RIZAL TECHNOLOGICAL UNIVERSITY

Cities of Mandaluyong and Pasig

BA-MGT 103
OPERATION MANAGEMENT
(TQM)
 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

SESSION NO. 1

MODULE NO. 1: INTRODUCTION TO TOTAL QUALITY

MANAGEMENT

Objective

1. Define quality.
2. Identify primary elements, core concepts and benefits of total quality
management.
3. Distinguish between traditional management and TQM.
4. Compare and contrast reengineering and TQM.
Total Quality Management (TQM) is not a fresh idea. The approaches advocated
by Deming, Juran, Crosby, and others have long been used by well effective
manages. The most noteworthy feature is the level of mutual trust that is needed
by both management program and staff to create a culture in which effective quality
management program can be successful. Quality is currently everyone’s task, not
just the inspection department. People are anticipated is currently everyone’s task,
not just 5the inspection department. People are anticipated to serious weigh up
their jobs and make the first move to improve their part of the process. Open,
objective measurements are necessary.

Define Quality:
Quality is lot more than the non-existence of defects which allow companies to
meet customer expectations. Quality needs-controlled process improvement, allowing
companies to exceed customer’s expectations. Quality will let companies to re-
establish pride and loyalty in their organizations. Quality can only be attained by non-
stop improvement of all systems and processes in the organizations, not simply the
production of products and services but also the design, development, service,
purchasing, administration and indeed, all aspects of the transaction with the
customer. Each one must work in concert toward similar end.
Quality can only be observed through the eyes of the customers. An
understanding of the customer’s expectations is the first step. Then exceeding those
expectations is required. Communications will be the key. Going beyond customer
expectations guarantees meeting all the definitions of quality.

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

Approaches to Quality Definition.

Harvard Professor David Garin summarized five principal approaches to
defining quality:
1. Transcendent - Most people would agree that the Mona Liza or
Michelangelo’s David are works of art which represent quality because people
travel from around the world to view them. Television and print media are
flooded with such indescribable claims, and therein lays the problem that
quality is no easy to define or operationalized. It therefore becomes obscure
when using the approach as a source of advantage. Besides, the function of
design, production and service may discover it complicated to use the
definitions as a starting point for quality management.

2. Product based - Quality is observed as a quantifiable or measurable

characteristic or attribute. For instance, durability or reliability can be measured
and the engineer can draw to that yardstick. Quality is concluded objectively.
Although this approaches many benefits, it has limitations as well. The
yardstick for measurement may be deceptive where quality is founded on
individual taste or preference.

3. User based This definition is founded on the idea that quality is an individual
issue and products that best please their preferences are those with the highest
quality. This is an approach based on reason but directs to two problems. First
consumer preferences differ extensively and it is not ways to combine these
preferences into products with broad demand. This leads to the selection
between a niche strategy and a market aggregation approach which strives to
identify those product attributes that support the needs of the biggest number
of customers. Another concerns whether quality and customer satisfaction is
the same. Probably not. One may confess a Montero has many quality
attributes, but contentment may be better realized with an Adventure. One has
only to remember the box office success of recent motion pictures that endure
from poor quality but are obviously favored by the largest number of
moviegoers.

4. Manufacturing based – The definition is focused mainly with engineering and

manufacturing practices and use the universal definition of “conformance
requirements.” Requirements or specifications are launched by design and any
difference involves decline in quality. The concept is relevant to services as
well as products. Superiority in quality is not automatically in the eye of the
beholder but rather in the standards set by the organization. Thus, both
Fortuner and Isuzu Max process quality, as do Adventure and Innova’s as long
as the product or service “conformance requirements are met. This approach
has a serious weak point. The consumer’s perception of quality is compared
with conformance and this is internally focused. Stress on the reliability in
design and manufacturing is inclined to attend to coast reduction as the
objective. Cost reduction is perceived in a limited way which is to invest in
design and manufacturing improvement until these incremental costs equal the
cost of non-quality like rework and scrap. This approach goes against Crosby’s
concept of quality is free.

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

5. Valued based - It is defined using costs and prices as well as the number of
attributes. Hence, the consumer’s purchase decision is founded on quality at
an up to standard price. This approach is based on two criteria which quality
and value. The highest quality product is not typically the best value. The
description is given to the “best buy” product or service.

