Total Quality Management in a Theoretical and Practical Context

Table of Content

1. Introduction

2. The Emerging and Development of Quality Concepts

3. The Principles of Total Quality Management
3.1. Adaptation of a Quality Orientated Attitude
3.2. The Role of Management
3.3. Leadership Development
3.4. Management of People
3.5. Customer/Supplier Relationship
3.6. Customer Orientation
3.7. Supplier Integration
3.8. Preventive Action
3.9. Continuous Improvement
3.10. Lean Management
3.11. Benchmarking
3.12. Quality Controlling

4. The European Quality Award

5. Nokia Company Profile

6. Nokia and the Excellence Model
6.1. Leadership
6.2. People
6.3. Policy and Strategy
6.4. Partnership and Resources
6.5. Processes
6.6. People Results
6.7. Customer Results
6.8. Society Results
6.9. Key Performance Results

7. Conclusion

8. Bibliography

1. Introduction

Today’s leading organisations are getting aware that it is important to develop a process of continuous improvement in order to deal with the worldwide increasing competition in a successful way. The adaptation to the incessant changing demands of the market and the customer is a problematic task for a company. Under these conditions, top-managers are looking for ways to break up old structures and to take future demands into consideration.

One particular approach to improved effectiveness of company performance is the Japanese inspired Total Quality Management (TQM). The fundamental thought is that quality cannot only be seen as a mechanistic process but has to be accepted as a company pervading system. It requires teamwork and an increased development and involvement of employees.

Companies, which strive after a high level of quality, see in the customer the key element. They realise that they have to offer the highest possible quality level of products and services. Total Quality Management provides various techniques, which secure the acceptance of this philosophy within the entire organisation and facilitate the necessary changes of behaviour and mentality.

The following study focuses on the main principles of this management theory in relation to the implementation in a world leading company, which received the European Quality Award in the year 2000. The appliance of the various principles is examined and discussed. The subsequent results are critically analysed.

2. The Emerging and Development of Quality Concepts

After World War II the global business conditions significantly changed. This was mainly due to the Japanese revolution in quality. The development of quality concepts started in the mid 1950s in the USA. However, they were not put into practice at this time. The Japanese economy adopted some of these new ideas in order to achieve competitiveness in the international markets. Training programs in quality control were built up and continuous quality improvement projects were established.

Due to the impressing success of the Japanese economy, the Americans started to focus more closely on this concept in the 1980s. Soon all Western industrial countries realised that the Japanese factories were organised in a far more efficient way than it was usual in the Western world. Therefore the Japanese were able to offer high quality products to a favourable price and exerted pressure on the international market.

To oppose that pressure the United States founded the Malcolm Baldrige National Quality Improvement Act in 1987, which contains the annual award of a national quality price to merit organisations. Thereupon the European Community established the European Foundation for Quality Management (EFQM) in 1988. Since 1992 it also offers an award to organisations, which apply Total Quality Management in a successful way and can therefore function as a model for other companies.

The aim of the European Foundation of Quality Management is to encourage the application of quality management concepts in Europe and to support organisations, which are planning to implement Total Quality Management.

3. The Principles of Total Quality Management

Total Quality Management is a management strategy, which influences the entire organisation with all its activities, employees and its environment. The application of this tool helps to determine customer oriented quality goals.

Quality can be defined as “the totality of features and characteristics of a product or service that bare on its ability to satisfy stated or implied needs” (ISO 8402, 1986).

From this definition the objective criteria of TQM can be derived, which are customer and co-worker satisfaction, benefits for society, quality, time and costs. TQM is the most comprehensive strategy a company can apply and therefore it is indispensable to formulate quality principles, which provide a guideline and secure a uniform proceeding.

3.1. Adaptation of a Quality Orientated Attitude

In the past the majority of companies focused only on product quality while the quality development process was not taken into account. The new direction concentrates much more on the quality of the processes and assumes that high product quality is always a result of excellent process quality. That implies that all processes have to be controlled consistently and have to work without any defects.

It was also a widespread belief that quality represents a counterpart to productivity. Higher quality was related to a lower level of productivity.

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FIG.3.1. The Old Attitude (Source: Hummel & Malorny 1997 p.9)

The new attitude assumes that better quality of the processes means less repairs, less waste, less mistakes and thus a higher productivity.

