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<p>7. TOTAL QUALITY MANAGEMENTR. NAT NATARAJANTennessee Technological Uniuersity, Cookesuille, TN, USA</p> <p>ABSTRACT CoUis p. Huntington, owner of Newport News Shipbuding, engraved in 1917 the company's motto on the side of the building: "We shall buud good ships here; at a profit, if we can, at a loss if we must, but always build good ships." (Dobyns and Crawford-Mason, 1991: 11). Five thousand years before Huntington, Egyptian inspectors checked the work of masons who dressed the stones of the pyramids, and the ancient Chinese had a department of the government to estabHsh and maintain quality standards (Juran, 1993). These examples show that, meeting the standards, whether they were set by kings or merchants, was important. Ever since businesses have been engaged in the production of goods and services, quality has been a concern to the producer and the user. In that sense, quality has never gone out of fashion and never wl. But what has changed over the years is the meaning of the term "quality," its significance to organizations, and how it is managed. In the present day context, the word "quahty" has come to mean more than it did in the past. It means meeting or exceeding the requirements, expectations, and needs of the customerseven those needs which are latent and not articulated by the customers. In recent years, a pragmatic and comprehensive system for managing quality called Total Quality Management (TQM) has evolved. Many organizations have successfully developed and</p> <p>69</p> <p>70</p> <p>V Competing on quality</p> <p>implemented such systems, with dramatic improvements in performance. Many different experts and the practices of diverse organizations have contributed to the principles of TQM. Generally, TOTAL quality management implies performance excellence throughout the total systemincluding design, production, distribution, service, and the involvement of all categories of employees, customers, and suppliers in the quality initiative. The practices ofthe following companies are included here: Caterpillar; Dana Corporation; General Electric Company; General Motors-Numtni Plant; Hewlett-Packard; Highland Park Plant, Ford; IBM; Komatsu; Motorola; Toyota; Xerox. WHAT IS TQM? The following are essential characteristics and core values are common to most effective TQM systems. Customer Focus: This puts the customer first for real. The essence of customer focus is identifying the external and internal customers, their needs and expectations, and doing whatever it takes to satisfy them. Under TQM, the scope ofthe customer extends to those who are not directly involved in using the product but may have a legitimate concern such as the regulators, consumer organizations, the community, and the general public, whose concern over safety, health, the environment, and consumer protection are taken seriously by TQM.Active Involvement and Support ofthe Top Management: The top management ofthe orga-</p> <p>nization must actively demonstrate by their deeds, and not just words, their dedication to total quality. Their leadership must be informed and visible. Active Involvement of All Employees: Top management must lead everyone, from line workers to clerical employees to professionals and managers, to participate and become actively involved in the TQM process. Such involvement must be supported by policies for training, empowerment, performance measurement, recognition, and reward. Prevention Emphasis: The emphasis of TQM is on prevention of defects and errors, rather than after-the-fact detection and reaction, such as inspection. Defects are proactively eliminated by designing quality into the product and the process. Continuous Improvement and Learning: This basic philosophy includes constant efforts to identify and eliminate non-value adding activities, and to continuously improve product/service, processes, and all the inputs. It also includes education, training, and upgrading ofthe skills of human resources. Management by Fact: This means using facts and data to solve problems, understand sources of variation, and uncover root causes. Analytical tools are used, both intensively and extensively throughout the organization, to collect, communicate, analyze, and share data.</p> <p>7. Total quality management</p> <p>71</p> <p>Business Planning and Performance Measurement: Quality plans and objectives are inte-</p> <p>grated with overall business strategies and other objectives. Performance measurement, which includes comparative and competitive benchmarking, is aligned with quality objectives and organizational goals. Collaborative Relationships: This refers to partnerships and alliances with suppUers, customers, educational institutions, and other organizations. It is emphasized that any one ofthe above characteristics by itself does not imply TQM. They all interact and constitute a total system. Organizations will not realize the fuU benefits of TQM if they only pick and choose some ofthe above characteristics and core values for implementation. In order to fliUy understand what these characteristics imply, we need to consider the evolution of the terms "total," "quality," and "management" in TQM.HISTORY</p> <p>Before industrial revolution, skilled craftsmen produced products in small quantities customized to meet the needs of individual customers. Generally, a small group of craftsmen were involved in product design, acquisition ofthe inputs, production process, and interaction with the customer. They were also responsible for the quality of what they produced. There \vere no quality inspectors as such. All that changed with the advent of mass production in factories to serve the needs ofthe mass markets. To make mass production more efficient, division of labor and task specialization were introduced. This led to organizations structured along functional specialties like design, production, marketing, and accounting. Consequendy, production activities were separated from the task of inspecting the quality of what was produced. Quality meant conformance to certain standards, which were set rnosdy by the producers themselves. End-of-Hne inspection, which weeded out the products that did not meet the standards was the primary means for assuring quality. It is important to note how quality was managed in such a set-up. Of course, it was not economical for cost and time reasons, to inspect each and every item that was produced. But, in many instances, very rudimentary inspection procedures or no procedures were followed. This was particularly true of mass production systems, where consumer products were produced. In Ford's Highland Park plant, which had one of the most advanced forms of mass production for its time, finished automobiles were rarely inspected, and no Model T was ever road-tested (Womack, Jones, and Roos, 1991). Any defective product revealed by inspection was sent to a separate rework hne, because rectifying the defects on the assembly line sacrificed production. How did customers' needs figure in all of this? According to Henry Ford, "They can have any color they want, as long as it is black." Because mass produced products were competing on price, mass production systems focused on raising productivity and reducing costs by automation and reduction of direct labor. Quahty did not receive the same emphasis as cost in mass production. In contrast, in batch-oriented job shop type manufacturing systems, product quality was considered important. Even in those