Quality Types
In general, quality is meeting and exceeding customer expectations at a price
that he is willing to pay to possess the product or service. There are three types of
quality which are quality of design, quality of conformance and quality of performance.
1. Quality of Design – is all about set characteristics that the product or
service must minimally have to satisfy the requirements of the customer based
on market research. Thus, the product or service must be designed in such a
way so as to meet at least minimally the needs of the consumer at a given cost.
However, the design must be simple and also less expensive so as to meet the
customers’ product or service expectations. Quality of design is influenced by
many factors such as products type, cost, profit policy, demand of the product,
availability of part and materials, and product reliability.
This process of developing a product requires effective exchange of ideas
among marketing, sales, services, manufacturing, research and development
departments. Market research and service call analysis are the center of this
process. Market research on consumer shall indicate the customer need
(current and potential) and sales call analysis will provided investigation about
problems customers face with the product performance.
2. Quality of Conformance – is basically meeting the standards or user-based
characteristics defined in the design phase after the product is manufactured
or while the service is delivered. It refers to the extent in which the firm and its
suppliers are able to manufacturing products with expected level of reliability
and uniformity at a specified cost with quality requirements based on the study
made on quality design. This phase is also concerned about quality control
starting from raw material to the finished product. Three broad aspects are
covered in definition, namely defect detection, defect root cause analysis, and
defect prevention. Defect prevention deals with the means to deter the
occurrence of defects and usually achieved using statistical process control
analysis collected from process. Subsequently, the root causes behind the
presence of defects are investigated, and finally corrective actions are taken to
prevent recurrence of the defect.

3. Quality of Performance - is now sound the product functions or service

performs when put to use. It measures the degree to which the product or
service pleases the customer from the angle of quality of design together with
the quality of conformance. Meeting customer expectations is the focus of
quality performance. Automobile industry performs test drive of vehicles to
gather information corning mileage and oil consumption. Bulbs are life tested
to be aware of its reliability throughput its useful life. Customer survey is carried
out to discover customer’s perception about service rendered. If product or

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

serviced does not meet to customer expectation, then modifications are

considered necessary in the designed or conformance phase.

Quality Levels
Quality focused organization must evaluate at three levels namely
organization, process and individual. Quality system and standards must be defined
at each level and then manage quality through improvement efforts. The organization,
process and individual are co-dependent and are linked together in a total system that
eventually decides the quality of products and services of an organization, having
received faulty parts by a customer would mean a problem at any or all levels. Perhaps
an operator has assembled the faulty part incorrectly or allows the faulty part shipped.
Or probably there just problems in the basic processes such as design, production,
order entry or material acquisition processes. Organization, represented by top
management could also be blamed because of not being able to identify the quality
necessary to be competitive, inappropriate strategy, unable to establish necessary
policies, budgets, goals and measures.
Organizational Level
The organizational level quality requirements revolve around its customers’
quality requirements. A customer is anyone who receives one or more of the
organization’s products or services who could be an internal or external one. The
following issues may help define quality at this level:
1. Products or services that meet customer expectations.
2. Products or services that do not meet customer expectations.
3. Products or services that are needed by the customers but they do not receive.
4. Products or services that are not needed by the customers but they do not
receive.
The resolution to these issues will include productivity and cost requirements and
those that are traditionally linked to quality. Timeliness, accessibility and value for
money are quality features for a customer. During interviews identified customer
requirements are converted into specific measures and then into performance
standards.
Most quality-focused organizations, aside from data gathering use
benchmarking to compare its functions with the same functions as other organizations.
Benchmarking should be a continuing concern to make certain that the organization
employs ongoing improvement to compete and deliver demanded customer
requirements. Customer feedback is also essential to ensure that organizational
quality management is a constant concern. Feedback on a a regular basis must come
from both internal and external customers. Standards coming from customer
requirements must be the foundation for goal-setting, problem solving, performance
evaluation, incentive compensation, nonfinancial rewards and resource allocation.
Process Level
At the process level, units of the organization are categorized into functions or
departments like marketing, operations, finance, human resource and so on. Most

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

processes are cross-functional so managers can optimize the activities of his

department and sub-optimize the activities of the entire organization.
The following issues may help define quality at this level:
1. Products or services that are most important to external customers.
2. Processes that produce those products or services.
3. The key inputs to the process
4. Processes that have the most major effects on the organization’s customer
drive performance standards.
5. The internal customers and their needs.
Defining quality at the process level start6s with determining the end customer
requirements for the process. End Customer requirements should the ne translated
into specific measures that should drive one or more internal measures for the overall
process. These measures must be brought to the different sub process and sub sub
process. The outcome is a set of meters in addition to the specific standards they
produce placed at key stages of the process that will serve as the basis for monitoring
each step’s contribution to process quality, the meters and standards will also be used
for trouble shooting the system in case customer requirements are not met.
Like managing organization quality, it requires search for improvement
opportunities to handle process quality. As an example, a producer of electronic
components faces a problem of excessive cycle time (the time from customer order to
customer receipt of the product). The product was given to the customer late 83% of
the time. Through developing a map and setting up performance measures, the
company discovered that the largest fault was in other areas. A customer order to
reach fabrication took 13 days. During most of the time, the order was hanging around
for the next processing time. The initial process improvement attempt created a
reduction in cycle time from 13 weeks to five weeks. Without suffering in product
quality, the process continually improves and cycle time has been reduced to 19 days.
Performer/Job Task Design Level
Nearly all people desire to do high quality work, but often times they are limited
by systems that do not support it. It is vital to generate an individual quality in the
context of organization and process quality despite quality being broken at the
individual level. The statistical tools for instance are not appreciated by workers
because the tools are used at the individual level without being connected to the overall
need of the system.
Individuals are one of the vital components of the human performance system.
At the micro level they serve as a reflection of the process and the system being used
by the organization. Each individual under the human performance system accepts
inputs, generate outputs and then adjust his performance from the feedbacks obtained.
Developing standards to measure each individual key output is a necessity to
define individual quality. The standards created from organization and process levels
should be the basis for these standards created to be developed, productivity and
levels should be the basis for these standards to be developed. Productivity and cost
are the requirement for customer driven quality. With these requirements the areas to
be measured to qualify individual stnda4rd would include accuracy, completeness, and

