TOTAL QUALITY MANAGEMENTTOTAL QUALITY MANAGEMENT

“ “MUST KNOW” CONCEPTS FOR ENGINEERSMUST KNOW” CONCEPTS FOR ENGINEERS

Sequence of presentationSequence of presentation IntroductionIntroduction Three Quality GurusThree Quality Gurus Commonality of Themes of Quality GurusCommonality of Themes of Quality Gurus DIFINITION OF QUALITY Five Approaches of Defining QualityFive Approaches of Defining Quality System Approach for TQMSystem Approach for TQM Triangle of wisdomTriangle of wisdom TQO HRMTQO HRM Customer Satisfaction Customer Satisfaction Indicators for Customer SatisfactionIndicators for Customer Satisfaction Cost of Quality Cost of Quality Benefits of TQMBenefits of TQM ConclusionConclusion

INTRODUCTION TO TQMINTRODUCTION TO TQM

What is TQM?What is TQM?TQM is the integration of all functions and TQM is the integration of all functions and processes within an organization in order to processes within an organization in order to achieve achieve continuous improvement continuous improvement of the quality of the quality of goods and services. The of goods and services. The goal is customer goal is customer satisfaction. satisfaction.

“ “ No doubt , humans are always deficient”No doubt , humans are always deficient”(Al-Quran)(Al-Quran)

The Three Quality GurusThe Three Quality Gurus

Deming:Deming: the best known of the “early” the best known of the “early” pioneers, is credited with popularizing pioneers, is credited with popularizing quality control in Japan in early quality control in Japan in early 1950s.Today, he is regarded as a 1950s.Today, he is regarded as a national hero in that country and is the national hero in that country and is the father of the world famous Deming prize father of the world famous Deming prize for quality.for quality.

JURANJURAN Juran, like Deming was invited to Japan Juran, like Deming was invited to Japan in 1954 by the union of Japanese in 1954 by the union of Japanese Scientists and engineers.Scientists and engineers.

Juran defines quality as fitness for use Juran defines quality as fitness for use in terms of design, conformance, in terms of design, conformance, availability, safety and field use. He availability, safety and field use. He focuses on top-down management and focuses on top-down management and technical methods rather than worker technical methods rather than worker pride and satisfaction. pride and satisfaction.

Philip CrosbyPhilip Crosby: : author of popular author of popular book Quality is Free. His book Quality is Free. His absolutes of quality are:absolutes of quality are:

Quality is Quality is defineddefined as conformance to as conformance to requirements, not “goodness”requirements, not “goodness”

The The systemsystem for achieving quality is for achieving quality is prevention, not appraisal.prevention, not appraisal.

The performance The performance standardstandard is zero is zero defects, not “that’s close enough”defects, not “that’s close enough”

The The measurementmeasurement of quality is the price of quality is the price of non-conformance, not indexes.of non-conformance, not indexes.

Commonality of Themes of Quality Commonality of Themes of Quality GurusGurus

Inspection is never the answer to quality Inspection is never the answer to quality improvement, nor is “policing”.improvement, nor is “policing”.

Involvement of leadership and top management is Involvement of leadership and top management is essential to the necessary culture of commitment essential to the necessary culture of commitment to quality.to quality.

A program for quality requires organization-wide A program for quality requires organization-wide efforts and long term commitment, accompanied by efforts and long term commitment, accompanied by the necessary investment in training.the necessary investment in training.

Quality is first and schedules are second.Quality is first and schedules are second.

DIFINITION OF QUALITYDIFINITION OF QUALITY The concept and vocabulary of quality are The concept and vocabulary of quality are elusive. Different people interpret quality elusive. Different people interpret quality differently. Few can define quality in differently. Few can define quality in measurable terms that can be proved measurable terms that can be proved operationalized. When asked what differentiates operationalized. When asked what differentiates their product or service;their product or service;

The The bankerbanker will answer” service” will answer” service” The The healthcarehealthcare worker will answer “quality worker will answer “quality health care”health care”

The The hotel employee hotel employee will answer “customer will answer “customer satisfaction”satisfaction”

The The manufacturermanufacturer will simply answer will simply answer “quality product”“quality product”

Five Approaches of Defining Five Approaches of Defining QualityQuality

Harvard professor David Garvin, in Harvard professor David Garvin, in his book his book Managing QualityManaging Quality summarized summarized five principal approaches to define five principal approaches to define quality. quality.

TranscendentTranscendent Product basedProduct based User basedUser based Manufacturing basedManufacturing based Value basedValue based

Transcendental viewTranscendental view

Those who hold the transcendental view would say “I Those who hold the transcendental view would say “I can’t define it, but I know it when I see it”can’t define it, but I know it when I see it”

Advertisers are fond of promoting products in these Advertisers are fond of promoting products in these terms.terms.

