CHAPTER 1

Introduction to Total Quality Management

Objectives

• Define quality

• Identify primary elements, core concepts and benefits of total quality management.

• Distinguish between traditional management and TQM

• Compare and contrast reengineering and TQM

Total Quality Management is not a fresh idea. The approaches advocated by Deming, Juran, Crosby,
and others have long been used by well effective managers. The most noteworthy feature is the level of
mutual trust that is needed by both management program can be successful. Quality is currently
everyone’s task, not just the inspection department. People are anticipated to seriously weigh their jobs
and make the first move to improve their part of the process. Open, objective measurements are
necessary.

Defining Quality

Quality is a lot more than the nonexistence 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 the nonstop improvement of all systems and processes in the organization, not
simply the production of products and services but also the design, development, service, purchasing,
administration and indeed, al aspects of the transaction with the customer. Each one must work in
concert toward similar end.

Quality can be observed through the eyes of the customers. An understanding of the customer’s
expectations (effectiveness) is the first step. Then exceeding those expectations (efficiency) is required.
Communications will be the key. Going beyond customers expectations guarantee meeting all the
definitions of quality.

Different people understand quality in a different manner. Hardly anyone can describe quality in
quantifiable terms that can be operationalized. The banker may differentiate their products or service
with “service”; for the health care worker it is “customer satisfaction”; and for the manufacturer it is
simply “quality product.” A few individuals can provide a specific definition and measurement of quality
when pressured. There is an old saying in management which says, “If you can’t quantify it, you can’t
manage it,’ and it is also true with quality. Every member of the organization should be clear about its
concept, definition and measurement as it applies to his job if the strategic management system and the
competitive advantage, are to be based on quality. Appropriate quality can be identified or perceived in
a different way in the same company.
Approaches to Quality Definition

In his book Managing Quality, Harvard Professor Davin Garin summarized five principal approaches
to defining quality namely:

1. Transcendent – Most people would agree that the Mona Lisa or Michelangelo’s David are works of art
which represent quality because people travel from around the world to view them. But can they define
it? Those who embrace the transcendental outlook would say, “I can’t define it, but I know it when I
witness.” Advertisers are inclined of promoting products in these terms. “Where shopping is a pleasure”
(supermarket), “We love to fly and it shows” (airlines), “The great American beauty…its elegant”
(automobile) and “It means beautiful eyes” (cosmetics) are examples. Television and print media are
flooded with such indescribable claims, and therein lays the problem that quality is not easy to define or
operationalized. It therefore becomes obscure when using the approach as a source of competitive
advantage. Besides, the functions of design, production and service may discover it complicated to use
the definition 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 approach has 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 (perceived quality) 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
easy 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 products
attributes that support the needs of the biggest number of customers. Another problem concerns
whether quality and customers 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 a 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 possess 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 thus is
internally focused. Stress on the reliability in design and manufacturing is inclined to attend to cost
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 costs of non-quality like and scrap.
This approach goes against Crosby’s concept of “quality is free.”

5. Value-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 is quality and value. The highest quality product is not typically the best value. That
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 customer 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 product type, cost, profit
policy, demand of the product, availability of parts 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 center of this process. Market research on consumer shall indicate the customer needs
(current and potential) and sales call analysis will provide investigation about problems customers face
with 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 manufacture 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 this definition, namely defect detection, defect root
cause analysis, and defect prevention. Defect prevention deals with the means to deter the occurrence
of defects and is usually achieved using statistical process control techniques. Detecting defects may be
by inspection, testing or statistical data 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 how 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 expectation is the focus of quality of
performance. Automobile industry performs test drive of vehicles to gather information concerning
mileage and oil consumption. Bulbs are life tested to be aware of its reliability throughout its useful life.
Customer survey is carried out to discover customer’s perception about service rendered. If product or
service does not meet to customer expectation, then modifications are considered necessary in the
design or conformance phase.

Quality Levels

Quality focused organization must evaluate at three levels namely organization, process and
individual. Quality systems and standards must be defined at each level and then manage quality
thorough 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
might problems in the basic process such as design, production, order entry or materials 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 needed by the customers but they do not received
4. Products or services that are not needed by the customers but they do not received

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 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 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 effect on the organization's customer-drive performance
standards
5. The internal customers and their needs

Defining quality at the process level starts with determining the end-customer requirements for the
process. End-customer requirements should then be 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 serves as the basis for monitoring each step’s
contribution to process quality. The meters and standards will also be used for troubleshooting the
system in case customer requirements are not met.

