Total Quality Management


Total Quality Management











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Total Quality Management

by Faulkner Staff

Copyright 2022, Faulkner Information Services. All Rights Reserved.

Docid: 00018772

Publication Date: 2205

Report Type: TUTORIAL

Preview

Total Quality Management (TQM) is a philosophy that holds management accountable for the quality of goods and
services delivered by an enterprise. Proponents of TQM assert that any product,
process, service, or methodology can be made better via a cycle of continuous
improvement, iteratively performing activities in five major areas: focusing on
customer needs; developing and tapping employees’ potential; involving everyone
in efforts to find better ways; managing business processes; and managing by
using reliable data. The Baldrige Awards, ISO 9001
certification, and numerous other programs recognize companies that have
successfully implemented TQM programs. This tutorial examines the common
considerations regarding establishing a TQM strategy.

Report Contents:

Executive Summary

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Total Quality Management (TQM) is a
collection of theories and practices that grew out of the works of Armand Feigenbaum, W. Edwards Deming, Peter Drucker,
and Joseph Juran, beginning in the 1940s1.

Balanced
Scorecard Management Tutorial

These four were the first to
articulate a philosophy of management accountability for the quality of goods
and services delivered by an enterprise. In a sense, they were also the first
to establish a connection between business processes and outcomes.
Revolutionary for its time, TQM advocated close collaboration between
management and the factory floor, giving rise to the idea of
"hands-on" management. Deming in particular was a persuasive voice
for the value and dignity of individual workers, asserting that management
should "take care of its people" and that much could be learned about
improving quality by listening to the people who actually built the product.
TQM has been described as managing a business so that every job and process is
carried out correctly the first time and every time.

Proponents of TQM assert that any
product, process, service, or methodology can be made better via a cycle of
continuous improvement, achieved by iteratively performing activities in each
of five major areas:

  • Focusing on customer needs.
  • Developing and tapping
    employees’ full human potential.
  • Involving everyone in efforts
    to find better ways.
  • Managing business processes
    rather than just functions or departments.
  • Managing by fact, using
    reliable data.

The TQM movement gave rise to a wave
of quality improvement methodologies and practices, including Motorola’s Six
Sigma and the Baldrige Award process. ISO 9001
standards were developed to provide a recognized set of benchmarks by which
organizations can evaluate their quality assurance efforts.

Over the years, it has been
convincingly demonstrated that though quality improvement processes themselves cost money, they create productivity and
profitability improvements that more than offset their costs.

Description

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In its simplest form, Total Quality
Management (TQM) consists of the application of several principles to enterprise
management:

  • Focus
    on Customer Satisfaction     – Collecting and
    analyzing information about the satisfaction, loyalty, and future
    purchasing plans of a company’s customers, and the customers of
    competitors.
  • Employee Commitment – Training and other techniques enable
    the empowerment and betterment of employees.
  • Fact-Based Decision Making – Teams gather and review data
    to make sure that completed work meets specifications.
  • Communication – There should always be open communication
    among all parties.
  • Strategic Thinking – Quality is at the heart of all
    aspects of work and vision.
  • Integrated System – A cohesive system of all involved
    parties keeps everyone connected and committed to quality.
  • Process-Centered – Reviewing each process allows for the
    best process to be repeated.
  • Continuous Improvement – Every employee must look at ways to
    continuously improve his or her job tasks2.

Figure 1 depicts these tenets.

Figure 1. Total Quality Management Principles

Figure 1. Total Quality Management Principles

Source: Smartsheet

The Pioneers

TQM has its roots in a series of
revolutionary changes in management thinking and practice dating back to the
end of World War II. TQM is a synthesis of principles, techniques, processes,
and best practices that have proven themselves in tens of thousands of
companies, and in more than a hundred countries. To get a better picture of the
quality movement, it helps to understand the motivation and work of the
movement’s key founders.

Dr. Armand Feigenbaum originated the concept of Total
Quality Control while working on a doctorate at MIT in the 1950s. His basic
principles quickly found adherents in the Japanese, who were already eager
consumers of quality theory. He emphasized the holistic nature of the pursuit
of quality and mandated involvement of all business components, in contrast to
earlier views that isolated manufacturing activities from the "white
collar" aspects of business.

Feigenbaum was the first to articulate that quality
control is a business process, and that human relations are central to the
execution of any quality improvement scheme. In his groundbreaking book, he
introduced a systematic approach to engineering quality, comprising four steps:

  1. Set quality standards.
  2. Monitor compliance with quality standards.
  3. Take action when standards are not met.
  4. Continuously plan for improvements.