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

innovativeness, and reliability, ease of used, timeliness volume, rate, cost and
flexibility.
Three issues have to be answered for each ouput of the individual tasks in
order to develop individual qualities which are:
1. The requirement of both internal and external customers
2. The manner of measuring the requirements
3. The specific standards for each measure
Under the human performance system, the quality of each individual work on
performance is shaped by these factors:
1. The input an individual receives which consists of how clear the
performance expectation is, the reasoning of the work procedures, the
sufficiency of resources, the appropriateness of skills and knowledge and
how clear the cues that prompt performance.
2. The positive/negative results for performing as desired/not desired.
3. The feedback an individual obtains such as the nature of the information
given, when how frequent it is given and the manner in which it is provided.
4. An individual’s physical, mental and emotional capacity.
Quality Paradigms
1. Custom Craft paradigm – In this paradigm the focus is on the product or
service and performance should be exactly as what customer demands. Each
products or service and performance should be exactly as what customer
demands,. Each product unit is designed and built exactly the way the
customer wants it. The requirements include skilled craftsperson, basic hand
tools, and demand for unique product. Some examples of this pattern are from
bank loans, coffee shops, tailor shop s and furniture suppliers.

2. Mass production an sorting paradigm - Here the focus is on production rate

without direct involvement of the customer. Products are designed and built
based on how the customer defined the products. Rework and scrap are
obvious since product performance is low. Sales are taken from the stock held
which makes delivery time typically low. Service organizations under this
paradigm are labor intensive. The requirement consists of interchangeable
parts, factory =, power, unskilled labor pool, large customer pool and hard
selling. Some examples of this pattern are from automobile parts and
readymade buildings for commercial enterprises.

3. Statistical quality control paradigm - This paradigm is comparable to the

mass production and sorting paradigm except that more emphasis is given to
production processes. The application of this paradigm together with
mechanized production results in low scrap and rework and know production
cost. Products are designed and built, statistical process control and statistical
sampling are used, and then customers are generated. The requirements
sampling are used and then customers are generated. The requirements
comprise interchangeable parts, factory power, unskilled labor pool, large
customer pool, hard selling, statistical methods. Some examples of this pattern
are from automobile parts and electronic components.

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

4. Total quality management paradigm – this paradigm focuses on customers

and suppliers in addition to mass production and statistical methods. Possible
customers participate in product definition, creation and performance
evaluation stages to inform the produces what to design and build. Using
employee involvement and empowerment, customer focus, continuous
improvement, top management commitment, training and teamwork, the
producer successfully delivers a product the customers want. This paradigm
results in high quality product, low-cost speedy delivery and substantial
decrease for rework and scrap. The requirements contain interchangeable
parts, factory power, statistical methods, empowered employees, supplies
partnerships and customer relationships. Some examples of this pattern are
from products/services of TQM companies.

5. Techno craft paradigm – this paradigm is the socio technical complement to

the custom-craft paradigm with the intention of r educing delivery time. Each
units is designed and builds exactly the way the customer wants it built using
high level of product process flexibility. The requirements incorporate
interchangeable parts, factory power, statistical methods, empowered
employees, supplier partnership, customer relationships, customer aided
design and customer aided manufacturing. Some examples of this pattern are
from the footwear and apparel industries.

Cost of Quality
Cost of quality is a method that permits an organization to decide on the level
to which its resources are used for activities that avoid poor quality, that assess the
quality of the organization’s products or services, and that result from internal and
external failures. An organization is able to determine the potential savings to be
gained by implementing process improvement having such information.
Quality-related activities that incur costs may be divided into prevention costs,
appraisal costs, and internal and external failure costs.
1. Prevention Costs – These are incurred to prevent or avoid failure problems.
Prevention activities lead to reduce of failure and appraisal cos. These costs are
associated with the design, implementation, and maintenance of the quality
management system. They are planned and incurred before actual operations, and
they could include:
a. Product or Service Requirements – Establishment of qualifications for inward
bound materials, processes, finished products, and services.
b. Quality Planning- Drawing of plans for quality, reliability, operations,
production, and inspection.
c. Quality Assurance – Planning and continuance of the quality system.
D, Training – Development, preparation, and continuance of programs.
2. Appraisal Cost. – These costs are associated with measuring and monitoring
activities related to quality standards and performance requirements. These cost tale

