Total Quality Management - CAN TQM BE THE SOLUTION TO ALL OUR PROBLEMS

Table of contents

Table of figures

1 Introduction
1.1 What causes the need to adapt our company?
1.2 What can TQM do in this case?

2 Definitions
2.1 Quality
2.2 Definition and Development of TQM

3 The concept of TQM
3.1 The TQM Model
3.2 Main Aspects of TQM
3.2.1 Employee-orientation
3.2.2 Customer-orientation
3.2.3 Constant improvement

4 The quality standard ISO 9000

5 Why do we need TQM?
5.1 Quality-related-cost
5.1.1 Prevention Cost
5.1.2 Appraisal Cost
5.1.3 Failure Cost
5.1.4 Influence of TQM on the total quality cost
5.2 Consumer benefit
5.3 Company benefit

6 How can TQM be implemented
6.1 Tools for the implementation
6.1.1 Identification tools
6.1.2 Identification and analysis tools
6.2 TQM implementation phases
6.2.1 Analysis-phase
6.2.2 Design-phase
6.2.3 Realisation-phase
6.2.4 Maintenance-phase
6.3 Main problems for the implementation of TQM
6.3.1 Management
6.3.2 Employees
6.3.3 Implementation traps

7 Success Factors of TQM

Bibliography

Table of figures

Figure 1: Challenges of today’s business environments

Figure 2: TQM in the model of operations improvement

Figure 3: Development of Total Quality Management

Figure 4: TQM-model

Figure 5: ISO 9000 Standards

Figure 6: Motives for implementing ISO 9000

Figure 7: Relationship between cost of quality and organization capability

1 Introduction

In contemporary business environments with an increasing degree of globalization and international supply relationships there is a growing demand for comparable quality standards. More and more buying decisions are not only based purely on the attributes of the product itself but also on the quality standards of the organization that produces it. Accredited companies tend to by their products only form accredited ones. The ever increasing quality-focus made quality become a constant element of the marketing-mix and a strategic success factor (Anonymus, 2002). The implementation and application of Total Quality Management (TQM) has become a philosophy for most of today’s companies. The following essay will outline the main elements of TQM, describe implementation processes and evaluate the needs and threats of TQM.

1.1 What causes the need to adapt our company?

In today’s global business environments big changes occur, boost up the speed in which new companies have to face new challenges. The impact of the changes on contemporary businesses is increasing. The question today is not if things are going to change, but when (Harigopal 2001, pp. 16).

As the markets are getting more and more competitive and are subject to enormous changes, there are several aspects that can be influenced in order to create a competitive advantage for a business.

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Figure 1 : Challenges of today’s business environments (Kobi 1996, pp. 13-14), (Anderson 2001, pp. 16-18)

The aspects, described above underline the major changes in the three areas of social, economic and technical kind. Every company has to adapt to these in the best possible way in order to survive in the changed surroundings. TQM can be seen as one of these strategies to gain competitive advantage in today’s markets. TQM helps to improve internal processes, satisfying customer’s-needs in the long run cutting down the cost of running a business (Dale and Oakland 1991, pp. 11-13) and has the major positive impact on creating competitive advantages.

1.2 What can TQM do in this case?

Total quality management can support and strengthen the position of a company and is described as the ‘fast track’ to improve performance and profitability in the companies’ processes (Anonymus, 2002) in order to be able to act more competitively in the markets.

2 Definitions

The purpose of this chapter is to define the relevant terms: quality and total quality management.

2.1 Quality

The accordance between services/goods and expectations can be defined as quality. It is essential what consumers regard as important, based on their subjective requirements. Where technical aspects are measurable, several elements which are crucial cannot be measured. Quality is the overall impression of partial-qualities and can be either interpreted subjectively or objectively (Gabler 1999).

2.2 Definition and Development of TQM

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Figure 2 : TQM in the model of operations improvement (Slack, et al. 2001)

As it can be seen in the figure above, TQM is one element of the operations improvement processes, which is not only concerned with quality but also with all aspects of operation’s performance and improvement.

As there are several different definitions of TQM available, this essay will use Freigenbaum’s definition, that defines TQM as “an effective system for integrating the quality development, quality maintenance and quality improvement efforts of the various groups in an organization so as to enable production and service at the most economical levels which allow for full customer satisfaction” (Feigenbaum 1986).

The main goal of an operation that implements TQM is to design and improve its business-processes corresponding to its strategies and to involve its employees and resources in the maximum efficient way in order to reach the following goals:

- Customer satisfaction: fulfil the expectations of internal and external customers.
- Employee satisfaction: fulfil the expectations of the employees
- Public Image/responsibility: act in a responsible way

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Figure 3 : Development of Total Quality Management (Slack, et al. 2001)

The figure above shows, how quality has evolved over the last years and how it has grown from the pure error detection, over a holistic approach to a quality philosophy. The TQM is now focussing on the value-added-chain, labour conditions and the environment. The needs and interests of the customers have become the major decision driver where as the interests of marketing or productions have lost importance.

3 The concept of TQM

The main concept of the TQM-approach, compared to the traditional quality assurance is that quality is not limited to products or services. It is a systematic process, which runs throughout the whole company. This splits the steps of the different processes up into customer-supplier relationships, where there is no difference between internal and external customers. This enables a customer-focused thinking and acting throughout the company and prerequisites to meet external requirements (Freiling 1994, 31-33).

3.1 The TQM Model

In order to set up the customer’s and supplier’s interaction as an efficient concept, it is vital to define what the requirements of the customers are and to make sure, that those can be met by the processes. To ensure that these requirements can be fulfilled, Oakland (1999, 14) defines three elements: a good management system, tools to control the processes and teamwork that have to be set up. They are complementary but all share the same uncompromising commitment to quality.

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Figure 4: TQM-model (Oakland 1999, 14)

To push TQM into any form of organization, a total change in the commitment of the management is required. Ideally it starts with the senior management and is distributed and flat down through the business.

There are several approaches of using the three elements of the model. A company can either use one or more of them as a spearhead to drive the quality concept through the organization. Some companies start their TQM initiative with a new computer system, some with the installation of a new management. There is now best practice approach, as the structures and situations of the different companies vary.

Interpreting figure 4, it can be said, that the installation of a quality concept and the implementation of quality-processes require teams, tools and systems in order to install TQM and to change culture, commitment and the way of communicating within a company (Oakland 1999, 14).

3.2 Main Aspects of TQM

The three main elements of TQM are employee-orientation, customer-orientation and constant improvement.

3.2.1 Employee-orientation

Every employee has two functions within today’s businesses as he on one hand generates cost and on the other hand income. The employees, involved in planning and conducting goods and service processes have an enormous impact on the produced quality and their involvement into the TQM processes (Freiling 1994, 15-16).

3.2.2 Customer-orientation

It is crucial within the TQM processes, that the company regards and treats its workforce as internal-customers and manages to address the relevance of the internal customer-supplier relationships. If the employees adapt to it and live this concept, it will result in an increased work-satisfaction and motivation of everybody. Implementing this concept will result in an improved and intensified communication within the supply-chains, helping to reduce misunderstandings. The new status will end up in a positive communication to external instances and a build up a positive overall image of the company (encouraging sales), an identification of employees with their corporation, and the willingness to takeover higher responsibilities.

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