One of Feigenbaum’s
most radical departures from the thinking of the day was his assertion that statistical
quality assessment by itself is insufficient to guarantee improving outcomes,
because continuing, sustainable improvements require full participation across
the hierarchy of an organization.

Dr. Joseph Juran worked with Motorola CEO Bob Galvin
to develop the TQM practices known as Six Sigma. Juran
also had a direct and fundamental role in the quality revolution in Japanese
manufacturing, which transformed that former apotheosis of poor manufacturing
quality into an industrial and economic superstar. To a substantial degree, it
was Juran’s Japanese quality revolution that led to a
reactive, but belated, interest in quality management in the West.

Juran later influenced Western companies
to explore the implications of quality within the supply chain. In the interest
of winning back market share lost to Japanese companies, US enterprise not only
began to evaluate their own quality management practices, but also expanded
their quest for improvement to include business partners and suppliers.

Juran’s role was so important to the
development of quality consciousness in Japanese industry that nearly 30 years
after his service there, Japanese Emperor Hirohito awarded him the highest
honor Japan can bestow on a non-native, the Order of the Sacred Treasure.

Dr. W. Edwards Deming was marked by his upbringing in the
wide-open spaces of Wyoming. Deming believed strongly in the value of
people, the importance of cooperation, and the perniciousness of any form of
waste. Though an icon of management theory and practice throughout most of the
20th century, his values were mostly about finding purpose and
meaning. His results, however, were profoundly bottom line.

Deming’s fundamental management
thesis was that people should do their best, always strive to improve, care for
those for whom they are responsible, and never forget that everybody is in it
together. What distinguished Deming’s application of traditional values to
business practice is that he developed methods of statistically measuring the
application of his principles. Deming’s major
contributions are Statistical Process Control (SPC) and the Plan-Do-Check-Act
(PDCA) cycle.

Deming initially articulated his
ideas about managing for quality in the years before World War II, but he was
met with disinterest from American industrialists. His theories emphasized the
need for upper management to be involved in the quality process, and there was
no cultural inclination to such an approach at the time. While involved in the
postwar economic redevelopment of Japan, he began speaking to leading Japanese
executives on his methods of management and the application of statistics to
quality control. Deming and Juran became enormously
influential, launching a Japanese quality revolution which
came to full fruition two decades later.

Dr. Peter Drucker was a visionary business theorist
for the last six decades of the twentieth century. Drucker
pioneered the concepts of privatization, outsourcing, management theory,
knowledge work, and the knowledge economy. Throughout his long tenure as an
advisor to the most powerful and pervasive organizations in the world, he has
been a step ahead of the crowd, identifying trends before they emerge, and
accurately forecasting their effects. A huge proponent of managing for quality,
he recently turned his thoughts toward the implications of an unwieldy American
health care system, perhaps one of the most formidable and looming quality
challenges of the 21st century.

Born in Vienna and educated in
England, Drucker received training in international
law, and later worked briefly as an investment banker. He came to the US and
was a professor of politics and philosophy at Bennington College. In his early
writings, Drucker – a keen observer of the world –
examined the emergence of management and its social, economic, and political
implications. Drucker observed that in the 1850s,
when Karl Marx was beginning his work on the pivotal Das Kapital, there was no such thing as
management or even enterprise as we know it today. The largest business in
existence was a cotton mill that employed 300. In this business and others like
it, members of the workforce enforced discipline on their own. In less than 150
years, professional management emerged and "transformed the social and economic
fabric of the developed world," in Drucker’s words. "Rarely in human
history has any institution emerged as quickly as management or had as great an
impact so fast."

Drucker broadly defined management as the
ability to "put people with different skills and knowledge together to
achieve common goals." His books on management, dealing with issues of
economics, business, and society, have been published in more than 20
languages3.

Related
Quality Enhancement Protocols

TQM was the first of a wave of quality
protocols, all of which were designed to increase organizational effectiveness,
control costs, and improve the quality of goods and services. Some of these
were intended to satisfy the needs of for-profit business, while others were
intended to improve the quality of service rendered by government and
non-profits. A few of the more widely embraced standards are explored below.

