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GE406 TOTAL QUALITY MANAGEMENT UNIT I INTRODUCTION Definition of Quality, Dimensions of Quality, Quality Planning, Quality costs – Analysis

, Techniques for Quality Costs, Basic concepts of Total Quality Management, Historical Review, Principles of TQM, Leadership – Concepts, Role of Senior Management, Quality Council, Quality Statements, Strategic Planning, Deming Philosophy, Barriers to TQM Implementation. • • • Total Quality Management (TQM) is an enhancement to the traditional way of doing business. It is a proven technique to guarantee the survival in the world class competition. Only by changing the actions of the management the culture and actions of an entire organization will be transferred.

TQM is for the most part common sense. v Total =Made up of the whole v Quality =Degree of excellence a product or service provides. v Management =Act, art or manner of handling, controlling, Directing etc. v Therefore, TQM is the art of managing the whole to achieve excellence. v The golden rule is a simple but effective way to explain it, do unto others as you would have them do unto you. v TQM is defined as both a philosophy and a set of guiding principles that represent the foundation of a continuously improving organization. v It is the application of quantitative methods and human resources to improve all the processes with in an organization and exceed customer needs now in the future. v TQM integrates fundamental management techniques, existing improvements efforts and technical tools under a disciplined approach. Gurus of TQM v W.Edwards Deming: Statistical process control, 14 points provide a theory for management to improve quality and competitive position v Walter A.Shewhart: Control charts theory with control limits assignable and chances causes of variation and rational sub groups. He also developed PDSA (plan, do, study and act) cycle for learning and improvement.


v Joseph M.Juran: Recommended project improvements based on return on investment to achieve break through results.Juran Trilogy –planning, control and improvements. v Feigaubaun: Total quality control to achieve productivity, market penetration and competitive advantage. v Ishikawa: Cause and effect diagram, he developed quality circle concept in Japan. v Crosby: Quality is free, doing it right the first time, quality without tears. v Taguchi: Quality loss function-concept that combines cost, target and variation into one metric. Robust design parameters and tolerances. Basic approach: TQM requires six basic concepts: v A committed and involved management to provide long term top to bottom organizational support. v An unwavering focuses on the customer both internally and externally. v Effective involvement and utilization of the entire work force. v Continuous improvement of the business and production process. v Treating supplier as partners. v Establishing performance measures for the process. v The above concepts outline an excellent way to run an organization. Management must participate in the quality program v A quality council must be established to a clear vision set long term goals and direct the program. v An annual improvement program is established and involves input from the entire work force. v Managers must participate on quality improvement teams and also acts coaches to other teams and TQM must be communicated to all people. TQM program is to focus on the customer • • • • • • We must listen to the voice of the customer and emphasize design, quality and defect prevention. Do it right the first time and every time. Customer satisfaction is the most important consideration. All persons must be trained in TQM, statistical process control (SPC) and other appropriate improvement skills so that they can effectively participate on project teams. Involving internal suppliers in developmental activities is an excellent approach and they understand the process better than any one else. People must be given empowerment to perform.


Basic Approach TQM requires six basic concepts: 1. A committed and involved management to provide long-term top-to-bottom organizational support. 2. An unwavering focuses on the customer, both internally and externally. 3. Effective involvement and utilization of the entire work force. 4. Continuous improvement of the business and production process. 5. Treating suppliers as partners. 6. Establish performance measures for the processes. These concepts outline an excellent way to run an organization. A brief paragraph on each of them is given here. The next six chapters cover these concepts in greater detail. 1. Management must participate. in the quality program. A quality council must be established to develop a clear vision, set long-term goals, and direct the program. • Quality goals are included in the business plan. An annual quality improvement program is established and involves input from the entire work force. • Managers participate on quality improvement teams and also act as coaches to other teams. 2. The key to an effective TQM program is its focus on the customer. An excellent place to start is by satisfying internal customers. v We must listen to the "voice of the customer" and emphasize design quality and defect prevention. v Do it right the first time and every time, for customer satisfaction is the most important consideration. 3. TQM is an organization-wide challenge that is everyone's responsibility. • All personnel must be trained in TQM, statistical process control (SPC) and other appropriate quality improvement skills so they can effectively participate on project teams. • Including internal customers and, for that matter, an internal supplier on project teams is an excellent approach. 4. There must be a continual striving to improve all business and production processes. v Quality improvement projects, such as on-time delivery, order entry efficiency, billing error rate, customer satisfaction, cycle time, scrap reduction, and supplier management, are good places to begin. 5. On the average 40% of the sales dollar is purchased product or service; there- fore, the supplier quality must be outstanding. v A partnering relationship rather than an adversarial one must be developed. Both parties have as much to gain or lose based on the success or failure of the product or service.


v The focus should be on quality and life- cycle costs rather than price. Suppliers should be few in number-so that true partnering can occur. 6. Performance measures such as uptime, percent nonconforming, absenteeism, and customer satisfaction should be determined for each functional area. v These measures should be posted for everyone to see. Quantitative data are necessary to measure the continuous quality improvement activity. New and Old Cultures -----------------------------------------------------------------------------------------------------------Quality Element Previous State TQM -----------------------------------------------------------------------------------------------------------Definition Product-oriented Customer-oriented Priorities Second to service and cost first among equals of Service and cost Long-term Prevention System everyone Teams Life-cycle costs, partnership.