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

place from spotting defects rather than prevention. These costs are associated with
the supplier’s and customer’s evaluation of purchased materials, processes, products,
and services to ensure that they conform to specifications. They could include:
a. Verification – Checking of inward bound material, process set up and
products against contracted specifications.
b. Quality Audits – Confirmation that the quality system is operating properly.
c. Supplier Rating – Appraisal and endorsement of suppliers of products and
services.
3. Internal Failure Costs – These costs are acquired to treat defects revealed earlier
when the product or service is delivered to the customer. These costs happen when
the results of work fail to attain design quality standards and are noticed before they
are transferred to the customer. They could include:
a. Waste – Performance of needless work or holding of stock as an outcome
of errors, poor organization, or communication.
b. Scrap – Faulty product or material that cannot be repaired, used or sold.
c. Rework or rectification – improvement of flawed material errors.
d. Failure analysis, activity necessary to ascertain to ascertain the reasons of
internal product or service failure.
4. External Failure Costs – These are costs obtained to treat defects exposed by
customers. These costs occur when products or services that fail to attain design
quality standards are not discovered until after transfer to the customer. They could
include:
a. Repairs and Servicing – Of both returned products and those in the field.
b. Warranty Claims – Failed products that are replaced or services that are re-
performed under a guarantee.
c. Complaints – all work costs connected with handling and servicing customers
complain.
d. Returns – Handling and investigation of discarded or recalled products,
including transport costs.
There are two main components of cost of quality which are cost of
conformance and cost of non-conformance.
a. Cost of Conformance – is the cost of making available products or services
based on required standard. Simply it is a good amount spent such as
prevention and appraisal cost.
b. Cost of Non-Conformance – means failure costs linked with a process not
functioning based o required standards. Simply it is a pointless amount
spent like internal and external costs.
Essentially quality costs are defined as the total costs acquired by investing in
the prevention of non-conformance to requirements and appraisal of a product
or service for conformance to requirements and failure to meet requirements.

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

Defining Total Quality Management

Total quality Management (TQM) is an all-inclusive and well thought out means
to organizational management that searches to advance the quality of processes,
products services and culture through continuing minor changes in reply to constant
feedback. TQM consists of continues process enhancement activities cocerrning
managers and workers alike in an organization in a completely integrated effort toward
improving performance at all level. This enhance performance is aimed at satisfying
such cross functional goals as quality, cost schedule, mission need and suitability.
TQM combines tools in a disciplined approach focused on continuous process
improvement. The activities are eventually focused on improved customer
satisfaction.
TQM begins with a focus on the customer and is boundless, with a lifetime
dedication to continuous improvement. TQM merges a participative philosophy of
management attributed to Dr. Edward Deming with importance on quantitative
techniques and employee involvement to get better the quality of goods and services.
TQM is a process of controlled change that comprises the entire employees in the
improvement of the quality of products and services to boost the productivity of the
organization. TQM optimizes innovative approaches to problem solving and shifts the
organization from effect detention to defect pr3evention. With TQM all of the
organization’s resources are used effectively to improve all of its processes. TQM
engages everybody in the organization from top management to the lowest position.
The timing, progression, method of execution and integration of these elements will
differ from one organization to another.
Essential to the TQM approach is the transformation in management
philosophy regarding the responsibility for quality. Previously it is given to a separate
group of individuals inj a department/directorate/division frequently designated as
Quality Assurance. In TQM, the responsibility for quality is given to everyone, each
and every employee, from top management to the lowest position in the organization.
TQM is accomplished using a team organization with both management and
the employees as members of Quality teams which focus on continuous process
enhancement. Those who do a job know it best. Thus suggestion to improve the
quality of an exacting process would come from the employees who work in the
process and the managers who work on the process. Communication must be
encouraging to let employees and management to work jointly to attain the shared
goad of continuous process improvement.
TQM necessities may be denied independently for a specific organization or
may be in loyalty to established standards, like the International organization for
Standardization’s ISO 9000 series. TQM can be apply to any type of organization; it
originated in the manufacturing sector and has since been adapted for use in almost
every type of organization imaginable, including school, highway, maintenance, hotel
management and churches. As a current focus of e-business. TQM is based on
quality management from the customer’s point of view.
The Primary Elements TQM
Quality is a necessary parameter which helps organization their
competitors and survive the fierce of competition.