Like managing organizational 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 measure, 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 only.

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 needs 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. 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 e the basis for these
standards to be developed. Productivity and cost are the requirements for a customer-driven quality.
With the requirements the areas to be measured to qualify individual standard would include accuracy,
completeness, innovativeness, reliability, ease of use, timeliness, volume, rate, cost and flexibility.

Three issues have to be answered for each output 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 or performance is shaped
by these factors:

1. The input an individual receives which consist of how clear the performance expectations are,
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 and how
frequent it is given and the manner in which it is provided.
4. An individual’s physical, mental and emotional capacity.

Figure 1 Three Levels of Quality

Quality Paradigms

1. Custom-craft paradigm – In this paradigm the focus is on the product or service performance should
be exactly as what customer demands. Each product unit is designed and built exactly the way 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’s shops and furniture
suppliers.

2. Mass production and 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 vicious 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 requirements consist of interchangeable parts, factory power, unskilled labor pool, large
customer pool and hard-selling. Some examples of this pattern are from automobile and readymade
buildings for commercial enterprise.
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 low production cost. Products
are designed and built, statistical process control and statistical sampling are used, and then customers
are generated. The requirements comprise both 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.

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 producer what to design and build. Using employee
involvement and empowerment, customer-focus, continues 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, supplier 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 reducing delivery time. Each unit 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 partnerships,
customer relationships, customer aided design, and customer-aided manufacturing. Some examples of
this pattern are from the software 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 asses 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 improvements 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 cost. These costs are associated with the design, implementation, and
maintenance of the quality management system. They are planned and incurred before actual operation,
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 Costs – These costs are associated with measuring and monitoring activities related to
quality standards and performance requirements. These costs take place from spotting defects rather
than prevention. These costs are associated with the supplier’s and customers’ 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 setup, and product 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 or errors
d. Failure analysis – activity necessary 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 reperformed under a
guarantee
c. Complaints – all work and costs connected with handling and servicing customers’ complaints
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. Cost of conformance is the cost of making available product or services based on required
standards. Simply it is a good amount spent such as prevention and appraisal costs. Cost of non-
conformance means failure costs linked with a process not functioning based on 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.

DEFINING TOTAL QUALITY MANAGEMENT

 Total Quality Management (TQM) is an all-inclusive 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 continuous process
enhancement activities concerning 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 basic management techniques, current improvement efforts and technical 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. Edwards 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 defect detention to
defect prevention. With TQM all of the organization’s resources are sued effectively to improve all of its
processes. TQM engages everybody in the organization from the 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 sperate group of individuals in 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 employees as members
of “Quality Teams” which focus on continuous process enhancement. Those who do a job know it best.
Thus, suggestions to improve the quality of an exacting process should come from the employees who
work in the process and the managers who work on the process. Communication must be encouraged to
let employees and management to work jointly to attain the shared goal of continuous process
improvement.

TQM necessities may be defined independently for a specific organization may be in loyalty to
established standards, like the International Organization for Standardization’s ISO 9000 series. TQM can
be applied 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 schools, 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 of TQM

 Quality is a necessary parameter which help organization outshine their competitors and survive the
fierce competition.

The achievement of TQM depends on following eight elements which are further classified into
following groups.

Foundation

The entire process of total quality management is built on a strong foundation of ethics, integrity
and trust. TQM involves every single employee irrespective of his designation and level in the hierarchy.

1. Ethics – Ethics is a combination of written and unwritten codes of principles that govern decisions and
actions within a company. It is an understanding of the difference of good and bad decision making and
behavior at the business world. It boils down to following the conde of conduct of organization and
adheres 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 actions, values, methods, measures, principles, expectations
and outcomes at workplace. There is a need to 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 participation of everybody and allows empowerment that encourages pride of
ownership and commitment. Trust fosters individual risk-taking for continuous improvement and is
essential to ensure customer satisfaction. Trust improves relationship among employees and eventually
helps in better decision making which further helps in implementing TQM successfully.

Building Bricks

Bricks are placed on a strong foundation to reach the root of recognition. The foundation needs to
be strong enough to hold the bricks and support the roof. Leadership, teamwork and training are the
building bricks of TQM.

