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