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FIG.3.2. The New Attitude (Source: Hummel & Malorny 1997 p.10)

Quality is the key to productivity, and a higher quality level means less costs. The traditional conflict between quality, cost and time is removed. The new thinking on continuous improvement of the processes leads to decreasing mistakes and thus to diminishing costs. As well, a high process quality enables an undisturbed flow of material and information with short supply and development times.

That means cost and time become a characteristic of quality and quality becomes the highest strategic objective of the company.

This new attitude has to be disseminated within the entire company and provides the basis for all other principles.

3.2. The Role of Management

The introduction of Total Quality Management is a strategic decision, which will lead to a change of the entire organisational structure of an organisation. In order to avoid uncertainty and resistance of employees and executives, the necessary changes have to be directed and pushed by the management. The management has to perform its executive function and has to support the changing process by an exemplary behaviour.

The basis for the implementation of TQM can only be built up if the management strives in the strongest possible way for quality and supports this with the consequent proceeding.

All changes have to be initiated by the senior management. It is important that employees in leading positions are not able to prevent or slow down necessary actions.

This principle goes ahead with the theory of Philip B. Crosby, who assumes that within the management a core of quality specialists has to be created in order to spread the quality improvement approach throughout the organisation. Crosby strongly supports the “Top-Down” approach, which leads to the conclusion that senior management is entirely responsible for quality insurance. (Crosby 1984 p. 68–75).

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Fig.3.3: Crosby’s Top-Down Approach (Source: Financial Times 1986)

3.3. Leadership Development

TQM is a management method, which is based on the co-operation of all members of an organisation. Leadership has to be created in a way that gives everybody the possibility to be actively involved in the company.

It is the people in an organisation who create quality. Therefore, it is the duty of the leaders to develop an effective work environment that encourages the creativity and the productivity of all employees.

In order to use the full potential of all members, teamwork plays an important role. Leaders have to be prepared for this form of co-operation, which requires social competences like communication skills, empathy, creativity, personality and an exemplary behaviour.

The organisation should introduce an executive development program that improves the methodical and the social competences of quality-orientated leadership. It is essential to offer learning opportunities, which are specially directed towards quality techniques and quality management systems. Additionally proficiency in group presentations and discussion management should be further developed.

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Fig: 3.4. Leadership Style (Source: Hummel & Malorny, p. 30, 1997)

The aim is to form leaders with an excellent quality understanding combined with social leadership competences.

3.4. Management of People

In every organisation, it should become commonly accepted that every single member of staff is a significant potential for creativity and problem solving. Therefore, a work environment has to be created, which enables all members to think independently, to work on their own responsibility and to be satisfied.

According to Kamiske, the following points build the foundation for a successful implementation of TQM (Kamiske 1996 p. 50).

- The preventive quality strategy of TQM requires the commitment of all people, who are involved in the process. Only then, possible mistakes can be realised and eliminated in an early stage.
- The orientation of all members of staff on quality and continuous improvement builds the core element of all activities.
- Flexibility and adaptability concerning customer demands can only be reached with the help of good trained employees who are able to think entrepreneurial.

All members on all levels of the organisation have to acquire a basic knowledge of the main TQM principles. This can be done with the help of training facilities. Additionally the employees should work in teams and develop an appropriate application of the principles in their work area.

In order to support group work, the strict division of labour has to be abolished. New work contents have to be created and groups with a high degree of self-responsibility have to be formed.

If there arise skill or knowledge based difficulties, the leaders have to meet those problems by increased training programs and personal conversations.

3.5. Customer/Supplier Relationship

The majority of people in an organisation never meet their external customers directly. As a consequence, they often fail to realise their individual importance in improving quality. Therefore, as Atkinson says, “everybody within an enterprise should consider the interactions between themselves and their “internal” customer – those who are next in line” (Atkinson 1990 p. 120). First, if this internal customer/supplier chain is successful, it will be possible to meet the needs of the external customer.

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Fig.: 3.5. The Customer/Supplier Network (Source: Dale & Cooper 1992 p.44)

The effectiveness of this internal relationship should be examined on a regular basis. It builds the basis for a successful communication and cooperation with all external customers and suppliers.

3.6. Customer Orientation

In order to achieve or maintain competitiveness, a company must continuously determine the requirements of the customer, the eventual buyer of the product or service.

In recent years, it became obvious that quality is one of the most important product features for the customers. That means that a product only will survive in the market if it meets market demand and works without any problems.

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