1. Leadership – Leadership provides a direction to the entire process of TQM. It is about raising the
aspirations of the followers and enthusing people with a desire to reach the goals. Leadership in TQM
requires the manager to provide an inspiring vision, make strategic decisions 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 needs 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 is a crucial element of TQM. Rather than working individually, employees
need to work 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 contiguous improvement in processes and operations. The teams may be:

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 teams consist of small groups of skilled works who share tasks and
responsibilities. These teams use concepts such as employee involvement teams, self-managing
teams and quality circles.

3. Training – Employees need to be trained on TQM to become highly 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 profits 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 the indispensable resources.

Figure 2 TQM Key Elements

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 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 all members of the organization.

Communication binds employees and extracts the best out 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 later on. Employees need to interact with each other to come up with the problems
existing in the system and find their solutions as well. Three types of communication take place between
employees:

1. Downward communication – This is the dominant form of communication in an organization.

Presentations and discussions are two examples of this form of communication. Flow of
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 effects of
TQM to the upper level management using this type of communications. Supervisors should
 listen effectively and incorporate the insights and constructive criticisms offered by the
employees in correcting the situations that arise through the use of TQM. This creates a level of
trust between supervisors and employees. This is also similar to empowering communication,
where supervisors listen to others.
3. Sideways/lateral communication – Communication also takes place between various
departments. This type of communication is important because it 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 even the next time. The most important responsibility on a supervisor is
that of according recognition to the employees.

Cor Concepts of TQM

Each of the following core concepts of TQM can be used to drive the process of continuous
improvement and to develop a framework for quality improvements over 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 arid 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. Many 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 motivations levels of employees and develops the model of “employeeship”
with core stress on the principles of customer satisfaction. Further, one the external customer front,
surveys are carried out among the customers for identifying their satisfaction, expectations and the
cause for low customer satisfaction. For that reason, the satisfaction index is compiled and product
qualities are monitored to improved customer satisfaction.
2. Internal customer satisfaction – Customers are not only external customers, but the people outside
who are the end user of a firm’s products 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 customers’
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 require speed, efficiency and accuracy.
That’s why the idea of the internal customer can be used as a highlight for improvement.
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
product a product or service. All processes include natural variability and one approach to quality
improvement is to progressively reduce variation. First, this can be down by removing variation due
to special causes and secondly by driving down the common cause of variation, thus brining 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 measured:
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 times – work not required

5. Synergy in teamwork – The idea of synergy in teamwork, where the whole is greater than the sum of
the parts, is a key concept in TQM. Here, it is used to promote collaboration, consensus, “creative
conflict” and team winning. One of the strengths of using teams for TQM is that they can merge the
mutually restricted individual qualities needed for running business today. Teamwork can provide
opportunities for the 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 the 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 the poor quality of their work. Bringing people
together within teams with the common goal of quality improvement 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 a group of people to work as a
taskforce as seen in cross-functional teams, committees and other which look at cross-functional
problems, solving problems and identifying and adopting new way of doing things. In this connection,
quality circles and quality improvement tools facilitate team-building processes in organizations.

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. The system often comes in the
way of employee are trying to do a good job. In such a situation, 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 organization where people are eager to take responsibility for the quality of their
own work. Releasing the talents f everyone within the organization in this way can generate a culture for
quality improvement
7. Continuous improvement cycle – The continuous cycle of instituting customer requirements, meeting
and measuring them, measuring success and continuing the 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 the continuous improvements.

8. Prevention – At the heart of TQM is the conviction that it is possible to achieve detect-free work most
of the time. This is termed “right first time, every time” or zero defects. The “right first time, every 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 results and also benefits business in several business ways. Here are some benefits f TQM:

1. Create 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 review from customers – Another benefit of TQM is that customers and clients are highly
satisfied with the performance. Given the quality assurance testing procedures, the products of
company will constantly meet the requirement and needs of the clients and customers. Therefore,
the customers stay with the company longer, deepen their relationship with the company and
demonstrate less price sensitivity while recommending the company’s products and 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 business.
3. Better performance from employees – Through TQM, there is often more attention placed on
meeting the needs of the employees or the internal customers. The training given to the employees
as part of the program can boost the 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 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 and quality and without pandering 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 observant to consistent quality
standards, since any drop in quality will be detected by the customers and will weaken the success of
this style.

