Total Quality Management Essays - Process Management, Management

Total Quality Management What is Total Quality Management? Quality is not determined or defined by the producing company. Quality is determined by the customer. Thus quality of a product or a service is the customer?s perception of the degree to which the product or service meets his or her expectations. Total Quality Management (TQM) is an approach to improving competitiveness, effectiveness, efficiency and flexibility of the organization in satisfying the customer demands. It is a process that recognizes the need to determine the customers' requirements and uses that knowledge to drive the entire organization to ensure those needs are fully met. It is essentially a way of planning, organizing and understanding each and every activity that takes place in the organization, and depends on every individual at his or her own level in the organization. Thus from Senior Executives to the person just cleaning the premises has to be involved in the quest for continual improvement towards the same goals, recognizing that each person and each activit y interacts and has an effect on others. Why TQM? Companies strive for Total Quality Management in an effort to: ? Increase customer satisfaction ? Increase customer retention ? TQM not only focuses on gaining a new customer but maintaining the current customers. ? Reduce customer complaints ? Attract new customers ? Increase organizational effectiveness ? Reduce costs due to less waste and rework ? Quality costs and every time something is done incorrectly, money is lost. ? Increase profitability ? Achieve a greater market share ? Maintain a competitive advantage Dr. W. Edwards Deming?s Quality Chain Reaction in figure 1 provides a logical rationale for implementing a quality improvement effort. It says that if an organization improves quality, costs will decrease due to fewer errors and more efficient use of materials and time. This causes an improvement in productivity and leads to capturing the market due to higher quality and lower prices. Therefore, a company will stay in business and provide more jobs1. Figure 1. Deming?s Chain Reaction provides the rationale for why an organization should start with quality. What are the specific reasons why a company should consider using TQM efforts? (1) Become more profitable: The main effects of quality on profits are realized through lower costs due to efficiencies achieved, higher customer retention, greater attraction of new customers, and the potential to charge higher prices (refer to figure 2). (2) Competitive position: What makes your company different from the one down the street? Why should a client keep your company or choose your company to do business with rather than your competitor? Competitive advantage is a unique strength relative to competitors, often based on quality, time, cost, innovation, or customer intimacy. If properly done, TQM?and the resulting high quality?can often serve as a competitive advantage because most firms have not yet adopted TQM.1 (3) Employee involvement: TQM requires total employee commitment to the process or it will fail. The whole idea is to permit the people who actually carry out the activities to continuously improve them. They are, after all, the ones who know them the best. They have a vital role to play and firm management must keep them involved. It is a complete change to the way business has been carried on in the past. Figure 2. HOW QUALITY LEADS TO PROFITS How do you Implement TQM? By applying following eight Quality Management Principles, organizations will produce benefits for customers, owners, people, suppliers and society at large. Principle 1 - Customer-Focused Organization Importance of Customer Satisfaction: Indirectly the company does not pay your wages, but the consumers do. Without their orders, no money would come into the company. Thus nobody would get paid at the end of the month. The customer is the most important person to the company. Customer satisfaction is the result of the number of positive and negative factors that are experienced by the customer. Organizations depend on their customers and therefore should understand current and future customer needs, meet customer requirements, and strive to exceed customer expectations. Customer satisfaction is the result of the number of positive and negative factors that are experienced by the customer. The more satisfier factors present, the higher customer satisfaction. Eliminating dissatisfiers alone (by improving processes) will not result in increased satisfaction level. It will only result in fewer dissatisfiers. A