“ “ Where shopping is a pleasure” (supermarket). “We Where shopping is a pleasure” (supermarket). “We love to fly and it shows" (airline).love to fly and it shows" (airline).Television and print media are awash with such Television and print media are awash with such indefinable claims and therein lies the problem:indefinable claims and therein lies the problem:

Quality is difficult to define or to operationalize. Quality is difficult to define or to operationalize. It thus becomes elusive when using the approach as It thus becomes elusive when using the approach as basis for competitive advantage. Moreover, the basis for competitive advantage. Moreover, the functions of design, production and service may find functions of design, production and service may find it difficult to use the definition as a basis for it difficult to use the definition as a basis for quality management.quality management.

PRODUCT BASEDPRODUCT BASED

Quality is viewed as a quantifiable or Quality is viewed as a quantifiable or measurable characteristic or attribute. For measurable characteristic or attribute. For example durability or reliability can be example durability or reliability can be measured and the engineer can design to that measured and the engineer can design to that benchmark. benchmark.

Quality is determined objectively.Quality is determined objectively. Although this approach has many benefits, it Although this approach has many benefits, it has limitation as well. Where quality is has limitation as well. Where quality is based on individual taste or preference, the based on individual taste or preference, the benchmark for measurement may be misleading.benchmark for measurement may be misleading.

USER BASEDUSER BASED

It It is based on idea that quality is an individual is based on idea that quality is an individual matter and products that best satisfy their matter and products that best satisfy their preferences are those with the highest quality. This preferences are those with the highest quality. This is rational approach but leads to two problems;is rational approach but leads to two problems;

Consumer preference vary widely and it is difficult Consumer preference vary widely and it is difficult to aggregate these preferences into products with to aggregate these preferences into products with wide appeal. This leads to the choice between a wide appeal. This leads to the choice between a niche strategy or a market aggregation approach niche strategy or a market aggregation approach which tries to identify those product attributes which tries to identify those product attributes that meet the needs of the largest number of that meet the needs of the largest number of consumers.consumers.

Another problem concerns the answer to the question Another problem concerns the answer to the question “Are quality and customer satisfaction the same?” “Are quality and customer satisfaction the same?” the answer is probably not. One may admit that a the answer is probably not. One may admit that a Lincoln continental has many quality attribute, but Lincoln continental has many quality attribute, but satisfaction may be better achieved with an Escort.satisfaction may be better achieved with an Escort.

MANUFACTURING BASEDMANUFACTURING BASED

Manufacturing-based definitions are concerned Manufacturing-based definitions are concerned primarily with engineering and manufacturing primarily with engineering and manufacturing practices and use the universal definition of practices and use the universal definition of “conformance to requirements”. Requirements or “conformance to requirements”. Requirements or specifications are established by design and any specifications are established by design and any deviation implies a reduction in quality. The deviation implies a reduction in quality. The concept applies to services as well as product. concept applies to services as well as product. Excellence in quality is not necessarily in the Excellence in quality is not necessarily in the eye of the beholder but rather in the standards eye of the beholder but rather in the standards set by the organization.set by the organization.

This approach has the serious weakness. The This approach has the serious weakness. The consumer’s perception of quality is equated with consumer’s perception of quality is equated with conformance and hence is internally focused.conformance and hence is internally focused.

Value BasedValue Based

It is defined in term of costs and It is defined in term of costs and prices as well as number of other prices as well as number of other attributes. Thus, the consumer’s attributes. Thus, the consumer’s purchased decision is based on quality purchased decision is based on quality at an acceptable price. This approach is at an acceptable price. This approach is reflected in the popular reflected in the popular Consumer Reports Consumer Reports magazine which ranks products and magazine which ranks products and services based on two criteria: Quality services based on two criteria: Quality and Value.and Value.

The highest quality is not usually the The highest quality is not usually the best value. That designation is assigned best value. That designation is assigned to the “best- buy” product or serviceto the “best- buy” product or service..

MANAGEMENT OF MANAGEMENT OF PROCESS PROCESS QUALITYQUALITY

HUMAN RESOURCE HUMAN RESOURCE DEVELOPMENT AND DEVELOPMENT AND

MANAGEMENTMANAGEMENT

STRATEGIC STRATEGIC QUALITY QUALITY PLANNINGPLANNING

INFORMATION INFORMATION AND ANALYSISAND ANALYSIS

CUSTOMER FOCUS AND

SATISFACTION

QUALITY AND

OPERATIONAL RESULTS

SENIOREXECUTIVELEADERSHIP

System Approach for TQM

Driver

System

TOWTOWTriangle of wisdomTriangle of wisdom

LM

DM KM

Characteristics of TQM LeaderCharacteristics of TQM Leader

Visible, Committed and Visible, Committed and KnowledgeableKnowledgeable

A Missionary ZealA Missionary Zeal Aggressive TargetsAggressive Targets Strong DriversStrong Drivers Communication of ValuesCommunication of Values OrganizationOrganization Customers ContactCustomers Contact

TQO HRMTQO HRM

Five Principles are:Five Principles are: QualityQuality Work Work the First Timethe First Time FocusFocus on the Customer on the Customer Strategic Strategic Holistic Approach Holistic Approach to to ImprovementImprovement