Changing from a traditional style to a quality-focused 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 style forces sweeping changes in every aspect of a company’s
management from the selection of personnel to the function of the team within the company, but the
end result is a better-quality product, a pleased customer, and 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 had a meaning which was
totally internally defined. Products or services provided by the organization are 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 customer. Fitting to
the customer requirement was the least requirement while delighting them is 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 responsibility of the quality to the management. Especially
responsibility of the quality goes into the middle level management in the operation level.
3. Total quality management is an organization wide movement. All the organization has to be in
agreement to apply TQM principles. Total quality management, unlike traditional management calls
for high amount of team 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 very less struggle.
4. TQM believes in quality assurance rather than checking. Quality is inbuilt to the system, so that the
products are assured to be in good quality. Some decision like narrowing down the supplier base is
total quality management concepts used for this purpose, which is revolutionary still today.
5. Unlike in traditional management style, total quality management 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 teambuilding,
brainstorming and decision making.

There are many other differences between the old or 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

Reengineering sometimes called Business Process Reengineering (BPR), involves a complete

rethinking and transformation of key business processes, leading to strong horizontal coordination and
greater flexibility in responding to changes in environment. Because work is originated around processes
rather than function, reengineering often involves a shift to horizontal structure based on teams.

Reengineering basically means starting over-throwing out all the thinking of how work was done,
and deciding how can it be best done now. It entails identifying customer needs then designing
processes and supporting people to meet those needs.

Banks and insurance companies, manufacturing and mining companies, and service companies
throughout the world, all have achieved breakthroughs in speed, flexibility, innovation and quality
through reengineering.

It is very important to understand that reengineering is not a disconnect discipline. It is, in fact, a
subset of TQM. The essential difference between (Business Process) Reengineering and TQM is that
reengineering aims at quantum gains on the order of 30% to 50% or more, whereas TQM program stress
incremental progress, striving for inch-by-inch gains again and again.

The two approaches to improve performance are not mutually exclusive; it makes sense to use them
in tandem. Reengineering can be used to first produce good basic design that dramatically improves
business process. Total quality programs can be used to work out bugs, perfect the processes, and
gradually improve both efficiency and effectiveness.

Similarity and Difference between Reengineering and TQM

Some people have said that both TQM and Reengineering are the same, while others have argued
that they are incompatible. Michael Hamer argues that 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 innovation.
TQM and reengineering fir together over time in the life of a process (see Figure 3).

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.

Figure 3 How TQM and Reengineering Fit Together

The differences that have been identified may generate an idea that reengineering is outside the
area of quality management. Hammer, the reengineering guru, together with quality gurus such as
Deming and Juran, all agree that innovation and break-through in processes 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 the world has changed dramatically since the process was first (or
most recently) designed, the current design may be incompetent of delivering the necessary
performance. Reengineering is then essential.

Table 1 Reengineering vs. TQM

Reengineering (BPRE) TQM (CPI)

Similarities:
Basis of analysis Processes Processes
Performance measurement Rigorous Rigorous
Organizational 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, within functions
Risk High Moderate
Primary enabler Information technology Statistical Control
Type of change Cultural and 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 refereed to as Kaizen. This is incremental, gradual and continuous
improvement. According to Masaaki Imai, who coined the term, “Kaizen” means improvement. It means
continuous improvement involving everyone, both managers and workers. Kaizen strategy maintains and
improve the working standard through small gradual improvements. In general, improvement can be
defined as Kaizen and innovation.
 Kaizen means gradual, incremental, continuous improvement. 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 term “continuous improvement”.
When 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
results. 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 processes.
However, to be effective, a firm’s internal organization and processes should be directly and formally
linked to enhancing profitability through the fulfillment 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.
QUALITY IN-FOCUS

Name:__________________________________________________________Date:_________________
Year/Section: ______________________________________________Grade/Score: _______________

Direction: Read the story of Uratex and answer the question below it.

