mission, operating principles and business objectives.

Processes. These include the quality delivery process, the quality improvement process, the quality management process, and cross-functional process management. The quality delivery process emphasizes the customer focus, ownership and self-measurement of workgroup outputs, assessment of customer satisfaction and process efficiency and identification of opportunities for improvement. The quality improvement process has to provide a simple

Figure 21.2 TQM business structures

Source: R. Seemer: “Winning more than the Malcolm Baldridge National Quality Award at AT&T Transmission Systems”, in National Productivity Review (New York), Spring 1993, p. 144.

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structured process whereby every workgroup can prioritize, select and realize opportunities for improving business performance. The quality management process ensures that the total quality strategy is implemented throughout the organization; all workgroups identify, develop and implement improvement projects and ensure that these projects meet the criteria defined by management.

Cross-functional process management ensures that process improvements are communicated from the originating workgroup to all other users of the process and that total processes are optimized rather than particular functions.

Organization. The TQM organization involves the business organization structure, quality support organization (quality managers in major business functions, quality facilitators, quality trainers) and quality function organization (quality office, company quality managers and assistants, and technical staff). Many companies have set up a quality council made up of 6 to 8 key managers and executives to develop the organizational strategy for TQM implementation.

Training. A total quality training strategy should involve all members of a workgroup and train them together. Training should be based on work actually performed in a format such as “concept–case study–application to own job”. Managers should lead the training of their workgroup and be responsible for its effectiveness. Training should be cascaded down from the top of the company, thus enabling senior managers to provide role model leadership and example to lower levels in the application of vital quality concepts, processes and techniques.

Motivation. A system of rewards and motivation is a very important building-block of the TQM system. All employees must be motivated to commit to the concepts, apply the processes, and become involved in achieving total customer satisfaction at lower cost and reduced lead-time. To motivate employees to participate in TQM it is important to provide systematic feedback on performance and to recognize achievements.

Quality management team. The quality management team is the primary agent for TQM in an organization. It must plan, implement and advocate for change, and it must become the role model for change in the organization. Members of the team are responsible for implementing the plan in their own areas of business. The team must include the key people who lead the business units. The team should meet monthly to review progress, with problem-solving done between meetings. Each member of the team should also lead change in his or her part of the organization.

Quality assurance (QA) system. This is a management system designed to monitor activities at all stages (product design, production process, purchasing, delivery and service) to prevent quality problems and ensure that only conforming products reach the customer. The key features of an effective QA system are effective quality management and periodic audit of the system to ensure that it is effective and that it continues to meet changing requirements. Modern QA practice strives to get things right first time; it is a preventive discipline addressed to the people who produce the goods and services, virtually eliminating the need for external quality control inspection. QA really becomes effective only when the organization is totally committed to quality, which has become part of its culture.

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