Total Quality Management

What It Means

Total quality management (TQM) is a philosophy of business management that seeks excellence and maximum efficiency in all areas of the production of goods and services. The careful and reliable design of products is the most basic priority of total quality management. The philosophy also emphasizes reliable operational strategies that ensure that the firm can produce the good or service on a consistent basis.

The word “total” in total quality management is important. The emphasis of this management approach is that both good product design and proven, high-quality production methods must exist together for a company to achieve a competitive presence in the market. For many businesses a focus on these two areas relates efficiency and quality to other business areas, such as systematic measurement (involving statistical measurement), team-based organization, and attention to customer satisfaction. A focus on customer service includes using effective methods to collect customer feedback. Most businesses that apply TQM also use it to develop processes that ensure ongoing improvement and self-evaluation. One way a company might implement this is to involve lower-level employees in evaluations of those managing and running the company.

Businesses apply TQM in many ways. In fact, there is no single method of putting the philosophy into practice. One company may focus on creating and sustaining excellence in a collaborative workplace environment by building team-based efforts and approaches. Another company may emphasize state-of-the-art manufacturing by investing in the newest machinery and creating careful measurements of produced goods.

Total quality management’s focus on product quality comes not only from the belief that customer satisfaction will drive sales of products but also from the fact that more efficient production processes will lower a company’s costs. If systems are running as efficiently as possible, fewer raw materials will be wasted and fewer finished products will require repair. Additionally, employees value working for a safe and efficient business.

When Did It Begin?

Total quality management has its roots in the work of U.S. inventor and engineer Frederick Taylor (1856–1915), who organized a theory of business management that became known as scientific management. Taylor viewed organizations essentially as machines and relied on fixed principles to organize a business so that it produced high volumes of goods with maximum efficiency. Part of Taylor’s approach was an emphasis on the efficient training and close monitoring of well-qualified workers and precise guidelines for worker productivity. The innovations that Taylor popularized were adapted in the 1930s, when other management theorists developed statistical methods for measuring work tasks that improved manufacturing practices. These methods enabled managers to measure such things as the number of errors in the manufacturing run of a car engine, for example. They also provided managers with ways to locate glitches or problems in the production process that could result in faulty or defective products.

One of the leading statisticians of the early twentieth century, William Edwards Deming (1900–93) advocated the application of statistical methods to business. His ideas were especially popular in Japan, whose economy had been devastated by World War II. Japanese manufacturers applied Deming’s measurement techniques to production and operations, and by the middle of the twentieth century Japan had become a leading economic power on the world stage. The Japanese particularly surpassed U.S. companies in the production of automobiles and other durable goods, such as room air conditioners. In the 1980s and 1990s improving the quality of production became a priority in the United States, and the government launched incentives to help companies develop quality-measurement programs.

More Detailed Information

Essential to any company’s quality program is how it determines the specifications of its product designs and the costs of achieving the level of quality it has targeted. Total quality management’s focus on quality relies on a company’s ability to systematically apply quality standards to production.

The term design quality refers to the inherent value of a product in the marketplace. The quality specifications of a product are the measurements that relate to the quality of the design and how well the product conforms to an established design. There are several so-called dimensions of quality, and they all go into measurements of product quality:

• The performance dimension is the primary characteristics of the product or service. For example, a fax machine might be designed to send a certain number of pages per minute.
• Features of the design are dimensions dealing with secondary characteristics, or anything that is added to the design as an “extra.” Added features to the fax machine might be its capacity to be used as a copier.
• Reliability or durability dimensions have to do with how consistently the product will perform over time, the chances that it will fail, and how long it will last. The company producing the fax machine might measure this dimension by calculating an average time between failed transmissions or determining the “life expectancy” of each of the machine’s components.
• Serviceability dimensions have to do with how easy the product is to repair. The availability of repair centers and the number of copies per print cartridge are measurements of serviceability.
• Aesthetic dimensions are a product’s sensory characteristics, such as its sound, feel, and look. The fax machine’s case color, button size, and display screen are examples of its aesthetic dimension.
• Perceived quality dimension has to do with customer perceptions and the product’s past performance and reputation. The reputation of the fax machine’s brand name and its rating in a consumer magazine are measurements of its perceived quality dimension.

Total quality management stresses systematic measurement to ensure that quality standards are defined and met. It also stresses a continuous effort on the part of manufacturers to put systems in place to keep product output at this maximum level. The most stringent applications of TQM impose sophisticated statistical analysis that aims to reduce the incidence of errors. Part of this ongoing analysis is collecting data on workflow, products, workers, and tasks and using the data to maintain a constant awareness of how production lines and the overall company production system are functioning. TQM proposes that if quality production is sustained, then mass inspections of goods are not necessary, since quality is ingrained in the product from its origin.

One of the ways in which companies apply TQM to design and production is to carefully analyze the costs of what they make. Quality costs are defined as the costs of not creating a quality product or service. Every time work has to be redone, the cost of quality increases because, for example, a manufactured good needs to be reworked, a bank statement needs to be corrected, or a food order in a restaurant needs to be remade. Therefore a cost that would not have been incurred if quality were flawless becomes part of the cost of quality.

Businesses take on different types of quality costs. Prevention costs are those meant to prevent poor quality. Appraisal costs are those spent on any measurements, evaluations, or audits that help ensure quality standards are met. Failure costs result from products failing to meet requirements.

Recent Trends

In the late 1980s total quality management was used to advance a related philosophy known as Six Sigma. Bill Smith (1929–93), a vice president at the electronics manufacturer Motorola, took several different quality control methods, including TQM, and combined elements of each to create a new method to reduce the number of defects in manufactured goods and improve the effectiveness of production.

Like TQM, Six Sigma focuses on improving quality by giving businesses the tools to produce products and services faster, more cheaply, and of higher quality. However, Six Sigma differs from TQM in that it focuses on prevention of defects and elimination of the costs incurred because of waste. Companies that currently utilize Six Sigma include financial management firm Merrill Lynch and technology company General Electric.

Quality management has come under scrutiny as global trade has increased and products manufactured in newly industrialized countries have been found to be defective or, in some cases, even dangerous. In 2006 and 2007 goods such as pet food, cough syrup, toothpaste, and tires imported into the United States and other countries from China were found to be defective and resulted in injuries and deaths. China is the largest exporter of consumer products in the world, but it does not have an established quality-management system to guarantee its products. In the age of the global marketplace, the challenge to the field of quality management is the adoption of international regulations for quality assurance.