Baldrige Awards. US Secretary of Commerce under President
Ronald Reagan, Malcolm Baldrige created the Baldrige
Awards to recognize excellence of organizational management. The Baldrige Criteria encapsulate the major themes of the TQM
movement, evaluating applicants in seven key areas:

  • Leadership
  • Information and Analysis
  • Strategic Quality Planning
  • Human Resource Development and
    Management
  • Management of Process Quality
  • Customer Focus and Satisfaction
  • Business/Operational Results

Scoring considers how well strategies are carried out within an organization, and the ultimate business results that can be linked to TQM practices. The Baldrige Awards have played a major role in raising the
profile of TQM concepts, as winners are required to share non-proprietary
"best practices" information, as well as data which are valuable in
benchmarking other TQM initiatives. Since 1988, 115 organizations have received Baldrige Awards; eight of them have
received the award twice. Beginning in 2012,
organizations became eligible for recognition in one or more Baldrige Criteria categories, even if not chosen as an
overall winner. The influence of the Baldrige Awards extends beyond the nearly 1700 companies who have applied
for the award; many organizations use the Baldrige framework internally to guide improvement and innovation
without applying for an award.

Six Sigma. A quality benchmark developed at Motorola, Six Sigma
requires six standard deviations between the worst case specification limit and
the mean of process variation – essentially a zero defect policy. When Motorola
received one of the first Baldrige Awards for these
pioneering efforts, it quickly became a high-profile TQM role model. The major
contribution of Six Sigma to quality improvement thinking is its systematic
approach to analyzing problems, identifying and implementing solutions, and
tracking results. Six Sigma’s five-step process is often abbreviated as DMAIC:

  • Define
  • Measure
  • Analyze
  • Improve
  • Control

A related process, Design for Six
Sigma, helps companies design quality into a product or process from the
beginning, rather than testing for and fixing defects afterward, using a
five-stage process:

  • Define
  • Measure
  • Analyze
  • Design
  • Verify

ISO 9001.
The International Standards Organization (ISO) is a non-profit collaborative
organization with 119 full member countries, whose mission is to develop standards
that facilitate the international exchange of goods and services. The American
National Standards Institute (ANSI) represents the US within the ISO. ISO
Technical Committee 176 was formed in 1979 to reconcile various quality
assurance standards being used around the world, most of which could trace
their roots back to the theories of quality engineering pioneers such as Feigenbaum, Juran,
Deming, and Drucker. The committee’s work culminated in the publication
in 2000 of ISO Standard 9001:2000, the first global framework of standards for
fundamental quality management.

The ISO 9001 standard provides a
recognized set of elements and benchmarks by which organizations can evaluate
their quality assurance efforts. To demonstrate compliance, organizations
document their achievement of benchmarks and hire an accredited, independent
third party evaluator to certify their compliance with the standards. Compliant
organizations are entitled to register with the ISO and receive recognition for
quality management standards compliance. Registration is a prerequisite to
competition for a Baldrige Award.

ISO uses seven quality management principles as the foundation to guide
performance improvement.

  • Customer focus
  • Leadership
  • Engagement of people
  • Process approach
  • Improvement
  • Evidence-based decision making
  • Relationship management

Auditors evaluate the degree to
which quality management practices are integrated into the organization’s
day-to-day function, and the depth to which principles and practices are
communicated.

The ISO encourages the application
of the ISO 9001 quality standard to new industries. For example, ISO/IEC
90003:2004 provides guidelines for applying the ISO quality standard to the
development, supply, acquisition, operation, and maintenance of computer
software. ISO 13485:2003 provides a quality management model suited to the
stringent needs of the medical device industry.

ISO 9001 is revised approximately every seven years. The current version is
ISO 9001:2015, which was released in September 2015. Less prescriptive than earlier
versions, ISO 9001:2015 focuses on performance rather than documentation.
Within this system, organizations are urged to combine risk-based thinking
with a process approach, and to employ the Plan-Do-Check-Act cycle at all levels
within the organization. ISO 9001:2015 is designed to be integrated with other
management systems, and to serve as a base for sector-quality standards (e.g. in the automotive,
aerospace, and medical industries).

Current View

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The TQM movement in the US began in
the early 1980s, primarily in manufacturing companies, which were facing
serious competitive pressure from Japan and sought to emulate the Japanese
quality- and customer-focused management systems. America thus came to quality
consciousness at least 20 years later than Japanese industry, which
enthusiastically embraced Juran and Deming’s theories
during post-World War II industrial reconstruction. Few may recall that Japan’s
manufacturing fame was once limited to a celebrated inability to produce
reliable flashlight batteries. Ironically, it is now the US and other Western
countries that are engaged in a catch-up game.

The key to getting US companies to
sign on to the quality agenda was convincing managers that quality, though
requiring investment, would more than pay its own way. In the words of Feigenbaum, "Quality has become the single most
important force leading to organizational success and company growth in
national and international markets. The return on investment from strong and
effective quality programs is providing excellent profitability results in
firms with effective quality strategies. This is demonstrated by substantial
increases in market penetration, by major improvements in total productivity,
by much lower costs of quality, and by stronger competitive leadership."