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

The achievement of TQM depends on following eight elements which are

further classified into following four groups.
Foundation
The entire process of total quality management is built on a strong foundation
of ethics and trust. TQM involves every single employee irrespective of his designation
and level in the hierarchy.
1. Ethics – is a combination of written and unwritten codes of principles that
govern decision and action within a company. It is an understanding of the
difference of good and bad decisions making and behavior at the business
world. It boils down to following the code of conduct or organization and adhere
to rules and regulations. It describes the actions of individuals within an
organization as well as those of the organization as a whole.
2. Integrity – Integrity is the consistency of action, values, methods, measures
principles, expectations and outcomes at workplace. There is need of respect
organization’s policies. Avoid spreading unnecessary rumors about fellow
workers. TQM does not work in an environment where employees criticize and
backstab each other.
3. Trust – Trust is one of the most important factors necessary for implementation
of TQM because it builds a cooperative environment. It is a relationship based
on reliance. Employees need to trust each other to ensure customer
participation. Trust improves making which further helps in implementing TQM
successfully.
Building Bricks –
Bricks are placed on a strong foundation to reach the roof of recognition. The
foundation needs to be strong enough to hold the bricks and support the roof.
Leadership, teamwork and training ate the building bricks of TQM.
1. Leadership – Leadership provides a direction to the en tire process of TQM.
It is about raising the aspirations of followers and enthusing people with a desire
to reach the goals. Leadership in TQM requires the manager to provide an
inspiring vision, make strategic decision and instill values that guide
subordinates. TQM needs to have a supervisor who acts as a strong source of
inspiration for other members and can assist them in decision making. A leader
himself need to believe in the entire process of TQM for other to believe in the
entire process of TQM for others to believe in the same. Proper downloads,
briefs about TQM must be given from to time to employees to help them in its
successful implementation. TQM initiatives have to be introduced and led by
the top management.

2. Teamwork – Team work if s crucial element of TQM. Rather than working

individually, employees need to works in teams. When individuals work in
unison, they are in a position to brainstorm ideas and come up with various
solutions which would improve existing processes and systems. Team
members ought to help each other to find a solution and put into place.
Teamwork offers contagious improvement in processes and operations. The
teams may be:

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

a. Problem Solving – these are temporary and formed to solve certain

problems, identify and overcome causes of those problems. They generally
last from one week to three months.
b. Quality improvement – These are temporary teams with the purpose of
dealing with specific problems that often recur. These teams are set up for
a period of three to twelve months.
c. Natural work – These are temporary teams with the purpose of dealing with
specific problems that often recur. These teams used concepts such as
employee involvement teams, self-managing and quality circles.

3. Training - Employees need to be trained on TQM to become productive.

Managers need to make their fellow workers aware of the benefits of TQM and
how would it make a difference in their product quality and eventually yield
profiles for their organization. Employees need to be trained on interpersonal
skills, the ability to work as a team member, technical know-how, decision
making skills, problem solving skills and so on. Training enables employees to
implement TQM effectively within their departments and also make them
indispensable resources.
Binding Mortar
Binding Mortar binds all the elements together. Communication binds
everything together, starting from the foundation and going up to the roof.
Communication is the vital link between all the TQM elements and must be prevalent
in an organization in order for TQM to work the way it should. The channels of
communication need to be credible and easily interpreted for members of the
organization.
Communication binds employees and exacts the best of them. Information
needs to be passed on from the sender to the recipient in its desired form. Small
misunderstandings in the beginning lead to major problems existing in the system and
find their solutions as well.
Three types of Communication:
1. Downward Communication – this is the dominant form of communication in
an organization. Presentations and discussion are two examples of this form
of communication. Flow information takes place from the management to the
employees. The supervisors are able to make the employees clearly
understand TQM using this type of communication.

2. Upward communication – Flow of information takes place from the lower level
employees to the top-level management. The lower level employees are able
to offer suggestions on the effect of TQM to the upper level management using
this type of communication. Supervisors should listen effectively and
incorporate the insights and constructive criticism offered by the employees in
correcting the situations that arise through the use of TQM. 5this creates a
level of trust between supervisors and employees. This is also similar to
empowering communication, where supervisors listen to others

3. Sideway/lateral communication – Co0mmunication also take place between

various department. This type of communication is important because iot

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Cities of Mandaluyong and Pasig

breaks down barriers between departments. It also allows a more professional

dealing with customers and suppliers.
Roof –
It includes recognition which brings greater internal customer satisfaction which
in turn leads to external customer satisfaction in the organization. There can be a huge
change in self-esteem, productivity and quality when the contributors are recognized.
Recognition is the final element of TQM. Recognition is the most important
factor which acts as a catalyst and drives employees to work hard as a team and
deliver their lever best. Every individual is hungry for appreciation and recognition.
Employees who come up with improvement ideas and perform exceptionally well must
be appreciated in front of all. They should be suitably rewarded to expect a brilliant
performance from them event the next time. The most important responsibility on a
supervisor is that of according recognition to the employees.
Core Concepts of TQM
Each of the following core concepts of TQM can be used to drive process of
continuously improvement and to develop a framework for quality improvements over
many years.
1. Customer Satisfaction – TQM is centered on the requirements of the
customer. In order to meet customer requirements, it is imperative to listen to
them and do what is agreed upon. Companies have to give identical
importance to the internal as well as the external customers. A better technique
for companies to use their customers is to learn what is significant to them and
then, equal their performance to the customer’s satisfactions. May forward
looking companies of the world have started the process of carrying out a
survey known as energy meter which reflects the satisfaction, morale, and
motivation levels of employees and develops the model of employee ship with
core stress on the principles of customer satisfaction. Further, on the external
customer front, surveys are carried put among the customers for identifying
their satisfaction, expectation and the causes for low customer satisfaction. For
that reason, the satisfaction index is compiled and product qualities are
monitored to improve customer satisfaction.

