Total Quality Management (TQM)

Total Quality Management (TQM) is a philosophy of quality management that originated in Japan in the 1950s.

• Total - means that everyone in the value chain is involved in the process, including employees, customer and suppliers
• Quality - products and services must meet the customers' requirements
• Management - quality is actively managed rather than controlled so that problems are prevented from occurring.

Key principles of TQM

There are three basic principles of TQM:

(1) Get it right, first time

TQM considers that the costs of prevention are less than the costs of correction. One of the main aims of TQM is to achieve zero rejects and 100% quality.

The aim of TQM is thus to get things right first time. This contrasts with the traditional approach that less than 100% quality is acceptable. TQM will result in an increase in prevention costs, e.g. quality design of systems and products, but internal and external failure costs will fall to a greater extent.

(2) Continuous improvement

The second basic principles of TQM is dissatisfaction with the status-quo. Realistically a zero-defect goal may not be obtainable. It does, however, provide a target to ensure that a company should never be satisfied with its present level of rejects. The management and staff should believe that it is always possible to improve and to be able to get it more right next time!

Quality management is thus not a one-off process, but is the continuous examination and improvement of processes.

(3)Customer focus

Quality is examined from a customer perspective and the system is aimed at meeting customer needs and expectations

A quality management programme is a relatively modern approach to quality. It will require a significant investment in prevention costs but should minimise or eliminate appraisal, internal failure and external failure costs.

As stated above, the 'total' in TQM means that everyone in the value chain is involved in improving quality, including:

• Employees - they are expected to seek out, identify and correct quality problems. Teamwork will be vital.
• Suppliers - quality and reliability of suppliers will play a vital role.
• Customers - the goal is to identify and meet the needs of customers. 
• Managers must be committed and encourage everyone else to be quality conscious.

One aspect of this is the idea that everyone has a customer who's needs and expectations they should be trying to meet and exceed.

For example, a junior accountant might be asked to produce a report for their line manager. The line manager is their "internal customer" and the junior should be considering what the manager wants (and doesn't!), what they might use the report for, why it has been requested, the appropriate level of detail needed and so on.

 Illustration

A TQM success story

Corning Inc is the world leader in speciality glass and ceramics.This is partly due to the implementation of a TQM approach. In 1983 the CEO announced a $1.6 billion investment in TQM. After several years on intensive training and a decade of applying the TQM approach, all of Corning's employees had bought into the quality concept. They knew the lingo - continuous improvement, empowerment, customer focus, management by prevention and they witnessed the impact of the firm's techniques as profits soared.

An example of TQM failure

British Telecom launched a total quality program in the late 1980s.This resulted in the company getting bogged down by quality processes and bureaucracy. The company failed to focus on its customers and later decided to dismantle its TQM programme. This was at great cost to the company and they have failed to make a full recovery.

Performance measurement and TQM

Examples of performance measures in a TQM environment include:

• monetary measure - cost of rectification
• non-monetary measures - percentage of wastage
• variance analysis - care must be taken with regard to traditional performance reports such as favourable price variances, these can arise because of using poorer quality resources
• targets or benchmarks must be set against which the performance of suppliers can be measured
• outputs too must be measured for quality against pre-determined targets.

To assist in this, new classifications of quality-related costs have been developed.

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Tags:	quality;TQM;Total quality management