Decisions Emphasis Errors Responsibility Problem Solving Procurement

Short-term Detection Operations Quality control Managers Price

Manager's Role Plan, assign, control, Delegate, coach, facilitate, and enforce and mentor -----------------------------------------------------------------------------------------------------------Awareness • • • • • An organization will not begin the transformation to TQM until it is aware that the quality of the product or service must be improved. Awareness comes about when an organization loses market share or realizes that quality and productivity go hand-in-hand. Also occurs if TQM is mandated by the customer or if management realizes that TQ is a better way to run a business and compete in domestic and world markets. TQM does not occur overnight; there are no quick remedies. It takes a long time to build the appropriate emphasis and techniques into the culture. Overemphasis on short- term results and profits must be set aside so long-term planning and constancy of purpose will prevail.


Gain In Productivity with Improved Quality Item Before After Improvement Improvement 10% Nonconforming 5% Nonconforming ----------------------------------------------------------------------------------------------------------Relative total cost for 20 units 1.00 1.00 Conforming units 18 19 Relative cost for Nonconforming units 0.10 0.05 Productivity increase (100)(1/18)=5.6% Capability increase (100)(1/18)= 5.6% Profit increase (100)(1/18)= 5.6%

Defining Quality When the expression quality is used we usually think of an excellent product or service that fulfills or exceeds our expectations. These expectations are based on the intended use and the selling price . Quality can be quantified as follows: Q=P/E Where, Q = Quality P = Performance E = Expectations • • If Q is greater than 1.0, then the CU.5tomer has a good feeling about the product or service. Of course, the determination of P and E will most likely be based on perception with the organization determining performance and the customer determining expectations.

Quality has nine different dimensions. v These dimensions are somewhat independent; therefore, a product can be excellent in one dimension and average or poor in another. v Very few, if any, products excel in all nine dimensions.


The Dimensions of Quality Dimensions Meaning and Example ---------------------------------------------------------------------------------------------------------PERFORMANCE Primary product characteristics, such as brightness of the picture. Secondary characteristics, added features, such as remote control. Meeting specifications or industry standards, workmanship. Consistency of performance over time, average time for the unit to fail. Useful life includes repair. Resolution of problems and complaints, ease of repair. Human to human interface, such as courtesy to the dealer. Sensory characteristics, such as exterior finish Past performance and other intangibles, such as being ranked first






Historical Review The history of quality control is undoubtedly as old as industry itself. During the middle Ages, quality was to a large extent controlled by the long periods of training required by the guilds. This training instilled pride in workers for quality of a product. • • In 1924, W. A. Shewhart of Bell Telephone Laboratories developed a statistical chart for the control of product variables. This chart is considered to be the beginning of statistical quality control. Later in the same decade, H. F. Dodge and H. G. Romig, both of Bell Telephone Laboratories, developed the area of acceptance sampling as a substitute for 100% inspection. In 1946, the American Society for Quality Control was formed. Recently, the name was changed to American Society for Quality (ASQ). This organization, through its publications, conferences, and training sessions, has promoted the use of quality for all types of production and service.

• •


v In 1950, W. Edwards Deming, who learned statistical quality control from Shewhart, gave a series of lectures on statistical methods to Japanese engineers and on quality responsibility to the CEOs of the largest organizations in Japan. v Joseph M. Juran made his first trip to Japan in 1954 and further emphasized management's responsibility to achieve quality. Using these concepts the Japanese set the quality standards for the rest of the world to follow. v In 1960, the first quality control circles were formed for the purpose of quality improvement. v Simple statistical techniques were learned and applied by Japanese workers. v In the late 1980s the automotive industry began to emphasize statistical process control (SPC). v Suppliers and their suppliers were required to use these techniques. v Taguchi introduced his concepts of parameter and tolerance design and brought about a resurgence of design of experiments (DOE) as a valuable quality improvement tool. The Deming Philosophy o Dr. W. Edwards Deming was a protégé of Dr. Walter Shewhart, who pioneered statistical process control (SPC) at Bell Laboratories. o The two spent much time together during the late 1920s, 1930s, and 1940s. He also spent one year studying under Sir Ronald Fisher, who pioneered design of experiments. o Dr. Deming is credited with providing the foundation of the Japanese quality miracle and resurgence as an economic power. o He developed the following 14 points as a theory for management for improvement of quality, productivity, and competitive position. 1. Create and publish the Aims and Purposes of the Organization Management must demonstrate constantly their commitment to this statement. It must include investors, customers, suppliers, employees, the community, and a quality philosophy. 2. Learn the New Philosophy o Top management and everyone must learn the new philosophy. o Organizations must seek never-ending improvement and refuse to accept nonconformance. o Customer satisfaction is the number one priority, because dissatisfied customers will not continue to purchase nonconforming products and services.