Beyond Manufacturing. In the late 1980s and early 1990s, TQM was widely
promoted in business magazines and the popular press as a response to foreign
competition and the trade deficit. Although originally developed in a
manufacturing context, TQM is now applied within diverse industries, including
service, high-tech, and public-sector, based on the
assumption that any product, process, service, or methodology can be improved. For
example, Johnson reported that quality improvements in the healthcare system
saved 50,000 lives and $12 billion from 2010 to 2013, and that the US
Department of Health and Human Services plans to tie 50 percent of payments to
Medicare providers to the quality of care they provide4.

A recent study found
that 71 percent of 880 British companies used or were implementing some form of
TQM, and more than 60,000 North American companies have earned ISO
registrations. TQM is still widely implemented in most of Japan’s big
enterprises, and it is popular in other far eastern countries, although it has
been much slower to catch on in Europe. According to the ISO, by 2013 more than
one million organizations in more than 170 countries had implemented ISO
9001:2008 (a 3 percent increase over 2012); the ISO reported that China, Italy,
and Germany had the most certificates issued in 2013, while Italy, India, and
the USA had the greatest growth in certifications.

In the US, there are many
state-level quality award programs, in addition to the Malcolm Baldrige National Quality Award. In addition, about 50
quality award programs have been initiated outside the US, many at the national
level, including the European Quality Award and the Canada Awards for
Excellence. Demand for TQM training seminars continues to grow, and
organizations are increasingly using the Baldrige and
other quality award criteria for internal self-assessment. Many organizations
require their suppliers to have ISO 9001 registration as reassurance that they
will effectively supply their needs.

Outlook

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Bottom-Line Benefits. Perhaps as a reaction to the earlier widespread media praise
for TQM, in the late 1990s questions arose about the value of TQM. Articles
that questioned TQM’s future appeared in The Wall Street Journal, The Washington Post, and The Economist. A 1997 article on
business fads in Business Week declared
that TQM was "as dead as a pet rock." A survey of 27 vice presidents
of quality in Fortune 500 companies showed that 75 percent were under
significant pressure to show a payoff from TQM.

In answer to these questions,
several researchers have undertaken to measure the financial benefits or lack
thereof of implementing TQM. Easton and Jarrell reviewed nine academic studies
and three other studies on the financial impact of TQM. They found that the
vast majority showed a positive financial impact from TQM. In addition, NIST reported that
for two-time Baldridge Award winners,
the median growth in revenue was 92 percent, and the median job growth was 63 percent
(vs. 3.5 percent for a matched set of industries and time periods).

Singhal and Hendricks studied the stock
performance of 600 companies that won quality awards at the state or national
level or from their customers. They found that over a five-year period
beginning the year before the award was announced, the stock price of an
award-winning company increased, on average, 114 percent, significantly
outperforming both the S&P 500 Index, which increased an average of 80
percent in the corresponding years, and the combined benchmark made up of all
the stocks traded on the New York, American, and NASDAQ exchanges, which
increased an average of 76 percent in the corresponding years. The Baldrige Index was a fictitious stock fund made up of
publicly traded US companies that have received the Baldrige
Award. For nine of the eleven years it was tracked, the Baldrige
Index outperformed the S&P 500 by as much as 6 to 1.

TQM is
not a quick fix or short-term solution, however, nor can success be expected if
it is implemented in a sporadic or piecemeal manner. Singhal
and Hendricks intentionally selected quality award winners rather than simply
companies that claimed to be using TQM, in order to ensure that the companies
they were studying had implemented complete, effective TQM programs. They also
point out that it took a couple of years for a TQM program to influence a company’s
stock price. Some of the disillusionment with TQM may have come from companies
that implemented partial rather than total quality management, or that did
not allow sufficient time for results to materialize. How well a TQM program
improves organizational performance also depends heavily on the level of
employee participation in continuous improvement tasks.
Lam, O’Donnell, and Robertson (2015) found that managers who use
collaboration, consultation, ingratiation, inspirational appeals, and rational
persuasion tend to gain their employees’ commitment, and therefore to achieve
successful TQM programs.

Even TQM’s
proponents admit that it is far easier to apply TQM in a manufacturing
environment than a service environment. Services cannot be specified with the
same precision as for products. For example, a common measure of service
quality is the inherently subjective customer satisfaction survey. In addition,
services are necessarily more variable than products: two people following the
same specifications will unavoidably deliver slightly different services
because of their different personalities and manners.

