Operations Management Revision Notes : Quality Management

Quality is important. It can literally be a matter of life and death (Chernobyl) or just incredibly
expensive (Intels $475m chip recall). Quality can be understood as product based what the
customer experiences, or process based, whereby the company does things right first time
and avoids the cost of corrective action. Achieving exceptional quality is rare but the results
can be incredible Japanese autoplants produce 193 defects per million parts compared to
1650 per million for UK plants.
Total Quality Management (TQM)
TQM is not about inspections. Its a loose collection of ideas built around a culture of quality. It
emphasises continual improvement and measurement of process results. This can involve
looking outside your business (if you select suppliers on cost why be surprised if quality isnt
great?). Employees need to be highly trained, motivated and empowered to make decisions.
In particular companies need to drive out fear so employees will ask questions and make
suggestions.
Deming even suggested that numerical targets and quotas were a bad idea, since managers
usually manage to the targets rather than the actual goal theyre trying to achieve. Finally top
management has to buy into this approach, believe in it and make it happen.
Statistical Process Control
All systems produce variance. The key is to
differentiate between special cause variance and
common cause variance. Common cause variance
is simply what youd expect from the system and
only improvements to the system will reduce it.
Special cause variance can be traced to particular
events and directly addressed.
Process control charts show where results are
within or without limits. The average value of the
variable is a central limit. Upper and Lower control
limits are then set at a standard number of
standard deviations away from this.

Upper
limit
Central
limit
Lower
limit
Acceptable
Unacceptable

Capability is about whether or not the variance in a system is acceptable. It is calculated as

upper tolerance limit lower tolerance limit / 6 times standard deviation (six sigma)
What this means is 3.4 defects per million parts. Deming still feels this is missing the point as
it doesnt generate the required culture shift of continual improvement.
Problems with TQM
TQM requires workers to put in a lot of extra effort and makes them responsible for things
which they were not responsible for previously. However it doesnt necessarily reward them
for this, essentially breaking the wage-effort relationship. It also requires workers to be more
flexible and reduces worker power accordingly.
An AT Kerney study of TQM in the UK found that 80% of implementations fail. Mostly down to
no training, too much hype, unrealistic expectations, mixed messages and bad faith.