2. Internal Customer Satisfaction – Customers are not only external customers,

but the people outside are the end user of a firm’s product and services. There
is also the internal customer, the person within the company who receives the
work of another and adds his contribution to the product or service before
passing it on to someone else. It is essential to attain a successful internal
working relationship in order to satisfy the needs of the external customer. If
the internal customer’s requirements are agreed and met, a chain of quality is
built that reaches out to the external customer. Whether an organization
supplies products or services, the people it supplies internally are as real as its
external customers. Therefore, they also required speed, efficiency and
accuracy. That’s why the idea of the internal customer ben be used as a
highlight for improvement.

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3. All work is process – another possible focal point of improvement is that of

business processes. A process is a combination of methods, materials,
manpower and machines that work collectively to produce a product or
serviced. All processes include natural variability and one approached to
quality improvements is to progressively reduce variation. First, this can be
done by removing variation due to special causes and secondly by driving down
the common cause of variation, this bringing the process under control and
improving capability.

4. Measurement – In order to improve, one must first measure one’s present

performance. This will help one focus both on satisfying internal customers
and meeting the requirements of external customers. There are seven generic
ways in which the quality of outputs can be measure.

a. Defects - work not up to specification

b. Rework – work requiring correction
c. Scrap – work thrown away
d. Lost Items – work done again
e. Backlogs – work behind schedule
f. Late Deliveries – work after agreed time
g. Surplus Items – work not required.

5. Synergy Teamwork – The idea of synergy in teamwork, where the whole is

greater than the sum of the parts, is key concept in TQM. Here, it is bo5used
to promote collaborations, consensus, creative conflict and team winning. One
of the strength of suing teams for TQM is that they can merge the mutually
restr4icted individual qualities need for running business today. Teamwork can
provide opportunities for people to work together to reach quality improvement.
People who work on their own or in a small group often have a
compartmentalized picture of their organization and work that it does. They are
quite strange with the work done even by people who are in their vicinity.
Consequently, they are unacquainted of the results of he poor quality of their
work. Bringing people together within teams with the common goal of quality
impr9ovement aids communication between people, departments and
functional activities. Teamwork gradually breaks down the communication
barriers and acts as a platform of change. Teamwork also enables group of
people to work as a task force as seen in cross functional teams, committees
and others which look at cross-functional problems, solving problems and
identifying and adopting new ways of doing things. In this connection, quality
circles and quality improvements tools facilities team building processes in
organization.

6. People make Quality – Most of the quality problems within an organization are
not usually within the control of an individual employee. The system often
comes in the way of employees who are to do a good job. In such as situations,
motivation by itself cannot work. Therefore, managers are required to ensure
that all necessary is prepared to let people to produce quality. This creates an
environment where people are eager to take responsibility for the quality of
their own work. Releasing the talents of everyone within the organization in
this way can generate culture for quality improvement.

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7. Continuous Improvement cycle – The continuous Cycle of instituting

customer requirements, meeting and measuring them, measuring success and
continuing he improvement can be used both externally and internally to
stimulate quality improvements. The continuous improvement cycle used over
and over again will lead to a fresh chemistry within the organization so that the
culture starts to change to one of continuous improvement.

8. Prevention – At the heart of TQM is the conviction that it is possible to achieve

defect free work most of the time. Termed right first time, every time or zero
defects. The right first time, or zero defects policy is the results of an emphasis
on prevention, and the diligent use of measurement, process controls and the
data driven elimination of waste and error, It serves as a goal for continuous
improvement. Prevention is the goal of all quality assurance. Through planned
and systematic action such as documentation of work processes or cost of
quality audits, quality assurance prevents quality problems.

BENEFITS OF TQM
There are many benefits of TQM. Essentially TQM refers to the total quality in
fulfilling the needs of the customers, the quality of the products and the quality of life.
Having these focuses leads to better business in several different ways.
1. Creates a good corporate culture – TQM is an approach where the customer is the
center point of the business rather than the department. Therefore, quality is
transformed from an issue of the production department to a strategic business entity
to meet global challenges. The TQM philosophy revolves around developing a culture
that supports total commitment to customer satisfaction through continuous
improvement.
2. Better reviews from customer – Another benefit of TQM is that customers and clients
are highly satisfied with the performance. Given the quality assurance testing
procedures, the procedures, the products of the company will constantly meet the
requirements and needs of clients and customers. Therefore, the cust0mers stay with
the company longer, deepen their relationship with the company and demonstrate less
price sensitivity while recommending the company’s products or services to others.
Customer satisfaction and high-performance results also possibly lead to high reviews
in different publications and newspapers which further enhances the image of the
company and in turn that of the business.
3. Better performance from employees – Through TQM, there is often more attention
placed on meeting the needs of the employees or internal customers. The training
given to the employees as part of the program can boost employee morale at the
workplace resulting in employees working harder to achieve the goals of TQM.