organizations, if customers received</p> <p>72</p> <p>V Competing on quality</p> <p>defective products, the inspectors, rather than the operators, were questioned. The more important question^Why was the product made defective?was never raised. In other words, the source of chronic waste in the system was not attacked. Such practices also fostered the belief that quality can be inspected in and that inspectors were responsible for quality! In countries where the mass production systems were not widespread because of the smaller size of the markets, quality became a competitive factor in certain niche industries, e.g., optical equipment and cameras in Germany and watches in Switzerland. However, the situation was quite different when it came to production of military goods, in the U.S. the customer was the U.S. Department of Defense. Here, exacting standards of performance for the products were applied and were stricdy enforced. Often, it was quality attained at any cost. This was true in many industrialized countries ofthe world including U.S., Japan, and, until recendy, the former Soviet Union. Juran observes: "Japanese quality was all military until 1945. Their toys were shoddy, but their torpedoes were superior." (Juran, 1993, 43). Because of the attention given to quality and reliability in the case of hardware and materiel, important techniques were developed for sampling and inspection in production of military goods. World War II provided further stimulus to these efforts, resulting in the development and application of more advanced techniques. In fact, the origins ofthe now popular ISO 9000 standards could be traced to the standards developed by the U.S. Department of Defense. From the 1930s onwards, along with advances in methods for process control and inspection, there w^ere significant advances in measurement, gauging, testing, and other technical aspects of quality. Quality control had emerged as a separate function but with a narrow focus and managed by technically oriented specialists. In this era, the word "total" would mean application of quality control techniques across all product lines ofa firm. This was the era of quality with a small "q."From smaU "q" to big "Q"</p> <p>Things began to change in the 1950s. As the economies ofthe industriahzed countries recovered from the devastation of the war and began to grow, competition among suppliers increased, which increased the choices for the consumers. There were other major forces and trends worldwide: greater complexity and precision of products; product safety and liability litigation; government regulation of quality; and the rise of consumerist movements. In this emerging environment, the firms were forced to address the requirements ofthe customers and the regulators. Now, satisfying the customers required the coordination of all the activities that had a bearing on customer satisfaction but may take place in separate functional silos. For instance, the impact of design on conformance quality, i.e., meeting the design specifications during production, was recognized. It became imperative that customers' viewpoint was reflected in all the activities and quality had to be managed across the functions from design to marketing. Dr. A.V. Feingenbaum was one such quality professional who had first-hand experience in dealing with such across-the-company cooperation issues at General Electric</p> <p>7. Total quality management</p> <p>73</p> <p>Company in the U.S. He originated the concept of Total Quality Control (TQC) to describe the broader scope of quality assurance function. In Western companies, with their functionally and professionally oriented speciahzation, it was the QC departments that designed and ran the quality programs. Top management was only peripherally involved, and the rank and file in the organization did not play any role in such programs. By 1960s, many Japanese companies also had TQC or Company Wide Quality Control (CWQC) systems as they were called, but the term "total" in TQC had a very different meaning in Japan. It meant involvement of every one in the hierarchy, from top management to the production worker on the shop floor, and the clerical worker in the office. Dr. Juran's lectures on managing quality in 1954 had convinced many Japanese top managers ofthe importance of top management's responsibility. As a result, they no longer viewed quality as a technical function that could be left to the specialists. Another important development was due to the efforts of Dr. Ishikawa who insisted on involving aU employees in studying and promoting QC (Ishikawa, 1985). In 1962, he developed the quality control circles, small groups of Japanese workers who met voluntarily to discuss ways to improve their own work and the system. His approach was to provide easy-to-use analytical toolsincluding his own innovation, the cause-and-effect or fishbone diagramthat all workers could use to analyze and solve problems. He also persuaded Japanese management to not only support the activities of quahty control circles but also incorporate their suggestions in the total quality effort. He also made them think about co-workers and colleagues as internal customers. In Summary, the momentum generated by the following factors had a profound impact, not only on product quality but on cost as well: (1) top management's involvement and leadership for quality; (2) lowering the barriers between departments; (3) relying on workers' brainpower for quality improvement; (4) adopting the philosophy oikaizen or continuous improvement ofthe product, the process, and the inputs; and (5) focusing on the needs of external and internal customers. Many Japanese companies, by the 1970s, were able to achieve rapid improvements in the quality of their products, and, more significantly, could dehver them consistently at lower costs to the market (Shiba, Graham, and Waiden, 1993).TQM, STRATEGY, AND COMPETITIVENESS</p> <p>From the 1970s, global competition has intensified due to the revolutions in communication, transportation, and reduction in barriers to trade. Threats to human safety, health and environment have become major concerns for citizens, governments, and corporations. Quality may be necessary for the survival of a firm without guaranteeing its success. But the TQM perspective can provide the firm \vith new strategic options for business (Belohlav, 1995). To illustrate, a few years ago, companies like Xerox, Motorola, IBM, and the Big Three automakers in the U.S. found themselves in serious trouble against competitors from Japan, whose product quality and customer acceptance levels were much higher. For these firms, quality improvement became a necessity, not a choice. In</p> <p>74</p> <p>V Competing on quality</p> <p>these recovering companies, quality defined their business strategy. At Xerox, quahty improvement thrust drove the entire strategy, and major organizational changes that followed. For Motorola, the new strategy meant that high quality would not only differentiate its products in the market place, but it would also make the company a low cost leader in the industry. Top priority given to quality in the overall strategy gave Motorola a significant competitive edge. It had, in fact, set the industry standards for quahty, forcing its competitors to play catch up. Sometimes, a perceived quality edge can be sustained even after the competitors have caught up. For instance. General Motor's Geo Prizm and Toyota's Corollas were produced in the same NUMMI plant in Cal...</p>