Total Quality Management (TQM)
Total Quality Management (TQM)
Total Quality Management (TQM) refers to management methods used to enhance quality and productivity in business organizations. TQM is a comprehensive management approach that works horizontally across an organization, involving all departments and employees and extending backward and forward to include both suppliers and clients/customers.
TQM is only one of many acronyms used to label management systems that focus on quality. Other acronyms include CQI (continuous quality improvement), SQC (statistical quality control), QFD (quality function deployment), QIDW (quality in daily work), TQC (total quality control), etc. Like many of these other systems, TQM provides a framework for implementing effective quality and productivity initiatives that can increase the profitability and competitiveness of organizations.
TQM, in the form of statistical quality control, was invented by Walter A. Shewhart. It was initially implemented at Western Electric Company, in the form developed by Joseph Juran who had worked there with the method. TQM was demonstrated on a grand scale by Japanese industry through the intervention of W. Edwards Deming—who, in consequence, and thanks to his missionary labors in the U.S. and across the world, has come to be viewed as the "father" of quality control, quality circles, and the quality movement generally.
Walter Shewhart, then working at Bell Telephone Laboratories first devised a statistical control chart in 1923; it is still named after him. He published his method in 1931 as Economic Control of Quality of Manufactured Product. The method was first introduced at Western Electric Company's Hawthorn plant in 1926. Joseph Juran was one of the people trained in the technique. In 1928 he wrote a pamphlet entitled Statistical Methods Applied to Manufacturing Problems. This pamphlet was later incorporated into the AT&T Statistical Quality Control Handbook, still in print. In 1951 Juran published his very influential Quality Control Handbook.
W. Edwards Deming, trained as a mathematician and statistician, went to Japan at the behest of the U.S. State Department to help Japan in the preparation of the 1951 Japanese Census. The Japanese were already aware of Shewhart's methods of statistical quality control. They invited Deming to lecture on the subject. A series of lectures took place in 1950 under the auspices of the Japanese Union of Scientists and Engineers (JUSE). Deming had developed a critical view of production methods in the U.S. during the war, particularly methods of quality control. Management and engineers controlled the process; line workers played a small role. In his lectures on SQC Deming promoted his own ideas along with the technique, namely a much greater involvement of the ordinary worker in the quality process and the application of the new statistical tools. He found Japanese executive receptive to his ideas. Japan began a process of implementing what came to be known as TQM. They also invited Joseph Juran to lecture in 1954; Juran was also enthusiastically received.
Japanese application of the method had significant and undeniable results manifesting as dramatic increases in Japanese product quality—and Japanese success in exports. This led to the spread of the quality movement across the world. In the late 1970s and 1980s, U.S. producers scrambled to adopt quality and productivity techniques that might restore their competitiveness. Deming's approach to quality control came to be recognized in the United States, and Deming himself became a sought-after lecturer and author. Total Quality Management, the phrase applied to quality initiatives proffered by Deming and other management gurus, became a staple of American enterprise by the late 1980s. But while the quality movement has continued to evolve beyond its beginnings, many of Deming's particular emphases, particularly those associated with management principles and employee relations, were not adopted in Deming's sense but continued as changing fads, including, for example, the movement to "empower" employees and to make "teams" central to all activities.
Different consultants and schools of thought emphasize different aspects of TQM as it has developed over time. These aspects may be technical, operational, or social/managerial.
The basic elements of TQM, as expounded by the American Society for Quality Control, are 1) policy, planning, and administration; 2) product design and design change control; 3) control of purchased material; 4) production quality control; 5) user contact and field performance; 6) corrective action; and 7) employee selection, training, and motivation.
The real root of the quality movement, the "invention" on which it really rests, is statistical quality control. SQC is retained in TQM in the fourth element, above, "production quality control." It may also be reflected in the third element, "control of purchased material," because SQC may be imposed on vendors by contract.
In a nutshell, this core method requires that quality standards are first set by establishing measurements for a particular item and thus defining what constitutes quality. The measurements may be dimensions, chemical composition, reflectivity, etc.—in effect any measurable feature of the object. Test runs are made to establish divergences from a base measurement (up or down) which are still acceptable. This "band" of acceptable outcomes is then recorded on one or several Shewhart charts. Quality control then begins during the production process itself. Samples are continuously taken and immediately measured, the measurements recorded on the chart(s). If measurements begin to fall outside the band or show an undesirable trend (up or down), the process is stopped and production discontinued until the causes of divergence are found and corrected. Thus SQC, as distinct from TQM, is based on continuous sampling and measurement against a standard and immediate corrective action if measurements deviate from an acceptable range.