3. Understand the Purpose of Inspection • Management must understand that the purpose of inspection is to improve the process and reduce its cost. For the most part, mass inspection is costly and unreliable. • Where appropriate, it should be replaced by never-ending improvement using statistical techniques. Statistical evidence is required of self and supplier. 4. Stop Awarding Business Based on Price Alone v The organization must stop awarding business based on the low bid, because price has no- meaning without quality. v The goal is to have single suppliers for each item to develop a long-term relationship of loyalty and trust, thereby providing improved products and services. 5. Improve Constantly and Forever the System Management must take more responsibility for problems by actively finding and correcting problems so that quality and productivity are continually and permanently improved and costs are reduced. The focus is on preventing problems before they happen. 6. Institute Training • Each employee must be oriented to the organization's philosophy of commitment to never-ending improvements. • Management must allocate resources to train employees to perform their jobs in the best manner possible. 7. Teach and Institute Leadership o Improving supervision is management's responsibility. o They must provide supervisors with training in statistical methods and these 14 points so the new philosophy can be implemented. o Instead of focusing on a negative, fault-finding atmosphere, supervisors should create a positive, supportive one where pride in workmanship can flourish. 8. Drive out Fear, Create Trust, and Create a Climate for Innovation v Management must encourage open, effective communication and teamwork. v Fear is caused by a general feeling of being powerless to control important aspects of one's life. v It is caused by a lack of job security, possible physical harm, performance appraisals, and ignorance of organization goals, poor supervision, and not knowing the job. v Driving fear out of the workplace involves managing for success. 9. Optimize the Efforts of Teams, Groups and Staff Areas o Management must optimize the efforts of teams, work groups, and staff areas to achieve the aims and purposes of the organization. o Barriers exist internally among levels of management, among departments, within departments, and among shifts.


o Externally, they exist between the organization and its customers and suppliers. These barriers exist because of poor communication, ignorance of the organization's mission, competition, fear, and personal grudges or jealousies. 10. Eliminate Exhortations for the Work Force • Exhortations that ask for increased productivity without providing specific improvement methods can handicap an organization. • They do nothing but express management's desires. They do not produce a better product or service, because the workers are limited by the system. • Goals should be set that are achievable and are committed to the long term success of the organization. 11a. Eliminate Numerical Quotas for the Work Force o Instead of quotas, management must learn and institute methods for improvement. Quotas and work standards focus on quantity rather than quality. o They encourage poor workmanship in order to meet their quotas. Quotas should be replaced with statistical methods of process control. o Management must provide and implement a strategy for never-ending improvements and work with the work force to reflect the new policies. 11b.Eliminate Management by Objective o Instead of management by objective, management must learn the capabilities of the processes and how to improve them. o Internal goals set by management, without a method, are a burlesque. Management by numerical goal is an attempt to manage with- out knowledge of what to do. 12. Remove Barriers That Rob People of Pride of Workmanship o Loss of pride in workmanship exists throughout organizations because Workers do not know how to relate to the organization's mission o They are being blamed for sys- tem problems o Poor designs lead to the production of "junk" o Inadequate training is provided o Punitive supervision exists o Inadequate or ineffective equipment is provided for performing the required work. Restoring pride will require a long- term commitment by management. 13. Encourage Educations and Self-Improvement for Everyone o What an organization needs are people who are improving with education. o A long-term commitment to continuously train and educate people must be made by management. o Deming's 14 points and the organization's mission should be the foundation of the education program. o Everyone should be retrained as the organization requirements change to meet the changing environment.


