Total Quality Management (TQM)

Introduction

A broad system that focuses on meeting customer requirements by achieving continuous improvements in product and services

A culture that focuses on quality across the entire value chain

Managers need to be able to measure quality in order to improve and maintain it.

The performance of quality can be assessed using qualitybased performances measures, as well as cost of quality reports.

Internal Failure Cost

Defective products are detected before leaving the business

Examples: scrap, rework, downtime, material disposals and lost contribution from scrapped products.

External Failure Costs

Defective products are provided to customers

Examples: sales return, warranty claims, processing complaints, legal fees and service callouts

Appraisal Costs

Cost of determining whether defect exist

Examples: monitoring, inspecting materials, inspecting WIP, inspecting finished goods and testing equipment

Prevention Costs

Preventing defects and in minimizing appraisal activities

Examples: quality engineering, quality planning, employee training, quality reporting

Features

Organization wide

Customer-driven

Involves continuous improvement

Supported by quality management system

Has a process perspective

Advantages

Cost reduction - when applied consistently over time, TQM can reduce costs throughout an organization, especially in the areas of scrap, rework, field service, and warranty cost reduction.

Customer satisfaction - since the company has better products and services, there should be fewer customer complaints. A higher level of customer satisfaction may also lead to increased market share.

Defect reduction – since TQM emphasis on improving quality rather than inspecting quality into a process, it will not only reduces the time needed to fix errors, but makes it less necessary to employ a team of quality assurance personnel

Employee Morale - the ongoing and proven success of TQM, and in particular the participating of employees in that success can lead to a noticeable improvement in employee morale, which in turn reduces employee turnover, and therefore reduces the cost of hiring and training new employees.

Disadvantages

Extremely demanding of management and staff time

It can become overly bureaucratic and mechanical and lead to an emphasis on consistency of procedures, rather than a focus on improvement

Only help if the organization is heading in the right direction

It is not a quick fix and takes years to implement

It can lead to too much attention