CICI as a Way of Life as a Way of Life MutualMutual Respect and Teamwork Respect and Teamwork

Customer SatisfactionCustomer Satisfaction Three Part SystemThree Part System

Human Resource Management

Customer Expectations

Company Operations(Processes)

Customer Satisfaction

Indicators for Customer Indicators for Customer SatisfactionSatisfaction

Frontline empowermentFrontline empowerment Excellent hiring, training, attitude and Excellent hiring, training, attitude and morale for front line employeesmorale for front line employees

Proactive customer service systemProactive customer service system Proactive management of relationship with Proactive management of relationship with customers customers

Use of all listening postsUse of all listening posts Quality requirements of market segmentQuality requirements of market segment Commitment to customersCommitment to customers Understanding customer requirementsUnderstanding customer requirements Service standards meeting customers Service standards meeting customers requirementsrequirements

Cost of QualityCost of Quality Three Views of quality Costs Three Views of quality CostsHigher quality means higher cost.Higher quality means higher cost.

Quality attributes such as performance and Quality attributes such as performance and features cost more in terms of labor, features cost more in terms of labor, material, design and other costly resources.material, design and other costly resources.

The additional benefits from improved quality The additional benefits from improved quality do not compensate for additional expense.do not compensate for additional expense.The cost of improving quality is less than The cost of improving quality is less than the resulting savings.the resulting savings.

The saving result from less rework, scrap and The saving result from less rework, scrap and other direct expenses related defects.other direct expenses related defects.

This is said to account for the focus on This is said to account for the focus on continuous improvement of processes in continuous improvement of processes in Japanese firms. Japanese firms.

Three Views of quality CostsThree Views of quality Costs

Quality costs are those incurred in excess Quality costs are those incurred in excess of those that would have been incurred if of those that would have been incurred if the product were built or the service the product were built or the service performed exactly right the first time.performed exactly right the first time.

This view is held by adherents of TQM This view is held by adherents of TQM philosophy.philosophy.

Costs include not only those that are Costs include not only those that are direct, but also those resulting from lost direct, but also those resulting from lost customers, lost market share and the many customers, lost market share and the many hidden costs and foregone opportunities not hidden costs and foregone opportunities not identified by modern cost accounting systems.identified by modern cost accounting systems.

Quality CostsQuality Costs

COST OF COST OF QUALITY QUALITY IS THE COST OF IS THE COST OF NON NON QUALITYQUALITY

1: 10:100 Rule1: 10:100 Rule““A stitch in time saves A stitch in time saves

nine”nine”

Types of Quality CostsTypes of Quality CostsThe cost of quality is generally The cost of quality is generally classified into four categoriesclassified into four categories

1.1. Cost of PreventionCost of Prevention2.2. Cost of AppraisalCost of Appraisal3.3. Cost of Internal FailureCost of Internal Failure4.4. Cost of External FailureCost of External Failure

Quality CostsQuality Costs

Cost of PreventionCost of Prevention Prevention costs include those activities Prevention costs include those activities which remove and prevent defects from which remove and prevent defects from occurring in the production process.occurring in the production process.

Included are such activities as quality Included are such activities as quality planning, production reviews, training, and planning, production reviews, training, and engineering analysis, which are incurred to engineering analysis, which are incurred to ensure that poor quality is not produced. ensure that poor quality is not produced. AppraisalAppraisal

Those costs incurred to identify poor quality Those costs incurred to identify poor quality products after they occur but before shipment products after they occur but before shipment to customers. e.g. Inspection activityto customers. e.g. Inspection activity..

Quality CostsQuality Costs

Internal FailureInternal Failure Those incurred during the production process.Those incurred during the production process. Include such items as machine downtime, poor Include such items as machine downtime, poor quality materials, scrap, and rework.quality materials, scrap, and rework.

External FailureExternal Failure Those incurred after the product is shipped.Those incurred after the product is shipped. External failure costs include returns and External failure costs include returns and allowances, warranty costs, and hidden costs allowances, warranty costs, and hidden costs of customer dissatisfaction and lost market of customer dissatisfaction and lost market shareshare..

Benefits of TQMBenefits of TQM

Greater customer loyaltyGreater customer loyalty Market share improvementMarket share improvement Higher stock pricesHigher stock prices Reduced service callsReduced service calls Higher pricesHigher prices Greater productivityGreater productivity

ConclusionConclusion

Remember the earth revolves around Remember the earth revolves around the CUSTOMER. the CUSTOMER. Quality begets customers Quality begets customers and customers beget quality. Let us all and customers beget quality. Let us all have action plans to support quality, have action plans to support quality, this will make the world happy and earn this will make the world happy and earn us the blessing of God Almighty.us the blessing of God Almighty.

““Actions are direct reflection of one’s Actions are direct reflection of one’s intentions” (Al-Quran)intentions” (Al-Quran)