14. Take Action to Accomplish the Transformation Management has to accept the primary responsibility for the never-ending improvement of the process. o It has to create a corporate structure to implement the philosophy. A cultural change is required from the previous "business as usual" attitude. o Management must be committed, involved, and accessible if the organization is to succeed ill implementing the new philosophy. v Many organizations, especially small ones with a niche, are comfortable with their current state. v They are satisfied with the amount of work being performed, the profits realized, and the perception that the customers are satisfied. v Organizations with this culture will see little need for TQM until they begin to lose market share. v Once an organization embarks on TQM, there will be obstacles to its successful implementation. v The eight most common were determined by Robert J. Masters after an extensive literature search. They are given below. Lack of Management Commitment v In order for any organizational effort to succeed, there must be a substantial management commitment of management time and organizational resources. v The purpose may be clearly and continuously communicated to all personnel. Management must consistently apply the principles of TQM. Inability to Change Organizational Culture Management must understand and utilize the basic concepts of change. They are: 1. People change when they want to and to meet their own needs. 2. Never expect anyone to engage in behavior that serves the organization's value unless adequate reason (why) has been given. 3. For change to be accepted, people must be moved from a state of fear to trust. Improper Planning v All constituents of the organization must be involved in the development of the implementation plan and any modifications that occur as the plan evolves. v Of particular importance is the two-way communication of ideas by all personnel during the development of the plan and its implementation. Lack of Continuous Training and Education v Training and education is an ongoing process for everyone in the organization. Needs must be determined and a plan developed to achieve those needs. v Training and education are most effective when senior management conducts the training on the principle of TQM.


Incompatible Organizational Structure and Isolated Individuals and Departments v Differences between departments and individuals can create implementation problem. The use of multifunctional teams will help to break down long-standing barriers. v Restructuring to make the organization more responsive to customer needs may be needed. v Individuals who do not embrace the new philosophy can be required to leave the organization. Ineffective Measurement Techniques and lack of Access to Data and Results Key characteristics of the organization should be measured so that effective decisions can be made. Paying Inadequate Attention to Internal and External Customers Organizations need to understand the changing needs and expectations of their customers. Effective feedback mechanisms are necessary for this understanding. Inadequate Use of Empowerment and Teamwork v Teams need to have the proper training and, at least in the beginning, a facilitator. Whenever possible the team's recommendations should be followed. v Individuals should be empowered to make decisions that affect the efficiency of their process or the satisfaction of their customers. Leadership Concepts To be effective, a leader needs to know and understand the following: 1. People, paradoxically, need security and independence at the same time. 2. People are sensitive to external rewards and punishments and yet are also strongly selfmotivated. 3. People like to hear a kind word of praise. 4. People can process only a few facts at a time; thus, a leader needs to keep things simple. 5. People trust their gut reaction more than statistical data. 6. People distrust a leader's rhetoric if the words are inconsistent with the leader’s actions. Implementation • The TQM implementation process begins with senior management and, most important, the CEO's commitment. • The importance of the senior management role cannot be overstated. Leadership is essential during every phase of the implementation process: and particularly at the start. Role of Senior Management o Everyone is .responsible for quality, especially senior management and the CEO; how- ever, only the latter can provide the leadership to achieve results.


o Senior management must actively participate in the implementation process described in the previous section. o They must also actively participate in the quality council and all of its duties. These two activities provide the primary activities of the senior manager's role. Quality Council In order to build quality into the culture, a quality council is established to provide over- all direction. It is the driver for the TQM engine. o The responsibility of the coordinator is to build two-way trust, propose team needs to the council, share council expectations with the team and brief the council on team progress. o In addition, the coordinator will ensure that the teams are empowered and know their responsibilities. The coordinator's activities are to assist the team leaders, share lessons learned among teams, and have regular leaders meetings with team leaders. In general the duties of the council are to 1. Develop, with input from all personnel, the core values, vision statement, mission statement, and quality policy statement. 2. Develop the strategic long-term plan with goals and the annual quality improvement program with objectives. 3. Create the total education and training plan. 4. Determine and continually monitor the cost of poor quality 5. Determine the performance measures for the organization, approve those for the functional areas, and monitor them 6. Continually determine those projects that improve the processes, particularly those that affect external and internal customer satisfaction 7. Establish multifunctional project and departmental or work group teams and monitor their progress 8. Establish or revise the recognition and reward system to account for the new way of doing business Once the TQM program is well established, a typical meeting agenda might have the following items: v Progress report on teams v Customer satisfaction report v Progress on meeting goals v New project teams v Recognition dinner v Benchmarking report Core Values and Concepts Core values and concepts foster TQM behavior and define the culture. Each organization will need to develop its own values. Given here are the core values and