SHIFTING FROM TRADITIONAL MANAGEMENT TO TQM

Traditional management styles are all essentially management by results
Managers feel justified in letting quality standards slip, adjusting output to meet quotas,
and generally forfeiting the right production standards and procedures to pander to

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results. This management style is predicated on the “ends justify the means”
philosophy. This “charade of conformance” fosters dishonesty and a juggling of the
facts.
Quality-focused management is predicated instead on the quality of the product
and the satisfaction of the customer. In this style, the goal is to produce an extremely
high-quality product without cutting corners on quality ad without pandering to profits.
This is a radical departure from traditional styles, which applaud profits above quality
and virtually every other consideration. In quality-focused management, profits
improve because the product is better and the customer is willing to pay for it. This
type of management requires detailed quality measurement and observance to
consistent quality standards, since any drop-in quality will be detected by customers
and will weaken the success of this style.
Changing from a traditional style to a quality-focused style of management
requires re-education of managers to become leaders instead of bosses as well as
clear communication of the company’s quality vision. The quality goal must be
championed by everyone, beginning from the top down to the lowest worker. The
alteration to a quality-focused styles forces sweeping changes in every aspect of a
company’s management from the selection of personnel to the function of teams within
the company, but the end result is a better-quality product, a pleased customer, and a
company that operates with greater integrity.
Total Quality Management has changed the traditional management style
forever. It was a very essential movement those days. Some of these changes are
essential even today. Few of these changes are discussed below.
1. Traditional way of management focused on internal activities. Quality gad a
meaning which was totally internally defined. Products or services provided by
organization were assumed to be good in quality, if this organization has done its best
in producing that product or service. But in total quality management, focus is the
customer. So that final decider of the quality is the customer. Fitting t the customer
requirement was the least requirement while delighting them is the ultimate goal.
2. Traditionally people thought bad quality products are due to the workers who do not
perform their job properly. One of the major differences between total quality
management and traditional management style is the assignment of the responsibility
of the quality to the management. Especially responsibility of the quality goes into the
middle level management in the operational level.
3. Total Quality Management is an organization wide movement. All the organization
has to agree to apply TQM principles. TQM, unlike traditional management calls for
high amount of tam working. Team building, especially cross functional teams is
feature of TQM. These teams will present the necessary thrust to the implementation
process and will push the system forward, with vey less struggle.
4. TQM believes in quality assurance rather than checking. Quality is inbuilt to the
system, so that products are assured to be in good quality. Some decision like
narrowing down the supplier base is total quality management concepts used for his
purpose, which is revolutionary still today.

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5. Unlike in traditional management style, total quality makes decisions on facts and
figures. Therefore, problems are identified properly. Therefore, solutions are well
planned.
6. TQM depends on cyclic thinking. Also, it is continuous. Therefore, improvements
are small, stable and continuous in nature. This is also known as Kaizen. These
events are used in team building, brains storming and decision making.
There are many other differences between the old or the traditional way of
management to the total quality management. In the bigger picture, TQM has basically
changed the culture and the thinking patterns of the organization.
TQM and Reengineering
Business process can be defined as "a set of logically related tasks performed
to achieve a defined business outcome." It is "a structured, measured set of activities
designed to produce a specified output for a particular customer or market." Improving
business processes is important for businesses to stay ahead of competition in today's
marketplace. Over the last 10 to 15 years, companies have been forced to improve
their business processes because customers are demanding better products and
services. Many companies begin business process improvement with a continuous
improvement model. The BPR methodology comprises of developing the business
vision and process objectives, identifying the processes to be redesigned,
understanding and measuring the existing processes, identifying IT levers and
designing and building a prototype of the new process. In this context it can be
mentioned that, some of the biggest obstacles faced by reengineering are lack of
sustained management commitment and leadership, unrealistic scope and
expectations, and resistance to change.

Business Process Reengineering (BPR) and Total Quality Management (TQM)

Total Quality Management and BPR share a cross-functional relationship.
Quality specialists tend to focus on incremental change and gradual improvement of
processes, while proponents of reengineering often seek radical redesign and drastic
improvement of processes. Quality management, often referred to as TQM or
continuous improvement, means programs and initiatives, which emphasize
incremental improvement in work processes, and outputs over an open-ended period
of time. In contrast, reengineering, also known as business process redesign or
process innovation, refers to prudent initiatives intended to achieve radically
redesigned and improved work processes in a specific time frame. In contrast to
continuous improvement, BPR relies on a different school of thought. The extreme
difference between continuous process improvement and business process
reengineering lies in where you start from and also the magnitude and rate of resulting
changes. In course of time, many derivatives of radical, breakthrough improvement
and continuous improvement have emerged to address the difficulties of implementing
major changes in corporations. Leadership is really important for effective BPR
deployment, and successful leaders use leadership styles to suit the particular
situation and perform their tasks, giving due importance to both people and work.
Business process is essentially value engineering applied to the system to bring forth,
and sustain the product with an emphasis on information flow. By mapping the
functions of the business process, low value functions can be identified and eliminated,

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thus reducing cost. Alternatively, a new and less costly process, which implements the
function of the current process can be developed to replace the present one.