Related Approaches. Over the decades since TQM’s
introduction, many closely related approaches have become popular, including
Supply Chain Management, Business Process Reengineering, Balanced Scorecards,
ISO 9001, and Six Sigma. These related approaches have also been shown to
benefit the companies that implement them. For example, Ismyrlis
and Moschidis found that ISO 9001:2008 certified
Greek companies in all business sectors benefited from ISO implementation.

At their base, all of
these quality programs rest on the same common-sense principals that can be
much easier to articulate than to implement consistently. All businesses need
to

  • Focus on customer needs;
  • Develop and tap employees’ potential;
  • Involve everyone in efforts to find better ways;
  • Manage business processes; and
  • Manage based on reliable data.

The function of programs such as TQM, Six Sigma, or the
Balanced Scorecard is to institutionalize these approaches and make them a
habit. TQM is no longer the only player on the field, but it is likely to
remain popular because it addresses the fundamental requirements for business
success and has been proven to improve companies’ financial performance.

Sustainable Quality. Quality includes a customer’s subjective experience of a product or service. Watson discusses that because customers
today are increasingly concerned about sustainability and the environmental
impact of the goods and services that they purchase, companies must aim for
sustainable quality, i.e. products and services that minimize negative impacts
on society by being efficient and not wasting resources. Many organizations are
reluctant to move in this direction because they perceive sustainable practices
as too costly. However, studies show the opposite to be true.
For example, Jabbour et al.
(2015), in their study of 75 ISO 9001-certified Brazilian companies, found
a positive relationship between better environmental management and better
operational performance.

Recommendations

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Every American manager understands
at least two things about managing for quality. First, quality is strategic.
Delivering quality creates customer loyalty, helps to effectively penetrate
markets, and often reduces costs associated with manufacturing or providing a
service. Second, quality is not free. Managing for quality requires continuous
and effective planning, monitoring, and realignment. To deliver a quality
product or service, organizations need to understand customer needs, which
change over time. As needs change, they must alter plans, realigning them to
meet emerging business circumstances. Gathering and analyzing information about
customer satisfaction must drive iterative cycles of product redesign. Each of
these processes requires competence, sophistication, and diligence, and all of
them introduce costs.

What fewer managers understand is
that TQM is a long-term process requiring patience and a willingness to defer
gratification. Its lengthy implementation process requires major organizational
changes in culture and mindset. And even after implementation, it can take a
few years before performance starts to improve.

Most
importantly, a company should introduce a TQM program only in answer to real
organizational needs and conditions – not as an end in itself – or the program
will not have the support of managers and workers throughout the company.
If managers and workers begin to feel that that conforming to the steps of TQM
has become their second or maybe even their primary job, it will
be difficult to retain their commitment to the process.

Another potential obstacle to the success of a new TQM program is the natural
human resistance to change. Balestracci (2009) notes that too often managers
talk about quality but don’t behave differently; he offers the following practical
suggestions to help a quality management initiative result in a genuine change in the
system:

  • Supplement training in quality skills with support and processes that address the fear
    of change, and assist managers with any resistance to the transition.
  • Put briefings on quality progress on the agenda at staff meetings, and recognize
    success in public ways.
  • Create quality teams that comprise employees and managers of all levels.
  • Expand managers’ performance criteria to include principles of quality management.

Software, training, or consulting to help
organizations implement TQM is available from numerous companies, including
SixSigma.US, ExpertRating, ASQ, the Management and Strategy Institute, Villanova University, and Juran Global.

References

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1 "A Quality Principle: Everything You Need to Know about Total Quality
Management." Smartsheet. Accessed May 2021.
2 Ibid.
3 "Major Contributors to TQM." Cliffnotes.com. Accessed May
2021.
4 Johnsen, M.
(2015). "HHS Seeks to Tie Medicare Payments to Quality of Care Provided." Drug Store News, 37(3), 62-63. Accessed May 2021.

Additional:

Jabbour, C., de Freitas, T., Soubihia, D., Gunasekaran, A., & Jabbour, A. (2015).
"Green and Competitive: Empirical Evidence from ISO 9001 Certified Brazilian Companies."
The TQM Journal, 27(1), 22-41.
Balestracci, D. (2009) "Why Did Total Quality Management Fail?" Quality
Insider, 08/06/2009.
Ismyrlis, V., & Moschidis, O.
(2015). "The Effects of ISO 9001 Certification on the
Performance of Greek Companies." The
TQM Journal, 27(1), 150-162.
Lam, M., O’Donnell, M., & Robertson, D. (2015).
"Achieving Employee Commitment for Continuous Improvement Initiatives."
International Journal of
Operations & Production Management, 35(2),
201-215.
Watson, G. (2015). "The Strategic Importance of Sustainable Quality."
The Journal for Quality and Participation, 37(4), 19-23.

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