concepts; for the Malcolm Baldrige National Quality Award. They can be used as a starting point. For any organization as it develops its own. Customer-Driven Quality o Quality is judged by customers. All product and service characteristics that contribute value to the customer and lead to customer satisfaction, preference, and retention must be the focus of an organization's management system. o Value and satisfaction may be influenced by many factors throughout the customer's overall purchase, ownership, and service experiences. o These factors include the organization's relationship with customers that helps build trust, confidence, and loyalty. • Customer-driven quality is thus a strategic concept. It is directed toward customer retention, market-share gain, and growth. • It demands constant sensitivity to changing and emerging customer and market requirements and the factors that drive customer satisfaction and retention. Leadership v An organization's senior leaders need to set directions and create a customer orientation, clear and visible quality values, and high expectations. v Values, directions, and expectations need to address all stakeholders. The leaders need to ensure the creation of strategies, systems, and methods for achieving excellence. v Strategies and values should help guide all activities and decisions of the organization. v The senior leaders must commit to the development of the entire work force and should encourage participation, learning, innovation, and creativity by all employees. Valuing Employees o An organization's success depends increasingly upon the skills and motivation of its work force. o Employee success depends increasingly upon having opportunities to Learn and to practice new skills. o Organizations need to invest in the development of the work force through education, training, and opportunities for continuing growth: Such opportunities might include classroom and on-the-job training, job rotation, and pay for demonstrated knowledge and skills. o On-the-job training offers a cost-effective way to train and to better link training to work processes. o Work force education and training programs may need to use advanced technologies such as satellite broadcasts and computer aided learning. o Increasingly, training, development, and work units need to be tailored to a more diverse work force and to more flexible, high-performance work practices.


Fast Response v Success in competitive markets increasingly demands ever-shorter cycles for new or improved product and service introduction. v Also, faster and more flexible response to customers is now a more critical requirement. v Major improvement in response time often requires simplification of work units and work processes. v To accomplish such improvement, the time performance of work processes should be among the key process measures. Design Quality and Prevention • Organizations need to emphasize design quality-problem and waste prevention achieved through building quality into products and services and efficiency into production processes. • In general, costs of preventing problems at the design stage are lower than costs of correcting problems that occur "downstream." • Design quality includes the creation of fault-tolerant (robust) or failure-resistant processes and products. • A major success factor in competition is the design-to-introduction (product generation) cycle time. • Meeting the demands of rapidly changing markets requires that organizations carry out stage-to-stage integration (concurrent engineering) of activities from basic research to commercialization. Long-Range View of the Future o Pursuit of market leadership requires an organization to have a strong future orientation and a willingness to make long-term commitments to all stakeholders’ customers, employees, suppliers, stockholders, the public, and the community. o Planning needs to anticipate many changes, such as customers' expectations, new opportunities, technological developments, new customer and market segments, evolving regulatory requirements, community / societal expectations, and thrusts by competitors. o Plans, strategies, and resource allocations need to reflect these commitments and changes. Management by Fact v Modem organizations depend upon measurement and analysis of performance. v Measurements must derive from the organization's strategy and provide critical data and information about key processes, outputs, and results. v Data needed for measurement and improvement are of many types, including customer, product and service performance operations, market competitive comparisons, supplier, employee-related, and cost and financial. v Analysis refers to the process of obtaining larger meaning from data to support evaluation and decision making at various levels within the organization.


Partnership Development o Organizations need to build internal and external partnerships to better accomplish their overall goals. o Internal partnerships might include labor-management cooperation, such as agreements with unions. o Agreements might entail employee development, cross training, or new work organizations, such as high performance work teams. o External partnerships include those with customers, suppliers, and education organizations. o An increasingly important kind of external partnership is the strategic partnership or alliance. o Such partnerships might offer an organization entry into new markets or a basis for new products or services. Corporate Responsibility and Citizenship o An organization's leadership needs to stress its responsibility to the public and practice good citizenship. o This responsibility refers to basic expectations of the organization’s business ethics and protection of public health, safety, and the environment. o Health, safety, and the environment include the organization's operations as well as the life cycles of products and services. o Organizations need to emphasize resource conservation and waste reduction at their source. o Planning should anticipate adverse impacts from production, distribution, transportation, use, and disposal of products. Results Focus • An organization's performance measurements need, to focus on key results. Results should be guided by and balanced by the interests of all stakeholderscustomers, employees, stockholders, suppliers and partners, the public, and the community. • To meet the sometimes conflicting and changing aims that balance implies, organizational strategy needs to explicitly include all stakeholder requirements. • This action will help to ensure that actions and plans meet differing stakeholder needs and avoid adverse impact on any stakeholders. Shared Values There are eight principles that comprise the shared values process. Rob Lebow advocates that management share these values with employees; this sharing will lead to greater productivity, quality, job satisfaction, and profits. Treat Others with Uncompromising Truth o Everyone is told the truth all the time. o Telling the truth means relating good and bad news so that all members of the organization know what's going on instead of being left in the dark or, much worse, being deceived.