The role of executive leadership or top management in business process

reengineering cannot be disregarded. They should provide the needed resources to
the team, demonstrate their active support for the project, set the stage for
reengineering by determining core business processes, and by defining the project
scope and objectives. The management should also take care to provide adequate
funding, set new standards as well as encourage others to be open to innovative
approaches. Many reengineering projects fail to be completed or do not achieve
bottom-line business results. For this reason alone, business process reengineering
'success factors' has become an important area of study. Success factors are a
collection of lessons learnt from previous projects. It is useful to think of your team
structure in 3 levels: stakeholders, core team, and extended team.

The stakeholders are key business leaders ultimately accountable for the
success of the project. Their role is to provide high-level guidance to the team, help
remove barriers, and provide funding. The core team is the group responsible for the
design and implementation of the solution. Your extended team includes other people
in the organization contributing to the project on an as-needed basis. These extended-
team members include subject-matter experts. A well-rounded team includes a mix of
people and skills. Such a team may include individuals who thoroughly understand the
current process, who actively use the process and also work closely with customers,
technical experts, and consultants, if necessary. But the main criterion is that the entire
team should work together for the project to succeed.

Similarity and Difference Between Reengineering and Total Quality Management

Some people have said that both TQM and Reengineering are the same, while
others have argued that they are incompatible. Michael Hammer argues that the two
concepts are compatible and actually complement each other. Both concepts have the
same focus – customer satisfaction.

TQM has contributed the concept of teamwork, worker participation and

empowerment, cross-functionality, process analysis and measurement, supplier
involvement and benchmarking. Also, TQM has emphasized the need for a “total” view
of the organizations in its approach to problem solving. TQM has also influenced
company culture and values by exposing organizations to the need for change.

TQM has advocated continuous and incremental improvement of processes

(Kaizen) whereas reengineering is about radical discontinuous change (breakthrough
improvement) through process innovation. Exhibit 1.3 illustrates how TQM and
reengineering fit together over time in the life of a process.

First, the process is enhanced until its useful life time is over, at which point it
is reengineered. Then enhancement is resumed and the entire cycle repeats again.
Hammer points out that this is not a once-in-a-life time endeavor. As business
circumstances change in major ways, so must process design.

The difference that have been identified may generate an idea that
reengineering is outside the area of quality management. Hammer, the reengineering

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guru, together with quality gurus such as Deming and Juran, all agree that innovation
and brake through in process are indispensable parts of quality management. TQM
assumes that the design of the process is sound and that all it needs is some
improvement or enhancement. But if he world has changed dramatically since the
process was first designed, the current design may be incompetent of delivering the
necessary performance, Reengineering is then essential.
Table 1. Reengineering vs. TQM

Similarities Reengineering (BPRE) TQM (CPI)

Basis of analysis Processes Processes
Performance measurement Rigorous Rigorous
Organization Change Significant Significant
Behavioral change Significant Significant
Time Investment Substantial substantial

Differences
Level of change Radical Incremental
Starting point Clean Slate Existing process
Participation Top down Bottom up
Typical scope Broad, cross functional Narrow, w/in functional
Risk High Moderate
Primary enabler I.T. Statistical control
Type of change Cultural & Structural Cultural

TQM is the way of achieving the objective of “total quality”. The techniques
used for continuous improvement and process reengineering are the tools of TQM.
In Japan, continuous improvement is referred to as Kaizen. This is incremental,
gradual and continuous improvement. According to Masaaki Imai, who coined the
term, “Kaizen” means improvement, a continuous improvement involving everyone,
both managers and workers. Kaizen strategy maintains and improves the working
standard through small gradual improvements. In general, improvement can be
defined as Kaizen innovation. Innovation calls for the radical improvements as a result
of large investments in technology and/or equipment. But the modern approach to
total quality management includes both incremental and breakthrough improvements
under the the term “continuous improvement”
When the reengineering is implemented, the objective of total quality must
always be foremost to ensure success. Otherwise, implementation can be costly and
still not yield acceptable or long-term result. Process reengineering emphasizes
radically changing to the existing processes under the assumption that those changes
will definitely improve the firm’s global performance or the performance of one of its
specific process.
However, to be effective, a firm’s internal organization and processes should
be directly and formally linked to enhancing profitability through the fulfilment of its
customers’ needs. If this relationship is correctly and explicitly established right from
the beginning, then reengineering can be one of the best tools to achieve total quality
and it will significantly improve the performance of a firm.

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