TQM is SQC—plus all the other elements. Deming saw all of the elements as vital in achieving TQM. In his 1982 book, Out of the Crisis, he contended that companies needed to create an overarching business environment that emphasized improvement of products and services over short-term financial goals—a common strategy of Japanese business. He argued that if management adhered to such a philosophy, various aspects of business—ranging from training to system improvement to manager-worker relationships—would become far healthier and, ultimately, more profitable. But while Deming was contemptuous of companies that based their business decisions on numbers that emphasized quantity over quality, he firmly believed that a well-conceived system of statistical process control could be an invaluable TQM tool. Only through the use of statistics, Deming argued, can managers know exactly what their problems are, learn how to fix them, and gauge the company's progress in achieving quality and other organizational objectives.
MAKING TQM WORK
In the modern context TQM is thought to require participative management; continuous process improvement; and the utilization of teams. Participative management refers to the intimate involvement of all members of a company in the management process, thus de-emphasizing traditional top-down management methods. In other words, managers set policies and make key decisions only with the input and guidance of the subordinates who will have to implement and adhere to the directives. This technique improves upper management's grasp of operations and, more importantly, is an important motivator for workers who begin to feel like they have control and ownership of the process in which they participate.
Continuous process improvement, the second characteristic, entails the recognition of small, incremental gains toward the goal of total quality. Large gains are accomplished by small, sustainable improvements over a long term. This concept necessitates a long-term approach by managers and the willingness to invest in the present for benefits that manifest themselves in the future. A corollary of continuous improvement is that workers and managers develop an appreciation for, and confidence in, TQM over a period of time.
Teamwork, the third necessary ingredient for TQM, involves the organization of cross-functional teams within the company. This multidisciplinary team approach helps workers to share knowledge, identify problems and opportunities, derive a comprehensive understanding of their role in the overall process, and align their work goals with those of the organization. The modern "team" was once the "quality circle," a type of unit promoted by Deming. Quality circles are discussed elsewhere in this volume.
For best results TQM requires a long-term, cooperative, planned, holistic approach to business, what some have dubbed a "market share" rather than a "profitability" approach. Thus a company strives to control its market by gaining and holding market share through continuous cost and quality improvements—and will shave profits to achieve control. The profitability approach, on the other hand, emphasizes short-term stockholder returns—and the higher the better. TQM thus suits Japanese corporate culture better than American corporate culture. In the corporate environment of the U.S., the short-term is very important; quarterly results are closely watched and impact the value of stocks; for this reason financial incentives are used to achieve short term results and to reward managers at all levels. Managers are therefore much more empowered than employees—despite attempts to change the corporate culture. For these reasons, possibly, TQM has undergone various changes in emphasis so that different implementations of it are sometimes unrecognizable as the same thing. In fact, the quality movement in the U.S. has moved on to other things: the lean corporation (based on just-in-time sourcing), Six Sigma (a quality measure and related programs of achieving it), and other techniques.
As evident from all of the foregoing, TQM, while emphasizing "quality" in its name, is really a philosophy of management. Quality and price are central in this philosophy because they are seen as effective methods of gaining the customer's attention and holding consumer loyalty. A somewhat discriminating public is thus part of the equation. In an environment where only price matters and consumers meekly put up with the successive removal of services or features in order to get products as cheaply as possible, the strategy will be less successful. Not surprisingly, in the auto sector, where the investment is large and failure can be very costly, the Japanese have made great gains in market share; but trends in other sectors—in retailing, for instance, where labor is imposed on customers through self-service stratagems—a quality orientation seems less obviously rewarding.
For these reasons, the small business looking at an approach to business ideal for its own environment may well adapt TQM if it can see that its clientele will reward this approach. The technique can be applied in service and retail settings as readily as in manufacturing, although measurement of quality will be achieved differently. TQM may, indeed, be a good way for a small business, surrounded by "Big Box" outlets, to reach precisely that small segment of the consuming public that, like the business itself, appreciates a high level of service and high quality products delivered at the most reasonable prices possible.
see also ISO 9000; Quality Circles; Quality Control
Basu, Ron, and J. Nevan Wright. Quality Beyond Six Sigma. Elsevier, 2003.
Deming, W. Edwards. Out of the Crisis. MIT Center for Advanced Engineering Study, 1982.
Juran, Joseph M. Architect of Quality. McGraw-Hill, 2004.
"The Life and Contributions of Joseph M. Juran." Carlson School of Management, University of Minnesota. Available from http://part-timemba.csom.umn.edu/Page1275.aspx. Retrieved on 12 May 2006.
Montgomery, Douglas C. Introduction to Statistical Quality Control. John Wiley & Sons, 2004.
"Teachings." The W. Edwards Deming Institute. Available from http://www.deming.org/theman/teachings02.html. Retrieved on 12 May 2005.
Youngless, Jay. "Total Quality Misconception." Quality in Manufacturing. January 2000.
Hillstrom, Northern Lights
updated by Magee, ECDI
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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.
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.
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"Total Quality Management." Everyday Finance: Economics, Personal Money Management, and Entrepreneurship. . Retrieved September 19, 2018 from Encyclopedia.com: http://www.encyclopedia.com/finance/encyclopedias-almanacs-transcripts-and-maps/total-quality-management