o It is much better to receive accurate information from the top rather than through the grapevine. Lavish Trust on Your Associates v When people feel trusted they will go out of their way not to disappoint the person who gave them the gift of trust. v Empowering associates creates a trust between managers and employees. Managers must trust employees to make decisions, promote organization values, and do the right thing without direction. v Trust is a powerful tool-the confidence it builds can result in great rewards for the organization. Mentor Unselfishly • Everyone is a mentor-management teaching employees, employees teaching employees, and employees teaching management. • Successful organizations will create an environment where everyone realizes the importance of giving and receiving knowledge. Be Receptive to New Ideas, Regardless of Their Origin v A healthy work environment is one that invites people to offer ideas and suggestions. No one has a monopoly on good ideas. v They may come from fellow workers, suppliers, consultants, articles, benchmarking, and customers. v Many organizations act as if the only good ideas come from corporate headquarters. v This approach eliminates good ideas and pressures managers to come up with all the good ideas. Some of the best ideas will come from the people who are performing the process. Take Personal Risks for the Organization’s sake o Playing it safe is not the safe thing to do in our competitive world. Without some risk, there will be no gain. o The organization must encourage all employees to express their ideas without fear of ridicule or retribution. o Risk taking is one of the most vital activities an organization must engage in if it is to survive and grow. o The organization's culture should allow for failures without reprisal. Give Credit Where Credit Is Due o People need to know that they are appreciated. However, credit must not be given without reason; otherwise, it will lose its value. o Employees want to understand the rewards given and feel that the reward and recognition system is fair.


Do Not Touch Dishonest Dollars v Studies show that the majority of employees believe that to some extent their managers are dishonest. v In many cases there is a perception that the leadership lacks integrity. v This thinking has an extremely negative impact on the organization's morals and self- respect, which leads to rationalizing internal theft and leaking vital information to competitors. v The organization should review all business transactions to determine if they are morally right. Put the Interest of Others before Your Own • When people focus on what's good for the organization rather than their own selfinterests, then everyone gains. • In the long run, managers who put the interests of others before their own benefit greatly by creating a productive work environment. Ethics o In the last section we discussed the shared value principle of "do not touch dishonest dollars," which is of course fundamental to ethical behavior. o In this section we will discuss individual and organizational ethics in detail. Definition v Ethics is a body of principles or standards of human conduct that govern the behavior of individuals and organizations. v It is knowing what is the right thing to do and is learned when one is growing up or at a rater date during an organization's ethics training program. Roots of Unethical Behavior Unethical behavior in organizations occurs when: 1. Organizations favor their own interests above the well-being of their customers, employees, or the public. 2. Organizations reward behavior that violates ethical standards, such as increasing sales through false advertising. 3. Organizations encourage separate standards of behavior at work than at home, such as secrecy and deceit versus honesty. 4. Individuals are willing to abuse their position and power to enhance their interests, such as taking excessive compensation for themselves off the top before other stakeholders receive their fair share. 5. Managerial values exist that undermine integrity, such as using people by stereo typing or labeling them to promote oneself at their expense, and anything is right if the public can be convinced that it is right. 6. Organizations and individuals overemphasize the short-term results at the expense of themselves and others in the long run, such as behavior is good based on the degree of utility, pleasure, or good received regardless of the effect on others.


7. Organizations and managers believe their knowledge is infallible and miscalculate the true risks, such as when financial managers invest organizational funds in high-risk options trading. Ethics Management Program Managing ethical behavior requires commitment, new policies and procedures, continuous improvement, and investments in appraisal, prevention, and promotion. The first step is appraisal, which is the analysis of the costs associated with unethical behavior. These costs can be divided into the three root causes of pressure, opportunity, and attitude. • • • Costs from pressure are those costs from well-intended but unethical decisions made under pressure. They include but are not limited to errors, waste, rework, lost customers, and warranties. Costs from opportunity are those costs from intentional wrongdoing. They include but are not limited to theft, overstated expenses, excessive compensation, and nepotism. Costs from attitudes are those costs from mistaken beliefs in unethical forms of behavior. They include but are not limited to errors, waste, rework, lost customers, and health care.

The second step is prevention, which is the development of a system that will minimize the costs developed in the first step. Because management has a good idea of the appraisal costs, this step can proceed concurrently with Step I. • • • • Pressure can be addressed by being involved in the development of goals and values (see the section on goals) and developing policies that allow for individual Diversity, dissent, and decision-making input. Opportunity can be addressed by developing policies that encourage and protect whistleblowers and require the existence of ombudsmen who can work confidentially with people to solve ethical problems internally. Attitude can be addressed by requiring ethics training for all personnel, recognizing ethical conduct in the workplace, requiring performance appraisals to include ethics, and encouraging open discussion concerning ethical behavior issues.

The third step is promotion, which is the continuous advertising of ethical behavior in order to develop an ethical organizational culture that is clear, positive, and effective. To be clear the philosophy needs to be written, with input from all personnel, and posted. Standardized ethics training should be given to everyone to: (1) teach them how to clarify ethical issues, (2) encourage them to get the facts before acting, (3) encourage them to consider all the consequences before acting, and


(4) show them how to test their actions in advance. This testing can be accomplished by asking (1) Is it legal? (2) Is it right? (3) Is it beneficial for all involved? and (4) How would I feel if it was published on the front page? • • To be positive, the culture should be about doing what is right, encouraging principled organizational dissent, and rewarding ethical behavior. To be effective, the philosophy must be set and adopted by senior management with input from all personnel. Senior management should act as they would want others to act and make no exceptions.