Uratex Commits to Product Quality

Source: http://www.philstar.com/business/2010/08/16/602727/uratex-commits-product-quality
http://www.lazada.com.ph/uratex/

Remember the time when you are still lying on a flat, hard, and uncomfortable bed? As time passed,
people/s curiosity, skill and demand have driven the research on making materials that cater the needs
of man. From flat and hard bed, shifted into soft and more relaxing couch, began in 1968, as part of the
owners’ dream in producing high end quality foam at an affordable price as well as something that man
can use in everyday lives, Uratex has been produced. The brand is well-known for three reasons; its
durability, satisfaction and comfort ability. The company worked passionately in designing products
aimed to provide comfort, healthful, restful and peaceful sleep every single night.

Multiflex RNC Philippines Inc., which makes Uratex, has invested on top-of-the line equipment to
produce mattresses that are up to world-class standards, while raising the bar in terms of quality foam
production in the Philippines.

It is now one of the leading foam producers in Southeast Asia, with products that are comparable to
the best in the world. All Uratex foam blocks are produced using processes that rival the best in the
United States and Europe. It utilizes the computerized Vertifoam process to form perfectly shaped foam.
The work doesn’t end there. Each block of form is cured through a cooling and drying process that
ensures durability.

With optimum storage conditions and special equipment for customized cutting according to
specifications, consumers are assured of a top-quality product. And since it is made in the Philippines, it
has a more reasonable cost than imported foam products.
 Just recently, Multiflex invested on a German Hennecke foaming equipment to improve its foam
production consistent with its vision for quality. With the call for a green workplace, efforts have been
made to significantly reduce foam waste, which may affect the environment.

The secret to the success of Uratex is based on an uncompromising commitment to product quality
and investment, sound financial management, and people skills that encouraged its staff to help
innovate on its different foam products.

These have helped the Uratex brand become synonymous with world-class manufacturing in the
Philippines.

Questions:
1. What approach in quality has Uratex brand used to excel? Explain brieftly.
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2. How would you qualify Uratex brand using the three quality types of design, quality of conformance
and quality of performance? Discuss further.
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3. Can Uratex brand make use of reengineering to further improve its mattresses? Defend your side.
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CHAPTER 1 EXAMINATION

Name:__________________________________________________________Date:_________________
Year/Section: ______________________________________________Grade/Score: _______________

I. True or False
One the space provided before each number put ✓ if the statement is TRUE and X if the
statement is FALSE.

____________1. Quality can only be observed through the eyes of the customers.
____________2. Design must be simple and also less expensive so as to meet the
customers’ product ______________or service expectations.
____________3. Feedback on a regular basis must come from both internal and
external customers.
____________4. Developing standards to measure each individual key output is a
necessity to define ______________ individual quality.
____________5. With TQM all of the organization’s resources are used effectively to
improve all of _______________its processes.
____________6. Quality is a necessary parameter which helps organizations outshine
their ______________+competitors and survive the fierce competition.
____________7. TQM does not work in an environment where employees criticize and
backstab ______________+each other.
____________8. Employees who come up with improvement ideas and perform
exceptionally well _____________+must be appreciated in front of all.
____________9. Teamwork gradually breaks down the communication barriers and
acts as a platform _____________+of change.
____________10. Kaizen strategy maintains and improves the working standard
through small gradual improvements.

II. Identification

On the space provided before each number, write the word or words that will
make the statement correct.
________________________1. __________is defined using costs and prices as well as the
number of __________________________+attributes.
________________________2. ____________is how sound the product functions or service
performs when ________________________+_put to use.
________________________3. ____________focuses on the product or service and
performance should __________________________be exactly as what customer
demands.
________________________4. _____________are incurred to avoid failure problems.
________________________5. _____________ is checking of inward bound material,
process setup, __________________________ products against contracted specifications.
________________________6. ______________ is faulty product or material that cannot be
repaired, used, __________________________or sold.
________________________7. ______________ deals with the means to deter the
occurrence of defects ___________________________and is usually achieved using
statistical process control techniques.
________________________8. _______________ is the cost of making available products
or services based ____________________________on required standards.
________________________9. ________________ are acquired to treat defects revealed
when the product ____________________________or service is delivered to the
customer.
________________________10. A _______________ is a combination of methods,
materials, manpower ____________________________ machines that work collectively to
produce a product or service.
III. Enumeration

5 approaches to quality definition

1. ____________________________________________
2. ____________________________________________
3. ____________________________________________
4. ____________________________________________
5. ____________________________________________

5 core concepts of TQM

1. ____________________________________________
2. ____________________________________________
3. ____________________________________________
4. ____________________________________________
5. ____________________________________________