Final Comment Quality obtains its power to reduce costs, improve competitiveness, and create customer satisfaction from its ability to improve ethical behavior within the management process. Quality Statements o In addition to the core values and concepts, the quality statements include the vision statement, mission statement, and quality policy statement. o Once developed, they are only occasionally reviewed and updated. o They are part of the strategic planning process, which includes goals and objectives. Vision Statement The vision statement is a declaration of what an organization should look like five to ten years in the future. It is a realistic picture of what it wants to become and what is possible. Mission Statement v The mission statement answers the fol1owing questions: who we are, who are the customers, what we do, and how we do it. v This statement is usually one paragraph or less in length, is easy to understand, and describes the function of the organization. v It provides a clear statement of purpose for employees, customers, and suppliers. Quality Policy Statement o The quality policy is a guide for everyone in the organization as to how they should provide products and service to the customers. o It should be written by the CEO with feedback from the work force and be approved by the quality council. Common characteristics are v Quality is first among equals. v Meet the needs of the internal and external customers. v Equal or exceed the competition. v Continually improve the quality. v Include business and production practices.


v Utilize the entire work force. v A quality policy is a requirement of ISO/QS 9000. Strategic Planning • Many organizations are finding that strategic quality plans and business plans are inseparable. • The time horizon for strategic planning is three to ten years and short-term planning is one year (annual) or less. Both types of planning require goals and objectives. Goals and Objectives o Goals and objectives have basically the same meaning. o We will differentiate between the two by using goals for long-term and objectives for short-term planning. o The goal is to win the war; the objective is to capture the bridge. Seven Steps to Strategic Planning There are seven basic steps to strategic quality planning. 1. Customer Needs. 2. Customer Positioning 3. Predict the Future. 4. Gap Analysis. 5. Closing the Gap. 6. Alignment. 7. Implementation Annual Quality Improvement Program v An annual program is developed along with a long-term strategic plan. v Some of the strategic items will eventually become part of the annual plan, which will include new short-term items. Communications All organizations communicate with their employees in one manner or another. The quality council is the driver for the TQM engine, and communications is the fuel. Interactive v Perhaps the most effective communication is between the employee and his/her supervisor. v The immediate supervisor is in the best position to transfer information and create discussions on what needs to be improved, how to do it, and why it needs to be done. v All supervisors are not equally effective as communicators; therefore, a training program is a necessity.


Formal v Formal communication occurs by either the printed page or electronics. v The most common form is by periodic publications such as daily or weekly newsletters and monthly or quarterly magazines. Feedback • In order for the communication system to be effective, there must be feedback. • The culture must encourage two-way communication so that information flows up the ladder as well as down. Decision Making • Making poor decisions is one of the deadliest threats to the success of the organization and to one's career. • People fail because they act haphazardly without regard to the values and goals of an organization. In order to make correct decisions, it is best to use the problemsolving method. The 7 Habits of Highly Effective People o Stephen R. Covey has based his foundation for success on the character ethicthings like integrity, humility, fidelity, temperance, courage, justice, patience, industry, simplicity, modesty and the Golden Rule. o The personality ethic-personality growth, communication skill training and education in the field of influence strategies and positive thinking--is secondary to the character ethic. o What we are communicates far more eloquently than what we say or do. Ø Ø Ø Ø Ø Ø Ø Habit 1: Be Proactive Habit 2: Begin with the End in Mind Habit 3: Put First Things First Habit 4: Think Win-Win Habit 5: Seek First to Understand, Then to Be Understood Habit 6: Synergy Habit 7: Sharpen the Saw (Renewal)

Characteristics of Leaders There are 12 behaviors or characteristics that successful leaders demonstrate. 1. They give priority attention to external and internal customers and their needs. Leaders place themselves in the customers' shoes and service their needs from that perspective. 2. They empower, rather than control, subordinates. Leaders have trust and confidence in the performance of their subordinates. They provide the resources, training and work environment to help subordinates do their jobs. 3. They emphasize improvement rather than maintenance. Leaders use the phrase "If it isn't perfect, improve it" rather than "If it isn't broke, don't fix it."


4. They emphasize prevention. "An ounce of prevention is worth a pound of cure" is certainly true. 5. They encourage collaboration rather than competition. When functional areas, departments, or work groups are in competition, they may find subtle ways of working against each other or withholding information. 6. They train and coach, rather than direct and supervise. Leaders know that the development of the human resource is a necessity. 7. They learn from problems. When a problem exists, it is treated as an opportunity rather than something to be minimized or covered up. 8. They continually try to improve communications. Leaders continually disseminate information about the TQM effort. They make it evident that TQM is not just a slogan. 9. They continually demonstrate their commitment to quality. Leaders walk their talk-their actions, rather than their words, communicate their level of commitment. 10. They choose suppliers on the basis of quality, not price. Suppliers are encouraged to participate on project teams and become involved. 11. They establish organizational systems to support the quality effort. At the senior management level a quality council is provided, and at the first-line supervisor level 12. They encourage and recognize team effort. They encourage, provide recognition, and reward individuals and teams. Leadership Survey In order to evaluate a manager's performance, a survey of the manager's workers should be taken periodically To define quality produced several dozen different responses, including the following: • • • • • • • • • Perfection Consistency Eliminating waste Speed of delivery Compliance with polices and procedures Providing a good, usable product Doing it right the first time Delighting or Pleasing Customers Total Customer service and satisfaction

Quality is defined as ‘fitness for intended use’ Quality is defined as ‘Conformance to Specifications’ Quality is defined as ‘the totality of features and characteristics of a product or service that bears on its ability to satisfy given needs’ [ISO 8402, 2.1:1994]


Quality Dimensions • Quality of Design Ø Quality characteristics suited to needs and wants of a market at a given cost Ø Continuous, never-ending improvement • Quality of Conformance Ø Predictable degree of uniformity and dependability • Quality of Performance Ø How is product performing in the marketplace? QUALITY PLANNING Quality planning is responsible for several important functions such as • Examining drawing received from design section. • Preparing inspection and test schedules. • Planning process control. • Determining Quality control and inspection staff requirements. • Scheduling calibration and maintenance of gauges, measuring instruments. Carrying quality cost studies. QUALITY COST Quality costs are defined as those costs associated with the non-achievement of product or service quality as defined by the requirements established by the organization and its contracts with customer and society.

Quality costs: Prevention costs
Costs of control

Appraisal costs

Internal failure costs Costs of failure of control External failure costs


Quality costs are broadly classified into: 1. Failure costs 2. Appraisal costs 3. Prevention costs Failure costs: Failure costs are the direct and indirect costs incurred on those products or services, which fail to comply with their prescribed specifications. Ø Internal failure costs – before delivered to customers Ø External failure costs – after delivered Appraisal costs: Appraisal costs are those costs involved in actual checking of the quality, viz., the cost of carrying out actual inspection. Prevention costs: Prevention costs are those, which are involved in ensuring that faulty or defective work, or rejections are not produced in very first instance. BASIC CONCEPTS OF TOTAL QUALITY MANAGEMENT: TQM requires six basic concepts: 1. A committed and involved management to provide long-term top-to-bottom organizational support. 2. An unwavering focuses on the customer, both internally and externally. 3. Effective involvement and utilization of the entire work force. 4. Continuous improvement of the business and production process. 5. Treating suppliers as partners. 6. Establish performance measures for the process. THE DEMING PHILOSOPHY: Dr. R Edwards Deming protege of Dr.Walter shewhart, who pioneered statistical process control at bell laboratories. He developed 14 points as theory for management for improvement quality, productivity and competitive position. 1. Create and publish aims and purposes of the organization. 2. Learn the new philosophy. 3. Understand the purpose of inspection. 4. Stop awarding business based on price alone 5. Improve constantly and forever the system. 6. Institute training. 7. Teach and institute leadership. 8. Drive out fear, create trust and create a climate for innovation. 9. Optimize the efforts of team, groups, and staff areas 10. Eliminate exhortations for the work force.


11. a. Eliminate numerical quotas for the work force. 11. b. Eliminate management by objective. 12. Remove barriers that rob people of pride of workmanship. 13. Encourage education and self-improvement for everyone. 14. Take action to accomplish the transformation.


Produce (Do)

Correction of Process Inspect and DEMING S CIRCLE

(Check) Feedback


1. Define Quality 2. Define TQM 3. How can be quality quantified? 4. What are the various dimensions of quality? 5. What is quality planning? 6. What is quality cost? 7. What is leadership? 8. What is the difference between vision and mission statement? 9. Define empowerment? 10. What is the role of senior management?


11. Describe the six basic concepts of TQM. 12. Explain the principles of TQM. 13. Select one or more of Deming's 14 points and describe how you would achieve or implement it. 14. Describe customer perception of quality. 15. What are the various types of quality costs and explain them briefly. 16. Name the various types of analysis techniques for quality costs? 17. What are the seven steps to strategic planning? 18. Briefly explain about theory for management. 19. Explain briefly about the Deming Philosophy. 20. What are the barriers for TQM implementation?


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